Here Come the Dendreon Lawsuits

Looks like Paris Hilton and drugmaker Dendreon (Nasdaq: DNDN  ) have something in common, now that both may have to deal with the courts and litigation over the coming months.

On Wednesday the inevitable class action "shareholder" lawsuits started following the approvable letter Dendreon received last month for its lead drug Provenge. Among the six frivolous reasons for the class action suit are that Dendreon failed to mention that the FDA decision on the Provenge marketing application could come before the PDUFA date of May 15 and that "study D9902A was not a complete clinical trial due to the limited number of enrolled patients, and therefore it lacked complete statistical significance."

These are among some of the dumbest reasons ever for a shareholder lawsuit. It's common knowledge that the FDA Prescription Drug User Fee Act date is only a goal for when the FDA will give a drug candidate the thumbs up or down, and is not a hard date when the FDA makes a regulatory decision. The FDA even says itself that its goal with a priority review PDUFA date is to review a compound "within 6 months of receipt (of BLA or NDA)" and not "6 months exactly after the receipt of a BLA or NDA."

The other main reason for the class action suit is that the phase 3 study D9902A was not a "complete clinical trial" and lacked "complete statistical significance." These are such an incoherent set of words that it's hard to even discuss what the complaint is about. It's painfully obvious that these lawyers don't have any understanding of statistics. Neither I, nor any statistician, could tell you what "(lacking) complete statistical significance" means or what a "complete" clinical trial is.

While the phase 3 study results that Dendreon has presented have been confusing and hard to analyze for many investors, this does not mean that the company misrepresented the data. From this analyst's perspective, Dendreon has never delayed, sugar-coated, or tried to obfuscate the Provenge data or progress of the drug. Its actions are in possible contrast to drugmakers like Telik (Nasdaq: TELK  ) , Neurochem (Nasdaq: NRMX  ) , Introgen (Nasdaq: INGN  ) , or Northfield Labs (Nasdaq: NFLD  ) -- see here, here, here, or here for more details.

As Rule Breakers analyst Charly Travers found after examining a sample of the biotech companies, it's almost inevitable that a drugmaker will get sued following negative clinical trial results or an unsuccessful go with the FDA. Investors should take these lawsuits with a grain of salt until they examine the details of the suit. In the case of this Dendreon "shareholder" suit, it looks to be just another frivolous grab at a drugmaker's cash.

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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.


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