Michael Milken, 60,000 Deaths, and the Story of Dendreon (Chapter 7 of 15)

    What follows is PART 7 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

    Where we left off, CNBC’s Jim Cramer had declared Dendreon to be a “battleground stock,” and we had learned about the ties that bind certain financial analysts, hedge fund managers and journalists, including Cramer.We had also learned that a great many people in this network are tied to the famous criminal Michael Milken or his close associates.

    We had learned further that seven hedge fund managers in this network were among the only people on the planet known to be holding large bets against Dendreon as of March 31, 2007 – which was right at the time when criminals were flooding the market with millions of phantom Dendreon shares; and right after Dendreon had received the fantastic news that an FDA expert advisory panel had endorsed the company’s prostate cancer treatment; and right before Dendreon was to be derailed by some singularly strange occurrences.

    I will describe those strange occurrences in due course. I will also describe how those strange occurrences coincide with the “philanthropy” of Michael Milken.  But first let us meet another dubious financial analyst, and then let us begin to understand how Michael Milken himself stood to profit financially from the demise of Dendreon, the only company with a viable new treatment for prostate cancer.

    * * * * * * * *

    It is easy for executives of public companies to know that they are “battleground” targets of the Milken network because the members of this network have quite distinctive characteristics. Whether they be journalists tied to Cramer, financial analysts, or hedge fund managers, they are unusual among financial professionals in that they take overt pride in their thuggish manner.

    They let it be known that the executives are in their sights, and sometimes issue outright threats. They let on that they have inside information, influence, and power – and that unforeseen calamities can happen.  (This may have what economists call a “signaling effect,” dissuading potential investors from purchasing a stock, even if they believe in the fundamentals of the company.)

    Often members of this network will join companies’ quarterly conference calls, and take turns firing off insinuating and preposterous questions in staccato fashion, giving the targets of their interrogations no opportunity to formulate reasonable replies.

    So it was in March of 2007, when Dendreon held a conference call to discuss the FDA advisory panel’s recent vote in favor of Provenge. Nearly every analyst on the call was cheered by the news that the prostate cancer treatment would reach patients. Most of these analysts were advising clients that Dendreon’s stock would hit at least $20 (compared to the $1.50 target set by the doctor-impersonating financial analyst, Jonathan Aschoff).

    Here is a representative sample of analysts who participated in the conference call, along with quotations showing how they greeted Dendreon CEO Mitchell Gold, and how they signed off.

    Charles Duncan – JMP Securities

    Greeting: “A big congratulations!”

    Singing off: “Congrats Again.”

    David Miller – Biotech Stock Research

    Greeting: “Good evening. Warm congratulations.”

    Signing off: “Congratulations to everybody on the team.”

    Mark Monane – Needham & Company

    Greeting: “Good day and congratulations to all.”

    Signing off: “Congratulations once again.”

    William Ho – Bank of America

    Greeting: “Congratulations”

    Signing off: “Okay”

    Paul Latta – McAdams, Wright & Regan

    Greeting: “Good evening & congratulations, Mitch, a great accomplishment for you and your team.”

    Singing off: “Congratulations again.”

    But then a financial analyst named Elliot Favus appeared on the conference call. Favus worked for Lazard Capital, and announced that he was sitting in for Joel Sendek, who usually covered Dendreon for Lazard. Favus launched into a series of aggressive questions, suggesting that the FDA advisory panel had been a sham, and that the FDA would not approve Dendreon’s prostate cancer treatment.

    Then Joel Sendek, Elliot’s colleague at Lazard, got on the call and initiated a similar interrogation. He kept asking whether the FDA advisory panel had asked the “right question” about the effectiveness of Provenge. When Dendreon’s CEO tried to answer, Sendek interrupted and asked again – Did the panel ask the “right question”?  The baffled answer was, “Yes.”  But Sendek kept asking. Do you think it was the “right question”? Do you think the FDA will have to “change the question”?

    This was very strange. The FDA panel asked two questions. Is Provenge safe? And, is there “substantial evidence” of efficacy?  Those are the two questions that advisory panels always ask. Federal regulations require them to ask those questions.

    It was hard to tell what Sendek was up to. Change the question? Did Sendek believe that the FDA was somehow going to alter its regulatory standards? Did he have information that the FDA might not approve Provenge – never mind that the agency had followed its advisory panels’ recommendations in 97% of cases, and had never in history rejected a panel-approved drug destined for dying patients?

    And who was this Joel Sendek?

    * * * * * * * *

    Actual Joel Sendek publicity photo
    Actual Joel Sendek publicity photo

    Sendek is an analyst for Lazard research. He is famous on Wall Street for spending his evenings calling Wall Street investors and shareholders, and literally singing songs into their voicemail. Usually, these songs celebrate the demise of some biotech company or medicine. For example, when Sendek decided that an anemia drug called Erythropoietin wasn’t going to make it to market (or to patients suffering from anemia), he gleefully called everyone he knew on Wall Street and began singing (to the tune of American Pie):

    Bye-bye, Erythropoietin pie.

    Drove my growth rate with the pipeline,

    But the pipeline went dry.

    I don’t know what song Sendek sings about Dendreon’s prostate cancer medicine, but his reports on Dendreon have been marked by a similarly cheerful pessimism. Same goes for the reports on Dendreon published by Elliot Favus, who, until recently, worked with Sendek at Lazard. In the long two years that followed that conference call in March 2007, Lazard’s reports have consistently predicted (in tones that seemed almost hopeful) that Dendreon’s treatment would fail to reach patients who were dying of prostate cancer.

