Will Dendreon's Provenge Benefit From Off-Label Use?

(MoneyWatch)  Dendreon's successful Phase 3 trial results for Provenge are in -- so let the speculation begin!

Dan Rosenblum over at Seeking Alpha thinks potential sales of the prostate cancer drug are being understimated because analysts fail to take into account off-label use of the drug. He says:

Most of the analyst reports I have seen assume peak sales in the U.S. somewhere between one and two billion dollars. These estimates are based on the assumption that the cost for Provenge will be somewhere between $30,000 - $50,000 and a penetration rate of around 10-20% of the total prostate cancer population of which there are around 230,000 annual new cases each year in the U.S.

He notes that Eli Lilly's Erbitux costs $100,000, and thus:

I would be shocked if the price for Provenge per patient is under $50,000 and I would not call it out of the question that the cost for the drug might run as high as $75,000 per patient.

Rosenblum says Dendreon is to brief analysts on the cost situation next month; it presents at a Deutsche Bank conference today.

In the longer term, Rosenblum notes Provenge's lower side effect profile:

I believe that Provenge will be used quite extensively off label by earlier stage prostate cancer patients.

Taking all that into account, here's the math:

50,000 patients multiplied by the $75,000 price gets you to $3.75 billion. If Dendreon charges "only" $60,000 per patient and it captures the same 50,000 patients, then it will make $3 billion.

As BNET noted a few weeks ago, Provenge still has a long way to go before it becomes a blockbuster. But that hasn't stopped the Dendreon bulls. The company raised $221 million from new stock, which should have diluted the price but, as you can see from the graphic, it's holding steady. Even Breen Murray rates it a buy.

Note that Rosenblum owns the stock he's touting.

Hat tip to Internet Drug News.

• See previous coverage of Dendreon:
• Dendreon Still Faces Hurdles for Provenge Despite Positive Phase 3 Data
• Dendreon: Pro-Provenge Activists Heap Abuse on Cancer Drug's Critics
• Vultures Circle Dendreon Even Though Jury Is Still Out on Provenge