As a reminder, there is still hope that the EU might actually save it when the FDA wouldn’t.

Dendreon shares are now down over 7% to $5.37, and its 52-week trading range is $3.57 to $25.25.

Jon C. Ogg
February 13, 2008

We have been looking for something like this to come up, although the day-after time period was not what we were thinking.

Dendreon regularly is screened for our weekly "10 Stocks Under $10" newsletter.  Shares are now up 25% at $7.03 on almost 20 million shares and options trading activity has gone through the roof today.

Jon C. Ogg
December 13, 2007

Jon Ogg can be reached at jonogg@247wallst.com; he does not own securities in the companies he covers.

• FDA Has Agreed That Positive Survival Data from IMPACT Study Would Support Licensure of PROVENGE;
• Interim Survival Results Expected in Second Half of 2008.

The IMPACT study is a double-blind, randomized, placebo-controlled Phase 3 trial designed to measure overall survival in men with metastatic hormone-refractory prostate cancer receiving PROVENGE versus placebo.  Even though the company received a set back this year that may or may not allow PROVENGE onto the market, Dendreon maintains that the FDA will accept either a positive interim or positive final analysis of overall survival from the IMPACT study to amend the Biologics License Application and support the efficacy claim for PROVENGE.

With this being one of the only hopes for late-stage prostate cancer patients, this ‘completed enrollment’ would have been easy to expect.  There have not yet been any trades in the pre-market, but first indications are $7.62X$8.05 versus the $7.58 close.  If there was much new data or anything that pointed to positive data there would be significant pre-market trading.

Jon C. Ogg
October 23, 2007

Dendreon is not obligated to utilize any of the $130 million facility and remains free to enter into and consummate other equity and debt financing transactions.  Dendreon will determine, at its sole discretion, the timing, dollar amount and floor price per share of each draw under this facility, subject to certain conditions. The number and price of shares sold in each draw are determined by a contractual formula, whereby Dendreon will issue shares to Azimuth when and if Dendreon elects to use the facility at a small discount to the volume weighted average price of Dendreon’s common stock over a preceding period of trading days.

This is a good news situation for the company, IF it determines it wants to bolster its cash. Sure, it’s dilutive.  But with PROVENGE on hold and the FDA being more unpredictable than a two-card draw game, they bought themselves much more cash if they want.  Some may try to say that they see the company showing a position of need, but this also gives the company even more long term cash to keep up its fight.  Dendreon’s options haven’t shown any major indications of late, although the bias has still leaned to call option buying and higher open interest compared to put options.

Jon C. Ogg
October 12, 2007

Jon Ogg can be reached at jonogg@247wallst.com; he produces the Special Situation Investing Newsletter and he does not own securities in the companies he covers.

This filing actually lists the transaction date as JULY 25, 2007, so there is a full six weeks of look back here. If that form is accurate on the ownership date, shares are higher now than on the trade date.  Also last night the company filed its form 424B3, which allows holders of the 4.75% convertible senior subordinated notes that were placed on June 11 and July 11, 2007 to resell notes and common shares.  This is actually a common event and does not necessarily mean any such sale is pending.

Other than its breast cancer Phase I data from last month, this one has been fairly quiet on the news front of late.

Yesterday there were some 13.68 million shares that traded hands and shares rose 5.6% from Friday’s close.  Shares are up another 1.5% today at $8.25 and it has already traded over 6 million shares in less than two hours of being open.  The stock did briefly put in a near-term high of $8.48 today, but have come back in.  The $8.30 to $8.35 had been the prior intra-day levels that acted as intraday highs in both July and August.

Jon C. Ogg
September 11, 2007

Jon Ogg produces the 24/7 Wall St. SPECIAL SITUATION INVESTING NEWSLETTER; he does not own securities in the companies he covers.

So the company slowed its cash burn rate, and that is what we wanted to see.  Unfortunately the company made no new developments in the "highlights" or "disclosures."  Unless the company announces some unexpected FDA developments or unless it announces a surprise partner, this one sounds like there could be a continued news vacuum.

