Dendreon's (NASDAQ:DNDN) sales of its prostate cancer treatment, Provenge, haven't exactly lived up to expectations. The biotech is doing its best to raise U.S. sales and keep costs in check, but one way to get an instant boost in revenue is to start selling the treatment in Europe.
But first it has to be approved there. And because the drug has a complex manufacturing process, before that, Dendreon has to get its manufacturing plant approved.
The biotech announced on Thursday that it's making progress there; the first patient has been dosed in a trial of European men. This is an open-label study, meaning the patients know they're receiving Provenge, so we won't learn anything new about efficacy of Provenge.
The trial is simply to show that it can manufacture the individualized treatment. Dendreon has previously set up three manufacturing plants, one that it had to close, so this is a fairly low-risk step toward selling Provenge in Europe.
Once Provenge is approved in Europe, it'll likely run into the same challenges it's seeing in the U.S. Johnson & Johnson's (NYSE:JNJ) Zytiga and Sanofi's (NYSE:SNY) Jevtana are already on the market to treat prostate cancer in Europe. And Medivation (NASDAQ:MDVN) has applied for approval of Xtandi there. In addition to competition, Provenge's other issue -- cost -- will still be a problem in Europe, where centralized health care focuses on the cost-benefit ratio for drugs.
Dendreon's best solution might be to license out the European rights to Provenge for some upfront cash and a royalty on sales. The biotech won't make as much -- the pharma partner has to take a cut -- but it might not give up that much since a big pharma partner with a presence in the region would likely be able to keep expenses lower than Dendreon can. And in exchange for giving up some profits, Dendreon would alleviate risk since it won't have to shell out cash until the region becomes profitable.
Fool contributor Brian Orelli has no positions in the stocks mentioned above. The Motley Fool owns shares of Dendreon and Johnson & Johnson. Motley Fool newsletter services recommend Johnson & Johnson. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.