What the heck do you do on days like this? Cash out? Stand pat? Never buy in?

Dendreon (NASDAQ:DNDN), everyone's favorite tiny biotech, got bigger today. A lot bigger! The stock was up a lot today -- as much as 203% (that's a one-day triple!) -- but it seems to have settled up about 135%. Even better for some, it is currently a six-bagger from its lowest close of $2.61 last month. All this because positive phase 3 results for its prostate cancer treatment, Provenge, were announced this morning. You've got to love those breakout biotechs.

The huge jump, of course, begs the question: Is Dendreon overpriced at this new level, meaning you should sell? Or should you buy? While I cautioned readers that the price last week didn't justify the risk of the trial flopping, with the data now out, most of the risk has vanished.

We'll have to wait and see the full details of the trial when they're presented at the American Urological Association's annual meeting at the end of the month, but things sure look promising for Food and Drug Administration approval. The FDA already signed off on the trial design, and Provenge met its primary endpoint of extending overall survival, which should be enough to get a thumbs-up from the agency. The company expects to submit the data to the FDA by the end of the year, so a six-month review would result in a decision by June of next year.

You'll recall that Dendreon submitted a marketing application for Provenge a few years ago. In 2007, an FDA advisory panel recommended approval of the drug, and the market cap ran up to around $1.9 billion. This was before the FDA went on its run of not approving drugs recommended by its advisors, including Schering-Plough's (NYSE:SGP) Bridion, Theravance's (NASDAQ:THRX) telavancin, and Remoxy from King Pharmaceuticals (NYSE:KG) and Pain Therapeutics (NASDAQ:PTIE) (just to name a few). So while there was some risk of rejection (which is what happened), many investors obviously thought an approval was imminent. With the company having met its latest phase 3 goal, a similar market cap seems justified at this point.

Another way to look at the potential value of Dendreon is to compare it to other one-drug wonders. Onyx Pharmaceuticals (NASDAQ:ONXX), for instance, sports a market cap of about $1.5 billion, but it's only entitled to half of the revenue from its oncology drug Nexavar. The drug managed only $678 million in sales last year because of relatively small treatment areas and competition from Pfizer's (NYSE:PFE) Sutent. That's much less than I'd estimate Provenge is capable of, given the potentially large market -- prostate cancer is the most common type of cancer after skin (nonmelanoma) and lung -- and the probable high price tag. This should give plenty of room for the stock to run if Provenge gets on the market.

Dendreon doesn't look overpriced here, but with any FDA approval more than a year away, there's plenty of time to buy in.

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Fool contributor Brian Orelli, Ph.D., doesn't own shares of any company mentioned in this article. Pfizer is a recommendation of the Inside Value newsletter. The Fool has a disclosure policy.