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Dendreon (Nasdaq: DNDN ) is headed overseas.
The good news is that the company won't have to run additional clinical trials to get its prostate cancer drug, Provenge, approved in Europe. The bad news is that it's going to be a long boat ride.
The biggest obstacle for gaining EU approval? Provenge is an individualized treatment that requires shipping the patient's cells back and forth between the doctor's office and the manufacturing plant, where the cells are programmed to stimulate the immune system to attack the prostate cancer. The U.S. manufacturing plants are too far away from Europe, so Dendreon needs a European manufacturing facility.
Dendreon plans to build one on its own, but to get the ball rolling, the company is hiring a contract manufacturer to produce Provenge. Once the facility is set up, Dendreon can apply to the European Medicines Agency late this year or early next year, which would put an approval in the EU sometime in the first half of 2013.
And then, of course, there's the question of whether anyone will buy it. Provenge is a costly medicine -- $93,000 for the three-course treatment -- and European countries haven't been all that open to paying the high costs we see in the U.S. Pfizer (NYSE: PFE ) , for instance, had trouble getting its oncology drug Sutent past the U.K.'s National Institute for Health and Clinical Excellence (NICE). The company eventually had to agree to pay for the first round of treatment in order to get the drug approved for reimbursement.
On the conference call, Dendreon seemed upbeat, pointing out that the low side effects of Provenge help justify the high costs. The reimbursement agencies will look at total cost of the drug plus the cost to treat any side effects in deciding whether to cover the drug. Management compared Provenge to drugs such as Roche's Avastin, GlaxoSmithKline's (NYSE: GSK ) Tykerb, and Novartis' (NYSE: NVS ) Afinitor, which have European prices that are similar to the price they fetch in the U.S.
Now that the EU strategy is set -- and years away from generating revenue -- investors can get back to obsessing over U.S. sales.
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