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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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