Dendreon shares plummeted more than 57% in Wednesday trading after the FDA told the company it wants more clinical data to support claims in its application for Provenge prostate cancer treatment. Denedreon has asked the FDA for clarification as to the nature of the data it wants, but says it is working closely with the FDA to resolve its questions. It said "Given our strong belief in the survival benefit and safety profile of Provenge, coupled with the positive outcome of the Advisory Committee meeting, we are disappointed that this decision will cause a delay in the availability of Provenge for patients who suffer from advanced prostate cancer." Dendreon also said the FDA has asked for more information about the chemistry and manufacturing of the drug.
Provenge would be Dendreon's first marketed drug since its 1992 founding. The medicine triggers the immune system to attack malignant tumors. In a study, it prolonged lives in advanced cases of prostate cancer, but failed to meet the trial's primary goal of slowing the spread of the disease: One trial of 127 men showed patients on Provenge lived 25.9 months vs. 21.4 months for those on a placebo. Another trial of 98 men showed a median survival of 19 months, vs. 15.7 months for the placebo.
Analysts estimate Provenge's U.S. sales potential at $1 billion/year. David Miller of Biotech Stock Research told clients in a research note that the company's $106 million in cash/investments (as of year-end) should last it until it can get interim results from a survival study in H2 2008. He also said the company would now likely halve its 250-person workforce to save money; Dendreon declined to comment on job cuts.
About 34 million shares of the company were held in short positions in April, up more than 100% since January. CEO Mitchell Gold sold 202,000 shares in April at about $13.46, which reprsents about 20% of his stake, after the FDA voted 13-4 in favor of approving Provenge. Miller said the company can now expect shareholder lawsuits over insider trading.
Sources: Press release, MarketWatch, Bloomberg
Commentary: Dendreon Tanks On FDA Letter - How I'm Playing It • Dendreon: The Short Story • Why Dendreon is a 'Must-Own' Stock For Biotech Investors
Stocks/ETFs to watch: Dendreon Corp. (DNDN). Competitors developing similar medicines: Cell Genesys Inc. (CEGE) [-9.23%], Antigenics Inc. (AGEN) [-10.80%]
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