    In April 2009, a few days before a Yahoo! message board poster predicted, almost to the minute, the“BEAR RAID” that shattered Dendreon’s stock price by 65% in 75 seconds, Lazard put out a statement that said that an “investigator in the current Provenge study” had concluded that Dendreon’s treatment did not work. This was terrible news – assuming that the “investigator” was somebody actually participating in the “current Provenge study” or any other scientific study of Dendreon’s treatment.

    But it turned out that Lazard had made “a mistake.”

    When Dendreon supporters started hollering that there was no such “investigator,” Lazard changed the statement to read that an “expert” had concluded that Provenge does not work. When Lazard was challenged to produce such an expert, it changed the message again. Now the expert wasn’t exactly saying that Dendreon’s prostate cancer treatment does not work. Instead, it was that Provenge was “mentioned cautiously” by this particular “expert,” who remained anonymous.

    If you can spot the similarity between this “mistake” and the “mistakes” of CNBC’s Jim Cramer, it will not surprise you to learn that Lazard’s research operation was then run by a guy named Paul Noglows. Prior to joining Lazard, Noglows was the director of research at IRG Research, an outfit owned by Jim Cramer’s financial news and research company, TheStreet.com.

    Elliot Favus, the Lazard analyst who teamed up with the singing Sendek to trash Dendreon, later resigned from that job. Then he went to work for Och-Ziff Investment Management, a hedge fund managed by Dirk Ziff.

    As you will recall, Ziff was the guy who helped Jim Chanos (host to Ashlee Dupre, hooker of Jim Cramer’s best friend Eliot Spitzer) start his hedge fund empire – an empire that now employs Evan Sturza, the fellow who used to be in the business of publishing research that predicted, with similar glee, the demise of medicines developed by companies that were under attack by Michael Steinhardt (Cramer’s former business partner; mentor to Chanos) and other cronies of Michael Milken and Ivan Boesky.

    Ziff’, remember, was also the fellow who improperly received–along with Chanos, Steve Cohen and others in their network, advanced copies of biased financial research published by Morgan Keegan. And, of course, Chanos met Ziff through Michael Steinhardt and Marty Peretz, who was Ziff’s Harvard professor;  a close friend of Boesky; an ardent defender of Milken; a key limited partner, along with Boesky, in Michael Steinhardt’s hedge fund; and the co-founder, along with Cramer, of TheStreet.com.

    Study the world of abusive short selling for three years, as I have, and you will see that these relationships matter. You will see how these people work together. And you will see that the most egregious cases of market skulduggery – the serious damage to public companies done by journalists and analysts through these repeated and precisely-crafted “mistakes”; the hired thugs; the threats; the over-the-top gloom (sung gleefully); the sudden bankruptcies, the orchestrated calamities, the endless litany of strange occurrences – an alarming amount of it can be traced to the same cast of beady-eyed, Milken-loving mischief-makers.

    * * * * * * * *

    As you may have gathered by now, Provenge has yet to be approved by the FDA. Despite evidence that it decreases prostate cancer mortality by 38%, the treatment has yet to be administered to patients, 60,000 of whom have died in the two years since the FDA’s advisory panel voted in Dendreon’s favor.

    What strange occurrences have contributed to this outcome? What calamity was awaiting Dendreon as these seven “colorful” hedge fund managers stocked up on put options while naked short sellers flooded the market with at least ten million phantom shares?

    Before I answer those questions, we ought to get to know some things about the “philanthropy” of Michael Milken and a firm called ProQuest Investments.

    In 1993, Milken founded the Prostate Cancer Foundation, with a stated mission to promote advancements in the treatment of prostate cancer.

    In 1998, ProQuest Investments opened for business with the specifically stated mission to invest in companies developing treatments for prostate cancer.

    Ostensibly, ProQuest was founded by two men – Jay Moorin and Jeremy Goldberg. But the man who is really behind ProQuest Investments is Michael Milken. Industry reports suggest that Milken is the firm’s rainmaker. It was Milken who delivered  most of ProQuest’s early capital. And it is Milken who brings ProQuest’s deals to the table.

    One of those deals was a company called Novacea, now known as Transcept Pharmaceuticals. For a long while, the controlling shareholders in Novacea were ProQuest Investments and a fund called Domain Associates. I believe it is safe to assume that ProQuest and Domain are affiliated, given that the two funds not only invest in the same companies, but actually share the same address.

    Industry reports state that Domain was the “mentor” to Proquest, and an investor in the fund. One report states that the two funds “plot strategy” together.  Thus, it would be more accurate to say that the controlling shareholders in Novacea were first, ProQuest Investments, and second, ProQuest Investments (acting through Domain Associates).

    But ProQuest and Domain are not like most biotech investment firms, which scout out companies with promising treatments and invest capital in them. Rather, ProQuest and Domain sometimes invest capital in  themselves. For example, Novacea was founded by Eckard Weber, who works as an executive and partner of Domain Associates. One day, there was no such thing as Novacea. The next day ProQuest and Domain had invested in a company called Novacea, which ostensibly had a promising treatment for prostate cancer.

    This alone should have set off alarm bells. But for a long while, the media and others believed that Novacea was a serious – indeed, the most serious – competitor to Dendreon. An achievement for Dendreon was considered to be a set-back for Novacea. By the same token, a calamity for Dendreon had the potential to be a major boon to Novacea’s shareholders.

    In fact, Dendreon suffered just such a calamity. And this calamity did indeed reap a large fortune for Michael Milken’s ProQuest Investments and Domain Associates.

    But ProQuest and Domain are no longer shareholders in Novacea.

    That is on account of some strange occurrences that I must describe in more detail.

