Shares of drugmaker Dendreon (NASDAQ:DNDN) have almost tripled, following a positive recommendation from an FDA advisory committee that was set up to debate the merits the company's lead cancer compound.

The advisory committee panel vote was strongly in favor of Provenge, with 13 out of the 17 panel members voting that there was "substantial evidence" of the drug's efficacy and all 17 voting in favor of it having a "reasonably" sound safety profile. This isn't nearly the same thing as a recommendation for the drug's approval when its PDUFA date comes up on May 15, but it is a much more positive outcome than the mixed panel vote toward the negative that I was expecting.

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. The positive advisory-committee outcome significantly raises the odds of the drug's approval in the coming months, but the FDA does not always follow the lead of its advisory panel and the chance of an approvable letter is still very high.

Even if an approvable letter asking for more clinical trial data is given, Dendreon does have clinical trial data coming out from a now-enrolling 500 person study that could satisfy the agency's request for more data. Final analysis of the study isn't slated to occur until 2010, but Dendreon has planned interim looks at the data beforehand. This is the type of data that could possibly satisfy any approvable-letter concerns.

If it gains approval in the coming months, Dendreon plans on marketing Provenge by itself with a small sales force in the United States. The company's marketing application with the FDA is for the treatment of asymptomatic, metastatic, androgen-independent prostate cancer, or AIPC (i.e., the patient is experiencing no symptoms, the cancer is growing and not responding to treatment with hormone deprivation therapies).

Last week, Dendreon presented estimates that there are roughly 58,000 men in the U.S. suffering from asymptomatic, metastatic, AIPC. But there will probably be much off-label usage of the drug among the 99,000 patients in the more broadly characterized metastatic AIPC grouping.

Dendreon has been coy about its plans for Provenge in the European Union for the past several years, except to say that it has been searching for a marketing partner for the drug overseas. Estimates are that roughly the same number of men suffer from late-stage prostate cancer in Europe, so this represents another sizable market opportunity as well.

Going out on a limb and making predictions about drug approvals is always risky when dealing with an unpredictable regulatory agency that changes personnel with the shifting political winds. If Provenge gains full approval in May, it still would be the most unexpected drug approval since cancer treatment Iressa, considering the dearth of clinical trial data for the drug. A less conservative stance by the FDA in this regard would be good news for all smaller drug companies developing prostate cancer therapies, including potential competitors like Cell Genesys (NASDAQ:CEGE) or GPC Biotech (NASDAQ:GPCB).

Although Provenge represents a completely new treatment modality, should it get approved on the first go-around its valuation should fit somewhere between other one-drug cancer wonders like Onyx Pharmaceuticals (NASDAQ:ONXX) and ImClone Systems (NASDAQ:IMCL). A lot of factors affecting the company's valuation are still up in the air, though. For instance, which company would Dendreon decide to partner with to market Provenge outside the U.S., should it eventually go on to gain approval in other places?

In the past, Dendreon's management has likened the company to a baby version of Genentech (NYSE:DNA), since it is trying to introduce a totally new treatment modality for cancer with its immunotherapy products. Much as Genentech's monoclonal antibodies can be targeted against different types of cancers, Dendreon's management has been testing its immunotherapy platform technology against different types of cancers in the hopes that it can be used to fight a broad assortment of tumors.

Development of its other clinical stage immunotherapy candidate,  the breast cancer treatment Neuvenge, has been on hold since finishing phase 1 trials in 2004. Now that Dendreon is valued at over a billion dollars, it can afford to raise cash at less prohibitive levels of dilution and restart some of these other immunotherapy projects as well as move its monoclonal antibody and small molecule programs along. Any dilutive financings will probably not come until after the FDA gives its opinion on Provenge in the coming weeks. After this positive advisory committee meeting with the FDA, the drama with Dendreon and its attempts to get Provenge through the regulatory hurdles are not over yet -- but the show just became much more interesting.  

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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.