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Dendreon Runs to Daylight

Approval for Provenge is likely, but not clear-cut. Do the right thing and take some profits.

The Food and Drug Administration will approve



Provenge prostate cancer vaccine on or around its May 15 deadline.

I don't normally start a column with such a declarative opinion, but it seems right in this case. Thursday's positive

recommendation from the FDA's advisory panel was a big win for Dendreon.

I stayed

neutral on Provenge going into the panel, but the discussion and vote -- despite some strangeness and controversy -- moves me into the pro-Dendreon camp.

That's not to say I think Dendreon is home free. The FDA decision carries risk -- if pressed for odds, I'd say there is an 80% chance that regulators clear Provenge for approval and immediate sale. That leaves a 1-in-5 likelihood that the FDA delays Provenge approval and asks Dendreon for something more before it gives the marketing OK.

On Friday, Dendreon shares jumped $7.71, or 148%, to close at $12.93. Not bad, unless you were short, as many of Wall Street's biotech hedge funds surely were. The stock did open Friday as high as $18, so a lower close probably reflects a nervousness going into the FDA's May 15 decision. Given the advisory panel vote, that's not unexpected.

Dendreon shares were up more than 5% to $13.63 in recent Monday trading.

If you owned Dendreon going into Thursday's panel and now sit on a tidy profit, don't be piggish. At the very least, take whatever investing steps are necessary to lock in some winnings ahead of May 15. Thursday was a clear win, so enjoy it, but don't lose everything if, for some reason, the FDA decides not to grant approval to Provenge.

I posted a

column a couple of weeks ago (with additional comments

here) that laid out my best and current thinking on Provenge sales projections for the U.S. (peak sales about $1 billion) and how that translated into a fair value for Dendreon of around $27.

I don't see any reason now to change my numbers. Just remember: My forecasts hinged on Provenge approval, so no, I didn't expect the stock to get there Friday.

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Dendreon doubters were fazed Thursday, but they're not going away. And to be perfectly honest, their skepticism deserves consideration. So, while I've given you my view on what Dendreon shares are worth, I have no idea if, when or how long it might take to get there.

But back to Thursday's panel vote: in a word, crazy! To be honest, I didn't think it was looking good for Dendreon as the panel members began chewing over the FDA's penultimate efficacy question: "Does the submitted data establish the efficacy of

Provenge in the intended population?"

Oncologists Maha Hussain and Howard Scher immediately took up the mantle of conservative data analysis and strict biostatistical methods, arguing that the Provenge data weren't strong enough to justify a yes vote. Hussain, in particular, seemed very persuasive, and I thought she would convince many other panel members to also vote no.

But then a pair of Dendreon presenters took the podium to defend Provenge, and that prompted panel member Robert Samuels of the Florida Prostate Cancer Network to make a passionate and human plea for Provenge's approval, countering the cool, clinical logic offered up by Hussain.

"At the end of the day, this is not about statistics but about patients' lives," said Samuels, himself a prostate cancer survivor. "The panel should take the courageous step and approve

Provenge. Let doctors and patients make up their own mind."

When the debate ended and voting on the Provenge eficacy question began, it was clear that panel members were struggling with their choice. Had the vote been hurried, through, my sense is that it would have gone against Dendreon, although by a close margin.

That's when things got a bit strange. Celia Witten, the FDA department head in charge of the Provenge review, suggested to the panel chairman that the Provenge efficacy question could be amended. After some back and forth, panel members were asked to decide -- yes or no -- on whether the Provenge clinical data "provided substantial evidence of efficacy."

This was a slightly lower burden of proof, although still strong enough to give the FDA the guidance it needed. When the votes were tallied, the count wasn't close: 13-4 in favor of recommending Provenge for approval.

Obviously, changing the key question in mid-vote is controversial and suggests to some that the FDA might want to look askance at the panel's recommendation and turn down Provenge.

But it was Witten -- the FDA reviewer ultimately responsible for making the Provenge approval decision -- who allowed the change. I think that says a lot about the FDA's thinking on Provenge, and it points to a May 15 approval.

There also was a lot of discussion about the ongoing Provenge phase III trial, which is enrolling 500 prostate cancer patients and will likely be the final arbiter on whether or not the vaccine can extend survival. Panel members and the FDA are clearly eager to get that information, but it's not likely to be ready until 2010.

The bear case against Provenge has been -- and continues to be -- that the FDA will need to see survival data from this phase III study before approving Provenge. But three years is a long time to wait, especially for a relatively nontoxic vaccine like Provenge that has some compelling efficacy data already in hand, as well as significant public support (as was demonstrated Thursday).

My best guess is that the FDA will grant approval to Provenge next month, with some promise or guarantee that the ongoing phase III study is completed and survival data collected as soon as possible.

David Miller, who runs the

Biotech Stock Research


, suggested Friday that the FDA might make Provenge approval contingent on completion of enrollment in the phase III study. (Dendreon said Thursday that about 400 patients out of 500 are already enrolled.)

This is an interesting idea, because it would balance the needs of those who want a guarantee of more clinical data on Provenge with those who want the drug on the market as soon as possible.

Miller, by the way, deserves a hearty congratulations for his longtime bullishness on Dendreon. I've known him for years, and we've often disagreed about biotech stocks, but his research on Dendreon and Provenge has been spot-on. Well done, David.

Of course, Miller won't be happy or totally right about Dendreon until the FDA's approval stamp hits the Provenge application. There is still a bit of time before that takes place, and given the stock's history, the wait could be an interesting ride for investors.

Adam Feuerstein writes regularly for In keeping with TSC's editorial policy, he doesn't own or short individual stocks, although he owns stock in He also doesn't invest in hedge funds or other private investment partnerships. Feuerstein appreciates your feedback;

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