(RTTNews) - Ever since going public, it has been a roller coaster ride for Dendreon, the beleaguered biotech firm that is developing a therapeutic cancer vaccine, Provenge. The volatility of Dendreon's stock provides a fascinating insight into the allure of a new treatment modality, the bungles of the Provenge trials and the steely determination of the company to bring its first ever product to market.
Dendreon's Provenge, an investigational vaccine for the treatment of prostate cancer, belongs to a new class of therapy known as Active Cellular Immunotherapy. Provenge works by stimulating the immune system to recognize a protein known as the prostatic acid phosphatase or PAP, which is found in about 95% of all prostate cancer cells and mounts an attack on the cancer cells.
Despite a number of biotech firms investigating cancer vaccines for decades, not a single therapeutic cancer vaccine has made it to market. The therapeutic approach to cancer has evoked considerable interest across the biotechnology industry, regardless of the setbacks encountered by this field. There are two types of vaccines namely therapeutic and prophylactic. While a therapeutic cancer vaccine is given to patients to treat existing cancers, a prophylactic cancer vaccine is given to healthy subjects to prevent infection with cancer-causing viruses. Merck's Gardasil and GlaxoSmithKline's Cervarix, which are approved to prevent cervical cancer, are examples of prophylactic cancer vaccine.
Contrary to doomsday predictions of some of the analysts, when Provenge won the backing of the FDA advisory committee, it was thought that Provenge would become a trailblazer in today's new arsenal against cancer. But much to the surprise of the investors, who were hopeful that Provenge had a decent chance of approval, the FDA flunked Provenge, blacking out the dawn of a new era in cancer immunotherapy.
Is the FDA's action a mere display of the regulatory agency's extreme hubris or is it a revelation of a more cautious approach about new drug approvals?
....As the debate continues, let's take a walk through the troubled history of Dendreon and its vaccine in the making - Provenge.
Dendreon - An Anatomy
By Profile
Founded in 1992, Dendreon Corp., was formerly known as Activated Cell Therapy, Inc. On June, 16, 2000, the Seattle-based Dendreon took the final leap from a backwater biotech startup to a public corporation, making an initial offering of shares to the public at $10 each. Dendreon's IPO, which occurred at a time when Provenge was entering pivotal trials, was underwritten by Prudential Vector Healthcare, SG Cowen, and Pacific Growth Equities. And even in the first day of trading, the prognosis for Dendreon, which was beating the drum for its immune-based prostate cancer therapy, wasn't so hot. The shares dropped 3% to close the first day of trading at $9.69.
Dendreon, which has no products on the market till date, is more of a one-trick pony with everything riding on its lead product candidate Provenge. Though the company has more than one trick up its sleeve, the other products are still in early stages of development.
Lapuleucel-T, also known as Neuvenge, an investigational therapeutic cancer vaccine for the treatment of patients with ovarian cancer, breast cancer and other solid tumors has been kept on hold since finishing phase 1 trials in 2004, while other cancer candidate drugs like Trp-p8, Carcinoembryonic Antigen or CEA, Carbonic Anhydrase 9 Antigen or CA-9, Anti-Serine Protease Monoclonal Antibodies are in preclinical stages.
Results from two Phase 1 studies of Neuvenge, announced in December 2004, indicated that Neuvenge stimulated an immune response and may provide clinical benefit in patients with advanced breast cancer. Dendreon suspended the study on its follow-on immunotherapy drug, Neuvenge, in order to conserve its cash to focus on Provenge.
By The Numbers
Ever since its inception, Dendreon's bottom line has been in red as a result of the mounting research and development expenses, clinical trial expenses, contract manufacturing expenses and general and administrative expenses incurred. As of March 31, 2007, the company's accumulated deficit was $423.2 million. The company derives revenue from its collaborative research and development agreements and from grant awards.
Here's a seven-year summary of the company's top line and bottom line numbers.
| | 2000 | 2001 | 2002 | 2003 | 2004 | 2005 | 2006 |
|---|
| Total Revenue in Mln | $6.52 | $13.82 | $15.27 | $27.04 | $5.04 | $0.21 | $0.27 |
| Net Loss in Mln | $16.07 | $23.16 | $24.67 | $28.49 | $75.24 | $81.55 | $91.64 |
| Loss per share | $1.57 | $0.94 | $0.96 | $0.82 | $1.32 | $1.36 | $1.27 |
| R&D Expenses in Mln | $17.19 | $31.31 | $32.00 | $38.88 | $64.39 | $65.94 | $74.09 |
In the first quarter ended March 31, 2007, Dendreon posted a net loss of $30.9 million or $0.38 per share, on revenues of $80,000. This compares to a net loss of $24.4 million or $0.34 per share, on revenues of $25,000 in the same period a year ago.