    * * * * * * * *

    First, though, it is necessary for us to continue learning more about Michael Milken’s prostate cancer business,  ProQuest Investments, and Michael Milken’s “philanthropic” outfit, the Prostate Cancer Foundation.

    As we know, ProQuest Investments was ostensibly founded by two men – Jeremy Goldberg and Jay Moorin.

    Prior to becoming the ostensible co-founder of ProQuest (Michael Milken’s investment fund for companies that supposedly have treatments for prostate cancer) Moorin’s most significant achievement had been to serve as CEO of Magainin Pharmaceuticals, a company that later changed its name to Genaera Corporation. In many transactions, the financial advisor to this company was Paramount Capital.

    Paramount Capital, as you will recall, is owned by Lindsay Rosenwald, the fellow who used to help his father-in-law (the “king of stock fraud”) run D.H. Blair, which was the dirtiest Mafia-affiliated brokerage on Wall Street – the same brokerage whose president had been Michael Milken’s national sales manager, and whose business model had been to underwrite phony biotech companies, then pump and dump their stocks.

    As you will recall, Paramount’s vice president was once a top trader at SAC Capital, the hedge fund run by Milken crony Steve Cohen, who became the “most powerful trader on the Street” largely by maniacally maintaining relationships with his former colleagues. You will also recall that Cohen and Paramount employee Joseph Edelman were among those seven “colorful” hedge fund managers who held large numbers of put options in Dendreon as of March 2007.

    At the risk of being repetitive, I will also remind you that Lindsay Rosenwald, the fraud king’s son-in-law, controlled Cougar Biotechnology, a company whose scientific advisory board included four doctors affiliated with Milken’s Prostate Cancer Foundation.

    When Dendreon became a “battleground stock,” Dendreon had no more than three “serious” competitors. One was Milken crony Rosenwald’s Cougar Biotechnology. The other was Novacea, controlled by Milken’s ProQuest Investments. The third was a company called Cell Genesys, which I will return to in an upcoming chapter.

    Magainin/Genaera, the company that was run by ProQuest’s ostensible founder, Jay Moorin, had lots of big ideas. For example, it claimed to have developed a way to treat foot ulcers with a substance extracted from the African clawed frog. It also claimed to have discovered a treatment for cancer. This treatment was apparently derived from the livers of tropical dogfish sharks.

    Indeed, a great many of Magainin/Genaera’s supposed treatments were derived from exotic wildlife. And many of these treatments were heralded in press releases that suggested that regulatory approval was just around the corner.

    Sometimes, the company announced that its treatments had already gained approval – albeit in exotic locales. Genaera’s lung cancer vaccine “was approved Jun 12 by the Cuban regulatory authorities…” noted one of Genaera’s optimistic press releases. Presumably, Cubans are now free of lung cancer.

    For three decades, these press releases appeared. Many of them sent Magainin/Genaera’s stock into orbit. Then the stock would sink. After that, there would be another press release and the stock would be back in the stratosphere.

    But in three decades, Genaera never brought a treatment to market. In fact, it never had a treatment approved by the FDA.

    Three full decades. Countless potions and serums derived from all manner of critter and jungle beast. A stupendous salary for the CEO, and fantastic profits for anyone who spent those 30 years riding the volatility of Magainin/Genaera’s stock. But not a single treatment was brought to market.

    In June 2009, Genaera announced that it was going out of business.

    * * * * * * * *

    Jeremy Goldberg, the other ostensible founder of Milken’s ProQuest Investments, was previously best known for his service as the founding CEO of a company called Versicor, which purported to make anti-viral medicines.

    Among Versicor’s biggest early investors was Healthcare Ventures, a fund that was founded by two former Johnson & Johnson executives. It seems that a preponderance of Heathcare Venture’s principals previously worked for Luekosite, a biotech firm founded by Marty Peretz, the Boesky and Michael Steinhardt crony who launched TheStreet.com with Jim Cramer.

    Another early investor in Versicor was Schroder Venture Management, a unit of the same company that runs Schroder Wertheim, which was the principal clearing firm for Euro-Atlantic, a Mafia-run brokerage that the Feds shut down in the late 1990s.

    But Versicor’s most important investor was a biotech company called Sepracor, which markets Lunestra, the sleeping pill. Sepracor’s chairman, Timothy J. Barberich, was also a major investor in Versicor. Barberich served as Versicor’s founding chairman, while Goldberg served as Versico’s founding CEO. This was the Jeremy Goldberg who later founded Milken’s ProQuest Investments.

    So Barberich was chair of Sepracor (a company that markets sleeping pills), and founding chairman of Versicor (which has yet to produce any drugs fit for human consumption). Curiously, Barberich also bankrolled Atlantic Casino Cruises, a gambling outfit that was being set up by a businessman named Adam Kidan and an alleged mobster named Anthony Moscatiello.

    Moscatiello, who travels in an armor-plated Mercedes, has been pegged by the government as being the top bookkeeper to the Gambino Mafia family. As the story goes, Kidan masterminded Atlantic Casino Cruises. Moscatiello set the company up. And Barberich was the principal financier of the project.

    Unfortunately, the project never really got off the ground. Soon after Barberich invested his money, Kidan, the businessman, entered into a deal to buy another casino, SunCruz, from a fellow named Konstantinos “Gus” Boulis. In due course, Boulis accused Kidan of financial improprieties in the deal.

    Not long after that, Boulis was shot in the head – execution style.

    And Moscatiello was arrested.

    * * * * * * * *

    To be continued…Click here for Chapter 8.

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    37 Responses to “Michael Milken, 60,000 Deaths, and the Story of Dendreon (Chapter 7 of 15)”

    1. Nonymoussurfer says:

      Re: chapter 6
      Thanks to Harveydawabbitt for posting the link to comment back to Mr.Chanos.

