By Elliot Turner
In afterhours trading Wednesday, shares of Dendreon (DNDN) went on a roller coaster ride that saw prices drop from its closing price of $33.39 to below $30 in a matter of minutes. Within the next half hour the stock once again reached its closing price and proceeded to trade all the way up to $33.89, up $0.50 cents from the day’s close. On what other stock would you see the following two articles posted within minutes of each other? The first sent Dendreon on its wild plunge:
- Dendreon’s Provenge questioned in NEJM–a story about how an editorial in the New England Journal of Medicine (NEJM) questioned Provenge’s efficacy.
- Dendreon Gets Some Respect–an article about how the very same NEJM laid to rest any lingering doubts on Dendreon’s Provenge ability to treat prostate cancer.
So the ominously titled article, written by Adam Feuerstein over at TheStreet.com, came out moments before the real news and led to an instantaneous 15% haircut in Dendreon’s shares afterhours. Meanwhile, two minutes later, the real news reached the press. NEJM not only did not question Provenge, it turns out that the NEJM wrote a very respectable review about the results from Dendreon’s trial. According to Matthew Harper at Forbes:
Seeing the Provenge results in black and white in the New England Journal is likely to clear up lots of remaining doubts. It helps that Philip W. Kantoff, a well-respected prostate cancer researcher at the Dana Farber Cancer Institute, is the study’s lead author.
Although the contrasts in the headlines are striking, they are unfortunately far from unusual in Dendreon. In terms of medical treatment, the “old guard” of medicine tends to look cynically at new, different forms of treatments. That alone generates an inherent emotive element to what Dendreon does. But that’s only part of the equation. For years now there has been a substantial short interest in the stock and a gross amount of misleading news stories and drastic fluctuations in the stock’s price.
Either Feuerstein and TheStreet.com are fed their news from sources who have a vested interest in manipulating Dendreon’s share prices, or Feuerstein did not do his research. To proffer an editorial as news, in which Feuerstein acknowledges that “none of the criticisms leveled…are particularly new or surprising,” makes his article headline both misleading and questionable ethically.
Disclosure: Long shares of DNDN