Despite the promising future and positive outcomes attributable to Provenge, the first immunotherapy for prostate cancer to gain approval from the FDA, the drug’s manufacturer, Dendreon, is facing serious cutbacks after a poor economic forecast sent the company’s stock crashing.
On August 4, Dendreon’s stock dropped 67.4%, from $35.86 a share to $11.69 a share, after financial analysts determined that the company would have trouble selling Provenge. The drug’s projected cost was $93,000 for 3 doses, but the company believed the price would drop with more financial backers and increased production over time.
While Provenge, a prostate cancer vaccine, has been shown to extend the life of patients, many physicians hesitated to prescribe the expensive drug in light of the complex and lengthy delays in the current reimbursement process, which has caused financial problems for many individual practices. Dendreon estimates that only about 25% of eligible prescribing physicians were aware that Medicare had decided to cover the drug for its on-label use of treating prostate cancer.
The company was expecting increased patient demand and a heavier flow of physicians prescribing the drug, leading to initial projections for annual revenue for Provenge estimated at $350 to $450 million. Because the demand did not surge as expected, Dendreon is projecting only modest growth. In fact, the company’s second quarter revenue for 2011 was $49.6 million.
“We anticipate the positive National Coverage Determination (NCD) and Q-code will have a significant impact on increased physician adoption,” said Mitchell H. Gold, MD, president and CEO of Dendreon, in a statement. “However, we believe this will take time, and for the remainder of 2011 the launch trajectory will reflect a more gradual adoption of Provenge as physicians gain confidence in this positive reimbursement landscape.”