I am not a day trader and I focus on stocks invoved in emerging technologies in biotech and alternate energy. Though it takes quite long to benefit from investment but it does pay off big time.

But to cover my cost, I do take profits around significant news leaving the core position until final results. I am a regular reader of Mark's Fund My Mutual Fund column and benefited by trading in APWR.

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In 2006 I started looking into biotech companies with disruptive technologies. While researching, I noticed the following companies with huge potential.

Sirna Theurapeautics - Involved with RNAi technology to treat diseases by manipulating gene expressions. It was acquired by Merck in 2006.

Dendreon - Involved in developing immunotherapy vaccine for Prostrate Cancer. Currenty therapies include Chemotherapy.

I did invest in Sirna but unfortunately didn't hold the stock until its acquisition by Merck. I started buying Dendreon Stock in early 2006 when it was in 5 dollar range and rode into the 2007 spike when an Advisory Committee voted unanimously in favor of Dendreon. Unfortunately FDA denied approval acting against the committee's decision and stock collapsed after reaching around 20 dollars. It was a temporary set back as FDA had asked for more data. Sold all my positions around 7 dollar for a little profit expecting further downside as analysts were not hopeful of the innovative vaccine and data was not going to be available until after couple of years. Subscribed to David Miller's biotech analysis and kept following the company. Couple of other competitors like Cell Geneses failed badly leaving just Dendreon in the race of vaccine. I was waiting for dips and started buying the stock back in dollar 3-4 range earlier this year as I was sure to witness another round of upside volatility close to the announcement of results. Last year Dendreon had taken a peak of data and they were at 20% while the target agreed by FDA was 22%. I did took some profit before the recent data announcement as a backup to cover my cost.

In short I was convinced that it is just matter of time for Dendreon (DNDN) to become one of the pioneers in immunotherapy. It was extending life without any major sider effects and their technology could be extended to other types of cancers as well. I owe a big thanks to Investor Village message board members for keeping rest of the people updated about Dendreon.

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I would like to briefly discuss about Dendreon's trials and highlight key points from the current announcement before talking about various aspects related to future potential.<?xml:namespace prefix = o />

Brief History of Dendreon's Trials

Prostate cancer is the most common nonskin cancer in American men. An estimated 186,000 new cases and 28,660 deaths from it occurred last year. Provenge, which is also known as Sipuleucel–T, is an active immununotherapy that treats cancer by training the immune system to fight tumors.

DNDN had started enrolling patients in 2000 for Phase 3 trials for Provenge in men with prostate cancer (PC) that had progressed after primary hormone deprivation therapy. Men in this stage of PC live on average 15-19 months. By mid-2002 preliminary results were available and did show clinical benefit but did not achieve the pre-specified primary endpoint of the study, the Time To Disease Progression (TTP). Further analysis of the data showed that a particular category of patients did show significant delay in TTP. The median TTP for the whole group was 9 weeks and the subgroup had a median progression of 16 weeks, a 78% advantage. Since the retrospective analysis is not suitable for FDA approval, Dendreon talked to FDA and amended the protocol to enroll patients of the category that shown to have benefited most from the trial.

Then something very interesting happened. After following the patients from the initial trial for 3 years, the percentage of surviving patients treated with Provenge was 3-fold higher than those who received placebo. These results were valid for the whole group . These findings were significant mainly because survival is considered the "Gold Standard" for late-stage cancer drugs. In 2005 the survival data from their shortened second trial also showed the same survival trend as the first trial.

Following this DNDN again talked to FDA to change the enrollment criteria to allow all categories of patients in their third trial. Furthermore, survival would be the primary endpoint with TTP as the secondary endpoint.

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FDA Advisory Committee Panel and stock reaction in 2007

FDA conducted an Advisory Committee meeting on March 29th 2007 to go over data submitted by Dendreon. March 29th was, for investors such as myself, one of the most dramatic days in memory. It began with the company’s presentation including some moving testimony from prostate cancer survivors and concluded with wild swings in sentiment. Advisory committee voted unanimously in favor of safety (17 yes-0 Nos) and for efficacy 13 voted yes and 4 no. By the way none of the four dissenters were immunologists.

The stock more than tripled by the open the following day and reached a high of 25 in next few days as it was looking certain that FDA will go by the strong recommendation of its advisory committee. However between advisory committe vote and FDA decision, several key FDA figures came out in media writing letters urging FDA to ask for more data before approving provenge. These officials included couple of dissenters who had voted NO and it is been found that they also had conflict of interest and some of them were involved with other competitors's trials.

