Investors are betting that the U.S. Food and Drug Administration will break with tradition and approve Dendreon's prostate cancer treatment. The company's stock, which traded below $4 in March, soared 30.6% on Monday, to $23.58, a $5.53 gain.
The shares have been rising since an FDA advisory panel recommended late last month that the government approve the drug. The FDA usually follows the advice of its advisers but is not bound to do so, and Dendreon (nasdaq: DNDN - news - people ) provides it with what could be viewed as a problematic situation. The drug actually failed to do what the clinical trials were designed to test for: slow the spread of prostate cancer. But instead, it has been effective in prolonging the lifespans of men who take it.
From the point of view of a cancer sufferer, longer life seems like the better outcome. But although somebody was buying the stock hand over fist on Monday, analysts say approval is not a slam-dunk.
Rahul Jasuja, an analyst for MDB Capital Group, said it is difficult to predict how the FDA will vote. “There are two schools of thought. If you look at it one way, you have a product that failed its primary endpoint, and, given the FDA’s history with drugs that failed their endpoints, it should be rejected,” he said.
“But, this product is also a novel cancer drug for a hard to treat disease. It showed statistical significance in increasing survival and for oncology, survival should be the gold standard,” Jasuja said. In Dendreon (nasdaq: DNDN - news - people )'s initial trial, 34% of patients who took Provenge were alive after three years, compared with only 11% who took a placebo. (See : " Prostrate Drug Promise Vs. FDA Rigidity.")
When the clinical trial was designed, the medical community had not designated survival as a primary endpoint, or goal, for cancer drugs. Instead, the study employed primary endpoints traditionally used for chemotherapy drugs, such as the measurement of the disease's progression over time. But an immunotherapy treatment, such as Provenge, may require more time before the immune system responds.
"Potentially the FDA could take a middle path -- acknowledge the decision of the advisory panel that voted 13-4 in favor of approval but still put narrow restrictions on the label with a requirement to complete the ongoing trial," said Jasuja who remains neutral on the stock.
Earlier in the day, Brean Murray Carret analyst Jonathan Aschoff was decidedly negative on the drug, saying it was unlikely that the FDA would approve it. “The stock is rising on investor optimism, which should continue to climb until the FDA releases its final decision,” Aschoff said in an interview on Monday.
Aschoff said the approval of Provenge could set a "dangerous double standard in FDA policy.”
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