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Michael Milken's Prostate Cancer Foundation vs. Dendreon

By Mark Mitchell, Published: September 15th, 2009 11:33 AM CDT

In July 2008, not long before Cell Genesys announced that its drug was killing people, CNBC’s Jim Cramer called Dendreon a “dog.” Cramer, of course, did not mention that the illegal naked short selling of Dendreon was continuing apace. Throughout that month, more than 1 million Dendreon shares “failed to deliver” every day, according to SEC data.

At the end of August 2008, after Cell Genesys announced that its drug was killing people, Milken’s Prostate Cancer Foundation posted a story that suggested that this failure was a sign that Dendreon could be in trouble, too. Clearly, the Prostate Cancer Foundation, whose top officials had done so much to derail Dendreon in 2007, were not eager to see the company’s treatment reach patients.

Not once did the Prostate Cancer Foundation note that the difference between Dendreon and the three companies promoted by the Prostate Cancer Foundation was that Dendreon had provided heaps of evidence that its treatment actually worked.

In October 2008, Dendreon released still more favorable data. Its Independent Monitoring Committee’s studies were showing (as had the company’s phase 3 trials in 2007) that Provenge was safe, and offered a significant survival advantage over a placebo.

Meanwhile our two favorite financial analysts – the singing Sendek and Jonathan Aschoff – continued to reiterate their sell ratings on Dendreon.

The attacks continued through March 2009, which is when we were treated to the reappearance of  Matthew Herper, the Forbes reporter who had dismissed Dendreon during those strange occurrences in April 2007. Now, Herper published a story in which he made it clear that Dendreon’s treatment would not, and should not, be approved by the FDA.

In support of his claims, he cited the analysis of Dr. Thomas Fleming, one of the three people whose missives had ended up in the hands of The Cancer Letter. To show that Fleming (who is not a physician, but rather a statistician) was not the only “expert” opposed to Dendreon’s treatment, Herper cited several other “experts”  – Susan Ellenberg, Donald Berry, and Janet Wittes – who had views that were remarkably similar to Fleming’s.

What Herper did not mention is that Susan Ellenberg had co-authored a book with Fleming, Janet Wittes was credited with editing that book, and that book enthusiastically cited the work of Donald Berry. Clearly, these “experts” had worked together to make sure that one message was whispered in Herper’s ear.

While Herper was working on his article, John Stewart of the “Daily Show” began exposing Jim Cramer as a fraud. This created quite a stir, and in the midst of it Cramer went on CNBC to tout none other than….Cougar Biotechnology, the company controlled by Lindsay Rosenwald, formerly of the Mafia-linked “pump and dump” shop D.H. Blair. Cramer said he thought Cougar was the next big thing in prostate cancer treatment, and everybody should load up on its stock.

Meanwhile, with Novacea and Cell Genesys killing people, Milken’s “philanthropic” outfit was now directing much of its energy to promoting the mostly untested treatment then being hawked by Cougar Biotechnology.

Cougar’s treatment “has recently attracted global media coverage,” began one Prostate Cancer Foundation press release, which described the treatment as “a promising experimental medication with the potential to treat patients who have failed conventional medical treatment for advanced prostate cancer…”

The press release continued:  “The [Prostate Cancer Foundation] Therapeutic Clinical Investigation Consortium played an important role by accelerating US clinical testing of this new agent in Phase II clinical trials….In Phase 1 studies, [Cougar’s treatment] exhibited the potential to attenuate disease progression and shrink tumors.”

Actually, the studies were not quite so encouraging as Milken’s foundation would have one believe. Abiraterone had been tested on a total of 30 patients. These patients purportedly experienced declines in levels of “prostate specific antigen,” but this is a long way from demonstrating that  Cougar’s treatment “attenuates disease” or “shrinks tumors.” As for that “potential to treat patients,” it will be at least two years before Cougar has enough data to submit an application for FDA approval.

For the sake of prostate cancer patients everywhere, Deep Capture hopes that Cougar’s drug proves to be successful. We wish merely to note the different reception the network of Milken cronies delivers to a drug like Provenge, whose supporting data is ample and overwhelmingly positive, versus the opinions the network expresses about a drug whose data is preliminary and inclusive, but whose investors hail from the Milken network.

