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Michael Milken, 60,000 Deaths, and the Story of Dendreon (Chapter 15 of 15)

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Michael Milken, 60,000 Deaths, and the Story of Dendreon (Chapter 15 of 15)



What follows is PART 15 of a 15-PART series. Soon, we will publish the full 15-part story as a single document.

Click here to read PART 1

Click here to read PART 2

Click here to read PART 3

Click here to read PART 4

Click here to read PART 5

Click here to read PART 6

Click here to read PART 7

Click here to read PART 8

Click here to read PART 9

Click here to read PART 10

Click here to read PART 11

Click here to read PART 12

Click here to read PART 13

Click here to read PART 14

Where we left off, we had learned that on March 29, 2007, an FDA advisory panel had overwhelmingly voted to approve Provenge, a prostate cancer vaccine developed by Dendreon.  As a result, most financial analysts and investors believed that Dendreon had a promising future. However, ten hedge funds (out of a universe of 11,500 hedge funds) held large numbers of Dendreon put options (bets against the company), suggesting they expected that Dendreon would be derailed. At least seven of those hedge funds can be tied to Michael Milken or his close associates.

We had also learned that Milken himself stood to profit if Dendreon were to experience  problems receiving FDA approval. This is because Milken was the early financier and principal deal maker for ProQuest Investments, a fund that (along with an affiliate) controlled a company called Novacea, which was one of Dendreon’s competitors in the race to produce a new treatment for prostate cancer. Meanwhile, Lindsay Rosenwald (a Milken crony who once helped run a Mafia-linked brokerage called D.H. Blair, which specialized in pumping and dumping fake biotech companies) controlled Cougar Biotechnology, which was Dendreon’s second competitor in the race to develop a treatment for prostate cancer. And hedge funds affiliated with Milken or his close associates were heavily invested in Cell Genesys, which was Dendreon’s third competitor.

We had learned further that Milken’s “philanthropic” outfit, the Prostate Cancer Foundation supported Novacea, Cougar and Cell Genesys. The Prostate Cancer Foundation’s support for these companies preceded announcements that they had signed massive deals with large pharmaceutical companies. In the cases of Novacea and Cell Genesys, those deals were soon cancelled on the news that their treatments were ineffective, and the companies’ investors quickly dumped their stock. This fact, combined with other evidence, suggests that the Prostate Cancer Foundation was supporting what amounted to sophisticated “pump and dump” schemes.

Meanwhile, the Prostate Cancer Foundation snubbed its nose at Dendreon. And in April, 2007, Dr. Howard Scher, who was an executive and director of Milken’s investment fund, ProQuest, and the chairman of the Prostate Cancer Foundation’s “Therapeutic Consortium”, spearheaded an unprecedented lobbying effort to convince the FDA to reject Dendreon’s treatment – the first time in history that the FDA had gone against an advisory panel’s recommendation to approve a drug for terminally ill patients. This lobbying effort had the support of government officials who have ties to Michael Milken.

In the days before and after the lobbying effort, Dendreon was trashed by a few captured journalists – most notably, CNBC’s Jim Cramer — and was also subjected to a blistering attack by naked short sellers who illegally flooded the market with millions of phantom shares to help drive down the company’s stock price. This criminal naked short selling continued intermittently for much of the next two years, while the SEC did nothing, and while other events conspired to hobble Dendreon, a company that had completed multiple clinical trials that strongly indicated that its product, Provenge, was capable of lengthening the lives of tens of thousands of men with prostate cancer.

Amazingly, the SEC will not reveal the names of the naked short sellers. As it says on its website, to release information about (illegal) naked short selling would be to reveal the (criminal) hedge funds’ “proprietary trading strategies.”

* * * * * * * *

When Dendreon’s FDA application was derailed simultaneously with a naked short selling attack that flooded the market with tens of millions of phantom shares, Dendreon’s supporters went berserk. They sent the government hundreds of letters complaining about the naked short selling and the apparent machinations of Michael Milken’s associates. After that, all but one of the ten hedge fund managers ceased to own “put options” in Dendreon.

However, the naked short selling continued pretty much unabated for two years. And in April 2009, Dendreon was once again on the SEC’s “Reg  Sho” list of companies whose stock was “failing to deliver” in excessive quantities.  Dendreon stayed on that list even after the company’s CEO announced that results of an Independent Monitoring Committee study of 500 patients were “unambiguous in nature…a clear hit” for Provenge.

After the CEO’s announcement, Dendreon’s stock, which had been as low as $4 weeks earlier, rose to the mid-20s. Then, on April 28, 2009, just hours before Dendreon was to present this “unambiguous” data to an all-important meeting of the American Urological Association, the now legendary Yahoo! message board post appeared, warning of  a “BEAR RAID” that was to occur at precisely 12:30pm Central time. Right on cue, Dendreon’s stock tanked 65% in matter of 75 seconds (to $7), within minutes of the moment predicted by that message.

Within hours after that amazing crash, Nasdaq announced that it had investigated the matter and decided to let the trades stand. This was quite remarkable, given that it would have been impossible for the exchange to determine the identity of that message board poster and sort through the trading data in such a short period of time. It is all the more remarkable considering that this “BEAR RAID” was most likely the work of naked short selling criminals.

At any rate, it is likely that short sellers, recognizing that it was now going to be more difficult to prevent Dendreon from getting FDA approval, used the opportunity of that sharp price drop to cover their short positions. Some short sellers might also have used the opportunity to buy shares, hoping to cash in on the bonanza that was to follow. After the “BEAR RAID,” Dendreon’s stock price quickly rose above $27.

The night after the “BEAR  RAID”, CNBC’s Jim Cramer (who has begun a “crusade” against the crime of naked short selling in an effort to distance himself from his previous efforts to cover up the crime of naked short selling) said “I’m not qualified to talk about Dendreon.” This was just two weeks after Cramer had screamed that Dendreon had no chance of receiving FDA approval. Now, he was no longer commenting on Dendreon’s chances, but he noted,  “I am a big believer in taking profits when I see a short squeeze. So I am going to recommend taking profits.”

Some people clearly did take profits. After Cramer’s comment, the stock started to fall, and by May 8, it was at $19. Then the buying started again. Quite possibly, some of the hedge funds that had been short selling Dendreon used the dip to $19 to purchase still more Dendreon shares. After May 8, the stock rose back up to around $25, which is approximately where it remains today. When SEC filings for this period are in, it will be interesting to see which hedge funds bought shares.

But it will remain impossible to know who the criminal short sellers were. As far as the SEC is concerned, that is a big secret –  “proprietary trading strategies.”

* * * * * * * *

After Dendreon reported its data to the American Urological Association –data that showed almost precisely what the data showed two years earlier (that is, that Provenge was safe, and that it lengthened survival times while greatly improving the quality of life for end-stage prostate cancer patients who would otherwise be subjected to the misery of chemotherapy) — Milken’s Prostate Cancer Foundation, which had long shunned Dendreon while Milken’s allies maneuvered to derail it, finally concluded that it was time to say something positive about Provenge.

“The PCF is delighted to see evidence of increased patient survival from Provenge,” the Milken “philanthropic” foundation said in a press release. “We share the analysis of Dr. Philip Kantoff, a leader in the PCF Clinical Therapy Consortium…and a principal investigator of the Provenge Phase III clinical study. The results validate 16 years of modern research to harness a patient’s own immune system to fight their prostate cancer and prolong their lives…”

The Prostate Cancer Foundation continued: “The PCF first provided funding to Dr. Eric Small…to support clinical research around measuring immune responses in patients treated with Provenge…”

In other words, Milken’s “philanthropy” hadn’t spent two years ignoring, and in some cases trying to quash Dendreon’s treatment. In fact, the Prostate Cancer Foundation had supported Dendreon all along!

This is nonsense. What the Prostate Cancer Foundation did not mention is that Dr. Philip Kantoff, the physician mentioned in the press release, was on the advisory board of Cougar Biotechnology, the company that Milken’s “philanthropic” foundation was promoting as a better alternative to Dendreon.  Moreover, Dr. Kantoff was one of the few physicians to publicly cast doubts on Provenge. He was never able to say that Provenge did not work, but when talking to the press at the time of the FDA advisory panel meeting in 2007, he was dismissive, or at least confused.

“I didn’t think [Provenge] had a snowball’s chance in hell of working,” Dr. Kantoff told Forbes magazine’s Matthew Herper, the journalist who went to lengths to argue against FDA approval. “I’m still skeptical, but I think there’s something going on here.” Kantoff suggested that Provenge could be a “slam dunk,” but maybe the trial size was too small. Left unmentioned was the fact the FDA had regularly approved treatments for dying patients when relatively small trials had shown such stunning results.

As for Dr. Small, he too was on the advisory board of Cougar Biotechnology. The Prostate Cancer Foundation did indeed give him funding to measure immune responses in patients treated with Provenge, but it is not at all clear that Milken’s “philanthropic” outfit was keen to see Dr. Small’s study yield positive results. When the study did yield positive results, Dr. Scher, the chairman of the Prostate Cancer Foundation’s Therapeutic Consortium (referred to in the above press release as the “Clinical Therapy Consortium”), spun them as negative results.

In his letter to the FDA (the one that quickly and mysteriously ended up in the hands of The Cancer Letter), Dr. Scher quoted Dr. Small as saying the following: “In summary, this study suggests that while sipuleucel-T fell short of demonstrating a statistically significant difference in TTP, it may provide a survival advantage to asymptomatic [prostate cancer] patients.” Dr. Small had not written the word “may” in italics. That was Dr. Scher’s improvisation, part of his effort to convince the world that absolute “proof” of efficacy was needed for FDA approval.

As both Dr. Small and Dr. Scher knew, the “gold standard” for physicians, and the federally mandated standard for drug approval, is “survival” — “substantial evidence” that a treatment may help patients live longer. Perhaps Dr. Small felt constrained in challenging Dr. Scher’s misuse of his study. Perhaps he also felt uncomfortable about joining Dr. Scher, who was, after all, the powerful chairman of Milken’s Therapeutic Consortium, at the meeting of the FDA advisory panel that voted on Provenge in March 2007.

Dr. Small was supposed to speak on behalf of Provenge at that panel. Perhaps this concerned the folks at the Prostate Cancer Foundation. Either way, Dr. Small was a no-show at the panel that day.

He apologized – something about a hitch in his travel plans.

* * * * * * * *

In May 2009, while Milken’s Prostate Cancer Foundation was rewriting history, Milken’s hedge fund crony, Steve Cohen, who was one of those seven hedge fund managers who had bet big against Dendreon after the advisory panel meeting in 2007, reached out to Care-to-Live, the grass-roots organization that had done so much to highlight the connections among Milken’s “philanthropy,” Milken’s investments, and Dendreon’s travails

On May 19, one of Care-to-Live’s founders received an email from an employee of CR Intrinsic Investors, which is one of Steve Cohen’s hedge funds.  “I’m an investor in biotechnology and pharmaceutical companies and I’m interested in understanding the patients perspective on Provenge and any other therapies in development…,” the email began. “Would you or someone from Care-to-Live be available speak with me…? I have spoken to a number of academic thought leaders, but I’d like to better understand what the patients want…”

And by the way, “I’m happy to provide compensation for time spent speaking with me if that is of interest.”

Milken-affiliated hedge funds already have analysts and journalists regurgitating their party line on command. They also have doctors on the payroll. Might as well put the troublemakers on the payroll, too.

* * * * * * * *

Or perhaps Cohen is genuinely thinking about investing in Dendreon. Perhaps he already has. The intentions of this network remain a matter of some speculation.

Much of this speculation focuses on Dmitry Balyasny, the Russian “whiz kid.” As recently as March of this year, when they filed their last SEC documents, Balyasny’s hedge fund, Visium, held around 900,000  call options in Dendreon. Simultaneously, the hedge fund owned 860,000 put options. It is possible that Balyasny and his associate, Jacob Gottleib, were implementing a split-strike pricing strategy – selling out of the money calls and buying out of the money puts. The effect is to create a large synthetic short position.

SEC documents show that during much of the past two years, Balyasny’s funds also owned large numbers of Dendreon shares. These could have been shares that they bought to cover short positions. Or it could be that they owned shares to gather proxy votes and put pressure on Dendreon’s management to act in ways that might not be  good for the company.

Dendreon’s latest Schedule 14-A, filed on April 30, showed that Balyasny (remember, Balyasny’s other fund was previously one of the seven hedge funds with large  bets against Dendreon) had become one of Dendreon’s largest shareholders, with a 5.5% stake in the company. Another major shareholder was Capital Ventures International, the unit of Susquehanna that did the PIPEs deal with Dendreon. Meanwhile, Joseph Edelman, the hedge fund manager who was employed in 2007 by Lindsay Rosenwald, formerly of the Mafia-connected D.H. Blair, has bought at least 2 million Dendreon shares.

