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Saul Kerpelman
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I am an attorney in Baltimore, Md., representing children with lead poisoning. I have been investing in biotech for over a decade. I have an A.B. from Vassar College '76, Phi Beta Kappa; J.D. from Duke Law School '79; M.S. from Johns Hopkins University '08.
  • Dendreon, The Fabled "Next Amgen"  35 comments
    Jul 8, 2010 7:52 PM | about stocks: DNDN, AMGN, CELG

    In the Biotech oncology space immunotherapies are red hot.  The hottest of the hot--and actually the probable reason for all the heat of its brethren-- has been Dendreon (NASDAQ:DNDN), the Seattle oncology biotech that received the first FDA approval in history for a "therapeutic vaccine".  In common understanding a vaccine is given to prevent disease--by training the patient's immune system to recognize and defeat invading organisms.  A therapeutic oncology vaccine puts kind of a twist on this idea:  the patient already has cancer and the therapeutic vaccine trains the patient's immune system to kill the cancer. 

    For over a hundred years doctors and cancer researchers of every stripe have been trying to stimulate the patient's immune system to fight cancer, and have failed.  A key difficulty in the fight against cancer is that the "invaders" causing the illness are the patient's own cells--run amok and wreaking havoc to be certain--but "us" in the eyes of the immune cells charged with fighting disease--so they leave it alone.
    Finding a way around this problem is the Holy Grail of cancer research--and has been for these past hundred years.

    Dendreon has succeeded where all others failed.

    Provenge, the autologous therapeutic vaccine for late stage prostate cancer, approved by the FDA on April 29, 2010, demonstrated in clinical trials the ability to significantly extend the lives of the sickest of the sick men with prostate cancer.  It demonstrated the largest survival advantage EVER in the late stages of this disease, improving three year survival by a gigantic (in the world of late stage prostate cancer) 40%. 

    Provenge works by a process in which the patient's blood is drawn, immune cells are isolated, and then combined with Dendreon's patented antigen delivery cassette.  What this really represents is a "school for the immune system":  the antigen delivery cassette is made up of an antigen that is present on the surface of almost every prostate cancer cell, fused to an immune stimulating protein.  It's kind of like holding up a mug shot to the immune system and saying "Look--these are the bad guys!"  The infusion bag of "activated" immune cells (trained in what the bad guys look like)is Provenge.  The activated cells are infused back into the patient (3 times over the one month course of treatment) and treatment is done--and the process produces a MASSIVE immune response against the patient's cancer.  All with a very benign side effects profile--none of the usual ravages of chemo.

    Unbelievably awesome, right?  Success where all others have failed.  Minimal side effects.  And in the second most common cancer of all.  

    How big is that market and what could the revenues look like for the company? There are over 100,000 men currently diagnosed.  30,000 new cases every year and the company has priced Provenge at $93,000 for a complete course of treatment--competitive with current chemos--and with a brand new decision by Medicare to provide coverage.  You can do the math, but since approval men have been clamoring for the treatment, waiting lists have been forming, and the company has been hustling to bring three plants online by mid 2011 that will have the capacity to process $2.5 Billion worth of Provenge a year.

    And the story gets better.  Dendreon somehow limped, and begged, and dragged itself across the FDA approval line without partnering (please see my earlier article--Dendreon Learned From Icos' Mistake) and having maintained 100% rights to the well protected cassette technology--and process technology that is behind Provenge.  Not only does the company own it all--and as of April 2011 have almost One Billion dollars in cash to execute the launch of Provenge, with Hans Bishop, a top gun hired away from Bayer, to oversee it--but there is the real prospect that the same technology that has been validated with Provenge will also prove successful in follow on treatments for bladder cancer and renal cancer, for which the company plans trials beginning this year and next.

