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

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.

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