Cancer Immunotherapy—A Cursed Sector to Date, but Someone Will Make it Someday
Cancer immunotherapy (formerly cancer vaccines) is different from typical prophylactic vaccines
which are designed to prevent disease. Instead, cancer immunotherapy is designed to
treat established cancer and looks to prolong patient survival. The goal of cancer immunotherapy
is to recruit a patient’s own immune system into attacking the cancer.
Cancer immunotherapy contains cancer cells, parts of cells or pure antigens. Important observations
by scientists and physicians over the last 1-2 years is that cancer immunotherapy has
the potential to keep cancer as more of a chronic disease while increasing survival. Many
strides are also being made in assessing the potential for combination therapies, but the approach
is fraught with many hurdles while also having great potential.
The last two years have been very historical for cancer immunotherapy and yet could also be
considered very “run of the mill” for the space by many. The historical aspect revolved around
Dendreon’s Provenge coming in front of the FDA for approval for metastatic hormone refractory
prostate cancer (mHRPC). Beyond that, we have also seen major partnerships signed in the
cancer immunotherapy space, with the leading deals being Oxford BioMedica/sanofi-aventis,
Cell Genesys/Takeda (now discontinued) and Celldex/Pfizer. We have also received increasingly
positive data from several companies linking the ability to mount an immune response to the
therapeutic immunotherapy product and survival/clinical benefit. The “run of the mill” events
revolved around even further failures in the space, namely Genitope, Favrille and a major blow
to the space in Cell Genesys’ GVAX Phase III failures in prostate cancer.
While big pharma has been previously been focused on small molecule development, biologics
are taking an increasingly important role in pipelines. For immunotherapy, companies like
Merck and GlaxoSmithKline have very large cancer immunotherapy initiatives.
One major result of the above mentioned news flow is that cancer immunotherapy is finding
itself more and more in the minds of investors as a technology that should be, at the least,
paid attention to.
Key Late Stage Players
In the next 12-18 months we expect the cancer immunotherapy space will be defined or continued
to be broken by key upcoming pivotal data and regulatory decisions. As discussed, Dendreon
has been the standard bearer, but it remains to be seen whether its Phase III IMPACT
study will turn the company’s Approvable Letter into a full approval for Provenge.
Within the next year or so, we have identified five players in the immunotherapy space who we
believe will garner the most attention, are in late stage studies and who will have important
data catalysts. We believe the important players today are:
Celldex (CLDX, $8.65, Buy)
Geron (GERN, $5.14, Buy)
Dendreon (DNDN, $4.54, Sell)
Medarex (MEDX, $5.37, Sell)
Oxford BioMedica (OXB.L, £7.25, Not Rated)
Prices as of January 6, 2009.

Trials and Tribulations To Date
The last two years have been very historical for cancer immunotherapy and yet could also be considered very
“run of the mill” for the space by many. The historical aspect revolved around Dendreon’s Provenge coming
in front of the FDA for approval for mHRPC. Beyond that, we have also seen major partnerships signed in the
cancer immunotherapy space, with the leading deals being Oxford BioMedica/sanofi-aventis, Cell Genesys/
Takeda (now discontinued) and AVANT (now Celldex)/Pfizer (chronologically). We have also received increasingly
positive data from several companies linking the ability to mount an immune response to the therapeutic
immunotherapy product and survival/clinical benefit. The “run of the mill” events revolved around even
further failures in the space, namely Genitope, Favrille and Cell Genesys.
One major result of the above mentioned news flow, is that cancer immunotherapy is finding itself more and
more in the mind of investors as a technology that should be, at the least, paid attention to.
The Dendreon “Melt-Up and Melt-Down”
Cancer immunotherapy was at the forefront of investors’ attention in 2007 when Dendreon’s Provenge came
in front of an FDA Advisory Committee for its application for the treatment of mHRPC. Based on the data
package that Dendreon submitted, namely survival data, there was much controversy coming into the date
of the Advisory Committee meeting. For those watching the story, the Street was really split down the middle.
The controversy did not end there, however. Once the questioning and discussion began, leading to “No”
votes from the first two Committee members, the Chairman of the Committee altered the underlying question
posed to the members. The original question was “Does the submitted data establish the efficacy of sipuleucel-
T (APC-8015) in the intended population?” This was changed to “Does the submitted data provide
sufficient evidence of efficacy?” The result of the questioning was a unanimous vote for safety for Provenge
and a clear majority vote for the efficacy of Provenge, although the question change already laid the ground
for controversy, in our view. This led to the stock “melt up” for Provenge, which was also partially responsible
for pulling up the stocks for multiple other cancer immunotherapy companies, namely Cell Genesys.
After the Advisory Committee voting, one might have thought that the controversy would end there, but it
did not. Two of the physicians on the panel, had letters written by them to the FDA made public, which
caused quite a stir to stay the least as they were against the approval of Provenge. While the FDA usually
follows the vote of its Advisory Committees, controversy and rampant speculation would continue ahead of
the May 15, 2008 PDUFA date for Provenge.
One week before the PDUFA date, Dendreon received an Approvable Letter from the FDA, which immediately
led to a “melt down” in the stock, price, again pulling with it multiple names in the cancer immunotherapy
space. In short, the FDA requested more clinical data, namely from the ongoing IMPACT Phase III study, in
order to provide unequivocal evidence of Provenge’s efficacy.
This receipt of the Approvable Letter also led to a deluge of protests from investors, physicians and prostate
cancer patients, including the potential of a Congressional inquiry (which did not transpire) as to why the
FDA did not follow the Committee’s vote.
The effect that the Advisory Committee and subsequent action by the FDA had on Dendreon’s stock is evident
in the chart below, which similarly affected other stocks such as Cell Genesys in the same fashion.