      Here’s what I left for him: Sorry for the grammer, spelling, punctuation errors. I should’ve proof-read… I think he’ll get the gist.

      Jim Chanos,

      I’ve seen you addressed by the popular media as a “hedge fund titan” and as a “rock star”. You hardly deserve such accolades.

      Jim Chanos’ et al agenda is simple enough. They don’t want to see the market maker / Madoff exemption eliminated because doing so would eliminate the unethical and complicite hedge funds’ & brokerages’ recipe for alchemy (i.e. creating wealth out of nothing-or rather out of other peoples wealth). It is absolutely ridiculous that these hedge fund guys (i.e. mobsters) are still shamelessly spewing their nonsensical rationale of “improving liquidity in capital markets” and “enhancing price discovery” as good solid reasoning or this exemption. This is a total load of bullshit rationale for fucking over middle America, as is obvious with the now public explosure of his buddy, Bernie Madoff. And the main stream media is STILL largely ignoring it. Perhaps this is just symptomatic of a problem that is too technical of a problem to digest for the typical ‘C’ student that ends up doing journalism for a living…

      Chanos refers to “…the already very low level of naked short selling that does occur.” The SEC doesn’t publish this data, but I would agree he’s in a position to have a good idea how much abusive NSS goes on as he’s guilty as well-perhaps not himself but in collusion with numerous other hedge funds in the Chanos/Milken/CNBC “network”. Given his proximity & collusion in this activity, he’s not one to seek counsel in regard to this practice… He’s in favor of retaining the privalege because it makes him a lot of money.

      Here’s a crazy idea… Lets have Chanos advise us on regulatory reform since he’s such a fine upstanding citizen. NOT! Chanos is a fucking vampire.

      Why is it such a ridiculous request-scratch that-DEMAND that sellers be it long or short… Why is it such an outrageous demand that the sellers be required to actually deliver what they have sold. In any other setting, it would be quickly identified-and rightly so-as fraud.

      A few hedge funds have organized to manipulate the market. There much be true regulation to keep the Mob (Chanos, Cramer, Milken, from cheating to enrich` the few short pricks at the expense of the savings of the unwashed masses. If the USA is a nation of laws (and I’m not sure it is), Chanos & his cronies will spend the rest of their miserable lives in Federal “pump you in the ass” prison.

      Of course, mine are just the musings of a peasant in Mr. Chanos’ eyes… Here’s a challenge to Mr. Chanos. Accept an open forum debate with Dr. Patrick Byrne on naked short selling . Agree to this (and actually follow through by participating) and you will start to earn a little credibility. I am confident you would never agree to do so, as I believe you would be found out to be less “rock star”-ish than the media portrays you to be (and more smarmy moron).

      Mr. Chanos: you sir are an empty suit.

    2. KDDublin says:

      It is time for the DOJ to convene a special Grand Jury.

      It’s time for Congress to investigate the SEC and maybe even time to send the FBI into the SEC offices with a search warrant.

      It’s time for you whistle blowers on the inside to step up and do the right thing!

      The crooks are running Wall Street and Wall Street is running the Country.


      Government’s sole purpose is safeguarding the individual and his/her inherent, inalienable rights; each societal institution that does not benefit the nation is illegitimate.

    3. sean says:

      Nice piece Mark. The parts are coming together and the crooks are sweating. You can tell that from the message board bashers. When someone refers to the Deepcapture website they freak out and I love it..

      Also just to show that there will be no change in how the SEC operates take a look at who they hired and from where he was hired!!

      SEC Recruits Another Former New York Federal Prosecutor
      By Andrew Longstreth
      July 02, 2009
      The Securities and Exchange Commission has recruited another former assistant U.S. attorney from the Southern District of New York. On Thursday, the SEC announced that Lorin Reisner, who has been a partner at Debevoise & Plimpton for the last 15 years, will join the agency’s enforcement division as deputy director.

      Reisner’s appointment seems to confirm that the SEC is looking to staff its enforcement division with former prosecutors from the famed Manhattan U.S attorney’s office. Robert Khuzami, who was named director of enforcement back in February, spent 11 years at the office. George Canellos, a partner at Milbank, Tweed, Hadley & McCloy who was named director of the SEC’s New York regional office last month, is also a former Manhattan assistant U.S. attorney.

      We spoke briefly to Resiner on Thursday, who confirmed to us that he met Khuzami during their stints as prosecutors in New York during the 1990s. Resiner, 47, also told us that despite the lumps the SEC has taken in recent months over its enforcement record, he’s excited about his new gig. “[Chairman] Mary Schapiro and Robert Khuzami have already brought to the SEC renewed energy, professional excellence, and intelligent aggressiveness on enforcement issues,” said Reisner.

    4. sean says:

      More talk and little action..do they really think we can’t see thru this b.s.

      SEC May Reinstate Rules for Short-Selling Stocks
      Topics:Regulations | Stock Market | SEC | Economy (U.S.)By: Gerry Shih, The New York Times | 03 Jul 2009 | 06:10 AM ET Text Size They have been reviled as the bad hats of Wall Street, nefarious traders who cashed in on the market collapse and, some insist, helped precipitate it.

      Sharon Lorimer

      Now short-sellers, the market skeptics who correctly called last year’s downturn, are coming under even more unwanted scrutiny, this time from federal regulators. The Securities and Exchange Commission appears poised to reverse itself and reinstate rules that would make shorting stocks — that is, betting their prices will decline — somewhat more difficult.

