It takes years in biotechnology to forge an enduring success. But failure is always just one false step away.
Look at Dendreon ($DNDN). A little more than a year ago, the biotech pioneer was celebrated for its groundbreaking science and steadfast perseverance in the face of FDA obstacles as it won an approval for Provenge, its treatment vaccine for advanced prostate cancer. Now the biotech is subjected to harsh criticism--if not outright scorn--every time it comes out with a quarterly report with weak sales figures and uncertain projections.
If you just listened to CEO Mitch Gold, who went from hero to goat in less time than it takes to design a Phase III study, you might believe that the only major problem the company faces is physician reluctance to order its expensive treatment without some reassurances payers will reimburse for it on a timely basis.
But in survey after survey--from Decision Resources to R.W. Baird--the issues fracture into a complex set of factors that aren't easy to control and that need to be clearly understood by everyone in the development industry. Physicians aren't just feeling threatened about getting left on the hook for a $93,000 bill--although that is a factor. They're also deeply conflicted about providing a drug to patients who may face a 25% to 30% or 35% coinsurance charge on the treatment. Many doctors clearly don't believe that a drug that delivers a median benefit of four months of life warrants the overall cost. Meanwhile, new rivals are appearing in the market that cost less and aren't as difficult to administer.
One of the new priorities in any development group these days is to get a clear and early read on payers' willingness to cover a drug once it gains approval. Maybe they should take some extra time and try to figure out how providers are assessing costs and benefits in the U.S.
The bar keeps getting raised in biotech. That trend will not end anytime soon.