Second time's the charm for Dendreon (Nasdaq: DNDN); the Food and Drug Administration approved its prostate cancer treatment, Provenge, yesterday.

Earlier this week, I said that shares would probably jump on approval of Provenge simply because there was some chance of a rejection. But I wasn't expecting Dendreon to jump quite that much. Shares closed up more than 26% after the early afternoon announcement, and they're up a further 13% this morning.

Then again, I wasn't expecting the company to charge $93,000 for the three-infusion treatment. That's a steep price for a drug that's only shown to extend lives by an average of 4.1 months.

Cancer drugs have gotten expensive over the past couple of years, but Provenge's sticker price seems awfully high. An article in The New York Times last year pegged the cost of Eli Lilly (NYSE: LLY), Merck KGaA, and Bristol-Myers Squibb's (NYSE: BMY) Erbitux at $10,000 per month, which works out to about $50,000 for the average patient. Biogen Idec (Nasdaq: BIIB) and Roche's Rituxan costs between $5,000 and $15,000 per month. Novartis' (NYSE: NVS) Gleevec runs about $3,600 per month, while Provenge's main competition, sanofi-aventis' (NYSE: SNY) Taxotere, costs $4,900 per month.

Dendreon is ready to start selling Provenge right now, but the ramp-up will take time as it builds other plants. In the first year, the company expects to treat 2,000 patients.

So let's do some math: 2,000 patients at $93,000 each is $186 million. At the current market cap, that's a price-to-sales ratio in the mid-30s. Mighty steep, but of course Dendreon will be able to grow sales substantially. For now, Provenge is limited to treating only those with advanced prostate cancer. According to the National Cancer Institute, 27,000 men died from the disease last year.

Dendreon has removed the regulatory risk from its stock, but it's far from risk-free. Selling the drug will be easy -- patients have been awaiting its arrival for three years -- but Dendreon still needs to persuade insurance companies to pay the high price. To support its inflated market cap, Dendreon can't stumble on the manufacturing front either.

Letting your winner run is probably a prudent move at this point, but keep a close eye on Dendreon. It's not out of the woods yet.

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Fool contributor Brian Orelli, Ph.D., doesn't own shares of any company mentioned in this article. Novartis is a Motley Fool Global Gains recommendation. The Fool has a disclosure policy.