On May 9, 2007 the FDA sent Dendreon a Complete Response Letter (aka denied approval) indicating that despite a 17-0 vote on safety and 13-4 vote in favor of drug efficacy, Dendreon needed to submit additional data to be granted drug approval. The FDA had never before overruled an advisory committee for a life saving drug.

In short, the FDA has already indicated that it agrees that D9901 provided evidence of a survival benefit for Provenge. They now want data from Impact that will support that survival benefit. DNDN took an interim peak into data of the current ongoing trial in October last year and noticed 20% survival benefit and the target was 22% hence the trial continued to final.

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Latest Unambiguous Results

The recent announcement about Dendreon's latest trial meeting the target led to the spike in share price. Several analysts were expecting that the data may not meet the target and hence were very negative of DNDN. Most notably, the Bean Murray's analyst had set the target of dollar 1 with sell rating. Any ways it is history and analysts have started upgrading the stock. Let us look at the highlights of the latest announcement from Dendreon Management:

* Results were "unambiguous", "clear hit", and "robust and held up to multiple sensitivity analyses"

* To honor American Urological Assocation's embargo policy, data will not be presented until AUA conference on 4/28 at 2:20PM

* Safety consistent with previous trials, no new signals.

* Median survival benefit very consistent with previous two trials (4.3 months from integrated)

* Survival benefit consistent across all sub-groups (perhaps this could lead to label expansion to minimal pain patients, or at least off-label usage)

* Biological License Appication will be resubmitted in 4Q09. There is up to 6 years of follow up data to compile and it is important to put together a "high quality" amendment to the BLA. FDA will have 6 months to review.

* "Substantially addressed" 483 / CMC issues. Had preliminary discussions with FDA on most issues. Final resolution is pending license application, where the FDA will provide written feedback.

* Build out of sales and marketing infrastructure, and commercialization plans will be presented at the analyst conference this summer

* NJ plant initial phase build out as part of pre-approval inspection in 2007. Facility can expand very readily.

* Dr. Gold and David Miller(well respected biotech analyst) had an exchange about Jim (Caggiano?) leading the sales organization, but Dr. Gold said they would look at all qualified candidates

* Company has not established pricing yet, but expect it to be "similar to other biologics in the oncology space".

* Pricing and mfg cost will also be discussed at summer analyst conference

* Dr. Gold said "data supports Provenge as front line therapy"

* In the Provenge clinical trials 50% led by Urologist, 50% by Oncologists. Company feels that a 100 person sales force will be able to handle the domestic market targeting both.

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Stock Valuation and Future events

AS Michael Murphy in his April 15 Flash Alert says "I suspect the survival benefit was stunning". The detailed results will be announece on April 28th in Urological conference. Until we see the details sometime around 4/28/09 the UAU Conference, there is likely to be stock volatility. The most significant future event is resubmission of BLA and FDA's decision. The company will resubmit the BLA the FDA in the fourth quarter, that may happen around October of this year and the FDA has six months to respond. So a year from now, Provenge should finally be approved during 1st quarter of next year. The following points will help understand furture potential of Dendreon:

Adoption of Provenge versus ChemoTherapy

The only other treatment which is available today is the Chemotherapy from Sanofi Avantis. Chemotherapy side effects are very bad. Infact one of the nay sayers in the last FDA committee at somepoint said that the side effect profile of chemotherapy is so sconcerning that she believe it is OK to refer chemotherapy patients to clinical trials instead of giving them Taxotere (chemotherapy). Taxotere sales have underwhelmed because patients refuse to take it due to side effects. Urologists largely will not prescribe Taxotere once they have Provenge available.

Provenge has no such barriers to adoption by patients. It has no side effects that last longer than a couple of days. It doesn't submit the patients to the disruption caused by losing one of every three weeks for over seven months like Taxotere does. Urologists will prescribe Provenge in droves.

The treatment of provenge involves:

Patients cells are obtained through a blood collection process.

These cells are co-cultured with a recombinant fusion protein containing prostatic acid phosphatase and results into Provenge.

Provenge is then infused into patient to stimulates response against prostate cancer cells.

The process is performed three times over the course of a four-week period, upon which treatment is completed.

Side effects vary from slight dizziness to 48 hours of flu-like symptoms (fever/chills) Where as chemotherapy side effects are so horrible that some patients even refuse to take it.

