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Dendreon Drug Works, But Can It Manufacture Enough to Meet Demand?

The most successful homegrown biotech company from Seattle, Immunex, ultimately stumbled when it couldn’t keep up with feverish demand for its big rheumatoid arthritis drug. Now investors want to make sure another Seattle-based biotech, Dendreon, doesn’t drop the ball on manufacturing.

Dendreon (NASDAQ: DNDN) has been riding a wave of enthusiasm since last month, when a clinical trial showed its immune-stimulating treatment for prostate cancer helped men live longer with minimal side effects. If the company can make a bulletproof application to the FDA, it could have its first product on the market next year. Analysts predict this product, sipuleucel-T (Provenge), will soon reach blockbuster status, with annual U.S. sales of more than $1 billion.

Now investors want to know if Dendreon has figured out how to manufacture enough of this drug—a step that has tripped up many biotechs before, not just Immunex. CEO Mitchell Gold fielded a handful of questions yesterday from investors at the Deutsche Bank Healthcare Conference in New York.

This is an especially important issue for Dendreon, because Provenge isn’t made like a standard “pill in a bottle” as Gold put it, or even like common genetically engineered protein drugs like Genentech’s bevacizumab (Avastin). It is composed of a genetically engineered protein found on prostate cancer cells, called PAP, fused to an immune-boosting compound, called GM-CSF. This fusion protein is incubated for a couple of days with an individual patient’s own white blood cells to “teach” them to fight prostate cancer. The revved-up cells are personalized to each patient, and need to be shipped back to the clinic to be re-infused into the patient.

So you get the idea that this is more complicated than your average pharmaceutical. Dendreon’s chief scientific officer, David Urdal, has been working on this issue for years, just like he did when he was at Immunex in the 1990s as that company prepared to introduce what became the world’s best-selling biotech drug, etancercept (Enbrel). Immunex failed to meet all the demand for this product and missed out on hundreds of millions of dollars in sales, a setback that played a big part in its ultimate takeover by Amgen in 2002. Back in August 2006, when Dendreon had a lot less cash than it does now, Urdal told me that he was mindful of that example and the company would have been comfortable building a bigger factory for Provenge “to be really aggressive.” But at that time, it had to be careful conserving its cash.

Gold didn’t get into that history, but he did provide an update yesterday on where Dendreon’s factory stands at the moment. Here’s are highlights from his comments:

—Dendreon estimates there are more than 100,000 men in the U.S. who have prostate cancer that fails to respond to standard hormone deprivation therapy, and has spread through the body—the initial market for Provenge. Its one commercial manufacturing plant, located in Morris Plains, NJ, has total capacity to produce something between $500 million to $1 billion worth of Provenge to supply market, Gold said. The New Jersey plant is currently set to operate at about one-fourth of its full capacity. Dendreon is quickly putting much of the $221 million in capital it raised … Next Page »

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