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Expert Financial Analysis and Reporting

Provenge’s European Opportunity (DNDN, $33.59)

The European Union represents a large pool of hormone resistant prostate cancer patients and could be a commercial opportunity for Provenge as large as that in the US. The treatment paradigms in the US and EU are similar. It is estimated that there are 1.5 to 2.0 times as many patients in the EU as in the US. However, reimbursement is more challenging so that the addressable market based on sales dollar potential may prove to be about the same in both areas.


On a recent conference call, management stated that they had met with several of the EU regulatory agencies. Based on these meetings, management expressed confidence that the data package used to gain approval in the US will be sufficient to gain European approval. These are the 9901, 9902-A and IMPACT studies. Dendreon now plans to file for approval in the EU in late 2011 or early 2012. A regulatory decision is expected in the first half of 2013. Commercial sales could start in the second half of 2013.


DNDN is beginning to build a new plant in central Germany that is very similar to the Los Angeles and Atlanta facilities. It is a 36 work station plant that is scheduled to come on line in the first half of 2013. Europe offers a very concentrated group of patients. About 20% of the market is within a four hour drive of the German facility and 50% is within an eight hour drive. The logistics of using trucks or cars creates significant logistic and cost efficiencies as opposed to using airplanes. Of course, the remaining 50% of patients can be reached by air or possibly truck.


Securing reimbursement in the EU is more challenging than in the US and we are all aware of the focus placed on the $93,000 price in the US. Based on managements statement that the “dollar” commercial potential in the EU is similar to the US even though there are more patients, indicates that the company may be expecting a lower price.


There are a number of things working in favor of Provenge reimbursement. The primary endpoint reached in its clinical trials of improvement in survival is the gold standard of outcomes and is very positive for reimbursement considerations. Another significant advantage is that Provenge does not need much supportive care. Its side effects of infusion related reactions and flu-like symptoms can be cheaply treated with Benadryl and aspirin. Chemotherapy and targeted therapies on the other hand can give rise to the need for supportive care to treat side effects that can sometimes cost as much or more than the drug regimen. In addition, Provenge is used as a single agent whereas many other drugs are used in combination with other expensive drugs.


Some drugs have been approved in the EU at the same price as in the US. Examples are Avastin, Tykerb and Affinitor. As an out and out guess, I am thinking that Provenge will be reimbursed at $50,000 to $60,000 in the EU per course of therapy.



Disclosure: The author of this article owns shares of Dendreon at the time this note was written. This should be taken into account as it may introduce bias into the conclusions and interpretations that are made. In reading this note, you acknowledge that you have not used it as the sole basis of your decision making and that all investment decisions are based on your own analysis. An investment in Dendreon carries substantial risk and investors could potentially lose much of their investment. The reader acknowledges that he/she has carefully read the Investment Approach, Terms/Conditions and Disclosures sections in the About Us section of the website. The reader acknowledges that he/she will not hold SmithOnStocks accountable for any investment loss that may be incurred if a decision is made to invest in Dendreon.


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