Dendreon's New 'Hold' Rating at A.G.Edwards
Jon C. Ogg
24/7 Wall St.
A.G.Edwards (AGE) has initiated the recently volatile and controversial Dendreon (DNDN) with a Hold/Speculative rating. The summary points are that it is starting the biotech as a Hold rated stock for Speculative investors.
It sees significant risks surrounding the May 15th PDUFA action date for Provenge for prostate cancer. This notes that Provenge was the subject of a recent panel meeting where committee members voted unanimously on the Safety and 13-4 on the Efficacy of Provenge.
A.G.Edwards notes that beyond a positive panel vote, there may be political forces within the Center for Biologics Evaluation and Research that increases the odds of Provenge being approved. It notes that, however, given that Provenge failed to achieve primary or secondary endpoints in either Phase II trial and that the primary statistical analysis for comparing overall survival was not pre-specified. A.G.Edwards believes that additional confirmatory data may be required by the agency. After surveying 16 oncologists and 14 urologists, the brokerage firm found that oncologists were mixed 50%/50% on whether Provenge should be approved and that urologists favored approval 71.4% to 28.6%.
The A.G.Edwards' summary ends with "Nevertheless we recommend that investors stay on the sidelines."
Furthermore it notes that Dendreon is not profitable and is not expected to be profitable until 2011. A.G.Edwards notes that an "Approvable Letter" and request for more data could be an outcome of the PDUFA, but also notes the flipside that the agency would be viewed as not looking out for the interest of patients' best interest if they hold this up. That's a coin toss there.
It is worth noting that Needham reiterated their Buy rating with a $22.00 target, and that was what energized the shares today. Shares of Dendreon (DNDN-NASDAQ) closed up 6.3% at $17.20 in regular trading. Remember that two analysts can look at the exact same data and take away opposite opinions, and that appears no different here.
As far as looking at options for any direction, a MAY08 $17.50 Straddle (own Put and Call) to play volatility would cost you $10.30 based upon last look at the end of the day. Here is what we noted just last week on this one, and it has links to several prior issues as well.
Source: 247WallSt.com
RELATED READING:
- Dendreon: Countdown to FDA
- Cramer Looking For the Next Dendreon
- Out of Dendreon; Another Chance in May
_____________________
24/7 Wall St.
A.G.Edwards (AGE) has initiated the recently volatile and controversial Dendreon (DNDN) with a Hold/Speculative rating. The summary points are that it is starting the biotech as a Hold rated stock for Speculative investors.
It sees significant risks surrounding the May 15th PDUFA action date for Provenge for prostate cancer. This notes that Provenge was the subject of a recent panel meeting where committee members voted unanimously on the Safety and 13-4 on the Efficacy of Provenge.
A.G.Edwards notes that beyond a positive panel vote, there may be political forces within the Center for Biologics Evaluation and Research that increases the odds of Provenge being approved. It notes that, however, given that Provenge failed to achieve primary or secondary endpoints in either Phase II trial and that the primary statistical analysis for comparing overall survival was not pre-specified. A.G.Edwards believes that additional confirmatory data may be required by the agency. After surveying 16 oncologists and 14 urologists, the brokerage firm found that oncologists were mixed 50%/50% on whether Provenge should be approved and that urologists favored approval 71.4% to 28.6%.
The A.G.Edwards' summary ends with "Nevertheless we recommend that investors stay on the sidelines."
Furthermore it notes that Dendreon is not profitable and is not expected to be profitable until 2011. A.G.Edwards notes that an "Approvable Letter" and request for more data could be an outcome of the PDUFA, but also notes the flipside that the agency would be viewed as not looking out for the interest of patients' best interest if they hold this up. That's a coin toss there.
It is worth noting that Needham reiterated their Buy rating with a $22.00 target, and that was what energized the shares today. Shares of Dendreon (DNDN-NASDAQ) closed up 6.3% at $17.20 in regular trading. Remember that two analysts can look at the exact same data and take away opposite opinions, and that appears no different here.
As far as looking at options for any direction, a MAY08 $17.50 Straddle (own Put and Call) to play volatility would cost you $10.30 based upon last look at the end of the day. Here is what we noted just last week on this one, and it has links to several prior issues as well.
Source: 247WallSt.com
RELATED READING:
- Dendreon: Countdown to FDA
- Cramer Looking For the Next Dendreon
- Out of Dendreon; Another Chance in May
_____________________
posted by Nico at
10:08 PM
1 Comments:
Dendreon "is not expected to be profitable until 2011"??? How do they figure that? Provenge will be an instant blockbuster in sales. How about some facts? For the 80000 men annually who progress to hormone-resistant metastatic prostate cancer, there are no good options. The only approved therapy, taxotere, is so toxic that most patients turn it down. In contrast, Provenge will triple their 3-year survival chances with no side effects. With only 50% market penetration and an expected 3-"shot" treatment price of $30000, you're looking at $1.5 billion in annual sales. And that's not including booster shots or off-label usage in earlier-stage prostate cancer or usage by tourist patients. And Provenge is expected to have show results in earlier-stage prostate cancer, a 3-4x larger market, in currently ongoing trials by 2009. By 2011 you can expect official approval for Provenge in the US and Europe for all post-surgical prostate cancer and sales of over $5 billion. Provenge production is well worked out and the company has already made the capital investment to build a production facility, and capacity can be scaled with minimal further outlay. The drug can be expected to have margins on par with other cancer biologics. Whether thats 30% or 60%, and whether you want to believe 50% market penetration or 10%, 3 things are sure: there will be a profit, it will be large, and it will be here before 2011.
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