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Dendreon Drops on Drug News

Several analysts vigorously reaffirm their favorable views, nonetheless.

Updated from 3:28 p.m. EDT

Shares of



, which have jumped more than 50% this month on news about its cancer-research efforts, dropped Thursday when the company released updated information about tests on its experimental prostate cancer drug Provenge.

Although the Seattle-based biotechnology company said a clinical trial narrowly missed a primary research goal, several analysts who like the drug's -- and company's -- prospects vigorously reaffirmed their favorable views. Still, the stock closed down 7.9%, or 83 cents, at $9.63. The stock had fallen as low as $8.74.

"Buy the dip," proclaimed Paul C. Latta, of the Seattle investment banking firm of McAdams Wright Ragen, in a research note to clients Thursday as he reaffirmed his buy rating. He doesn't own shares; his firm is a market maker for Dendreon's stock.

"This information is old news," said Mark Monane, of the New York-based Needham & Co., in a research report issued Thursday, as he reiterated his strong buy rating.

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He said investors should focus more on Dendreon for its continuing clinical trials of Provenge, a "deep pipeline" of products, strong management and approximately $130 million in cash. He doesn't own shares; Needham & Co. makes a market in the stock and has had an investment banking relationship.

The negative news for Dendreon was the final audited result from a clinical trial that examined patients treated with Provenge against patients treated with a placebo. The goal was to see if Provenge patients showed a statistically significant delay in the time of progression of an aggressive form of prostate cancer.

To be significant, results had to demonstrate a 5% or less chance of being random. The final measurement was 6.1%, down from 8.5% in the preliminary analysis.

But Dendreon said the research revealed that the median survival rate for Provenge-treated patients was 26.3 months in the preliminary results vs. 19.3 months for the placebo group. A follow-up treatment of some placebo patients with Provenge showed a median survival rate of 23.9 months.

"We have previously reported that (a clinical trial) indicated that Provenge delays disease progression and the onset of disease-related pain," said Dr. Mitchell H. Gold, Dendreon's chief executive, in a prepared statement. "Together, these data provide evidence that Provenge holds promise to change the outlook for the many prostate cancer patients worldwide."

The final audited results also noted better outcomes than the preliminary results in Provenge's ability to delay disease progression and to reduce the onset of cancer pain compared with men given placebos.

Dendreon's stock received a boost earlier this month when the FDA said it would accelerate its review of Provenge, allowing Dendreon to submit data in segments rather than to wait until all of the research results have been tallied. A so-called fast-track review means the agency could rule on the product within six months rather than the traditional 12 months.

The crucial challenge now for Dendreon is another Phase III test that would confirm a previous test of Provenge's success in delaying the progression of less aggressive prostate cancer and the development of cancer-caused pain. That's the research for which the FDA has granted a fast-track review and which could serve as the company's foundation for its FDA application. The company is enrolling patients, and analysts expect the participants will be chosen by the first quarter of 2004.

Provenge is designed to stimulate a man's immune system into fighting prostate cancer, the leading cancer diagnosed among men. Dendreon says there are more than 1 million U.S. men with prostate cancer; last year, the disease was diagnosed in 189,000 men, and it killed 30,200. There are no therapies for the aggressive disease -- asymptomatic metastatic androgen independent prostate cancer -- in the Provenge clinical trials.