We also wish to reiterate that Milken’s Prostate Cancer Foundation and people tied to Milken gave ringing endorsements to companies – Novacea, Cell Genesys, and Cougar Biotechnology – right before those companies entered into purportedly massive deals with major pharmaceutical companies. In the cases of Novacea and Cell Genesys, those massive deals were canceled soon after they were signed because the companies’ treatments were shown to be ineffective.

Yet, in all three cases, investors with ties to Milken or his close associates made large fortunes selling out their stock soon after the companies received over-the-top endorsements from the Prostate Cancer Foundation. Meanwhile, the Prostate Cancer Foundation, whose officials had played a key role in derailing Dendreon back in 2007, continued to snub its nose at Dendreon’s Provenge, the one treatment that could be safely and effectively administered to patients – right away.

* * * * * * * *

It is not clear if Milken himself was invested in Cougar, but Dr. Samuel Saks, who was a director on Cougar’s advisory board, was also a board member of Milken’s fund, ProQuest Investments. Three other members of Cougar’s advisory board were doctors affiliated with Milken’s “philanthropy,” the Prostate Cancer Foundation.

In addition to Rosenwald, the biggest investors in Cougar Biotechnology have included Millennium Management (the hedge fund that was co-founded by the guy who was going to murder Ivan Boesky, and later died of an early heart attack) and Visium Capital, which is co-owned by Dimitry Balyasny and Jacob Gottleib.

As noted, Millennium, Visium and Balyasny were also among the largest shareholders in Cell Genesys when the Prostate Cancer Foundation began promoting that company’s treatment, GVAX, in mass mailings and flyers handed out in front of shopping malls. Millennium’s manager and Dmitry Balyasny, meanwhile, were among the seven traders who were betting big against Dendreon in March 2007.

The few media stories about Balyasny make him seem like he is a “prominent” investor – and a poster boy for the American dream. Born in Russia, he came to America as a young man and soon started raking in the bucks as a “whiz kid” investor. In addition to Visium, Balyasny is the proprietor of Balyasny Asset Management and BAM Capital. Some of Balyasny Asset Management’s employees –  including, for a period of time, the fund’s chief risk officer — have come from SAC Capital, the hedge fund run by Milken crony Steve Cohen.

A great many of Balyasny’s other employees were hired from a hedge fund called Magnetar Capital. The senior partner and investment committee chairman of Magnetar is Michael S. Gross, who was previously a founding partner of Apollo Advisors, the investment fund run by Milken crony Leon Black.

As you will recall, Leon Black funded the new Milken “philanthropic” foundation that hired National Cancer Institute prostate cancer chief Alison Martin after she helped the chairman of Milken’s Therapeutic Consortium foil Dendreon’s FDA application. Leon Black is also a business partner of Felix Sater, the alleged Russian mobster who once stuck a broken stem of a wine glass through a stock broker’s face and then went on to run White Rock Partners, a Mafia-infested brokerage that was indicted for manipulating stock in cahoots with the above-mentioned Lindsay Rosenwald’s D.H. Blair.

Prior to starting his own hedge funds, Balyasny was the top trader at an outfit called Schonfeld Securities, the proprietor of which is a man named Steven Schonfeld. Prior to founding his firm, Schonfeld worked for Blinder Robinson (then known on the Street as “Blind’em and Rob’em”). Blinder Robinson was among the first firms to be shut down by the Feds when they began investigating a network of Mafia-linked brokerages that included Rosenwald’s D.H. Blair and Sater’s White Rock Capital.

Schonfeld worked at Blinder Robinson with Anthony Elgindy, the criminal naked short seller who was was later sentenced to prison for stock manipulation and bribing FBI officials. As you will recall, Elgindy appeared for his sentencing missing a finger – reportedly because the Russian Mafia forced him to saw it off, giving him something on which to meditate while he served his 11 years in jail. Meanwhile, the Elgindy investigation led the authorities to other hedge funds, such as Gryphon Partners, whose manager was later among the few who bet big against Dendreon.