    What about the rest of the world?  I'm glad you asked.  The company owns 100% rights there too, and plans to keep it that way.  They've shown they're serious there by publicly admiring Celgene's go alone success with Revlimid and following up with meetings with the EMEA--the European equivalent of the FDA.  They have already reported that those meetings indicate that Europe is unlikely to require new trials for Provenge, given the rigorous gauntlet the company has already run with the FDA.  The company is expressing its optimism in Europe by contracting for a gap producer of Provenge to support an application for European approval late in 2011 or early in 2012, and by planning a new Provenge factory for construction in Germany.  European and Rest of the world revenues could easily equal or exceed those of the U.S.

    Has your calculator exploded yet?
    There's more.  It will be tough, because it's harder to run trials in prostate cancer victims in earlier stages of the disease--with their longer life expectancies and the FDA not yet accepting any surrogate endpoints for survival--but if Dendreon can expand the Provenge label to earlier stage disease the revenue prospects are tremendous--multiples of the figures we have already discussed.  And of course since Provenge works by stimulating the immune system, there is every logical reason to expect that having succeeded in the sickest of the sick PC sufferers, with immune systems already so compromised that they had allowed their cancer to spread, it will work even better in men with earlier stage disease and healthier immune systems.  One researcher, who participated in Provenge trials, even expressed the hope at an analyst's day held by the company that in earlier stage disease Provenge might prove to be--(Let's whisper it, since for some reason some people get upset when I quote her here--remember I'm quoting--I'm not saying it--the research doctor is saying it) a cure.  That's right, a possible cure for early stage prostate cancer.

    One aspect of the recent Medicare decision to cover Provenge that has not been fully appreciated is its handling of off label use of Provenge.  The label indication is late stage metastatic disease. So far everyone's analysis of the market potential of Provenge has been limited to labeled use.  As above, patients are going to be eager to receive Provenge in earlier stage disease, before the cancer has spread and their immune systems are even weaker.  Medicare did not--as many expected them to--forbid coverage for off label (earlier stage) disease.  Instead they left that decision to the local regional Medicare contractors.  Dendreon has trials going on in earlier stage disease, and while success in those trials might not suffice for FDA approval--they are not registration trials for approval--there is still the chance that if the results are good the various treatment Compendia, which CMS looks to in addition to the FDA in making coverage decisions, may list Provenge in earlier stage disease as a treatment recommendation, and thus open the door for off label coverage.  That would be absolutely HUGE and could push the U.S. Provenge market into the 10 Billion dollar range.

    Sound good?  Sound like it could be the "Next Amgen"?.  Do all the due diligence you care to--and for sure, as always, there WILL be bumps in the road--from here on execution will be everything--but all the bureaucratic obstacles have finally been removed and it sure looks like the best candidate out there for "Next Amgen" status to me.

    So where are they selling this?  It's over at the NASDAQ under the symbol DNDN, and guess what?  Right now it's on sale--because of the "Tempest in a Teapot" fears about the CMS review (see my earlier article Dendreon: Fear is Our Friend) and because analysts have yet to dig deeply enough into the story to be even including the European and Rest of the World markets, or the chance of off label revenues, into their models.  Not to mention other cancers which may be treatable by the patented technology behind Provenge.  The shares are currently well off their immediate post FDA approval highs (57's)--but they won't be for long as the Market learns and believes the full story. 

    Long term investors should load up.  I predict you'll be very happy you did.

    Disclosure: I am long DNDN.

    Stocks: DNDN, AMGN, CELG
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Comments (35)
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  • froggmister
    , contributor
    Comments (4) | Send Message
    Saul hits on important point - if you look at the history of breakthrough therapies the developer of therapy almost always is able to leverage the breakthrough drug into other indications and wider labels. The recent drop in the stock price, in my opinion, provides another opportunity to get in at a reasonable price. Will it stay down for awhile? Who knows? But the longterm opportunity seems clear.
    8 Jul 2010, 08:12 PM Reply Like
  • robtcheng
    , contributor
    Comments (4) | Send Message
    This article is indeed the most comprehensive analysis of a biotech stock I ever read on Seeking Alpha. SaulK deserves to be congratulated for his knowledgeable, in-depth analysis of Dendreon. Please make him a Contributor so that we can read more of his writings.
    8 Jul 2010, 08:21 PM Reply Like
  • donwaldecker
    , contributor
    Comment (1) | Send Message
    Saul provided great insight into an emerging approach to cancer treatment and valuable information about a leading company (DNDN) in this new area of immunotherapy.
    8 Jul 2010, 08:24 PM Reply Like
  • Giboney
    , contributor
    Comments (2) | Send Message
    Chemo is now resigned to the same catagory as blood-letting.


