June 4, 2012
Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of Dendreon (Nasdaq: DNDN ) have fallen 13% today after competitor Johnson & Johnson (NYSE: JNJ ) reported positive results from a drug test.
So what: The trial in question is Johnson & Johnson's prostate cancer clinical trial for Zytiga, a competitor to Provenge. The successful results may put a big dent in Provenge's $82 million in quarterly sales as physicians transition to the more effective therapy and generics enter the market.
Now what: An analyst from Wedbush predicted that Provenge may be replaced completely as more effective and cheaper therapies become available for early stage prostate cancer patients. He was already bearish in the stock but cut his price target to $4 from $5, not a good sign for investors. I don't see a reason to buy the dip today since Dendreon was already losing money even before this blow to its future results.
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