On Wednesday, November 16, investors watched as Antares Pharma (AIS) and Dendreon's (NASDAQ:DNDN) respective share prices pop. It may not have seemed like there was a reason but investors (against popular belief) do not send stocks higher for fun. So, you may ask, why did these stocks rocket higher?
First off, Antares' share price was in the red for the first 10 minutes of the trading session. After this, the share price gapped up 7.11% over the next 62 minutes. Once the gap closed the share price moved right the rest of the day. The share price slowly crept higher 2%-3% throughout the day, but this did not last as the stock closed 7.11% above Tuesday's close.
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Dendreon on the other hand gave shareholders a roller coaster ride. After cruising in the red until 12:59 PM EST, the share price exponentially jumped 12% in nine minutes. This led to the stock being halted for five minutes as regulators needed time to digest what happened. This kind of volume and share price movement is usually seen during times of FDA or developing treatment news that investors were not expecting. After this pop the share price slowly slid and ultimately finished 5.8% higher including after hours trading.
Why did this happen? Answering this question for Antares is more simple than Dendreon. Antares' share price could have popped due to three reasons. First off, Biosante (BPAX) announced positive pharmacokinetic trial results for Libigel. These results have been expected and investors have kept the share price inflated in anticipation. Therefore once these results were released it gave investors a reason to send the stock higher. Similarly, Biosante's share price jumped almost 8%. The difference is Biosante was never in the red, therefore there may have been another reason for the Antares pop.
A second reason could be the expectation of Libigel's phase-three efficacy trial results; which are due in December 2011. Antares has hinted that the efficacy results are positive, but no official release has been given. The final reason is Antares' December 8, 2011, PDUFA date for Anturol because investors are likely to begin taking positions on the Anturol PDUFA date with a few weeks prior to the decision. All three reasons could have been the main cause for the pop.
Dendreon on the other hand is a different story. The share price and volume popped at an exponential rate with virtually no news at the time. One event that comes to mind is the Lazard Capital Healthcare Conference. But Dendreon presented Tuesday morning before the market opened. There are two alternatives that could have made the share price pop: 1) an institutional buyer purchased a large portion of Dendreon shares and this will not be disclosed until the end of the fourth quarter or next week, or 2) Dendreon may have disclosed information regarding future treatments at the Lazard Healthcare Conference on Wednesday during a casual conversation that led to an immediate avalanche of buying.
Both company's stocks may have popped, but how should investors manage these two unique situations? The answer should be fairly obvious. Antares should remain a long-term buy, and a possible 2-3 day short; while Dendreon should remain a long-term hold or sell and certainly and 2-3 day short.
Antares continues to be a long-term buy because the company has major catalysts coming up in the next 1-12 months. It is important to note these catalysts could be a turn for the worse, but at this stage there is no evidence that suggests Antares stock will plunge on bad news. On the other hand the stock is definitely a short-term short. After today's pop investors will take profits as the macro-economic situation continues to deteriorate.
Dendreon, however, does not have any catalysts in the near future. Dendreon has strong treatments in the company's pipeline, as it outlined at the Lazard Healthcare Conference, but nothing in the near future. On the other hand Dendreon can make up for the loss in share price if Provenge sales recover, but this will take time. And the more time it takes the more 52-week lows Dendreon's share price will create. In the short term, it should be obvious Dendreon should be shorted. The share price has already began a steady decline and this will continue for several days.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.