European Partner

Within a year or so the company may look for an European partner to get the drug approved and sold over there. If EU regulators don't require new clinical data then the drug could be on the market in Europe in 2011. European sales is bound to include a huge cash infusion, at no dilution to the shareholders.

Extension of this technology to other cancers

On the conference call, management said: "As you know, Provenge employs our novel proprietary Antigen Delivery Cassette technology that may be leveraged to develop similar products to treat breast, colon, bladder, kidney, and multiple other types of cancer. Each of those cancers is a multibillion dollar market for Dendreon’s technology, in the U.S. alone.

Manufacturing

Manufacturing of Provenge is easily scalable. Dendreon has a facility in New Jersey that is sufficient for early launch. It can be scaled much faster than a typical biologics manufacturing plant.

Michael Murphy, based on his valuation model suggests that:

Provenge will be a $1+ billion drug just based on the price ($50,000 for the three infusions, one every two weeks) and number of men in the target group. But it will be a $2+ billion drug with off-label usage for earlier-stage prostate cancer, because this is the right way to treat cancer. Each $1 billion of ultimate sales is worth $40 a share to Dendreon today. So Provenge for its indicated patent population should make DNDN a $40 stock. Adding Provenge used off-label makes Dendreon an $80 stock. Adding breast, head & neck, colon, bladder and kidney cancers…well, the numbers just get ridiculous, even before adding in Europe and Asia.

Sometime between now and FDA approval, Michael Murphy expects DNDN to hit $40 a share.

Short Squeeze.

The shorts are desperate to cover. ....... Shorts caught off guard by a clear statistical hit. This stock is header higher into AUA and especially after once the details are out. .There may be a seconday after the April 28 meeting and shorts may cover buying the secondary. Personally I am hoping for a bit lower prices to buy more for the rise after AUA. I don't know if it will happen.

Retirement Stock.

Personally, I am holding my core position as a long term investment but will trade some shares around different news going forward. I owe big thanks to IV members for their continued tireless efforts in bringing the details to rest of the masses.

Modest Valuation

At a minimum:

1) Revenue will begin in approximately a year. Let's assume it reaches $1.2 Billion/year in two years.

2) A very conservative valuation of a Biotech like DNDN is five times revenue. To figure a Market capitalization then:

$1.2 X 5 = $6 billion

3) Since this is a future revenue stream we must discount it for uncertainty. A thirty percent discount is common in such a circumstance:

1st year: $6billion X .7 = $4.2 2nd year $4.2 billion X .7 = $2.94 billion

4) While approval is now a near certainty, we must allow for an outside chance of further delay:

Probability of approval in 1 year = .95 So $2.94 billion X .95 = $2.793 billion:

5) Current implied value per share = current discounted enterprise value divided by the number of shares outstanding:

$2.793 billion/ 98 million shares = $28.50

$28.50 represents a minimum current value per share as this only computes the value of Provenge for the Company; and as we know the antigen cassette will be expanded for other forms of cancer.

Final Thoughts

Provenge should have been approved couple of years back itself when Advisory Pannel had voted almost unanimously on the safety and efficacy of the treatment. However its approval was derailed by FDA officials for the reasons I mentioned above causing several deaths of terminally ill patients. Now the company has announced that they have met the target and will discuss the results in detail in the forthcoming AUA meeting. Financially, there is a huge potential for investors and above all there will be a humane treatment available for cancer patients. I hope it will be approved as soon as possible without further going into FDA politics.

Good Articles by Analysts and IV board members

Analyst Eats Dendreon Crow by Mike Hukman. The following article describes how biotech analyst Jonathan Aschoff at Brean Murray Carret & Co.flip flopping.

http://www.cnbc.com/id/30245189

Dendreon: Short Squeeze Time by Michael Murphy

http://seekingalpha.com/article/130996-dendreon-short-squeeze-time?source=commenter

Very solid article on the Provenge story by Andrew Pollack, NY Times

http://tinyurl.com/c6chw6

Analysts Miss the Boat

http://tinyurl.com/d72vp7

Luke Timmerman article in Xconomy that summarizes well the current state of Dendreon and Provenge

http://tinyurl.com/d6ldvt

Feuerstein from the Street’s valuationhttp

http://tinyurl.com/cjgt8y

CaretoLive . An advocacy group who has been fighting on behalf of patients.

http://caretolive.com/ways-to-help/