The disclosure: Dendreon ($DNDN) has canceled its Provenge supply contract with GlaxoSmithKline ($GSK), which had been set to run through 2015. The reason, cited in SEC documents: "Unforeseen delays and implementation difficulties in achieving the commercial purpose of the agreement."
The timing: Dendreon gave 60 days' notice to GSK on Sept. 1, a few weeks after it announced Provenge wasn't selling at nearly the rate it had expected. At the time, the company slashed its 2011 sales forecast and announced layoffs. And just two weeks ago, the company announced its third Provenge production facility had won FDA approval.
Perhaps the combination of lower-than-expected sales and increased manufacturing capacity--not to mention a heightened focus on reining in costs--made paying GSK to make the Provenge antigen less than economical. Also, if manufacturing hadn't yet begun, as Dendreon disclosed, then taking the trouble to ramp up may not have seemed worth the effort, at least not under the circumstances.
Since Dendreon withdrew its revenue forecast for Provenge, there have been hints that sales of the prostate cancer vaccine might continue to languish, rather than accelerating into high gear as the company had expected. A Reimbursement Intelligence survey of payers found the drug's complex administration was inhibiting uptake. Oncologists and urologists surveyed by Sermo said they were concerned about the drug's $93,000 cost, given the survival data in clinical trials. And R.W. Baird last week cited a survey, performed by ICI OncoReports, that found some doctors are using Johnson & Johnson's ($JNJ) new pill Zytiga in patients who might otherwise have qualified for Provenge.