Fluent Essays

Due on Aug 29th, 10 PM in US Central Time. Instruction and martial please check the attachment below. Dendreon Questions Required: Prepare a memo addressing the questions below. Please note: Your memo should be a stand-alone document, so that the reader can understand which issue you are addressing without referring back to this assignment. While you do not have to address each question in order, the questions are ordered so that it should make sense to answer them in order, and doing so will make it much easier to grade. The memo should be in Times New Roman, 12-point font with 1” margins on each side (double-spaced). This is a professional writing assignment, so please proof your report before submitting it. Clearly state your information sources 1. How informative are GAAP earnings about Dendreon’s “success?” What measure(s) of success would you find more informative (be specific – what measures would you use if you were considering investing in a biotech firm)? 2. At the end of fiscal 2007, Dendreon’s book value (assets less liabilities) was $40,377,000. At the same time Dendreon’s market value (price per share times the number of outstanding shares) was $517,866,066. What do you think accounts for the difference between these two numbers? 3. Do you think it makes sense to expense all of Dendreon’s R&D? If not, what criteria would you use to determine how much R&D expense to capitalize as an asset? How would your answer affect the income statement and balance sheet (in general…not in dollar terms)? Instruction: 1. Research relevant materials : · Dendreon case (A) · Dendreon (B) · Dendreon (C) 2. Prepare a memo addressing the questions. 3. Times New Roman, 12-point font with 1” margins on each side, double- spaced. 4. Clearly state your information sources. Due on Aug 29th 10PM in US central time The FDA Approval Marathon and Dendreon Corporation (A) * The Biotechnology Industry An industry built from a single cell As the legend goes, the biotechnology industry (biotech for short) was launched in the 1970s over a lunch of hot pastrami and corned beef sandwiches. 1 Stanley Cohen of Stanford University and Herbert Boyer of the University of California, San Francisco met in 1972 while presenting papers in Hawaii at a conference on bacterial plasmids. After the presentations, the two colleagues stopped at a local deli to get a bite to eat and engage in light gossip about “using plasmids as a vector for cloning individual DNA segments”. Cohen and Boyer’s chitchat was the birth of biotechnology, an industry that now boasts $60 billion in revenues annually. The biotech industry looks at the cell as “a miniature factory, containing genetic material that acts as a blueprint for its structure and function.” 2 Biotechnologists isolate, copy and rearrange this genetic blueprint. The result is manipulation of cellular processes into therapies that fight disease. Plants are green, industrials are white, & red is the sector that makes you feel alright Although originating from a single cell, biotech has evolved into a colorful world of three distinct sectors: green, white and red. Green biotech uses plant organisms and cells for the production of food, biomaterials and energy. 3 White biotech uses living cells and enzymes to synthesize products requiring less energy and creating less waste. 4 Finally, red biotech uses cells to directly aid the body in fighting a disease or illness. 5 Most U.S. biotech firms are pursuing markets in the human health care sector (red biotech). These companies discover methods to prevent, diagnose, treat, and cure the life threatening conditions that currently do not have treatments. About 40 percent of red biotech drugs are for the treatment of cancer, a leading cause of death in the U. S. and around the world. a The cost of caring for U.S. cancer patients exceeds $104 billion per year. In the battle between our bodies and cancer, the best defense is a good offense. Unfortunately, mankind has yet to make an offensive play against cancer. Currently our only game plan is to feverishly defend ourselves with early detection, surgery, and chemotherapy after the body has been hit with the disease. * Created by Frank Hodge and Roya Labib from publicly available data. Revised by Frank Hodge, February 2009. a Cancer develops when cells in the body begin to grow out of control. Normal cells grow, divide and die. Instead of dying, cancer cells continue to grow and form new abnormal cells. Cancer cells often travel to other parts of the body where they grow and replace normal tissue. Dendreon A Page 2 of 8 Red biotech needs the green that does not grow on trees Most red biotech companies are in early development stages, cultivating their first products, and depend on investor capital for survival. A biologic is the substance most often used to prevent and detect cancer, and is made from a living organism. The cost to develop a biologic in 2006 was estimated to be $1.2 billion. 