Cell Genesys (CEGE) and Dendreon (DNDN) :: Michael Shulman's Biotech Blitz

Cell Genesys (CEGE) and Dendreon (DNDN)

Before you go out and rush to buy the stock, some things to consider:

1) By the time the company submits its' BLA (Biologics License Application) the FDA may have established new, less opaque guidelines on what an immunotherapy needs to show in trial to get approval. The GVAX Phase II trial is well constructed but it is only a mid stage trial -- a longer Phase III trial will have to be initiated before they can request approval from the FDA.

2) At present, Dendreon is enrolling a Phase III or, assuming they get final FDA staff approval on May 15th, post marketing or Phase IV trial with 500 patients that will take three years to complete. The data output from this trial will set the bar for GVAX and Cell Genesys - and could be stronger than the results used to secure the panel approval for Provenge, which means the GVAX trial is shooting at an unknown target. And if the current Phase III trials for GVAX do as well in trial as Provenge, GVAX will still not be in a position to apply for marketing approval for at least another two and a half years, perhaps more. That is a long time for Dendreon's Provenge to establish itself as a standard of care -- and it also means GVAX will have to raise a considerable amount of money, diluting existing shareholders, to get to that point in time. The company has roughly $125 million in cash and burns $25-$30 million per quarter. You can do the math.

There is nothing wrong with being patient -- but CEGE is, for an investor, a one trick pony with GVAX -- the company has lots in development but the stock will rise and fall based on this treatment -- but five years is a long time to invest in a stock driven by headlines. I feel I have had my readers in Dendreon forever but it has actually been 18 months.

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I wrote in my newsletter, ChangeWave Biotech Investor, about companies that would benefit when Provenge got the thumbs up from an FDA panel on March 29th, which it did, tripling shares in Dendreon (DNDN) but also boosting the shares of Cell Genesys (CEGE). CEGE is also developing an immunotherapy or vaccine for advanced prostate cancer but is several years away from the market. Data from a mid stage clinical trial released last week also boosted the case for this treatment, GVAX, showing a survival benefit that, in theory, could warrant an approval from the FDA. Before you go out and rush to buy the stock, some things to consider: 1) By the time the company submits its' BLA (Biologics License Application) the FDA may have established new, less opaque guidelines on what an immunotherapy needs to show in trial to get approval. The GVAX Phase II trial is well constructed but it is only a mid stage trial -- a longer Phase III trial will have to be initiated before they can request approval from the FDA. 2) At present, Dendreon is enrolling a Phase III or, assuming they get final FDA staff approval on May 15th, post marketing or Phase IV trial with 500 patients that will take three years to complete. The data output from this trial will set the bar for GVAX and Cell Genesys - and could be stronger than the results used to secure the panel approval for Provenge, which means the GVAX trial is shooting at an unknown target. And if the current Phase III trials for GVAX do as well in trial as Provenge, GVAX will still not be in a position to apply for marketing approval for at least another two and a half years, perhaps more. That is a long time for Dendreon's Provenge to establish itself as a standard of care -- and it also means GVAX will have to raise a considerable amount of money, diluting existing shareholders, to get to that point in time. The company has roughly $125 million in cash and burns $25-$30 million per quarter. You can do the math. There is nothing wrong with being patient -- but CEGE is, for an investor, a one trick pony with GVAX -- the company has lots in development but the stock will rise and fall based on this treatment -- but five years is a long time to invest in a stock driven by headlines. I feel I have had my readers in Dendreon forever but it has actually been 18 months.