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Diagnosing Dendreon Postmortem

A drug gets denied marketing approval by the FDA, and the biotech's share price falls more than 50%. Was there any way we investors could have foreseen this happening? Today, drugmaker Dendreon (Nasdaq: DNDN  ) experienced this unfortunate event when the FDA issued an approvable letter for its lead compound, potential prostate cancer treatment Provenge.

What sent shares sharply lower wasn't simply the fact that an approvable letter was given for Provenge. It was that the FDA asked for more efficacy data on the drug, and the nature of the data the agency is asking for sounds like it will necessitate further clinical trial work. The FDA also requested more information on the manufacturing of Provenge, but this request sounds like it will be easier to complete (although other drugmakers like Discovery Labs (Nasdaq: DSCO  ) have proven this assumption wrong).

The approvable letter with Dendreon didn't come as much of a surprise to me. After all, it's important that investors are able to separate out what sort of decisions they would make on a drug's approval, from the decisions that the FDA would make on the drug. It's almost always best to base your estimates about how the FDA will vote on its past actions.

As I said in my last article about Dendreon, "My quibble with Provenge has never been that the drug wasn't promising. Rather, it is that within the constraints of the FDA, Provenge has not demonstrated enough statistical proof of efficacy to make it through the drug approval process without more clinical trial data."

Besides AstraZeneca's (NYSE: AZN  ) cancer drug Iressa, which has turned into a big flop, no other compound has made it through the FDA on such a weak data package. After today's decision on Provenge, it doesn't look like the FDA is ready to risk allowing a second possible Iressa on the market. (The FDA got egg on its face when a later clinical trial for Iressa showed that the drug failed to improve survival for the cancer patients it was approved to treat.)

Even with the negative FDA decision on Provenge, Dendreon is not dead in the water. It still has the 500-person D9902b phase 3 trial under way, which could supply the "additional clinical data in support of the efficacy claim" that the FDA is looking for. However, the issue with the D9902b trial is that Dendreon doesn't expect it to be completed until 2010. This could mean years of waiting and copious amounts of share dilution for Dendreon investors unless the FDA allows an interim look at the trial's results to satisfy the request for more efficacy data.

Speaking of dilution and share price, Dendreon currently has a market capitalization in the $500 million range. Now that the drugmaker's future is once again based on the outcome of an uncertain phase 3 study years away from completion or even interim analysis, Dendreon is much more deserving of a valuation in the $300 million to $500 million market cap range of other oncology-focused biotechs at this point in their development, like ArQule (Nasdaq: ARQL  ) or Seattle Genetics (Nasdaq: SGEN  ) .

The lesson that investors can learn from the Dendreon saga is that betting against historical FDA actions is usually a losing proposition. It's also important to remember that companies will always try to present their efficacy and safety data in the best possible light, so you have to view their top-line press-release data presentations with a sharp and skeptical eye and be wary of anything that doesn't sound right -- like with Neurochem's (Nasdaq: NRMX  ) recent press releases regarding its Alzheimer's compound.

In the end, it is usually the little details that end up meaning big things for investors. The earlier FDA advisory panel vote of 13-4 in favor of Provenge sounds unequivocally positive if you don't take a closer look at what the panel was actually voting in favor of. It wasn't the drug's approvability, but rather "whether there is substantial evidence that the product is efficacious," which is a completely different and much less contentious issue.

It's important to remember that when dealing with the FDA, things are never as easy or transparent as they seem, and interpreting the nuances of FDA-speak is an incredibly difficult trick. Those involved with Dendreon found out that hard lesson today.

Looking for more Foolish drug stock coverage? Check out the Fool's market-beatingRule Breakers newsletter. You can check out all our recommendations, as well as get access to our message boards and exclusive content, with a 30-day free trial.

Fool contributor Brian Lawler still doesn't understand all the nuances of trying to speak German and does not own shares of any company mentioned in this article. The Fool has a disclosure policy.

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  • Report this Comment On October 08, 2008, at 11:04 AM, prginww wrote:

    The Unreachable Availability of Provenge

    Terminal patients are those who are not expected to live due to usually illness such as advanced cancer. If the patient has 6 months or less to live, those patients are considered terminally ill. Regardless, if a patient is terminal, they are without a cure or a tolerable treatment for their illness. Since such patients will likely die in a short period of time, treatment options, even if unproven, are often desired by such patients. This is understandable, because at such a severe stage of illness, such as prostate cancer, possible extension of their lives with comfort is worth it to them, regardless of lack of evidence of proof of whatever treatment that may be advantageous to them regarding these issues. The FDA, however, claims authority on the treatment options of such patients, although that administration has proven itself over the years to be rather inadequate with its frequent drug recalls and black box warnings, and they do these things only under pressure from the public, usually. So, the FDA may not be an ideal judge regarding such issues as treatment options for very sick patients.

    Prostate cancer is rather frequent, with between 10 to 20 percent of men predicted to acquire the disease during their lifespan, resulting in about 30,000 deaths a year from this disease. It is the third most common cancer one can acquire, and the United States has the most cases diagnosed n the world, which usually strikes men past the age of fifty. One million do have prostate cancer in the United States, and about thirty thousand will die from the disease each year. Furthermore, there are different stages of prostate cancer, and the more severe the prostate cancer cases are, the higher of what are called Gleason Scores will be, and the severe cases are the most difficult to treat, of course.