    Market size - how many men have a postrate?


    Pipeline - how many women have breasts?


    ..."Has your calculator exploded yet?"....


    8 Jul 2010, 08:24 PM Reply Like
  • Theodore Cohen
    , contributor
    Comments (2108) | Send Message
    Looking at the price of Dendreon today reminds me of this quote:


    “You Will Never Go Broke Underestimating the Intelligence of the American Public” – PT Barnum


    Mr. Market has put this stock on sale. Everybody was chasing it when it was in the 40s and 50s. They couldn't buy it fast enough.


    Now, everyone is running around with their hair on fire, mostly because of disinformation/misinfo... put out by 1. people who need to cover their short positions; 2. people who want to establish large positions on the cheap; 3. people who want to destroy Dendreon (yes, drive it out of business) before it destroys them (the chemo cartel); 4. people who are ignorant (and I'm being kind) and don't understand the difference between "average" and "median", among other things; 5. people who are paid shills for others with private agendas, whatever those agendas may be.


    So, what we have here, for those astute enough to recognize it, is a buying opportunity unlike anything we have seen since DNDN was selling for under $3 (yes, Virginia, there was a Santa Clause) in March, 2009.


    Here's the lowdown from DNDN that was published today by the recipient of an e-mail from Investor Relations:


    “Last week, the Centers for Medicare and Medicaid Services (CMS) initiated a National Coverage Analysis (NCA). A NCA is generally a review of evidence to determine if the use of a product is reasonable and necessary. In CMS’ announcement of the NCA, CMS stated it is requesting public comments on the effects of PROVENGE on health outcomes in patients with prostate cancer. It is not a change in Medicare coverage policy.


    “What that means for physicians is that NCAs do not impact existing coverage decisions, nor do they restrict local Medicare contractors from covering PROVENGE. Therefore, Medicare beneficiaries are still able to access PROVENGE and private payers can also still cover PROVENGE.


    From: Rightmire, Judy (
    Sent: Thu 7/08/10 3:22 PM


    Don't take my word for it. E-mail DNDN IR. Ask!


    And be careful when your read what is written by some of the alleged biotech mavens these days ... you know the ones I mean ... some work for major newspapers and magazines, others for cable channels. What they are producing is loaded with the kind of stuff I see in the cow pasture about one-quarter mile down the road from my house, except the media products smell worse! It's all meant to generate controversy and "hits" for their sites, and gee, if it helps separate you from your money in the process, that's great, too.


    Saul's right. And I know for a fact he's put his money where is mouth is. Do your own research. Make up your own mind. But act with intelligence and foresight, not rumor and misinformation, as others would have you do.
    8 Jul 2010, 08:34 PM Reply Like
  • ammass
    , contributor
    Comment (1) | Send Message
    That away to go,bravo wrt your comments . It could not have been said better by any of us long term holders of Dendreon.
    10 Jul 2010, 06:54 PM Reply Like
  • gloriason
    , contributor
    Comments (39) | Send Message
    Love reading your articles and this is another excellent one, Saul. Thanks for your voice of reason, dispelling the FUD out there, spread by those who want to manipulate share price. I've forwarded this article on to friends and family.
    8 Jul 2010, 08:40 PM Reply Like
  • loblolly6
    , contributor
    Comments (12) | Send Message
    I appreciate your analysis and I think your thoughts are spot on! My only issue is that what near term catalyst would be available for DNDN that might get investors excited again?
    8 Jul 2010, 09:04 PM Reply Like
  • trinitytrading
    , contributor
    Comments (12) | Send Message
    Always insightful and dead on. This is the place for your money to be allocated for a long term INVESTMENT. With ObamaHood economics you will not find a better place to be invested. Dendreon will outperform the market for the next 5 plus years with 200% Plus returns over the next couple years. All the noise with CMS is just that....NOISE. Thanks Saul for bringing out the TRUE FACTS among all the erroneous and outright lies by the chemo industry pundits and supporters. They know what Dendreon has and how it will affect their own profits. Dendreon has the Pc REPLACEMENT treatment for chemo and they are scared of their they SHOULD BE! Keep up the excellent articles.


