Why Did Dendreon Execs Cash Out on Friday?

May. 5.09 | About: Dendreon Corporation (DNDN)

Whenever a politician, government agency or company puts out news late on a Friday, chances are it probably isn't good or it's stuff they'd like to just slip under the door. That's when they like to dump stuff that will usually get less attention over a weekend news cycle when readers/viewers are distracted and/or catch reporters after their deadlines. Of course, they'll deny the ulterior motive, but it's a tried and true media relations practice.

So, should investors be all that surprised that Friday evening, May 1st, Dendreon (NASDAQ:DNDN) revealed that eight top execs and Directors unloaded a bunch of stock on April 29th and 30th, the two days following the release of the positive test results on the company's prostate cancer treatment?

CEO Dr. Mitchell Gold cashed in more than half a million shares. He's now a multi-millionaire. But the windfall is raising at least a few eyebrows. One shareholder emailed me saying, "This is kind of annoying if you're a (Dendreon) bull." However, these guys have probably been out of the money for years. I did a quick search and couldn't find any previous stock sales by Dr. Gold. And given the unpredictable, rocky history of Provenge, can you blame him/them for pocketing some cash after the huge run-up in the shares? I'm not making a judgment call there, I'm just raising the question.

Is it a signal about the fate of Provenge and the company? Based on their recent commentary, analysts would answer that with a unanimous "No." They all seem to think that FDA approval of the treatment is all but certain and that Dendreon's attractiveness as a partner or takeout target has gone, or will go, way up.

According to the company's proxy statement Dr. Gold received total compensation of $1.6 million last year. His package dropped slightly in 2007 to $1.23 million from $1.29 million in 2006. The statement also says Dr. Gold has (or had) as much as a 1.5% stake in the company. Wouldn't investors have more cause for concern if it turned out the CEO and others tried to thin their holdings (not that they could have) during that frenzied, two-minute cliff-drop last Tuesday before the data came out?