In addition to those purchases, many of the Milken network hedge funds that bought Dendreon’s convertible bonds now have the capability to convert, so  they, too, might soon count themselves among Dendreon’s largest shareholders. Altogether, this network may already control (or have the ability to convert into control of) as much as 30% of the company.

It is possible that this network is planning to seize control of Dendreon by stealth. This was the modus operandi of the Milken network in the 1980s. As most every book on Milken recounts, affiliated investors (some combination of Milken, Ivan Boesky, Carl Icahn, Princeton-Newport, John Mulheren,  and others) would each buy, say, 4.9% or 9.8% of a company without declaring themselves to be affiliated investors. In some cases, Milken would “park” stock (e.g. Princeton would secretly buy stock on Milken’s behalf) in order to conceal that he had any ownership at all.

By secretly holding large blocks of shares, the network was able to acquire controlling stakes while bypassing regulatory requirements to declare such positions. Besides putting them in a position to manipulate prices, Milken and friends then put pressure on companies’ managements by quietly letting it be known that they had, as a group, a controlling number of proxy votes.

If Milken’s friends come to control Dendreon, Milken’s “philanthropic” foundation will no doubt continue to articulate its new position of being “delighted” that the data shows that Dendreon’s treatment is safe and effective (which is the same thing the data showed two years and 60,000 American deaths ago). And if the Milken network takes over Dendreon, perhaps Michael Milken will, in the name of “philanthropy,” convince his government minions to grant approval to Provenge, so that it can be administered to the patients who so desperately need it.

But that should not cause us to ignore the ordeal that Dendreon has endured during these past few years. And we should demand an end to a status quo which lets Wall Street miscreants, cheats, and manipulators (and not free markets) decide which companies survive unmolested, and which will be crippled or killed off entirely.

But it is not surprising that criminals see fit to maim public companies.

Consider that it is impossible to buy life insurance on another person’s life. The legal principle has developed that one can only insure something in which one has “an insurable interest.” But imagine that this were not the case. Imagine if it were possible for people to buy insurance on other people’s lives. One can see that there might evolve a type of criminal who would buy life insurance on the lives of others, and then arrange for those people to die.

One can even imagine that, as society wised up to this practice of buying life insurance and then manipulating outcomes, such criminals would evolve new tactics towards the same end. For example, the criminals might target newborn babies in hospitals, because babies are vulnerable, and it would be difficult for anyone to know for certain whether they were dying naturally, or as a result of criminals manipulating outcomes.

One could even imagine that the most sophisticated of these criminals would come to target newborn babies who were already sick, because manipulating their medical outcomes in order to cause their deaths would leave the slightest statistical footprint possible.

In our society one cannot buy life insurance on another person, but one can buy “life insurance” on a company: that is, one can make a bet that a company will fail, and collect on that bet when the company dies. It is the contention of Deep Capture that there are criminals who take out life insurance policies against companies, and then manipulate their outcomes so as to collect on those policies.

And just as we can understand the logic of criminals focusing on newborn babies, so too can we understand why the financial criminals have learned to focus on small, early-stage public companies. And to extend the morbid metaphor one last step: just as the criminals might focus on newborns who are already sick, because their outcomes are already in the most doubt (making the criminal manipulations hardest to spot), so too have the financial criminals learned to focus not just on early-stage public companies, but on early stage public companies working in the field of biotechnology.

That is because in biotechnology the difficulties in valuing a company are at their greatest. There is often little to no revenue.  The idea behind the company may be nothing more than the theory of a scientist. No one knows whether it will work. If it works, no one knows how long it will take to prove that it works. And even if it can be proven to work, no one knows how long it will take to clear all the legal and regulatory hurdles it will face. Such companies are favored targets for manipulators because it is easy to manipulate the truth when no one knows the truth, and whatever truth there is lies behind so many veils.

In the case of Dendreon , the truth was hard to miss. It was more than a company with a blockbuster treatment. It was the first company in decades to develop a medicine that could truly revolutionize the way that doctors treat cancer. The company had gathered its data, and the data was conclusive (to a 95% confidence level): Provenge was safe and effective. A panel of experts assembled by the FDA had declared that the treatment should be approved.

So when naked short sellers attacked, and the treatment was derailed, it was obvious that there had been foul play. Hundreds of concerned citizens took it upon themselves to investigate, and document, the footprints of the miscreants. As a result we have been able to present a highly discernible, if admittedly imperfect, picture of their trail.

But we must ask: How many other small biotech companies have been victimized in less obvious ways? How many companies were like the babies in our morbid metaphor — snuffed out before they could demonstrate their potential; killed by criminal naked short sellers and their captured accomplices (journalists, regulators, doctors) who successfully pled innocence, saying the companies died because they were sick or weak? And how many of those murdered companies, weak or not, had medicines that could eventually have improved health and saved lives?

Our morbid metaphor, you see, is not entirely metaphor. Real people have died.

In answer to the question of how many people have died, we know only from the data that abusive and illegal short selling has affected many hundreds of small biotech companies with all manner of medicines. We know that the vast majority of those companies are now gone, and that some number of them, if left to the rigours of the market, but not to the whims of criminal short sellers, would have one day delivered their medicines to patients.

But, of course, we do not know who the criminal short sellers are. According to the Securities and Exchange Commission, that is a big secret – “proprietary trading strategies.”

THE END

* * * * * * * *

Note: The original draft of this story incorrectly stated that BAM Capital was affiliated with Dmitry Balyasny’s Balyasny Asset Management. Having mistaken BAM Capital with Balyasny’s fund, I aslo suggested in the original draft of this story that Balyasny had aquired more than ten percent of Dendreon’s shares in the Spring of 2009. This was incorrect. Balyasny’s Visium hedge fund had aquired 5.5% of Dendreon’s shares. I regret the error.

Posted in Featured Stories, The Deep Capture Campaign, The Mitchell ReportComments (76)

Michael Milken, 60,000 Deaths, and the Story of Dendreon (Chapter 13 of 15)

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Michael Milken, 60,000 Deaths, and the Story of Dendreon (Chapter 13 of 15)



What follows is PART 13 of a 15-PART series. The remaining installments will appear on Deep Capture in the coming days, after which point the story will be published in its entirety.

Click here to read PART 1

Click here to read PART 2

Click here to read PART 3

Click here to read PART 4

Click here to read PART 5

Click here to read PART 6

Click here to read PART 7

Click here to read PART 8

Click here to read PART 9

Click here to read PART 10

Click here to read PART 11

Click here to read PART 12

Where we left off, we had learned that on March 29, 2007, an FDA advisory panel overwhelmingly voted to approve Provenge, a vaccine Dendreon developed for prostate cancer. As a result, most financial analysts and investors believed that Dendreon had a promising future.  However, ten hedge funds (out of a universe of 11,500 hedge funds) held large numbers of Dendreon put options (bets against the company), suggesting they had expected that Dendreon would be derailed. At least seven of those hedge funds can be tied to Michael Milken or his close associates.

We had also learned that Milken himself stood to profit if Dendreon were to experience unexpected problems receiving FDA approval. This is because Milken was the early financier and principal deal maker for ProQuest Investments, a fund that (along with an affiliate) controlled a company called Novacea, which was one of Dendreon’s competitors in the race to produce a new treatment for prostate cancer. Meanwhile, Lindsay Rosenwald (a Milken crony who once helped run a Mafia-linked brokerage called D.H. Blair, which specialized in pumping and dumping fake biotech companies) controlled Cougar Biotechnology, which was Dendreon’s second competitor in the race to develop a treatment for prostate cancer.

We had learned further that Milken’s “philanthropic” outfit, the Prostate Cancer Foundation, which appears to act in concert with Milken’s investment fund, ProQuest, had supported Novacea and Cougar, neither of which had shown that their treatments were safe or effective, while turning its back on Dendreon.

In addition, we had learned that in April, 2007, Dr. Howard Scher, who was an executive and director of ProQuest, and the chairman of the Prostate Cancer Foundation’s “Therapeutic Consortium”, spearheaded an unprecedented lobbying effort to convince the FDA to deny approval to Dendreon’s treatment – the first time in history that the FDA had gone against an advisory panel’s recommendation to approve a drug destined for dying patients.

In the days before and after the lobbying effort, Dendreon was subjected to a blistering attack by naked short sellers who illegally flooded the market with millions of phantom shares to help drive down the company’s stock price. This criminal naked short selling continued intermittently for much of the next two years, while other events conspired to hobble Dendreon, a company that had completed multiple clinical trials that strongly suggested that its product, Provenge, was capable of lengthening the lives of thousands of men with prostate cancer….

* * * * * * * *

In December 2007, three U.S. Congressmen — Mike Michaud (D-Maine), Dan Burton (R-Indiana) and Tim Ryan (D-Ohio) — called on the House Commerce Committee to investigate why the FDA failed to approve Dendreon’s treatment for prostate cancer. Referring to Dr. Scher and his ally, Dr. Hussain, the lawmakers said in a letter that “there are reasons to believe that serious ethics rules were violated by two FDA advisory panel members in their decision [to vote and lobby against Dendreon] and that these violations played a role in the subsequent FDA decision not to approve Provenge at this time.”

A bipartisan group of 12 additional Congressmen eventually signed on to the request for an investigation. And in February 2008, as outrage over this scandal spread through the medical community, a group of seven respected doctors, calling themselves “Physicians for Provenge” wrote a letter to the ranking members of the House Commerce Committee, suggesting that the investigation should urgently proceed.

“Please consider why our colleagues and we KNOW that Provenge works and why tens of thousands of men with late stage prostate cancer should be given access to it,” the physicians wrote. Noting the “egregious conflicts of interest” of Dr. Scher and Dr. Hussain, the “Physicians for Provenge” added that the “FDA should be carefully assessing risk versus reward for the treatment of terminally ill patients, rather than ‘gate keeping’ based on outdated statistics, reducing short-term health costs or backroom shenanigans.”

Nonetheless, Commerce Committee Chairman John Dingell denied the requests for an investigation. To justify this decision, Dingell wrote in a letter to the committee that an “investigative hearing prior to an agency’s final decision runs the risk of interfering with the normal regulatory process.”

Apparently, it was fine if FDA-contracted doctors and government officials tied to Michael Milken corrupted the normal regulatory process by obfuscating approval standards (“substantial evidence” versus “proof”) and by drafting unsolicited post-vote letters with back-channel help from a government employee who was weeks away from taking a new job created by Michael Milken.  But investigating such improprieties would corrupt the regulatory process, in the eyes of Commerce Committee Chairman John Dingell.

Dingell also pointed out that “a new law strengthening conflict of interest provisions now governs FDA panels.” Unfortunately, that law was passed in September 2007, some months after Milken’s conflicted allies derailed Dendreon’s application.

In any case, it is not clear that the old conflict of interest provisions were not violated in the Dendreon case. Dr. Scher received a conflict of interest waiver, but in his application for that waiver he did not mention his financial ties to Milken’s ProQuest Investments. There should have been an investigation into why that waiver was granted. And while he was at it, Representative Dingell should have investigated the illegal naked short selling of Dendreon and the “backroom shenanigans” of Milken’s captured officials at the FDA and the National Cancer Institute.

At any rate, while the congressional investigation was being stopped in its tracks, Milken’s Prostate Cancer Foundation was becoming more brazen.

In March 2008, for example, the Prostate Cancer Foundation sent out a peculiar mass mailing. Written by a cardiologist on Prostate Cancer Foundation letterhead, the mailing began, “I’ll never forget the day my 5-year-old son came home from school, worried. One of the other kids told him I was going to die.”

The letter went on to describe the horrors of being diagnosed with prostate cancer. So far, all kosher. But then came the strange part – the charity’s solicitation explicitly promoted a mostly untested experimental treatment that was being developed by a public company that was considered to be one of the few competitors to Dendreon. The treatment was called GVAX, and the company developing it was called Cell Genesys.

The author of the letter noted that during his treatment, he had “learned about some of the groundbreaking research projects supported by the Prostate Cancer Foundation, such as GVAX, a drug now in phase 3 clinical trials that boosts the immune system to fight off prostate cancer cells.”

Notice that the name of the drug – GVAX – was printed in boldface letters, so nobody could miss it. Notice, too, the underlining, which stressed that this treatment (as opposed to others, such as Dendreon’s) was endorsed and supported by the Prostate Cancer Foundation. And, finally, notice the unequivocal statement that GVAX works – that it “boosts the immune system” and is able to “fight off” cancer.

Lest there be any question that Milken was eager to promote GVAX, the Prostate Cancer Foundation, soon after, began distributing flyers at supermarkets and shopping malls with a similar message. “My 5-year-old didn’t want to lose his daddy,” read the flyers, which then proceeded to describe a “groundbreaking” new medicine – GVAX.

At the time, Cell Genesys was nowhere near bringing GVAX to market. It had just finished phase 2 clinical trials on a total of 65 patients. Lab results showed that GVAX might increase prostate cancer antibodies, but they did not show that the immune system was actually boosted in such a way as to better “fight off” cancer or improve survival. Phase 3 trials, which would determine whether GVAX actually improved the health of patients, had just begun.

