Dendreon Rises After Winning Approval for Cancer Drug (Update2)

 April 29 (Bloomberg) -- Dendreon Corp. won approval for its first product, a vaccine to fight prostate cancer, after a three-year battle with U.S. regulators. Shares surged the most in a year in New York trading.

The Food and Drug Administration cleared sales of the medicine, called Provenge, Shelly Burgess, a spokeswoman for the agency, said today in a telephone interview. Dendreon, of Seattle, submitted its application with the FDA in November 2006 and, after winning the backing of an advisory panel in 2007, was required to conduct another study to prove the drug worked.

Provenge will be the first medicine to train the body’s immune system to attack cancer cells like a virus. More than 27,000 men die of prostate cancer each year in the U.S., according to American Cancer Society. Provenge may bring in $4.3 billion in annual sales by 2020, according George Farmer, an analyst with Canaccord Adams Inc. in New York.

“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.

Dendreon gained $12.87, or 32 percent, to $52.49 as of 3:33 p.m. in Nasdaq Stock Market composite trading. Before today, the shares had gained 51 percent so far this year as investors looked ahead to the FDA decision, scheduled for May 1.

Stock Volatility

The historic volatility of the stock attracts traders and short sellers who seek short-term profits. Hedge funds own 27 percent of Dendreon shares, according to data compiled by Bloomberg.

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.

Sales Plans

Dendreon Chief Executive Officer Mitchell Gold said Feb. 9 that the company will have three plants to make Provenge by mid- 2011 and 125 sales representatives. Production will be at full capacity within one year of approval, he said.

Questions about manufacturing logistics and Dendreon’s ability to meet demand for Provenge have resulted in varying estimates for potential sales of the product. The drug will generate $1.2 billion by 2014, according to the average estimate of four estimates surveyed by Bloomberg.

That year, Farmer projected Provenge would cost about $94,000 for each patient treated with a full course of the medicine. Provenge can generate $3.1 billion in 2014, he said.

At least a dozen additional products that harness the immune system to battle tumors are in late-stage development and Provenge approval “would be an important validation to the field,” said Janice Reichert, a senior research fellow at the Tufts Center for the Study of Drug Development in Boston.

“Provenge will certainly be a pioneer in that area,” Reichert said in an April 21 phone interview. “The experience will definitely inform the clinical development programs of other companies and other products.”

The most advanced of these vaccines include Stimuvax from Merck KGaA in Darmstadt, Germany, and Oncothyreon Inc. in Seattle; ipilimumab from Bristol-Myers Squibb Co. in New York; and TroVax from Oxford BioMedica Plc in Oxford, United Kingdom.