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Adrian Sciberras
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Accountant by profession, and Part-time Trader. Personal blog: www.scibbytrading.blogspot.com
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  • DNDN is a $7 stock - beware 17 comments
    May 9, 2009 8:41 PM | about stocks: DNDN

    DNDN is committed to raise money. Judging by the annual data of their financial statements, they burn around $70m - $100m per year. That is $25m per quarter. The company has no revenues and they are increasing their job postings. The company right now is probably technically bankrupt as it has only $12m in assets as at 31st March 2009, and despite having a huge cash balance they are all due to be repaid, unless they manage to "convert" the debt into shares which is the idea of the bondholders. Someone has to pay for all this. And thanks to you "long" stockholders, they manage to do this very easily.

    The very recent "Provenge news" pumped up the price so high that the debt holders went short of the stock and cashed out on 2.1m shares (they can never lose, because the conversion price was set at $10, so they only had to play the exact price so as to profit wisely, i.e. by selling over $20). They cover the short by paying $10 per share. The shares are now in public hands. The company raised $21m from this issue, just enough to survive 1 more quarter. Read their SEC filing 8-K dated 4th May.

    Secondly, insiders managed to distribute stock over $20 last week and they unloaded over 1.4m+ shares again, the shares are now in the hands of the public, again! At an average cost of $5-7 the insider profited over $21m at the expense of the public. Dr. Gold benefited most. He has secured his financial freedom with a small piece of news, which is difficult to interpret, it's rather a play on words.

    Thirdly Friday's announcement of a public offering is the string that broke the camel's back. They are going to further dilute the longs, but once again, someone must have taken a net short position between $24-27, just after the news broke out. This short position will be covered at the offer price, again here the shares will be immediately transferred to the public. There is no big institution who is willing to buy the stock, not at this price! Big retail investors who have big money always work in collusion with market makers to increase their capital and profits, and they rarely lose, they distribute stock they don't own before they buy it back! Some uninformed press leaked out the news that the offering was priced @ $19.20 so MMs worked their way to hold that price in a tight range. Longs are holding the stock since the mid-20s and are hopeful that this is the ceiling. They read every piece of news and are so scared of their and want to believe every piece of positive news? Why? Because there is lack of news, momentum traders have already left the stock. Now its in the hands of the MMs who are controlling. The analysts have done their work by getting everyone interested and pumping it. Why was no one pumping the stock when it was at $5. It has traded for a year at that price but no one seemed interested, it was building the base for this news. The really good analysts would have recommended you to buy shares when they were cheap! Not after they are 500% up! 

    Selling was obvious during the whole week particularly on Friday 8th, as MMs were mostly sellers on the day, but they supported the market on purpose at $19.20+ and gave false hopes of an impending ceiling. But I tell you it was another day of manipulation. Because bottoms dont occur with volumes of 7m+ shares. Volume should have dried up by 80%, but the day of Friday shows clearly that the market was feeding shares. If you have watched the ticker on Level 2, you will have noticed big buys at $19.20 and big sells as the stock went above $19.50. The MMs were buying and selling but on balance, they were distributing shares to the public.


    What about the offering price? What will it get? The company does not care about its shareholders. Now that insiders have sold, their interest now is to secure their financial future, i.e. their monthly salaries and bonuses. Since the company has no trading history, and the FDA still is 1+ years away (ability to generate cash flows is very far away), the company cannot survive without raising capital. So they will accept any price pre-conditioned by the short-sellers. Obviously they will negotiate the highest price possible, but they will accept any price even if it is below the market price.


    In my opinion, the future will emerge differently (ugly for stockholders) as the stock is priced for an FDA, which I do believe it is possible although no one has any clues on their % success rate to get the approval, no one questioned that so far.

    I am sure the company can work to improve their chances prior to applying for the FDA next year, but then again the company is a research company and the management has no experience on production or logistics and sales? So the only choice for the company is to be bought out. To get the $2bn in peak sales per year it will take years for that to happen, so I do not believe any big pharma company will pay more than $2bn now for something that cannot be commercialized for quite some time. Not at this time of the market, not without an FDA approval. Who wants to buy a company with so many shares in the hands of the public? What is the interest of the directors to get bought out? If that happens they end up without a job, because they earn their money from DNDN's cash coffers.  