6 Understandably, the key to biotech growth and success depends on the ability to secure needed capital. The industry’s growth phase explains why biotech is one of the most research-intensive and expensive industries in the world. The outflows to research and development (R&D) are staggering – the U.S. biotech industry spent $55.2 billion on R&D in 2006 alone. 7 So how does a firm justify such exorbitant R&D? With quick turnaround and manufacturing of product? Think again. Unlike other manufacturing industries, biotech takes an average of twelve years to bring a new product to the market. Young biotech companies simply cannot rely on product revenues to meet their financial needs. A firm’s burn rate is the rate at which capital is expended before generating positive cash flow from operations. Presently, the prohibitively high costs and time commitment required to push a new product through the exhausting regulatory process has produced an average burn rate for biotech of well over $100 million dollars a year. High risk? Absolutely. But with high risk comes the potential for high return. Biotech has created more than 400 biotech drug products, therapies and vaccines targeting more than 200 diseases, including cancers, Alzheimer's, heart disease, diabetes, multiple sclerosis, AIDS and arthritis. 8 Biotech, with its humble origins, has evolved into a prime example of the financial complexity of risk versus return. The incredible outlays for R&D are amplified by the scarcity of earnings and/or losses experienced for years, even after launching a new product. The success or failure of a biotech firm is perilous to predict because the costs and effort required to produce has forced most companies to focus on a single product. Ever hear the adage, “Do not put all of your eggs in one basket?” The vast complications and risks of biotech remind us that it is still a relatively infantile industry. Though it may be producing life-changing discoveries at an exponential rate, biotech requires a great deal of parenting, or should I say regulation. Accordingly, the regulatory process plays a defining role in the success or failure of a biotech product, and the fate of its company. The Food and Drug Administration Regulatory Process The biotech industry is regulated by the U.S. Food and Drug Administration (FDA), the Environmental Protection Agency (EPA) and the Department of Agriculture (USDA). Specifically, the Center for Drug Evaluation and Research (CDER) is the division of the FDA that reviews and approves new drugs. 9 The current objective of CDER is to approve products that are both safe and effective. This objective is defined by the Kefauver Harris Amendment (Drug Efficacy Amendment) of 1962 passed in response to the Thalidomide tragedy in Europe b . The bill required drug manufacturers to provide proof of the safety and efficacy of their drugs before approval. Establishing the effectiveness of a drug is more demanding, expensive, and arduous than simply proving a drug is safe. The efficacy of a drug is judged relative to alternative therapies available and therefore is constantly changing. The Kefauver Harris Amendment strengthened the FDA’s control of approval and regulation of drugs. Most importantly, the Amendment deemed the approval process a b “In 1957, a West German pharmaceutical manufacturer introduced a new sedative, thalidomide, which alleviated the symptoms of morning sickness in women during the first trimester of pregnancy. In 1962, by which time the drug had been sold in forty-six countries, it became clear that thalidomide damaged the fetus, causing stillbirth or, most prevalently, phocomelia (Greek for “seal limb”). From 1956 to 1962, approximately 10,000 babies were found to have truncated limbs that resembled flippers. By virtue of photojournalism, the horror and sadness were shared throughout the world.” (‘History of Regulation FDAReview.org) Dendreon A Page 3 of 8 bureaucratic decision. In other words, since its birth, biotech has had a very strict parent and a firm set of rules. The average length of time for an experimental drug to travel from lab to consumer is twelve years. If this figure is not daunting enough, consider the odds of a drug actually reaching a consumer. Only one in one- thousand compounds that enter preclinical testing make it to human testing, and only 20% of drugs that enter human testing are approved. Remember the biotech burn rate is close to $100 million cash a year. Now consider that figure with the 1 /5000 chance of approval, and the fact that only 30% of approved drugs produce revenues that match or exceed the twelve years of capital investment. 