Analyst: Dendreon’s Growth Stalling With Cancer Docs as Rival Gains

Xconomy Seattle — 

Seattle-based Dendreon (NASDAQ: DNDN) is still struggling to get cancer physicians in the habit of prescribing its new immune-boosting drug for prostate cancer, as a competing product is gaining momentum, according to a survey by investment firm Robert W. Baird.

In a survey of 100 community-based medical oncologists conducted in March, about 41 percent of physicians said they work in a practice where sipuleucel-T (Provenge) is available, almost identical to the 42 percent who said that in November, according to the report to Baird clients. Physicians who prescribe Provenge reported administering it to an average of seven patients in the previous 90 days, compared with an average of five patients in the November survey, Baird said.

“For real revenue acceleration to occur, much more than this is needed,” said Baird analyst Christopher Raymond in the report. He rates the stock “neutral” with a price target of $13.

Dendreon (NASDAQ: DNDN) won FDA approval for its first-of-a-kind immunotherapy in April 2010. The company’s sales were limited in the early days by its own manufacturing capacity, and by insurance reimbursement concerns. While Dendreon worked to boost capacity and persuade Medicare to reimburse doctors for its $93,000 treatment, the company couldn’t keep up with investors’ expectations. The company generated $213 million in sales of Provenge last year, its first full year in the market, which fell far short of the $350 million to $400 million company forecast, and which caused the company to lose more than two-thirds of its market value. New CEO John Johnson was brought in to help capture the opportunity in treating prostate cancer patients, just as a competing drug from Johnson & Johnson, abiraterone (Zytiga), has begun to gain momentum in the same set of prostate cancer patients that Dendreon is going after—those whose disease has worsened after chemical castration treatment, but who haven’t yet gone all the way to chemotherapy.

The J&J drug is currently FDA approved for sicker patients who have already gotten their chemo, but doctors have shown a willingness to prescribe the drug “off-label” for patients with earlier stages of disease. Zytiga’s market share in the Dendreon target population has grown from 6 percent in July to 12 percent in November to 18 percent in March, according to the Baird survey. And Johnson & Johnson has recently released data from a clinical trial which suggests its drug works in pre-chemotherapy patients. The company has said it plans to seek FDA approval so it can market to those patients. Details of the study are expected to be released next month to a large audience of cancer physicians at the American Society of Clinical Oncology conference.

The new analyst report from Baird was released just before Dendreon plans to report its first quarter financial results on Monday. Expectations are low, as Dendreon has forecasted “moderate” sales growth, just a single digit percentage higher than the $77 million it reported in the final three months of 2011. Analysts now expect about $81 million in first quarter sales from Dendreon, Raymond wrote.

Dendreon bulls can take heart that the Baird survey didn’t include urologists, who can also prescribe Provenge. New commercial leader Joe DePinto told Xconomy last month that Dendreon has sharpened marketing messages that now appeal to urologists, as well as oncologists.

“While we acknowledge DNDN’s heavy urology focus, we remind investors oncology still dominates, accounting for about 80 percent of Provenge use,” Raymond wrote. “If oncologist adoption is indeed stalling as our survey suggests, we now see a heightened urgency around executing in urology.”

Brad Loncar, an individual investor who has been critical of Dendreon management, said he isn’t that concerned with the information in the Baird report. “It is no secret that the launch has perhaps been a little slower than what everyone hoped for. The question is what plan does the new management team have to get the program back on track to a level more in line with the product’s true potential,” Loncar said.

“I do agree that the company needs to step up their efforts to market to urologists. It makes sense to use this product according to its label as soon as possible, and urologists are obviously uniquely positioned to make that happen,” Loncar said.

Dendreon shares fell 1.4 percent to $11.23 at 11:47 am Eastern time.

By posting a comment, you agree to our terms and conditions.

3 responses to “Analyst: Dendreon’s Growth Stalling With Cancer Docs as Rival Gains”

  1. Joe R. says:

    I’m confused.
    • Baird reports a 40% increase in Provenge prescriptions among community practices from November to March. Q3 2011 revenues reported in November were $66 million yet Q1 2012 revenues are forecast to improve by only 22% to $81m?
    • The number of locations (academic med centers and community practices) where Provenge is verifiably available has increased from 731 in November to well over 1000 currently (see That is a 37% increase in locations. Who / where does Baird survey for availability? Baird’s stats of 41 of 100 current Provenge-ready practices vs. 42 of 100 in November is selectively skewed.
    •Reaching and recruiting urology practices to prescribe Provenge has been Dendreon’s marketing focus as described in the last few conference calls. (As described by ex-CEO Gold in November, 90% of urologists’ clientele with prostate cancer are within Provenge’s space versus 60% of PC clients of the oncologist’s.-
    • In Xconomy’s interview with John Johnson (Dendreon’s new CEO) linked in your article, it was emphasized that new drugs (i.e. Zytiga) that might be approved in Provenge’s pre-chemo treatment space would be welcomed as potential sequencing partners. According to Xconomy’s interview with Johnson, such additions to the space benefit Provenge with the added buzz out the possibilities of treatment and that he expects Provenge to remain the Standard of Care for Pre-Chemo.
    • Please find an investor other than Brad Loncar from which to draw quotes. He is not representative of nor is he as knowledgeable as many other serious DNDN investors. For example, you might want to contact Ted C. or Saul K. I think you know where to find them.
    • Let’s see what is reported on Monday.

  2. Richard S says:

    What are you so confused about?

    It is always important to read SEC filings. The May 7 10Q filing has an additional new tidbit in the legal section. It was written in a way that it is lumped in the same paragraph as the class action suits. Maybe it’s an old lawyer’s trick so people won’t notice it. If you read toward the bottom of the large paragraph, Dendreon has disclosed that they are under federal investigation.