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Analyst Eats Dendreon Crow

CNBC.com

As late as the day before the positive Dendreondata on its prostate cancer treatment Provenge came out, biotech analyst Jonathan Aschoff at Brean Murray Carret & Co. reiterated his "Sell" rating and $1 price target on the stock in a research note to clients.

Today he's offering a bit of a mea culpa.

Aschoff is upgrading DNDN from "Sell" to "Hold." But that's not all. Under normal circumstances I lift only brief quotes from analyst research notes for the blog or for my on-air reports. But since this one is relatively short and I know Dendreonians are gonna have a field day with this, I'm putting the whole thing on the blog.

"After more careful consideration of Dendreon's conference call, we are upgrading Dendreon to Hold from Sell due to our belief that management's bullish account of the data, despite the absence of any data presentation, will likely be justified by the data to come at the AUA conference on April 28. We find it increasingly difficult to believe that management would be that positive in a public forum, and therefore risk certain prosecution, by underdelivering at AUA due to their analyses being less than prospectively defined. We believe that Dendreon shares have an equal chance of rising or trading sideways, but we no longer see much risk of shares trading sharply lower upon presentation of the data. We also believe that there is far too much popular support for Provenge for the FDA to easily reneg on its SPA and the promise of approval should IMPACT succeed, as prospectively defined. Given the earlier results, we cannot explain how IMPACT succeeded, but we know that it does not matter as long as success was measured in a prospectively defined manner."

Wow.

Aschoff now says that his price target is "NA" or not applicable. In other words, he did not set a new one. BMC makes a market in DNDN and would like to bank the company.

Yeah, good luck with that.

SPA, by the way, is not a place where the FDA pampers itself. It stands for special protocol assessment which is basically an agreed-upon roadmap between the agency and a company on how to possibly win approval of a drug. IMPACT is the acronym for the Provenge study. And AUA is the American Urological Association.

What I think Aschoff is referring to is DNDN CEO Dr. Mitch Gold's repeated use of the word "unambiguous" to describe the test results. He said it on the conference call and again later in my interview with him on CNBC. He also called the data "a clear hit." I tried to pin him down on whether that meant they had met or surpassed the pre-defined threshold of showing at least a 22 percent reduction in the risk of death, but he wouldn't go there. That information will come out at AUA on the 28th.

I'll be reporting live from that meeting in Chicago where I also hope to interview Dr. Gold again shortly after researchers present the data.

Questions? Comments? Pharma@cnbc.com and follow me on Twitter at mhuckman

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