Is the FDA's Action Positive For Dendreon?

Echo To All submits: The FDA took the most expected course of action yesterday regarding Dendreon (DNDN). It is still a bit ambiguous as it leaves the FDA with the decision to disregard the interim results. I say this because the FDA already disregarded an obvious positive review from the Advisory Committee, so they can also most certainly disregard positive interim data.

If DNDN learned anything from the strong arm tactics from the corruption within the FDA, they will partner with a high powered big boy now. They can still go at it alone, but that will require a secondary, and if they do plan on going alone, the secondary should come very soon. But observing the corruption of the FDA, they will need a partner to get Provenge through and to market by 2008. (The reason I use the word corruption… the minority voices of the FDA with obvious conflicts of interest were able to sway the FDA decision against the FDA’s own findings within the Briefing Documents and overwhelming majority opinion of an Advisory Commitee. I define this as corrupt!)

Throughout my readings of various blogs and message boards, and even CNBC, I've noticed that all have stated that yesterday’s news was ‘good’ news. I guess it can be viewed as ‘good’ when the FDA’s previous uncertain remarks become certain. This result was expected and it was one of the first assumptions management gave during their conference call earlier in the month. If the interim data on survival is positive (as described in the SPA - Special Protocol Assessment), the FDA most approve the drug. However, the interim data will not be ready until 2008 (probably the 2nd half).

In my opinion, the only reason it is positive is because the FDA gave certainty to the situation. I am hard pressed calling yesterday’s development positive as I still strongly believe the FDA short-changed the company (and Prostate Cancer patients) by not giving it Conditional approval from the data already in hand. The fact that there is now certainty gives DNDN the ability to partner with a big boy, and have some kind of leverage. I hope management does partner, but over the three years I have been following this company the one thing I recognize is CEO Mitchell Gold’s stubbornness. This makes me uncertain as to whether or not DNDN will partner.

If Gold and management decides to ‘go at it alone’ they will need to do a secondary, and the stock can most certainly see the 4-6 dollar range again, as we await the data. If management decides to partner DNDN can very well see 15. The cash infusion, and more importantly the validation from a Big Boy (and their FDA lobbying abilities), will give the Street tremendous confidence in Provenge. (In other words, DNDN needs to partner.) Yesterday’s development is a firefly’s light in a very dark abyss for the sole fact that a partner can arise. If they partner, that light will get brighter and larger.

Disclosure: Author has a long position in DNDN

DNDN 1-yr chart