Well, my trade in Dendreon (Nasdaq: DNDN) from Thursday did not go well on Friday. I bought it after it retraced from it's $13/share high, under the belief that $10 would provide psychological support as the shorts covered. Recall that some 40-50% of the stock's 83 million share float has been shorted and that's significant considering the stock was once $25/share just a few months ago. But as a result of the controversial FDA ruling, the shares plummeted.

Here's a link to the CNBC interview with Dr. Gold, DNDN CEO back in March when the FDA panel recommended approval for Provenge:

March, 2007 interview on CNBC with DNDN CEO

DNDN short interest as of May 15

The company has completed Phase III testing on its Immunotherapeutic drug for Prostrate Cancer, Provenge and has received "fast track" authority for final approval. And what is more interesting is that it's the first cancer drug that is designed to assist the bodies own immune response to target the cancer cells, rather than typical chemo-therapy that uses chemicals to destroy the cancer (and generally winds up killing other healthy cells and weakening the immune system as a result). So we're talking about some innovative bio-technology here that could have a huge impact on fighting not only prostrate cancer, but other forms as well.

But what is the company's stock worth, should their drug be approved by the FDA?:

DNDN value analysis

This gentleman from the "Seeking Alpha" website suggests that there are signs of major "corruption" within the FDA advisory panel that has been delaying approval of Provenge and this makes sense to me:

Seeking Alpha's comments on DNDN and FDA

So we're engaged in some serious market valuation "Hardball" and both the shorts and longs are lining up for a market "brawl" in coming weeks. This is going to be an interesting week to observe in the stock.

I posted this commentary on the DNDN Yahoo discussion thread yesterday and I still stand by my comments:

My Yahoo comments

But what are the charts telling us about investor psychology in the shares?:

Daily Bigchart for DNDN

But even more telling is the weekly chart:

DNDN Weekly Bigchart

Now if you'll note on that weekly chart, everytime the weekly Stochastic has turned upward, it has led to major gains in the share price. Hence, my decision to speculate on having a chance to participate in a second run-up (having missed the first one .. sigh). There's just that much money at stake that it's hard to discern what the true valuation of this stock should be based upon the potential of the drug.

But what is the status of Provenge? Is it safe? Is it effective? Well, the FDA has ALREADY ruled that Provenge is safe by a UNANIMOUS vote of 17-0, so what's the problem with approving it?

FDA minutes from March meeting of advisory council:

FDA Advisory Council minutes discussing Provenge..

Pg. 370 is where they discuss effectiveness and the controversial NO votes were cast by 3 out of 4 panel members who have a conflict of interest and had to be granted waivers

And did Dr. Scher, one of the "Nays" on the FDA advisory committee, lie about his conflict of interest, for which he had to receive a waiver to be on that FDA advisory committee? The member who went to the extraordinary measures of actually writing a letter warning against approving Provenge, here is a list of his UNDISCLOSED conflicts of interest that should have been sufficient to deny his eligibility for being on that that committee to begin with? Decide for yourself:

Dr. Scher is on the Science Advisory Board of an investment fund with over $900 million under management. Why wasn't this disclosed on his COI waiver? And why wasn't it disclosed that Novecea is one of those portfolio companies? Fine, if he had disclosed this, then it could have been adjudicated. But it NEVER came up in the COI waiver letter.

Dr. Scher on Science Advisory board of investment fund

Summation of Dr. Scher's undisclosed Conflict of Interest

FDA confirms safety of Provenge

And read this logically based letter from another DNDN shareholder, to the FDA:

Open Letter from DNDN shareholder to FDA

I can't find any fault with the logic the author displays. Clearly the drug is efficacious because 34% of the patients who took Provenge are still alive, as compared to only 11% who took the placebo. And the FDA advisory committed UNANIMOUSLY agreed that Provenge is safe, so what's the problem with temporary approval of the drug, pending final results of the IMPACT study? If it's safe, let THE PATIENT make the choice of taking it or not.. If anything, it provides HOPE...

And what's even more interesting, and something that will likely receive some news coverage on Monday, is that a Cancer patients have spontaneously banded together to lobby congress to have the FDA approve the drug NOW, and not wait. That's unheard of, from my past experience. The group, ProvengeNow will be assembling on Capital Hill at 10 AM on Monday, and since I'm near-by, I think I'll try and be in attendance as well (with Laptop in hand because the Scrutinizer is addicted to his Level 2 market data). But it will be interesting to see if any Senators step out to speak with the demonstrators, and how the FDA will respond to future calls from Senators asking:

"If this drug has been unanimously deemed safe, and 75% of you deemed it effective, why are you holding up approving it? Get off your butts and approve the drug NOW!!! I have constituents WHO VOTE and I don't want them to die before the next election!!.."

That's how politics work.

This could get interesting...

ProvengeNow assembly on the Upper Senate Park on Capital Hill

ProvengeNow's mission statement

Now one more point. DNDN has been "flying solo" throughout this development process, apparently not being willing to partner with a big pharmaceutical. There has been some rumours flying through the CBOE in Chicago (where coincidentally the ASCO convention is occuring this weekend) that DNDN will arrive at a partnering agreement in order to ensure they have the political clout to get their drug onto the market first. Some shareholders have mentioned that DNDN fired their marketing staff recently as a cost-saving measure, presumably because they would not rely upon their partner firm to market and distribute the drug. If this is the case, presumably it could prove to be a tremendous driver for the stock price and the shorts will find themselves facing a problem.

In sum, owning DNDN is a high risk venture that could provide massive returns, or (at these current valuations) some time spent in Cramer's "House of Pain". But again, looking at the charts, I'm wagering I'll be hearing that sultry voice telling me I'm in the "House of Pleasure" sometime in coming weeks.

The Scrutinizer