Jon C. Ogg
August 7, 2007

Jon Ogg can be reached at jonogg@247wallst.com; he does not own securities in the companies he covers.

There can always be some activist group activity here, or at least that is what incoming emails received have stated.  Some sent in to us listed "the first of many" and "Many more to come."  We’ll see if that creates some movement or not. Options are still fairly active in the open interest with over 154,000 contracts in the August $7.50 Calls and over 129,000 contracts in the $7.50 puts.  That huge open interest drops off a cliff in the near-months after this as no new FDA data is really expected.  An at-the-money straddle right now only looks like it costs $0.70, lower than in any recent month.   

All of these following issues are already known and already in the news, but on top of earnings the company is going to address the following:

• The Company received confirmation that the U.S. Food and Drug Administration will accept either a positive interim or final analysis of survival from its ongoing IMPACT study to amend the Biologics License Application for Provenge® (sipuleucel-T), its investigational active cellular immunotherapy for metastatic, androgen-independent prostate cancer.
• The Company continues to have strong patient enrollment in its Phase 3 IMPACT study, which is on track for completion of enrollment this year.
• The Company completed a financing that resulted in gross proceeds of approximately $85 million from a convertible senior subordinated notes offering.
• Presented data from an analysis of Phase 3 Studies (D9901 and D9902A) that showed a prolonged survival benefit for patients who were initially treated with PROVENGE who then went on to receive docetaxel chemotherapy after disease progression.

Obviously if there is any new development out of the FDA or if the company decides it wants a partner that will be key to watch over anything else.  We previously noted how shares may face a news vacuum through much of summer and that looks like it has been the case as trading volume has dropped and volatility in the stock has disappeared.  What we will be looking at the closest is the company’s current and projected cash burn rates since it secured the recent financing package and announced its reduced cost structure. 

This one has been eerily quiet of late as far as any real news out of the company.  We’ll follow up if there are any substantial changes ahead of the release. 

Jon C. Ogg
August 3, 2007

Jon Ogg can be reached at jonogg@247wallst.com; he does not own securities in the companies he covers.

Jon C. Ogg
April 4, 2007

Jon Ogg can be reached at jonogg@247wallst.com; he does not own securities in the companies he covers.

When traders made bets and saw a move of more than 200% at one point onFriday in Dendreon (DNDN), this is the sort of news that can getbiotechs with upcoming events (and even some of the old dead biotechzombies) going.  Don’t be shocked when you look back to Friday or evenover the next two weeks as traders are parsing through trades to findwhat could be the next mover like Dendreon (DNDN).  Before readingfurther, understand that trying to look for a 200% gainer is not thenorm and trying to predict a gain or loss of anything remotely close tothis in a biotech company is one that even industry and corporateinsiders have charred their fingers on many times. 

But what can be done is looking out on the horizon as far as optionstrading and open interest is telling you, and this will at least give ashot to see where some of the smart money and aggressive traders areplacing some bets and where they see a big potential move down theroad.  Medarex Inc. (MEDX-NASDAQ)is one of those names as one of the upcoming biotech review stocks towatch.  This is already a battleground stock as traders have placedbets in favor and against this name, just like they did in Dendreon,and the short interest has risen.  The company’s financials have beenleft off for a space-saving since this is already a long note, but theyhave ample operating capital and partnerships that should keep themgoing for years.  The short interest grew from 13 million shares inFebruary to 16.7 million in March, and its market cap is almost $1.6Billion.  At a $12.72 close MONDAY, shares are in the middle of a $8.51to $16.23 52-week trading range; shares have been significantly higherand lower over the last 10 years and more.

