What the heck do you do on days like this? Cash out? Stand pat? Never buy in?
The huge jump, of course, begs the question: Is Dendreon overpriced at this new level, meaning you should sell? Or should you buy? While I cautioned readers that the price last week didn't justify the risk of the trial flopping, with the data now out, most of the risk has vanished.
We'll have to wait and see the full details of the trial when they're presented at the American Urological Association's annual meeting at the end of the month, but things sure look promising for Food and Drug Administration approval. The FDA already signed off on the trial design, and Provenge met its primary endpoint of extending overall survival, which should be enough to get a thumbs-up from the agency. The company expects to submit the data to the FDA by the end of the year, so a six-month review would result in a decision by June of next year.
You'll recall that Dendreon submitted a marketing application for Provenge a few years ago. In 2007, an FDA advisory panel recommended approval of the drug, and the market cap ran up to around $1.9 billion. This was before the FDA went on its run of not approving drugs recommended by its advisors, including Schering-Plough's
Another way to look at the potential value of Dendreon is to compare it to other one-drug wonders. Onyx Pharmaceuticals
Dendreon doesn't look overpriced here, but with any FDA approval more than a year away, there's plenty of time to buy in.
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