Valeant only just picked up Provenge and other assets from bankrupt Dendreon, but it's already trumpeting positive preliminary data for the flailing cancer vaccine. On Wednesday, it announced Phase II results showing that the immune response from Provenge continues two years after biochemically recurrent prostate cancer (BRPC) patients complete treatment.
Additionally, as part of Dendreon's ($DNDN) STAND study, one group of BRPC patients--for whom Provenge is not approved--completed treatment with the vaccine two weeks before starting androgen deprivation therapy (ADT), while the second group received Provenge three months after beginning ADT. Researchers observed immune responses in both study arms, though results suggest receiving Provenge before ADT might provide a better result.
"These are very encouraging preliminary data and the longest duration of immune responses observed following Provenge completion in men with this particular type of prostate cancer," Andrew Sandler, Dendreon's chief medical officer, said in a statement. "
Valeant ($VRX) is welcoming the good news on the new asset with open arms after earlier this month agreeing to shell out $400 million in cash for the Seattle biotech. With a sky-high price tag, reimbursement is key for Provenge's success, and the vaccine has already run up against stumbling blocks in that department. The U.K.'s cost effectiveness gate keeper NICE shot the treatment down just this week, with its health technology evaluation center director commenting that based on existing evidence, "it costs too much for the extra benefit it may provide."
|Valeant CEO J. Michael Pearson|
But Valeant CEO J. Michael Pearson, for one, is confident Provenge is a good fit for his company, which is making its first foray into oncology--a platform he thinks fits "well in Valeant's business model, with strong market growth, a concentrate specialist set of prescribers, where relationships really matter, a favorable reimbursement regime, and a market that other pharma companies are beginning to de-emphasize," he said earlier this week on the company's Q4 conference call.
In Dendreon, Pearson also sees ample opportunities for cost-cutting--Valeant's specialty. In particular, it can squeeze some money out of the struggling Provenge's infrastructure, which was "built for a billion-dollar product," he said. He expects to wring out more than $130 million in synergies--including manufacturing savings--before factoring in the benefit of Valeant's Canadian tax domicile.
Combine those plusses with opportunities for low-risk R&D projects to expand Provenge's label, and investors are looking at a turnaround-to-come, Pearson insists.
"We believe that we have the ability to raise the gross margins of this business to more than 65% by the end of 2015 and to reach 80% gross margins in the longer term," he said.
- read Valeant's release
- see the call transcript from SeekingAlpha
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