Today’s little tease comes to us from Hilary Kramer, who I briefly wrote about way back before the Gumshoe Vacation (that was the “Apple Killer,” which inspired a bit of discussion). This time she’s telling us that she’s got a “Cancer Killer” that’s ready to break out — and yes, killing cancer certainly sounds more important than killing Apple, regardless of how you feel about black turtlenecks and Adobe Flash … so who is it?
Here’s the intro:
“July 7, 2011
“The last time I recommended this stock, it rocketed 38% in just 3 days.
“I expect even bigger returns this time around.
“In an epic breakthrough, this little-known biotech company has developed one of the most exciting medical advances of the last 30 years.
“The treatment is so revolutionary and the impact so far reaching, it will blow you away.
“And today, the company sits on the cusp of receiving a coveted approval. After months of closed-door meetings, a crucial decision being released by the Centers for Medicare and Medicaid Services before the end of the month could cause this stock to soar literally overnight. You must get on board before this happens.”
Yeah, I know — July 7 was a few days ago … but even your favorite neighborhood Gumshoe needs a vacation now and then. And if it makes you feel any better, that “crucial decision,” as I read it, came out the week before Kramer’s “special alert” and the stock didn’t really “soar” just yet. Maybe she actually wrote this back in June and the ad folks just keep using it, since the “crucial decision” came at the end of last month, on June 30.
So who is it? One more bit of the hinty spiel:
“Welcome to the Era of Personalized Medicine….
“We’re ushering in an era of personalized medicine that will see doctors and scientist will develop drugs specifically tailored only to you. The company I’m recommending today is far ahead of its competitors in doing just that.
“In an epic breakthrough, after decades of research, this small, little-known biotech company has developed one of the most exciting medical advances of the last 30 years—the first ever cancer vaccine.
“This is no ‘gee-whiz, someday in the future’ kind of thing…this drug is already approved and in use.
“The treatment takes a patient’s own cells and teaches their immune system to attack cancer cells the way it fights a virus.
“The company already has FDA approval to use the drug for a specific type of cancer today. But they are using the same proven technology to develop treatments for other types of cancer, including breast, ovarian and colon cancer.
“There is no doubt that when we look back ten years from now, this will be one of the biggest game-changers of the decade. And the company will deliver windfall profits to investors who get on board at the right price.”
This must be Dendreon (DNDN), maker of the FDA-approved Provenge for prostate cancer. This is indeed the cutting edge of cancer treatments right now, a personalized cancer vaccine that is created for each individual and delivered intravenously in a few doses over the course of a month … for $93,000.
Which is why the big issue had been, for many people, whether Medicare and Medicaid would cover the drug — those insurance programs are not allowed to consider cost in their coverage decisions (which is also why they can’t negotiate for better drug prices), and a preliminary decision had been made to extend coverage to Provenge for some prostate cancer patients several months ago, so the final decision on June 30 was expected by the market and didn’t impact the stock price much at all.
There’s a pretty good AP article about the Medicare/Medicaid decision here — basically, the drug will be covered for the indicated use (prostate cancer patients whose disease has progressed very far and who haven’t responded to other treatments), but might not be covered for “off-label” use, which as I read it would include “early” use in prostate patients as well as use against other cancers.
That still leaves a large market, with analysts estimating that revenues next year will come close to a billion dollars — and they do have other drugs in the pipeline, with the potential boost that some of them are using the same basic “personalized vaccine” technology as Provenge to fight colorectal, breast and ovarian cancers, which are among the biggies in terms of numbers of sick people. The fact that they’re using the same vaccine doesn’t necessarily mean that Provenge will be safe or effective in fighting these other cancers, but perhaps it will speed up the approval process somewhat compared to the extremely long and drawn out ordeal that Provenge had to go through as a “first of its kind” treatment.
And yes, that billion dollar revenue number does sound impressive — but this is a company that continues to have very high R&D costs and a market cap of nearly six billion dollars, so the expectations for Provenge are arguably “priced in” to some degree. Analysts are probably being conservative about revenue and earnings expectations, I would guess, since Provenge is still ramping up and, as a personalized medicine that needs fast turnaround, requires more production facilities (which each have to be FDA-approved — as some of them have been so far). So there could easily be hiccups, which may be why analysts are predicting that billion dollar (or nearly) sales number for next year, but not predicting growth after that. The prostate cancer patient pool is absolutely going to grow pretty quickly, with an aging population and extended lifespans that will make prostate cancer treatment more important for larger numbers of people, so you can probably justify making your own growth projections that might be a bit more ambitious for Dendreon if you like.
And yes, if the same basic technology and treatment turns out to be a powerful way to get after breast or colon cancer, that could potentially also drive much higher revenue. The other risk that you’ll often see noted is that it will also continue to drive politicians and regulators to look at the cost-effectiveness of health care, particularly cancer treatment. The impulse is to cover everything that can possibly be justified for cancer, since it’s such a terrible disease with such painful and harsh treatments, but as more and more drugs that cost $80-100,000/year (or per treatment) come out and inspire hope among patients (which also helps to drive off-label use — like that of Avastin, for example, which is still covered for off-label breast cancer use under Medicare despite the recent FDA decision that it was ineffective for breast cancer), and as the brutal necessity to control health care costs becomes more critical in the years ahead (we are, after all, out of money), it’s hard to imagine that we won’t have a more public debate about these expensive and designer drugs. That’s not to say that this debate will turn on a dime, or that it will hit Provenge specifically, but I bet we’ll hear pundits talking it up in future health care debates as folks grapple with the concept of how much an extra few months of life is worth, if only because Provenge and Avastin are among the more high-profile high-cost treatments.
So has the market failed to take into account the potential of a $1 billion+ sales year for Provenge, and future growth from that number, or is it priced in? How much are you willing to pay for that potential growth, and for the “maybe” of applying this cancer vaccine to other large populations? Let us know with a comment below.
P.S. Yes, for those who are asking, we’ve also written about Kramer’s “Stock of the Decade” — that’s the one that’s supposed to revolutionize the plastics industry, you can see the article here.