"People have missed that there are a large number of patients sitting in urology offices today who don't know they have metastatic disease," CEO John Johnson said in a telephone interview. "Historically, there hasn't been an imperative to identify those patients. Now that we have new agents there is an imperative."

J&J said last week that a trial of its prostate cancer pill Zytiga in patients who had not received chemotherapy was stopped early so that those in the control group could be offered the drug after its benefits became obvious to safety monitors.

Shares of Dendreon have fallen about 9 percent since the J&J news as investors worry that Zytiga, rather than Provenge, will become the drug of choice for prostate cancer patients whose disease has stopped responding to conventional hormonal therapy. The shares ended down 2 percent on Monday.

Johnson said Dendreon still expects modest quarter-over-quarter growth for sales of Provenge this year. Analysts, on average, have projected 2012 sales of $384 million, according to Thomson Pharma.

ISI Group has estimated that around 30,000 U.S. men with prostate cancer are currently eligible for treatment with Provenge. Johnson declined to comment on Dendreon's own estimate of the Provenge-eligible population.

Hopes for future Provenge sales were sky high when U.S. regulators approved the therapeutic vaccine in April 2010 for patients with prostate cancer who had failed to benefit from hormone therapy. Some analysts had expected Provenge, which spurs the immune system to attack prostate cancer cells, to have sales in the billions.

But those forecasts have been ratcheted back.

COMBINATION WITH ZYTIGA

Zytiga, a pill, is already approved for patients after they have undergone chemotherapy, while Provenge, an injected immunotherapy, is approved in the pre-chemotherapy setting. J&J said it plans to file this year for approval of Zytiga in patients no longer being helped by hormonal therapy.

An experimental pill from Medivation and Astellas Pharma, with a mechanism of action similar to Zytiga's, has been shown to help patients with advanced prostate cancer live longer and is expected by many industry observers to also be effective in earlier-stage cancer.

Johnson said that as soon as late this year Dendreon could have the first batch of results from a trial looking at the use of Provenge and Zytiga in combination and in sequence.

He said it is possible that the pool of patients eligible for treatment with Provenge could shrink if it turns out that pre-chemotherapy patients are routinely treated first with Zytiga.

"That's not how we see it playing out, but it is a possibility," the CEO said.

Johnson was named as Dendreon's CEO last month, succeeding Mitchell Gold, who had served in that post for nearly a decade. Gold will serve as executive chairman through June, at which point he will continue as a director and Johnson will become Dendreon's chairman.

A course of therapy with Provenge, which has been shown in a pivotal trial to extend survival by 4.1 months, is priced at $93,000. Zytiga is less costly, at about $5,000 a month, usually for eight cycles, and is much easier to manufacture and administer.

JNCI STUDY

A recent study published in the Journal of the National Cancer Institute which concluded that Provenge trial patients treated with a sham infusion may have been harmed by it, making survival results for Provenge look comparatively better, was dismissed by Dendreon as without scientific merit.

"That theory was circulated a couple of years ago, when Provenge was under review for Medicare coverage," said Mark Frohlich, the company's chief medical officer, referring to the government health insurance program for the elderly.

Treatment with Provenge requires that immune system blood cells be removed from the patient, treated with a prostate antigen and stimulating factor, then infused back into the patient. In the original trial of Provenge, patients in the comparison group went through the same process, but were re-infused with untreated cells.

Frohlich said the authors of the latest study failed to acknowledge that the massive volume of lymphocytes circulating in the body means the number removed from patients during the trial was between just 0.3 and 1.4 percent of that total.

"If you ask any immunologist, it's not really biologically plausible that those patients were immunologically depleted," Frohlich said.

Prostate cancer kills about 250,000 men a year globally and is the second most common cause of cancer death in men in the United States, after lung cancer.

"I do think this issue around the growth of the market and the benefit of having multiple companies working in the urology space is one that has been underappreciated," Johnson said.

(Editing by Gary Hill, Tim Dobbyn and Muralikumar Anantharaman)

• A Permanent Economic Emergency