But if you were an average Joe who read those flyers – or a wealthy Mary who received that solicitation in the mail – you’d be mighty convinced that Cell Genesys was the next big thing in cancer therapy. You might even be tempted to buy its stock.

* * * * * * * *

When Milken’s Prostate Cancer Foundation began distributing his fliers promoting GVAX, a number of hedge funds had accumulated large numbers of shares in Cell Genesys.

One of these was Millennium Management, the hedge fund that had been founded by the fellow who planned to murder Ivan Boesky when it seemed that Boesky might cooperate with the authorities in their case against Milken. Again, Millennium is one of those seven hedge funds that had the foresight to own put options in Dendreon back in March 2007, right before Dendreon’s treatment was unexpectedly scuttled by the FDA.

Another hedge fund with a big stake in Cell Genesys was Forest Investment Management, owned by Michael Boyd, the father of hedge fund shill Roddy Boyd, currently of Fortune Magazine.  Michael Boyd, remember, had previously been involved in two big ventures – one with a former Milken colleague from Drexel Burnham; the other with Santo Maggio, the convicted criminal CEO of Refco Securities.

Hedge fund Perceptive Advisors also held a moderately large stake in Cell Genesys. Recall that Perceptive was then run by Joseph Edelman, who was not only another one of those seven hedge fund managers who held put options in Dendreon, but was also simultaneously serving as a trader for Paramount Capital.

As you might recall, the vice president of Paramount Capital was a former employee of Milken crony Steve Cohen, who was also one of those seven hedge fund managers betting big against Dendreon. The owner of Paramount, of course, is Lindsay Rosenwald, who used to run the Mafia-controlled D.H. Blair with Milken’s former national sales manager, and controlled Cougar Biotechnology, another Dendreon competitor promoted by the Prostate Cancer Foundation.

Another big buyer of Cell Genesys shares was Mazama Capital, a hedge fund based in California. In December 2006, Mazama also owned 2.1 million shares of Dendreon. It dumped more than a million of those shares sometime before or immediately after the March advisory panel meeting, when it seemed certain that Dendreon would receive FDA approval.

Only one other hedge fund dumped similar quantities of Dendreon shares at that time. It was JL Advisors, which is controlled by the above-mentioned Steve Cohen. This dumping of shares contributed to the selling volume that was amplified by whoever was selling massive amounts of phantom stock in Dendreon.

Then there was Renaissance Technologies, which held 800,000 shares in Cell Genesys when Milken’s “philanthropy” began promoting the company.  The CFO of Renaissance is James Rowen, who was previously the chief financial officer of SAC Capital, the hedge fund run by the above-mentioned Steve Cohen, who is known to be maniacal about making sure that his former employees remain satellites of his trading empire.

Meanwhile, hedge funds Balyasny Asset Management and Visium Capital held a combined 12 million shares of Cell Genesys. Balyasny and Visium have overlapping ownership (Dmitry Balyasny is a partner in both hedge funds) though they don’t generally disclose that in their SEC filings.

Dimitry Balysasny is a close associate of Steve Cohen. He has employed some of those former SAC Capital traders and managers with whom Cohen maniacally maintains relationships. And he and Cohen have attacked the same companies.

As I mentioned, Balyasny was one of our seven hedge fund managers with large numbers of put options in Dendreon. I will return to him, because this enigmatic Russian might have more surprises in store for Dendreon.

* * * * * * * *

Three weeks after Milken’s Prostate Cancer Foundation began publicly promoting Cell Genesys’s virtually untested prostate cancer treatment, Cell Genesys announced that it had signed a gargantuan $320 million deal to develop and commercialize GVAX with Takeda Pharmaceutical, the Japanese biotech giant.

The press reported this deal dutifully and uncritically, making it sound like GVAX was the next big thing. The stock price soared, earning large profits for the Milken-network hedge funds that had invested in Cell Genesys.

But just as there was something fishy about the Milken-invested Novacea and its $500 million deal with Schering Plough, so too did the “$320 million” Cell Genesys deal deserve a hearty dose of skepticism.

For starters, only days before Cell Genesys announced the Takeda deal, Takeda had bought a company called Millennium Pharmaceuticals. Millennium had been transformed into Takeda Pharmaceutical Capital Ventures. It was Takeda Capital Ventures, not the Takeda parent company, that signed the deal with Cell Genesys.  In other words, it was almost certain that Millennium’s management, most of whom had been retained by Takeda Capital, orchestrated the whopping $320 million deal.

That was rather strange because Millennium had been founded by a man named Mark Levin. It was Levin who orchestrated Millennium’s merger with LeukoSite, the biotech company that belonged to Marty Peretz, the Boesky-Milken crony who founded TheStreet.com. And more important to this particular episode,  it was Levin who had founded Cell Genesys. He founded the company basically by investing in himself (just as Domain Associates had created the Milken-invested Novacea out of thin air).

So, assuming Levin still had influence over Millennium/Takeda, and assuming he was still invested in Cell Genesys, he had just orchestrated a deal to use other people’s money to invest $300 million in himself.

Or, at least Cell Genesys’s press release said that Takeda (which was, in fact, Millennium) was going to “pay Cell Genesys an upfront payment of $50 million and additional milestone payments totaling up to $270 million…Takeda [actually Millennium, now known as Takeda Capital Ventures] will pay Cell Genesys tiered, double-digit royalties based on net sales of GVAX immunotherapy for prostate cancer…”

Sounds good, doesn’t it? Sounds like those “net sales” are imminent, right? In fact, just as the Milken-invested Novacea’s $500 million deal was dependent on clinical trials showing good results, so too was Cell Genesys’s big deal with itself dependent on the company producing some evidence that it’s drug actually worked. The operative phrase in that press release was “milestone payments totaling up to $270 million.”

Of course, just three months later, Cell Genesys announced that it had halted its trials of GVAX after its Independent Data Monitoring Committee, in a “routine safety review meeting,” observed “an imbalance of deaths…”  In other words, GVAX was not helping patients. It was killing them. And, of course, the $270 million worth of “milestone payments” announced with so much fanfare were unceremoniously canceled.

Either before this announcement, or immediately after, the big investors in Cell Genesys – Mazama, Balyasny, Millennium, Perceptive Advisors – all dumped their shares. Given the big boost those shares got from Milken’s Prostate Cancer Foundation promotions and the giddy announcement that Cell Genesys would receive $330 million, we can assume that those investors made a nice profit on their sales, just as Milken’s ProQuest and affiliated funds made nice profits on their sales of Novacea.

It seems to me that Cell Genesys, like Novacea, was a sophisticated pump and dump scam, aided by Michael Milken’s  “philanthropic” outfit, the Prostate Cancer Foundation.

Which brings us to Cougar Biotechnology, the third Dendreon “competitor” promoted by Milken’s Prostate Cancer Foundation.  Cougar Biotechnology, as we know, was controlled by Lindsay Rosenwald, who used to help run D.H. Blair, the Mafia-linked pump-and-dump shop whose two vice chairman pled guilty to securities crimes, and whose president was Milken’s former national sales manager.

D.H. Blair was indicted on 173 counts of securities fraud, and it was notorious for pumping and dumping biotech companies with no real medicine. But who knows? Maybe Cougar has a genuine product. It is hard to say at the moment, and will remain that way for years to come, because its prostate cancer treatment remains virtually untested.

In any case, just last month, Cougar, no doubt aided by the Prostate Cancer Foundation’s vigorous endorsements, wangled a $1 billion deal to merge with Johnson & Johnson, so Rosenwald and friends did quite well on their investments.

Remember that while Milken’s Prostate Cancer Foundation was using unwitting donors’ money to promote Novacea, Cougar Biotechnology, and Cell Genesys, its top officials, and perhaps Milken himself, were actively seeking to derail Dendreon, the one company that actually had a promising treatment for prostate cancer. This was certainly to the benefit of the short sellers (some of whom were illegally naked short selling) and the buyers of put options who were betting big against Dendreon

Meanwhile, it should be noted that Cougar Biotechnology experienced almost no naked short selling, according to SEC “failures to deliver” data. The Milken-invested Novacea also experienced virtually zero naked short selling, even after it announced that its treatment was killing people. The same goes for Cell Genesys — relatively little naked short selling, even when its treatment flopped.

The miscreant party line is that hedge funds do not engage in naked short selling to manufacture phantom stock. The party line is that most “failures to deliver” are the result of mechanical “errors.” It’s funny how those “errors” tend to occur when miscreants in a certain network are short a company. It’s also funny that those “errors” don’t happen to companies in which Milken and his cronies are invested.

If only there were a pattern.

* * * * * * * *

To be continued…Click here for Chapter 14.

Posted in Featured Stories, The Deep Capture Campaign, The Mitchell ReportComments (60)

Michael Milken, 60,000 Deaths, and the Story of Dendreon (Chapter 12 of 15)

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Michael Milken, 60,000 Deaths, and the Story of Dendreon (Chapter 12 of 15)



What follows is PART 12 of a 15-PART series. The remaining installments will appear on Deep Capture in the coming days, after which point the story will be published in its entirety.

Click here to read PART 1

Click here to read PART 2

Click here to read PART 3

Click here to read PART 4

Click here to read PART 5

Click here to read PART 6

Click here to read PART 7

Click here to read PART 8

Click here to read PART 9

Click here to read PART 10

Click here to read PART 11

Where we left off, we had learned that on March 29, 2007, an FDA advisory panel voted overwhelmingly to recommend approval of Provenge, Dendreon’s promising new treatment for prostate cancer. As a result, most financial analysts and investors expected that Dendreon would have  a promising future. However, ten hedge funds (out of a universe of 11,500 hedge funds) held large numbers of Dendreon put options (bets against the company), suggesting they expected Dendreon would be derailed.  At least seven of those hedge funds can be tied to Michael Milken or his close associates.

We had also learned that Milken himself stood to profit if Dendreon were to experience problems receiving FDA approval. This is because Milken was the early financier and principal deal maker for ProQuest Investments, a fund that (along with an affiliate) controlled a company called Novacea, which was one of Dendreon’s competitors in the race to produce a new treatment for prostate cancer. Meanwhile, Lindsay Rosenwald (a Milken crony who once helped run a Mafia-linked brokerage called D.H. Blair, which specialized in pumping and dumping fake biotech companies) controlled Cougar Biotechnology, which was Dendreon’s second competitor in the race to develop a new treatment for prostate cancer.

We had learned further that Milken’s “philanthropic” outfit, the Prostate Cancer Foundation, seems largely to be an extension of Milken’s investment fund, ProQuest. This might explain why the Prostate Cancer Foundation endorsed and provided financial support to Novacea and Cougar, neither of which had shown that their treatments were safe or effective, while snubbing its nose at Dendreon.

In addition, we had learned that in April, 2007, an FDA-contracted physician, Dr. Howard Scher, who was also an executive and director of Milken’s ProQuest Investments, and the chairman of Milken’s Prostate Cancer Foundation “Therapeutic Consortium”, spearheaded an unprecedented lobbying effort to undermine the prescribed regulatory process and convince the FDA to deny approval to Dendreon — the first time in history that the FDA went against an advisory panel’s recommendation to approve a drug destined for dying patients.

In the days before and after the lobbying effort, Dendreon was subjected to a blistering attack by naked short sellers who illegally flooded the market with millions of phantom shares to help drive down the company’s stock price. This criminal naked short selling continued intermittently for much of the next two years, while other events conspired to hobble Dendreon, a company that had completed multiple clinical trials that strongly suggested that its product, Provenge, was capable of lengthening the lives of tens of thousands of men with prostate cancer….

* * * * * * * *

“Black Wednesday at the FDA.”

That is how Dr. Mark Thornton, a former medical officer in the FDA’s Office of Oncology Products, described the FDA’s decision not to approve Dendreon’s Provenge.  In an op-ed for the Wall Street Journal, Dr. Thornton described vaccines such as Provenge as the “Holy Grail of cancer treatment.”  Without directly referring to anyone by name, Dr. Thorton described Dr. Scher’s lobbying effort as “arrogant” and “unprecedented.”

Dr. Thornton added that when the FDA succumbed  to that lobbying, “the dawn of a new era in cancer immunotherapy was driven back into the night. It will be years before we know the full impact of these decisions and how many cancer patients…have had their lives cut short as a result.”

This scandal infuriated many other physicians and patient advocates (with  the exception of those affiliated with Milken’s Prostate Cancer Foundation). Some Dendreon supporters took to the streets.

On June 2, 2007, there was a protest in front of the American Society of Clinical Oncology. Two days later, several prostate cancer advocacy groups rallied in Washington. On June 6, there was yet another protest, this one attended by still more physicians who demanded to know why the FDA had failed to approve Dendreon’s treatment.

“I’d like to explain in the most basic of terms,” said Dr. Mark Moyad of the University of Michigan medical school, at the June 6 rally. “We think a mistake has been made. We are here in a friendly way to start the process of correcting that mistake.”

