DNDN Study Removes Uncertainty

Dendreon: IMPACT data reported, uncertainty removed

Yesterday (April 28), Dendreon Corp. (DNDN - Analyst Report) shares swung widely before the final data of IMPACT trial were reported. Share price of this tiny biotech company rose as high as $25 and then declined to as low as $7.5 per share, which prompted a brief probe and trade halt by the NASDAQ market oversight body.

We believe the wild ride reflected investors' nervousness about the data of the company's phase III IMPACT trial for Provenge.

At 2 pm ET yesterday, Dendreon reported detailed data at the American Urological Association (AUA) Annual Meeting held in Chicago. Key findings from the trial include:

Provenge extended median survival by 4.1 months compared to placebo (25.8 months versus 21.7 months). Provenge improved 3-year survival by 38% compared to placebo (31.7% versus 23.0%). The IMPACT study achieved a p-value of 0.032, successfully exceeding the pre-specified level of statistical significance defined by the study's design (p-value less than 0.043), and Provenge reduced the risk of death by 22.5% compared to placebo (HR=0.775).

Provenge exhibited a favorable safety profile consistent with prior trials.

We think the data are robust, which confirmed findings from previous clinical studies for Provenge for the treatment of prostate cancer.

Dendreon intends to file an amendment to its existing Biologic License Application (BLA) in the fourth quarter of this year. Now the FDA has all the data it needs to approve Provenge. The agency will probably take 6 months to review the filing.

We believe the FDA will finally approve Provenge in mid-2010 based on the IMPACT results. We also expect the company will announce a partner for Provenge in Europe soon.  

We think the approval of Provenge is not only an incremental advance to prostate cancer patents but also a big win for science. Once approved, Provenge will represent the first in a new class of active cellular immunotherapies specifically designed to engage the patient's own immune system against cancer.

Provenge has blockbuster potential if it is approved for marketing. We estimate US sales will be $120 million in 2010, and $200 million in 2011, respectively. We further estimate the company will be profitable in 2010 with an EPS of $ 0.36. With sales potential over $1 billion, Provenge will provide both top-line and bottom-line growth for Dendreon in the coming years.

We reiterate our Buy rating on DNDN.