A Make or Break Week for Dendreon (DNDN)

Dendreon(DNDN-NASDAQ) is going to be one of "THE TOP ISSUES" this week.  The company will have and FDA review panel on Thursday, and you should just expect that if you are an active trader or if you hate being in a stock when it is halted then you should just expect a trading halt this Thursday in DNDN shares.  The company’s lead product candidate Sipuleucel-T (Provenge) is having the FDA panelreview as far as its life-extending statistics for prostate cancer.  This drug indication is NOT a cure for prostate cancer, but statistically the company has shown that it extends the life of late-stage prostate cancer patients.  For some reason the coverage on this issue was very muted last week with only a few sites covering this issue ahead of time.

On Friday, DNDN stock traded almost 5-times its average daily volume and even its stock optiosn saw much activity.  The issue at stake is that some are betting that DNDN will fall to $3.00 or under and some are betting that it will rise to $6.00 or more.  Because of the number of patients whose life could be extended (if these statistics hold up as well as they have in the past), this is a potential blockbuster drug.  I have even been told that this could be the "next Genentech" if this works, but what seems more realistic on the obvious surface is an Imclone Systems comparison as more fair.  That is analogous rather than saying the company will spring into the multi-billion dollar range; the reason is that this is in lay terms a life extending drug, but it should be quite clear that this is not a cure.

The beauty of being independent is that we can use "user generated content" when we see fit.  This piece is not really user generated, but one of our readers and users did send some very helpful data.   You will have to makethe real determination and any prediction on your own, because the FDA is the FDA and thatis an entirely different animal in making predictions.  But here issome of the data that may be of help:

There is a presentation from the Chemotherapy Foundation Symposium XXIV (November 8-11, 2006).Scroll down halfway down the page and you can view Daniel P. Petrylak,M.D. presentation "Sipuleucel-T In Advanced Prostate Cancer."  It isroughly a 9 minute presentation but it gives some great data comparingDendreon’s Sipuleucel-T who received DoceTaxel (Docetaxel was approvedas Taxotere (R) in 2004 for Sanofi-Aventis(SNY)).
If you don’t want to watch an audio presentation with slides then you can read some of the basic data on it from the Nov 10 06 press release.  Here is Dendreon’s basic information link with some data as well.  There is a presentation made with slide show data for the FDA with a long transcript from earlier last year, but please be advised that its is a LONG TRANSCRIPT.  Here is a Download dendreon_provenge_powerpoint.ppton this.

This panel backing on a YES/NO basis is no light matter, regardless of the investor communitythought on this.  Breast cancer is a disease that has been a trueburden to much of the female population.  Prostate cancer is the equivalentfor men now that we are living longer, particularly with the old adage now prevalent: "If you are aman, you’ll probably get prostate cancer if you live long enough." In no way is this meant in stressing prostate cancer overbreast cancer, but Provenge is for prostate cancer and is Dendreon’s lead product candidate.  Prostate cancer is something that has affected some of my own closefamily friends and the aftermath of it even after treatment and surgerygoes above and beyond what men (and there wives and families) wouldconsider a great quality of life. 

On March 1, Dendreon announced that the FDA Office of Cellular,Tissue and Gene Therapies Advisory Committee will review the BiologicsLicense Application for PROVENGE(R) for the treatment of asymptomatic,metastatic, androgen-independent prostate cancer on March 29, 2007. TheCenter for Biologics Evaluation & Research has oversight of theCellular, Tissue & Gene Therapy Advisory Committee. 

As a reminder, if things go very well for Dendreon, the company doeshave an active securities shelf filing that will allow them to raise upto $146.8 million.  That may be a wildcard in the scenario, but if thecompany is going to have a true blue winner on its hands in last lineof defense against prostate cancer then they will probably have notrouble getting the market to absord the dilution.  If the company gets a recommendation against supported approval and the stock tanks it will probably not be able to raise the cash as easily, unless it can show that it has some "new and improved data or methods"’ but if the company is thrown the curveball of a "request for more information" then the company may still raise cash.  The reason for stressing this is that if the decision goes in favor of the company, just don’t think that there wasn’t at least one source telling you that there would be some shareholder dilution so that the company can go boost its cash for sales and marketing.

It would not be appropriate for me to throw up a prediction withoutgetting to evalue the actual panel and hearing their last thoughtsright ahead of the meeting, and the chances of getting that is probablyZero Percent.  But there "may" some hope yet for such a criticalproblem, particularly since the late stage of cancer treatment here ismeant not as a cure but as a life extender.  Investors on both sideshave been making their bets.  I do have some more calls in that havenot been returned and I am waiting on more data and opinions on thissubject, so there is a shot that there will be more data posted by usahead of the FDA meeting.  Also, we should get the NASDAQ ShortInterest data for March early this week, but the FEB SHORT INTEREST was20.3 million shares and that is a large number as it represents almost 10 days of volume.

As far as the "user generated" portion goes: I want to extend personal thanks to  Michael K for sending me some of thedata here and some thoughts.  It was a lot of information and we dolook into many things in depth like this when we can.  This is notpurely user-generated content, but it does show that influentialoutside help from users and readers can be when objective data can be shared.  Thank you for the information Mike.

Jon C. Ogg
March 25, 2007

Jon Ogg can be reached at [email protected]; he does not own securities in the companies he covers.