    I challenge any of the opponents of Dendreon to rebut your articles with REAL FACTS and TRUTH. They will not, cause they can not with real hardcore facts without their posturing, doubts, and what if's.
    8 Jul 2010, 09:16 PM Reply Like
  • anne_elk
    , contributor
    Comments (2) | Send Message
    Thanks, SaulK, for another excellent article! I too believe DNDN is ridiculously underpriced at the moment, but the future's so bright I gotta wear shades. Of course there will be some bumps in the road, perhaps more than normal because Dendreon is pioneering a new treatment paradigm, but eventually this will be a huge winner for cancer patients and DNDN investors.
    8 Jul 2010, 09:21 PM Reply Like
  • BeTheyKings
    , contributor
    Comments (2) | Send Message
    Another great article. Thanks for the analysis.


    So, Dendreon is the next Amgen and now everyone is looking for the next Dendreon. I think David Miller of BSR ( mentioned in your first blog) stated the next Dendreon might be Dendreon. All the rights to Provenge and a pipeline to boot.


    Yes my calculator has exploded!
    8 Jul 2010, 09:27 PM Reply Like
  • opa11111
    , contributor
    Comments (7) | Send Message
    Saul, cut it out, you are not letting me sell those $25 puts. Your blogs have driven the price up where the Jan $25 are way less than the 20% premium I got on the $30 & $35's sold on the way up. Seriously. keep up the good work by enlightening the ignorant like myself.
    8 Jul 2010, 09:38 PM Reply Like
  • OFDMGuy
    , contributor
    Comment (1) | Send Message
    Thanks Saulk for your encouraging article. As an investor in Dendreon since summer 2006, I haven't sold a single share. I believe it is totally justified for Dendreon to charge $93,000 for the drug cost considering it takes 15 years to develop the drug and millions if not billions private equity money to fund this innovative technology.


    The future of Dendreon still looks promising despite recent sell-off since May 1. My only concern is that if M Gold is the right person to take the company to the next level. He is too greedy, selfish, and has big ego.
    8 Jul 2010, 09:56 PM Reply Like
  • ack35504
    , contributor
    Comment (1) | Send Message
    I've invested in DNDN because they hold the key to treating cancer in the future. People will pay for the technology.
    8 Jul 2010, 11:02 PM Reply Like
  • pb
    , contributor
    Comments (4) | Send Message
    Great comments Saulk. Hopefully the institutions and big money that control so much of our lives and the markets will sooner than later give Dendreon the green light to begin THE new paradigm in cancer care.
    9 Jul 2010, 12:29 AM Reply Like
  • dfwl28
    , contributor
    Comments (2) | Send Message
    I have come across your articles before. Thanks for a literate and positive update on DNDN as an investment, warts and all.
    9 Jul 2010, 05:21 AM Reply Like
  • dfwl28
    , contributor
    Comments (2) | Send Message
    Retired lawyer and investor.
    9 Jul 2010, 05:22 AM Reply Like
  • grrr
    , contributor
    Comments (13) | Send Message
    Thanks Saul for getting the truth out there. The amount of mis-information and distortion is remarkable. Perhaps there really is a flat earth society.