That word — “friendly” – seems to me to perfectly describe Dendreon’s supporters. I might add  “intelligent,” and “fair,” and “engaged.”  But the mainstream media played its customary role by portraying such advocates as vexatious wackos (notwithstanding the fact that many of Dendreon’s supporters were respected physicians).

“Oncologists do not usually need bodyguards…” began a story in the Washington Post, which was all about the Dendreon “controversy.”  The gist of this story was that people advocating for prostate cancer patients might somehow be dangerous – that it was strange how vocal they were, it was strange that they used the Internet to get the word out – and Dr. Scher (the physician who helped derail Dendreon) feared for his safety. He had even received some “threats.”

Nowhere in the story was it suggested that a great many prominent doctors were saying that the FDA had made a “mistake” in failing to approve Dendreon’s application. Nowhere was it mentioned that Dr. Scher played a significant role in engineering this “mistake.”  And nowhere was it mentioned that Dr. Scher was egregiously conflicted due to his financial ties to Michael Milken’s investment fund and Dendreon’s competitors, Novacea and Cougar Biotechnology.

Essentially identical stories appeared in the Philadelphia Inquirer, the New York Times, the Boston Globe, the Seattle Times, and on CNBC. Every one of these media outfits portrayed Dendreon’s supporters as potentially dangerous lunatics. Every one of them stated unequivocally that Dr. Scher had been “threatened.”  Yet, not one of them specifically described the threats, and as far as I can ascertain, there were no “threats.”

Clearly, there was a new party line – Dr. Scher was the victim. Given the near verbatim repetition of this party line in so many newspapers, and given my experience working in the mainstream media, I can say with near certainty that this was the work of an orchestrated public relations campaign – a campaign to distract attention from what was really happening to Dendreon.

Meanwhile, Dendreon remained one of the most manipulated stocks on Nasdaq. On the day that the Washington Post story appeared, SEC data showed that criminal naked short sellers had sold, and failed to deliver, more than 13 million Dendreon shares. Following the mainstream media’s standard operating procedures, no mention was made of this phantom stock in any of the stories on Dendreon’s troubles.

* * * * * * * *

By June of 2007, Dendreon’s stock price was averaging around $7 – down from its early April high of $25. There was no way the company could raise more money on the stock market, and so it had to significantly scale back its work on Neuvenge, a promising treatment that fought breast cancer in the same way that Provenge fought prostate cancer. In order to get enough cash to continue work on Provenge, Dendreon issued over $100 million worth of convertible bonds.

Sometimes, hedge funds that buy a company’s convertible bonds are well-intentioned – they want the company to succeed so that the company can repay the loan.

But, often, hedge funds that buy convertible bonds do not have the company’s best interests at heart. Indeed, Deep Capture has obtained an internal client presentation given by a well-known investment bank that states that the single largest segment of investors in convertible bonds are hedge funds that actually intend to increase their bets against the companies that they are financing.

A convertible bond is debt that can be “converted” into stock. A hedge fund lends a company, say, $100 million. As repayment, the hedge fund can either receive the $100 million plus interest at maturity, or instead it can receive, say, 10 million shares in the company.

If the share price is $8 at the time of the loan, those 10 million shares would be worth $80 million. But if the share price rises to $20, the hedge fund can convert his $100 million loan into $200 million worth of stock. If the hedge fund manager is a value investor who wishes the company well, he will make his loan and wait for the stock to rise.

But there are various ways that convertible bonds can be put to malevolent use. Suppose a group of hedge funds have launched a full scale short selling attack against a company, but the hedge funds want to short sell even more stock.  To do that legally, the hedge funds must first locate more stock to borrow, and then sell it. But sometimes there is simply no more stock available for short sellers to borrow.

Now, suppose the share price has already been significantly hammered, so the company can no longer raise money through the stock market. The hedge funds know this. And the hedge funds are important clients of an investment bank. So the hedge funds and the investment bank hatch a plan.

It works like this: the investment bank tells the victim company that it can resolve the company’s cash problems by brokering a convertible bond offering. If the company agrees, the investment bank says, “great, but there’s just one hitch – you, the company, have to lend us, the investment bank, the shares that the company would normally keep on hand in case the bond holders convert.

To assuage any fears, the investment bank might promise the company that it will not re-lend those shares to short sellers, but will merely sell them to long buyers – people who want to invest in the company. The company says, “fine,” and issues, say, $100 million worth of debt convertible to 10 million shares. The company also agrees to that “hitch” — so now the investment bank has wangled a “stock loan” agreement that gives it exclusive rights to borrow those 10 million shares until such time as the bond holders convert.

Meanwhile, the investment bank returns to that group of hedge funds, who agree to buy the convertible bonds as a means to extricating those 10 million shares from the company. Once the investment bank is in possession of those shares, it cannot (at least according to its agreement with the company) lend them to the hedge funds for purposes of short selling. But it can do one better. It can broker swap contracts that oblige counterparties to pay the hedge funds a certain amount of money in the event that the company’s stock price decreases in value.

Then, the investment bank dumps those 10 million shares into the market all at once, causing the stock price to further collapse. Meanwhile, the hedge funds and the investment bank might be engaging in naked short selling – selling stock that has never been borrowed by anybody (i.e. stock that does not exist).

If anyone asks about this illegal naked short selling, the hedge funds say they thought they had “a locate” on stock that they could borrow and deliver. If anyone asks the hedge funds to be more specific, the hedge funds say that they had “located” and planned to borrow those 10 million shares that the investment bank had borrowed from the victim company. If the SEC notes that the investment bank had an agreement not to lend those shares to short sellers, the hedge funds say they didn’t know about that.

Of course, the SEC rarely asks any of these questions, but the convertible bonds provide some immunity, just in case.

As the stock price hits rock bottom, the company depletes the cash it raised from the bond offering. And the only way for the company to receive new funding is to issue more convertible bonds to the hedge funds, or do one of those dreaded “death sprial” PIPE deals.

If this were a game of chess, it would now be “check” for the hedge funds. The company knows that its stock price and its financing depend entirely on the hedge funds, which are put in the position of being able to drive (and trade ahead of) the company’s business decisions. This scheme might even allow a set of hedge funds to take control of, say, a $700 million company, for a $100 million loan.

With the exception of the naked short selling, most of this scheme’s elements can be found in the standard PowerPoint presentations that some banks deliver to their hedge fund clients behind closed doors. The investment banks market the scheme as a way to profit from volatility in the stock. When the stock crashes, the hedge funds make money from the swaps and their short selling. If the stock subsequently increases in value, the hedge funds can convert their bonds and use some of the proceeds to pay the counterparties to the swaps.

But sometimes the hedge funds intend to fully destroy the company. They make plenty on their short positions and swaps, and their bonds pull in some money during the bankruptcy proceedings. Sometimes, during bankruptcy, the hedge fund lenders get their hands on company assets (such as blockbuster medical treatments) that are actually worth considerably more than what they spent on their bonds.

At other times, the ultimate goal is not to destroy the company outright, but to crash the stock, and then accumulate shares, giving the hedge funds still more influence over company decisions, and perhaps paving the way for a hostile takeover.

I do not know for certain the motivations of the hedge funds that bought Dendreon’s convertible bonds. I do not know if they engaged in naked short selling. After all, the identities of the naked short sellers and the real amount of failed trades they are generating are, as far as the SEC is concerned, still a big secret. Remember that the SEC says that releasing information about (illegal) naked short sales would reveal the (criminal) hedge funds’ “proprietary trading strategies.” And the SEC cannot have that.

I do know, however, that nearly every one of Dendreon’s convertible bond holders are connected in important ways to Michael Milken or the seven affiliated hedge fund managers who held large numbers of put options in Dendreon prior to the strange occurrences of March 2007. This raises the suspicion that the convertible bond holders were not typical investors (that is, investors who put in capital hoping that the company would prosper).

Instead, the fact that the buyers of the converts were part of the same network that was placing large bets against Dendreon (and taking steps, with help from Milken’s “philanthropy”, to derail Dendreon’s treatment for prostate cancer) raises the possibility that these bond investments were made as part of a strategy to manipulate Dendreon’s stock price down,  during which time members of this network would (with help from Milken’s Prostate Cancer Foundation) pump up the stock prices of Dendreon’s “competitors” – the companies controlled by Milken and his friends.

In the two years that these shenanigans were going on, 60,000 American men died of prostate cancer, which seemed to be of no concern to this particular network of miscreants. But once the competing, Milken-connected companies had been thoroughly pumped, and then dumped (on the news that their treatments were worthless), it would perhaps be time to exert greater control over the one company–Dendreon–that actually had a treatment that could extend lives.

As we will see, members of the Milken network – some of the hedge funds that bought the convertible bonds, and some of the seven hedge funds that were betting big against Dendreon in 2007 – have, as a group, recently become the company’s largest shareholders. Their precise intentions, however, remain a mystery.

While we do not have photo-perfect pictures of what was going on behind the scenes of Dendreon’s bizarre trading (the SEC does not let that get public), we do know that this paradoxical play of participating in a convertible bond in order to further a manipulative scheme against a company, is in fact a standard play on Wall Street. Given this, we would be remiss  not to name the colorful hedge funds that bought Dendreon’s convertible bonds.

* * * * * * * *

As we have covered, Milken crony Carl Icahn founded the options department at Gruntal & Company, which owed its existence to Michael Milken and was one of the more disreputable trading houses on the Street. Ultimately, Gruntal was found to have employed several traders with ties to the Mafia, and soon after, it was charged with a massive fraud and forced to pay what was then one of the largest fines in Wall Street history.

Many of Gruntal’s former employees ended up working for White Rock Capital, which was run by the alleged Russian mobster, Felix Sater, the fellow who was allegedly behind the threat to have Deep Capture reporter Patrick Byrne murdered if he did not end his crusade against naked short selling and the “deep capture” of important institutions.

As we also know, when Icahn left Gruntal, he handed over direction of the options department to Milken crony Ron Aizer. The first trader Aizer hired was Steve Cohen, who was reportedly investigated by the SEC for trading on inside information provided by Milken’s shop, and later became “the most powerful trader on Wall Street” — the fourth of those seven hedge fund managers prescient enough to bet big against Dendreon before Milken’s other cronies derailed the company in 2007.

The second trader hired by Aizer was a man named Andrew Redleaf, who later went on to co-found two hedge funds — Deephaven Capital Management and Whitebox Advisors.  According to a media account posted on Whitebox’s website, Redleaf’s family kept its investment accounts at Drexel Burnham Lambert, where Michael Milken was then running his stock manipulation and junk bond empire. Redleaf was recommended to Aizer by Andy Stillman, who was then managing Drexel’s propriety options trading.

In later years, Redleaf became well-known for investing in Sun Country Airlines in partnership with Tom Petters, who was recently arrested at gunpoint amid allegations that he had orchestrated a massive Ponzi fraud in cahoots with a fellow named Michael Catain. Catain’s father, Jack Catain, was a Genovese Mafia enforcer and loan shark who had been involved, along with Michael Milken, in ZZZZ Best, a fraudulent carpet cleaning company run by Barry Minkow.

Minkow was eventually imprisoned for the ZZZZ Best fraud, and when he was released, he began a career as a self-described “fraud investigator.” He works in partnership with Sam Antar, the convicted felon who masterminded a massive fraud in the 1980s at an appliance retailer called Crazy Eddie. Antar, who is close to Milken and his network (members of which once tried to help Antar seize control of Crazy Eddie) now spends most of his time on the Internet, smearing and threatening people who work to expose the crime of naked short selling.

For example, Antar once posted on the Internet the names and address of Deep Capture reporter Judd Bagley’s young children. Antar writes with almost daily regularity that Deep Capture reporter Patrick Byrne is running a fraudulent company (Overstock.com), though he has produced nothing to support his claims, and every reputable person who has examined his arguments has concluded that they are absurd.

Meanwhile, Antar has littered the Internet with all manner of falsehoods about me—stating, for example, that I’m a drug addict and was fired from my last job. Ever the charmer, Antar has also let it be known that he is friendly with violent people, including those who once ambushed me, punched me in the face, and suggested that I should stop working with Patrick Byrne.

It is interesting to note that, these facts notwithstanding, in 2008 Fortune magazine saw fit to grace its pages with a highly flattering 2,738 word profile of Antar (“It Takes One to Know One”). Fortune did this even as it acknowledged that, “As would-be fraudbuster, Sam E. [Antar] has yet to notch his first kill. (Although in fairness he doesn’t hold himself out to be a full-time 10-Q detective. ‘I don’t have 40 people working for me like the SEC,’ he says.) He hasn’t brought any companies down or caused any regulators to open any investigations.”

That is, concerning a notorious swindler and convicted felon who threatens little girls, smears other journalists, is denounced by public officials, and who has not actually been the source of any credible investigation that Fortune can cite, Fortune published a perfectly complimentary puff piece.

