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    DNDN’s Bears Strike Back

    By Stock Charts | April 16, 2007

    The last few trading days have seen a pretty vicious tug of war between Dendreon (NASDAQ: DNDN) bulls and bears. After topping out around ~$25, shares of DNDN settled at $17.25 this Friday. It’s only natural that a little consolidation is in order as investors (including the CEO) lock in some gains, but where will Dendreon go from here?

    dendreon.gifDendreon was downgraded on Wednesday from “Strong Buy” to “Market Outperform” by a JMP analyst, who believes that last week’s good news is already built into the price of the stock and until more news is released the price won’t climb any higher. “We continue to believe there to be roughly a 50 percent probability of Provenge being granted an approval by the FDA by the Prescription Drug User Fee Act date, as well as a 50 percent probability of the company receiving an approvable letter with additional clinical data required for final approval.” The User Fee Act date is May 15th. If Provenge is granted a final approval by this date, it will be able to market the drug immediately. The alternative—an approval letter with additional trials required for final approval—would cause short term traders to exit in droves.

    While many feel that an FDA approval is imminent, the outcome really is still up in the air. Provenge failed two clinical trials and precedent shows many instances where the FDA has shot down drugs that failed their primary goals, yet a FDA advisory committee still voted 17-0 that it was safe and 13-4 that it was effective.

    It’s also important to remember that a large portion of the gap up was caused by a massive short squeeze—last month, 26 million shares were short out of 81 million outstanding. After the initial euphoria has subsided, many of these bears may return to recover some losses. On top of this, Dendreon’s news has caused a feeding frenzy among investors rushing to catch the wave, making DNDN one of the most heavily traded stocks on Wall Street. Once this initial goldrush is over and the PDUFA date gets closer, I suspect that short term traders aren’t going to stick around to hear the final decision, causing a gradual—if volatile—decline over the next month or so as volume dries up. What happens on May 15 could easily spark another fire, but we’ll cross that bridge when we get to it.

    Disclosure: I currently have no positions in DNDN.

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    Topics: Commentary | 3 Comments »

    3 Responses to “DNDN’s Bears Strike Back”

    1. Dorotie Says:
      April 20th, 2007 at 1:29 am

      Re: failed primary endpoint, don’t forget that the FDA agreed BEFORE filing of the BLA to accept SURVIVAL as the proper endpoint for filing of the BLA. And Dendreon’s survival numbers are fantastic. And the drug is safe.

      Re: statistics of approval. Look up the number of times the FDA turned down a positive panel vote.

      Then look up the number of times the FDA turned down a positive panel vote for a drug for terminal disease with no other alternatives.

      The you’ll know why we are so bullish about chances of approval. And the reversal in stock you see is just due to more lies and propoganda of the shorts (there were several lie headlines on the wire). Oh well, we’re used to crooks trying to prevent a life extending safe drug from patients. But the drug will get approved very very soon and the shorts will get a squeeze of historical magnitude.

    2. bob Says:
      May 23rd, 2007 at 9:07 pm

      it seems every time some one loses money in this type stock its always the fda they always say oh! the poor souls who have cancer its not fair that the fda willnot pass this drug,when in reality they dont care about the poor soul,the only thing they want is the stock to go up for theyre own greed,if they are so concerned about the poor soul with cancer ,how about making a contribution to the american cancer assc. if the drug was passed and someone died from effects of it ,then it would be “,that DAMN FDA IS RESPONABLE NOT DNDN”so lets sue the fda,greed is a terrable thing isnt it?

    3. DNDN Hammered | The Wall Street Matador Says:
      May 29th, 2007 at 9:14 am

      [...] bobit seems every time some one loses money in this type stock its always the fda they always say oh! the poor souls… [...]