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    DNDN’s 15 Minutes

    By Stock Charts | April 12, 2007

    The hot stock of the hour is currently Dendreon (NASDAQ: DNDN), a biotech company that recently had Provenge—their prostate cancer drug—”deemed safe” by a FDA advisory committee. Now bear in mind that this doesn’t necessarily mean that the drug will be approved by the FDA, but a thumbs up from the advisory committee greatly enhances Provenge’s chances of full FDA approval. Which of course would mean quite a windfall for Dendreon’s investors. In anticipation of this approval, wall street bulls (as well as bears rushing to cover) have pushed the stock to astronomical levels from the $3-4′s to yesterday’s close of $18.23. Let’s take a look at DNDN’s stock chart:


    The chart overall seems pretty flat but that’s mainly because it’s jumped so high in the past few days. Dendreon was granted a priority review in the middle of January, and the stock slowly climbed upwards, briefly touching overbought territory. However, on March 1st Provenge was assigned a review date and the stock tumbled on fears of failure to gain approval. In mid-March Dendreon reported a net loss of 91.6 million, causing shares to fall even further. But lo and behold, it appears that a little bird leaked the upcoming approval (or maybe the skeptical investors had a sudden change of heart?) and the last five days before the trial showed sharp gains for DNDN. The rest, as they say, is history.

    Right after the approval was announced, Dendreon’s management began pulling the trigger on their options as their company ballooned from a ~300 million dollar company to a ~1.58 billion dollar company. Time to bust out the party hats and yachts, perhaps?

    I came across a pretty in-depth valuation of DNDN over at Technicator.net. While DNDN is today’s hot stock, the valuation may provide some insight on where it may settle after the hype fades. There’s still a while to go before the drug begins production, as “the committee will want to see the results of an ongoing trial involving 500 patients, the results of which are due out in 2010.” I’m not certain exactly when the final approval will take place (apparently the FDA will offer an “opinion” within 40 days) but if it’s after 2010, the journey is only beginning.

    In short, feel free to ride the hype but place your bets carefully. Personally, I’ll be staying out of this one.

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    Topics: Stock Charts, Stock News | 2 Comments »

    2 Responses to “DNDN’s 15 Minutes”

    1. Lawrence Says:
      April 13th, 2007 at 2:51 am

      My doubt was taking the risk before the AC Meeting, since I Loaded the boat before the AC I feel the risk is more like 1% that it won’t be approvaed. I see a Slam Dunk on approval. Which may be a moot point anyway for a Buyout before would ONLY make sense for a SMART Pharma. I will be in this until $60+ and then I will only being selling some not all. Its a LOCK for those who invested well in their DD!

    2. The Biotech Short Squeeze | The Wall Street Matador Says:
      April 27th, 2007 at 1:01 am

      [...] happened very recently with Dendreon’s short squeeze following the good news about one of their primary drugs, Provenge. Prior to the approval, 30% of outstanding shares were [...]