A lot of talk here on DNDN. We all know that answers will be released by the FDA before May 15. If they give an approval, it's almost a guaranteed 60%+ jump. Likewise, a delay or disapproval will get it back to the $6 range. Heavy wagers have been put on both the calls and the puts, so one thing is for sure out of this, there will definitely be some big losers. My thought on this whole ordeal? DNDN is likely to see the bright light - FDA will give thumbs up.
For the past two days, we saw two research houses coming out to say that DNDN will more than likely get approved with their prostate wonder-drug. First was AG Edwards that intiated coverage on the company. Though they initially started out with a "HOLD" rating, they did give an estimated target price of $22. The hold rating comes instead of the buy given the risky nature of a one-shot decision that will determine their price, rather than strong fundamentals. They gave the following statement (note the highlighted points in red):
"...significant risks surrounds the May 15th PDUFA action date for Provenge. This notes that Provenge was the subject of a recent panel meeting where committee members voted unanimously on the Safety and 13-4 on the Efficacy of Provenge.
The Company notes that beyond a positive panel vote, there may be political forces within the Center for Biologics Evaluation and Research that increases the odds of Provenge being approved. It notes that, however, given that Provenge failed to achieve primary or secondary endpoints in either Phase II trial and that the primary statistical analysis for comparing overall survival was not pre-specified. A.G.Edwards believes that additional confirmatory data may be required by the agency. After surveying 16 oncologists and 14 urologists, the brokerage firm found that oncologists were mixed 50%/50% on whether Provenge should be approved and that urologists favored approval 71.4% to 28.6%.
The Company's summary ends with "Nevertheless we recommend that investors stay on the sidelines."
Furthermore it notes that Dendreon is not profitable and is not expected to be profitable until 2011. A.G.Edwards notes that an "Approvable Letter" and request for more data could be an outcome of the PDUFA, but also notes the flipside that the agency would be viewed as not looking out for the interest of patients' best interest if they hold this up. That's a coin toss there.
It is worth noting that Needham reiterated their Buy rating with a $22.00 target, and that was what energized the shares today..."
One day after this analyst note, Next Generation Equity Research came out with a "BUY" rating giving it an expected price of $25. They gave the following statement (again note the highlighted points in red):
"...The Company believes the FDA approval of Provenge is less than 2 weeks away. Analyst Liisa Bayko said, "Over the past month, we have spoken withseveral industry experts regarding this question and have becomeincreasingly confident that FDA will grant Provenge an approval in thenext two weeks."
The reason being, "The vote: 17-0 for safety and 13-4 for efficacy.;The panel meeting: We understand FDA often holds panel meetings to gainaddition insights on certain aspects of the compound or to gain supportfor its decision.
In this case, we believe it was the latter; Politics:There have been several letters written by ODAC panel members advisingFDA not to grant approval to Dendreon. Our research suggests that eachdivision within FDA acts independently such that such correspondenceshould have little influence on the decision by OCTGT.;
Need: There isa significant need for new therapies for advanced prostate cancer.Given the safety of the agent in question, we believe FDA would like toapprove a drug in this indication.;
Management: Despite the rally inthe company's stock since the panel meeting (a high of about $25),management did not take the opportunity to raise additional capital andwe do not believe they will do so prior to May 15. They currently haveabout 1 year of cash on hand and we feel it would have been prudent forthem to raise cash, particularly on the eve of a binary event such as aPDUFA date. Given that firms approaching PDUFA dates are typically inactive discussion with FDA throughout the approval process, we believethat management likely has a fairly good idea regarding the action theFDA will take. Thus, we believe this could be interpreted as a signalof management's confidence that Provenge will be approved..."
Re-iterating my opinion; I'm not an expert but I do trust the ones that are. I'm throwing my life-savings into this one. Volatile and risky, hopefully the payoffs will be good, otherwise I'll give up and start a new account here.