    Just try to figure out the chances of the longs to make money now that the company will have over 115m shares outstanding of which 112m+ (over 98%) in the hands of the public from this and previous offerings. Net book value per share will $2 after the offering, and if you give the Provenge "hope" a more realistic value of $500m (at this stage, because their is no FDA), so Provenge value per share would be $4 per share, therefore I would give the company a fair value of $7 at maximum.

    The technicals are clearly showing that the stock has lost its recent support, and is now back on a downtrend. A picture is worth a thousand worths, so I let you judge by support. In my opinion unless some huge positive news is out next week (which is very unlikely), the support looks deep below.
     
    Technical Analysis showing one month chart which shows rally is over and stock is in downtrend with no support until the early teens, click on link: static.seekingalpha.co...;
      
     
    Now, please tell me how you can expect to make money. Now that's what I call a diluted company.

    Disclosure: I trade for myself, I am not involved in the hedge fund industry, I do not represent any firm, and the article above is not a recommendation to buy or sell shares. Please do your own research before you enter any position. I own May and June puts in DNDN.

     

     

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Comments (18)
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  • gloriason
    , contributor
    Comments (39) | Send Message
     
    FDA approval will come in the first quarter of 2010. Provenge is a first in class prostate cancer vaccine with little to no side effects. Compare that to toxic Taxotere which is the chemo treatment currently available to prostate cancer patients. Scibby you need to learn more about Provenge before trashing Dendreon. This product is just the beginning for Dendreon. Following in the pipeline are vaccines for breast, colon, and kidney cancers. $7 value on DNDN is a joke.
    9 May 2009, 08:59 PM Reply Like
  • oakestate
    , contributor
    Comments (2) | Send Message
     
    If Deutsche Bank is willing to purchase $10 million in shares on Friday, they must know something (i.e. FDA approval for Provenge is coming and its a game changer).. Smart money knows, Scibby simply doesn't.
    9 May 2009, 09:02 PM Reply Like
  • Gaucho
    , contributor
    Comments (895) | Send Message
     
    Wow EVERBODY on this board please note that this guy is what you would call a tool for some hedge fund that is so far under water they are about to go BK. This fool is a good education for those of you who have never seen such blatant manipulation.
    What this hack forgot to mention was the market for Provenge worldwide is around 5 billion a year. Those Seeking Alpha people out there can calculate the price per share given the estimated revenue. Add the 12 other cancer treatments based on the same cassette technology with breast cancer being one of them that has gone through phase 1 trial with great results.

     

    Do not let this fool dissuade you from a revolutionary shift in cancer treatments and the next DNA.
    9 May 2009, 09:09 PM Reply Like
  • Moral Hazards Amok
    , contributor
    Comments (131) | Send Message
     
    (I'm disappointed in the editors of Seekingalpha, who I believed to have better publishing standards than this. "Scibby" is simply a basher on a yahoo message board (user ID "scib2") and this article is simply a copy and paste of one of his recent posts.

     

    "saynothingunlessgood" has easily debunked Scibby's poor attempt at FUD, with his reply noted below.)

     

    "You are pretty unconvincing to an educated professional if he/she can read financials for themselves. Try to reasonable/realistic!

     

    That is, $93mllion is long term debt, $26 million is current and they have $110 in short term investments (read CASH!) Oh, and that was as at 31.03.09 BEFORE they raised $190 million in equity that now can be used to TOTALLY REPAY ALL DEBT leaving the company TOATLLY DEBT FREE and with over ANOTHER US $100 million of cash to operate for at least a year at a burn rate of two times previous rate!

     

    Got this? Hope so. So that we don't have to read foolishness. If you have some real info., please post."
    9 May 2009, 09:30 PM Reply Like
  • Carl Cachia
    , contributor
    Comments (420) | Send Message
     
    Finally, an article that makes sense about DNDN.

     

    DNDN is defintely a manipulated stock. How can you longs be longs in DNDN after what happened 2 wees ago when the pps plumetted from 20+ to 750c.

     

    I have shorted a few weeks ago at 25+, and a week ago at 21. Currently am laughing. I expect it to touch 15 this coming week. Market is topping, so be careful longs. Cash in while you can.

     

    Well done scib for ur insight.
    9 May 2009, 11:28 PM Reply Like
  • 007DOC
    , contributor
    Comments (21) | Send Message
     
    The author is totally ignorant of the "small bit of news". First immunotherpy to market!!!

     

    Provenge is likely to be used earlier than the indication to be filed for.