Provenge's Bumpy RideRight from the start, Provenge, evaluated in three phase III studies - D9901, D9902A, and D9902B, has been a crapshoot.
In 2000, Dendreon initiated a double-blind, placebo-controlled Phase 3 trial, evaluating Provenge in men with prostate cancer. The study dubbed as D9901, enrolled 127 men with late stage, metastatic, hormone resistant prostate cancer - 82 of who were administered three infusions of Provenge and 45 were given placebo over a four-week period. The study was designed to measure time to disease progression and time to development of disease-related pain in men with hormone resistant prostate cancer.
Hormone resistant prostate cancer commonly referred to as Androgen independent prostate cancer or AIPC is an advanced stage of prostate cancer in which the tumor growth is no longer regulated by androgens, or male hormones. Currently, there are no FDA-approved therapeutic treatment options for men with AIPC.
The results of an interim analysis of the D9901 study released in January 2002 were disappointing, as Provenge failed to meet its primary endpoint of slowing disease progression. The negative results from the trial took its toll on the company's share price, setting off a 38% fall. The stock fell $3.05, to $5, on the Nasdaq on January 11, 2002, the day the study results were reported.
Although the interim results of the D9901 trial did not achieve statistical significance, further analysis of the data in August 2002, revealed that Provenge delayed the progression of disease as well as the onset of disease-related pain in men with advanced prostate cancer, whose cancer has a Gleason score of 7 and less. (Gleason score is a measure of the severity of prostate cancer).
Dendreon's second Phase 3 trial, D9902, was still underway when the interim results of D9901 study were released and the survival follow up was still ongoing. In order to confirm the D9901 study results, after consulting with the FDA, the company halted further enrollment in its D9902 study, which had till then signed up 98 patients with advanced prostate cancer. The original target was 120 patients.
The study of the truncated group in which 98 patients were enrolled, regardless of Gleason score was named D9902A. Another study, dubbed D9902B trial, enrolled only those patients with Gleason scores of 7 or less. Trial D9902B, which has received a positive Special Protocol Assessment from the FDA, is an ongoing one, now known as the IMPACT study. Over 400 men with hormone resistant metastatic and progressive prostate cancer have been enrolled in the IMPACT study. The primary end point of the study is overall survival and time to disease progression is now a secondary endpoint.
On October 28, 2004, the company released the final data of the completed D9901 study of Provenge, including the three-year follow up results. According to the final D9901 study results, Provenge extended the lives of men with advanced prostate cancer, regardless of their Gleason score. The news pushed Dendreon's shares up $1.90, or 24%, to $9.85. The final survival data also showed a statistically significant survival benefit in the group of patients with Gleason scores of 7 and less.
In January 2005, Dendreon reported the preliminary D9902A trial data, which confirmed the results of the D9901 study. D9902A study, which enrolled 98 men with advanced prostate cancer, fizzled as it did not show a statistically significant delay in time to disease progression in the overall group or in the Gleason score of 7 and less. Following the ambiguous results, the stock lost nearly 40% in the month of January alone.
But Dendreon found the final three-year survival data from D9902A study reported in July 2005 encouraging, as Provenge significantly extended the survival of men with advanced prostate cancer. Though the experimental results were exciting, it was hardly an earthshaking evidence because D9902A study was not a complete one as it was only a small, truncated trial which had enrolled only 98 patients.
Opinion Matters - Analysts Take Sides
Based on the results of the D9901 and D9902A studies, Dendreon announced in September 2005 that it would file for FDA marketing approval for Provenge. With results of the clinical trials of Provenge being equivocal, analysts were skeptical about the much touted therapeutic cancer vaccine's prospects. The stock lost almost 50% of its value by December 2005, and traded in the range of $5.21 - $5.82 that month.
The following year was no better and with waning investor enthusiasm, Dendreon shares slid further to a level less than $5. Dendreon submitted its application, seeking marketing approval for Provenge in August 2006.
Though Dendreon was pridefully optimistic about Provenge's approval, some analysts exhibited a bit of realistic fatalism about the drug's future. Brean Murray Carret analyst Jonathan Aschoff, who was of the view that Dendreon did not have strong data to gain Provenge approval, expected an approvable letter to be issued for the drug. Paul Latta, an analyst with McAdams Wright Ragen, expected the drug to be given at least a conditional nod. Joel Sendek, an analyst with Lazard Capital Markets was of the view that the FDA might wait for more study results and approve the drug in 2009. He expects Provenge to garner sales of $231 million in 2011.