      Whether the SEC will go far enough to satisfy the many critics of short-sellers is far from certain. The controversial role of these investors has divided not only the financial industry, but also federal regulators. As the SEC considers its options, the debate is heating up.

      Hedge funds and big pension funds argue that short-selling is vital to modern markets. Such trading not only enables investors to hedge their risks but also to ferret out weak companies or, as in the case of Enron, outright frauds.

      But many banks, whose stocks came under attack last autumn, maintain that unfettered short-selling is dangerous. The shorts, their argument goes, helped bring down Bear Stearns and Lehman Brothers last year.

      Many people on Wall Street and in Washington dismiss such claims, arguing that while short-sellers may have accelerated some stock declines, the real problem was the precarious state of the companies’ own finances.

      Given the climate in Washington, as well as the running suspicion of Wall Street, new rules seem inevitable, analysts say. Mary L. Schapiro, chairwoman of the SEC, has said that considering new rules restricting short-selling is a priority. Members of Congress like Barney Frank, the Massachusetts Democrat who heads the House financial services committee, are calling for quick action.


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      Boom, Bust and Blame: Inside the Crisis

      For the moment, the most likely outcome may be for the SEC to reinstate a rule that the commission itself abolished with a unanimous vote in 2007, under its previous chairman, Christopher S. Cox. Known as the uptick rule, it would bar investors from shorting a stock until its price ticks at least a penny above its previous trading price.

      But current and former SEC staff members appear to doubt that reinstating the uptick rule would have much of an effect on trading. Some say the change would be merely cosmetic.

      “The government wants a confidence measure right now, and that’s all this is,” said Lawrence E. Harris, a former SEC chief economist.

      Traders, he said, will simply find ways to circumvent the rule, but the commission probably will make the move if only to deflect outside pressure.

      “Every crisis requires action,” he said. “It’s not worth fighting over.”

      In March, Mr. Frank urged Ms. Schapiro to reinstate the uptick rule. That same month, Senator Edward E. Kaufman, Democrat of Delaware, introduced a bipartisan bill to reinstate the rule, saying its demise in 2007 “added fuel to the fire of distressed stocks and markets.”

      But a more radical solution — a so-called circuit breaker that would halt trading in a stock for an entire day if its price fell by a certain percentage — appears to be off the table.

      The SEC first enacted the uptick rule during the Depression, after the market crashed in 1937-38. It then voted to repeal the rule in mid-2007, after internal studies showed that removing the restrictions would not have a “deleterious impact on market quality or liquidity.”

      To some, the issue is clear-cut. The American Bankers Association, a trade group representing the vast majority of American banks — whose equity values have been especially battered in the last 18 months — recently submitted an opinion in favor of reinstating the short-sale restrictions.

      Sally Miller, a spokesman for the ABA, said the member banks thought there was a clear link between the market turmoil and the rule change.

      “All of a sudden subsequent to 2007 they can see all their stocks going haywire,” Ms. Miller said. “It’s cause and effect.”

      Traders and fund managers, however, say the rule is a part of a broader opposition to short-selling, a tool investors need to bring overvalued stocks back into line. Short-sales, they say, are a frequent scapegoat for companies of exaggerated fundamental strength. Others say that the rule will have little meaningful impact. “I don’t mind what I see as minor inconveniences,” said Whitney Tilson, an author and managing partner of T2 Partners, “if it will get rid of the critics who like to blame short-sellers every time a stock goes down.”


      Current DateTime: 01:04:14 03 Jul 2009
      LinksList Documentid: 22528754
      DealBook Blog
      Small Business News

      Duncan Niederauer, the chief of NYSE Euronext, which runs the New York Stock Exchange, said in March that while “there was no economic benefit” from having the uptick rule, “it would go a long way to adding confidence.”

      The exchange has since officially voiced its support. Joseph M. Mecane, the chief administrative officer for United States markets at the NYSE, said that the exchange was not trying to curb traders’ ability to sell short but was wary of the “kind of herd mentality” that gripped the markets during the few most staggering days of the fourth quarter last year.

      “You want some sort of a dampener in those periods,” Mr. Mecane said, “and let the stock breathe a bit.”

      This story originally appeared in the The New York Times

    5. Jeff says:

      WOW! All those words about problems with short selling, and not a “NAKED” or “ILLEGAL” to be found!

    6. akcje says:


      Here we go again…

      I’m shocked.
      Well, not really, but I should be 🙂
      You took many weeks to study Dendreon’s Provenge story and wrote a 15 part expose. But you appear to be ignorant on one of the most controversial aspects of Provenge approval process?

      Didn’t you bother to read the minutes of the Provenge Panel meeting? Are you not aware of a controversy over the efficacy question?

      You wrote: “The FDA panel asked two questions. Is Provenge safe? And, is there “substantial evidence” of efficacy?” But this is an implicit lie, a lie by omission, and you know it!

      In short:
      The second question posed to the Panel was: (page 370) Does the submitted data establish the efficacy of sipuleucel-T in the intended population?
      After several No votes and the panel members questioning the use of the word “establish” which suggests unequivocally that Provenge works, the question was rephrased. And the voting redone with:

      (page 378) is there substantial evidence that the product is efficacious.

      Well, I believe that you did read the minutes, and are very well aware of the controversy surrounding the change of the question.

      So why are you pretending to be surprised that some of the financial ANALysts actually did they work and tried to question CEO about this issue. And to tried to find out if FDA is happy with the final, modified question.

      Perhaps you should instead criticize other ANALysts and journalists for limiting themselves to just congratulations, and not asking hard questions. It is their job and duty after all to try to find out as much as possible. It is not their job to be smiling flower delivery boys.

