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Are the Shorts Wrong About Dendreon?

In this video entry, David and Austin focus on Dendreon, which has attracted shorts as the company continues to struggle launching prostate-cancer vaccine Provenge. Is it time to invest in this cutting-edge company on the cheap, or is the high short interest a sign of further troubles ahead? Watch and find out.

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David Williamson owns shares of Johnson & Johnson and Dendreon, while Austin Smith owns shares of Johnson & Johnson, but neither holds positions in any other company mentioned. Check out Dave's holdings and a short bio. The Motley Fool owns shares of Johnson & Johnson and Dendreon. Motley Fool newsletter services have recommended buying shares of Johnson & Johnson and creating a diagonal call position in Johnson & Johnson. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days. The Motley Fool has a disclosure policy.

Read/Post Comments (2) | Recommend This Article (3)

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  • Report this Comment On September 10, 2012, at 11:04 AM, lebronz wrote:

    Ten reasons why dndn is the next Celgene and the best stock investment of the decade:

    1.) Dndn is evolving to a commercial biotech because it has the only FDA approved (and 12 year patent exclusivity since April, 2010 under Obamacare) immuno-therapeutic cancer vaccine for men dying from metastatic castrate resistent prostate cancer.

    2.) U.S. market size (stats): According to the American Cancer Society, 241,740 U.S. men will be diagnosed with prostate cancer (pc) this year. 1-2 million U.S. men have pc (the pc market will only grow as the baby boomer influx continues over the next 2-7 years). About 10% or about 100,000 men have metastatic castrate resistent pc (mCRPC) and are eligible for Provenge.

    30-35,000 men are "diagnosed with mCRPC" each year and about 30,000 men die each year. Since FDA approval back in April 2010, Dndn has only treated about 5,000 men in total (or $465M in total revenue) with Provenge. In 2012, Dndn on average is treating about 300 men per month or 3600 men annually. Various wallstreet analysts have said the Provenge market is 70,000 men (Robyn Karnauskas, Deutsche Bank), 30,000 men (ISI Group) and even a Citi analyst quoted a laughable figure of just 4,000 men. Don't believe wallstreet analysts. Believe that 100,000 men are eligible for Provenge and 30-35,000 are newly diagnosed each year.

    3.) Dndn's institutional holdings are climbing each quarter and are currently at 61% of the total number of outstanding shares of the company (154M), while the stock analysts following the company (listed on dendreon's website in the investor section) continually bash the company, stating that competition like Zytiga and MDV3100 will drive out Provenge (while knowing full well that urologists and oncologists will "sequence" the available therapies), or they will spin recent news as a negative (e.g: spinning the New Jersey plant closing as a negative when the other two 155,000 square foot facilities in Seal Beach, CA and Atlanta, Georgia can more than handle the U.S. market demand (produce $1 billion of Provenge and after automation, produce up to $2 billion in Provenge product). Anyone that has worked for large corporate understands that large successful corporations have a 3-5 year plan. Dendreon officers/execs knew that they would be eventually closing the NJ plant 3 years ago.

    4.) Provenge Sales have increased quarter over quarter since launch back in April, 2010...,except this last quarter (Q2/12) where sales came in at $80M versus $82M in the Q1/12. Some analysts are spinning this 2 million shortfall as the end of the world for Provenge. The new CEO is working with large institutional shareholders (comes from a SALES/NEGOTIATING background and not a urology background like Dr. Gold) and is working from the premise of "underpromise" the remainder of this year and over deliver mid next year. Large institutions are supporting this modest and cautious premise by shorting the stock which depresses the price. This shakes out weak retail investors.

    5.) Infusion accounts/sites are continually growing quarter over quarter. There are more than 1000 sites across the U.S. Again, CEO Johnson has commercial experiennce (unlike Dr. Gold) and will underpromise to over-deliver for large institutional shareholders who are slowing ACCUMULATING!

    6.) When the 1000+ infusion sites each treat 1 dying man per month or 1000/month or 12,000 men per year..., that equates to $1.1B in annual revenue ($93,000 x 12,000). You then have a blockbuster company.

    7.) Treating 1000 men per month or 12,000 annually still doesn't impact the U.S. market of 30,000 men that die EACH YEAR FROM PROSTATE CANCER... let alone the 100,000 that are eligible for Provenge today!

    8.) The big pharma industry is cash rich and yet struggling to replace their blockbuster drugs coming off patent (generic threat) and struggling with successful drug trials. Dendreon is a buyout candidate because it owns patent exclusivity for 12 years (from FDA approval according to our new ObamaCare bill). This increases dndn's value and makes Dndn a takeover target by big pharma.

    9.) Wallstreet wants to generate fear over a period of time by purposely shorting the stock (currently 43million short) and manipulate the stock price by keeping it undervalued/depressed. They are working to scare the average retail investor away while they churn and slowly accumulate shares. This churning tactic initiated by large institutions is called "short and distort". They have the financial wherewithal to execute such an expensive tactic. There are only 154 million shares worth about $800M and this is pennies for just several mega billion dollar large instititions to play and manipulate the stock price with.

    10.) EMEA approval is coming by late Summer 2013. European approval of Provenge will further drive the stock price because the EU market is about the same size as the U.S.


  • Report this Comment On September 17, 2012, at 3:01 PM, lebronz wrote:

    Oh, and guys, I wrote another revised comment summary about DNDN in your Fewlish colleague Selena's article (in link above). You may want to read them.

    Selena, like yourselves, seem quite dillusional when it comes to the value and future potential of DNDN.

    Good luck gents!

    I hope when you write future articles or publish videos about DNDN you'll be thinking of the 1000's of men in the U.S. that are dying from prostate cancer and would like to include a novel immunotherapy cancer vaccine in their cancer treatment sequencing regimen.


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