Dendreon Nailed by FDA with a “Request for More Information” and “Approvable Letter”

Dendreon Corporation (DNDN-NASDAQ) was hammered this morning.  It received a Complete Response Letter from the FDA that is the equivalent of an "approvable letter" with a request for additional clinical data for Provenge in the fight as a last line of defense in prostate cancer.

The FDA has requested additional clinical data in support of the efficacy claim contained in the BLA. The Company is seeking a clarification from the FDA as to the nature of the data that is being requested. The FDA has also requested additional information with respect to the chemistry, manufacturing and controls (CMC) section of the BLA, which the Company believes it can supply to the FDA in a timely manner.

Initial trading is showing indications down around $12.00 in pre-market activity, but we still have more than 3 hours until the official stock market open.  That number may be higher or lower by the open.  Just last night the "at the money" straddle as a pure volatility play (May $17.50 Put & Call)  would have cost $12.90 for a May 17 expiration, and that is for what was a $17.74 stock.

Mitchell H. Gold, M.D., president and chief executive officer of Dendreon: "Given our strong belief in the survival benefit and safety profile of PROVENGE, coupled with the positive outcome of the Advisory Committee meeting, we are disappointed that this decision will cause a delay in the availability of PROVENGE for patients who suffer from advanced prostate cancer.  We are committed to working closely with the FDA to resolve these questions in a timely and efficient manner to bring PROVENGE to patients with advanced prostate cancer who currently have few appealing treatment options."

This news is too fresh to have that many analyst calls out there, but it is safe toasume there will be many analyst calls.  You can probably expect some additional fallout in many of the speculative biotech names as well.  Just on May 2, A.G.Edwards started this with a Hold rating, noting that investors would do better by staying away from the situation.

Jon C. Ogg
May 9, 2007

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