in the scientific and medical community, which wanted to see Dendreon hit the primary goal of a clinical trial designed to show improvement in survival time. Many investors were skeptical that Dendreon could win approval on its thinner set of existing data. Short-sellers, who intend to profit on a falling stock price, placed huge bets with millions of shares that said Dendreon was bound to fail.
By March 2007, the FDA, as it often does with new drugs, sought the advice from an expert panel of cancer physicians, statisticians, and immunologists on whether to approve the drug.
This hearing—which I saw firsthand in a hotel conference room in Gaithersburg, MD—was filled with drama. After panelists debated the effectiveness of the drug for an afternoon, while analysts furiously thumb-typed observations on their Blackberries to their trading desks in New York, the panel voted 13-4 in Dendreon’s favor that Provenge demonstrated “substantial evidence of effectiveness” and 17-0 that it was safe. One panelist from the National Cancer Institute told me after the meeting that he voted in favor, partly because he was hopeful this would spark a new day in immune therapy research.
Since the FDA almost always follows the advice of its expert panels, investors wagered that Dendreon had actually achieved the impossible. Its stock boomed from $5.22 before the panel to close at $12.93 the day after this vote, as 92 million shares changed hands that day. This little company from Seattle, without a product on the market yet, was the most active stock in the entire NASDAQ that day, with even more activity than Microsoft or Cisco Systems.
But there were even more plot twists to come. The four members of the advisory committee who voted no apparently felt strongly that the panel had made a mistake that could set a dangerous precedent for the FDA, essentially lowering the required standards for approval. Letters from two of these panelists, Maha Hussain of the University of Michigan and Howard Scher of Memorial Sloan-Kettering Cancer Center in New York, were eventually made public in The Cancer Letter, an influential trade publication.
The market essentially blew this off as a minor academic dust-up for a while, as Dendreon shares reached a peak of more than $24 a share, making it briefly worth more than $1 billion in market value. Some of the hedge funds that were shorting the stock were essentially run out of business by the losses, Miller says. During this extraordinary run-up, many people chose to sell their shares at a high point—including a few Dendreon board members and CEO Mitchell Gold. (The Dendreon CEO sold 202,090 shares on April 2, 2007, at $13.46 apiece, for gross proceeds of $2.7 million, according to this filing with the SEC.)
Nobody seemed to mind much if Gold or the Dendreon directors made some money. After all, so were a lot of other people. I heard stories of low-wage nurses in Seattle—not the usual biotech investor—buzzing to all their friends about how they made a bundle on Dendreon shares.
Then Dendreon dropped a bombshell.
Before markets opened on May 9, 2007, Dendreon announced the FDA had shot down its application. Regulators demanded the company produce more evidence from the ongoing clinical trial of 500 men, designed from the outset to answer the question of whether it can prolong lives. This meant Dendreon would have to wait another two years, at least, to achieve its dream of winning FDA approval for Provenge. Dendreon’s release made it sound like it was stunned, as the company needed to seek “clarification” from the FDA about what it really meant.
In a heartbeat, all that stock wealth was wiped out when the market opened. Dendreon stock collapsed from $17.74 the previous day to close at $6.33. Trading volume skyrocketed, again making Dendreon the world’s most active stock that day. Patient advocates were outraged. Investors were shell-shocked by the roller coaster. The inevitable shareholder suits arrived.
The recriminations in the wake of the FDA rejection got ugly at times. Some infuriated individuals went so far as to threaten Hussain and Scher, before they appeared in public at the American Society of Clinical Oncology (ASCO) meeting the following month, forcing officials there to tighten up security. The Provenge advocates continued their fight, urging members of Congress to hold hearings and investigate the FDA’s decision. No hearings were held.
Dendreon, once a highly visible and promotional company, had little to say at that year’s ASCO meeting and not a lot of news the rest of the year. It sought to pick up the pieces and find a new way forward. After yet another meeting with the FDA, the two sides agreed on a compromise of sorts that could get the agency the proof it needed to be confident Provenge works in the study of 500 men, while offering Dendreon a shot to get to the market more quickly.
The agency agreed to allow Dendreon to take an early peek at the survival data, known as an “interim analysis.” This meant that even before several years of data was in, if Dendreon could clearly demonstrate Provenge lowered the risk of death for patients, it could file a new application immediately on that still-evolving set of data. This type of analysis would make it possible for Dendreon to get an answer as quickly as the fall of 2008.
Otherwise it would likely have to wait until sometime in 2009 to get the result. This sounded like an agonizing wait, since the pressure was on all parties to get this answer quickly. Prostate cancer patient advocates made plain they consider this to be a life-saving therapy being held up by some kind of bureaucratic politics they didn’t really understand.
Dendreon got that interim result last October, delivered by an independent panel of trial monitors. The news was not what the company had hoped for. Provenge showed
