A Lost Hope? Dendreon Derailed While Archaic FDA Promises 'New Era'

| About: Dendreon Corporation (DNDN)

Two weeks ago, I wrote that “Dendreon (DNDN is a stock from the backwoods that has moved to the forefront as a new day dawns at FDA”. I was right on the first half of that statement. Dendreon has been on the forefront, trading more 100% of its issued shares twice in the past 30 trading days, and exceeding one billion shares traded since March 30, 2007.

On March 29, 2007 an FDA panel voted 17-0 on safety and 13-4 in efficacy for late stage prostate cancer patients. Since then, Dendreon has flown high and is about to crash with the hopes of their patients, advocates, and investors.

In the meantime, the FDA is on a half baked mission to change itself. It is stuck in the Stone Age. There way of carrying out their mission would offend the Geico cave men.

Their leader Dr. Andrew von Eschenbach is promising a new era. Excerpts from his recent speeches:

“…We are committed to serving patients to bring them new products and a new vision. Ability to bring new solutions for cancer. I saw much suffering and dying. Important we continue to make progress. Progress has to have a purpose. We are immersed in era of opportunity. Opening up opportunities for new solutions for cancer, diabetes, etc...”

“….A bridge between discovery and development to delivery - rapid, translation and delivery of those interventions. Accelerate and facilitate, while we can still assure patients, not just as a bridge but to protect their health. Rapid is not reckless. Bring effective agents rapidly not less safe. Most profound transformation of what is now possible in this new era. Effectiveness and safety can go hand in hand. Profound transformation has come about because of the advancement made. Cancer is no longer a lump or a shadow, but for the first time at the genetic, molecular and cellular level. Opened up a new understanding to create new solutions…”

“…..FDA is positioned to take a new view of its future, to be that bridge to bring the products to patients for safety and efficacy. FDA is going to work across the entire life cycles of those products. Total life cycle - need to ensure understanding of outcomes. Promote and protect public health. Work collaboratively and cooperatively. Enhance our understanding, to maximize their effectiveness and minimize side effects….”

“….Science led and science based. So radical a transformation that one must think about it like a metamorphosis, the difference between a caterpillar and a butterfly. The change is profound, it’s occurring as we speak…”

"People will no longer need to suffer from a disease. They will be able to see their grandchildren grow up."

The new FDA is a“a bridge rather than a barrier”, and “guard rails instead of speed bumps and potholes in the development of new therapies”.

“We can change the world”.

Well the guard rails seem to have derailed Dendreon.

• Dendreon has lost 75% of its market value in the last two days.
• Dendreon has spent much needed cash for its survival in anticipation of approval.
• The Complete Approval Letter is incomplete.
• Investors have lost hundreds of millions of dollars.
• Short sellers have won, because they were able to forecast FDA’s outcome.
• Above all the patients have lost the most….Hope!

In the aftermath of FDA’s Complete Response Letter, Dendreon is hanging on to its life much the same way as its patients were awaiting the promise of provenge…with a wing and a prayer!

As I listened to the conference call from Dendreon yesterday, President and CEO Dr. Mitch Gold was unsure of exactly what additional data would suffice. It was even more shocking to learn that Dendreon had, “limited to no contact” with the FDA since the Advisory Panel meeting. Yet, Dendreon continued to post over 44 job openings on their site, spent several million dollars on purchase of commercial antigens in anticipation of the expected approval. As a result, Dendreon’s losses widened and their cash on hand has diminished substantially.

Dendreon had an opportunity to sell up $200 million of additional shares during the stocks run up to over $20 dollars. Were they so confident, or did they misread FDA’s posture after the panels meeting.

According to Dendreon’s press release Wednesday:

The FDA has requested additional clinical data in support of the efficacy claim contained in the BLA. The Company is seeking a clarification from the FDA as to the nature of the data that is being requested. The FDA has also requested additional information with respect to the chemistry, manufacturing and controls [CMC] section of the BLA, which the Company believes it can supply to the FDA in a timely manner.

And today the Company is still seeking clarification. Asked if Dendreon would appeal the decision (if you can call it that), Dr. Gold said, “we could, but we will not...”

As I finished listening to the conference call, I left with more questions than I had before listening to it. The management seemed confused by the next steps. They are planning to reduce the burn rate. The website has gone from 44 job openings to no openings at this time.

In the meantime, Dr. Andrew von Eschenbach says, “We can change the world”.

Well sir, you have…

Disclosure: Author has a long position in DNDN

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