Dendreon's Got Miles to Go With Provenge

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I want to conduct a postmortem on my Dendreon(DNDN Quote) call. I was right on the Provenge interim analysis, but came up wrong on the stock.

As I expected, the interim analysis of the Provenge study failed: The data were not strong enough to stop the study early. The stock should have dropped. Instead, Dendreon shares rose 33% Monday because the company surprised us all by releasing what looked like promising Provenge survival data from the study.

In Tuesday trading, Dendreon was down 13.5% to $6.

At the interim analysis, prostate cancer patients treated with Provenge had a 20% reduction in the risk of death compared with patients treated with a placebo. This certainly looks like Provenge is helping these patients, and if so, the odds that Provenge will be a winner next year (when the final analysis of the study is announced) have increased.

To declare victory at the final analysis, Provenge must reduce the risk of death by 22% compared with placebo. Looks like a slam dunk, doesn't it? Provenge is already at 20% and only needs to get to 22%. Easy!

Not so. Yes, the odds that Provenge will win next year have increased, but there is still a lot of failure risk here. I covered the Dendreon short in the model portfolio, but I wouldn't consider going long the stock at this time.

I could bury you under bio-statistical mumbo jumbo to explain all this, but I'll spare you the misery and instead employ a sports analogy.