    Once the remaining 75% of N.J. is cleared by the FDA, the share price will explode. I expect a steady climb until then. Hopefully, the high $20's was the bottom
    9 Jul 2010, 07:44 AM Reply Like
  • exnurse
    , contributor
    Comments (6) | Send Message
    dead on. this information deserves a wide availability. i hope SA will make that possible.
    9 Jul 2010, 08:44 AM Reply Like
  • drgmoney
    , contributor
    Comments (9) | Send Message
    I agree that Dendreon is on sale right now. Wait until the NJ plant is fully operational!
    9 Jul 2010, 08:59 AM Reply Like
  • the duke of sc
    , contributor
    Comment (1) | Send Message
    Right on Saul....thank you.
    9 Jul 2010, 10:10 AM Reply Like
  • sam63
    , contributor
    Comments (12) | Send Message
    Still the one big obstacle is cost. Everything Saul said I agree with but in the end with the new CMS director who loves England's health care system we might see this drug as being too expensive. They basically have a two tier system there. One for the masses and those rich enough to afford better care. Obama care is to take care of more people by cutting costs. I think even expensive chemo therapy may be cut. I heard the argument cost is not suppose to be considered which is true before but that might all change.


    I am sure most have read this that Berwick is controversial because he is a big fan of Britain's National Health Service and has said: "The decision is not whether or not we will ration care — the decision is whether we will ration with our eyes open." Believe me he will make changes and that decision will be who dies and who lives. Let the dying die so more of the living can be cared for will be his calling card. He is my biggest fear, he is a true socialist and even said "The social budget is limited".
    9 Jul 2010, 10:28 AM Reply Like
  • inhumane fda
    , contributor
    Comments (7) | Send Message
    What these last weeks have shown is that there remain many enemies of Dendreon that are willing to lie, cheat and steal, if it can hurt Denendreon. In the industry, in government and even among some of the so call advocates, jealousy abounds over the success of this company. These people placed their bets elsewhere and have failed to achieve success despite billions of public dollars pouring in to their projects. Dendreon shows them up and bruises their egos. How can this little biotech have succeeded where they did not…that is the question that haunts them all.
    9 Jul 2010, 11:08 AM Reply Like
  • retiresumday
    , contributor
    Comments (11) | Send Message
    Great Article Saul. You not only have great facts but, your articles are well written and a pleasure to read. Please keep on contributing great articles with the "true facts" regarding the topics you choose but also with regard to the accomplishments of Dendreon and Provenge. Here's to all patients and their families that now have a superior alternative treatment to what's been the norm or only options of the past.
    9 Jul 2010, 11:19 AM Reply Like
  • brahmsennobles
    , contributor
    Comments (3) | Send Message
    Another great article. Thank you. Do you perhaps read/follow Michael Murphy and his New World Investor? I ask because his was the voice of reason that got me interested in DNDN in 2006, when there was not another analyst with a buy on it, and I wonder if you like any other of his biotech picks: AIS, ARNA, BCRX, CRXX?
    9 Jul 2010, 02:09 PM Reply Like
  • GS2000
    , contributor
    Comments (4) | Send Message
    sorry got cut out and dont know why, here is the rest:
    I want to be there when the world say this is the REAL THING not only for PC but others on the works as well. 10 years down the road these price fluctuations will be very very small blips on the chart and no one will even notice. Stay long be a beilever and don’t day trade this, buy and buy and hold
    10 Jul 2010, 12:10 PM Reply Like
  • innovation
    , contributor
    Comments (4) | Send Message
    I really appreciate this new writer. I am going to start reading his posts because for the first time someone has done his homework and reports the facts correctly. Saulk is an asset worth keeping. My father died waiting for Provenge approval in 2007 his doctor told him it should be approved and he was an excellent candidate. The price was well worth it, especially since the other treatments cost more because of the damages on the body.
    10 Jul 2010, 05:13 PM Reply Like
  • nunbid
    , contributor
    Comments (74) | Send Message
    pr that neuvenge trial for bladder cancer is starting should happen soon. CMS changes nothing for provenge revenues in 2010 or 2011. We are limited by factory capacity, not bureaucrats doing favors for Milken's friends. No worries, Dendreonites. Provenge is approved and its a beautiful thing. Don't let the bastards get your shares, or even lend them out.
    10 Jul 2010, 06:47 PM Reply Like
  • Seeks The Truth
    , contributor
    Comments (2) | Send Message
    After seeking the truth about Dendreon and Provenge for years,
    I've FINALLY found the right place AND the right person to reveal the truth.
    My only regret is that Saul admits to being a Dookie.
    Well, I guess part Dookie since he admits to having matriculated there and getting a J.D....errrrr...... law degree.
    It's shocking that any Dookie could have been successful in the legal profession but occasional outliers occur.


