Dendreon's (Nasdaq: DNDN) drug isn't as simple as a pill in a bottle, and neither is telling the story about how it performs in the marketplace. But the Seattle-based biotech company offered a lot of information in a conference call today about how its groundbreaking prostate cancer drug is performing in its first few months on the market, which goes way beyond a simple sales number.

The sales, as we reported earlier today, fell short of Wall Street's expectations. But there is important context to note, here. The drug won FDA clearance for sale in the U.S. market on April 29 and began generating sales in the first week of May. The company recorded $340,000 in sales that month, as it spent most of its time training the 50 U.S. clinical sites that are equipped to prescribe this first-of-its-kind immune-boosting drug for prostate cancer. The company generated $2.45 million in sales in June, and then doubled that performance in the month of July, with $5.2 million in sales.

Dendreon repeated on today's conference call that because of the supply constraints at its lone U.S. factory in New Jersey, it will only be able to serve about 2,000 patients in Provenge's first 12 months on the market. Already, doctors have prescribed the product to 500 patients, and a number of the U.S. clinical sites have waiting lists for patients who want to get the drug. For a drug that costs $93,000 for a full 3-dose, one-month course of therapy, that represents as much as $46 million worth of current and potential sales in the queue.

Chief operating officer Hans Bishop, who oversees the launch, pointed out in the conference call and in a follow-up interview that three things were most important to Dendreon in the early days of the launch. It was vital for the company to win over the hearts and minds of prescribing physicians -- and it took a couple of major steps in that direction by getting the National Comprehensive Cancer Network to incorporate Provenge into its influential prescribing guidelines for cancer physicians, and by getting the pivotal clinical trial data published in the New England Journal of Medicine

The second important item on Bishop's list was winning reimbursement from insurers -- which was positive on the local level, where it counts in the early going, but not so positive when some national uncertainty was injected into the process. And the third key was staying on schedule with the expansion of the company's factory in New Jersey. The plant right now operates at one-fourth of its total capacity, and the remainder is on track to be ready in "early 2011," Bishop says.

Taking those three factors together, Dendreon still says it can hit its stated goal of treating 2,000 patients in Provenge's first 12 months. While the second-quarter sales of $2.8 million missed the $4.4 million average estimate of Wall Street analysts, Dendreon insists that most of the expected revenue, and the bulk of the expected first-year patients, should come in early 2011 when it has a bigger factory to work with.

"We are very encouraged," Bishop says.

Here are the highlights from the call, and my follow-up conversation with Bishop.

Dendreon stock tanked in early July after the Centers for Medicare and Medicaid Services said it was opening up a National Coverage Analysis, a yearlong process in which it will determine whether to cover a drug or not. While this announcement took Dendreon by surprise, Bishop says, it doesn't really have an effect on near-term reimbursement of the drug. What matters in the early going is whether regional Medicare subcontractors agree to reimburse physicians for the product -- at least until the supervising agency in Washington, DC, tells them to stop. So far, nine of the 15 regional subcontractors have published guidelines saying they will reimburse doctors who prescribe the product, and five more have given verbal or emailed assurance to doctors in their regions that published guidelines are forthcoming. Only one region -- serving Louisiana, Arkansas, and Mississippi -- has said it won't reimburse doctors who prescribe the product. Dendreon "doesn't have a deep understanding" of why that region's Medicare subcontractor chose not to reimburse for the product, Bishop said on the conference call.

While Medicare is of vital importance for a prostate cancer drug -- because most men with the disease are 65 or older -- Dendreon has also made efforts to get coverage from private insurers. Aetna, Humana, and Kaiser Permanente are a few of the major private insurers who have agreed to reimburse doctors who prescribe the therapy.

Financially, there were no major changes. Dendreon repeated that it expects to serve 2,000 patients in the first 12 months of experience on the market, and that it is planning to spend $460 million of its cash reserves on the launch of Provenge, according to chief financial officer Greg Schiffman. Much of that spending -- $200 million -- is going toward capital expenditures on Dendreon's two other manufacturing plants, in the Los Angeles area and near Atlanta, GA.

Dendreon offered a little context on its interactions with Medicare since the agency said it plans to evaluate coverage of Provenge. The company said it is important that the Medicare agency be able to clearly define exactly which sorts of patients should be covered, and which shouldn't, in accordance with the FDA-approved prescribing information. While Dendreon was surprised that Medicare authorities sought to question reimbursement for Provenge, it is having "regular dialogue" with the agency and, Bishop added, "we're pleased with progress we are making." The company, of course, is arguing that it deserves to get reimbursed because its drug extends lives a median time of 4 months with minimal side effects -- and it is definitely pointing at the FDA approval, the NCCN's endorsement in its prescribing guidelines, and the new publication in the New England Journal of Medicine to buttress its argument.

Much of the work in the month of May went into training the 50 U.S. sites on how to carry out the commercial process for prescribing Provenge, Bishop says. While the sites were familiar with the medical process, because they all participated in the Provenge clinical trials, a different set of people at each site needed to get trained to manage the insurance reimbursement process that isn't a part of clinical trials, Bishop says. That training period explains why sales were low in that initial month, he says.

This didn't come up on the conference call, but I asked Bishop about personnel, and how Dendreon is managing growth in that department. The company has grown from about 200 employees in the spring of 2009 to about 800 today. The full team of 70 sales reps and medical science liaisons are on the payroll and trained, and Bishop says he has personally met them all. Such rapid growth has been a challenge to manage, but Bishop says he believes the company's patient-first culture has remained intact.

"I'm confident that people are coming to work here because they want to help patients," Bishop says.

Still, while those sales people are getting off to a good start, harder work lies ahead. That's because Dendreon is essentially selling product through a network of 50 sites with doctors that already believed in the product enough to participate in clinical trials. As Dendreon grows, it will need to win over doctors who are much less familiar with the product, and train them on the process.

CEO Mitch Gold made a passing reference to the product's potential outside the U.S., but there wasn't much to say there. The company is having conversations with European regulatory authorities about next steps and isn't characterizing what those might be. Schiffman, Dendreon's finance chief, noted that if the company were in position to do a commercial rollout in Europe, it would need to build another factory there, and raise more capital to do that.


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Luke Timmerman is the National Biotech Editor of Xconomy, and the Editor of Xconomy Seattle. You can email him at, or follow him at

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