Dendreon Gets Another Analyst Thumbs-Down

I know I blogged as recently as last week that I thought there wouldn't be much reason to write about Dendreon (DNDN) for awhile, but I couldn't help myself when I got an email Wednesday night from Merriman Curhan Ford, which is launching coverage of DNDN with a "Sell" rating.

I am doing so at my own peril since I know I'm going to take it on the chin from the Dendreonians for even calling attention to an analyst's bearish position on the stock.

Baby biotechs like Dendreon typically get little, if any, analyst coverage so on that level alone you could argue it's worth at least this brief mention.

The analyst, Joe Pantginis, is initiating coverage of a handful of biotechs, but DNDN is the only one in the bunch that he's telling risk-averse investors to stay away from. In the research note to clients titled, "All Dressed Up with Nowhere to Go," he writes, "We believe the stock has been too emotionally charged from both an investor and political standpoint and we would avoid the shares at this time."

Pantginis has several reasons for his recommendation including potential competition for DNDN's prostate cancer drug Provenge (should it ever make it to market) that will limit its sales potential, the price of the treatment (he throws out the "common estimate" of $75,000 for the three infusions) and his belief that Dendreon will have a difficult time attracting a corporate partner to sell the drug outside the U.S.

Update:

Part of Joe Pantginis' thesis on Dendreon is that a prostate cancer drug called GVAX from Cell Genesys would be better and cheaper than Provenge. But yesterday morning CEGE announced it's abandoning the late-stage clinical trial of  that treatment because it had such a small chance of success.

But the lynchpin of his argument is the final Provenge test results that the company says are due out around the middle of next year. "If the...data does not replicate the earlier debatable 'survival' data, we would expect the stock to be down 60-70 percent (on the first trading day following the release of the results," Pantginis writes. But on the flip side he places 50-50 odds on the clinical trial being a success. "We believe a positive...outcome could significantly drive the stock forward. (But) we believe this singular event does not warrant owning the shares (except for very short-term oriented investors who want to bear the risk)."

MCF makes a market in DNDN.

Comments

[dougout:]

Mike, please remember who's really taking it on the chin when another analyst piles on against Provenge's prospects. It's not you. The primary victims are the people with prostate cancer and their families and friends, who would prefer access to a breakthrough cancer therapy that almost certainly works (the remaining question is to what extent it works), is certainly safe, and has no significant side effects. Secondary victims are those with cancers other than prostate, that Dendreon is working on, who must wait much longer for their immunotherapies, because of the costly delays in getting Provenge approved. The third set of victims, admittedly far less penalized than the medical victims, because "it's only money," are the Dendreon shareholders. Every investor must accept the possibility of an investment gone bad, but it's frustrating how the plague of naked short selling, artificial "management" of the stock through gigantic option open interest, and extensive and documented financial conflicts of interest within the FDA and a few of its consultants, have all combined to keep the financial benefits limited to the short sellers and short-term traders.

How to crush innovation and hope? Just watch what's going on at the FDA and in the stock market, with Dendreon. How to help? Don't whine about taking it on the chin. Instead, present the truth, and keep presenting it. Give your readers the links to the conference call announcing the interim results, which shows Provenge works, and that based on similarities between this and previous trials, the odds are better than 50/50 that it will be approved in mid-2009. Give them the history, showing how the FDA took the unprecedented step of going against its own advisory committee, to deny approval of Provenge, and how the FDA commissioner made great speeches about the golden future of individualized immunotherapy, and then proceeded to allow it to be stomped on. Tell them about the 30-million share short interest in DNDN. In other words, Mike, give your readers the amazing context surrounding Dendreon medicine and finances. I know you can do this. You have in the past, and we hope you will now and in the future. Thanks.

2008 Oct 17 09:46 AM

[cposch:]

What Mike Huckman didn't report is this: that Joe Pantginis left (or was fired? - more on that later) Cannacord Adams where he had a similar rating on DNDN. Pantginis didn't just "pick up" coverage - he merely took the rating he had when he left Cannacord and transfered it over to Merriman. This makes me wonder if Cannacord is even covering DNDN at this time - perhaps a new analyst at Merriman resumed covered after he left. So, Pantginis rating is nothing new, and Huckman should have reported this if he did his due dilgence (instead of crying to get on the nerves of rabbid DNDN fans).

But, facts are facts: Pantginis said CEGE's product was superior due to trial results and stated CEGE would be approved before DNDN's product. He also said CEGE was a buy and recommended this stock to Cannacords institutional investors. Perhaps the following is why Pantginis left Cannacord:

CEGE's stock is now trading at .18 cents because the results of their trial showed they would essentially fail. CEGE is now exploring strategic asset sales of the company (not a good sign the company will remain a viable entity for an extended period of time, IMO). CEGE's business was this one product that they abandoned yesterday.

So, Pantginis is recommending clients buy (as of Friday) a company that now has no product, no future, was trading at $3 recently, and is now trading at .18 cents and is now exploring asset sales of the company, while he says DNDN is a sell, and has an inferior product.

Pantginis is a joke, and Huckman should have done his DD before reporting this.

2008 Oct 17 12:10 PM

[stockresear...:]

Dougout I agree with you 100%

2008 Oct 26 12:56 PM