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Is Dendreon's Window Officially Closing?

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You know a company isn't in a good place when investors enthusiastically greet an event that could cause its demise. That's exactly what happened to Dendreon (Nasdaq: DNDN  ) on Friday.

The biotech has been a house of pain for investors over the past year, yet shares rose nearly 3% when Johnson & Johnson (NYSE: JNJ  ) filed with the FDA to move Zytiga intp direct competition with Provenge. With approval likely, does Zytiga's expanded indication mean Dendreon's window has started to close?

It's always better to have a monopoly on treatment, but even if the window has closed a little, there remains a large enough opening for Provenge to be a success. Sure, Zytiga could provide an alternative to doctors looking to avoid Provenge's high costs and unfamiliarity. However, the real binary event for Dendreon is how Provenge performs with Zytiga, not against it. The biotech is currently running a trial testing the two drugs in concert, and new CEO John Johnson has clearly hitched his wagon to this thesis. In a recent shareholder meeting, he acknowledged that the company had been "overly optimistic" in the past, unsurprisingly reiterated his belief in Provenge's potential, and stated that "physicians will layer on therapies." That statement potentially also holds true for Medivation's (Nasdaq: MDVN  ) enzalutamide, which has passed a phase 3 trial; the FDA is considering its New Drug Application and priority review.

Provenge's advantage as a combo drug is its unique mechanism. The future of prostate cancer treatment could be a cocktail approach similar to what we see in HIV and hepatitis C. Next-generation drugs by Bristol-Myers Squibb and Gilead (Nasdaq: GILD  ) work more effectively together than separate.

If improved efficacy is the ultimate outcome, then Dendreon should welcome newcomers to the space, including Exelixis' (Nasdaq: EXEL  ) cabozantinib, which is currently in phase 3 trials treating patients who have already failed Zytiga and enzalutamide.

An expanded indication for Zytiga won't determine the fate of Provenge. The real binary event spelling out the future of the biotech are results from the phase 2 trial testing those two drugs concurrently.

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David Williamson owns shares of Johnson & Johnson and Dendreon, but he holds no other position in any company mentioned. Check out his holdings and a short bio. The Motley Fool owns shares of Dendreon, Exelixis, and Johnson & Johnson. Motley Fool newsletter services have recommended buying shares of Johnson & Johnson, Gilead Sciences, Exelixis, and Vertex Pharmaceuticals and creating a diagonal call position in Johnson & Johnson. The Motley Fool has a disclosure policy. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.

Read/Post Comments (4) | Recommend This Article (8)

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Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On June 17, 2012, at 1:39 PM, erniewerner wrote:

    Concurrent Versus Sequential Treatment With Sipuleucel-T and Abiraterone in Men With Metastatic Castrate Resistant Prostate Cancer (mCRPC)

    At n=60 that trial may yield some insight into immune response but unlikely to answer any questions about efficacy.

    DNDN's best hope is that pre-chemo abiraterone is displaced by MDV 3100 which does not require concurrent prednisone.

  • Report this Comment On June 18, 2012, at 9:22 AM, marketdorf wrote:

    Again, ignoring the fact that Zytiga is chemical castration. I am a prostate cancer survivor. I can tell you, without a doubt, that I would avoid Zytiga at all costs if I had the choice between that and Dendreon - and believe me, no doctor is going to convince me to go the cheaper route when that route represents the end of my manhood. Are you people really this dense? I find it hard to believe that you yourself would choose castration over immunotherapy. Do you truly believe that the patient has no say in their treatment, or is too stupid to question their doctor and insist on the least harmful strategy when dealing with their illness? REALLY?

  • Report this Comment On June 18, 2012, at 10:39 AM, krapbuster wrote:

    Provenge is the better treatment period. Zytiga data did not extend survival and J&J is hiding this info. Overall costs Provenge may prove to be the more cost effective 2 years out as Zytiga costs $66K per year ($132K over 2 years) where Provenge is one time cost of $93K. Summer Street just last week raised DNDN guidance to $18.

    We are buyers of DNDN at current pps.

  • Report this Comment On June 19, 2012, at 10:31 AM, erniewerner wrote:

    The currently approved indications for both Zytiga and Provenge are in Castrate resistant populations. These patients are already physically or chemically castrate with progressing disease. Opting for Provenge over Zytiga is not a way to avoid androgen deprivation therapy.

    In 2008 DNDN proposed a clinical trial in an ADT naive population, but later shelved it and has not revisited that option to date.

    If a patient were so inclined and could get a physician to prescribe the treatment, it would be possible to have the Provenge treatment prior to ADT, but as it would be an off label use, there would be the issue of reimbursement for a treatment with a $93k price tag.

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