As for the above-mentioned Andrew Redleaf, I noted that he is a founding partner in Deephaven Capital Management. In 2006, Deephaven was sanctioned by the SEC for short selling 19 public companies (almost all biotech firms) on inside information that his hedge fund colleagues were giving the companies “death spiral” PIPEs finance.

As you will recall, similar schemes have involved Milken crony Carl Icahn (the founder of Gruntal’s options department); Jeffrey Thorp (son of the Mafia-linked card counter who was the most important figure in Milken’s stock manipulation network during the 1980s); Milken crony Lindsay Rosenwald (who used to run the Mafia-linked D.H. Blair, the president of which was Milken’s former national sales manager); and Gryphon Partners (which was tied to the Mafia-linked, nine-fingered Anthony Elgindy, a naked short seller who is now serving an 11 year sentence for stock manipulation schemes and bribing two FBI agents).

My apologies for the repetition, but there are some who are new to this, and it is difficult for even the well initiated to keep track of so many miscreants, so permit me to remind the reader that Gryphon’s founder and Lindsay Rosenwald were among the seven colorful hedge fund managers who bet big against Dendreon in March 2007, just before the company was derailed by strange occurences engineered by Milken’s cronies. Also among those seven hedge fund managers was Steve Cohen, who was, earlier in his career, investigated for trading on inside information provided by Milken’s shop, and was the first trader hired at Gruntal by Milken-crony Ron Aizer.

Andrew Redleaf, the second trader hired by Aizer at Gruntal, is, remember, not just a co-founder of Deephaven Capital (sanctioned for short selling on inside information that companies were to receive dubious financing), but also the proprietor of Whitebox Advisors.

And Whitebox Advisors is among those hedge funds that bought convertible bonds issued by Dendreon, a company that suffered a two-year, sustained naked short selling attack while trying to bring to market a treatment for dying cancer patients.

* * * * * * * *

A hedge fund called DKR Management also bought convertible bonds issued by Dendreon. DKR was founded by Barry L. Klein and Gary S. Davis. Previously, Klein worked for Michael Milken as the President of Drexel Burnham Lambert Trading. Davis also worked for Milken at Drexel.

In later years, Klein and Davis founded the predecessor to AIG Trading Group, a unit of American International Group. AIG Trading Group was later run by Joseph Cassano, who had also been a Milken employee at Drexel.

While at AIG, Cassano sold tens of billions of dollars worth of credit default swaps (contracts that pay out if a company defaults on its debt) to hedge funds and investment banks.

Rolling Stone magazine’s Matthew Taibbi, who is one of the mainstream media’s finest journalists, was among the first to establish that AIG Trading Group and Milken crony Cassano destroyed AIG, which ultimately had to be nationalized by the U.S. government – greatly contributing to the collapse of the financial system last fall. Since then, several reports have also implicated Cassano’s Milken-tied predecessors, Klein and Davis.

Meanwhile, various government investigations are seeking to know whether short sellers acquired and manipulated the prices of AIG’s credit default swaps as a way to weaken their target companies – including Lehman Brothers and Bear Stearns.  The question that remains unanswered is whether the short sellers that bought credit default swaps from Milken cronies Cassano, Klein and Davis were also members of the Milken network (which would mean that some members of the Milken network wrecked the world while the other members of the network bet that they would).

Another highly significant factor in the collapse of the financial system – as can be discerned from statements by countless officials and by reports in virtually every newspaper in the land, though the newspapers seem content not to investigate the matter or state this explicitly – was the naked short selling of AIG, Bear Stearns, Lehman Brothers, Fannie Mae, Freddie Mac, and hundreds of other companies.

In the years leading up to the financial cataclysm (and during the time when Dendreon was under attack by naked short sellers), certain hedge funds orchestrated an effective public relations campaign aimed at covering up the crime of naked short selling. As part of this public relations campaign, the hedge funds would regularly trot out a certain Yale professor, who would do his utmost to defend the criminals.

This professor’s favorite stratagem was to divert discussion away from illegal naked short selling, and repeat, over and over, that legal short selling was good for the markets–a fact that was never in dispute. The professor’s capacity for obfuscation was unmatched, but he nonetheless became a favorite source for some members of the media. He appeared regularly on CNBC and was quoted in dozens upon dozens of articles – all of which communicated the non sequitor that illegal naked short selling is not bad for the markets because legal short selling is good for the markets. Of course, this is like arguing that sexual harassment is not bad because sex is good.

The name of this professor is Owen Lamont. To this day, the professor is still sought out by the press, which dutifully regurgitates his baloney. But the professor does not work for Yale anymore.

Now he works for the above-mentioned DKR Management, one of the Milken-connected hedge funds that bought Dendreon’s convertible bonds while Dendreon was brutally attacked by criminal naked short sellers.

* * * * * * * *

There are interesting stories to be told about most every hedge fund that bought Dendreon’s convertible bonds. One of them, Eagle Rock Capital, run by an Iranian fellow named Nadir Tavakoli, was once a controlling investor in the International Fight League, a promoter of ultimate fighting matches. The other controlling investor in the International Fight League (which went bankrupt amidst allegations of ultimate fighting’s connections to the Japanese Yakuza and stories that fighters were committing suicides and murders at alarming rates) was a “Russian whiz kid” (according to the media) named Dmitry Balyasny.

The first things to know about Dmitry Balyasny are that he is closely affiliated with Steve Cohen and he is the seventh of those seven hedge fund managers who were betting big against Dendreon by holding put options on the company’s stock, after the FDA advisory panel had recommended that Provenge be approved, and before Milken’s cronies successfully lobbied the FDA to ignore that recommendation. So I will return to Balyasny soon.

But first, let’s continue with our list of hedge funds that held Dendreon’s convertible bonds.

One was GLG Partners. As we know from emails acquired in a lawsuit, GLG Partners received updates on Steve Cohen’s attack on Canadian insurer Fairfax Financial, so it would be unsurprising if GLG was also clued in to Cohen’s attack on Dendreon.

Recall also that (shortly before GLG bought Dendreon’s convertible bonds) French authorities fined GLG  for being part of an insider trading ring that included UBS O’Conner (a unit of UBS investment bank, which, until March, 2007, was led by former Milken employee Ken Moelis) and Meditor Capital, a hedge fund (also, of course, with ties to Steve Cohen) that had just made a large investment in Novacea, the prostate cancer company that was then being promoted (by Milken’s fund and Milken’s “philanthropy”) as a competitor to Dendreon. In short, GLG was “in the mix.”

Another outfit that bought lots of Dendreon’s convertible bonds (shortly after it was caught running an insider trading ring with Meditor and GLG Partners) was…UBS O’Conner.

Then there was Quattro Partners, which bought Dendreon bonds convertible into a more than a million Dendreon shares. The founding partner of Quattro is named Michael Baldock. He had a long career in biotech investing after spending time as an investment banker at Michael Milken’s Drexel Burnham Lambert.

* * * * * * * *

Another of the big investors  in Dendreon’s convertible bonds was Forest Investment Management, a hedge fund controlled by a man named Michael Boyd. Prior to founding Forest, Boyd was a partner in an outfit called Forum Capital Markets. Boyd’s co-founder in Forum was C. Keith Hartley, yet another of Milken’s disciples from Drexel, Burnham Lambert.

Boyd was also the co-founder of a brokerage called McMahan Securities. One of his partners in that operation was Santo Maggio, who later became chief executive officer of Refco Securities, the brokerage that was allegedly processing the phantom stock sales of Rhino Advisors, which illegally naked shorted companies after providing them with finance brokered by Milken crony Carl Icahn’s Ladenburg Thalmann. When Refco was found to be fraudulently hiding $400 million worth of liabilities (liabilities that many believe were related to naked short selling), Maggio pled guilty to two counts of securities fraud, one count of conspiracy, and one count of wire fraud.

Another of Michael Boyd’s many accomplishments is his son, Roddy. Refco employed Roddy as a trader, perhaps as a favor to his father’s former partner, the criminal Santo Maggio.

But Roddy soon abandoned the securities business to become a business journalist – first at the New York Post and now at Fortune magazine. Roddy Boyd is a key figure among the small coterie of journalists who turn up repeatedly in Deep Capture‘s analyses.

Like all members of the coterie, Roddy has spent several years trying to cover up the naked short selling scandal, ridiculing anyone who mentions the crime or the remarkable coincidence of companies appearing on the Reg Sho list (the SEC’s list of companies suffering from naked short selling) when those companies are the targets of a select group of hedge funds whose names will be familiar to the reader who has made it this far.

In addition to covering up naked short selling crimes, Roddy writes hatchet jobs on the public companies targeted by this same select group of short selling hedge funds. The sources of the information in Roddy’s stories are, of course, the short sellers themselves, and most of the short sellers are, as has been explained over and over, tied to Michael Milken or his close associates.

For example, Roddy spent a great deal of time working with a soon-to-be arrested criminal named Spyro Contogouris, who had been hired by a subsidiary of Steve Cohen’s SAC Capital, to sabotage, harass, and trash Fairfax Financial.

As mentioned, we have obtained a great number of emails between Cohen, Jim Chanos of Kynikos Associates, and others in the network that was attacking Fairfax. In one email, hedge fund manager Chanos writes to journalist Roddy Boyd, “your courtesy was a boon to me. Thank you!”

With the exception of Roddy’s particular clique of journalists, it is not typical for reporters to receive thank you notes for the “courtesies” that they have extended to help hedge funds make money.

Another holder of Dendreon’s convertible bonds was CNH Partners, run by Todd Pulvino, who used to work for Grosvenor Capital. Grosvenor is managed by Scott Lederman, who was the grad school roommate of Steve Cohen and later the chief operating officer of Cohen’s SAC Capital. While Pulvino was presenting himself as a legitimate investor in Dendreon’s debt, was he in touch with Steve Cohen, who had bet big against Dendreon right before Provenge was derailed by the unprecedented lobbying effort of Milken’s other cronies?

We can’t say. And we can’t say who was illegally naked short selling Dendreon’s stock. That, remember, is a big secret – “proprietary trading strategies.”

* * * * * * * *

On October 12, 2007, Dendreon, still desperate for capital to continue clinical trials that might eventually help its cancer treatment receive FDA approval, signed the paperwork on its first PIPE deal. A dreaded PIPE – the sort of deal that dilutes equity and tends to attract naked short selling that sends a company’s stock into a “death spiral.”

The provider of this PIPE finance was the Azimuth Opportunity Fund, managed by an outfit called Acqua Wellington Asset Management.

Acqua Wellington is controlled by a “prominent” investor named Isser Elishis. In an otherwise flattering article, Herb Greenberg – a journalist whose entire career was devoted to granting “courtesies” to hedge funds in the Milken network – described Elishis as the “banker of last resort.”

Herb, who disappeared from public sight after he was exposed by Deep Capture,  now owns a company that ostensibly sells financial research to hedge funds in the Milken network (or, arguably, merely receives payment from them for the extensive string of “courtesies” that Herb extended while working as a journalist).

Among Azimuth’s first forays into the markets was an investment in a company called SulphCo, which claimed to have a method for turning sulphrous crude into clean-burning oil. Elishis collaborated on this deal with SulphCo’s principal investor, Zev Wolfson, who, you will recall, was the investor who financed Milken cronies Carl Icahn, Saul Steinberg, John Mulheren, and various brokerages tied to the Mafia, naked short selling, or both.

SEC data shows that on the day that Dendreon signed its PIPE deal with Azimuth, naked short sellers flooded the market with more than 2 million phantom shares. During the following week, more than a million Dendreon shares “failed to deliver” every day, despite (or perhaps because of) the news that Dendreon had enrolled 500 patients in a trial to confirm its earlier positive results, putting Provenge back on the track to FDA approval.

* * * * * * * *

In the late 1980s, a fellow named Jeffrey Yass and his two friends, Eric Brooks and Kenneth Brodie, set up a partnership to place bets at horse racing tracks across the country. On one single day at Sportsman Park in Chicago they pulled in winnings of more than $600,000. This seemed somewhat excessive, so Sportsman Park banned the three friends from its premises. The punters filed a lawsuit claiming that Sportsman Park had violated their rights to visit a public facility.

At any rate, Jeffrey Yass and Eric Brooks eventually abandoned the business of betting on horse races and instead pursued careers on Wall Street. Now they are “prominent” investors, the proprietors of a mid-sized investment and trading house called Susquehanna International.

In the spring of 2008, Susquehanna was introduced to Dendreon by a placement agent, Lazard Capital Markets. It is not clear why Dendreon would want to do business with Lazard. After all, Lazard was home to the singing Joel Sendek, who had been busily trashing Dendreon in his research reports.

Sendek had also been trumpeting Dendreon’s competitor, Cougar Biotechnology, as the next big thing in cancer treatment. In turn, Cougar Biotechnology (the company then controlled by Milken crony Lindsay Rosenwald, formerly of the Mafia-affiliated pump-and-dump shop D.H. Blair) had been quoting Sendek in its SEC filings.

