Dendreon May Yet Have Its Day

Following up on my earlier post on Dendreon (DNDN), I am surprised that the FDA's decision came earlier than the deadline of May 15, but of course, not surprised at all with their decision. I am not to say that DNDN is a bad stock to invest in - in fact, I would suggest investors keep a close eye on this one for opportunities to get back in. Another spike won't be impossible.

On Wednesday, the FDA gave a so-called "approvable" letter to Dendreon Corp. requesting more information on the Provenge drug. The word "approval" makes the situation sound good, implying that approval of the drug is still possible contingent that the information provided meets the requirements. Given the political factors behind this decision, I would think that as long as information is provided, the FDA would have enough support to cover their back to go ahead with the approval. The only question that remains now - is when?

What are these additional requests from the FDA? First, they have asked for more clinical data to prove that the Provenge drug is effective. This was a rationale arguing for a rejection by the FDA, given that test subjects were only slightly under 130 patients, and that full-effects of tests wouldn't be fully observable until 2012. Dendreon has said that they're trying to clarify that request in order to determine exactly what type of data the agency wants.

The FDA also asked for additional information on the chemistry, manufacturing and controls section of the approval application. Dendreon said it believes it can get that information to the FDA "in a timely manner." This information would be easier to come by by the Company, and might actually imply a quicker than expected approval.

Remember that in mid-January, the FDA had granted the drug "priority review", meaning that it views the Provenge drug as a medical product that addressed unmet medical needs. The conclusion towards the end of March was that the drug is "safe". In recent days, many critics, analysts and investors had been debating the results of the FDA. The debatable topic was whether the evidence was substantial enough for a clear approval - evidently not.

I wouldn't suggest investors walk away from this one - rather, it's a good time to keep your eyes on them. Like I suggested above, approval of the drug is imminent, the only question is when, which largely is dependent on the information provided to the FDA. Let's see how fast Dendreon will be able to do that. Hopefully then, it'll be better news. The bad news: the information to be provided may take anywhere from 18 months to three years down the road.

Quick Financial Fact: Dendreon doesn't currently have any products for sale. In 2006, the company posted a net loss of $91.6 million, or $1.27 a share, compared with a loss of $81.5 million, or $1.36 a share, in 2005. Revenue stood at just $273,000 vs. $210,000 the year before. Based solely on this, analysts have recommended a reasonable price of approximately $6.

Disclosure: Author has no position in DNDN

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