Dendreon Opinion

There has been a surge of articles reacting to Dendreon’s Nov. 3rd earnings report and conference call.  Most of the articles (Forbes, Motely Fool, Xconomy, and Minyanville) harped on Dendreon’s not meeting the demand for its vaccine, Provenge.  Demand outstripping supply is indeed a challenge, but, longer term it has to be good news for the company and its shareholders.

There were many who predicted Provenge would never secure FDA approval.  It was no given and it certainly took persistence by Dendreon, but in the end the FDA seal is now firmly attached to Provenge.  Others analysts and pharmaceutical commentators predicted that no one would pay the $93,000 price for Provenge.  Now it is obvious that not only are people willing to pay for it, but there are so many willing to pay that Dendreon cannot immediately supply enough Provenge.

The supply shortfall is yet another hurdle for Dendreon.  As the Motely Fool pointed out, Dendreon “can only produce $10 million worth of Provenge each month (presently)…The focus should be on 2011, when the capacity will increase tenfold. Expanded capacity at Dendreon’s New Jersey plant will come online in March, and its new Atlanta and Los Angeles plants come online around mid-year. Dendreon is guiding for revenue of $350 million to $400 million next year, with about half of that coming in the fourth quarter.”

If Provenge sales continue to expand at the same rate Dendreon is expecting for 2011, it will quickly approach blockbuster status.

As Seattle based Xconomy website said yesterday, “Dendreon can’t reap the full potential of its pioneering treatment for prostate cancer until it gets more manufacturing capacity built up, but it’s making enough progress to project how this supply-constraint story will play out over the coming year.”

It is going to take a year, or so, before Dendreon gets an automatic transmission for it supply engine.  Right now, there is a lot manual maneuvering in the works.   As Dendreon CEO Mitchell Gold put it, “It’s one thing to launch a new drug, and an entirely different thing to launch a new class of therapies.”

Prostate cancer sufferers, at least those who will require Provenge in future, are the biggest winners.  Doctors are writing prescriptions and Dendreon is being paid for fulfillment.  Those facts testify that the medical community has faith in the efficacy of Provenge and Dendreon’s bright future.

For those who need a reminder, Philip Kantoff, MD (Chief, Division of Solid Tumor Oncology; Chief Clinical Research Officer; Director, Lank Center for Genitourinary Oncology and Professor of Medicine, Harvard Medical School) six months ago expressed his view that Provenge was major medical breakthrough and he said, “it will take a while for such an innovation to ramp up production.”  View the video of his remarks: