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

11/3/10Follow @xconomy

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output in New Jersey in a “staged approach,” meaning it will gradually “bring it along in synch with an increase in demand,” Bishop said.

This is a tight-wire act for Dendreon to walk at the moment. Although more than 90 percent of targeted physicians were aware of the drug prior to its FDA approval, Dendreon hasn’t done much to market the drug yet, because it doesn’t want to disappoint people by putting them on a waiting list. Only 50 centers in the U.S. are currently able to fulfill orders for the product. The company will need to calibrate how and when new centers get trained to use the product, at the right moment when Dendreon is able to meet new demand.

Dendreon tried to manage expectations earlier this year, when it said it only would have enough capacity to meet demand from about 2,000 patients in the first 12 months. But the company carefully backed away from that today on the conference call, saying the forecast was used mainly to educate patients and physicians about the limited supplies. Dendreon now expects to deliver the drug to 2,000 patients by mid-2011, Gold said. Since the drug was approved by May 1, 2010, a strict interpretation of the original forecast would say Dendreon should hit the 2,000 patient number by that same date, May 1, 2011.

There wasn’t much new to say about the insurance reimbursement issue, other than that the company is preparing to make a case for Provenge at a public hearing on November 17 being convened by the Centers for Medicare and Medicaid Services. This panel will review the evidence to support the drug, which has prompted some investors to worry that the Medicare agency will put onerous reimbursement restrictions on doctors who prescribe this drug that costs $93,000 per patient. Dendreon made clear today it won’t back away an inch from the cost-benefit analysis it used to set the price. The price was based heavily on results from a pivotal trial of 512 men with terminal prostate cancer, which showed they lived a median time of about four months longer, with minimal side effects, than men who got a placebo.

“Over the last 15 years, only three therapies in metastatic cancer have been able to show a survival benefit of four months or more,” Bishop said.

Financially, there wasn’t a whole lot to say either, besides the sales forecast for 2011. Dendreon is in the midst of its budget process for 2011, said Greg Schiffman, the company’s chief financial officer. The company still plans to spend $460 million of its cash and investments this year. It expects to end the year with $250 million of cash and investments in the bank. He avoided one analyst’s question about whether the company expects to turn profitable in 2011, saying it’s too early to say until the budgeting process is complete.

Dendreon did have a few interesting bits of information to disclose beyond the all-important U.S. market introduction of Provenge. The company plans to discuss its strategy to introduce the drug outside the U.S. sometime late this year or in early 2011. This will require a lot of thought, about where it can set up manufacturing centers in Europe, how it can best appeal to European regulators, how big the opportunity may be there, and what kind of price it will be able to command from government payers.

Gold said the company is also thinking more broadly about its opportunities beyond Provenge. By the end of this year, the company plans to seek FDA clearance to start clinical trials of a second drug that uses Provenge-like technology. This treatment will be designed to stimulate the immune system against a market found on bladder cancer cells, known as HER2neu.

All this effort is taking more and more human resources than Dendreon has ever had before. The company, which had just 200 employees before its breakout success with the Provenge clinical trial in April 2009, has now expanded to more than 1,000 employees. That’s a lot of people being mobilized around a big new opportunity. While lots of people like to speculate about when Dendreon will sell out to a Big Pharma giant, the company is at least showing the outward signs of trying to capture this opportunity on its own.

“We are rapidly establishing a foundation for global growth and scientific innovation to improve the lives of patients with cancer,” Gold said.

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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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