Dendreon's Provenge: A New Hope For Both Patients and Shareholders

| About: Dendreon Corporation (DNDN)

I'll make this take short, because there has been plenty written to date on Dendreon (NASDAQ:DNDN) by folks much more technically oriented than I am. I'd suggest those interested read all the Seeking Alpha links, as well as excellent summaries by David Miller at, etc.

After watching the entire FDA advisory committee meeting that took place on March 29th (and after doing some additional diligence to make sure that questions not asked during the meeting actually had answers in the data) here is my summary of salient points for those looking to invest in Dendreon.

1) Don't be anchored by a price rise to date or a price per share. Yes, the price has risen from less than $4 pre-meeting to the mid-$20s as I write, and yet, this has returned the stock to essentially it's post-IPO pricing. Look instead at the expected market for the company's first (there are others, but the first is key) drug, Provenge, being evaluated by the FDA for approval. The conservative estimates put the market over a billion per year for this drug in its INITIAL market (Androgen Independent Prostate Cancer [AIPC], a cancer that has metasticized but in which the patient is currently not showing symptoms). The company obviously is researching giving patients the drug earlier (i.e. to less sick patients in hopes of helping them at an earlier stage) so this would potentially take them to the Androgen Dependent [ADPC] market, which is approximately four to five times the size of the AIPC market. Once you establish the market size, think about what you feel is a reasonable price to sales multiple and then back into the price per share you would be left with (85 million or so shares outstanding at this point). My own estimates suggest $40 per share is a VERY conservative estimate after approval.

2) People who say the FDA would be breaking with precedent to approve this drug are correct. This is important to note. The reason this statement is not negative is it's exactly what the new (a year or so in the position) FDA head, Dr. Andrew Von Eschenbach, has been saying he wants; in his words, he wants the FDA to be "a bridge, not a barrier", as it historically has been a barrier. His words - "patients" before "process". Dr. Von Eschenbach is the reason that Dendreon's drug was evaluated by the committee known as CTGT (Cellular, Tissue, and Gene Therapy), another break in traditional FDA ways of doing (or not doing) things, as old-style chemotherapies were reviewed by a committee known as ODAC, which has a history of putting "process" before "patients" (see Genta, for example). Dr. Von E has also publicly stated a goal to end the suffering of cancer by 2015, and has suggested that we are on the 'eve' of a new paradigm in cancer treatment, in bringing immunotherapies to the patients who need them. This will break FDA history, but in the right way, for the right reasons, to benefit patients.

3) As of last count, there were still some 23+ Million shares being sold short, so when you read some analysts' reports, ask them whom they represent (long holders or short holders) and take what they've said with that in mind. There is a LOT of money at stake on both sides and, lately, the short side has taken a significant hit. This week will be a very volatile one for the stock, so don't buy the stock if you can't stomach a bumpy ride.

4) Dendreon owns patents on its "antigen cassette" technology, used to create Provenge. It has earlier state therapies using this same technology that may be brought back to trials in multiple cancers once the company has received approval for Provenge and has been able to raise funds (at this stock price, additional financing is minimally dilutive) to advance both Provenge manufacturing AND its earlier stage immunotherapies. This will again expand the markets into which Dendreon can lead the way for patients and the FDA.

5) Most importantly for me, and I think for prostate cancer sufferers, is this single, crucial point of data. At the end of three-years, 34% of patients who received Provenge were alive.
11% of those who received the placebo were alive. According to the statistics of the trial, there is approximately less than a 1-in-40 chance of this being due to chance. Those are very, very important numbers. You can go from having a 1-in-10 chance of being alive in three years to a 1-in-3 chance, with improved quality of life because you're not taking a brutal chemo treatment. And, if you combine Provenge with Taxotere, which is the only other approved treatment for PC and is one of those brutal chemo treatments, not only is the chemo tolerated better by the patient, but the small survival benefit of Taxotere is magnified dramatically by Provenge.

When the FDA breaks its historical patterns of blocking and process focus over patients and approves Provenge, it will mark a wonderful day for patients across this country. It will be a day of new hope, new dreams, and for those who have long been invested in Dendreon stock, it may be the start of an early retirement.

Disclosure: Author has a long position in DNDN.