    However, since Saul DID live in The Tarheel Sate for at least three years, I grant him temporary immigrant status with eternal privileges to return.


    Hopefully, I can get him to sign my Duke Lacrosse t-shirt!!!


    Recall that HUNDREDS of Dookie professors signed a letter demanding expulsion of the lacrosse perpetraitors and deemed them "hooligans."
    I expect that some of Saul's law professors were in on the inquisition.
    How wrong they were!!


    It's TRULY amazing that Saul went to Dook and still prospered.


    If only he had been able to attend that magnificent University down the tobacco road......UNC-Chapel Hill!!


    We could then forgive him for all of his sins.


    Nevertheless, Good Luck, Saul!!
    I shall eagerly await all of your missives!!


    The TruthSeeker
    10 Jul 2010, 09:55 PM Reply Like
  • p888
    , contributor
    Comments (3) | Send Message
    DNDN: Fatal problem in trial design. Placebo patients only got 1/3 blood back. so many fewer immune cells back. This new analysis suggests harm in pdo arm could be cause of effect. Going to cause BIG headache.


    analysis here
    13 Jul 2010, 04:28 PM Reply Like
  • Saul Kerpelman
    , contributor
    Comments (85) | Send Message
    Author’s reply » That's total BS. The Provenge Impact trial was performed under an SPA with The FDA in which The FDA approved the trial design--further what you write doesn't even make sense: the control arm was not placebo, but guys allowed to cross over to frozen Provenge after their disease progressed, thus the 4.1 MEDIAN number UNDERSTATES the benefit of Provenge. Compared to the men who didn't cross over, Provenge had a 14.2 month median advantage. I sense that you are just trying to spread FUD, since your comment is ludicrous.
    13 Jul 2010, 05:34 PM Reply Like
  • oncodr
    , contributor
    Comment (1) | Send Message
    Did you read that trial design analysis? I think there is something to it. I feel sorry for the patients.


    The control arm received 1/3 of their blood back to start with and could then get Provenge if progressed. But by receiving only 1/3 of their blood to start with, they lost LOTS of tcells. It is this loss of Tcells which could have lead to progression and then to any difference with the Provenge arm.


    I don't think you've read the analysis. It is what the control arm was doing before progression which is key.


    FDA should never have agreed the SPA. It is like the mess on overdosing EPOs and on Avandia. FDA did it for ethical concerns, but missed the harm the control arm was doing before crossover.


    Read the analysis. YOu can die quicker, if you have less tcells...


    Anyways, I'm sure FDA will look at it and draw their own conclusion.


    Disclosure: Trading DNDN options, both puts and calls.
    14 Jul 2010, 05:49 AM Reply Like
  • Saul Kerpelman
    , contributor
    Comments (85) | Send Message
    Author’s reply » You are obviously pretending to have knowledge you don't really have to protect whatever option position you have taken. When is the FDA going to "look at it"? Provenge is already approved by the FDA, which approved the study design. No one in the study "lost T cells"--whatever that is supposed to mean. The therapy trains and activates antigen presenting cells, which are then reinfused and IN THE PATIENT induce a massive T cell response. Just like your bud who posted similar junk earlier, you don't know what you're talking about, and frankly you're not even good at pretending you do.
    Good luck.
    14 Jul 2010, 04:10 PM Reply Like
  • twinkle90049
    , contributor
    Comments (13) | Send Message
    It looks like you were wrong.
    24 Aug 2013, 03:28 PM Reply Like
  • Theodore Cohen
    , contributor
    Comments (2108) | Send Message
    Regardless of what youthink about the corporation and the current state of affairs, oncodr was incorrect. Saul was right.


    24 Aug 2013, 06:19 PM Reply Like
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