10 Ready to invest? Keep in mind…with high risk comes the potential for high return. One product, perhaps already in the biotech pipeline, could be the cure for cancer, AIDS, or malaria. The table below outlines the three stages of the FDA approval process: Preclinical Testing Phase I Phase II Phase III FDA Phase IV Year 0 – 3.5 3.5 – 4.5 4.5 – 6.5 6.5 – 9.5 9.5 – 12 Test Population Laboratory and animal studies 20 to 80 healthy volunteers 100 to 300 patient volunteers 1000 to 3000 patient volunteers Purpose Assess safety and biological activity Determine safety and dosage Evaluate effectiveness, look for side effects Verify effectiveness, monitor adverse reactions from long- term use Review process / Approval Success Rate 5,000 compounds evaluated File IND at FDA 5 enter trials File BLA at FDA 1 approved Additional Post marketing testing required by FDA The Race to Approval Years 0 - 3.5, off & running: The first stage of the approval process involves filing an investigational new drug application (IND) with the FDA. After three and a half years of laboratory animal testing, a company must demonstrate to the FDA that their results warrant human testing. A local institutional review board (IRB), composed of professionals from local hospitals and research institutions then delineates the parameters of the clinical research phase. The IRB approves the subject pool, scheduling, protocols, dosages, and the objective and length of the trial. The key issue in this stage is that the drug is reasonably safe for human testing. Years 3.5 – 9.5, the race is a marathon, not a sprint: After approval for clinical trials, Phase I of human testing typically involves testing the drug on twenty to eighty healthy people. The goal of this stage is to determine the drug’s side effects and how healthy bodies react to the drug. If there is no sign of drug toxicity (i.e. the drug is safe), Phase I of Stage II is complete. Recall that the Kefauver Harris Amendment stated the goal of the FDA is to approve drugs that are both safe and effective. Since Phase I alleviated questions of safety, the objective of Phase II is to demonstrate the efficacy of the drug. Phase II expands participation and ranges from thirty to three hundred people. STAGE I STAGE III STAGE II Dendreon A Page 4 of 8 While the population of the first phase is comprised of healthy volunteers, Phase II trials involve patients with the specific disease the drug is to treat. This phase is controlled, meaning some patients receive the drug and others receive a placebo. Finally, Phase III testing ensues if Phase II results are successful in demonstrating the drug’s effectiveness. The FDA and the company meet to agree upon the size and scale of Phase III testing, which usually involves several hundred to three thousand people. The purpose of Phase III testing is to gather as much information as possible about the safety, efficacy, and side-effects of the drug. Years 9.5 – 12, is that the finish line? After completing the IND and necessary clinical trials, a biotech company then files a Biologics License Application (BLA) with the FDA. The BLA is the formal step requesting approval of the drug to be marketed to U.S. consumers. Most BLAs include up to 100,000 pages of information on research findings and analysis of trial results. 11 Upon receiving an application, the FDA has 60 days to review it for completeness and to decide whether to accept the file. Once accepted, approximately 90% of applications are assigned a FDA review team within ten months. Evaluation for approval, however, can take up to two and a half years. Marathons ache…but winning has a way of alleviating sore muscles The FDA review team that assesses the BLA consists of medical doctors, statisticians, and pharmacologists. The review team pours over the results of clinical trials exposing weaknesses in the design of the testing procedures, and assessing if the results support the conclusion that the drug is safe and effective. In certain instances, the FDA will entreat help from an advisory committee comprised of outside experts to help make decisions on the BLA. FDA advisory committee members are nominated by professional societies, industry groups, and patient advocacy groups, or by the individual him/herself. All committee member candidates are required to disclose information that would result in a potential conflict of interest. Mark Goldberger, M.D., director of a CDER drug review office, states that advisory committees are used if a drug “has significant questions, if it’s the first in its class, or the first for a given indication.” The FDA follows the recommendations of the advisory committee in 72% of cases. 12 There are three outcomes to the FDA approval process – ‘approved’, ‘approvable’, or ‘not approvable’. For two of these outcomes the marathon FDA approval process is over. If ‘approved’ a company would end their twelve-year marathon with a stroll to the finish line; an FDA pronouncement that the drug meets the safety and efficacy criterion and can be sold in the U.S. Drugs that the FDA decides do not meet the safety and/or efficacy criterion are labeled ‘not approvable.’ If the drug is deemed ‘approvable’ it means that the FDA feels that the BLA does not currently meet their standards and that more information is required to make a final decision. John Jenkins, M.D., director of CDER’s Office of New Drugs explains that there are “often a combination of problems that prevent approval.” These problems can range from marketing trouble, manufacturing concerns, or simply the need for additional research before a decision can be made. At any rate, the stamp of ‘approvable’ means that the marathon continues… Once a company is notified that its drug has been designated “approvable”, CDER offers to facilitate a meeting between the FDA and the company to discuss the FDA’s concerns and provide an opportunity for the company to submit additional research and/or conduct new research. An approvable letter is frustrating and disappointing, to say the least. Twelve years of research and capital, reduced to a single document that often leaves a young biotech firm in limbo between survival and death. After receiving such a letter, employees, investors, and people that might benefit from the drug are left wondering why the FDA cannot simply make a decision. Politics play a role. Dendreon A Page 5 of 8 The Food and Drug Administration’s past and current legislation After the Thalidomide tragedy in Europe, the overarching stance of the FDA was to avoid such a tragedy happening on U.S. soil. Henry Miller worked in the FDA from 1979 to 1994 and knows the FDA approval process well. Miller states that, “In the early 1980s, when I headed the team at the FDA that was reviewing the [BLA] for recombinant human insulin…we were ready to recommend approval a mere four months after the application was submitted (at a time when the average time for [BLA] review was more than two and a half years). With quintessential bureaucratic reasoning, my supervisor refused to sign off on the approval – even though he agreed that the data provided compelling evidence of the drug's safety and effectiveness. “If anything goes wrong,” he argued, “think how bad it will look that we approved the drug so quickly.” To help change this mindset, the FDA proudly publicized a set of proposals to “reinvent” drug regulation in April 1995. The objective of these proposals was to accomplish the FDA’s goal of reducing product review time while maintaining high standards of safety and effectiveness. Under this new direction, the time for product approval decreased to an average of 1.6 years in 1995 from 2.3 years in the early 1990s. In October 1997, the House demonstrated support for the FDA new direction by approving the 1997 Modernization Act. Representative Mike Bilirakis, Chairman of the Commerce Health subcommittee, summarized the Act by stating, “We have given the FDA the tools it needs to alleviate the suffering of American patients…and have also removed the obstacles that delay the drug and medical-device approval process.” Not all were in favor of the FDA expediting the approval process. As the pace of approvals quickened, some began to question the agency’s ability to ensure that approved drugs were both safe and effective. It didn’t help that in late 1995, diet drugs Redux and Fenfluramine were removed from the market after they were found to cause heart valve problems. Then again in June 1996, Posicor, a medication prescribed for high blood pressure, was withdrawn after the FDA received reports of 24 deaths associated with the drug. Also in 1996, the painkiller Duract was pulled after four patients died of liver failure. Facing a loss of consumer confidence, the FDA decided to slow the pace of the marathon down (some would say to a crawl). Abigail Alliance for Better Access to Developmental Drugs v. von Eschenbach 13 Allow me to introduce you to Abigail Burroughs. Abigail is a college student who also happened to be battling head and neck cancer. With very few treatment options, Abigail’s father, Frank, sued the FDA in June 2003 to gain access to cetuximab (marketed under the name Erbitux), a drug currently undergoing clinical trials. Due to the changes in FDA policies after the backlash about the agency’s rapid approvals in the late 1990s, the drug most likely will not be available for at least a couple of years. The Abigail Alliance argument was simple. Terminally ill cancer patients, under the Due Process clause of the Constitution, have a right to experimental medications regardless of where they fall in the FDA approval process. After Phase I testing (safety testing) is complete, the suit contended that terminal cancer patients are entitled to any drug that can help them survive. Three years later, in 2006, the U.S. Court of Appeals for the District of Columbia ruled in favor of Abigail Alliance and the rights of terminally ill patients. The FDA filed for an appeal. On March 1, 2007, ten judges on the U.S. Court of Appeals heard both sides of the case. The decision is expected any day now. The Abigail Alliance case has the imminent potential to radically alter clinical cancer research. If terminally ill patients are given unregulated access to all experimental cancer drugs that have completed Phase I testing, there would be no incentive for these patients to participate in Phase II or III trials and risk getting a placebo. Without participants, biotech firms would effectively be unable to complete Phase II and III trials, and therefore unable to file for FDA approval under the current system. Dendreon A Page 6 of 8 About this marathon…why compete? As evidenced by the success rates, most drugs that enter preclinical testing (i.e. animal testing) never make it to clinical trials (i.e. human testing), much