      I’ve heard from people that the proper wording of the second question should in fact be like that in the final, corrected vote. That this is the normal FDA phrase. I think somebody pointed to actual FDA statement or regulation which clarifies this(?) You should include this if you can.

      If the original question was inappropriate, the FDA owes an explanation. It could have been an innocent screw-up, or very much not an innocent one.

      Instead you switch to your favorite and gossipy theme of who knew whom. This could eventually be helpful to show a conspiracy, but a wrongdoing has to be established first. Asking pointed or tough questions of CEOs is most appropriate and not a wrongdoing!

      So far you have added very little, and in this case even tried to gloss over and mislead about an major controversy surrounding Provenge in 2007.

      Mitchell : “I’m not one for conspiracy theories, but…”

      Very funny! 🙂
      = = = =
      (*) minutes of the Provenge Panel meeting: http://www.fda.gov/ohrms/dockets/AC/07/transcripts/2007-4291T1.pdf )

      • DCN says:

        Each chapter is not intended to be self-contained aspects of the story. And as such, criticism that aspects have been overlooked, when eight more chapters remain to be published, is disingenuous.

        • akcje says:


          DCN > criticism that aspects have been overlooked, when eight more chapters remain to be published, is disingenuous.

          Not “overlooked” . _Intentionally_ omitted to make false points.

          When you use cheap tricks of omission and twisting facts, your credibility is diminished. Errors are OK, but one should be able to admit it and correct them.

          I point out only a small subset of tricks used by Mitchell. See for example his expression “panel-approved drug”. Mitchell (presumably) knows that Panels don’t “approve” any drugs. He is twisting the words just like presumably whoever it was that twisted the 2nd question posed to the panel.

          Sure, in his case it is a small thing, comparing to a formal Panel question, but it is still distasteful to me.

          • Bill says:

            akcje, you’re the moron that got banned from Investor Village, right?

            You are one sad, sad individual. Don’t you have anything better to do than poke holes in the hard work that those are doing to reveal these crooks for who they are?

            Stop wasting your time fighting against people doing good and join them. You go after the wrong people.

          • Anonymous says:

            Michael, is that you???

      • Don says:

        akcje , You are on my shit list..I pray I can speak with you in person..Abour the 60,000 deaths or MURDER BY MIKE MILEN…


    7. Denise Hubbard says:

      The SEC may be finally doing something proactive.SEC requested a copy of STOCK SHOCK–new movie about market manipulation. Must see DVD (stockshockthemovie.com) and here is the article: http://satwaves.com/blog/2009/06/26/sec-investigating-illegal-naked-short-selling/

    8. Jeff says:

      The wording of the “question” at the AC meeting was discussed a lot at the time, here’s one opinion:


    9. hangthemall says:

      funny all the big mouth crooks all do their yapping from offshore.. Like i said do waste you time with thugs who make pennies posting for the big boys… They will be hung in the end..Let bashers keep posting, everyone knows the feds are here. Best of luck

    10. AMMASS says:

      So the pattern runs somethimg like this. An Investment Banker(IB) does an Offering for a BTK Company. The IB becomes very close to the people in management. It is virtually an Insider. On the Offering, the IB over-alots the Offering,in effect selling Short. This kind of Shorting is perfectly legal.Over alotments in the course of a Public OFFERING of the Shares or Bonds creates a legal Short Sale. Inorder to cover its Short position, the IB creates a situation as we saw in DEEP Capture, a lie about the BTK Company’s product, anything that may dammage the progress of the BTK Company that it recently offered Shares or Bonds of to Investors.
      I believe we saw this occurance in DNDN April’09 after Lazard did an offering that raised $221MM for the DNDN. But a lie was flotted that an Investigator of Provenge claimed that Provenge did not work. That was enough for DNDN ‘s Shares to fall 65% in flash of a moment. Who do you suppose was Buying those shares to cover its “legal” short. It is strange how Joel Sendek and the IB have such close ties. What Joel actually said following the Advisorary Committee hearing of the FDA,”this was not the way we were told things were going to happen we were misled” ,or words to that effect. It bothers me that DNDN would use Lazard to be its IB with Joel Sendek a known “Bear” of DNDN was employed at Lazard. Mark Mitchell said it this way in Chapter7 of DEEP CAPTURE (In April 2009, a few days before a Yahoo! message board poster predicted, almost to the minute, the“BEAR RAID” that shattered Dendreon’s stock price by 65% in 75 seconds, Lazard put out a statement that said that an “investigator in the current Provenge study” had concluded that Dendreon’s treatment did not work. This was terrible news – assuming that the “investigator” was somebody actually participating in the “current Provenge study” or any other scientific study of Dendreon’s Provenge).
      Joel Sendek must be watched carefully for if the Chinese Wall between Investment Banking and Research at Lazard is violated and Sendek receives “insider ” information that might be dammaging to DNDN shares ,he will relay it to the SHORTS,we know what the results will be. All this of course is imho.

    11. Mike K says:

      Let’s clear up the two question issue.

      When Advisory Committees are called, they get to see the drug presented by the sponsor and then by FDA staff. Then the panel discusses the treatment.

      After all that is done, the panel gets to vote on two, pre-specified, voting questions. They are regulatory questions. The FDA is simply trying to check the drug on two counts, Is it safe? and Does it show evidence of efficacy? The first voting question is simple and to the point, Is Provenge safe? All 17 panelists voted yes.

      The second question was a problem. When the Chairman of the Advisory Committee, in this case Dr. James Mulé, read the question to the panel, here is what he read:

      Does Provenge establish efficacy?

      The panel struggled with that question. As one doctor said, it is not a question you can answer yes or no, which the panel required in order to tally votes.

