Dendreon Appoints Savient’s John Johnson as Chief Executive
Dendreon Corp. (DNDN) named Savient Pharmaceuticals Inc.’s John H. Johnson chief executive officer and president, putting him in charge of boosting the sales of the company’s only product, the prostate-cancer drug Provenge.
Johnson, a member of Dendreon’s board since August, succeeds Mitchell H. Gold, the Seattle-based drugmaker said in a statement today. Johnson resigned as Savient CEO and will be replaced on an interim basis by David Y. Norton, the East Brunswick, New Jersey-based company said in a separate statement. Dendreon shares rose 4.9 percent.
Johnson will take over as the company works to get more physicians to prescribe Provenge, which was approved in April 2010 as the first therapy in the U.S. that trains the body’s immune system to attack cancer cells as if they were a virus. The treatment, at a cost of $93,000, was cleared for patients with advanced cases of the disease after the company’s three-year effort to persuade the Food and Drug Administration to back the medicine.
“We view this transition as a positive sign for a troubled company that faces problems with product adoption, high production and development costs and mounting pressures from emerging competitors,” Geoff Porges, an analyst with Sanford C. Bernstein & Co., wrote in a research note today.
Dendreon gained 67 cents to $14.25 as of the 4 p.m. close of trading in New York. The shares are down 59 percent in the last 12 months. Savient sank 11 percent to $2.26, the biggest drop since August, and has lost 75 percent in the last year.
Because Provenge is the first of its kind, doctors need time to get comfortable prescribing the treatment and to understand the reimbursement system, Gold said in an interview last month. Provenge generated $228 million in sales last year.
Expanding the medicine’s use among U.S. physicians and lowering the cost of goods sold are the top priorities, incoming CEO Johnson said today on a conference call with analysts and investors.
“We need to be more efficient with how we manufacture Provenge,” Johnson said. Dendreon is preparing to start selling the medicine in Europe, and will open an office on the U.S. East Coast to augment its team in Seattle, he said.
Gold will serve as executive chairman until June 30, Dendreon said. At that point he will become a director and Johnson will take over as chairman.
Johnson was CEO of ImClone Systems Inc. from August 2007 to November 2009, during which time the company was sold to Indianapolis drugmaker Eli Lilly & Co. (LLY) for $6.5 billion. Johnson ran Lilly’s cancer business until January 2011, when he joined Savient, which had tried, unsuccessfully, to sell itself in 2010.
“John Johnson has history of M&A -- he successfully sold ImClone to Eli Lilly and attempted to sell Savient,” Robyn Karnauskas, an analyst with Deutsche Bank Securities, wrote in a note to clients today. “M&A history of new CEO and a fresh perspective might benefit the company’s near-term strategy.”
Savient’s ability to boost slow sales of gout drug Krystexxa may be impeded by the management change, said Eric Schmidt, an analyst with Cowen & Co. He lowered his rating on the stock to “neutral” from “outperform.”
“Though we continue to view Krystexxa as a valuable asset, turmoil in the company’s top ranks has hampered its launch, and a further managerial change introduces a new element of risk,” Schmidt wrote in a research note. “Savient’s financial position necessitates a significant gain in sales traction within six months, and we are now less optimistic that this can be achieved.”
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