This is an example of why biotech is so unpredictable. That FDA panel surprised nearly everyone yesterday by recommending the agency approve Dendreon’s Provenge prostate cancer drug. And they did so by changing the wording of one question to ask about ’substantial evidence’ of effectiveness, rather than outright effectiveness.

The panel based its decision on two trials that failed to meet primary goals. But the second, which studied only 127 patients, showed Provenge extended survival. The benefit was statistically significant, but the trial wasn’t designed specifically to show survival. And a 500-patient study to prove the drug prolongs life won’t be complete for another three years.

Generally, the FDA doesn’t approve drugs that don’t meet primary endpoints. Moreover, you never know what the ongoing study will turn up; if the FDA were to approve Provenge and the ongoing trial later shows something damaging, the agency will come under fire. And lowering thresholds may encourage other biotechs to submit questionable studies.

This is a quandary for the FDA. On one hand, the agency is under pressure to approve cancer treatments more quickly. Yet the FDA is also widely criticized for not paying attention to safety issues. Some took the back-to-back withdrawals this week of Permax and Zelnorm as a sign the FDA hears its critics, although that remains to be seen.

This won’t be an easy decision to ballpark. Many investors, for instance, had Dendreon figured all wrong. The stock rose 147 percent yesterday. And there were 26 million shares held short this month, nearly a third of all outstanding shares, and this was up from 20 million just last month. But for cancer patients, much more is at stake. What’s your bet on what the FDA will do?

Further reading in…
Forbes;
Bloomberg News;
ShortSqueeze.com (type in ticker symbol DNDN).[tags]Dendreon, Provenge[/tags]