Provenge & Dendreon: Analysis of Authenticity

While reading about some recent clinical trials this morning, something really caught my eye. Dendreon (DNDN) has been developing a novel immunotherapy treatment for prostate cancer over the past few years, and recent data has led many to believe that FDA approval will now occur sometime in 2010. In the wake of recent events at Sequenom, which I covered in my last post, I thought a critical analysis of what's currently going down at Dendreon would be appropriate.

The Claim
First of all, Dendreon's data on the drug, which has been named Provenge, looks solid. And I don't mean SEQureDX by Sequenom solid, I mean solid. Here's the rundown on how the stuff is made and how it should work. Previous immune response based treatments using interferon and even microbe-based therapy have been fairly successful, but less specific and less potent than we would prefer that it be. Tumors, for a variety of reasons I won't cover, have a refined ability to hide their presence from an immune response. Researchers at Dendreon analyzed a range of antigen presenting cells (APC) and chose dendritic cells (DC) to work with, because of their status as potent antigen presenters and their ability to initiate anti-tumor responses in both naive and memory T-cells. They then chose prostatic acid phosphatase (PAP) as the prime target for the drug because of its presence in 95% of prostatic carcinomas and lack of expression in other tissues. Provenge, technically named APC8015 or Sipuleucel-T, is created by first fusing human PAP by its carboxy terminus to the amino terminus of human GM-CSF. Granulocyte Macrophage Colony Stimulating Factor (GM-CSF) is a potent APC stimulating factor, specifically targeting DC's. This fusion protein, called PA2024, is then used to treat CD54-positive white cells isolated from an individual patient via leukapheresis. Reintroduction of these primed APC's through Dendreon's nifty "proprietary antigen delivery cassettes" is then performed over three vaccinations. In recent studies, a combination therapy of APC8015 and bevacizumab has been tested. Bevacizumab is a vascular epithelial growth factor (VEGF) inhibitor, and VEGF, accordingly, is an inhibitor of DC's. Phase III trial data revealed today showed Sipuleucel-T extended median survival 4.1 months and three year survival rates by 38%. While it is no cure, it is a groundbreaking discovery that could soon be a practical solution to consider before having to settle for the dangerous, unpleasant, and cytotoxic option of chemotherapy.

The Controversy
Late last Friday eight members of high level management at Dendreon dumped 500,000 shares while prices were soaring into their mid twenties. This includes President and CEO Mitchell Gold, who unloaded 250,000 of his own. On one hand, this move isn't all that surprising. Most of the shares were options or company stock grants which had a listed purchase price of anywhere between $2.00 and $12.00, with most being near $5. This was a prime opportunity for these insiders to cash in on these securities and become instant millionaires. Doesn't sound like a bad deal to me! On the other hand, FDA approval seems to draw closer and more assured each day. If and when this treatment is approved, it will become the first therapeutic cancer vaccine ever. Not only that, but APC8015 also begins our quest for personalized medicine which I believe is the next breakthrough in human medicine. This said, analysts are calling DNDN undervalued at the moment, projecting its worth in the $30 range and some suggesting a target high upwards of $40. If I were an insider at Dendreon, I'm not sure I would have cashed in this early. Call me greedy, but with a blockbuster potential treatment about to come out of the pipeline, I think I'd hold on for a bit. I'm desperately hoping that they don't something we don't know. I don't want another scar like Sequenom's on this promising industry.