Dendreon’s Move Still Leaves Many Questions (DNDN)

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Dendreon Corp. (NASDAQ: DNDN) was an incredible performer today, and one which makes you wonder how well it would have done had the stock market not been so ugly.  Its interim data from Phase III PROVENGE IMPACT trial showed that the IDMC observed no safety concerns, and it recommended that the study continue.  The company has completed the planned interim analysis of the Phase III, randomized, double-blind, placebo-controlled IMPACT clinical trial designed to assess the safety and efficacy of PROVENGE in men with metastatic androgen-independent prostate cancer.  We do want to outline how that despite this data being good and despite it being an active day trader stock again, Dendreon is not suddenly a slam dunk and still has many risks associated with it.

Dendreon remains blinded to the data, but the independent datamonitoring committee reported to Dendreon a 20% reduction in the riskof death in the PROVENGE arm relative to placebo and observed no safetyconcerns and recommended that the study continue to its final analysis.

The final analysis is expected in the middle of 2009 and if the studydemonstrates approximately  a 22% reduction in the risk of death (basedon 304 events), the company would expect the study to meet its primaryendpoint of overall survival.

The data is mixed depending upon whether you are bullish or bearish onthis and we are merely outlining why investors need to treated lightlybefore jumping in and making big bets here.  For starters, it is moreof a bet than an investment, just like it sounds.  The company is stilltechnically an at-risk company for the future.  It is going to tradesomewhat as a call-option in the fight against prostate cancer.  Italso has severe FDA issues, which are still outstanding and unresolvedas of now.

On the flip side, there are reasons to like it as well.  Its data doeskeep it "in the game."  It genuinely may be able to beat some of itsopposition inside and outside the FDA.  It may even get some addedCongressional help in its fight.  It does have an army of loyalists whoare hoping for this to be the life extension it is meant to be.

Investors and traders alike are going to be paying close attention toits progress.  There will be many days where rumors or market chats getthe stock moving up or down when no news has come out of the company.  This was also just featured this weekend in our weekly "under $10 stocks" letter.

Dendreon traded up 33% today to $6.93 on more than 35 million shares.At one point its stock traded north of $9.00.  It traded more than40,000 Call Option contracts today for the October current monthexpiration, it traded over 37,000 call option contracts for Novemberexpiration, and traded over 90,000 call option contracts for theJanuary-2009 expiration.  If you add all that up on a fully leveragedbasis, you would see that this is equivalent to more than another 16.7million shares.

Stay tuned for more data as "later in 2009" is now much closer than it sounds.

Jon C. Ogg
October 6, 2008