less to the point of being reviewed by the FDA. The 0.1% of drugs that do enter human trials from animal testing must endure six arduous years of clinical trials followed by an additional three years of FDA scrutiny. In stark terms, there is a less than a one- hundredth of one-percent (0.006%) chance that a biotechnology company’s drug will be approved and provide a return on the twelve years of dedicated capital investment. c So why do it? Why invest billions of dollars and a decade of work to wait for an approval letter that may never arrive? Perhaps because you are driven by the belief that your firm has discovered a drug that can grant 27,000 people a year their final wish. Dendreon is such a company. Dendreon Corporation Imagine immunity from cancer. Meet Seattle based biotechnology firm, Dendreon, which went public in June of 2000. Despite its youth, the company’s goal is unabashedly clear: to earn leadership in the biotech industry by transforming the lives of patients through the discovery of innovative therapeutics. If Dendreon’s mission seems brazen for a newborn biotech company, then you don’t know Dendreon or its CEO, Mitch Gold, M.D. Currently, medicine’s most common method for fighting cancer is chemotherapy. Chemotherapy infuses the body with toxins, a process of willfully attacking healthy cells and cancerous cells at the same time, with the hope that the cancer perishes before the body does. Dendreon believes it has a better way of fighting cancer: energize certain cells in the body so that they attack and eliminate the cancerous cells. The warrior in this battle is called a T cell. T cells are exceptional because of their ability to kill specific tumor cells. When activated to identify tumor-cell antigens, T cells can multiply and attack cells bearing those antigens, essentially killing the cancer without surgery or toxic chemicals. Our bodies are equipped with a dream team to fight cancer; Dendreon believes we just need to wake them up. Wake up! The process of energizing T cells T cells are activated by antigen presenting cells (APCs). When APCs discover antigens (cancer cells) in the body, they deliver the news to T cells. Like sharks drawn to blood, the T-cells then seek out and destroy the cancerous cells. Dendreon aims to facilitate this process by developing Active Cellular Immunotherapies (ACIs) 14 that supercharge the APCs, allowing them to run (no sprint) around looking for cancerous cells that they then report to the T-cells. Denderon uses an Antigen Delivery Cassette™ to supercharge APCs. The method energizes the body’s APCs to discover specific cancer cells more efficiently and to more quickly alert T cells. Dendreon’s current focus is to program APCs to detect prostatic acid phosphatase (PAP), the specific antigen found in 95% of prostate cancer patients. By rallying the body’s APCs to locate PAPs, Dendreon’s aims to cure prostate cancer, a disease that strikes one in six American men, and kills 27,000 men each year. c On average, five out of 5,000 drugs (0.1%) are selected for human trials. Of these five, the FDA will only approve one (1/5,000 = 0.02%). Of those approved, only 30% provide enough revenues to cover the cost of development. The 0.02% chance of approval times a 30% chance of return after approval results in a 0.006% ultimate chance of return. Dendreon A Page 7 of 8 Dendreon’s Provenge® With 220,000 new diagnoses a year, prostate cancer is the most common type of cancer found in U.S. males, and is responsible for more male deaths than any other cancer except lung cancer. Provenge and Phase III of the FDA marathon Sipuleucel-T (commercial name: Provenge®) is Dendreon lead ACI candidate. Provenge is in late stage development (Phase III) for the treatment of prostate cancer. In January 2004, Dendreon announced year 2 of its Phase III results. Unfortunately, Provenge did not appear to slow the growth of cancer in prostate cancer patients. Fortunately, patients who took Provenge showed an increased survival time 89% greater than those patients who received a placebo. After thirty months of treatment, the survival rate for Provenge-treated patients was 3.7 times higher than for patients receiving the placebo. Dr. John Corman, Director of the Virginia Mason Comprehensive Prostate Cancer Clinic and Assistant Clinical Professor of Urology at the University of Washington in Seattle said, “This is the longest survival benefit ever reported in a Phase III study in late stage prostate cancer.” CEO Mitch Gold added that, “Provenge may provide for a well-tolerated treatment option that offers patients a potential survival advantage.” In February 2005, year 3 of Phase III results were announced. Again, Provenge did not slow the growth of prostate cancer. Again, it increased survival times. The final Phase III data showed that patients who took Provenge lived on average 4.5 month longer than those who received the placebo. It seems that Dendreon has fallen upon a biotech version of a wishing well, granting patients their desire for more time with friends and family. As Dr. Eric J. Small, M.D. announced at the 