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WIKI ANALYSIS
Dendreon Corporation (NYSE:DNDN) is a biotechnology company with a focus on developing drugs for cancer. Its most advanced product is Provenge (Sipuleucel-T), approved by the FDA in 2010, is a therapeutic vaccine developed for the treatment of prostate cancer. Successful late-stage clinical trials yielded very positive results that could turn Provenge into a blockbuster therapy. Dendreon is beginning to market Provenge in the U.S. on its own.
Dendreon's success over the next few years will depend both on its ability to expand capacity to keep up with demand for the drug as well as overall success of Provenge in the advanced prostate cancer market.
Business Growth
FY 2010 (ended December 31, 2010
- Net revenue surpassed $1 million for the first time at $48 million.[1]
- Revenue forecast for 2011 is$350 to 400 million.[2]
In 2010, Dendreon achieved FDA approval for its flagship therapy, Provenge, to treat advanced prostate cancer.[3] Revenue from sales of Provenge drove Dendreon's revenue increase in 2010, and will continue to drive Dendreon's revenue as it continues to build market share. Dendreon has yet to post a profit, and operational expenses to develop, manufacture, and market Provenge tripled to $300 million in 2010. Thomson Reuters projects an earnings loss again in 2011, but sees Dendreon becoming profitable in 2012.[4]
Pipeline
Provenge treats cancer as an active cellular immunotherapy (ACI), getting the patient's immune system to selectively attack cancer cells. Dendreon is developing the Provenge compound (Sepuleucel-T) as well as other ACI compounds for several cancer types[5]:
- Sepuleucel-T: Dendreon currently has Sepuleucel-T, the compound behind Provenge, in Phase 2 and 3 trials for both early and advance stage Prostate cancer.
- ACI Therapy for Breast Cancer: Dendron has a therapy that targets the Her2 receptor common in certain forms of breast cancer currently in Phase 1 trials.
Trends and Forces
Sales Growth for Provenge Will Drive Dendreon's Future Revenue
Over the next few years, virtually all of Dendreon's revenue will come from sales of its cancer drug, Provenge. Analysts predict that Provenge sales will peak at $2-3 billion, with sales in 2012 of $800 million.[6] However, the sales numbers that Dendreon is actually able to realize depend on a few factors. First, as the first cancer treatment of its kind, demand for Provenge may be difficult to predict. Second, Provenge costs $93,000 for 4 months of life extension in cancer patients, a cost that some doctors may balk at.[7] Dendreon's valuation over the next few years will be inextricably tied to the performance of Provenge.
Dendreon's Ability to Keep Up with Provenge Demand will Affect Revenue
The process of manufacturing Provenge is relatively complex, requiring treatments personalized for each patient, and Dendron may have trouble keeping up with demand. Early on, the company has seen production constraints dampen sales.[8][9] While Dendreon has added three manufacturing plants to its arsenal in order to meet demand,[10] the complexities inherent to the manufacturing process make manufacturing capacity an important indicator for Provenge's short-term sales.
Competition
Sanofi-Aventis SA (SNY): Sanofi Aventis received FDA approval for it new drug, Jevtana, to treat patients with advanced prostate cancer. Jevtana will compete with Provenge for patients, although the demand backlog for Provenge while Dendreon ramps up its capacity, will make up for any sales losses from competition.[11]
JOHNSON & JOHNSON (JNJ): Zytiga received FDA approval for advanced prostate cancer and will compete along with Provenge and Jevtana for market share.[12]
References
- ↑ DNDN 2011 10K
- ↑ BiotechSectorInvesting DNDN Earnings
- ↑ FDA Approves a Cellular Immunotherapy for Men with Advanced Prostate Cancer
- ↑ Ahead of Earnings: Analysts Fight Over Dendreon (DNDN)
- ↑ Dendreon R&D
- ↑ Dendreon: Make or Break Year for Provenge
- ↑ Provenge Cancer Vaccine: Can You Put a Price on Delaying Death?
- ↑ Dendreon's Biggest Provenge Problem? Managing Demand
- ↑ Dendreon sees Provenge contraints over by year end
- ↑ Dendreon boosts Provenge production, treatment sites
- ↑ New Dendreon Competition Is Not Really Competition (DNDN, SNY)
- ↑ Abiraterone in Prostate Cancer, Survival Gets Even Better
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