Dendrion as a Canary in the Stem Cell Therapy Industry Coal Mine

By Chris Centeno, MD /

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cell therapy industry

The cell therapy industry has a mounting problem that everyone goes out of their way to ignore. Dendrion is a company selling a cellular product that, like a canary in the cell therapy coal mine, exemplifies this little issue. What’s the problem? Price.

Manufacturing and approving traditional chemical drugs has a distinct advantage over cellular drugs. The cost of manufacturing chemical drugs is dirt cheap, with costs of pennies to dollars a dose. On the other hand, the cost of manufacturing live cells with high quality and potency is very expensive. In addition, the pathways for the approval of cell drugs are far less established than chemical drugs. Add in the storage and transportation of live cells and the cost metrics of drugs are quickly exploded. Also, because of this high price, the results produced by the cell drugs can’t be evolutionary, they must be revolutionary. Provenge is a great example of this sticky wicket.

Provenge began it’s life as a simple, but powerful idea at Stanford university. The physicians there would activate white blood cells in the lab with prostate cancer cells, hopefully making the white blood cells attack the cancer with more tenacity. It worked, in that prostate cancer survival generally improved by about 6 months. While these weren’t revolutionary results, the process was simple and cheap, so Stanford could have become a worldwide center of excellence for prostate cancer through offering the process. However, the university and the company it founded (Dendrion) soon came under pressure to turn the lab process into a prescription drug. In the end, what was an inexpensive lab process became a $93,000 course of a cellular cancer drug. While the frugal lab process had real value in the medical marketplace, the hyper-expensive cell drug did not.

This past week, Dendrion received a fatal blow. After very poor insurance reimbursement and subsequent poor adoption rates by oncologists here in the U.S., the company had hoped that the socialized medicine systems in Europe would pony up the inflated drug cost created by the U.S. regulatory juggernaut for cell based therapies. Regrettably, the U.K.’s NHS declined to cover the cell drug, citing cost issues. Essentially for the cost and hassle of dealing with live cells, the NHS wanted something that worked much better than existing and cheaper prostate cancer drugs.

To my mind, Dendrion is just the canary in the cell therapy industry coal mine. As an example, a colleague recently returned from a conference where the expected price of the first generation cell drugs was being discussed. For some, the price was predicted to be 5-20X the cost of competitive therapies. Rather than a realization that something was amiss in the math, the scientists present were planning a public relations campaign to educate insurers and consumers why the high costs were justified. It’s this kind of naive thinking that is prevalent right now in this industry. Arguing with United Healthcare that your hyper expensive cell drug deserves coverage is like a teenager arguing with a parent that he or she needs a $100,000 a year annual clothes allowance. It just isn’t going to happen…

This discussion also ties into the last blog I wrote on the company Pluristem. What ever cell drug is being proposed must enter a market where nothing else can produce similar results if the cost will be justified. For Pluristem, a tendon treatment costing 10-20X what competing autologous biologics cost that produce similar results will mean that the product is DOA. Dendrion learned this the hard way with Provenge. In both cases, the company failed to look at the market carefully relative to what was needed. For Pluristem, if nothing had ever before been shown to help tendons heal, they could have a winner. Just like for Dendrion, if no chemical drugs had ever shown prolonged prostate cancer survival, they could have a winner.

The upshot? Most of the cell therapy industry products in the first 1-2 rounds of cell drugs that will make their way to market over the next decade will be commercial busts, despite stock market hype. This is because most will enter markets where there are cheaper ways to manage patients and without the revolutionary results predicted by the university based animal models. Having said that, a few that do offer truly amazing results will become the “Band-Aids” of their niche, and do quite well. The problem right now is that the focus of cell therapy conferences should be finding those niches where cell drugs can out perform everything else, instead of on launching PR campaigns!

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Chris Centeno, MD

Regenexx Founder

Chris Centeno, MD is a specialist in regenerative medicine and the new field of Interventional Orthopedics. Centeno pioneered orthopedic stem cell procedures in 2005 and is responsible for a large amount of the published research on stem cell use for orthopedic applications.
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