SEATTLE ( TheStreet) -- Elliot Favus doubled down Tuesday on his bearish Dendreon ( DNDN) call, but investors seemed to largely ignore him. Favus, who runs an eponymously named healthcare research firm, sent a note to clients early Tuesday in which he repeated his March 2 claim that U.S. regulators were planning to convene an advisory panel to review Dendreon's prostate cancer vaccine Provenge. Favus' Tuesday note, which instructed clients to sell Dendreon, was titled "5 Reasons We Believe There Might be a Provenge FDA AdComm Panel." The disclosure at the bottom of the report says neither Favus nor his family members own long, short or options positions in Dendreon. Dendreon spokeswoman Katherine Stueland, reached by phone Tuesday night, says FDA has not told the company to prepare for an advisory panel meeting to review Provenge. The FDA is expected to issue an approval decision for Provenge on May 1. Favus' note circulated around Wall Street's trading desks all day but with little effect. Dendreon shares closed Tuesday down 29 cents, or less than 1%, to $36.48 on less-than-average volume of 2.9 million shares. At the low of the day, Dendreon was down just 2%. Contrast that to the stock volatility that ensued on March 2 when Favus issued his first report claiming FDA was planning a Provenge panel. On that day, Dendreon slumped as much as 10% before finishing up 2%. Trading volume was an extraordinary 31 million shares. It's not possible to definitively confirm or debunk Favus' report because, as he points out correctly, the FDA can decide to hold an advisory panel meeting for Provenge at any time if the agency chooses to do so, even after the so-called PDUFA date (the agency's drug approval decision date deadlines) has passed. On March 2, FDA, responding to questions about the original Favus report, appeared to take the unusual step of stating publicly that it was not planning to hold a Provenge advisory panel at all. Later in the day, however, an agency spokeswoman backtracked somewhat to only confirm that no such panel was in the planning stages at that time. "We believe that the Street is not expecting an FDA Panel to discuss Provenge and that the announcement of an FDA Panel to discuss Provenge would put significant downward pressure on DNDN shares," writes Favus in Tuesday's report.
That's likely true, but Favus does not explain the rationale for why FDA would decide to convene an advisory panel for Provenge so close to the agency's May 1 decision date, or even beyond it. FDA reviewers have had the Provenge clinical data in their possession since last December, which would have given the agency ample opportunity to hold a panel meeting if one was warranted. FDA did put out early feelers to prostate cancer doctors approximately six months ago about the possibility of convening an outside panel to review Provenge, but the agency apparently never followed through, according to two institutional investors who spoke with doctors familiar with FDA's plans. These investors both work for large healthcare hedge funds but are prohibited by their charters from speaking on the record to the media. One of the hedge fund investors owns a significant long position in Dendreon. Favus' five reasons for why FDA could hold a Provenge panel are listed below, followed by reaction and comments: 1. Favus says he contacted 69 doctors/scientists to ask them if they had been in contact with FDA about a Provenge panel. Two of these experts told Favus that FDA has sent them invitations to a panel, while another three experts indicating that FDA "might" have contacted them. Thirty-two others said no. The remaining 32 experts queried by Favus did not respond, he says. 2. The FDA has tentatively scheduled a meeting of the Cellular, Tissue and Gene Therapies (CTGT) Advisory Committee for Sept. 15-16, 2010. This is the same advisory committee that met in 2007 to review Provenge the first time. Favus says he believes this meeting could be set up to discuss the drug again. FDA has not yet disclosed an agenda for this meeting. Favus does not explain in his report why FDA would decide to hold an advisory panel for Provenge five months after the passing of the drug's PDUFA date. He also doesn't mention that the last CTGT meeting on Provenge resulted in a vote recommending the drug's approval. A second panel could easily vote in favor of Provenge again, especially considering that there is now more clinical evidence, not less, to prove the drug's efficacy.
3. It is not too late for FDA to convene a Provenge panel, says Favus, citing two examples -- Auxillium Pharmaceuticals' ( AUXL) Xiaflex and Eli Lilly's ( LLY) prasugrel -- in which FDA held late panels. True. FDA typically notifies companies of plans for a panel meeting no later than 55 business days prior to the drug's approval decision deadline. However, FDA can bend its own rules. The last two reasons cited by Favus involve what he says are "missing data" and "inconsistent presentation" of results from the phase III study of Provenge. This "data controversy" could compel FDA to discuss in front of a panel of experts, claims Favus. The phase III Provenge data has been presented at two major medical meetings, last April at the American Urological Association annual meeting and earlier this month at the American Society of Clinical Oncology's Genitourinary Cancers Symposium. Dendreon's Stueland says the presentations of the Provenge data at both meetings were consistent and that there are no missing data. The data demonstrate that Provenge prolongs survival in men with advanced prostate cancer. -- Reported by Adam Feuerstein in Boston. Follow Adam Feuerstein on Twitter.