Sunday, March 25, 2007

Dendreon (DNDN) - A Lottery Ticket For Some, But Survival For Many More

A Food and Drug and Administration advisory panel is set to review whether Dendreon's prostate cancer drug Provenge is worthy of approvable letter status. Provenge is the first ever immunotherapy to treat prostate cancer and the panel meeting will take place on Thursday. It is likely that briefing documents will be posted on the FDA's web site on Tuesday which could lead to pre-meeting volatility as players tried to interpret how the panel will lean.

Data released late last year by the company showed great promise in extending the survival of advanced stage prostate cancer patients. Further detail found here. But a key problem with Dendreon's trial was that in a key respect it was a failure since the trial did not achieve delaying so-called "time to progression" which is discussed here. The last link is to an older article and some of the outstanding issues have since been resolved, but the "time to progression" issue remains a sticking point. Will the FDA panel overlook that failure and see the drug's effectiveness through the eyes of a prostate cancer patient and the apparent life extension that it gives, or will data be a sticking point?

Puts and calls are VERY expensive as you might imagine with open interest in favor of the call side by roughly 2 to 1 in the April contracts. Short interest on the stock is about 20 mln shares. IF there's a favorable ruling, the move in the stock could be explosive. Negative ruling and no doubt the stock sinks below $2.

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