2005 Multidisciplinary Prostate Cancer Symposium, “The survival benefit seen with Provenge is the largest ever reported in this patient population with any therapy…[Provenge] has the potential to provide an important new treatment option for prostate cancer patients.” Is Provenge nearing the end of the FDA marathon? In November 2005, Dendreon submitted a Biologics License Application (BLA) to the FDA to produce and sell Provenge. The drug did not achieve its original objective, which was to slow the growth of prostate cancer. So why submit a BLA with failed efficacy testing? Arguably, the goal of slowing cancer is so patients can live longer. Although Provenge was not effective in slowing the growth of cancer, it was effective in extending the lives of its patients. Dendreon, in consultations with the FDA, determined that the survival benefits and the absence of any significant safety issues justified submitting a BLA for Provenge. Recall that the FDA can take up to two and a half years to issue an opinion on a BLA. However, due to the FDA Modernization Act of 1997, a drug that demonstrates the potential for the treatment of serious or life-threatening conditions can receive Fast Track regulatory review. On November 7, 2005, the FDA granted Fast Track review to Provenge. Dendreon then requested a Priority Review designation from the FDA. Priority Review is granted to products that, if approved, would provide a significant improvement in the safety or effectiveness of the treatment, diagnosis or prevention of a life-threatening disease. On January 16, 2007, the FDA granted Provenge Priority Review. Instead of waiting the usual two and a half years for the FDA’s opinion, Dendreon needs to wait little more than six months. Making history one stride at a time If approved, Provenge would be the first commercially available active cellular immunotherapy (i.e. cancer vaccine). CEO Mitch Gold proudly stated that, “This application is the culmination of 10 years of rigorous clinical study and the dedication and involvement of hundreds of patients and physicians. The Dendreon A Page 8 of 8 survival benefit we observed in our clinical program, combined with the favorable safety profile of Provenge form the basis of our submission, and we look forward to working with the FDA to make Provenge available to the many men with advanced prostate cancer who currently have few appealing treatment options.” The FDA’s Advisory committee review of Provenge – it appears the end is in site Fast-Track status, Priority Review…could the good news get any better? On March 1, 2007, Dendreon excitedly announced that the FDA’s Office of Cellular, Tissue and Gene Therapies Advisory Committee would review the BLA for Provenge on March 29, 2007. 1 “Stanley Cohen and Herbert Boyer.” http://www.nobel-prize-winners.com/cohen/cohen.html 22 Meeting the Challenge: U.S. Industry Faces the 21 st Century. The U.S. Biotechnology Industry. Jon Paugh and Dr. John C. Lafrance. Office of Technology Policy – Technology Administration. U.S. Department of Commerce. September 1997. 3 “About Biotech.” http://www.europabio.org/ 4 “White biotechnology” EMBO reports. Giovanni Frazzetto. 2003. http://www.nature.com/ 5 “What is Biotech?”. http://www.wisegeek.com/ 6 Pharmaceutical Industry Profile, 2007. Pharmaceutical Research and Manufacturers of America (PhRMA). ©2007. 7 R&D Spending by U.S. Biopharmaceutical Companies Reaches a Record $55.2 Billion in 2006 Washington, D.C. (February 12, 2007) 8 Biotechnology Industry Facts. The Biotechnology Industry (www.BIO.org) The U.S. government gathers data concerning industries based on the product or service provided, not according to the method of manufacture. Consequently, there are no separate government data on biotech-related companies, sales, employment, trade, R&D, etc., so information of this type comes from organizations that study the industry. 9 Center for Drug Evaluation and Research (CDER) http://www.fda.gov/cder/about/default.htm 10 Pharmaceutical Industry Profile, 2007. Pharmaceutical Research and Manufacturers of America (PhRMA).©2007. 11 Pharmaceutical Industry Profile, 2007. Pharmaceutical Research and Manufacturers of America (PhRMA).©2007. 12 “FDA Does Not Use Advisory Committees Effectively in Approving New Drugs”. Public Citizen. Lancet Medical Journal. January 3, 2007. http://www.commondreams.org/news2006/0103-59.htm 13 Abigail Alliance Citizen Petition to FDA. Abigail … The FDA Approval Marathon and Dendreon Corporation (B)* FDA Advisory Committee vote: March 29, 2007 To set the stage for the meeting, it is important to note that Dendreon currently has a trial with 500 patients enrolled. However, the trial will not conclude until the end of 2010, and FDA approval would come at earliest in 2011. Waiting until the results of this study are available would result in almost 400,000 patients dying while waiting for the opportunity for Provenge. The committee started off by reminding all in attendance that the Provenge trials had “failed to meet their primary endpoint,” which was to stop the growth of prostate cancer. After the committee