As should be clear by now, it is significant that a preponderance of the hedge funds that bet big against Dendreon, and a preponderance of the hedge funds that were invested in the three Milken-promoted companies – Cell Genesys, Novacea, and Cougar Biotechnology – were part of the same network. And it is significant that much of this network seems to be centered on Michael Milken and Steve Cohen, who became the “most powerful trader on Wall Street” some years after he was investigated by the government for trading on inside information provided to him by Milken’s shop at Drexel Burnham.

Permit me to repeat a few facts:  Cohen was once the top earner for Gruntal & Company, which was simultaneously employing several traders who were later tied to the Mafia. When Gruntal was indicted for embezzling millions of dollars, many of its former employees went on to fill the ranks of  White Rock Capital, run by the alleged Russian mobster Felix Sater (he with the broken wine glass).

Cohen, meanwhile, had left to start his own hedge fund empire. Cohen’s hedge funds have helped pump stocks promoted by D.H. Blair, which was eventually indicted on 173 counts of securities fraud and implicated in a Mafia stock manipulation scheme that was orchestrated by White Rock Capital.

Lindsay Rosenwald, who is the son-in-law of D.H. Blair’s founder and a former top executive of D.H. Blair, was not only the controlling shareholder of Cougar Biotechnology, but also the proprietor of a hedge fund called Paramount Capital. The vice president of Paramount was formerly a top trader for Steve Cohen’s SAC Capital. The vice president of the above mentioned Millennium Management is also a former top trader of SAC Capital.

And Cohen, who is maniacal about his working relationships, is on close terms with Schonfeld Securities, run by the former employee of Blind’em and Rob’em.  Cohen has employed Schonfeld’s traders, including Anthony Bassone, who was until recently assistant controller of SAC Capital; and Rob Cannon, who is Cohen’s top personal trader at SAC. Another “Russian whiz kid”, Michael Orlov, created the computerized trading infrastructure at both SAC and Schonfeld Securities. And, as mentioned, Cohen shares employees and trading strategies with that other “Russian whiz kid” — Dmitry Balyasny, who was once Schonfeld’s biggest earner.

All of which I mention only because I fancy myself a biographer of a particularly destructive network of Wall Street personalities. It may be of no significance that out of Planet Earth’s 11,500 hedge funds, there were only ten hedge funds with large numbers of Dendreon put options at the end of March, 2007.  There may be no significance to the fact that of those ten hedge funds, seven were in the same network — Millennium Management; Balyasny Asset Management; WS Capital (the successor to Gryphon Partners); Perceptive Advisors (whose manager was simultaneously working for Paramount Capital); Bernard Madoff Investment Securities; Pequot Management; and SAC Capital (managed by Steve Cohen, who is said to be maniacal about maintaining working relationships with people in his network).

And it could be purely coincidence that these hedge funds were the largest holders of put options on Dendreon shares right at the time that Dendreon was getting clobbered by massive amounts of illegal naked short selling – and right before Dendreon’s treatment for prostate cancer was stymied by an unprecedented lobbying effort led by FDA-contracted doctors and government officials tied to Michael Milken.

By the way, three months later – at the end of June, 2007 — there was just one more hedge fund with large numbers of Dendreon put options. It is not clear from SEC filings whether these put options were bought before or after the FDA announced (on May 8, 2007) that it would  not approve Dendreon’s treatment.

Either way, it is probably another coincidence that this eleventh hedge fund that bought large numbers of put options was the above-mentioned Magnetar Capital.


* * * * * * * *

This is part 14 of a 15-part series. The  story is published in its entirety at It is a story about the travails of just one small company, but it describes market machinations that have affected hundreds of other companies, and it contains a larger message for anyone concerned about the “deep capture” of our nation’s media and regulatory bodies.

Mark Mitchell is a reporter for He previously worked as an editorial page writer for The Wall Street Journal in Europe, a business correspondent for Time magazine in Asia, and as an assistant managing editor responsible for the Columbia Journalism Review’s online critique of business journalism. He holds an MBA from the Kellogg Graduate School of Management at Northwestern University. Email:

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