Positive Panel Surprise
The pivotal moment arrived for Dendreon, which has been betting the bank on Provenge, on which it spent nearly 10 years and $400 million in development and testing.
March 1 - When Dendreon announced that its prostate cancer vaccine Provenge has been taken up for review by the FDA panel, the company's stock shed 8.84% to close at $4.23, on skepticism of Provenge, passing the FDA muster.
Contrary to expectations, on March 30, the FDA panel voted 13-4 in favor of Provenge, giving Dendreon's stock price an unexpected lift. The share price, which nearly tripled in the first few minutes of trading on March 30, to $14.90 a share, closed the day's trade at $12.93. Buoyed by the FDA panel's positive vote, Dendreon's stock price continued its upward march and hit a 52-week high of $25.25 on April 10.
Following the positive recommendation of the FDA advisory panel, JMP Securities analyst Charles Duncan reiterated a "Strong Buy" rating on Dendreon stock, and raised his target price to $20 per share from $12. He even reasoned that Provenge could fetch $1 billion a year for Dendreon.
However, Lazard Capital Markets analyst Joel Sendek who was less buoyed by the positive recommendation of the FDA advisory panel maintained a "Hold" rating on Dendreon stock. In a note to investors he wrote that he expected the drug to be approved only in 2009 as the current available data will be insufficient for the FDA when it takes a final decision related to Provenge on May 15.
The Big Day Arrives And....
As the regulatory agency usually abides by the panel's advice, though not mandatory always, the odds for approval of Provenge remained high until the FDA overrode the panel's recommendation. Dendreon didn't have to wait till May 15 to know Provenge's fate.
On May 9, barely a week before the FDA was slated to rule on Provenge, the regulatory agency threw up a stiffer challenge to its approval, whacking the company's stock. The FDA issued an approvable letter, requesting Dendreon to furnish more clinical data related to Provenge. The stain of this news cratered the share price of Dendreon. The stock lost over 64% on May 9, eroding almost $1 billion in market value to close the day's trade at $6.33. In the following week, Dendreon stock wobbled back and forth trading in the range of $5.54 to $6.38.
With the FDA seeking more clinical data to prove the efficacy of Provenge as well as additional information on the chemistry and manufacturing of the therapeutic vaccine candidate, it is certain that the launch of the much-anticipated Provenge is not going to happen until at least next year. The company anticipates completing an interim analysis of the ongoing IMPACT' study with Provenge next year and the results of the final analysis are expected to be available only in 2010.
What Next?
Following the FDA's decision to delay the approval of Provenge, Dendreon on May 21, opted to trim 15% or 40 people of its work force of 250, in an effort to reduce its cash burn and preserve its existing cash and equivalent of $88.5 million. The news sent Dendreon's shares up more than 12% to close the day's trade at $6.80 on the Nasdaq. The layoff is expected to result in non-cash charges of $300,000 and cash charges of $1.5 million. Hoping that Provenge will be approved this year, Dendreon had hired about 30 additional workers over the past year to revamp its sales force.
Dendreon had earlier stated that its cash on hand is enough to make it through the interim analysis of the IMPACT trial, which is expected to happen in 2008. On June 4, the company announced that it intends to offer $75 million convertible senior subordinated notes due 2014 through a private placement to institutional buyers. The company expects to grant the initial purchaser of the notes a 30-day overallotment option to purchase up to an additional $25 million aggregate principal amount of the notes. The proceeds of the offering are expected to be used in financing all activities related to Provenge and support research and preclinical development activities of other drug candidates.
Provenge - A Potential Cure Or A Case Of Reasonable Doubt?
The opinion on the FDA's decision to delay the approval of Provenge has been equally divided. There have been voices for and against Provenge being approved.
The advocacy groups for prostate cancer patients believe that the FDA's refusal to delay its stamp of approval to Provenge will not make it a failure. Nevertheless, they feel that Provenge's expected rise to become a pioneer in one of the hottest areas in biotech research - therapeutic cancer vaccines, has clearly been delayed.
Prostate cancer, the second leading cause of cancer death in American men, affects 1 in every 6 men. According to the American Cancer Society, the disease proves fatal to 1 in 34 men and 27,000 men die annually from prostate cancer. As per the latest statistics available, a little over 1.8 million men in the United States are survivors of prostate cancer.
