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Feuerstein's Biotech-Stock Mailbag

Dendreon's 'big' news on Provenge doesn't change much.

It's been awhile since the last Biotech Mailbag, but this week's will be devoted to

Dendreon

(DNDN)

! So warm up those keyboards, I await your hate mail. (Insert sarcastic smirk here.)

Several readers asked about Dendreon's announcement Thursday of a new data analysis that correlates the potency of the prostate cancer vaccine Provenge to overall survival.

Among those was Don. B, who asks, "Do you think the study results from

Thursday morning saying an increased potency of Provenge ... is just noise? I'm not touting or griping, I read your stuff and respect your views and your note this morning seems to have come out before Dendreon released the data."

Let's address the potency analysis first. Then, I'll recap what I wrote Thursday on our subscription site

RealMoney

, for those who couldn't read it. That dealt with Congressional hearings on Provenge and the Food and Drug Administration.

I don't think Thursday's study results are noise, but I also don't see the data as new or very compelling, especially for those trying to handicap the interim data analysis expected later this year from the ongoing Provenge phase III study.

I know anything related to Dendreon makes for a good headline -- and gets the momentum traders excited -- but it doesn't take much Googling to easily show that Dendreon has been down this path before.

Take a look at Thursday's

press release

, titled "Dendreon Presents Data Correlating the Cumulative Potency of Provenge to Overall Survival." Then, compare it to a press release issued by the company on Oct. 27, 2006.

That

announcement

was titled "Dendreon Presents New Data Correlating Potency of Provenge to Survival in Phase 3 Studies."

Sounds familiar, doesn't it? Read both press releases and you'll be hard-pressed to see much difference. Note that the older announcement was issued before Provenge was filed with the FDA, before the March 2007 advisory panel, and obviously, before the FDA decided against approving Provenge.

It didn't matter much then, and I doubt it will matter much today.

That's because both data analyses somewhat state the obvious: The potency of Provenge, i.e., the vaccine's ability to train the patient's immune system to recognize and kill prostate cancer cells, has a direct impact on the patient's response. In this case, that response is overall survival.

In other words, this analysis tells us something important about the manufacturing of Provenge, but it doesn't really provide an early signal for how well a patient will ultimately respond to the vaccine.

When Dendreon makes Provenge for prostate cancer patients, the company tests the strength of the vaccine by measuring increases in a molecule called CD54. Proper "upregulation" of CD54 tells Dendreon that a batch of Provenge just made is potent and ready to be administered to patients.

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This is an important quality-control step in how Provenge is made, and it's one reason why the FDA hasn't really had any significant issues with Dendreon related to the manufacturing or potency of the vaccine.

The data analysis announced Thursday -- and the one released back in October 2006 -- confirm that Provenge must be potent (measured by CD54 upregulation or by another test looking at total nucleated cells, or TNCs) in order for prostate cancer patients to benefit by increased survival.

What these analyses can't predict is which patients will survive longer, or how long they will survive. So there's little value here in terms of trying to predict the outcome of the ongoing IMPACT trial, which will give us a definitive answer about Provenge's efficacy. Interim results from this phase III study are expected in the second half of this year.

I know the die-hard Dendreonites don't hold me in very high esteem, but if you don't trust me, perhaps you'll trust David Miller, proprietor of the

Biotech Stock Research

newsletter -- and the most vocal and visible Dendreon bull on Wall Street.

Miller relies on subscription revenue to fund his newsletter so I won't divulge all that he said about the announcement on Thursday, but suffice to say he titled his research piece, "Nothing New in Dendreon Poster."

I did contact Dendreon to ask them to explain the differences in the two press releases. The company responded, stating that Thursday's data analysis was a "much more rigorous scientific analysis that, for the first time presented at a national, peer-reviewed scientific meeting, looks at total nucleated cells and CD54 upregulation. In addition, this analysis also adjusts for baseline prognostic factors utilizing the Cox model for the first time; previous analyses had not."

Now, for those who missed my Thursday morning post on

RealMoney

, here it is, quoted in full:

Thank you, thank you, thank you to Rep. John Dingell for injecting some rationality back into the Dendreon story.In case you haven't heard, Dingell nixed the idea of a Congressional hearing to investigate the FDA for not approving Dendreon's prostate cancer vaccine Provenge. Tuesday, Dingell, chairman of the House Energy & Commerce Committee, sent a letter to four congressmen advising them that their request to hold such a hearing was denied."An investigative hearing prior to an agency's final decision runs the risk of interfering with the normal regulatory process," Dingell wrote. "As you can understand, as the committee conducts oversight of the FDA or any other agency, it must be careful to balance the need for aggressive oversight with the equally compelling need to avoid the appearance of political interference that favors a particular interest."The idea that Congress was somehow going to force the FDA to approve Provenge without any new clinical data was absurd from the get-go, but that didn't stop the message board hucksters, daytraders and a certain cable channel devoted to financial news from blathering on repeatedly about this silly notion. Wednesday, Dendreon shares actually spiked intraday simply because CEO Mitch Gold was scheduled to speak at the BIO CEO conference in New York. As if Gold was going to suddenly announce that Provenge was approved? Well, Gold said nothing new and the stock sold off, then it sold off some more when the Dingell news hit the airwaves. Perhaps this latest episode will finally end the ridiculous speculation and rumor-mongering that has turned Dendreon into a biotech farce. The FDA and investors wait for the interim analysis of the ongoing phase III Provenge study later this year. This, and only this, will determine if Provenge is a real prostate cancer drug. The rest is just noise.

I've got nothing to add to that little rant, but it does beg a question that hasn't been asked of me lately, so I will ask it myself.

Adam F. writes, "Adam, love your mailbag. You're a super-duper biotech columnist. I have a question about Dendreon. Do you think I should own the stock going into the Provenge data analysis later this year?"

Thanks, Adam, I hear fabulous things about you, too. The direct answer to your question is, no, I wouldn't recommend owning Dendreon ahead of the phase III data analysis.

The risk of failure and/or disappointing results are too great. There is a very high statistical hurdle that Provenge needs clear in order for the interim analysis of the study to be successful. Based on what we've seen to date from Provenge, I have a hard time having much confidence in a positive result.

This is becoming a bit of

theme with me, but I don't think biotech investors need to carry so much risk by making big bets on clinical trials. If the Provenge analysis later this year is positive, Dendreon shares will soar for sure.

But that won't stop investors who buy the stock after the event from also making money. There will likely be ample opportunities to buy Dendreon at a reasonable valuation if Provenge works.

If you do decide to play Dendreon going into the phase III Provenge data, please take whatever hedging strategy is appropriate to minimize the financial pain that will ensue if the analysis is negative and Dendreon shares crater.

Adam Feuerstein writes regularly for TheStreet.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;

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