      Soon it was discovered that that question was not the regulatory question. Right there, right at that hearing, some FDA folks looked up the regulatory question and found out “Does Provenge establish efficacy?” is not a regulatory question.

      That is when a lot of us said, “Hey, wait a minute here. Somebody has tampered with the regulatory question! Who gave that question to the Advisory Committee Chairman to read to the panel?”

      So then, Chairman Mulé was given the regulatory question. Here it is:

      Does Provenge show substantial evidence of efficacy?

      So these are the two questions the Lazard boys were challenging Mitch Gold about.

      Bastardized question –> Does Provenge establish efficacy?

      Regulatory question –> Does Provenge show substantial evidence of efficacy?

      These are the two questions. The first one was a bastardized question. Who did that? No treatment has ever had to answer that because it is asking the panelists if they are sure Provenge is 100% efficacious. No treatment before an FDA panel has had to measure up to that. Why did Provenge have to be measured that way? It just has to show substantial evidence, not a 100% sure thing.

      Well, as we know, when the panel voted on the regulatory question, it was a convincing, 13-4. That didn’t work out for the Lazard boys, so Favus and Sendek tried to paint a picture that the FDA somehow lowered its standards and made it easier for Provenge by “changing the question”. The truth of the matter is, somebody played with the question (was it Pazdur & CDER?) and gave it to Dr. Mulé and when the panel struggled, the CBER folks looked up the regulatory question during the Advisory Committee hearing.

      Since it was posted on an investment message board that Lazard Capital was a megashort, and the poster said he knew Elliot Favus, he knew they needed help. So they jumped on the question change acting like FDA made it easier for Provenge. No, FDA didn’t make it easier for Provenge, some of the folks at FDA looked up the question and discovered the regulatory question is: Does Provenge show SUBSTANTIAL EVIDENCE of efficacy? The panel voted yes 13-4. The Lazard Capital boys didn’t like that and too bad. They were wrong.

      Here is the actual testimony – The FDA always wants to know if a treatment is safe and efficacious. You can read this public record here:


      The safety question was just voted on and the secretary announces it:

      MS. DAPOLITO: Okay, for the record the vote was 17 yes, zero no, zero abstain for Question 1.

      So then the Chairman, Dr. Mulé, moves to the second question, the efficacy question:

      DR. MULÉ: Okay, we’ll move on to Question 2. Again I’ll read it. Does the submitted data establish the efficacy of sipuleucel-T in the intended population?

      The panel struggled answering yes or no. Here are some panelists’ reactions:

      “The question that I grapple with is, is the evidence that’s here so far, does it establish the therapy. Is the therapy established that, with full confidence,”

      “Well, so I guess at this point I’m not entirely sure how to answer this question. It’s not a yes or no question in my opinion the way it’s phrased. I mean, it’s really very absolutely phrased,”

      The panelists were having trouble with the question. So Dr. Mulé consulted with the folks from CBER who had been assigned the Provenge BLA:

      DR. MULÉ: Dr. Witten, with respect to this question–


      DR. MULÉ: Is it — from your standpoint and the FDA’s standpoint, are you looking for definitive answers to this question? Is it necessary to rephrase this question?

      So that is when the folks from CBER looked up the regulatory question. Dr. Celia Witten, the Spokesperson for FDA for this hearing, sets the record straight:

      DR. WITTEN: Yes. The regulatory definition is “provide substantial evidence.” So that’s our standard. Is there substantial evidence that it works. Is there substantial evidence of efficacy, if that helps. So is there substantial evidence.

      DR. MULÉ: Okay. So just to clarify what you’re asking, is there substantial evidence that the product is efficacious.

      DR. WITTEN: Yes.

      After they voted on the regulatory question, the secretary announces the vote:

      MS. DAPOLITO: Okay, for the public record, the question was, is there substantial evidence the product is efficacious. The vote was 13 yes, 4 no, zero abstain.

      So the panel voted overwhelmingly positive on the regulatory question much to the disdain of the Lazard boys. That is why Favus and Sendek acted like jerks on the conference call. They had nothing going in their favor so they tried to confuse things. They were wrong.

      • akcje says:


        “show” vs “establish” vs. “is there”

        Apparently nobody seemed to notice that we have not two but three phrases in the Provenge Panel question controversy: “show” vs “establish” vs. “is there”

        (It all depends on the meaning of “is” 🙂

        Many point out that a regulatory form question should have been:
        “Does Provenge show substantial evidence of efficacy?”

        But it was never asked in that form!

        At first the question was posed as:
        ” Does the submitted data establish the efficacy of…”

        And after the aborted vote which seemed to go toward “No” answer, it was changed to :
        ” is there substantial evidence that the product is efficacious.”

        One can argue that it was changed from a too strong one to a too weak one.

        “establish the efficacy” is more demanding than ” to show substantial evidence”
        “is there substantial evidence”: is a weaker standard than “show substantial evidence”

        Some people will perceive these phrases as three different ones, some as two different ones, some as all the same.

        In mathematics “to show” is used interchangeably with “to prove”. So some people with scientific background may feel that “to show” and “establish” are equally strong. And many may feel that “is there” is a weaker then regulatory(?) “to show”.

        It is clear, that the Provenge panelists perceived “is there” as weaker requirement than “establish”.
        But the supposed proper question “to show” was never asked.

        In my opinion (I knew you would ask:-) the question posed to the Panel was at first more demanding than regulatory one, and then it was changed to a weaker one than regulatory.

        With all this in mind, I believe that analysts questioning CEO about this phrase changed in the middle of a vote, and asking if FDA will be happy with the change, was very much appropriate. In fact it should have been cleared up by the CEO perhaps in consultation with FDA. But both FDA and Dendreon’s CEO apparently don’t like transparency.

