FDA approval sends Dendreon shares soaring
The Seattle biotech wins approval for its prostate-cancer drug Provenge. Shares jump 26.7%.
Provenge will be the first medicine to train the body’s immune system to attack cancer cells like a virus.
Dendreon closed at $50.18, up from Wednesday's finish of $39.62, and added 3.2% to $51.84 after hours. It's made a lot of investors very happy this year: The shares are up 90.9%.
Provenge may bring in $4.3 billion in annual sales by 2020, according to analyst George Farmer of Canaccord Adams.
"Demand will be very high given the simplicity and convenience of administration combined with the extremely benign safety profile," Farmer said in a research report today.
Those kinds of sales will be welcome news for the Seattle company. It reported just $100,000 in revenue in 2009 and a loss of $220 million. While it's been working on Provenge in the last five years, the company has built up losses of $256 million.
The FDA's approval on Provenge came three years after the agency rejected Provenge in its first attempt at approval.
Dendreon did another big study and convinced the agency that its cancer vaccine works.
The approval is a major milestone for Dendreon, a tiny biotechnology company that developed the treatment based on basic research that occurred at Stanford University.
Dendreon shares jumped 6% to $45 when news of the approval crossed the financial wires. Then trading was halted. When it was restarted, shares soared to as high as $54.48 before moving down again.
Forbes.com said the FDA approved Provenge for patients whose prostate cancer has spread into their bodies; who have either no symptoms or minimal symptoms from the disease; and who won't respond to hormone blocking drugs.
About 25,000 patients fall into this category each year,
The package insert for the medicine, on which Dendreon's marketing will be based, contains few major warnings about serious side effects (patients get fevers and chills) or caveats about the product's effectiveness.
Provenge will cost $93,000 per course of treatment.
"There's nothing in any of it that's a surprise, nothing hidden in the weeds that could dampen the party for Dendreon and prostate cancer patients," David Miller of Biotech Stock Research, a longtime Dendreon bull who has recommended the company, told Forbes.
"There will be a large demand for this," Mount Sinai School of Medicine urologist Simon Hall told Forbes. He was involved with several clinical trials of Provenge but has no financial interest in the company.
"Patients don't want chemotherapy. They are looking for alternatives, and using your own body to fight cancer is an attractive option." But he cautioned: "It is not the panacea. You are going to live longer, but eventually the cancer will progress."
The stock's volatility has attracted traders and short sellers seeking short-term profits. Hedge funds own 27%, Bloomberg News said.
Provenge helped men whose prostate cancer had spread to other organs live four months longer in the 512-patient study released by the company in April 2009.
The company had initially applied for approval based on an earlier study of 127 men that showed the drug improved survival and a second study of 98 men that failed to show a statistically significant benefit.
The therapy involves extracting white blood cells from a patient, mixing them with vaccine components and injecting the combination back into the person. It is designed to be given earlier in treatment of the cancer and pose fewer side effects than chemotherapy.
The FDA’s refusal to approve the drug in May 2007 based on the original data -- even after the agency’s outside advisers voted 13-4 that it was "substantially effective" -- sparked protests by patients and threats of a congressional probe.
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