Macro Tsimmis

intelligently hedged investment

Dendreon options (UKOHA & UKOTA) straddle play update #2

Posted by intelledgement on Wed, 25 Mar 09

Dendreon (DNDN) shares—and, by extension, our $5 Aug call options (UKOHA)—came under selling pressure in the wake of a Forbes article published earlier today asserting that the release by company management of data gleaned from the so-called “interim look” at the Provenge phase 3 IMPACT study may adversely affect the chances for approval of the product.

According to the article, “four top statisticians now say Dendreon may have compromised the integrity of the trial by putting out the release. They say it was unorthodox for Dendreon to even know such a detailed result, much less to publicize it. The danger: The company, patients or doctors might have changed what they were doing once they knew how the study was going. If the final outcome is only marginally statistically significant, it might be tossed, putting Dendreon and its drug back at square one.”

There are, indeed, four researchers quoted in the article as having problems with the release of the data last October…and such a release of interim data is unusual, precisely because of the danger it may affect the behavior of the doctors or patients partaking in the study.

However, given that the study consists of 500 patients, given that it started enrolling patients in June of 2003 and the last ones were enrolled in the Fall of 2007, given that the treatment consists of three injections spaced out over a month—so all treatments would have been completed at least 11 months and in some cases over four years before the release of the interim data—and given that about half the patients had to die before the interim look could occur, it is hard to see how learning that Provenge patients had a 20% survival advantage over placebo patients could materially affect the results. For starters, it seems safe to conclude the behavior of the 50% of study participants who were already dead could not be affected. Among those still surviving, all would long since have completed their treatment. So the theory that there could be a problem here seems a bit far-fetched.

Furthermore, according the to article, Dendreon management stated that they had approval from the FDA to release the data as part of the Special Protocol Assessment (SPA) that governed the interim look. So unless management are on drugs (not Provenge), it seems the FDA had no problem—indeed, management asserted, the agency even previewed the October 2008 press release.

Whatever, after tumbling as much as 5% early in the day, DNDN stock recovered to finish at $4.30, up three cents.

Previous DNDN-related posts:

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