Prostate cancer patients seeking Dendreon Corp.’s new tumor-fighting vaccine, Provenge, face delays of a year or more as hospital waiting lists dwarf the company’s capacity to produce medicine.
Dendreon can only make enough Provenge to treat about 2 percent of eligible patients until manufacturing increases in mid-2011, said Chief Operating Officer Hans Bishop. The University of Texas MD Anderson Cancer Center and Duke University’s Comprehensive Cancer Center are among hospitals scrambling to decide who should get the drug. Duke is considering principles used for high-demand organ transplants.
Typically, cancer drugs are first approved for a narrow group of difficult-to-treat patients, and by the time they’re widely released, there is sufficient supply. The last time a new cancer treatment faced similar shortages was in 1992, with Bristol-Myers Squibb Co.’s Taxol. Investors are also concerned about shortfalls, sending Dendreon shares down 33 percent since they peaked after Provenge was approved on April 29.
“Until the capacity issues can be addressed, this will not be an effective agent,” said Chris Logothetis, head of prostate cancer research at MD Anderson in Houston, in a telephone interview. “The waiting list -- even as we are telling patients we’re not starting a waiting list because we are inundated -- is more than 50 patients. This is going to be a problem.”
Dendreon, based in Seattle, rose 15 cents, or less than 1 percent, to $37.15 at 4 p.m. in Nasdaq Stock Market composite trading.
New Treatment Approach
Provenge takes a new approach to treating cancer, drawing blood from the patient’s body and training the immune system to attack malignant cells. On average, the medicine helped patients live an extra four months in testing, or twice the benefit of chemotherapy and with fewer side effects.
More than 27,000 men die of prostate cancer each year in the U.S. and about 200,000 new patients are identified, according to the American Cancer Society. At any given time, as many as 20 percent of patients may qualify for Provenge, Logothetis said.
It takes about a month to prepare each custom-made course of doses, Dendreon’s Bishop said. The company plans to make enough to accommodate 2,000 patients in the first year, falling short of the 100,000 patients with advanced tumors who may be eligible to receive it.
The shortages stem from Dendreon’s uncertainty about whether the U.S. Food and Drug Administration would approve the drug. The agency had previously denied approval, asking for more testing. Dendreon couldn’t develop manufacturing facilities and seek clearance of the plants until the regulators reached a decision, Bishop said in a telephone interview.
Dendreon is producing the initial doses in a single New Jersey plant. The facility will reach full capacity in early 2011, quadrupling the available vaccine, Bishop said. By the end of next year, the plant will be joined by facilities in Atlanta and Los Angeles to churn out medicine each year valued at between $1.25 billion and $2.5 billion, he said.
“It’s an unfortunate reality that there is not enough manufacturing capacity, but it’s a difficult process,” said Kris Jenner, a portfolio manager at T. Rowe Price Group Inc. in Baltimore, which held about 287,000 shares of Dendreon as of March 31, according to regulatory filings.
Adding to the Stake
Jenner, who manages his company’s $2.2 billion Health Sciences Fund, said he’s been adding to the stake since the most recent filing.
“The company has to be responsible to the shareholders that made this a reality; they also have to be responsible to the patients who are in line,” Jenner said in a telephone interview. “Hopefully after we exit 2011, the availability will become much better.”
Beginning in the next six to eight weeks, MD Anderson will be allotted enough Provenge to treat two new patients a month, each of whom will receive three doses, Logothetis said. The center sees 40 new prostate cancer patients a week, and doctors may have to resort to a lottery system to make decisions if they can’t agree on which patients will receive the most benefit, he said. MD Anderson is one of about 50 treatment centers to receive the initial doses.
Duke’s cancer center in Durham, North Carolina, looked to the example of organ transplants to come up with its plan for dealing with the Provenge shortage, said Jeffrey Peppercorn, an ethics expert and breast cancer specialist who helped craft Duke’s guidelines.
It convened a group of its genitourinary oncologists, two bioethicists and an expert in organ transplants to outline criteria for choosing who will receive the drug, he said.
“In oncology, we’re not used to situations where we have a treatment that may help and we don’t have enough of it,” Peppercorn said in a telephone interview. “We don’t want to have clinicians arguing over whose patient should receive it. We want them all to step back and discuss this as a group.”
To meet Duke’s criteria, patients must closely match the profile of participants in the drug studies; they must have cancer that has spread beyond the prostate but they don’t yet show severe symptoms, he said. They should be expected to live at least six months in order to receive the treatment’s full benefits. Finally, they must be able to pay the $93,000 price tag for the medicine.
Health insurers Aetna Inc. and Humana Inc. have said they will cover Provenge, and other plans are expected to follow, according to Dendreon. Patients may need to seek outside assistance to cover the 20 percent co-pay some plans charge.
The rationing strategies at Duke and MD Anderson differ in some aspects. After other qualifications are considered, Duke will give the medicine to patients in the order they sign up, while MD Anderson will shift to a random lottery system. MD Anderson gives priority to patients who previously enrolled in clinical trials, while Duke does not.
“We think it’s better if the company stays out of deciding which patient gets it,” Dendreon’s Bishop said. “We discussed this with patient advocates and clinicians that are expert in the field, and the overwhelming advice we got was to let doctors decide, using their clinical judgment.”
Dendreon initially applied for approval of Provenge in 2007, and was denied based on a 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. It has since tested the vaccine in a 512-patient pivotal study.
Dendreon, with a market value of about $5 billion and no other marketed products, decided to make Provenge on its own instead of partnering with a larger drug company. Regulators must approve each new facility, and the process would take a similar amount of time for a larger company if Dendreon decided to license production, Bishop said.
“We know more about this product that anyone,” Bishop said. “We realized that much of the challenge was in an area that we had strong expertise. If you think about the commercial infrastructure that a product like Provenge requires, it’s actually very manageable for a company our size.”
Once Dendreon has proven itself in the U.S., the company may seek sales partners in countries overseas, Bishop said.
After a slow start, the drug may generate annual sales of $1.7 billion by 2014, said Eric Schmidt, an analyst at Cowen & Co in New York.
The shortage “is what it is,” and shouldn’t affect long-term sales, Schmidt said in a telephone interview. He estimates the company will process enough of the medicine for 1,500 new patients a month by the end of next year.
“I prefer that they go it alone,” Schmidt said. “I think the drug will sell itself on its own merits.”