Dendreon

I think I’d probably get strung up if I didn’t mention Dendreon (DNDN), given their recent news.

At the JPMorgan conference, Dendreon announced that the final analysis of the IMPACT trial would arrive in April. This caught some folks by surprise, since the company had been forecasting mid-year. It also caused some analysts who don’t know as much about statistics as they think they do to opine this “early” arrival of the analysis means the drug doesn’t work.

Even assuming the analysis is “early,” it doesn’t tell us the trial is a failure any more than late data implies the trial is a success. In this case, it does tell us the trial may be running differently than the previous 2 Phase III trials of Provenge. That does imply increased potential risk for investors counting on simply a repeat of the previous trials, but it does not imply success or failure.

Dendreon has released data showing how IMPACT patients are generally the same as patients in the initial two Phase III trials of Provenge in terms of projected survival at entry, crossover to Provenge from the control arm, and a couple of other metrics. They also disclosed in October that the performance of Provenge arm compared to the control arm was positive and within hailing distance of the performance seen in the initial two trials.

We already know this is not going to be another GVAX. GVAX is another prostate cancer immunotherapy created by Cell Genesys (CEGE). My firm predicted failure of this drug for years, and two Phase III trials showed GVAX patients doing no better and in some cases worse than patients who didn’t get the drug.

Provenge, in contrast, showed a 20% survival benefit over the control arm at the interim analysis. That 20% wasn’t big enough to trigger a successful end to the trial at the interim, but 22% will be enough to trigger success at the final.

So, long-suffering Dendreon bulls (like me) will be rooting for those extra 2 points of patient benefit.

The last time good news arrived for Dendreon (in the form of a positive advisory panel vote that was later overruled by an FDA whose decision was mired in internal politics and conflict of interest), the stock opened in pre-market up nearly 400%. It closed the first day up about 150%, then soared to the mid-$20 range (up over 500%). Those ranges are certainly in play this time if the final analysis in April is cleanly met. Options activity has been heavy.

For those interested in learning more, my firm has been covering Dendreon since 2000. I’m not sure there is anyone out there who knows more about the company than we do. We’ve been right for years about the science and fundamentals, though my prediction of an 80% chance of FDA approval after the advisory panel vote turned out to be wrong when the FDA took the unprecedented step of overruling their advisory panel on a drug for a life-threatening condition. The FDA overruled advisory panels before, but never to reject a drug for a life-threatening condition that an advisory panel decided met the criteria for FDA approval.

In a note out this week, we straightened out some misconceptions about how the final analysis will be conducted and outlined some alternative paths to approval if the analysis specified in the Special Protocol Assessment for the IMPACT trial is not a clean success. These clarifications would be especially helpful to anyone who is running statistical models on the outcome of the IMPACT trial.

For those interested in the story, our work provides a factual counterpoint to some of the sell-side analysts out there. Those analysts can certainly be congratulated for their correctness on the price action, but some haven’t got a single fundamental prediction right yet (other than the aforementioned rejection by the FDA – which I’m the first to admit was a big one to get right even if they did so by flying in the face of a couple of decades of FDA precedent).

In any case, April should be an “interesting” month for those of us who follow the stock.