Dendreon (NASDAQ:DNDN) appears to be pulling out all the stops in an effort to restore at least some of the luster to its prostate cancer treatment Provenge. Once viewed as a potential blockbuster, Provenge sales may now top out at $500 million, Collins Stewart analyst Salveen Richter wrote to investors after meeting with management, according to an article in Medical Marketing & Media. And even that figure might be out of reach if Dendreon’s aggressive direct-to-consumer advertising campaign falls short.
The Seattle-based company’s need for something to ignite sales of Provenge became even clearer when Dendreon reported third-quarter results Tuesday. Sales were up 5.6% in October to $26.4 million from $25 million in September, but the company added that November sales will fall short of October’s. Even though Dendreon’s revenue tripled from the same period a year earlier, it lost $147.1 million, or $1 per share, in the third quarter — almost twice the decline for the same period in 2010.
By midday Thursday, investors had taken Dendreon to the whipping post, driving its shares down about 36%. For Dendreon, it was a case of déjà vu. In August, it was trading at nearly $36 when it severely cut its sales forecast for Provenge. That day, investors jumped ship in droves, sinking the stock by nearly two-thirds.
Provenge was approved in April 2010 as the first therapy in the U.S. that trains the body’s immune system to attack prostate cancer cells as if they were a virus. The treatment, which costs $93,000, was cleared for patients with advanced cases of the disease after Dendreon’s three-year effort to persuade the FDA to back the medicine.
Given growing concerns about government reimbursement, the drug’s cost undoubtedly has affected sales. Doctors don’t like the fact that they have to lay out the $93,000 and then wait for reimbursement from payers.
This cash flow concern is one big reason many physicians are gravitating toward the recently approved Johnson & Johnson (NYSE:JNJ) prostate medicine Zytiga. For one, they don’t have to finance its purchase. Moreover, patients can take Zytiga pills themselves, unlike Provenge, which is infused. And Zytiga treatment runs about half the cost of Provenge. What’s more, Zytiga reportedly works faster and reduces cancer-related pain.
“The bloom is off the rose for Provenge because patients are looking for something that can treat them more quickly” and with greater convenience, Charles Duncan, a biotechnology analyst for JMP Securities, told Reuters.
Still, Dendreon isn’t ready to throw in the towel. The opportunity is just too big. After all, prostate cancer kills about 250,000 men a year worldwide and is the second-most common cause of cancer death in men in the U.S., after lung cancer.
So, Dendreon is turning to patients to try to jump-start sales of Provenge by expanding consumer advertising. The direct-to-consumer expansion follows a revamped marketing approach Dendreon began in July that was aimed at physicians.
Is there a place for Provenge in treating prostate cancer? Dr. James Gulley, a director of clinical trials for the National Cancer Institute, thinks so. His opinion is echoed by Dr. Susan Slovin, an oncologist with Memorial Sloan-Kettering Cancer Center. But given the waning enthusiasm for the drug and the emergence of Zytiga, it now appears Provenge is highly unlikely to live up to its lofty expectations.
As of this writing, Barry Cohen did not own a position in any of the aforementioned stocks.