April 14 (Bloomberg) -- Dendreon Corp. more than doubled in Nasdaq trading after the company said its experimental prostate cancer drug “significantly” prolonged survival in a study designed to satisfy criteria for U.S. marketing approval.

The Seattle-based company’s shares jumped $9.69 to $16.99 at 4 p.m. New York time today in Nasdaq Stock Market composite trading. It was the biggest percentage gain since March 30, 2007, after an advisory panel backed the treatment, called Provenge, to stimulate the body’s immune system to fight malignant cells.

Provenge met its goal of helping men with advanced prostate cancer live longer, the company said in a statement. Dendreon plans to submit the data to the Food and Drug Administration in the fourth quarter, meaning the company’s first product may be cleared by mid-2010. Its sales may top $1 billion a year, said Navid Malik, an analyst at Matrix Corporate Capital in London.

“This is the birth of a completely new field, cancer vaccines, even personalized cancer vaccines,” Malik said in an interview today. “It’s brilliant. Obviously there will be caveats when they announce the data, but investors have clearly made their minds up.”

The company declined to elaborate on the results of the so- called Impact study until its April 28 presentation at the American Urological Association’s annual meeting in Chicago.

The 512-patient trial was designed to show a 22 percent increase in survival compared with a dummy pill after U.S. regulators rejected Provenge in 2007, demanding more evidence of effectiveness. Dendreon initially asked for approval after a study of 127 men showed the drug prolonged lives with few side effects, while a second study didn’t show a benefit.

First ‘Vaccine’

An estimated 186,320 new cases of prostate cancer were diagnosed last year in the U.S., and the disease killed 28,660 men, according to the National Cancer Institute. Provenge would be the first prostate cancer treatment to stimulate the immune system to attack tumor cells, leading some to call it a cancer “vaccine.”

No cure exists for advanced prostate cancer that has spread outside the prostate gland. Patients often are given hormone therapy or chemotherapy drugs such as Paris-based Sanofi-Aventis SA’s Taxotere. Chemotherapy has been shown to only temporarily prolong survival.

“There is an urgent need for oncology treatments that prolong life combined with a favorable safety profile for patients with few treatment options,” Mitch Gold, Dendreon’s chief executive officer, told investors and analysts today on a conference call.

FDA Rejection

The FDA’s rejection of Provenge in May 2007, over its advisory panel’s recommendation, sparked protests among advocates for prostate-cancer patients and almost led to a congressional probe.

“We need a better pre- and post-chemotherapy treatment,” said Howard Soule, executive vice president and chief science officer at the Prostate Cancer Foundation in Santa Monica, California, in an interview. With current therapies, “the duration of the response is fairly limited in some patients.”

While Malik and other analysts estimate that Provenge sales may reach $1 billion a year, most haven’t given the drug a high likelihood of success. None of the seven analysts who track the stock recommends buying shares, according to data compiled by Bloomberg.

Short Sellers

Dendreon’s short interest, a gauge of how many investors are betting that the stock will retreat, accounts for 20 percent of the shares available for trading, according to Bloomberg data. That’s more than quadruple the 4.3 percent average for shares listed on the Nasdaq Stock Market. In a short sale, investors borrow securities and agree to sell them at a later date, profiting from any drop in the stock.

Provenge is one of several drugs being tested in late-stage human studies for patients with advanced prostate cancer. These drugs include Los Angeles-based Cougar Biotechnology Inc.’s abiraterone, New York-based Bristol-Myers Squibb Co.’s and Medarex Inc.’s ipilimumab and London-based AstraZeneca Plc’s ZD4054.

The field has also had some recent failures. Cell Genesys Inc., a South San Francisco, California, company, and Osaka, Japan-based partner Takeda Pharmaceuticals Co. ended development of their drug to stimulate the immune system against prostate cancer tumor cells, called GVAX, in October after two studies failed to show the therapy was safe and sufficiently effective at prolonging patients’ lives.

To contact the reporter on this story: Catherine Larkin in Washington at clarkin4@bloomberg.net.

Last Updated: April 14, 2009 16:21 EDT