Right on, Dendreon!
by Andrew Vaino
Vaino's Biotech Corner
I really can’t think of anything to say about Dendreon (DNDN), the company I wrote about last week. Moves like this make investing in biotech such fun!
Dendreon’s drug Provenge went before an FDA advisory panel on Thursday. These panels provide guidance that the FDA considers in deciding whether or not to give the drug final approval. The date of final approval has been set as May 15.
In anticipation of wild trading in the stock on Thursday, trading of DNDN on the NASDAQ was halted. My recommendation of last week, which was highly speculative, was a bull spread created by buying Jan 08 2.5 calls and selling the 7.5 calls. As I mentioned, I was mildly bullish on this stock and the bull spread, I thought, was a prudent play.
Dendreon had been beaten down in the past year based on Phase 3 clinical data of its drug Provenge (to treat hormone refractory prostate cancer) that did not demonstrate any benefit measured by time to progression of the disease. Average survival time of patients on Provenge, however, was increased by 3-5 months. As well, there were some potential concerns over the safety of the drug: a small number of adverse cardiovascular events occurred.
In the end, the FDA panel voted unanimously that Provenge was safe, and found by a vote of 13-4 that it was effective. This was good news for DNDN investors. The stock was trading as high as $18 this morning, a staggering increase of 344% over Wednesday’s close of $5.22. Trading volume was also off the chart, with nearly 75% of the entire float having changed hands by noon. The stock closed at $12.93 on a volume of 92M.
Now, in reaching its final verdict the FDA usually follows the recommendations of the advisory panel, but not always. There are certainly a lot of remaining questions on Provenge, which will provide another round of fun as the May 15 decision date approaches.
The next few days should be interesting for Dendreon. DNDN has a float of 81.5M shares, of which 26.4M were held short as of March 2007 (according to Nasdaqtrader.com, Yahoo finance shows 20.3M shares short). So, a lot of people were betting against this stock and, it turns out, they bet wrong. These investors, I assume, will be looking to cover over the next few days. My guess is this stock will trend up for the next few days as investors jump in and shorts try to jump out.
Source: PeterNavarro.com
RELATED READING:
- Will Dendreon's Cancer Vaccine Win Final FDA Approval?
- Dendreon: Massive Pre-Market Action
- Dendreon Conference Call Transcript Summary & Commentary
- Dendreon's Big Day: Favorable FDA Review, Wild Trading Day Tomorrow
______________________
Vaino's Biotech Corner
I really can’t think of anything to say about Dendreon (DNDN), the company I wrote about last week. Moves like this make investing in biotech such fun!
Dendreon’s drug Provenge went before an FDA advisory panel on Thursday. These panels provide guidance that the FDA considers in deciding whether or not to give the drug final approval. The date of final approval has been set as May 15.
In anticipation of wild trading in the stock on Thursday, trading of DNDN on the NASDAQ was halted. My recommendation of last week, which was highly speculative, was a bull spread created by buying Jan 08 2.5 calls and selling the 7.5 calls. As I mentioned, I was mildly bullish on this stock and the bull spread, I thought, was a prudent play.
Dendreon had been beaten down in the past year based on Phase 3 clinical data of its drug Provenge (to treat hormone refractory prostate cancer) that did not demonstrate any benefit measured by time to progression of the disease. Average survival time of patients on Provenge, however, was increased by 3-5 months. As well, there were some potential concerns over the safety of the drug: a small number of adverse cardiovascular events occurred.
In the end, the FDA panel voted unanimously that Provenge was safe, and found by a vote of 13-4 that it was effective. This was good news for DNDN investors. The stock was trading as high as $18 this morning, a staggering increase of 344% over Wednesday’s close of $5.22. Trading volume was also off the chart, with nearly 75% of the entire float having changed hands by noon. The stock closed at $12.93 on a volume of 92M.
Now, in reaching its final verdict the FDA usually follows the recommendations of the advisory panel, but not always. There are certainly a lot of remaining questions on Provenge, which will provide another round of fun as the May 15 decision date approaches.
The next few days should be interesting for Dendreon. DNDN has a float of 81.5M shares, of which 26.4M were held short as of March 2007 (according to Nasdaqtrader.com, Yahoo finance shows 20.3M shares short). So, a lot of people were betting against this stock and, it turns out, they bet wrong. These investors, I assume, will be looking to cover over the next few days. My guess is this stock will trend up for the next few days as investors jump in and shorts try to jump out.
Source: PeterNavarro.com
RELATED READING:
- Will Dendreon's Cancer Vaccine Win Final FDA Approval?
- Dendreon: Massive Pre-Market Action
- Dendreon Conference Call Transcript Summary & Commentary
- Dendreon's Big Day: Favorable FDA Review, Wild Trading Day Tomorrow
______________________
posted by Nico at
1:35 PM
0 Comments:
Post a Comment
Subscribe to Post Comments [Atom]
<< Home