Dendreon (DNDN) is a biotechnology company that focuses on developing cures for cancer through new and previously unheard of treatments. Dendreon hopes to find more treatment options for cancer patients to reduce the stress caused on the body by current chemotherapy and radiation treatments, as well as its costs. The company's goal is to develop active cellular immunotherapy products, drugs that will initialize an immune response to the cancer and allow the body to fight it naturally. This method would be much healthier and easier on the body than most current treatments are today.
Dendreon has been taking large blows in the stock market, particularly after a failed launch of Provenge decimated stock price. The launch should have gone smoothly, but a plethora of unforeseeable complications arose the limited the release, causing share price to plummet $4 on November 2cd and 3rd, and remain at below average levels until January 6th. After January 6th, however, the price climbed until February 24th when it again dropped, but remained above the previous average.
Dendreon has a market cap of $1.49 billion. However, it is unclear whether this will remain; stock price has been on the rise after the Provenge fiasco, but now investors have a new worry - a fearsome competitor. According to one investment blog, Johnson & Johnson (JNJ) has taken the stage with its drug Zytiga.
As this drug is already on the market, it has a leg up on Provenge already. In addition, Zytiga defeated Provenge in an unmasked trial. According to Bloomberg Businessweek, "independent monitors said J&J's medicine was so effective it should be given to all patients in a study." Needless to say, Dendreon is caught between a rock and a hard place - the troubles the company might face could be immense as it tries to rebuild its stock and hold ground against competitors.
One of the main obstacles that faces Dendreon is the manner of treatment involved with Provenge - it is a $93 thousand infusion therapy. Even with insurance covering a huge part of that cost, it is vastly outside many normal budgets. Even so, should Provenge show effective results in the future, the cost may be worth it, and its demand and value may rise. This isn't something investors should rely on, however, as it is the opinion of this writer that things look bleak for Dendreon. I am not one to give up on a company before giving them a fighting chance, however.
Dendreon still has a head-up on one of its competitors, an up-start known as Northwest Biotherapeutics (NWBO). The company is still in its developmental stages, and is currently trading shares at less than a dollar per share. With a market cap of only $49 million, Northwest Biotherapeutics isn't much threat to Dendreon, but holds the potential to give some healthy competition that could increase both company's stock price. Northwest Biotherapeutics has the same goal as Dendreon in mind: to develop drugs that trigger an immune response to cancer, allowing the body to fight it without much outside help.
Another competitor, Progenics Pharamceuticals (PGNX), is a more dangerous threat. With only the marginal difference that exists between it and Dendreon stock, Progenics has a chance of pulling ahead and surpassing Dendreon. Progenics stock has been steadily increasing in price over the past several days, and maintains a stable average of around $10 per share. In addition to this, a new medication that has shown significant results is planned for release for mid-2012 which could cause Progenics stock to steamroll over Dendreon stock in value. Investors should keep an eye on this company.
Sanofi (SNY) may be Dendreon's largest competitor, the giant tower that Dendreon aspires to reach. Sanofi's goal is broader than Dendreon's; instead of focusing on a specific field such as oral anti-cancer treatments, Sanofi covers a larger field that includes treatment of numerous diseases, as
well as prevention of new diseases to come. The company is currently trading shares at nearly four times what Dendreon is trading at. Sanofi's market cap is $101 billion, and the company shows no signs of deteriorating soon. Sanofi's stock is back to its average after a recent spike, however.
With these four competitors in mind, what should Dendreon investors do? I feel the appropriate approach is caution; I cannot in all conscience tell you to invest in a company that is in such a risky situation, but there is an alternative, if you are a gambling investor.
Take charge of Dendreon stock now, while it is still low. If the company is able to turn its situation around and come out on top, the stock will increase in value and be worth far more than it currently is. Dendreon is struggling to stabilize itself, and with its past history, there is a decent chance the company will succeed. If this happens to be the case, then investing in Dendreon might not be such a bad choice.
The future is unclear for the company, but investors do not have to worry so much. With so many upstarts and potential money-making giants emerging within the field of biotechnology, investors have a wealth of opportunities to profit from. In addition to gambling with Dendreon, keep in mind the other companies listed in this article. Johnson and Johnson, Sanofi, or even Progenics with its extraordinarily cheap stock price - the only place to go is up with that company.
It is easy to be cautious with stock; no one wants to lose money, after all. But taking a gamble now and then may pay off in the long run.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.