Dendreon Shares Surge After Panel Backs Cancer Drug (Update4)

By Luke Timmerman

March 30 (Bloomberg) -- Dendreon Corp.'s shares tripled after the company's prostate cancer drug, the first treatment to stimulate the body's immune system against tumor cells, won support from U.S. advisers.

The Seattle-based company's shares rose $8.38 to $13.60 at 10:57 a.m. New York time in Nasdaq stock market composite trading, and earlier reached $18.05 a share. The price was $5.22 two days ago, the last full day of trading. Today's volume, at 46 million shares, was the heaviest for any stock.

Provenge would be the company's first approved drug and could generate $1 billion a year in U.S. sales, analysts say. The medicine, designed to train the body's immune system to fight prostate cancer as if it were a virus, would provide a new option for a disease that kills 27,000 men a year in the U.S. An advisory panel to the U.S. Food and Drug Administration said yesterday that Provenge is safe and ``substantially effective.''

``All of the doubts about the product have been answered,'' said David Miller, president of Biotech Stock Research, an independent equity research firm in Seattle, who owns shares in Dendreon. ``Fair value for this company is $20 a share.''

The FDA advisory panel voted 17-0 yesterday that the medicine, Provenge, is safe, and 13-4 that it is ``substantially effective,'' based on clinical trials. The FDA usually follows advice from its advisory committees in approving drugs for sale, although it isn't required to do so. Its deadline to complete the Provenge review is May 15, the company said.

Immune-Stimulation Companies

Stocks of other companies in the field of immune- stimulation therapy rose today. Shares of Cell Genesys Inc., of South San Francisco, California, rose 79 cents, or 23 percent, to $4.29 at 10:53 a.m. New York time in Nasdaq Stock Market composite trading.

Shares of Medarex Inc. of Princeton, New Jersey, rose $1.27, or 11 percent, to $12.76 at 10:55 a.m. New York time in Nasdaq Stock Market composite trading. New York-based Antigenics' shares rose 12 cents, or 6 percent, to $2.10 at 10:53 a.m.

Many investors have been betting Provenge would fail. About 26 million shares were held in a short position in March, more than twice the number in December, according to data compiled by Bloomberg. People who sell short try to profit by borrowing stock and repurchasing the securities later at a lower price to return to the holder. The stock traded at $3.65 a week ago.

Advising Caution

After the vote, UBS maintained its position that Dendreon is unlikely to get a speedy FDA approval because of cautious comments from the panel, according to a note to clients by analyst Graig Suvannavejh. ``Many voting `yes' did so saying that the `definitive' proof would come from an ongoing trial,'' Suvannavejh wrote.

``What this says to the FDA is that the drug has value to patients,'' said Mitchell Gold, Dendreon's chief executive officer, in an interview after the advisory meeting yesterday.

The FDA's deadline to finish reviewing the drug is May 15, according to Dendreon.

Internal discussions will weigh whether the drug has demonstrated ``substantial'' effectiveness, the agency's statutory requirement, said Celia Witten, director of the FDA's Office of Cellular, Tissue and Gene Therapies. She is leading the FDA review of Provenge.

``The committee felt there was substantial evidence of effectiveness with the caveat that they want to see more evidence'' from a continuing study, said Witten in an interview after the vote.

'Well-Tolerated'

The first trial submitted by Dendreon of 127 men showed patients on Provenge lived a median 25.9 months, compared with 21.4 months for those on a placebo. The second trial, of 98 men, had a median survival of 19 months for Provenge patients.

The difference ``might be attributable to chance'' and ``doubts remain'' about how persuasive the trials were, the FDA staff said in a report released March 27.

Provenge appeared to be ``generally well-tolerated'' for prostate cancer patients, the staff said. There was a higher risk of stroke in those taking the drug, 3.9 percent, compared with 2.6 percent of placebo patients, raising a ``potential safety concern,'' they said. The most common side effects were fever and chills lasting one to two days, the company said.

A Matter of Choice

Another trial of 500 men, designed to measure the drug's survival benefit, is enrolling patients, Dendreon said. Instead of waiting until 2010 for that study's results, the advisory panel decided that doctors and patients should decide whether to try the treatment.

``This is not about establishing overwhelming evidence. From the evidence we've seen, there is reason to say it's time to give patients a choice,'' said panel member Francesco Marincola, an immunologist with the National Institutes of Health in Bethesda, Maryland, in an interview after the meeting. ``This opens up a whole new field of vaccine therapy that is very promising.''

The drug, called an immunotherapy, doesn't work like a traditional cancer treatment. Blood is drawn from a patient, and some white blood cells vital to the immune system are separated in a lab.

The white blood cells are shipped to the company and incubated with a genetically engineered protein found on prostate cancer cells. The white blood cells are supposed to recognize the protein as an invader and attack the cells that contain it. The revved-up white blood cells are then shipped back and re-infused into the patient.

Dendreon failed to demonstrate in trials that Provenge could slow the cancer's progression, the primary statistical goal of the studies. The company has said that may be because it can take weeks for Provenge to charge up the immune system.

To contact the reporter on this story: Luke Timmerman in San Francisco ltimmerman@bloomberg.net .

Last Updated: March 30, 2007 11:24 EDT

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