    Yet innovation still exists in medicine. A few years ago, a small Biotechnology company called Dendreon was working on a conceptually new treatment for the worst prostate cancer patients, and this treatment therapy created by Dendreon was named Provenge. Provenge is the first immunotherapy biologic treatment for the progressed prostate cancer patients. Usually, these patients are unresponsive to usual treatment methods for prostate cancer, and are left with chemotherapy, specifically a hazardous drug called Taxotere, as their only treatment option at such a traumatic stage of prostate cancer. Understandably, most patients at this stage refuse treatment entirely, largely due to the brutal side effects of such chemotherapy treatments as Taxodere, which include cytotoxic side effects and haematological adverse events. The immunotherapy method developed by Dendreon requires the removal of white blood cells of the diseased patient and, after altered, are re-injected into this patient now designed to attack within the diseased body what is called PAP, which is on prostate cancer cells only. This treatment requires only three such injections in a period of six weeks. This results in life extension twice that of Taxodere, and Provenge is free of the discomfort of the only other treatment of Taxotere. The medical community and survivors of prostate cancer were elated and waited with great anticipation for access to this treatment method.

    Fortunately, as the years passed, Provenge, by 2007, had convinced others of its safety and efficacy in its benefit for severe prostate cancer patients. This caused great joy to such patients and their families. Perhaps greater elation was experienced by the caregivers and specialists of such a disease, such as Urologists and other caregivers who treat such patients. While Provenge was on fast track status at this time at the FDA, as they at the time agreed with the benefits of this new therapy, the FDA panel recommended with clarity the approval of Provenge based on its proven and superior efficacy and safety that was demonstrated in its trials, as they announced in March of 2007. Lifespan extension of severe prostate cancer patients was twice as long with Provenge versus Taxotere, which is the only other treatment indicated for this stage of prostate cancer that had only superficial efficacy, and is free of the toxic effects of this chemotherapy agent.

    Now for the bad news: With great shock and surprise, the FDA agency rejected the approval of this great treatment for very sick patients due to, they said, ‘lack of data’ in May of 2007. This contradicts their favorable opinion of Provenge weeks before delivering this terrible news. Especially when one considers the FDA Commissioner is a prostate cancer survival himself! Many found this ruling completely unbelievable.

    Soon after this judgment was passed by the FDA, conflicts of interest were discovered by others. For example, a member of the FDA agency who was evaluating Provenge, Dr. Scher, was found to have a financial commitment to a future competitor of Provenge that was being produced by a company called Novacea, and this company had signed a co-promotion agreement with Schering to provide support for this similar prostate cancer drug treatment being developed by this company. Dr. Scher never disclosed this conflict during the approval process of Provenge. As it turns out, this anticipated prostate cancer drug made by Novacea was discovered to have serious flaws, and Schering pulled out of the agreement with Novacea. In addition to this incident and before May of 2007, baseless letters were anonymously delivered to the FDA stating negative qualities about Provenge that were without Merit and speculative claims about the treatment were fabricated in these letters, it is believed Oncologists were speculated to lobby and pressure the FDA not to approve Provenge due to anticipated revenue loss. Yet overall, the disapproval by the FDA of Provenge angered and saddened many, and a newly formed advocacy group called Care to Live filed a lawsuit against the FDA for their clear lack of etiology for not approving Provenge, as they should have, according to the data about the therapy last year.

    Terminal patients, I surmise, desire comfort during their progressive disease that has placed them in the last chapter of their lives, and certainly should have a right to choose any treatment that possibly could benefit them. Clearly, because of their lack of desirable and beneficial treatment options, most are willing to assume any risks of unapproved, yet potentially and likely beneficial treatments such as Provenge. Because they have a terminal illness, these benefits provided by Provenge take priority over any possible safety issues of unapproved treatments for them. The controversy could be concluded by a terminal patient signing a waiver of some sort, perhaps, stating that they are responsible for the consequences of an unapproved treatment regimen such as Provenge. Yet the FDA, with reckless disregard and with deliberate intent, denied what likely was a great treatment therapy for these very ill patients. Several have concluded that the FDA ultimately harmed others more by not approving Provenge, or offering any valid explanations explaining their action. Thier action was irrational, as one considers the agreement of the FDA and others regarding the need of the benefits provided by Provenge for the sickest of the sick with advanced prostate cancer.

    The FDA does in fact presently have the ability to grant what is called conditional approval for such treatment methods as Provenge at this time, and why they have not remains completely unknown. What is known is that they are accelerating and worsening the illness, an illness the FDA pledged to protect so long ago. So now the FDA appears to be a bought, corrupt, and incompetent administration without loyalty and dedication to the public and its health, but with what appears to be overt collusion with venture capitalists and corporations. This needs to be corrected in any way possible for the lives of others- regardless of their own present health state today. Because of the FDA's flaws in the past regarding drugs taken off the market along with increasing black box warnings of other drugs, which happens often with both, the individual should be the deciding factor in such matters of deciding thier treatment course presently, along with their health care provider, due to this unreliable administration called the FDA.

    “Facts do not cease to exist because they are ignored.” --- Aldous Huxley

    Dan Abshear

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