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3 Reasons to Sell Dendreon Today

The turmoil in the markets makes it too easy to justify selling any stock these days. Yet, while panic never helps investors, it's still a good idea to play devil's advocate with investments.

Consider cancer treatment developer Dendreon (Nasdaq: DNDN  ) . Though its pipeline shows significant promise, you'll find that more than a few of the 1,415 Motley Fool CAPS members weighing in on the company are bearish.

Here at the Fool, we like to consider both the good and the bad sides of an investment, so I'm highlighting three of the main bearish arguments on Dendreon. Be sure to read the bullish side as well, and then weigh in with your own comments below or rate Dendreon in CAPS.                                              

1. Waiting for profits
While Provenge could bring billions of dollars in annual sales if it gets approved, Dendreon expects to incur more losses for the next several years while it ramps up manufacturing capacity and marketing efforts. The company posted a wider loss in the third quarter, and some people prefer investing in a stock that has billions in free cash flow, like Pfizer (NYSE: PFE  ) , Novartis (NYSE: NVS  ) , or GlaxoSmithKline (NYSE: GSK  ) , to complement dozens of potential drugs in development.        

2. Speculative play
Shares of Dendreon have earned a two-star rating in CAPS and have already generated huge gains this year, similar to the spike in Vanda Pharmaceuticals (Nasdaq: VNDA  ) . While some CAPS members continue to be bullish about the potential of Dendreon's pipeline, others aren't willing to shoulder the additional risk priced into shares and shy away from the possible volatility involved with approval for Provenge and the uncertainty of its other drug candidates.

3. Uncertainties remain
Another high-cost drug, Eli Lilly's (NYSE: LLY  ) and Bristol-Myers Squibb's (NYSE: BMY  ) Erbitux, has come under scrutiny recently as lawmakers and health officials try to rein in medical costs. Some CAPS members show concern about the price Dendreon might be able to command for Provenge and the possible changes in health-care reform that might affect its pricing.

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 in the comments box below.

The Motley Fool Inside Value team looks for beaten-down stocks that are selling at prices well below their intrinsic value. To see the full list of cheap companies the service is recommending today, take a free 30-day trial.

Fool contributor Dave Mock recommends three shots of brandy in the eggnog, but only if you won't be operating  heavy machinery. He owns shares of Pfizer, which is also an Inside Value recommendation. Novartis is a Global Gains pick. The Fool's disclosure policy survived Black Friday but remains concerned about shopping at the mall this week.


Read/Post Comments (1) | Recommend This Article (10)

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 23, 2009, at 11:00 AM, CEO007 wrote:

    I will continue to stay with Dendreon. i still think, it could become an $80.00 stock. I missed the boat with Taser several years ago which cost me by missing it over $1.25 Million Dollars. i will remember that move forever. Thanks

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