Dendreon CEO John Johnson: ‘This is My Last Stop’
Dendreon was run its entire 20-year history by people trained in science and medicine, and the big achievement was FDA approval of the first treatment to stimulate the immune system to fight cancer cells like a virus. But it stumbled in the early days of marketing its prostate cancer drug, so Dendreon did what many biotech companies do next: It brought in someone with commercial experience to run the show, and shake things up.
John H. Johnson, who took over the Seattle-based company (NASDAQ: DNDN) on Feb. 1, inherits a lot of daunting challenges. The company generated $213 million in sales last year, but missed its annual sales forecast by more than $135 million as doctors fretted about whether they’d get prompt reimbursement for the company’s drug, sipuleucel-T (Provenge), which costs $93,000 a patient. The stock lost more than two-thirds of its value in August, and still hasn’t recovered. The company is burning cash at a rate of about $75 million a quarter, and isn’t offering a timetable for when it will reach cash-flow break-even. The company faces competition from one of Johnson’s former employers, Johnson & Johnson (NYSE: JNJ), and San Francisco-based Medivation (NASDAQ: MDVN) is moving in fast on Dendreon’s turf. And a vocal band of skeptics continues to question the clinical trial data that showed the drug extends patients’ lives.
All of that has been reported here and elsewhere. But Johnson hasn’t made himself available to the media yet as CEO of Dendreon. So I was happy to have a chance to sit down and meet him and his new executive team earlier this month at Dendreon’s R&D center on Seattle’s Eastlake Avenue East. This is the first extensive interview Johnson has done as CEO of Dendreon, and the first tour the company has given of its facility, formerly occupied by ZymoGenetics. Five of the seven members of the company’s new executive committee were there—Johnson; Mark Frohlich, the head of R&D; Joe DePinto, the leader of commercial operations; Robert Poulton, the logistics chief; and Greg Schiffman, the chief financial officer. Christine Mikail, the new head of business development, and Richard Ranieri, the head of human resources, are the other members of the team.
There was a lot of conversation around the room about maximizing the opportunity with Provenge, making sure it gets to the patients in need, and making the Provenge processes more automated and efficient. Johnson has a reputation as a focused, no-nonsense commercial operator, but he was comfortable letting his deputies talk about their areas of expertise, and even showing some of his human side during the hour-long interview. (He was brave enough to admit to this Wisconsin Badger fan that he’s an unapologetic supporter of the archrival Michigan State Spartans, even after my Badgers advanced further in the NCAA tournament.)
What follows is a transcript of the conversation about Johnson’s vision for the company, and the challenges it faces. Warning: Even though I’ve edited this down for length and clarity, as with all Q&As, it’s still long. I left it long because I know Dendreon followers really want to hear about the company’s strategy straight from the horse’s mouth.
Xconomy: What’s it been like for you getting started here?
John Johnson: When I first came in here and met with Mark (Frohlich’s) team, it just confirmed for me that this was a once-in-a-lifetime opportunity. My dad has prostate cancer. The space is important to me. I love being in oncology. When I came to the building here and I saw the automation and the spirit of innovation, I knew I made the right decision. We’re being pioneers. The thing that’s difficult for a lot of people to appreciate is just how much innovation took place here. I know you appreciate it from being close to the story, but there’s been a lot of work. But people like [former chief scientist] Dave Urdal and Mitch [Gold, the former the CEO] really overcame the odds. In my view, it’s the direction cancer care is going. When you’re first, you’re going to experience some bumps. But when you’re first, you have a chance to innovate.
X: I know a bit of your biography from the filings, but can you walk me through how you came to join Dendreon? What drew you here?
JJ: When you’re in the oncology business, you know about Dendreon because they were first in immunotherapy and have a very high profile. I first met Mitch [Gold] more than a decade ago. I had moved up to president of Ortho Biotech, was company group chairman of J&J, was CEO of ImClone after Lilly acquired us, and ran Lilly’s oncology business globally. So I was very familiar with what these guys were doing. When Mitch approached me, and the board approached me to join, I said absolutely. I really felt this was the way cancer care was going. The work that’s been done here, the work Mark’s team is doing now, I just felt like it was a chance to really make a mark and leave a legacy.
Like so many people in this business, it’s personal. I’ve been to every visit with my Dad. I’ve watched two of my grandparents go through chemo. It leaves an impression on you. When you see a loved one go through chemo, what it says to you is, wouldn’t it be great to have a product that enables your own body to fight the cancer, not a toxic product. I’m not taking anything away from chemo, because it has made a huge difference for so many people, it’s wonderful, but as a developer of medicines, when you can come up with a low-toxicity therapy that shortens the duration of therapy, and extends survival, that’s the direction you want to go.
There’s a pretty high likelihood this is my last stop. This is the legacy … Next Page »