I'm still decompressing from a very stressful morning.
Shares of Dendreon fell around 10 percent before the market opened. And now, in regular trading, they're at a new intra-day high.
Here's what happened.
Dr. Elliot Favus emailed me a research note this morning. I'd never heard of him before. He was telling investors to sell DNDN because he claimed to have been in contact with doctors who told him they'd been invited by the FDA to sit on an advisory committee to review Dendreon's prostate cancer treatment Provenge.
So, why would that be a big deal?
Well, biotech investors don't necessarily like outside FDA panels. They usually translate into a delay on an FDA decision about whether to approve a drug and they increase the uncertainty about a drug's fate. The committees only make recommendations to the agency on what it should do. The FDA usually, but not always follows the advice of its expert panels. Veteran DNDN investors learned about that the hard way. A few years ago, an advisory committee recommended approval of Provenge. The stock soared. Then, the FDA shocked the Street and said, "No." The shares tanked.
I emailed Dr. Favus to find out a little bit about him and his research. I asked him to send me some of his previous research reports on DNDN, including his coverage initiation note. He got back to me quickly saying this was his first call on DNDN, that he doesn't do "passive, ongoing research," and that his relatively new boutique firm, bearing his name, focuses on providing "money making ideas and divergent information in the healthcare sector."
He boasts that since he started the company a little more than a year ago that he's written a dozen reports, 10 of them with "Sell" recommendations. Dr. Favus used to work at Lazard Capital Markets.
Anyway, the controversial call triggered a flurry of tweets in my Twitterverse and a selloff in the stock in the pre-market and shortly after the opening bell. But then the FDA took the rare step of publicly commenting on whether a product would go before an advisory committee. Bloomberg broke it, the stock suddenly did an about face and started trading at new highs.
My producer and I began frantically trying to confirm the story on our own. But lemme tell ya how difficult it was reaching the media relations folks at the agency. We repeatedly emailed and voicemailed them; called the main news media line at the FDA, sometimes got a live person, sometimes voicemail, were told the people we needed to talk to were in a meeting, and on and on. Argh!
I told the person on the other end of the line to get the person out of the meeting. This was urgent. I'm on deadline. No luck. Eventually, I got a call back from one point-person and my producer got patched through to another. Both of them confirmed the FDA will not convene another Provenege panel. I hung up, ran downstairs and jumped on the air.
After I caught my breath, I sent Dr. Favus a follow-up email. Did he still stand by his call? Were the doctors he cited misinformed? Did he care to comment on what the FDA said? I haven't heard back.
Meantime, the FDA is expected to make a decision on Provenge on or before May 1st, which is a Saturday, by the way.
Update: After two spokespeople told me over the phone this morning that there would be no FDA panel meeting on Provenge, one of them sent this email to my producer this afternoon:
"Whatever you folks are saying on Provenge it should be this: Upcoming meeting dates for the Committee are published on the FDA website and in the Federal Register. At this time there no dates published for CTGTAC meetings for 2010. FDA will post meeting dates for the CTGTAC as soon as they are available. As you know we can not disclose any AC meeting prior to the FR notice. Currently, there is no advisory committee scheduled to discuss Provenge."
CTGAC stands for Cellular, Tissue and Gene Therapies Advisory Committee.
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