MightyMo's Blog : Reasons to NOT buy DNDN now

Dendreon (DNDN)

First, I see DNDN (35.35) at 110-130 per share in year 2012.
Second, I own DNDN, buying in increments over the past year.
Third, I don’t plan to sell DNDN anytime soon.
Fourth, I’m not making any recommendations (buy or sell) on DNDN in this post.
Fifth, I’m providing the case of why not to buy DNDN now.
There are FOUR MAJOR reasons.
Sixth, I spent quite some time researching data for this post. Any serious comments or notation would be appreciated and let me know that the article is being read. I’m quite occupied with other endeavors. I’m seriously considering ending my tenure on this site. If so, it's been fun and we wish you well in your market trading. I do have my own site ( http://mightymo-market.blogspot.com/ ) and also can follow me on twitter.
Twitter name is MIGHTYMO_MO

(Later in this post, I’ll provide the reasons why DNDN will be a 100 per share plus stock in two years.) At this time, let’s review the reasons to NOT buy DNDN.

REASON number 1

DNDN must get approval from the FDA to market Provenge. If it doesn’t, the stock will tank. Anyone holding DNDN will see their money disappear in a hurry.

Based on the data provided to the FDA, the consensus is that there is a 90% chance of approval this time. The FDA has also said there is no other FDA advisory meeting needed. This also bodes well for approval. DNDN also has stated that they haven’t been asked to prepare for an advisory meeting. The scheduled date for the FDA to make a decision is May 1. However, there is a loud but minority view that the FDA will not give approval.

REASON number 2

Provenge is approved but the medical insurance community does not accept the procedure for insurance purposes.

As one noted on another site…
“Dendreon has always said they will price Provenge in line with the competition. Hmmm, similar price, better outcome, no side effects - you really think the insurance companies won't reimburse for that? And Europeans will keep taking Taxotere or dying, rather than approve Provenge?”

REASON number 3

The full first year of Provenge revenue will result in the USA of conservative sales of $1.5 billion. This gives the stock an evaluation share price of $30-35 per share. That is where it is priced now.

“These estimates are based on the assumption that the cost for Provenge will be somewhere between $30,000 - $50,000 ,a penetration rate of around 10-20% of the total prostate cancer population. According to the National Cancer Society, there are around 230,000 annual new cases each year in the U.S.)
Note that there are articles denoting that the above estimate is too low.

This is reason no. 3. Later in this post, I will provide information why revenues will be greater and why the stock will be valued over 100 per share.

REASON number 4

In a nutshell, reason No. 4 unfortunately is Hedge Fund Manager Manipulation. Dendreon has been one of the most manipulated stocks on NASDAQ. The influence of some very big names could have been the cause of DNDN being denied approval the first time around.

There appears to be a hedge club community where hedge managers and former hedge fund managers (Jim Cramer) have somewhat teamed together to perform a process called Naked Short selling on a large scale basis on DNDN. Naked Short selling is illegal. The hedge funds got around that by using a process called Married Puts. There is an absolutely fantastic story on this involving DNDN and hedge fund managers which I will provide a link.
Are the extremely odd delays in getting Provenge to market purely accidental? Or, were the remarkable trading patterns and volatility accompanying those delays in fact an expression of stock manipulation? If so, who were the manipulators? Since we know that Dendreon experienced naked short selling, and naked short selling is a crime, who are the criminals?
The names involved include Bernie Madoff, Michael Milken, and Jim Cramer.


There is an absolutely fantastic story on this involving DNDN and hedge fund managers which I will provide a link. During June and July of 2009 Deep Capture serialized a 48,000 word story about a network of market miscreants that includes disreputable financial analysts, prominent journalists, some of America’s best-known hedge fund managers, associates of the Mafia, and Michael Milken, the famous criminal from the 1980s. The story focuses on the travails of Dendreon, a company with a promising treatment for prostate cancer . I’ll start the first paragraph or so and then if interested, you can link to the story.

“This story, like too many others, begins with Jim Cramer, the CNBC personality, making “a mistake.”
On one September 26 Cramer announced to his television audience the sad news (punctuated by funny sound effects – a clown horn, a crashing airplane) that Provenge, an experimental treatment for prostate cancer, had flopped. Thousands of end-stage patients had been pinning their hopes on Provenge, but according to Cramer the treatment had just been rejected by the Food & Drug Administration. It would never go to market.
This seemed odd, because Dendreon (NASDAQ: DNDN), the company developing Provenge, had not yet submitted an application for FDA approval. “


http://www.deepcapture.com/wp-content/uploads/2009/10/story-of-dendreon.pdf
FUTURE VALUE OF DNDN

As stated, DNDN could have a value of over a 100 per share after two full years of provenge revenues. Other sites have indicated that the expected revenue from Provenge should be about $1.5 billion first year in the USA. This provides a stock valuation of around 30-35 per share. As Provenge is used, it’s expected to double after the first year to revenues of 3 billion. This will make the stock value around 60-65 per share. However this does not take into consideration the rest of the world. The international arena should be equal to the USA revenue, another 3 billion by year two. This makes the stock price valuation in the 120-130 area. This does not take into consideration other similar products for other kinds of cancer besides prostrate.

Good luck everyone.