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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 Update 14 comments
    Aug 9, 2010 4:40 PM | about stocks: DNDN
    Since my first piece on Dendreon on July 7, in which I recommended that readers buy all they could get their hands on, there have been many developments in the world of the company that is the first to get FDA approval for a cancer immunotherapy.  Readers are urged to consult the earlier articles, but in brief Dendreon is the small biotech that has rocked the world by attaining the Holy Grail of cancer research by succeeding in training the prostate cancer patient's immune system to recognize cancerous cells as foreign and to attack and kill them.  Its approved treatment, Provenge, significantly extended the lives of even the sickest of the sick prostate cancer sufferers in 3 separate phase three studies.

    First of all, those who followed my advice are sitting on a 33% gain (29.09 close on July 7 to the current 38.90 as I write) in just 33 days.

    There's no suggestion here that similar jumps are imminent, but good news continues to pile up for Dendreon.

    The scare I originally wrote about--Medicare instituting a review of coverage for Provenge--has died down as investors have consulted the law applicable to the review and as the medical community has weighed in on whether Provenge is "reasonable and necessary" for late stage prostate cancer patients.  As to the law, Mr. Market has confirmed what I wrote on July 7, which is that Medicare's statutory authority to conduct such a review DOES NOT INCLUDE authority to review a treatment's cost.  Therefore the hysterical moment of rumors about denying the treatment as too expensive have pretty much disappeared (except among the hard core Obamacare bashers, who somehow see a conspiracy to kill old people in every bureaucracy).  And as part of the review process, in the public comment portion of the review the medical community has weighed in like an 800 pound gorilla in favor of coverage for Provenge.  Out of close to 800 public comments there were a mere 11 or 12 that one would characterize as "anti-Provenge", while heavy hitter organizations like ASCO weighed in strongly in favor of Provenge not only as "reasonable and necessary", but heralded the treatment as a breakthrough in cancerworld and urged coverage in the strongest possible terms.

    Next, with wonderful timing for the company, since the CMS public comment period was just about to end, the results of the Impact trial--which resulted in FDA approval of Provenge--were published as the lead story in The New England Journal of Medicine, the premier medical journal in the world.  This enabled Dendreon in its public comment to the CMS to append the NEJM article and to agressively assert that the entire CMS review was unnecessary and should be withdrawn as baseless, since the case for Provenge coverage was overwhelming.

    Then they had a Quarterly conference call.  And Wall Street was blown away by its first look at the uptake of Provenge.  While Quarterly revenues from the first sales of Provenge were slightly below consensus analyst estimates at $2.8 Million, the company also wisely revealed the additional fact that in spite of the plant in New Jersey being closed down as part of expansion plans for 10 days in July, July revenue was still $5.2 Million.  They further revealed that doctors in the short period of time since Provenge was approved on April 29, 2010, have already written over 500 prescriptions for full course, $93,000, treatments with Provenge.  Further, the company said that 14 of the 15 regional Medicare contractors--whose policy decisions regarding coverage control pending the completion of the national CMS review--have already decided to cover Provenge.  They reiterated guidance that at least 2000 patients will be treated in the first 12 months of Provenge availability, and that further plant capacity for almost $2.5 Billion of annual Provenge production will come on line in mid 2011.

    The next day, August 4, Dendreon shares touched 40 before settling in the high 30's.  Many analysts reiterated buy ratings with targets in the 50's and 60's for the next year.

    The company did not announce anything, except that there would be a future announcement sometime in the fall or in early 2011, regarding the progress on EMEA approval for Provenge.  But for readers here only I will share that I spoke directly will Hans Bishop, Dendreon's Chief Operating Officer, at the shareholder's meeting in June and he gave me the distinct impression--without literally saying the words--that they do not expect EMEA to require additional trials in order to gain European approval.  I have not spoken with him since, but I would expect this feeling to be even stronger now that the Impact results have been accepted for publication in the NEJM.

    He did directly tell me that the company is likely to partner Provenge in the Asian market, although he provided no time frame for this to happen.

    This is the recent micro stuff--and it's all good.  But please also remember the macro:  this is the company that owns 100% of worldwide rights, not just to the first FDA approved active immunotherapy for late stage prostate cancer, but for a well protected antigen delivery cassette technology that has been validated by the success of Provenge.  That same technology will be tested in multiple cancers in the years to come--giving Dendreon the potential to be a biotech behemoth.

    Cure for cancer?  As shocking as it may be to type that question, it is at least in the legitimate realm of discussion regarding the future of Dendreon.  I remind you--the Provenge researchers themselves have publically opined that when given in earlier stage disease, as doctors may now legally do off label,  to men with earlier disease and thus healthier immune systems, Provenge may prove to be a cure.

