Dendreon To Spend $460M on Provenge Push This Year, Looks for Payoff in 2011

2/22/10Follow @xconomy

Dendreon raised $630 million from investors last year to gear up for the commercial push of its new drug for prostate cancer, and the Seattle-based company plans to spend a lot of it this year.

The company (NASDAQ: DNDN) plans to use about $460 million of its cash in 2010—about triple what it burned through last year—as it builds up three factories across the country to make sipuleucel-T (Provenge). About $200 million of that will be one-time capital expenses on facilities in New Jersey, Georgia, and Southern California. Another $30 million will go toward building up inventories, while the rest will go toward salaries, benefits, consulting, and marketing activities, according to Greg Schiffman, Dendreon’s chief financial officer. Then in 2011, Dendreon expects to generate positive cash flow. Schiffman made the remarks this afternoon on the company’s quarterly conference call with analysts.

Dendreon is spending all that cash as it enters the home stretch for what analysts expect is an almost certain green light from the FDA to start selling the prostate cancer drug in the U.S. The product, Dendreon’s first as a company, is also seeking to be the first in a new class of therapies that actively stimulate the patient’s immune system to fight cancer cells. It passed a pivotal clinical trial last year of 512 men with terminal prostate cancer, showing it could help them live a median of four months longer than a placebo, with minimal side effects.

The FDA’s deadline to complete its review of the drug application is May 1. There’s about a 90 percent chance the FDA will approve this drug on time, according to JP Morgan analyst Cory Kasimov, and if so, the sales will easily exceed the spending rate by Dendreon, he says. About 80,000 men in the U.S. might be candidates for this drug, at a cost of $65,000 per patient, which means the drug could generate at least $1.5 billion in U.S. sales in 2014, Kasimov said in a note to clients today. Even though Dendreon stock touched a 52-week high of more than $33 today, Kasimov predicts it will go even higher to $46 by the end of the year.

“Dendreon’s prostate cancer vaccine Provenge has encountered more bumps than a mogul run on Cypress Mountain, but now we believe the regulatory process that’s going on four years finally appears poised to reward the perseverance,” Kasimov wrote in the note to clients today.

The big bump he’s referring to was the euphoria … Next Page »

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  • Gloria Johnson

    Good job in recapping Mitch Gold’s conference call. I couldn’t be more excited about the future of Dendreon’s Provenge, not just financially but also for the hope it offers men with prostate cancer. Imagine treating cancer with an immune response instead of toxic chemo. Dendreon’s pipeline offers hope to future cancer patients (who knows, maybe me or a family member will benefit from Dendreon’s pipeline). The FDA needs to approve Provenge quickly, lives depend on it. Thanks again for your insightful articles.

  • http://na Steven

    Luke,

    I might ad that it sounded from the conference call that Dendreon is now more likely to control all manufacturing world wide. I like that better for quality control and for protecting their manufaturing secrets. The caset technology can be used for other forms of cancer, and can all be manufactured in the same facilities.Thanks for some great reporting on Dendreon.

    Steven from Minnesota