Markets

Dendreon's Provenge Beats FDA Approval Standard By Just Half a Percent; Stock Plunges Before Rally

By Jim Edwards

Updated on: April 28, 2009 / 5:54 PM EDT / MoneyWatch

Dendreon's IMPACT study of its cancer vaccine Provenge beat the FDA's 22 percent "reduction in risk of death" standard by just half a percent: The company said it reduced "risk of death" by 22.5 percent today. Dendreon stock plunged on the news and trading in it had to be halted, according to the WSJ, and then rallied strongly after the results, according to Bloomberg.

Dendreon shares fell from $24.66 to $11.81 during the day, causing fears there had been a mistake at a brokerage. CEO Mitchell Gold said he did not know why the stock would do that. (In extended trading, the stock then rallied to $27.22.)

Here's a theory: The success of Provenge is so slim that investors fear either the FDA won't back it or, if it is approved, that no one will want to pay for it. From Dendreon's press release:

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%);

Bear in mind that the price of Provenge is $50,000 a year, according to the WSJ. A lot of doctors and reimbursers are going to look at 22.5 percent "more life" -- or 4.1 months -- in a terminal cancer patient and conclude that it's not worth it.

But good news is good news: Ultimately the market seems to have agreed with the company -- that this drug is closer to approval and commercialization than it was before, and that dying patients will try -- and pay -- anything for a chance at life.

Next stop: FDA.