UPDATE 2-Dendreon says cancer vaccine launch going well

* Sees supplying Provenge to 2,000 patients in 1st 12 mos

* Says received more than 500 prescriptions since May

* Q2 net loss $1.04

* Shares rise 4.8 percent (Adds company, analyst comment, updates shares)

By Bill Berkrot

NEW YORK, Aug 3 (Reuters) - Dendreon Corp DNDN.O said on Tuesday that more than 500 prescriptions for its new prostate cancer vaccine Provenge have already been written, and its shares rose nearly 5 percent.

The tiny biotechnology company, which began selling the drug in May, said the launch was going well with sales rising to $5.2 million in July from $2.5 million in June, and that it expects to be able to supply the drug to about 2,000 patients over the first 12 months.

“We are on track with the expansion of all of our manufacturing facilities in order to provide Provenge to more patients in 2011,” Chief Operating Officer Hans Bishop said in a statement.

“We see strong demand in the clinics where we are providing Provenge,” Bishop later told analysts on a conference call.

The company said it has begun discussions with European regulators, but declined to speculate on the potential timing of a European Provenge approval.

Provenge in April received U.S. approval for advanced prostate cancer, making it the first therapeutic vaccine that actually treats cancer. Unlike traditional vaccines that prevent a disease, Provenge, given via three infusions at a cost of $31,000, treats prostate cancer by stimulating the body’s own immune system to attack malignant cells.

But Dendreon shares, which soared to above $57 immediately after the approval, have tumbled since over concerns about reimbursement and the company’s ability to provide an adequate supply of the drug.

The shares rose 4.8 percent to $35.48 in extended trading on Tuesday from their Nasdaq close at $33.83.

“I think the combination of the doubling in revenue month over month, as well as” the 500 prescriptions already written, “has probably given investors a better sense of how the launch is proceeding,” said Rodman & Renshaw analyst Reni Benjamin, who sees U.S. Provenge sales reaching $1 billion in 2013.

Addressing supply concerns, Dendreon said it still expects expansion and licensing of its New Jersey plant in early 2011 and of manufacturing facilities in Atlanta and Southern California in mid-2011.

Chief Executive Mitchell Gold said positive reimbursement notices were coming faster than he had anticipated.

He said several national health plans, including Aetna AET.N, Humana HUM.N and Kaiser, have issued positive reimbursement decisions. The company is still waiting to hear from Cigna CI.N and others.

In addition, Gold said the majority of local Medicare Administrative Contractors have come out with positive Provenge coverage decisions.

Dendreon posted a second-quarter net loss of $142.6 million, or $1.04 per share, compared with a loss of $126.7 million, or $1.20 per share, a year ago.

With the start of Provenge sales, Dendreon reported revenue of $2.8 million versus $25,000 in the year-ago quarter, but that was short of Wall Street estimates of $4.4 million. (Reporting by Bill Berkrot, editing by Bernard Orr)