Dendreon shares plummet as FDA delays prostate cancer drug

Dendreon's shares plunged nearly 65 percent today, wiping out almost $1 billion in market value, after U.S. regulators said more information is needed to approve the company's only product, the prostate cancer medicine Provenge.

The Food and Drug Administration (FDA) asked for more data supporting Provenge's effectiveness, the Seattle company said today in a statement. Dendreon, whose shares had risen as much as five-fold since March, said it is seeking clarification.

The news pushed Dendreon's stock down $11.41 to close at $6.33. They started the year at $4.17 and climbed as high as $23.58 on April 9, after a committee of U.S. government advisers recommended approval of Provenge.

Provenge would have been the first marketed product for Dendreon since its 1992 founding. The medicine is part of a new family of drugs that trigger the immune system to attack malignant tumors. While Provenge prolonged lives in advanced cases in one study presented to an FDA advisory panel this year, the drug didn't meet the trial's primary goal of slowing the spread of the disease.

"We are disappointed that this decision will cause a delay in the availability of Provenge for patients who suffer from advanced prostate cancer," said Mitchell Gold, president and chief executive officer of Dendreon. "We are committed to working closely with the FDA to resolve these questions in a timely and efficient manner."

The FDA ruling might delay Provenge's market introduction at least until 2011, said Liisa Bayko, an analyst with Next Generation Equity Research in Chicago, in a note to clients.

Patient advocates say demand for Provenge is intense. About 50 percent of men with late-stage prostate cancer said they wouldn't consider chemotherapy because of the side effects, according to a survey of 500 patients, caregivers and doctors in 2005 by US Too International, a patient advocacy group.

"With chemotherapy, men lose their hair, throw up and die," said Jim Kiefert, a 17-year prostate cancer survivor from Olympia, who is chairman of Us Too, in a telephone interview. "This means people will die without getting a chance to try this treatment. I'm very disappointed."

The FDA also asked Dendreon for information on the chemistry and manufacturing of the drug. In a statement, FDA spokeswoman Karen Riley said some members of the advisory committee "raised issues about the strength of the data" supporting the drug's effectiveness.

Analysts estimated that Provenge had U.S. sales potential of about $1 billion a year. Dendreon's only other product in clinical development is an immune-stimulator against breast cancer.

Dendreon said it had $106 million in cash and investments at the end of December. That's enough to last the company until it can get an interim look at results from an ongoing survival study in the second half of 2008, said David Miller, president of Biotech Stock Research, an independent equity research firm, in a note to clients today.

The company will probably conserve cash by cutting half of its workforce of 250 employees, Miller said. Katherine Stueland, a spokeswoman for the company, said in a telephone interview that Dendreon hasn't made decisions on job cuts.

Many investors had been betting Dendreon would fail to win approval. About 33.9 million shares were held in a short position in April, more than double the number in January, according to data compiled by Bloomberg News. Short-sellers try to profit by borrowing stock, selling it, buying back cheaper shares later and pocketing the difference.

Dendreon CEO Gold sold 202,000 of his shares in the company on April 2, after an FDA advisory panel voted 13-4 in favor of approving Provenge. The shares were sold at about $13.46 a share, according to a filing with the Securities and Exchange Commission. The sale was worth about $2.7 million, at prices more than double from the previous week, before the FDA vote.

The stock sold represented about 20 percent of Gold's holdings in the company, said spokeswoman Monique Greer. It was the first time Gold sold shares in the company, she said in April.

Provenge extended patients' lives with few side effects in smaller clinical trials, and Dendreon had hoped it could become an immediate new option for the disease, which kills 27,000 men a year in the U.S.

In the therapy, 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 sent back and re-infused into the patient.