Want some proof that the stock market is irrational? Shares of Dendreon (Nasdaq: DNDN ) were up more than 23% yesterday after a congressional probe was requested against two members of an advisory panel that reviewed Dendreon's lead drug in March.
In March, an FDA advisory panel was convened to discuss Dendreon's potential prostate cancer treatment Provenge. Advisory panels are often held when the FDA reviewers of a drugmaker's marketing application want to hear doctors', patients', and other sources' opinions on a subject.
There have been several advisory committee hearings this year that have produced mixed data on cancer drugs like Genentech's (NYSE: DNA ) Avastin for breast cancer or GPC Biotech's (Nasdaq: GPCB ) chemotherapeutic for prostate cancer. The Provenge advisory panel was a little different.
Panel members voted unanimously, 17-0, that Provenge had demonstrated safety in clinical trials, and 13-4 that there was substantial evidence of its efficacy. Two of those four negative efficacy votes were from doctors now being accused of not disclosing conflicts of interest prior to the panel hearing.
Following the panel vote, in May, the FDA issued Dendreon an approvable letter for Provenge, denying approval of the immunotherapy until more proof of efficacy was established with the drug.
Two panel members who voted against approval immediately were beset by accusations that their stance on Provenge was influenced by potential financial ties to other drugmakers. There isn't a major problem if doctors have financial ties to other drugmakers. In fact, most leading doctors do, but these two doctors were accused of not disclosing these connections ahead of the advisory panel, which would be a no-no.
The congressional probe request (seen here) was made by three House members. Investors shouldn't get their hopes up for anything substantively beneficial to Dendreon coming out of this even if an investigation of the two panel members does occur.
The bottom line is that this probe request will have no effect on Dendreon or Provenge's odds at making it through the FDA, since it was not the FDA reviewers of the Provenge marketing application that were accused of anything bad.
I'm not going to speculate whether anything bad occurred with these two doctors, but it's worth noting that there were 17 voting advisory panel members, as well as other speakers, and these two doctors were far from the dominating voices at the hearing. Even ignoring their two negative votes wouldn't change the outcome of the panel hearing, which was already a net positive in favor of Provenge.
Investors who believe the vote tally is all the FDA looks at are missing the point of an advisory panel. The accompanying explanations and all the hours of discussion provide the most value in helping to guide the FDA in its decision. You can read each panel member's vote on Provenge and reasons for it starting on page 370 of the hearing transcript (PDF).
Interim results of a phase 3 study for Provenge are set to be announced in the second half of next year. The study results from this trial will be the determining factor on whether Provenge makes it to the market, no matter how much other noise surrounds Provenge.