Antigenics, Dendreon and Cell Genesys Find Hope in Overseas Treatment Approvals

 |  Includes: AGEN, CEGE, DNDN
by: Michael Shulman

Antigenics (NASDAQ:AGEN) got Russian approval for its cancer immunotherapy - a cancer "vaccine" is the sexy, headline grabbing term. This also created a few seconds of buzz around two other immunotherapy companies, Dendreon (NASDAQ:DNDN) and Cell Genesys (CEGE). I mention these two other companies because, for purposes of full disclosure, I own CEGE stock and recommend it in my newsletter service. I also own a full hedged position of DNDN I cannot wait to liquidate when my hedge expires.

In the U.S., AGEN has been failing to get approvals from the FDA for good reasons - their treatment, Oncophage, did not work in Phase III trials - it did not even come close, which is at least a sort of argument DNDN could and did make. Oncophage targets kidney cancer and was shown to work within a sub group of patients with "lower-stage tumors" and therefore a better shot at survival - and 45% of these patients responded to Oncophage. Hence, the approval in a Russia looking to build new industries.

What is going on? A couple of things which are of critical interest to dying patients and some interest to investors.

• I started my career as a biotech wise-guy and sage as a fan of the FDA under Dr. Mark McClellan. I now believe the agency kills far more people in a month than Rumsfeld and successors have in Iraq. How? The FDA, despite what it says, does not really change its view of trial results for drugs for dying patients without hope. Its statisticians hide behind numbers - they insist trial data be used only based on the original protocol for the trial - subset analyses not in the original plan are verboten. Even for patients with absolutely no alternative other than a very painful death.

• Medicine is moving worldwide - and if Antigenics can treat a cancer patient in Russia, people with money in the US and Europe will go there for treatment - treatment that will be a lot cheaper than in the US if Oncophage is ever approved here. Immunotherapies from Antigenics and Dendreon are capital and labor intensive - treatments are literally customized and prepared in a factory for each patient - and Russia is a lot cheaper than other places.

• Professional investors are so disgusted with the FDA and so aware of the vibrant international medicine market they are willing to support the Antigenics business model. The proof - a new private offering by Antigenics to the tune of $21 million.

Where does this leave investors?

• AGEN is now an interesting play because they may now be able to generate revenue AND prove out their therapy in a distinctive sub group of patients without requiring huge additional infusions of capital.

• DNDN now has a fallback - I believe their interim trial results will not get them an approval due to the way the trial is structured and their final results may not be strong enough under the current regime of statistical fascism at the FDA. They could go a Russia, but probably a China or India route if necessary.

• CEGE has by far the best structured trials - they provide for patients with and without the current standard of late stage care, have embedded metrics using immune system biomarkers and are huge. In my opinion they stand the best chance of an FDA approval but this too helps them, they too now have a fallback if they need it.

Bottom line: this was not a minor announcement. You can expect other companies with good sub group analysis but no FDA approval, and life saving treatments, to look to Russia, China, India and South Africa for quick trials, drug approvals and an international base to build out their product. This reduces the risk in many companies.

Full Disclosure: I own CEGE stock and a full hedged position of DNDN.