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Dendreon: The Risks Today

In the following video, Fool analysts David Williamson and Austin Smith discuss the risks facing Dendreon (NASDAQOTH: DNDNQ  ) .

This small biotech was one of the most exciting stories for 2012 and may be again for 2013, but it's not without its risks, Austin says.

David sees three key areas of risk for Dendreon. The first is financial. Dendreon may be burning less cash than it had been, but it still said goodbye to nearly $100 million through the fist half of 2012. That's on top of $400 million in 2010 and nearly $300 million in 2011.

Sales of its drug Provenge will need to ramp up quickly for the company to make good on a $620 million debt payment coming up in 2016.

There is also a competitive threat. Provenge doesn't have the prostate cancer space all to itself, and it will go head-to-head with a a cheaper drug produced by Johnson & Johnson (NYSE: JNJ  ) .

The last area of risk is business. Dendreon has had a hard time convincing doctors that its $93,000 treatment is worth the upfront cost and burden on cash flow at their offices, David says. Because of this and questions of its efficacy, Dendreon could struggle to ramp up sales.

Although risks remain, Dendreon's run over the past four years has seen sub-$5 share prices skyrocket to 10-bagger status before tumbling all the way back down below $5, as its revolutionary prostate cancer vaccine, Provenge, became a lightning rod for debate. But where does that leave investors -- other than a bit nauseous from the roller-coaster ride? Our own David Williamson answers this question, and many more, inside our brand-new premium research report on Dendreon. Inside, he details every key issue facing the company and outlines just how Dendreon intends to regain its former glory. The report also comes with a full year of analyst updates, so claim your copy of this exclusive report today by clicking here now.

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  • Report this Comment On January 14, 2013, at 10:29 AM, lebronz wrote:


    Given you're doing a video everyday on DNDN tells us that you DON'T THINK DNDN is that risky of an investment.

    First, Don't think for one second that JPM will not convert their portion of the note to 42 million shares sometime in the next 3 years. That is why institutional short interest climbed from 23 million to 47 million over the last 14 months and is held (not covered) extrememly high;

    Major institutions will decide to trend up or explode the stockprice (via covering) above the conversion price during some catalytic event(s) yet to be determined across the next 3 years (prior to Jan, 2016 when the note is due).

    Remember, its all about owning valuable shares in this biotech.


    Secondly, When will you finally BELIEVE that ethical urologists/oncologists will sequence the various pc therapies to prolong the dying patients life to the MAX? (and not believe what wallstreet tells you about doctors & patients CHOOSING ONE OVER THE OTHER?

    Someday, I think you'll listen to your conscience. As you grow older and become more adept/educated in your biotech investing world (&hopefully wiser David), remember to stay grounded and don't get caught up in wallstreet greed & manipulation.

    You'll rest in peace with a clear conscience and with your readers knowing you were the best & gave the most ethical/accurate investment advice and tended to lean toward the company's side versus wallstreets side.

    But keep up with the daily vids on dndn... it tells us a lot and they're pretty cool dude ;)


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