scrutinized each aspect of Dendreon’s trials for eight exhausting hours, it was time to vote. Is it safe? Is it effective? The first question posed was, “Does the submitted data establish that sipuleucel-T (Provenge) is reasonably safe for the intended population?” One by one all seventeen panel members voted that yes, the treatment is reasonably safe. In fact, the worst side effect noted was a flu-like fever that lasted no longer than two days. The second question asked was, “Does the submitted data establish the efficacy of sipuleucel-T in the intended population?” This question was harder to answer as evidenced by the difficulty the first three committee members had in submitting their vote, which eventually became three no’s. There simply hadn’t been enough trials to statistically support that the efficacy of the treatment was unequivocally established. At this point, the chairman of the committee intervened. She revised the efficacy question, stating that it was not formatted according to FDA regulations. The new question posed was, “Does the submitted data provide sufficient evidence of efficacy?” Immediately, the first three panelists reversed their votes – yes, they stated there is sufficient evidence of efficacy, after all, Provenge was effective in extending the lives of cancer patients. The final vote for the drugs efficacy was 13-4 in favor of Provenge approval. At this point prostate cancer patients who had come to testify in favor of approval began to cry. Families of patients and Dendreon executives embraced as they noted FDA Advisory Committee approval as the last hurdle before FDA approval and commercial release of Provenge. It was a momentous day in biotech history; it was the first time that a drug with relatively small trials and “failed” results was recommended for approval. * Created by Frank Hodge and Roya Labib from publicly available data. Revised by Frank Hodge, February 2009. Reactions to the vote – fans and foes of Dendreon Enthusiastic admirers The world took note of Dendreon’s good news. The firm did not sell any products in 2006 and posted a net loss of $91.6 million, up from a loss of $81.5 million the year before. Yet news reports were littered with headlines such as, “Dendreon shares rocket on FDA panel support”, “Cancer vaccine stocks soar on Dendreon panel vote”, and “Dendreon shares triple on prostate drug.” It appeared that Provenge had not only finished the marathon, but had set a course record. Eager adversaries Dr. Howard Scher and Dr. Maha Hussain were two of the four panel members who voted against the efficacy of Provenge. They felt so strongly about their objections that they took the uncommon step of writing letters to the FDA urging that Provenge not be approved until further data has been gathered. The doctors’ letters were leaked to The Cancer Letter, a publisher of independent newsletters in oncology. Once available to the public, the letters created a stir and added uncertainty to whether the FDA would follow the committee’s advice and approve Provenge. Dr. Scher fought vehemently against Provenge in his letter stating, “There are simply too many alternative explanations for the observed survival difference beyond treatment with Sipuleucel-T.” This conclusion, he believes, “mandates deferring any decision on whether an approval should be granted until the results of the ongoing 500 patient phase 3 trial that is powered on a primary endpoint of survival, is accrued and analyzed”. Dr. Scher ends his letter with a warning to the FDA that approval of Provenge will “open the door to the premature approval of drugs based on inconclusive data.” Turbulent conditions for Dendreon leading up to the finish line Patients and investors alike contended that Dr. Scher’s and Dr. Hussain’s votes and letters were part of a conspiracy motivated by their conflict of interest involvement with Novacea. Dendreon is Novecea’s principal competitor in the race to find the first viable prostate cancer treatment. If Provenge is approved, Dendreon would be the first to market. Dr. Scher and Dr. Hussain both provide consulting services to Novacea. Adding fuel to the flame, on May 4th, just days before the FDA’s decision on the fate of Provenge, The Cancer Letter revealed that Thomas Fleming, a biostatistician professor at the University of Washington, had written to the FDA expressing his hesitations about approval of Provenge. Fleming had declined to serve on the FDA approval committee that voted on March 29th. In his opinion, without randomized controlled trials, the data on survival might be a fluke. Fleming affirmed Dr. Scher’s complaints and went on to make the bold statement that, “In the absence of an established benefit, Sipuluecel-T (Provenge) may readily provide more harm than benefit.” The professor gave a patronizing critique of the FDA, lecturing that the agency “should bring consistent scientific and ethical standards to the oversight and evaluation of clinical research much like a court of law should bring consistent standards to legal justice. FDA approval of Sipuluecel-T would set an unfortunate precedent for accepting lack of rigor, including giving undue credence to post-hoc analyses that very likely reflect misleading estimates of efficacy.” In closing, Fleming criticized Advisory Committee member Robert Samuels’ comment that approving Provenge simply provided patients with “an opportunity to make a choice.” Fleming countered by stating, “As a fellow person living with prostate cancer, I strongly disagree with [Samuels’] statement that all patients want is a ‘choice.’ Patients want an ‘informed choice.’ How then would pre-mature approval of Provenge diminish the likelihood of obtaining reliable results from the [continued trials] be in the best interests of prostate cancer patients?” The FDA Approval Marathon and Dendreon Corporation (C)* The FDA Decision On May 9, 2007, Dendreon announced that it received a Complete Response Letter, commonly referred to as an “approvable” letter from the FDA. In the letter, the FDA requested that the firm provide additional clinical data supporting the efficacy of Provenge. Within a day, Dendreon’s stock plummeted more than 60%. Commenting on the letter, CEO Mitch Gold stated, “Given our strong belief in the survival benefit and safety profile of Provenge, coupled with the positive outcome of the Advisory Committee meeting, we are disappointed that this decision will cause a delay in the availability of Provenge for patients who suffer from advanced prostate cancer. We are committed, however, to working closely with the FDA to resolve these questions in a timely and efficient manner to bring Provenge to patients with advanced prostate cancer who currently have few appealing treatment options.” On May 31, 2007 Dendreon announced that the FDA has agreed to accept additional data of survival from its ongoing Provenge trials. “The FDA indicated that either a positive interim or final analysis of survival would address their request for the submission of additional clinical data in support of our efficacy claim,” said CEO Gold. Denderon anticipates having interim survival results available for FDA review in 2008. Did the FDA trip Dendreon or was the firm not fit to finish the marathon? Dendreon was tripped! Supporters of Provenge have lobbied Congress, participated in rallies, ‘advertised’ their cause in newspapers, and created special interest groups such as Provenge Now! and Care to Live. They have also publicly accused Dr. Scher and Dr. Hussain of conflicts of interest. Both doctors have received death threats as a result of their actions. On June 20, 2007 activists from nineteen organizations rallied and petitioned Congress in Washington D.C. to encourage the FDA to approve Provenge while Dendreon completes its current clinical trials. Twenty-one days after the FDA’s release of an ‘approvable letter’ to Dendreon, Schering-Plough gave Novacea almost $500 million to help with Dr. Scher’s clinical trials on prostate cancer. For some, the timing of Dr. Scher’s letter, the FDA’s decision to delay approval, and Dr. Scher’s research with Novacea was suspicious. On July 30, 2007, non-profit organization, Care To Live, filed a lawsuit in federal court against FDA commissioner Andy von Eschenbach, head of the FDA Office of Oncologic Drugs Richard Pazdur, and Dr. Scher, for their “improper conduct…and inappropriate actions,” in denying available aid to dying patients, claiming the aforementioned are liable for any injuries caused to them. * Created by Frank Hodge and Roya Labib from publicly available data. Revised by Frank Hodge, February 2009. Dendreon was not fit to finish the marathon…yet Dr. Charles Myers, a leading oncologist and prostate cancer survivor, defends his objections about Provenge despite the benefits the treatment may provide to his patients and himself. In Myers’ opinion, “Dendreon made major and obvious mistakes in developing Provenge. The FDA is not some sort of bad guy – at least in this case…the primary end point of a clinical trial seeking FDA approval should be either survival or improved quality of life, but Dendreon chose to muddy the waters by changing endpoints midway through the clinical trial, forcing the FDA’s hand with their poor design.” He goes on to state, “While the FDA is far from perfect, people need to understand who to blame in this case…I can understand the anger, but is it really unreasonable to ask for proof that a drug is safe and either improves survival or quality of life? I think that Provenge is an active agent with a definite, but limited, benefit, so I feel a personal loss now that it is not going to be available. But killing the messenger doesn't change the message; it just obscures the real problem -- and solving problems is what modern medicine should really be about.” 1 The marathon continues… Dendreon is committed to finishing the FDA marathon and bringing Provenge to market. Finishing a marathon, however, requires more than just desire. It requires fuel, and fuel cost money. Will Dendreon have enough money to finish the race? 1 “D.C. Denies Prostate Cancer Vaccine, Provenge: Dendreon (WA) Not FDA To Blame.” Prostate Forum Charlottesville, VA., July 30, 2007