3 Reasons to Buy Dendreon Today

Historically, tumultuous times offer some of the best opportunities to buy stocks, and the market's recent mess surely qualifies. And while the price of biotech Dendreon (Nasdaq: DNDN  ) is already up about 450% this year, some investors think the stock still has room to run.

In our Motley Fool CAPS community, nearly 78% of the 1,415 investors rating the company are bullish, so there's no shortage of reasons why Dendreon will thrive, three of which I've highlighted below.

But here at the Fool, we're all for looking at both the good and the bad sides of an investment. Once you're done with this article, you can read the case against the stock, weigh in with your comments, or rate Dendreon yourself in CAPS.

1. Provenge
Many investors are betting that cancer drug Provenge will get approval from the Food and Drug Administration by the expected decision date in May, and expect it to reach blockbuster status once production ramps up. The drug appears to be more effective than sanofi-aventis' (NYSE: SNY  ) Taxotere and could fetch a high price, like other cancer drugs from Genentech, Eli Lilly (NYSE: LLY  ) , and Bristol-Myers Squibb (NYSE: BMY  ) , reaching up to $2.5 billion in annual sales, according to some estimates.

2. Building a cash machine
Dendreon is charging forward with moves to become a pharmaceutical company with a marketable drug -- it's raising cash, building new facilities, and beefing up its marketing. While companies like Onyx Pharmaceuticals (Nasdaq: ONXX  ) , Amylin Pharmaceuticals (Nasdaq: AMLN  ) , and Elan (NYSE: ELN  ) have marketing partners for their major drugs, some investors like the additional value that comes with Dendreon because it doesn't have one, at least for the U.S.

3. More than a one-trick pony
It's also important to point out that Dendreon is not hanging its future on just one treatment. In addition to Provenge, CAPS members like the additional technologies and drugs that Dendreon is developing to fight other types of cancer. It has other active cellular immunotherapies in early stage clinical trials that some see as having the potential to add significant value.

To see details of what CAPS members are saying now about Dendreon, just click on over to Motley Fool CAPS and have a look -- or add your own thoughts directly to this story in the comments box below.

Always looking ahead, Motley Fool Rule Breakers has already recommended several biotechs with big potential. To see what rule-breaking stocks David Gardner is recommending today, take a free 30-day trial.

Fool contributor Dave Mock has three new reasons to love eggnog even more than before. He doesn't own shares of companies mentioned here. Elan is a Rule Breakers recommendation. The Fool's disclosure policy is filling in for a flu-struck Santa at the mall this year.


Read/Post Comments (2) | Recommend This Article (20)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On December 26, 2009, at 4:26 PM, Blurtman wrote:

    It is remarkable that the technology underlying Provenge is a failed gradient technology that was pretty much useless for purifying stem cells. One company tried to make a go at it by using this technology for bone marrow transplantation, but it was a total failure as the technology was not very good at purifying stem cells. It is not very good at purifying dendritic cells either, which makes me doubt the robustness of the Provenge manufacturing technology, which uses this same inefficient gradient technology. So maybe the audit of the manufacturing process will illuminate the difficulties that result when this type of 20 year old gradient technology is used. Stanger things have happened, but this one could take the cake.

  • Report this Comment On December 31, 2009, at 2:25 PM, vt500ascott wrote:

    Buy this stock as a long-term hold and you'll be sorry. These guys have gotten way too much mileage from a technology that doesn't even really work. As immunotherapy treatments that really work become available in the next 5-10 years, these guys will disappear unless they are smart enough to in-license newer technologies. If you believe in Dendreon's management team, go ahead and take a gamble. But investing is not supposed to be gambling. I also wouldn't bet too heavily on management. If they had any understanding of the scientific developments in this area, they would have ditched this technology long ago.

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