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Cancer Immunotherapy Companies: Looking Forward and Looking Back

Opinion

Xconomy Seattle — 

[Updated, 4/7/15, see below] I’ve been researching one of our local immunotherapy developers here in Seattle, trying to round up the views of industry experts regarding the future prospects of a drug at the front of its pipeline. Do they think it’s a good investment? Here’s what I found out:

Analysts predict that sales of its first drug will peak at $2 to $3 billion per year.

The company’s “strong data will give [it] the upper hand in any negotiations with potential pharmaceutical partners interested in the drug.”

Its share price jumped 27 percent on the day of its IPO.

Its drug has “proved to be highly effective in late-stage clinical trials.”

A competing immunotherapy drug (that analysts were worried would take significant market share) was abandoned by the companies trying to develop it.

Sounds pretty darn promising! Where do I send my money?

There’s only one problem. The company I’m referring to is not high-flying Juno Therapeutics (NASDAQ: JUNO). It was Dendreon, which declared bankruptcy in November in the face of a crushing $660 million debt load and weak sales of its prostate cancer drug, sipuleucel-T (Provenge), the subject of the quotes above. The stock, which reached a high of $57.67 in 2010, traded down to 13 cents after Dendreon entered Chapter 11.

This was only a little over four years after the company received FDA approval for its first and only drug. Dendreon’s assets were sold off for $495 million a few weeks ago to Valeant Pharmaceuticals (NYSE: VRX). Although some forty organizations looked through Dendreon’s books, the dearth of bids suggests that most pharma companies thought it would be too difficult to bring sipuleucel-T to profitability. Dendreon’s workforce has shrunk to a small fraction of what it was only a few years ago. Shareholders are likely to be completely wiped out in the bankruptcy.

The problems that Dendreon ran into have been widely recounted, but here’s a short summary:

Sipuleucel-T was considered by many to be only marginally effective, especially for the $93,000 the company was charging for it. Men treated with the drug lived only about four months longer than men in the control arm of Dendreon’s key clinical trial.

The novel nature of this treatment (made by isolating each patient’s white blood cells, incubating them in a lab with immune system stimulatory proteins, and then reinfusing them back into the patient) meant that significant money would need to be spent educating doctors on its use. It also meant that manufacturing costs for the drug would be extraordinarily high. It’s still not clear how much the company was able to do to reduce this expense since sipuleucel-T first came on the market in April 2010.

Two competing drugs (enzalutamide, sold as Xtandi; and abiraterone acetate, sold as Zytiga) came on the market two years after sipuleucel-T was approved. They were each about as effective as Dendreon’s drug and were cheaper and easier to administer (once-a-day pills instead of doctor office infusions).

Sipuleucel-T had a high “cost density” that required doctors prescribing it to lay out $93,000 to purchase this treatment for each patient, then (hopefully) get reimbursed by insurers.

Overall, the expense, marketing and reimbursement issues, limited benefit, and complicated manufacturing process greatly inhibited sipuleucel-T’s acceptance by doctors.

Dendreon proved to be a stock speculator’s dream, with market machinations and accusations that insiders profited from stock sales when they had known that sipuleucel-T sales would not meet the expectations that they had publicly laid out. Some business school is bound to do a full business case study on Dendreon, if it hasn’t been done already.

What about Juno?

I’m hopeful that Juno will succeed in a field where Dendreon ultimately failed for three reasons:

1) Patients will benefit greatly if its treatment is truly effective against cancer, and its T-cell based technology is very powerful. This is not a retooling of some older cancer therapy, but is a new approach that has significant clinical promise based on early data.

2) The company may grow substantially here in Seattle, helping to rebuild a biotech cluster that has been diminished by numerous acquisitions (Immunex, Corixa, Icos, and ZymoGenetics), departures (Amgen, the Bristol-Myers Pharmaceutical Research Institute), and failures (Dendreon, VLST, Allozyne, and Novo Nordisk’s inflammation group) of local companies. A good sign: Juno recently leased a manufacturing site in Bothell, WA.

3) A number of people that I’ve worked with over the years and respect are employed there, and I’d love to see them achieve great success.

What scientific, legal, and business challenges does Juno (and, for that matter, many of the other immunotherapy companies that it is competing against) face?

[Updated with Juno/Novartis deal] 1) Intellectual property concerns. Juno is already embroiled in legal proceedings with the Novartis-backed group at the University of Pennsylvania. Juno licensed some of its IP from St. Jude’s Children’s Research Hospital, which is suing the UPenn group for breaching an agreement over the use of its T-cell technology. I have no idea which group has a stronger position or how this will play out, although it’s safe to say that the lawyers on both sides will be handsomely recompensed. My best guess is that there will be a cross licensing of IP between these organizations. Getting shut out of the market would be fatal. [Editor’s note: Juno and Novartis indeed reached a settlement on April 6.]

Seattle biotech veterans have already seen this scenario play out. Years ago we had a local company, CellPro, whose only product, the Ceprate column (used to purify stem cells from blood), won FDA approval in 1996. Unfortunately, a larger and stronger company with deep pockets and a strong patent challenged legal claims to the technology that were at the heart of CellPro’s product. Despite confident pronouncements in its position, CellPro … Next Page »

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Stewart Lyman is Owner and Manager of Lyman BioPharma Consulting LLC in Seattle. He provides strategic advice to clients on their research programs, collaboration management issues, as well as preclinical data reviews. Follow @

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  • Dennis L. Thireault, MS

    The future of Seattle Biotech needs to be focused on Enzyme Manufacturing. We have the talent, the resources, and the world class scientists to be able to do this (In addition the regulatory hurdles are less).

  • ddRNAi works

    $5b market cap for a phase I/II gene therapy trial, with patent woes and BigPharma competition is just crazy. Much better plays out there.