Though there are a number of potentially curative treatment options for early stage prostate cancer, the main alternatives available to men with metastasized prostate cancer known as Androgen Independent Prostate Cancer or AIPC include radiation, and Taxotere, a chemotherapy drug made by Sanofi-Aventis in combination with a steroid drug prednisone. But these treatments generally are considered to have severe side effects.
Taxotere, which prolongs the life span of men with advanced prostate cancer by 2.5 months, is associated with toxicities such as edema, liver damage, and neutropenia and carries a black box warning.Initially, the prostate cancer will be an androgen dependent tumor, meaning the growth of the tumor will be promoted by male sex hormones, also known as androgens. The male sex hormones such as testosterones are strong tumor promoters. Therefore in early stages, androgen deprivation therapy, which reduces the levels of male sex hormones, will cause prostate cancers to shrink or grow more slowly.
When the prostate cancer becomes metastasized or has spread to the bone or other organs, the tumor growth will no longer be dependent on the male sex hormones or androgen. This stage of prostate cancer is known as Androgen Independent Prostate Cancer or AIPC, which is an advanced form of prostate cancer.
Since there are no treatment options currently for Androgen Independent Prostate Cancer, Provenge promised a hope for men who are battling advanced stage prostate cancer, without having to suffer the side effects of traditional chemotherapy. Patients enrolled in the trials who were administered Provenge shots, lived, a statistically significant, 20% longer (average 4.5 months) than those receiving the placebo. As pointed out by some of the prostate cancer patients who testified at the advisory panel hearing, the 4.5 months of life extension, which is a 20% extension of life expectancy means a lot for them, though it may not seem long, for those who are healthy.
With the FDA delaying the approval of Provenge, whose safety and efficacy have already been endorsed by the FDA panel, advocacy groups for prostate cancer patients feel that it's a shame on the regulatory agency to deny a life-extending therapy to prostate cancer patients.
The indispensable answer to the rhetorical question Can patients who are battling prostate cancer, afford to wait until the company comes up with the final results of the ongoing trial? has to be an emphatic negative.
But some experts argue that the FDA was right in delaying the approval of Provenge, as the clinical data submitted by Dendreon was too small to determine the risk/benefit profile of Provenge. Not an erroneous logic though!
After all, the regulatory agency, which has been strongly criticized over the safety of approved drugs, having to withdraw some drugs from the market for safety reasons, cannot be faulted for being extremely cautious.
Future Of Dendreon - Experts' Views
Dendreon stock has shed 62% of its value, ever since the FDA demanded more data on Provenge before it can be approved.
A.G. Edwards analyst Aaron Reames, cautions investors that Dendreon stock lacks the near-term drivers and catalysts to cause to appreciate substantially.
Very recently, brokerage JMP Securities, downgraded the rating on Dendreon stock to Market Perform from Outperform, citing uncertainties and risks going into an expected FDA meeting after the regulatory agency requested additional data on Provenge.
On May 31, the FDA confirmed that it would accept positive interim or final analysis of survival data from the ongoing IMPACT study as additional clinical data in support of Provenge's efficacy. Following the news, Dendreon shares traded as much as 93% higher in the early hours. The stock closed the day's trade at $8.55, up 27% or $1.81.
Analysts at the brokerage firm, UBS who are skeptical of the overall efficacy of Provenge and doubt the statistical robustness of the analysis of the IMPACT trial, while maintaining their "reduce" rating on Dendreon stock, have reduced its target price to $4.50 from $9. According to UBS, Provenge might be launched by 2011.
Brean, Murray and Carret analyst Jonathan Aschoff does not expect promising results from the ongoing IMPACT trial, evaluating Provenge. The analyst believes that Dendreon might ultimately have to abandon the development of Provenge.
Conclusion
Investing in biotech stocks is a high-risk gamble. Until Provenge gets the FDA approval, which could be as early as 2008 or late as 2010, Dendreon is nothing but a pure speculative, risky stock.
Further, it remains to be seen whether Dendreon can race to the finish line, ahead of its competitor, South San Francisco-based Cell Genesys, which is also testing a therapeutic cancer vaccine Gvax, for multiple types of cancer like leukemia, prostate cancer and pancreatic cancer. GVAX immunotherapy for prostate cancer is currently being studied as a single agent and in combination with Sanofi-Aventis' Taxotere chemotherapy in two Phase 3 clinical trials.
Pending FDA's ruling on Provenge, it's going to be a long, long waiting game for Dendreon, as warned by A.G. Edwards analyst, Aaron Reames.  | | To receive FREE breaking news email alerts for DENDREON CORP and others in your portfolio |
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by RTT Staff Writer
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