Sendek’s endorsement, Cougar seemed to be suggesting, was evidence that the company was making progress toward bringing its prostate cancer treatment to market. This was odd, because most pharmaceutical companies use data collected from clinical trials to demonstrate this, not quotes from singing Wall Street analysts.

Meanwhile, it was widely understood that Lazard’s stock loan department was one of the go-to shops for hedge funds looking to short sell Dendreon’s shares. We cannot say that Lazard was loaning phantom stock to the short sellers (if it were, that would be a big secret), but Lazard’s coziness with short sellers ought to have given Dendreon pause.

There was also the fact that Lazard Capital had only recently been spun off from Lazard Ltd. Given that the two operations remained closely affiliated (sharing business and so forth), it might have been of some concern that the chairman of Lazard Ltd. was Bruce Wasserstein, a close associate of Michael Milken.

In “Den of Thieves,” James Stewart, the Pulitzer Prize winning author, quotes a criminal named Denis Levine as saying that Wasserstein was “owned” by Milken’s famous co-conspirator, Ivan Boesky. Given that Denis Levine was indicted for participating in Boesky’s insider trading schemes, one would think he knew of what he spoke, but there is no hard evidence to support his allegation.

In any case, Dendreon followed Lazard’s advice, and did a “registered direct offering” with Capital Ventures International, an affiliate of Susquehanna, the firm founded by Yass and Brooks. A “registered direct offering” is similar to a PIPE, the difference being that the securities sold to the investor are registered with the SEC and immediately tradable.

For most of March 2008, naked short sellers were failing to deliver less than 500,000 shares per day. As negotiations for the “registered direct offering” were underway, the amount of phantom stock gradually increased. And on the day the deal was signed, April 3, at least 1.6 million phantom shares had been sold into the market and remained undelivered.

For the next two months, more than one million Dendreon shares remained “failed to deliver” every day. This despite (or perhaps because of) the fantastic news, on March 12, 2008, that the FDA had agreed to an amended “Special Protocol Assessment,” which would enable the company to release, one year ahead of schedule, the results of an “IMPACT” trial that seemed likely to confirm the company’s Phase 3 trials showing substantial evidence that Provenge was safe and effective.

As Dendreon’s enemies must have known, it would soon be impossible to stymie the company with arguments about data, but stock manipulators were not yet ready to end their campaign against the company.

* * * * * * * *

To be continued….Click here for Chapter 13.

If this article concerns you, and you wish to help, then:
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Michael Milken, 60,000 Deaths, and the Story of Dendreon (Chapter 11 of 15)

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Michael Milken, 60,000 Deaths, and the Story of Dendreon (Chapter 11 of 15)



What follows is PART 11 of a 15-PART series. The remaining installments will appear on Deep Capture in the coming days, after which point the story will be published in its entirety.

Click here to read PART 1

Click here to read PART 2

Click here to read PART 3

Click here to read PART 4

Click here to read PART 5

Click here to read PART 6

Click here to read PART 7

Click here to read PART 8

Click here to read Part 9

Click here to read PART 10

Where we left off, we had learned that on March 29, 2007, an FDA advisory panel voted overwhelmingly that Dendreon’s promising treatment for prostate cancer should be approved. As a result, most financial analysts and investors were expecting that Dendreon had a promising future.  However, ten hedge funds (out of a universe of 11,500 hedge funds) held large numbers of Dendreon put options (bets against the company), suggesting they had reason to believe that Dendreon would be derailed. At least seven of those hedge funds can be tied to Michael Milken or his close associates.

We had also learned that Milken himself stood to profit if Dendreon were to experience unexpected problems receiving FDA approval. This is because Milken was the early financier and principal deal maker for ProQuest Investments, a fund that controlled, along with an affiliate, a company called Novacea, which was one of Dendreon’s competitors in the race to produce a new treatment for prostate cancer. Meanwhile, Lindsay Rosenwald (a Milken crony who once helped run a Mafia-linked brokerage called D.H. Blair, which specialized in pumping and dumping fake biotech companies) controlled Cougar Biotechnology, which was Dendreon’s second competitor in the race to develop a treatment for prostate cancer. We had learned further that Milken’s “philanthropic” outfit, the Prostate Cancer Foundation, had supported Novacea and Cougar, while turning its back on Dendreon.

In addition, we had learned that in April 2007, Howard Scher, an FDA-contracted doctor who had sat on the FDA advisory panel that reviewed Dendreon’s application, and who also happened to be the chairman of the Prostate Cancer Foundation’s “Therapeutic Consortium,” initiated an unprecedented lobbying campaign to have the FDA reject Dendreon’s application for approval. This was highly improper, not only because advisory panel doctors are not supposed to lobby the FDA after a panel has already voted, but also because Dr. Scher was hardly an objective observer. Aside from his affiliation with Milken’s “philanthropy,” Dr. Scher was also an executive and board member of Milken’s ProQuest Investments, the firm that controlled Dendreon’s competitor, Novacea. Dr. Scher was, moreover, leading clinical trials for Novacea and serving as a board member of Lindsay Rosenwald’s Cougar Biotechnology.

Also involved in the lobbying effort against Dendreon was Dr. Maha Hussain, who was also one of the 17 doctors who had sat on the FDA advisory panel that voted on Dendreon’s treatment (all 17 doctors voted that Dendreon was safe; only Dr. Scher, Dr. Hussain, and two others voted that it was not effective).  Dr. Hussain, like Dr. Scher, should not have been on that panel because she, too, had ties to the Milken-invested Novacea.

Perhaps owing to those ties, both Dr. Scher and Dr. Hussain trashed Dendreon in “confidential” letters to FDA commissioners, letters which immediately were reprinted in a dubious publication called The Cancer Letter, causing Dendreon’s stock price to tank, to the profit of those ten hedge fund managers who had had the “foresight” to place big long-shot bets against Dendreon.

Soon after, the FDA told Dendreon that it would not approve its prostate cancer treatment, sending the stock into the single digits, much to the delight of criminal naked short sellers who apparently knew the FDA decision was in the works and sold millions of phantom Dendreon shares in the days just prior to the decision becoming public knowledge.

While the hedge funds were not surprised by the decision, many were. This was the first time in history that the FDA had ignored an expert advisory panel recommendation to approve a treatment destined for dying patients.

Which raises the question…

* * * * * * * *

Who in the government helped sabotage Dendreon? Despite the lobbying by the captured doctors, despite the Wall Street whispering, despite the singing Sendek and the media mimics — despite all of this, it still seemed likely that the FDA would heed the advice of its advisory panel.

Instead, the FDA told Dendreon that it would not yet approve its treatment — that the company had to get more data, which would take years, by which time the company could easily run out of money. The FDA handed Dendreon (and prostate cancer patients) what seemed like a death sentence. This was a strange occurrence. It must have followed some serious work by government officials in high places.

One official who might have advocated against Dendreon was then FDA Commissioner Andrew von Eschenbach, who was a close ally of Michael Milken. Dr. von Eschenbach was a founding director of Milken’s Prostate Cancer Foundation, and later he was at the forefront of an ultimately unsuccessful effort to convince George Bush to grant a presidential pardon forgiving Milken for his crimes. But it is clear that von Eschenbach was not the only official courted by Milken and his associates.

Long before I came along, an assortment of Dendreon shareholders, prostate cancer patients, honest folks on Wall Street (there are some), and concerned citizens spotted the connections among Milken, ProQuest and the captured doctors who led the lobbying effort against Dendreon. When the FDA failed to approve Provenge, these folks saw that an injustice had been done, and they hollered loudly. Soon after, a grass roots organization called Care-to-Live was founded to advocate on Dendreon’s behalf.

Care-to-Live (to whom I owe a debt of gratitude for uncovering some of the information that appears in this story) has not only chronicled Dendreon’s travails, but has also labored tirelessly to right the wrongs.  It has organized street protests and letter-writing campaigns. It has lodged Freedom of Information Act requests and it has filed a lawsuit against the FDA. In the course of these efforts, it managed to get a hold of various documents and email communications between Dr. Scher (the physician with financial ties to Milken’s companies and “philanthropy”) and officials in the government bureaucracy.

What these documents and emails show is that Dr. Scher and his allies depended largely on support from a mid-level FDA employee and the National Cancer Institute, which oversees government funding of cancer initiatives, and has considerable, though unofficial, influence over FDA decisions. Over the years, Milken and his Prostate Cancer Foundation have made great efforts to ingratiate themselves with the NCI, which may be one reason why Dendreon was never able to receive government funding, despite the revolutionary potential of its treatment.

On March 31, 2007, Alison Martin, who was in charge of the prostate cancer division of the National Cancer Institute, emailed Dr. Scher, who was busy crafting the missive that would be published with mysterious immediacy by The Cancer Letter. “Glad to hear letter is being drafted,” Martin wrote. “If that [FDA] division’s vote suggests [that Dendreon’s treatment] be considered for approval, I was wondering if it then could go to ODAC, which is more clinically savvy, i.e. this is just a step in a process.”

The “division” whose possible approval of Dendreon’s treatment so discomfited Dr. Martin was the FDA’s Center for Biologic Evaluation & Research (CBER), which was assigned the task of evaluating Dendreon’s application. Martin was suggesting that if CBER was going to approve Provenge, perhaps the matter could be taken to ODAC – the FDA’s Oncologic Drugs Advisory Committee, which was led by an FDA official named Dr. Richard Pazdur.

Pazdur has a close relationship with a Washington lobbyist named Samuel D. Turner. Some years ago, Turner, who helps run an organization called the Cancer Leadership Council, led a campaign to have Pazdur appointed as the commissioner of the FDA. Michael Milken supported that campaign. And Milken’s advisors, such as Dr. Donald Coffey of the Prostate Cancer Foundation, have collaborated closely with Turner in another cancer lobbying group called C-Change, of which the Cancer Leadership Council is an affiliate.

As a result of this support, Milken and Pazdur have become very close friends.

Some years ago, a U.S. Congressional investigation determined that Pazdur, through his lobbyist friend Turner, had leaked inside information that the FDA was going to reject Erbitux, a cancer drug that was developed by ImClone. As you will recall, that inside information made its way to Martha Stewart, setting in motion the chain of events that landed her in jail.  The ImClone inside information also was first published in The Cancer Letter, the same rag that published Dr. Scher’s “confidential” letter to the FDA.  And, remember, the records of phone calls made to ImClone at that time raise the distinct possibility that funds managed by Milken cronies Carl Icahn, Steve Cohen, and Dirk Ziff also were privy to that information before it was made public.

As an aside, after ImClone’s stock crashed on the news, the company was seized by Milken crony Carl Icahn. And soon after Martha Stewart received the inside information, but before she was caught, hedge funds in the Milken network began short selling Martha Stewart’s company, Martha Stewart Living Omnivision. One hypothesis that explains the exquisite timing of those hedge funds is that the funds knew Martha was going to be arrested and therefore shorted her company on the assumption that news of her arrest would crash the stock. They may even have been the ones who turned her in.  But that is a story for another time.

For now, it merely needs to be emphasized that Pazdur, the FDA official, has unusually close relationships with Milken and some of his cronies. He was a key player in the ImClone scandal, which displays remarkable similarities (such as insider information mysteriously appearing in The Cancer Letter and the involvement of hedge funds in the Milken network) to the Dendreon scandal. And Pazdur appears to have been the FDA official most responsible for derailing Dendreon’s prostate cancer treatment.

Pazdur was not supposed to be the one who decided whether Dendreon’s drug was approved. Instead, because the drug is a biologic, the decision rested with the FDA’s Center for Biologics Evaluation and Research (CBER). Nonetheless, Pazdur inserted himself into the decision process. It was at Pazdur’s behest that Dr. Scher and Dr. Hussain were, despite their ties to competing companies controlled by Milken’s funds and friends, appointed to the advisory panel that voted on Dendreon’s application.

As you will recall, Dr. Scher and Dr. Hussain were among the four panelists who quickly voted “No” to the incorrectly phrased question about Dendreon’s effectiveness. When the phrasing was changed to the correct, legally mandated question ( Is there “substantial evidence” that the drug reduces mortality?) the remaining 13 experts on the panel voted “Yes.”

According to eyewitnesses, just as panelists began voting “Yes,” Pazdur began passing notes to Dr. Maha Hussain, who then attempted to instill further confusion, apparently hoping to have the remaining panelists continue to vote on the incorrect question. Pazdur, who had come to the meeting uninvited and unannounced, also spent a good deal of time conversing with Dr. Hussain, giving the impression that they were working together to devise arguments that might turn the panel against Dendreon.

Curious to know whether it was Pazdur who ultimately derailed Dendreon’s application, perhaps even delivering the captured doctors’ “confidential” letters to The Cancer Letter – and wondering whether this had anything to do with Pazdur’s relationship with Michael Milken — Care-to-Live, as part of its lawsuit against the FDA, subpoenaed Pazdur’s relevant emails and documents.