    How big would that be?

    Buy all you can and hold long term.


     



    Disclosure: long Dendreon
    Themes: biotech Stocks: DNDN
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Comments (14)
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  • gloriason
    , contributor
    Comments (39) | Send Message
     
    Love your recap of recent Dendreon events, Saul.
    9 Aug 2010, 05:42 PM Reply Like
  • drgmoney
    , contributor
    Comments (9) | Send Message
     
    Thanks for another great read - just wish I had double clicked on a Yahoo headline to get here. Dr G
    9 Aug 2010, 05:49 PM Reply Like
  • migootz
    , contributor
    Comments (6) | Send Message
     
    Excellent recap of the past major events in DNDN land. Appreciate all you do to spread the truth regarding Dendreon, and disprove all the misinformed people out there. Keep up the good work.
    9 Aug 2010, 05:53 PM Reply Like
  • Jimbo 14
    , contributor
    Comments (2) | Send Message
     
    Saul,

     

    Thanks for the update on Dendreon. It's nice to know that the Company and its novel therapy, Provenge appear to be running on all cylinders and hitting their targets!!

     

    Thanks
    Jim Littlefo
    9 Aug 2010, 06:45 PM Reply Like
  • donzoab
    , contributor
    Comments (223) | Send Message
     
    I like that you state at the end "hold long term" The optimal word being LONG. Investors expecting the run to 200, 300 etc are deluding themselves in the short run. Baring some earth shattering takeover with outrageous multiple, this will be a long slow ride to new highs.
    Additional approvals will be needed to help them get there. Remember, they have already issued and outstanding almost 135MM shares. At $125/share that would already equate to a $16+Bl mkt cap. Almost the cost of a Genzyme without any revenue to speak of yet. At $2bl in revenue, it would still be 1/2 the revenue of GENZ. This is a fabulous growth and human interest story but the over hype takes away from the pleasure of watching your stock grow into its multiple over time. Any revenue misses or hickups in earnings will be met with brutal selling short term
    9 Aug 2010, 06:51 PM Reply Like
  • perec
    , contributor
    Comment (1) | Send Message
     
    Your analysis of valuation is faulty on a number of accounts. Genz serves a lucrative but nonetheless niche market. It possess no dominant technology and has real competition in markets it serves. It also has lousy management. A better comparison can be made with celg,a co. with a market cap of 26B, a dominant cancer treatment, and lots of cash. It has revenues of ca. 3B. Using these criteria, dndn could well have a market cap of 20B in 2-3 years, or pps of ca. $120. Of course, management has to execute and Provenge has to meet or exceed expectations.
    9 Aug 2010, 11:58 PM Reply Like
  • Saul Kerpelman
    , contributor
    Comments (85) | Send Message
     
    Author’s reply » As I wrote, long term holders will be richly rewarded. The market in the US is easily 2 Billion a year. Europe a few years out is equal or twice that size and Asia is multiple Billions as well. Provenge alone could see 5 Billion in 5-7years. The market doesn't only value current revenues, but also pipeline and a new immunotherapy will be entering the clinic each year for the next 3 or 4 years. Once there are in fact multiple successes against cancers Dendreon will be the next big biotech. It may take 10 years to play out, but it will be worth the wait.
    9 Aug 2010, 07:51 PM Reply Like
  • freakyguy666
    , contributor
    Comments (12) | Send Message
     
    Interesting that you fail to mention the biggest threat: Zibotentan Phase 3 results being delayed until Q4. That is the biggest news as it is the biggest threat. Folks, this guy had been recommending backing up the truck on DNDN when the stock was at $56+.....I guess you get what you pay for!
    10 Aug 2010, 02:18 AM Reply Like
  • Saul Kerpelman
    , contributor
    Comments (85) | Send Message
     
    Author’s reply » You seem to have your own deceptive agenda. Yes, Zibo is a potential factor in prostate cancer treatment, but no one, including you, yet knows the results of Zibo's phase 3 study. Although it had good phase 2 results, those were against pure placebo, not delayed Zibo--which would be the parallel to the Provenge study, in which after patients progressed they received frozen Provenge. Many drugs do great in P2 and fail in P3--Zibo may be no different. Next, even if it does have good results there is nothing to say it will necessarily compete with Provenge. It has a different method of operation as an endothelian A inhibitor and some brilliant people believe it will prove to be a supplement to Provenge. Yes, if AZ prices it cheaply enough carriers may insist it be given first, but that does not exclude Provenge, only delays it's administration. There may be a revenue dip while this works out in the clinic, but it is not really a fundamental long term threat to Provenge.

