Dendreon Tries to Pick Up the Pieces

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After the negative FDA regulatory decision on its only drug candidate under development, Dendreon (Nasdaq: DNDN) held a conference call last Thursday to discuss its plans for the future in conjunction with the release of its first-quarter financial results.

As I mentioned before, Dendreon is not dead in the water after the approvable letter for potential cancer treatment Provenge. However, it is now very likely going to take positive survival data from the phase 3 study dubbed D9902b for Provenge to pass muster with the FDA.

Some may think that Dendreon will be able to fix all the issues with the approvable letter in a short amount of time. However, it should be noted that the company mentioned that it could complete the deficiencies with its manufacturing plant "in a timely manner" but when it comes to the FDA's request for more efficacy data, Dendreon made no such statement. So those holding out hope shouldn't expect any quick resolutions to these problems.

Dendreon expects to conduct an interim analysis looking at the survival efficacy data from D9902b next year and to complete the trial's final data analysis in 2010. Positive enough survival data at any point in time with D9902b will probably be enough to clinch the final approval for Provenge if the FDA's issues were only efficacy-related. But Dendreon has still not fully announced the complete nature of the FDA's issues that caused the approvable letter, so investors beware.

To reduce its $33 million cash burn rate this quarter, Dendreon plans on slashing jobs in the coming months. After a previous round of cost-cutting last year, it's unclear what other programs or staff Dendreon can cut back on to conserve its remaining $88 million in cash and equivalents and avoid copious amounts of future shareholder dilution.

After falling nearly 75% in price, shares of Dendreon are trading more in line with other oncology-focused development stage biotech peers like ArQule (Nasdaq: ARQL) and Marshall Edwards (Nasdaq: MSHL). Still, the future for Dendreon is now just as unclear as before the surprisingly positive advisory panel vote. Investors shouldn't necessarily take the smashed-down share price as indicative of a possible biotech value play, considering that the risk in shares has not diminished one bit with the fall in price.

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Fool contributor Brian Lawler does not own shares of any company mentioned in this article. The Fool has a disclosure policy.