Dendreon Massive Pre-Market

Dendreon (DNDN-NASDAQ) won big yesterday after receiving panel backing from the FDA for Provenge for the treatment  of advanced prostate cancer.  The stock has reopened for trading just a few minutes ago and the prints are amazing.  The prints have been all over the place, but as of 7:15 AM EST after it has been open for a few minutes the stock has shown more than a 200% rise.  Shares closed Wednesday at $5.22 and were halted all day yesterday.  The prints look to be around $16.00 but there looked like tehre were prints as low as $13.00 and as high as $18.00+.  Who knows exactly where this one will be by the open, but part of the reason for the meteoric rise outside of the news itself is the short sellers and the options traders.  The open interest in the April and May option contracts was more than 300,000 contracts on a net basis and the March short interest grew to more than 26.4 million shares versus 20.3 million shares in February (so now more than 32.4% of the float).  Needless to say, there are some short sellers getting kicked in the shorts this morning.  You can see a summary of the transcript of the conference call the company gave last night here with the Q&A from analysts.

Here was our conjecture on the call:  As far as any conjecture on analyzing how the company didon their answers, this is fairly easy.  I re-listened to the conferencecall to make sure on this, but all in all the company handledeverything they could quite well.  They were very straight and to thepoint on most of these, even though some of these answers wererepetitive.  There were not any classic tells shown of lying or highlyselective omissions made by management.  There is obviously not ariskless transaction, because there never is.  But all in all it sureseems like the company and the community would seem to agree that thisPDUFA date of May 15 will go in favor of the company.  Is that anassurance?  No way.  The FDA does some strange things sometimes, andlately they seem more and more that way.  Prostate cancer patients havemore likely than not just made a new friend, and because of that thereare some pretty happy investors today.  Be sure to watch out for asecondary offering at some point, because while the company did putthat off a bitthey did say that they will need more cash to ramp everything up toproceed.  And companies can change their stance quite rapidly,particularly if they get a massive jump in their stock prices.  Watchout for this one tomorrow, because with the 200,000 to 300,000 of nearmonths’ expirations (April & May) open interest and the massiveshort interest of more than 30% of the float this one is going to bewild Friday.  Does window dressing matter for that day? Maybe.Dendreon (DNDN) shares did not reopen today, so the trading will resumeFriday.  There is a chance that you can track this on Friday muchearlier than would normally be available because the stock doesactually trade in Germany under the "DNR" ticker in Frankfurt, BUT youwill have to verify all that data and pricing for accuracy since almosteveryone in the U.S. has delayed quotes for Germany.  OK, it’s been a15 hour day on the desk, so good night….. and congratulations toDendreon and to advanced prostate cancer patients hoping for one morepossible treatment.

Jon C. Ogg
March 30, 2007

Jon Ogg can be reached at [email protected]; he does not own securities in the companies he covers.