     

    I also have to criticize your jab about backing up the truck at 56 which is kind of a lie, since it lacks context. I have indeed been telling people to load up on Dendreon consistently, but you neglect to mention that that has been since it was in the 2's--anyone can verify that on Investorvillage. So if I have been consistently saying this is a stock to hold for ten years, one could say I recommended buying at 56, but it's really a stretch with an obvious agenda. Having said that, I do think those who did buy at 56 (does that include you?) will be OK as well in a couple years.
    10 Aug 2010, 09:26 AM Reply Like
  • freakyguy666
    , contributor
    Comments (12) | Send Message
     
    It seems that you missed the point....I specifically referred to the delay in releasing p3 results for zibo as one catalyst behind the recent rise in the stock price. And the fact that you failed to even refer to that fact even once in your blog makes one question the thoroughness of your so-called "update". It is something that should have been included. That's all.
    11 Aug 2010, 03:26 AM Reply Like
  • bbildman
    , contributor
    Comments (17) | Send Message
     
    You mention..."Cure for cancer?...I remind you--the Provenge researchers themselves have publically opined that when given in earlier stage disease, as doctors may now legally do off label, to men with earlier disease and thus healthier immune systems, Provenge may prove to be a cure."

     

    ------------------------

     

    Could you, for arguments sake care to define the difference between double blind testing for Provenge being a cure vs a "publically opined" comment to that effect.

     

    All I am saying is you are throwing out WORDS that have no basis in fact.
    10 Aug 2010, 07:27 AM Reply Like
  • Saul Kerpelman
    , contributor
    Comments (85) | Send Message
     
    Author’s reply » Hi Bernie--
    I don't really know what you mean by "WORDS that have no basis in fact". I have never said that there was a clinical trial that established Provenge as a cure for cancer in earlier stage disease--although as you well know many men in the Impact study were in fact "cured" depending on how one defines "cure". Is it 5 year survival? Many men had that. Is it living long enough in spite of a prognosis of 18 months to live, to die from something else? That was true for many men in the Impact trial also. Is it clearing all cancer from the body? Again, many men in Impact had that result.

     

    Do you dispute that Dr. Ferarri said at the analysts day a few years ago that she expected it to work even better in earlier stage, healthier immune systems and that it might prove to be a cure? I did hear her say that with my own ears.

     

    We are discussing prospects and for some reason it seems to bother you that a true--as yet not proven prospect--for Provenge is to cure cancer in earlier stage disease.

     

    Not proven yet, but it may be proven in the future. People do invest based upon prospects.

     

    Why do you object to that?

     

    P.S.--How's the weather in Spain today?
    10 Aug 2010, 09:37 AM Reply Like
  • bbildman
    , contributor
    Comments (17) | Send Message
     
    Your words, "Not proven yet, but it may be proven in the future. People do invest based upon prospects."

     

    If we would use your comment about "cures" we could apply that to MANY studies of other drugs that are not really a cure.

     

    ALL I'm asking for is some truth in your comments. You continue to bandy about using the word "cure" in MANY of your posts and I simply have trouble negotiating YOUR use of that word and the HUGE number of shares that you own --and can't help wondering how much of what you say is wishful thinking (in terms of your investment) and how much is based on what we know. Provenge has never been proven to be a CURE.

     

    And opining on your part does not make it so.

     

    The word "cure" is loaded and if in fact many believed that Provenge is or is going to be a cure for prostate cancer, the PPS would not be languishing at 38 bucks and change.

     

    The weather here in Spain is hot.
    10 Aug 2010, 10:29 AM Reply Like
  • Saul Kerpelman
    , contributor
    Comments (85) | Send Message
     
    Author’s reply » Come on Bernie, the shares are far from "languishing" at 38. They are up in just over a month from 25 and you know as well as I do that they are likely to continue a steady climb upwards as more capacity comes online and as revenues continue to grow.

     

    As to "cure" I still don't get why you're so worked up about my continuing to truthfully point out, as have the researchers, that there is that prospect for the future. Is it wishful thinking? Sure! But it's also the icing on the cake of an FDA approved treatment for prostate cancer that has shown the largest survival advantage ever in this disease. The latter is the basis for my large investment, not the former. Still, I don't blind myself to future possibilities.

     

    Do you know of any other approved cancer treatments in which the researchers have stated publicly that if they were given at an earlier stage they might cure the disease? Because I don't. And even if it's just a possibility, it's still something for the market to put a value upon and for investors to consider in making their decisions.

     

    It's hot here in Baltimore too.
    10 Aug 2010, 11:01 AM Reply Like
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