Pazdur responded under oath as follows: “I searched both my paper and computer files and was unable to locate any documents that were responsive to Plaintiff’s requests. I recall receiving…these letters…However, as these letters related to a specific regulatory application conducted by a different FDA Center (CBER), did not fall under my direct regulatory supervision…I shredded my hard copies of these letters and deleted any electronic copies. The documents were shredded and deleted within a month of receipt.”

This response was strange. For one, Pazdur seemed to be stating that he had no involvement in the Dendreon decision. If that were the case, what was he doing at the advisory panel meeting?  Pazdur’s statement also contradicted an earlier statement from the FDA. In response to complaints that Pazdur had participated in a decision that was supposed to be left to the CBER division, the FDA said that he had done so “at CBER’s request.” Clearly, Pazdur had been involved in the decision, so it was disingenuous for him to state otherwise in his efforts to explain why he had (frantically?) shredded and deleted all the relevant documents.

Moreover, if Pazdur is telling the truth (and not, that is, simply obstructing justice), then Pazdur violated the spirit of various initiatives, including a bill passed in the U.S. House of Representatives and directives from the Archivist of the United States, aimed at ensuring that government employees maintain records of their official business. The reason that government officials are asked to keep good records is that they are sometimes involved in controversies – controversies such as the one that was swirling around Dendreon’s FDA application when Pazdur began shredding and deleting documents so promptly and thoroughly.

In any case, most of the documents that Care-to-Live requested had been transmitted electronically, meaning that a simple computer excavation could have retrieved them, even if they were deleted. Clearly, Dr. Pazdur had reason not to hand over those documents. Perhaps he was advised not to by his lawyer, who happens also to be the same lawyer who represents The Cancer Letter, the rag that published the “confidential” letters that Dr. Scher and Dr. Hussain wrote to Dr. Pazdur and FDA commissioners.

Fortunately, Alison Martin of the National Cancer Institute did not shred everything – she handed over at least some of her documents. And the email quoted above strongly suggests that her plan was to get Dendreon’s application out of the hands of the designated authority, CBER, and into the hands of Richard Pazdur. In response to that email, Dr. Scher wrote to Martin that he, too, would try to have Dendreon’s application “reviewed by ODAC” (which was controlled by Pazdur). In a follow-up email, Dr. Scher wrote: “Got a minute for quick question related to FDA processes?”

A minute later, Martin responded: “Consider this confidential, please…but I wanted you to know.” As to what confidential information she delivered to Scher, that is unclear from the documents received by Care-to-Live. Apparently, the telling documents were also promptly shredded.

But other documents and emails show that by early April, Martin was fully engaged in helping Scher draft his letter trashing Dendreon — the “confidential” letter to the FDA that would be quickly published by The Cancer Letter. Indeed, a copy of a half-edited draft of Dr. Scher’s letter was found on Martin’s computer. And in one email, Martin appears to complain about all the work she has done on this letter. “Maybe you should write a letter, too,” she jokes.

So an employee of the federal government was helping a conflicted doctor lobby the federal government. That is, Martin, the head of the prostate cancer unit at the National Cancer Institute, was helping a doctor – a doctor with financial ties to Michael Milken and to a competing, Milken-invested company — sabotage Dendreon’s treatment for prostate cancer.

As news of this started to reach Dendreon’s supporters, Martin left her job at the National Cancer Institute. Soon after, she was appointed president and chief executive officer of the Melanoma Research Alliance (where one  can safely suppose her compensation exceeds her previous government salary).

The Melanoma Research Alliance was a brand new “philanthropic” outfit. It had just been set up by a “prominent philanthropist.”

The name of the “prominent philanthropist” is, of course, Michael Milken.

Milken founded the Melanoma Research Alliance and hired Alison Martin with an initial grant from Leon Black, the “prominent” billionaire and Milken crony who does business with an alleged Russian mobster named Felix Sater.

Sater, remember, is the fellow who allegedly was behind the threat to have Deep Capture reporter Patrick Byrne murdered if Patrick did not end his crusade against abusive short selling and the “deep capture” of the nation’s regulatory bodies.

* * * * * * * *

On May 11, three days after the FDA failed to approve Dendreon’s treatment, The Wall Street Journal published a report that purported to investigate the allegations that the government approval process had been compromised. This “investigation” entailed asking Dr. Scher whether he had any conflicts of interest.

“’I try to keep to the high ground,’” Dr. Scher told The Journal. Apparently content with his reply, and eager to assuage any suspicions that something nefarious had gone down, The Journal added that Dr. Scher “serves as an advisor to Innovive, a small biotech not involved in prostate cancer, and works with Bristol-Myers Squibb in an unpaid capacity on early stage drugs that may hold promise in prostate cancer. He and his wife hold small amounts of stock in Biogen, Idec and Pfizer.”

That was it. According to the Journal, Scher had no conflicts of interest.

The Journal did not mention that Dr. Scher was a board member and executive of  Milken’s ProQuest Investments. It did not mention the fact that ProQuest was heavily invested in Novacea, a Dendreon competitor. It did not mention that Dr. Scher was leading the trials of Novacea’s prostate cancer drug, or that he was a paid director on the advisory board of another Dendreon competitor – Milken crony Lindsay Rosenwald’s Cougar Biotechnology. And it did not mention that Dr. Scher was leading clinical trials for yet another Dendreon competitor, Cell Genesys, which, like Cougar and Novacea, was supported by Milken’s Prostate Cancer Foundation, whose “Therapeutic Consortium,” was chaired by none other than Dr. Scher.

The Wall Street Journal did not mention any of this, despite the fact that concerned citizens had plastered the information all over the Internet.

Four days after the Journal article appeared– May 15, 2007 – the FDA issued new guidelines for evaluating immunotherapy agents, such as Dendreon’s treatment. Now it was official – Pazdur’s division would have some influence.

This seemed like the FDA was papering over a scandal. If Pazdur had violated the guidelines by influencing the Dendreon decision, now the FDA could say that, in fact, there were new guidelines, and Pazdur had followed them (never mind that the new guidelines were written one week after the FDA failed to approve Dendreon’s treatment, possibly because Pazdur had violated the old guidelines).

* * * * * * * *

Just a few weeks after the FDA said it would not yet approve Dendreon’s treatment, it was easier to understand why Dr. Scher, Milken and their allies were so eager to see Dendreon fail. On May 30, 2007, Novacea, the company whose largest investors were Milken’s ProQuest Investments and the affiliated Domain Associates, announced that it had signed a $500 million deal to jointly develop its prostate cancer treatment with pharmaceutical giant Schering Plough. Within 24 hours, Novacea’s stock price jumped 86 percent.

In subsequent days, the business media reported this “news” as if it were not just a business triumph, but also a major breakthrough in the world of medicine. “On Tuesday, Novacea was just another young biotech, with a modest market capitalization of $187 million,” enthused Forbes magazine. “That all changed on Wednesday when the drug maker announced it had signed a deal worth over $500 million with pharma juggernaut Schering-Plough.”

Forbes added that Novacea’s treatment “appears to significantly increase the chance of survival among androgen-independent prostate cancer patients…”

As this $500 million figure and news of Novacea’s medical miracle made its way around the other news organizations, and appeared everywhere on the Internet, Novacea’s stock continued to soar.

Nobody in the media paused to consider whether a “$500 million deal” constitutes a medical breakthrough (like, for example, reducing mortality by 20% in late-stage prostate cancer patients, as Dendreon had done). The assumption was, if there is big money and the stock is soaring, the company’s prostate cancer treatment must be good.

Furthermore, nobody in the media paused to consider that had Dendreon received approval for its competing treatment, this “$500 million deal” would almost certainly not have happened. Nor did anybody in the media report that the people (Milken and friends) who stymied Dendreon were the same people who stood to profit from this purported “$500 million” deal.

At any rate, the deal was not quite what it was made out to be. Novacea did not receive $500 million. It received $60 million up front. Meanwhile, Schering-Plough was given $12 million worth of Novacea stock at a bargain price. By cashing out of the stock after it soared in value, Schering-Plough could significantly reduce that upfront investment. The rest of the much-trumpeted $500 million was dependent on Novacea’s clinical trials showing that its cancer treatment actually improved the health of patients.

Sure enough, just a few months later, in November 2007, Novacea announced that the clinical trial of its treatment had been terminated “due to an unexplained imbalance of deaths…” In other words, Novacea’s drug was not improving the health of patients. It was killing patients. And as soon as this news was released, the much-heralded $500 million Schering-Plough deal was cancelled.

Either shortly before or soon after the trials were terminated due to an “imbalance of deaths,” Milken’s ProQuest Investments and Domain Associates sold their stock in Novacea. Given the enormous boost the stock price had received after the “$500 million” news, it appears that  ProQuest and Domain (i.e. Michael Milken and friends) sold their stock at a significant profit.

So the questions remain: Did Dr. Scher (who worked for ProQuest and lead Novacea’s clinical trials) really believe that Novacea’s treatment was superior, as he claimed during his successful campaign to get the FDA to reject Dendreon’s drug? Did Michael Milken’s Prostate Cancer Foundation, which was an extension of ProQuest and snubbed its nose at Dendreon’s treatment, really believe that there were better treatments in the pipeline?

Did ProQuest and its affiliate Domain, which founded Novacea, ever care about producing a marketable drug? Or was Novacea a scam? A scam that was built on real science (though Dr. Scher was less than upfront about the results of his clinical trials, his efforts to develop Novacea’s treatment were no doubt sincere).  A scam that was more sophisticated than those perpetrated by the bucket shops of yore, and whose every component may have been technically legal.

But nonetheless a scam – an old-fashioned pump and dump scam.

* * * * * * * *

To be continued….Click here for Chapter 12.

If this article concerns you, and you wish to help, then:
1) email it to a dozen friends;
2) go here for additional suggestions: “So You Say You Want a Revolution?

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Michael Milken, 60,000 Deaths, and the Story of Dendreon (Chapter 9 of 15)

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Michael Milken, 60,000 Deaths, and the Story of Dendreon (Chapter 9 of 15)



What follows is PART 9 of a 15-PART series. The remaining installments will appear on Deep Capture in the coming days, after which point the story will be published in its entirety.

Click here to read PART 1

Click here to read PART 2

Click here to read PART 3

Click here to read PART 4

Click here to read PART 5

Click here to read PART 6

Click here to read PART 7

Click here to read PART 8

Where we left off, we had learned that on March 29, 2007, an FDA advisory panel had voted overwhelmingly that Dendreon’s promising treatment for prostate cancer should be approved. As a result, most financial analysts and investors were predicting that Dendreon’s future looked extremely promising.

As we had also learned, however, ten hedge funds (out of a universe of 11,500 hedge funds) held large numbers of Dendreon put options (bets against the company), suggesting they had reason to believe that Dendreon would be derailed. At least seven of those hedge funds can be tied to Michael Milken or his close associates. Michael Milken himself also stood to profit if Dendreon were to experience any problems receiving FDA approval. This is because Milken was the early financier and principal deal maker for ProQuest Investments, a fund that controlled, along with an affiliate, a company called Novacea, which was one of Dendreon’s putative competitors in the race to produce a new treatment for prostate cancer. Meanwhile, a Milken crony, Lindsay Rosenwald (who once helped run a Mafia-linked brokerage called D.H. Blair) controlled Cougar Biotechnology, the only other company that purported to be developing a treatment for prostate cancer. We had learned that Milken’s “philanthropic” outfit, the Prostate Cancer Foundation, had supported Novacea and Cougar, while turning its back on Dendreon.

Finally, we had learned that on April 13, 2007, The Cancer Letter, a newsletter with a history of publishing information leaked from the FDA, and reputation for being an organ of Wall Street hedge funds, published a confidential letter to FDA commissioners from an FDA-contracted doctor named Howard Scher, who was a board member and executive of Milken’s ProQuest Investments and the chairman of the “Therapeutic Consortium” of Milken’s Prostate Cancer Foundation.  In this letter (an unprecedented attempt to lobby the FDA after an advisory panel had already voted), Dr. Scher argued vehemently that Dendreon’s treatment should not be approved.

Now we learn more about Dr. Scher’s letter…

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As Dr. Scher made clear in his letter, his concern about Dendreon was not, strictly speaking, that it didn’t work, but that it would render irrelevant his work on Novacea’s competing treatment, Asentar. A new phase 3 trial to test the effectiveness of Asentar (referred to in the letter by its medical name, DN-101) had been “designed, initiated and continues to accrue,” Dr. Scher wrote. “I am the International Investigator on this trial.”

Nowhere in his letter (and nowhere in the conflict-of-interest waiver form that he submitted in order to get a seat on the FDA advisory panel that voted on Dendreon’s treatment) did Dr. Scher mention that he was not just the lead investigator in the Asentar trials, but also a board member and executive of Milken’s ProQuest Investments, which was, along with affiliate Domain Associates, the biggest investor in Novacea, the company that was developing Asentar.

