The Kennel

Dendreon: Revisiting the Risk/Reward Scenario

We rec'ced Dendreon back on 10 Jan 07 (stock closed at $4.01) and have held ever since. We believe the odds of full FDA approval by 15 May or shortly thereafter - probably with the condition that 9902B be fully enrolled and completed - are better than the odds that Provenge really works...and the FDA biostat guy set those latter odds as 39-out-of-40. We believe the FDA want to approve Provenge and open the door to immuno therapies. (We also believe that not approving it here would be wrong, considering that thousands of prostate cancer victims who might be helped by Provenge will certainly die between now and 2010 without it.)

Having said that, I am constrained to admit that, in the unlikely event we should get an approvable letter dependent on positive results of 9902B, then I expect the stock will go MUCH lower than $15. It will be 2010 before those results are known. By then Dendreon will have been forced to dilute to raise cash to survive, the competition will have three years to catch up, and there remains that risk that Provenge actually doesn't work. We would be lucky to stay north of $2, imo.

But then we don't expect to be testing that theory in this dimensional universe.


Brad Hessel (personally long DNDN common and LEAPs)
Manager, The Kennel