The one thing that may be different in Medarex (MEDX) is that if anyits candidates turn out to be duds, they have a substantial pipelineand a broad group of diverse partnerships that may generate revenues onan ongoing basis.  As you will see later, the partners are impressiveand they are in Phase II and Phase III in more than one candidate.  Itsprimary focus is in monoclonal antibodies to make potential drugdevelopment much faster and less expensive.  Cancers are the primarytargets here, but if you read on you will see they have many othertargets as well.  The company has two kep approaches:  (1)collaborative partnerships with partners to jointly generate, developand commercialize human antibody products (more than a dozencollaboration partners as of 2006); (2) out-licensing partnerships tolicense its human antibody generation technology to partners inexchange for license fees, milestone payments, and royalties (claimstwo dozen partnerships here).  MEDX lists Abbott (ABT), Amgen (AMGN),Centocor-J&J (JNJ), Eli Lilly (LLY), MedImmune (MEDI), Novartis(NVS), Novo Nordisk (NVO), Pfizer (PFE), and Schering Plough (SGP) aspartners as of 2006.  Here is the list:

MDX-010 Phase III for Melanoma and other cancers with Bristol-MyersSquibb (co-promotion/profit share); was granted "Fast Track"designation in 2004.
CNTO 148 & CNTO 1275 for inflammation both in Phase III with J&J’s Centocor (milestones/royalties).
HuMax-CD4, CD20, and EGFR in Phase III’s for cancers and lymphomas with Genmab/Serono (equity interest).
MDX-066 and MDX-1388 in Phase II for C. difficile Disease with MBL (co-development).
MDX-060 in Phase II for Hogdkins and other lymphomas (wholly owned).
AMGN Antibody #1 in Phase II for undisclosed treatment with Amgen (milestones/royalties).
MDX-018 in Phase I/II for undisclosed treatment with Genmab (co-development).
CNTO 95 in Phase I/II for Cancer with J&J’s Centocor (milestones/royalties).

The company also has numerous PHASE I studies going on (partner name,then treatment indication): Celldex for cancer, wholly-owned study forUlcerative Colitis, PharmAthene for Anthrax, MedImmune for Lupus, OnoPharma for cancer, Novartis for Autoimmune diesease, more undisclosedstudies with Amgen and with Eli Lilly, Bristol-Myers for cancer,Imclone for cancer, and more partnerships or wholly-owned candidates. 

Medarex has upcoming presentations May 2-4 at the Morgan Stanley GlobalHealthcare Unplugged Conference and May 22-27 at the CitigroupHealthcare Conference.  It has also recently begun a Phase I clinicaltrial for the potential treatment of Psoriasis and just last week notedsome positive activity in its primate study to potentially treatAnthrax.  Anthrax is a potential win for the company, but its pipelinein Phase II & Phase III studies is what you want to focus on.  Anumber of these could become blockbuster drugs, and Medarex operates asa royalty company that would collect fees if these go to market.

2007 is the potential pivotal year, because it has two BLA’s to befiled this year and next and has numerous updates coming in Phase I andPhase II trials (plus all of the preclinical candidates).  This isn’twithout problems: it is in need of some steadiness in leadership and inits SEC filing history.  We should have more detailed information onits phase II & III studies for melanoma later this year.  The popup in the stock from the Anthrax preliminary results was probablymagnified because traders saw Dendreon go up 200%, but this stressesthe forward "wild cards" that can be catalysts.  The problem is thatthe data, filings, and news may come "later this year" or any of it canbe delayed.  Traders are betting on "later this year" if you look atthe options open interest.

The May CALLS had over 50,000 contracts in the open interest and thesame PUTS were only about 28,000 spread out.  It is quiet for thesummer and in NOV07 PUTS/CALLS, but if you go out to JAN2008 you willsee that the bets are on.  And they are on big time.  Look at theJAN2008 open interest levels:

An at the money straddle ($12.50 strikes) out to JAN08 would run youroughly $5.65 right now, so you don’t have to claim where you think thestock will trade in 8 months to be able to recognize severe volatilityis being priced into the stock.  The "positive Anthrax news" was notpriced ahead of time in last Friday, but that isn’t even one of theimmediate candidates that could be the homerun or flop that traders arebetting on.

