Dendreon stock climbs as analysts note Medicare milestone
Analysts said Friday that Dendreon reached a key milestone when Medicare agreed to pay for Dendreon's prostate cancer therapy Provenge. The Centers for Medicare and...
The Associated Press
NEW YORK — Analysts said Friday that Dendreon reached a key milestone when Medicare agreed to pay for Dendreon's prostate cancer therapy Provenge.
The Centers for Medicare and Medicaid Services said Thursday it will cover treatment with Provenge. A course of treatment with Provenge costs $93,000, and on average it extends patients' lives by about four months.
Dendreon stock closed up $1.96, or 5 percent, at $41.40. Friday.
The agency had suggested in late 2010 and earlier this year that it would cover the drug, but Thursday's announcement makes the decision official.
Citi Investment Research analyst Lucy Lu said the decision was expected, but it was still "very important to Dendreon." That's because private health insurers often use Medicare policies in guiding their decisions, so the decision could influence them to cover treatment with Provenge. Lu said several health insurers are expected to review their policies on Provenge later this year, including Aetna and Cigna.
However Lu wrote that Medicare itself will be the main provider of Provenge because a large majority of prostate cancer patients are 65 and older. She maintained a "Hold" rating on shares of the Bothell company.
Rodman & Renshaw analyst Reni Benjamin noted that the company also received Food and Drug Administration approval for a new manufacturing facility on Thursday.
He said the approval expands Dendreon's manufacturing capacity by 75 percent, bringing maximum sales of Provenge to a range of $63 million to $70 million per month. Benjamin rates shares of Dendreon at "Market Outperform."