Dendreon (DNDN) Follow-Up: Panel Votes in Favor of Provenge

The Medicare advisory panel voted today in favor of Provenge coverage, Dendreon Corporation's (DNDN) prostate cancer drug. The panel recommends that Medicare cover the treatment based on its survival benefits. The vote was 3.4 on a 5-point scale in favor and paves the way for the Medicare to offer coverage of the $93,000 treatment.

There is always the chance Medicare could reject coverage or request more information but these panel recommendations are typically followed. Shares of DNDN are still halted as the news disseminates. Yet this a great hurdle mounted. The final decision will be made in June 2011.


Previous posts on DNDN:

Dendreon (DNDN) Still Halted Pending News from Medicare Advisory Panel

Dendreon's (DNDN) Fate Hangs in Balance of Tomorrow's Vote


Brandon R. Rowley
"Chance favors the prepared mind."

*DISCLOSURE: No relevant position, subject to change.

Dendreon (DNDN) Still Halted Pending News from Medicare Advisory Panel

Shares of Dendreon Corporation (DNDN) were halted this morning at 7:00 AM pending the release of pivotal news out of the Medicare advisory panel and remain so currently. I wrote yesterday that the company's short-term fate hangs in the balance of this panel's recommendation as a positive vote will likely pave the way for Medicare approval in March 2011 while a negative report could be very detrimental to the current outlook.

Dendreon's sole product is Provenge, a truly revolutionary prostate cancer treatment that trains a person's immune system to fight the cancer itself. No other drug on the market takes this approach. The drug though has been embattled in controversy for much of its existence. In mid-2007 an FDA advisory panel recommended the drug for approval but in a rare departure from typical procedures, the FDA demanded a third study to be run. After completing that study and showing efficacy and safety the FDA finally approved Provenge in April of 2010 for mass market production in the United States.

Now, Provenge must be approved by Medicare to allow the 70% of potential late-stage patients covered by the program to take the treatment. Today's recommendation from the Medicare advisory panel is a critical step in the approval process. If the panel offers a positive report, Medicare will likely accept the drug next year. It is not a foregone conclusion to be sure but these panel recommendations are followed in the vast majority of cases. We continue to await the news.


Brandon R. Rowley
"Chance favors the prepared mind."

*DISCLOSURE: No relevant position, subject to change.

Dendreon's (DNDN) Fate Hangs in Balance of Tomorrow's Vote

A Medicare advisory panel is scheduled to vote tomorrow on whether to accept Dendreon Corporation's (NASDAQ:DNDN) prostate cancer drug, Provenge. The fate of the company, and certainly its stock price, in the near term hang in the balance of this decision. While the panel is supposed to consider only whether Dendreon has produced sufficient evidence proving that Provenge extends patients' lives, many have doubted approval based on the price tag.

The drug, Dendreon's only product, costs a whopping $93,000 for the one month, three dose treatment. Provenge is truly on the cutting edge of cancer medication. It is the first of its kind fighting prostate cancer by training a person's immune system to fight the cancer itself in much the same way the body fights other illnesses. Yet, clinical trials have shown somewhat modest success with the drug extending life by 4 months to a total of 2 years when compared with the control group. It is worth noting though that tests were only performed on late-stage cases and may see improved results if and when used in earlier stages. The Medicare approval is absolutely necessary for Dendreon's success as 70% of men eligible for Provenge are covered by the program.

When the drug was initially cleared for sale in the United Stateson April 29th shares of DNDN surged to an intraday high of $57.67, up 46% in just two days. Yet, worries quickly mounted over the high price and modest results, and with the broader market sell-off, shares collapsed 55% before rebounding in July. Currently at $35.74, the stock still remains 38% off the highs.

According to a Bloomberg survey, shares could rally 60% on an approval from Medicare as Provenge is expected to generate $1.75 billion in 2014 sales. Soros Fund Management, for one, is making a big bet on the company buying up 1.8 million shares ($75 million) in the third quarter making it a new addition to their portfolio and their 9th largest holding. Apparently they're not worried about approval!

With 192,280 new cases of prostate cancer in the United States in 2009 and with Europe being a market of approximately 1.5 times the size, Provenge has huge room for growth. Since approval Provenge has received 1,000 prescriptions and expansion of facilities in New Jersey, Georgia and California are on track for mid-2011.

Should the Medicare panel approve Provenge tomorrow, shares of DNDN will likely see considerable upside. Without approval, investors will have a tough time supporting the $5.2 billion market capitalization without the clear path to profitability.

Brandon R. Rowley
"Chance favors the prepared mind."

*DISCLOSURE: No relevant positions but subject to change.