        Chapter-7 had plenty of space to quote verbatim all the meaningless congratulatory statements but found no space to even note that the controversial question and it’s change. Pretending that it never happened and analyst were asking questions in vacuum.

        As Ocyan suggested in his post http://investorvillage.com/smbd.asp?mb=971&mn=287784&pt=msg&mid=7535019 one can search FDA web site.

        I found that the phrase “establish efficacy” is in fact quite common. See the examples referred below.


        Well, perhaps a conspiracy? Or perhaps this word-use politics go much deeper than Provenge. Perhaps different people use different wording to influence others?

        I don’t know about conspiracy, it is the Mitchell’s domain.
        But I do see how people often replace words with a seemingly similar ones, and yet inappropriate.

        I already gave an example of word-politics from this very chapter-7, where Mitchell used inappropriate “panel-approved drug” to make his case stronger, knowing that Panels don’t do “approvals”.

        So was the Panel’s 2nd question a result of a conspiracy or FDA politics or an innocent screw-up. I don’t think we will ever know. FDA likes to compete with CIA in keeping their internal processes secret from the public they serve.

        Those that want to improve FDA should push for changes in regulations, for greater transparency, for minimizing conflicts of interest, etc… This anti-conspiracy crusade is just a distraction.

        The links between FDA politics and Wall Street shenanigans if any, are most likely not a conspiracy but elements of COI.

        = = =
        Note_1, for those not familiar with Dendreon-Provenge story.
        The 2007 Panel’s question-2 is now subject of the “conspiracy” theory, or an example of FDA politicking of the worst kind. It is not material any more to Provenge approval, which stands mostly on the strength of its newly completed in 2009 Impact trial.

        Note_2. This perhaps should be posted on the IV Dendreon board. But IV board owner arbitrary censors posts. DeepCapture is so far remarkably patient with critics, as well as with some of it’s supporter’s gutter language and “subtle” idiotic threats to me.

        = = = = = =
        FDA examples:

        Data submitted to the FDA was insufficient to establish efficacy in any childhood malignancy.

        Do the results of the open-label, historically controlled studies conducted in France establish the efficacy of this regimen for use in the United States?

        “For phase 3 studies, the sample size is often determined by the number required to establish efficacy of the new vaccine, which may be in the thousands or tens of thousands of subjects. ”

        Guidance for Industry: Safety, Efficacy, and
        “Phase 3 clinical trials conducted to establish efficacy and safety. ”

        Potential Merits of Cannabinoids for Medical Uses
        “These studies establish efficacy for a particular indication, examine additional uses, may provide further safety data …”

    12. Anonymous says:

      More on Suncruz and how this network tied into abramoff.


    13. ravenseye says:

      …”After his sentencing this week Madoff, now Prisoner No 1727-054, met Herb Hoelter, of the National Centre for Institutions and Alternatives, whose previous clients include the jailed Sotheby’s chairman Alfred Taubman and the financiers Michael Milken and Ivan Boesky.”…
      quote from The Times July 4, 2009
      Bernard Madoff hires help to survive hard time
      James Bone in New York

    14. Anonymous says:

      “Why is it such a ridiculous request-scratch that-DEMAND that sellers be it long or short… Why is it such an outrageous demand that the sellers be required to actually deliver what they have sold. In any other setting, it would be quickly identified-and rightly so-as fraud.”
      who ever said that here…so simple, so true, so needed!!!!

    15. Paul says:

      Here are the relationship maps for Chapter 7 of Milken, 60,000 Deaths, and the Story of Dendreon:

      Map 1:

      Map 2:

    16. Jim Hall says:

      Anyone smell a possible RICO case building here?

    17. whatgoeson says:

      Isn’t this whole thing kind of a sub-chapter of the larger drama, “Why Is Healthcare So Corrupt”? Medicine of any kind is supposed to be for the benefit of people who are sick, not investors, stockholders, speculators, or television personalities.
      But, medicine is also a business, prescription drugs are physical hard goods that get sold, and this or that next miracle treatment that’s supposed to cure all your problems including a bad complexion are ALL the rage. Bad news: Someday, you’ll get old, and then you’ll die. It’s a nature thing. And, I don’t care who your healthcare coverage is through, there just isn’t that much that they can do for you, except worry you sick and squeeze even more money out of people that are a hop, skip, and a jump from death’s door, exploitation of the elderly is a Big Problem in this country, using them as conduits for Medicare revenue, it’s not pretty and it goes on every day, and frankly maybe the best thing that could happen here is for a lot of these ‘miracle’ drug vendors to be put out of business, especially in instances where it can be found scientifically that they’ve made fraudulent claims.

    18. sean says:

      So lets get this straight, The SEC is corrupt, The FBI is corrupt, The DOJ is corrupt, Finra is corrupt and Finally the FDA is corrupt. If there were only a pattern. And there is basically nothing we can do about it. We’ll see about that!!! Also sad but true what goeone is basically right but it does not give these miscreants a right to steal form us!!

    19. Ben says:

      Honestly Mark, while I like the research and support your cause, this is REALLY badly written. You do NOT need to repeat bits of information 15 times each.

      Yes there are many names and it can get confusing for the reader, but repeating the same stuff over and over again is NOT the right strategy to get over that.

      I’m a very avid reader and interested in this topic and I’m struggling not to give up at this point. You have probably lost most readers by piece #2.

    20. Anonymous says:

      I enjoyed your article. I found it when I googled Joseph Edelmen. He just purchased stock in Uroplasty and his transaction makes me nervous.

      How about an update since Provenge has been approved?


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