Updated from March 8

Dendreon ( DNDN) will take its prostate cancer drug Provenge in front of an FDA advisory panel on March 29. This is going to be a major stock-moving event, and for me, at least, the outcome is very much in the air.

I said as much in a column last week, but I also promised to dig deeper into the story. Having done so, here's a discussion of the issues surrounding Provenge's date with the FDA.

What is Provenge?

You might have heard Provenge referred to as a prostate cancer vaccine. That's an easy descriptor, but it's not entirely accurate because the drug isn't an inoculation and therefore won't prevent you from getting cancer.

What Provenge does is prime your immune system to recognize a certain protein expressed on prostate cancer cells. When your immune system encounters this protein they recognize it as foreign and it attacks. In this way, Provenge is really an "immunotherapy."

Neat stuff, has there ever been an immunotherapy approved by the FDA?

No, that's what makes Dendreon such an interesting story. Many other "cancer vaccine" companies have tried but failed. Dendreon is the first to seek FDA approval.

What's going to happen at the FDA advisory panel meeting on March 29? I've heard that this panel should be favorably inclined to like Provenge. Isn't this a good development for Dendreon?

Yes and no. The FDA's Cell, Tissue and Gene Therapy Advisory Committee that will review Provenge is a more hospitable environment for Dendreon than the agency's cancer division, known to be real data-driven sticklers. As analysts at LifeTech Research first pointed out in a Dendreon report, the CTGT folks are no pushovers, especially the woman who runs the division, Celia Witten -- she is tough. When she was a director in the FDA's medical device division, she led the effort to reject Cyberonics' ( CYBX) neuro-stimulation device for depression, overturning the positive recommendation of an advisory committee panel.

But the Provenge clinical data is understood to be really good. Didn't the drug improve survival in prostate cancer patients by 4½ months compared with men who got a placebo? I also understand the safety profile of Dendreon is exceptional.

Yes, that's correct. The survival benefit and its low toxicity are Provenge's biggest selling points and could very well persuade experts on the March 29 panel to recommend approval. But the reliability of that survival benefit isn't crystal-clear.

Huh? There's nothing clearer than survival in a cancer study. A patient is alive or dead, correct?

True, but the Provenge phase III trial was designed to measure time-to-disease progression -- not survival -- as its primary endpoint. And on this score, the trial was a statistical failure. The measurement of survival was a secondary efficacy endpoint in the study, so while it was statistically significant, the validity of this finding is not a slam dunk.

Even the authors of the Provenge clinical study, published last year in the Journal of Clinical Oncology, take a cautious approach:

"While overall survival at 36 months was prespecified in the analysis plan, it was not specified as the primary efficacy end point, so the P value obtained for this analysis should be interpreted with caution," the authors wrote. A P value is a statistical measure of confidence that an outcome is the result of treatment, and not random chance.

This is old news. Dendreon did its own analysis to confirm Provenge's survival benefit, correct?

Indeed, and much of what Dendreon did is pretty convincing. For instance, skeptics had long thought that there were imbalances and other factors between the two arms of the Provenge study that favored the drug over placebo. This would explain why Provenge patients lived longer, skeptics believed.

But when researchers crunched the numbers, the truth was actually reversed. There were few imbalances in the study's two arms, and in fact, there were several factors that actually worked against Provenge.

Are there any other data that help or hurt Provenge's chances?

Yes, on both counts. Dendreon has data from a second, smaller clinical trial that show a similar survival benefit over more than three months for Provenge over placebo. But in this study, the result was not statistically significant. In fact, it wasn't even close.

Dendreon did run another analysis to account for imbalances, just like the first study, and when the numbers were crunched the survival benefit was statistically significant. It remains to be seen how the FDA and the advisory panel handles this data.

C'mon Adam, you're usually an opinionated guy, but in this case, you're sitting on the fence. What gives?

What gives is that I just don't know how the advisory panel shakes out. If the presentations and deliberations lean toward conservative data analysis and adherence to strict biostatistical methods, Provenge is going to be in for trouble.

But if the opposite occurs, if experts on the panel look at the drug through the eyes of a prostate cancer patient and worry less about statistical rigor, Provenge could have a good shot.

I understand your neutral stance, but it's been years since the FDA approved a new prostate cancer drug. In fact, the last prostate cancer drug brought before the FDA, Xinlay from Abbott Labs (ABT), was rejected. Also, the new FDA commissioner, Andy Von Eschenbach, is a prostate cancer survivor. I just don't see how Provenge could get dinged.

I understand that point of view, but at the end of the day, the FDA will make its decision based on clinical data. Sentimentality has its place, but I'm not sure I'd make a bet on it. And remember, Dendreon is running another clinical trial with Provenge in prostate cancer. This one is big -- 500 patients -- and is designed specifically to answer the survival question. If the FDA or the advisory panel isn't convinced on this go-round, they'll wait to see the results from this ongoing study. Unfortunately, survival data from that trial aren't likely to be ready until late 2008 or 2009.

Can you give me a rough idea of what happens to Dendreon's stock either way after March 29?

First, don't forget that the FDA will release briefing documents -- its review of the Provenge data and questions for the advisory panel -- on March 27. That's two days before the panel convenes. Expect some volatility in Dendreon's stock around that.

If the advisory panel rejects Provenge this time around, Dendreon's $4-plus stock gets cut in half easily. The company has a bit more than $1 a share in cash.

If the advisory panel is positive, Dendreon zooms. This will probably sound very conservative, but it's not hard to get to $500 million in sales for Provenge on its initial approval. Slap a five times sales multiple on that and discount it any way you want, because it doesn't matter -- Dendreon's current $280 million-plus market cap will be way undervalued.
As originally published, this column contained an error. Please see Corrections and Clarifications.

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