We can’t predict that the price action will be anywhere close toDendreon’s move.  It would be reckless.  But what is fair to say isthat if you look at the open interest in the JAN08 PUTS & CALLSthen you will be able to tell that there are many bets that Medarexcould see some of the same sort of anticipated action.  DNDN was"only"pricing in a 50% to 60% move based on last week’s option trading rightup to the stock halt, but that was merely a snapshot and you can’t usethe math as gospel.  That’s what we are seeing here in Medarex with aless certain date. Talk about time value.

We’ll be following up on this one as we get closer and closer and as wesee more news and research this year.  We operate on a two-way streetso any outside data or information that is factual or able to beconfirmed will be welcomed.  This was one we initially saw 10 days agoin a preliminary option screen, and constantly look at many of these tosee if there is value that can be added.

Jon C. Ogg & the 24/7 Wall St. , LLC Team
April 2, 2007

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Dendreon (DNDN) saw much options activity, but that would be expected because of the FDA panel review.  There were some fortunes made and lost on this one.  Of the top 15 options contracts in total trading volume Friday, 10 of the various strike and expiration months of DNDN were there.  This one was so aqctive after the reopen and subsequent 92.5 million shares that it masked some of the other usual options screens.

Brocade (BRCD) saw 22,150 contracts trade in the APR07 $9 Puts.  With the stock still close to its year highs someone is either hedging for 2.2 million shares or they are making a leveraged bet that the good news won’t last.

Traders have some pretty large long-term bets that Vista will be a winner for Microsoft (MSFT) as the open interest in the JAN08 $30 CALLS 337,000 contracts. That represents 33.7 million shares on a fully leveraged basis.  The open interest in the JAN08 PUTS is pretty high as well: $27.50 142,580 contracts; $25.00 156,273 contracts; $22.50 101,299 contracts; and $20.00 222,258 contracts.

Ford (F) has quite a few hedgers and speculators in the options as well.  Out of the 20 largest open interest contracts, 6 of the 20 belong to Ford.

True Religion (TRLG) had much higher than normal options activity as the stock traded 4-times normal volume on buyout rumors.  The company has been a potential “buyout name” for some time, but oddly enough the street wasn’t impresses with its last earnings.  There is also a split in the design area as the CEO and VP of women’s design are calling it splitsville.  Acquiring this company better include the full design team that has made it such a success story since this was as low as under $1.00 in 2004 and now sits at $16.24.

This one may not be the Most Unusual, but BJ Services (BJS) saw 5,648 contracts trade in the JULY07 $30 CALLS.  The open interest in the near-month APRIL07 contracts is more than 50,000 contracts if you combine the $27.50, $30.00, and $32.50 CALLS.  There is still speculation of more mergers being considered in the drillers and service companies in oil and gas, so who knows on this one.

Halliburton (HAL) still has some strange open interest in ARIL07 $40 PUTS/CALLS and it is possible these were either left from the KBR or a trade based on the self-tender.  It is listed as more than 430,000 contracts in each.  With the stock at $31.74 this may have been a large capture trade based on the old KBR spin-out or on the self tender.

Oddly enough, Sirius Satellite Radio (SIRI) is seeing less and less options trading and the LEAPS are much more vacant in open interest than one would guess for such a widely followed and speculated upon stock.  Its merger partner XM Satellite Radio (XMSR) is seeing the same thing.  That is a bit baffling for such a widely followed merger and for such a controversial situation.  The short interest was mostly steady in SIRI in March (123.6M vs. 125.1M in FEB) and grew in XMSR saw its short interest grow (31.2M vs. 28.9M in FEB).  Go figure.

Jon C. Ogg
March 31, 2007

Jon Ogg can be reached at jonogg@247wallst.com; he does not own securities in the companies he covers.