Dendreon, Hemmed in By Tight Supply, Sees $350M to $400M in 2011 Sales Plan

11/3/10Follow @xconomy

Dendreon can’t reap the full potential of its pioneering treatment for prostate cancer until it gets more manufacturing capacity built up, but it’s making enough progress to project how this supply-constraint story will play out over the coming year.

The Seattle-based biotech company (NASDAQ: DNDN) said today that it generated $20.2 million in the most recent quarter which ended on September 30. Demand for the drug, sipuleucel-T (Provenge) climbed each month during the quarter, and kept climbing until the company essentially maxed out its current capacity with $9.5 million in sales in October.

Dendreon’s ability to handle this manufacturing shortage is critical, as prostate cancer patients, physicians, shareholders, and many other aspiring immunotherapy companies will be hugely disappointed if it can’t solve the shortage on schedule. The company, which won FDA approval of the first-of-its-kind immune boosting therapy for prostate cancer in April, reaffirmed that it is spending $460 million in cash this year as it gets fully equipped with factories in New Jersey, Atlanta, and Los Angeles. Based on projections of demand from patients, and the company’s projected supplies, the company now expects to sell $350 million to $400 million worth of Provenge in 2011, with about half of that coming in the final three months of next year, when its factories will be operating at full tilt.

As I’ve written in this space many times, Dendreon’s drug isn’t as simple as a pill in a bottle or a liquid in a vial. It’s based on an intricate process in which blood is withdrawn from a patient, and certain immune system cells get “taught” to recognize markers of prostate cancer like a foreign invader. The cells are shipped to a Dendreon factory, where they get revved-up to fight cancer, and shipped back for re-infusion into the patient.

“It’s one thing to launch a new drug, and an entirely different thing to launch a new class of therapies,” Dendreon CEO Mitchell Gold said on a quarterly conference call today. “It’s a great responsibility we have.”

Today’s call was just the second time the company has reported on the market rollout of Provenge. The drug generated increasing sales each month—$5.2 million in July, $7.2 million in August, $7.8 million in September, and $9.5 million in October. The quarterly revenue of $20.2 million was a bit below the $24 million that Wall Street analysts had been expecting.

Month Provenge Sales
May $340k
June $2.5m
July $5.2m
August $7.2m
September $7.8m
October $9.5m

Dendreon spent a lot of time on today’s conference call walking through the demand and supply situation it is facing. About 1,000 prescriptions have been written by doctors, although not all of them have been fulfilled, because many patients have to go on waiting lists, said Dendreon’s chief operating officer, Hans Bishop. That means some patients won’t wait, and will end up seeking another form of treatment.

Dendreon’s three factories, when they are fully licensed and operating, are supposed to be able to supply the U.S. market with $1.25 billion to $2.5 billion worth of Provenge each year. Construction of the plants is “substantially complete,” and the company is working on typical activities to validate that it can produce the drug consistently at high quality, to satisfy regulators, Bishop said. Dendreon plans to seek FDA clearance to unleash the remaining 75 percent of its future capacity in New Jersey sometime this month, meaning that after a four-month regulatory review, that plant should be ready to boost output in March.

Still, that doesn’t mean Dendreon will instantly turn on the fire hose of more Provenge to clear out its waiting list of patients. The company actually plans to ramp up … Next Page »

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  • http://na JW

    Luke,

    Gr8 writeup summary for today’s call!

    I’m somewhat concerned about why Wallstreet analysts set such HIGH quarterly sales targets!?

    Then when DNDN doesn’t meet quarterly expectations (for Q2 and now Q3), articles from Reuters, etc write how DNDN didn’t meet the street predictions (ie: $24M)… etc!

    And the pps continues flatlining. I see a future pattern for future quarterly earnings going forward. I sense thee “STREET” doesn’t care for DNDN or the exec mgmt.

    gltu
    JW

  • gm

    With ROW, I expect $2B to $3B in 2014 sales
    No competitors

  • walt

    they have 12 operational work stations serving a few dozen hospitals which were their clinical trial sites. could it get any easier to predict demand, supply and model revenue? if they’re having problems being operational non-stop with only 12 stations 6 months after the approval, how are they going to run 3 full plants at full capacity within 12 months? if they cannot seem to get the hospital doctors who participated in their phase 3 trial to write enough scripts in 6 months, how are they going to get the rest of the hospitals and then all the privates in the country within the next 12 months? if the EU doctors want to see a head to head trial with chemo in order to use this (esmo did not go well for provenge), how are they even going to approach the EMA to get approval? they had a lot of luck getting approved in the US, but they’re in unchartered territory now and they’re messing it up. i see a lot of magical thinking surrounding the outlook of dendreon going forward.

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