Also left unmentioned was the fact that Dr. Scher was the chairman of the “Therapeutic Consortium” of Milken’s Prostate Cancer Foundation. The “Therapeutic Consortium” helps Milken’s “philanthropic” outfit decide which treatments and hospitals deserve its support.  It is clear that the Prostate Cancer Foundation’s donations to hospitals such as Dr. Scher’s Memorial Sloan are linked to the hospitals’ support of specific treatments being developed by specific Milken-affiliated companies.

For example, in one typical press release, the Prostate Cancer Foundation stated that the “Therapeutic Clinical Investigation Consortium [the Milken Prostate Cancer Foundation outfit of which Dr. Scher is the chairman] played an important role by accelerating testing of this new agent [Abiraterone, the agent developed by Milken crony Lindsay Rosenwald’s Cougar Biotechnology] in Phase II clinical trials…Right now, at MD Anderson and Memorial Sloan-Kettering, both NCI funded cancer centers, the Phase III trials of Abiraterone [Cougar’s treatment] are going on. PCF contributions to Sloan-Kettering reached $18 million to date, possibly more…”

In other words, Milken raised money from unsuspecting donors, including the ordinary folks who slipped cash into the buckets that the Prostate Cancer Foundation places outside of supermarkets and shopping malls. Then Milken, with the support of Dr. Scher, directed that money to Dr. Scher’s hospital, with the understanding that Scher and his hospital would attach their prominent names to drugs developed by companies in which either Milken or Milken’s friends were investors.

Keep in mind that the prostate cancer drugs developed by Milken-affiliated companies were in the earliest stages of development – there was not yet much evidence that they could help patients. But, as we will see, there was lots of potential for them to make money for Milken and his friends.

Meanwhile, the Prostate Cancer Foundation and affiliated doctors diverted attention, or (in the case of Dr. Scher) attacked Dendreon, the only company with a new treatment for prostate cancer that could be delivered to patients right away, and for which “substantial evidence” existed that showed it worked.

This is not exactly “philanthropy” in its purest form.

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Remember, on March 29, 2007, when Dr. Scher sat on the FDA’s advisory panel, he was one of the 17 doctors who voted unanimously that Dendreon’s treatment was safe. And two weeks later Dr. Scher wrote a letter to the FDA in which he vigorously trashed Dendreon’s treatment.

As mentioned, this letter was strange in that it was unprecedented for an FDA-contracted doctor to lobby the FDA after an advisory panel had already voted. It was strange in that the presumably confidential letter was quickly published by The Cancer Letter, an outfit with a reputation for being an organ of short selling hedge funds. And the letter was strange in that it was disingenuous, to the say the least.

For one, Dr. Scher seemed to have changed his mind with regards to the safety of Dendreon’s treatment.

In his letter to the FDA, he noted that the advisory panel had discussed the fact that Dendreon’s trials showed that 4.9% of patients treated with Provenge had experienced “cerebrovascular events” compared to 1.7% of patients who were given a placebo.

The panel’s 17 doctors, Scher included, had voted unanimously that this was an acceptable risk for patients with a deadly disease – especially since, in other regards, Provenge appeared to be perfectly safe.  But now Scher was insisting in a letter to the FDA that these rare “cerebrovascular events” (few of which were fatal) were worrisome enough to deprive end-stage prostate cancer patients of a treatment that might extend their lives.

But Dr. Scher’s “cerebrovascular events” argument was not new. It was precisely the same canard that had been delivered to the press by those dubious Wall Street players — the singing Sendek, and doctor-impersonating Aschoff, the troubled UBS, and the whispering hedge fund managers.

As to the effectiveness of Provenge, Dr. Scher averred in his letter that Dendreon had not met its “primary end-points” and the data was “not considered definitive.” He insisted that the treatment be delayed until Dendreon could provide “proof” that Provenge extended lives.

This was absurd. As Dr. Scher must have known, rarely in history has data on an experimental treatment shown definitive “proof” that the treatment works in every case. Instead, the legally established criteria for FDA approval (especially of treatments for life-threatening diseases) is that the data show “substantial evidence” that the treatment improves the health of patients.  Neither medicine nor science progresses by “definitive proof”.

Even if trials do not meet their “primary end-points,” the FDA usually approves treatments for deadly diseases if the odds are nonetheless good that the treatments increase survival. The odds might not be 100 percent, but if they are 98 percent, or even 51% percent, the treatment should be delivered to patients who will otherwise die. This criteria – “substantial evidence” of increased patient survival – is referred to as “the Gold Standard” by FDA officials and doctors everywhere.

In any case, “it may be time we focus less on statistical significance, and more on patient benefit.” So said Dr. Scher himself, in an interview with a medical journal, just a few weeks before he wrote a letter to the FDA harping on Dendreon’s statistical significance. Most likely, Dr. Scher was thinking about his trials of Asentar (the drug under development by Novacea, which was controlled by Milken’s ProQuest Investments and an affiliate) and Abiraterone (the drug developed by Milken crony Lindsay Rosenwald’s Cougar Biotechnology). These trials had not yielded particularly good results.

In fact, as we will see, Asentar was not just unhelpful to patients. During trials of the treatment, patients dropped dead. They dropped dead earlier than expected. And, as Novacea later acknowledged, the cause was clear: Asentar actually killed a significant number of people who were hoped to benefit from it. Provenge  increased “cerebrovascular events” in a small number of patients, but patients on Asentar died in such large numbers that Novacea had to discontinue its trials of the drug.

The question is: Did Milken’s Prostate Cancer Foundation, Dr. Scher, and the Wall Street hedge funds really believe that competing treatments were superior to Provenge when they began their attack on Dendreon?  Or were their attacks motivated by their financial interests?

* * * * * * * *

It was not necessary for Asentar to receive FDA approval in order for Milken’s ProQuest to make heaps of money from its investment in Novacea. As we will see, the Milken clan had hatched a plan to cash in on their Novacea stock, regardless of what the FDA had to say about the company’s prostate cancer treatment, and regardless of whether that treatment would eventually be shown to kill an unacceptable number of people.

Same goes for Cougar Biotechnology’s investors, who included not just controlling shareholder Lindsay Rosenwald (who once helped run the Mafia-affiliated D.H. Blair, which was indicted on 173 counts of securities fraud and was famous for pumping phony biotech companies), but also two of the seven Milken network hedge funds that were betting big against Dendreon. Cougar’s treatment, supported by Milken’s philanthropy and by the four Prostate Cancer Foundation doctors who sat on Cougar’s advisory board, was virtually untested, but as we will see, this did not prevent the company’s investors from cashing in.

When Dendreon came under attack, similar plans to cash in had been hatched by investors in a company called Cell Genesys, whose experimental (and, we will see, ineffective) treatment was promoted in a most peculiar fashion (which I will describe in due course) by Milken’s Prostate Cancer Foundation.

Investors in those companies did not need FDA approval to make money, but as we will see, their money-making plans would have been foiled if Dendreon had received approval. In reading the transcript of the FDA advisory panel meeting that voted on Provenge in March 2007, one has to wonder if  Dr. Scher—who led trials for not only Novacea and Cougar, but also Cell Genesys–knew of these money-making plans, and if this knowledge informed the lobbying he undertook at the panel meeting, and in the days following it.

Among Dr. Scher’s more revealing statements at the advisory panel meeting was this: “So if I start thinking, am I denying a potentially useful agent [Dendreon’s Provenge] to men who clearly need it, the answer is unfortunately I don’t know. So I say, well, what if we think that this really should be available, start thinking about the number of agents that are currently under development.”

This is the same message that was whispered in the ears of reporters, who eagerly transcribed it into their stories. If the FDA approved Provenge, they said, it would become the standard of care. This would be unfortunate because other treatments “under development” might be better. The problem with this argument is that there were very few other treatments “under development.” And when Dr. Scher referred to treatments “under development,” there was little else he could have been referring to other than the above-mentioned Asentar (Novacea), Abiraterone (Cougar Biotechnology), and GVAX (Cell Genesys).

As mentioned, Dr. Scher was connected to all three of those companies. Novacea’s Asentar, we know, was killing people. At the time of Dr. Scher’s attack on Dendreon, Cougar’s Abiraterone had been tested on a total of 38 patients. The data showed that some of those 38 patients saw their blood tests improve, and Cougar Biotechnology trumpeted this information in multiple press releases, but there was zero evidence that Abiraterone increased patient survival. GVAX had been tested on 80 patients, and some of them lived longer, but the data did not yet show “substantial evidence” that GVAX was the reason.

All of these treatments had undergone only Phase 2 trials, whereas Dendreon had completed Phase 3 trials on 170 patients. The data from the Dendreon trials had reached statistical significance, and showed that Provenge reduced mortality. In other words, none of the competing treatments (all financed by Milken or Milken’s friends and promoted by Milken’s “philanthropic” foundation) had come anywhere close to achieving results like Dendreon’s.

But Dr. Scher was insistent – ”a number of alternatives [those "alternatives" being drugs under development by Milken and his cronies with the assistance of Dr. Scher and Milken’s ‘philanthropy’, drugs that would prove, in time, to be inferior] were “currently under development.”  And so patients must not have access to Dendreon’s drug  – a drug that was capable of saving lives right away.

* * * * * * * *

To understand the lengths to which some people went to derail Dendreon, it is necessary to recall the Dendreon conference call, when the singing-Sendek kept asking whether the FDA might have to “change the question.”  Others on Wall Street were whispering about “the question,” the press transcribed into their stories these same whisperings about “the question,” and Dr. Scher made  “the question” a key feature of his letter to the FDA. All of them suggested that the FDA advisory panel vote was invalid because the 13 panelists who had voted that Provenge worked had, in fact, voted on the “wrong question.”

The transcript of the Dendreon advisory panel meeting clarifies what was meant by all of this questioning of the “question”. As noted, advisory panels are always asked to vote on two questions: Is the treatment safe? And, is there “substantial evidence” that the treatment is effective?

This is not just custom. It is the law of the land. The 1962 Kefauver Harris Drug Amendments, ratified by the U.S. Congress, stipulated that manufacturers of drug products must establish a drug’s effectiveness by “substantial evidence.”

On the first question, “Is the treatment safe?” the advisory panel had voted “yes”, 17-0. Those 17 included Dr. Scher (though, as has been explained, within weeks he was lobbying the FDA by raising doubts as to the safety of Provenge).

The second question to be addressed was, therefore, “Is there substantial evidence that the treatment is effective?” Dendreon had clearly met this standard – the “Gold Standard” of providing “substantial evidence” of increased survival.

But remarkably, somebody at the FDA advisory panel meeting rewrote the “question.” The chairman of the panel read the question out loud: “Does the submitted data establish the efficacy of [Provenge] in the intended population?”

Immediately, there was confusion. This was not the usual question. Did “establish the efficacy” mean that the panelists had to vote on whether the data had proved, with 100% conclusiveness, that Provenge extended lives? No experimental drug had ever faced such a standard.

Dr. Scher interjected to say that Dendreon’s trials had failed to meet their “two primary end-points.” To this, the FDA’s representative on the panel, Cecilia Witten, remarked that the FDA was aware that the trials failed to meet its two primary endpoints, but that was not the issue. The issue was whether the evidence suggested that Dendreon’s treatment saved lives.

“You know,” Witten said. “We’re given the application based on survival.”

The chairman of the panel resumed with the same question. “Again I’ll read it,” he said. “Does the submitted data establish the efficacy…?”

Thus began the voting. Dr. Scher quickly voted, “No.” So did another physician, Dr. Maha Hussain, and two other doctors. But confusion reigned.

One panelist, a certain Dr. Alexander, said, “So that’s – so my vote is, I don’t know what you would call that…”

A Dr. Chamberlain said, “Well, so I guess at this point I’m not sure how to answer this question. It’s not a yes or no question in my opinion the way it’s phrased. With the safety data and with what we’ve seen, I see no reason not to make this drug available, but I don’t think it’s 100 percent proven that it’s efficacious.”

A Dr. Chappell said, “There’s a degree of belief, and ‘establish’ implies much more certainty…you need please, to specify, at least to me, what you mean.”

A Dr. Alexander piped in, “Like is it a reasonable doubt, a shadow of a doubt?”

At this, there was a lot of mumbling and some laughter. Finally, the FDA’s representative clarified. “Yes,” she said, “the regulatory definition is ‘provide substantial evidence.’ So that’s our standard. Is there substantial evidence that it works…”

The chairman of the committee responded, “So just to clarify what you’re asking, is there substantial evidence that the product is efficacious?”

“Yes,” said the FDA’s representative.

That resolved any doubts, and 13 of the 17 doctors on the panel confidently voted “Yes.”  That is to say, when the doctors voted on the correct question – the question that was stipulated by law, as opposed to the question that had been tampered with — the overwhelming consensus was that Dendreon’s treatment should be approved.

* * * * * * * *

To be continued….Click here for Chapter 10.

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