Dendreon building Germany plant to support EU entry

Construction of the Germany plant is due to begin in 2011 with the aim of gaining regulatory approval in 2013. Dendreon expects to receive a European decision on the Provenge marketing authorisation application (MAA) around the same time as the Germany plant gains approval.

To accelerate the timeline for approval in the European Union (EU) Dendreon is to outsource to a contract manufacturing organisation (CMO). Qualifying a CMO can be done faster than plant construction and Dendreon expects to save 12 to 18 months by outsourcing to support filing.

An MAA will be filed when technology transfer to the CMO is complete. Negotiations with a CMO, which possesses appropriate equipment and has previously worked on similar projects, are in the final stages. Dendreon has previously used US CMOs so is comfortable with the transfer process.

Once constructed and approved Dendreon will meet commercial supply requirements using its Germany plant. Provenge has a short shelf-life and consequently Dendreon has located its facility to be close to as many patients as possible.

Dendreon says 20 per cent of patients can be reached in a four hour drive and 50 per cent within eight hours. Overland transport is preferred by Dendreon but planes can also be used to make delivery to almost all of Europe viable.

The Germany plant will support the first phase of the European expansion, with other sites possibly being constructed in the future. Output from the Germany plant is expected to be similar to Dendreon’s 160,000 sq ft site in Atlanta and 184,000 sq ft premises in Los Angeles.

As demand in Europe increases Dendreon may add more facilities to support operations in Germany. Dendreon will make decisions on the capacity and location of facilities when reimbursement negotiations have progressed.

Predictions for 2011​

Dendreon expects to spend $125m (€97m), split evenly between capital expenditure and operating expenses, to bolster capabilities in 2011. One-off start-up costs from US production facilities will continue throughout the first three quarters and total $90m in 2011.

These one-off costs are expected to contribute to a GAAP (generally accepted accounting principles) loss of $310-350m in 2011. Revenues in 2011 are predicted to be $350-400m with 50 per cent of sales being made in the fourth quarter.

By then Dendreon expects to have increased US production capacity 10-fold by making sites in New Jersey, Atlanta and Los Angeles fully operational. This will eliminate the capacity constraints Dendreon faced in 2010.

Dendreon shares have risen almost eight per cent to $38.16 following release of the news and its presentation at the JP Morgan Healthcare Conference.