Did Dendreon Play with Fire?

Oh, the Dendreon (DNDN) investor message boards are on fire! And my inbox has a few sparks. Matthew Herper at Forbes wrote a piece today daring to question the integrity of the all-important data due out sometime next month on DNDN's prostate cancer treatment Provenge. Interestingly, though, in the first half of the trading day it doesn't seem to be hurting the super volatile shares.

Matt talked to four "top statisticians" who think that when Dendreon put out this press release last year offering a sneak peek at the midterm test results, it might have compromised the end result and could possibly force the company to go back to square one. That'd be a difficult move for a baby biotech whose fate will be determined by the Provenge study and has a finite amount of cash.

Dr. Mark Monane is the top biotech analyst at Needham and Company and he's been following Dendreon for a long time. In fact, he's the guy who first introduced me to the story when I was just a biotech cub several years ago. Anyway, over the phone he told me there are a couple of reasons why he thinks the press release could not have influenced the study. He acknowledged that the sneak peek was a little more "fact filled" than most interim data announcements. But he said the patients had long ago finished getting the Provenge. So, it's not like this was an ongoing treatment. They get a few doses early on and then they're done. And Dr. Monane added that whenever you're looking to measure extra survival that there is going to be what he called a "post-treatment effect."

"I don't disagree with the reviewers (the statisticians quoted in Forbes) comments, however I think there are special conditions in terms of this trial that may minimize those effects," Dr. Monane said. Needham makes a market in DNDN and Monane has a "Hold" rating on the stock.

When the final results come out in April it will be a binary event. In other words, if the data are good, the stock will likely skyrocket. If they're bad, the shares, which are up about two bucks on higher-than-normal volume over the past few weeks, will probably tank.

Comments

[Jake Blues:]

CEGE Part Deux?

Mar 25 05:28 PM

[zhybrids:]

The negative article is nothing more, then someone trying to either cover a short position before a big run up in the stock price, hold down the stock for others to buy, or someone trying to cause confusion and doubt in the company, for a self motivated reward.

I believe there are several players out their, trying to put a negative spin on the facts and trying to cast doubt in every retail investor out their. Whatever the case may be, I'd take the gamble, and place a bet on the table, as all odds point in favor including the options for may 2009 for LONGS. Its very clear the calls are currently outpacing puts 4:1 and as long as they show 22%+ on effectiveness from the control group vs placebo, and this looks like a home run, for a major move above $25.00/ share.

2 Years ago DNDN's Share price skyrocketed to around $25 on a positive vote from the FDA's Advisory Panel, as the FDA usually goes along with the vote of its advisory panel. An unexpected rejection of the favorable vote from its panel, made DNDN's share price drop from $24+ a share to below $5.00.

Had the company gone on to get a favorable vote and approval from the FDA for its prostate cancer drug PROVENGE, the stock would have rocketed from the $24+ price tag it had going into the FDA meeting. Which leads me to believe the stock has the potential to trade north of $35.00 + as, that would place a 40% increase from the price at the time the FDA Panel had its positive vote.

I do hold a small long position, and feel 90% confident, this time provenge will be approved and feel the corruption in the FDA will not beable to overcome an approval, as it is now clear, there were some conflicts of interest by some board members of the FDA.

It was clear the negative vote, was partially the cause of a couple individuals who were tied to COMPETITORS of Dendreon.

A CONFLICT OF INTEREST, that became well known after the rejection for Provenge.

This time around, they will have to make the case, for not approving, and it will not be easy at all, now that all the facts are on the table about all of those involved with the process.

LONG DENDREON (DNDN)

Everything I state is my opinion, and should not be used for making an investment decision. Research before investing. Understand the risks involved, when investing in the bio-tech industry.

Mar 25 07:20 PM

[attenuation:]

As sure as the gravitation rule, I'm of the opinion that Provenge will be approved shortly provided the FDA panel rids itself of narrow parochial interests and makes an honest assessment of the superiority of Provenge over other drugs in the market. The new US administration must see to it that the FDA is rid of corrupt individuals obstructing the Provenge approval process.

Mar 25 07:40 PM

[logicalthought:]

This stock is a lot of fun to watch, even though I wouldn't touch it-- long OR short-- with a ten-foot pole. I wouldn't go long because I don't trust management for sh*t (Gold dumped a big wad of stock right after the FDA panel recommendation in '07, and the stock plunged shortly thereafter), and I wouldn't get short because it's WAY too crowded. As an aside, any company with a retail shareholder base as fanatical as this one's and almost no fundamental institutional ownership generally doesn't turn out to be successful. (And believe me, I know this from personal experience, because I've been on the wrong side of that bet myself, in other companies.)

Mar 25 09:14 PM

[mak doodle:]

He is just a guy knowing he can get a few extra hits to any article written about DNDN. None of it matters now - just stat sig or not. I bet there are a few writers hoping for something "unusual" to happen this time again with DNDN to keep the hits coming. It has been a wild couple of years, but I for one am ready to move this stock from my speculative bucket into my growth bucket. Maybe I can kill 2 birds this month between DSCO and DNDN :)

Mar 25 09:23 PM

[Whippet:]

Provenge may have politics on its side this time around, even if the statistics aren't perfect. Odds are they will be close to the 22% target; whether slightly above or below does not a final answer give, however. Chances are they will file their supplemental BLA and see what happens in the "new" FDA, given the drug has a squeaky clean safety profile and huge populist support. The agency has approved licensing applications before when the data was not perfect and could use this as an opportunity to show how they have reformed their ways since the messiah took office.
All this said, they're unlikely to abandon the study entirely if the data misses. This means a filing will occur, and the FDA will go through a review process. The safest way to play this (and what I'm doing) is to write May 2.50 puts- risk/reward ratio is about 1:1 and that's if the stock goes to 0. Chances are they'll be OTM if no final decision is reached by May expiration; this is highly likely given agency sBLA review times.

Mar 26 10:21 AM

[Gaucho:]

Mike the one sentence that you should have put in your article was: The release of data was authorized and coordinated with the FDA beforehand!!!

Another tidbit of information was that the interim was at 20% separation while the final only needs to be at 22% separation. I believe that this near miss in the interim was the reason the DMC and the FDA and DNDN all reviewed the data together to determine if the trial should be stopped due to its significant efficacy. They decided to wait until the final data that is due for release in April.

Another piece of information missing is that in the 2 previous phase 3 trials they achieved a combined curve separation of 33% at final and this trial is tracking the previous trials.

Perhaps you also forgot to mention that this is the first biological treatment for cancer on track to be approved by the FDA and that this will be a whole new way of treating cancer. You also forgot to mention that company has at least 12 other cancers treatments are going to use the same cassette technology. With the breast cancer treatment has gone through phase 1 trials and has show similar results to the prostate treatment now nearing approval.

The hedge funds have screwed up by betting against this company and are using their media outlets to scare the retail investor so they can get out of their short positions without too much financial pain.

Mar 26 11:01 AM

[drbob66:]

Anybody know the short-interest ratio on DNDN?
Thanks in advance.

Apr 14 08:48 AM

[drbob66:]

Never mind..just sold entire position @ $25.



On Apr 14 08:48 AM drbob66 wrote:

> Anybody know the short-interest ratio on DNDN?
> Thanks in advance.

Apr 14 09:20 AM