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Dendreon drops on disappointing Provenge sales

Growth of prostate cancer vaccine lower than expected

Shares in US biotech Dendreon fell yesterday after the biotech firm's fourth-quarter figures suggested that sales of its flagship cancer vaccine Provenge were not growing as hoped.

The stock lost 20 per cent of its value to close at $11.81 per share after revealing that sales growth of the prostate cancer treatment started to tail off in the first quarter of 2012 after a significant rise in the fourth quarter.

Sales of Provenge (sipuleucel-T) in the last quarter of 2011 reached $77m, up from $25m a year earlier, but the company expects the rise this quarter to be in the low single digits. For the full-year, sales of Provenge were $214m.

Dendreon's chief executive John Johnson told analysts on a conference call that it is not easy to introduce an entirely new treatment paradigm, and this was apparent from continuing difficulties for some patients in securing reimbursement for Provenge therapy.

However "we have made important progress towards establishing Provenge as a foundation of care," he stressed, noting that usage is growing among cancer centres as they chalk up positive reimbursement experiences.

One of the key issues for Dendreon is to increase the uptake of Provenge in the US and Europe and thereby reduce the cost of goods sold (COGS) for the treatment, which currently stands at 74 per cent.

The biotech has now brought the third of three US manufacturing units (in Atlanta) online, so the company has been booking costs for all the units while they have not been operating at full capacity.

The treatment involves taking immune cells from patients, exposing them to a prostate cancer antigen in a Dendreon production facility and re-injecting them into the patient.

The company is looking at increasing the use of automation in the process to reduce costs by 2013, with the ultimate aim of reducing COGS to around 50 per cent when sales of the drug reach $500m a year.

Discussing Dendreon's overall results, Johnson noted that total fourth-quarter revenue was $202m, boosted by $125m from the sale of Dendreon's stake in Merck & Co's hepatitis C treatment Victrelis.

That payment helped Dendreon post a fourth-quarter profit of $38m, reversing a loss of $92m in the fourth quarter of 2010.

28th February 2012

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