     

    This author should be ignored as he does not understand the science or applicability.
    10 May 2009, 04:20 AM Reply Like
  • stocwach
    , contributor
    Comments (6) | Send Message
     
    Scibby, you, bottom line, are an idiot. I'm surprised you actually want to post a picture of yourself..loser.
    10 May 2009, 05:13 AM Reply Like
  • Adrian Sciberras
    , contributor
    Comments (20) | Send Message
     
    Author’s reply » Amended article to include a piece on technical analysis:

     

    static.seekingalpha.co...

     

    Just to remind you that the close between Friday and Monday is the exact 2nd year anniversary from which the stock plummeted from $17 to $7 in one day.
    10 May 2009, 07:56 AM Reply Like
  • Borisrevenge
    , contributor
    Comment (1) | Send Message
     
    Ahhh yes because we all know that ANNIVERSARIES for stocks matter. By that buffoonish logic I could go back and argue that GM was trading at $50 a share a decade ago to the date so it must be a great buy!!!1

     

    You are a buffoon.

     

    On May 10 07:56 AM Scibby wrote:

     

    > Amended article to include a piece on technical analysis:
    >
    > static.seekingalpha.co...
    >
    >
    > Just to remind you that the close between Friday and Monday is the
    > exact 2nd year anniversary from which the stock plummeted from $17
    > to $7 in one day.
    10 May 2009, 09:07 AM Reply Like
  • Carl Cachia
    , contributor
    Comments (420) | Send Message
     
    OMG
    these longs will be crying when this touches 10$
    everyone is so long
    me waiting to buy a brand new porsche...

     

    cayman or boxster...advice longs?
    10 May 2009, 09:54 AM Reply Like
  • Day Trader Man
    , contributor
    Comments (4) | Send Message
     
    Scibby Doo Dooo. You are an absolute moron!!! Is that a picture of you living in your mom's basement! Oh, I bet you are still a virgin!
    10 May 2009, 10:58 AM Reply Like
  • Day Trader Man
    , contributor
    Comments (4) | Send Message
     
    Scibby Doo Dooo. You are an absolute moron!!! Is that a picture of you living in your mom's basement! Oh, I bet you are still a virgin!

     

    On May 10 01:51 AM Scibby wrote:

     

    > To reply to all:
    >
    > I am scib2 on Yahoo Msg Board:
    >
    > a) Yes, I am the writer of the article
    > b) No I am not BK or underwater
    > c) No I dont work for any hedgefund
    > d) I am very worried for you longs, because it seems everyone owns
    > the stock, everyone seems long the stock, so how are you going to
    > support it next week? Will you keep buying it?
    >
    > THERE IS NO NEW DEMAND FOR SHARES BECAUSE EVERYONE HAS ALREADY BOUGHT
    > IT. ONCE MMs LEAVE IT ALONE IT WILL FREE FALL.
    >
    > Wait for the SEC filing of the pricing in any moment and next week
    > it will be ugly. Remember what happened exactly 2 years ago. Check
    > the historical price, history repeats itelf.
    10 May 2009, 10:59 AM Reply Like
  • Day Trader Man
    , contributor
    Comments (4) | Send Message
     
    Wow. You are Scibby's only follower besides himself Physio man. I take back the part about Scibby Doo being a virgin. I didn't realize you have been sucking his cock this whole time. Hey man don't get me wrong, I'm all for gay rights. Whatever floats your boat.

     

    On May 10 09:54 AM Physio wrote:

     

    > OMG
    > these longs will be crying when this touches 10$
    > everyone is so long
    > me waiting to buy a brand new porsche...
    >
    > cayman or boxster...advice longs?
    10 May 2009, 01:22 PM Reply Like
  • Carl Cachia
    , contributor
    Comments (420) | Send Message
     
    I will suck his cock anytime if DNDN goes to 7$ as that will mean 78000$ in my pocket baby. And that means a wonderful baby Porsche Cayman. Now go back eating your mommy.
    10 May 2009, 10:19 PM Reply Like
  • fmoonda
    , contributor
    Comments (2) | Send Message
     
    I can't believe that sciby actually has a forum that people are forced to listen to. If this is journalism, I'm afraid for our future. Sciby should be banned from ever writing on any other biotech and possibly on any other stock, EVER! His analysis of the company was at best a 3rd grade level. I am sure my 4th grade son can do a much better job, I guarantee it. Scibby please refrain from ever writing on this subject again and forcing us to read utter trash.
    10 May 2009, 11:09 PM Reply Like
  • Day Trader Man
    , contributor
    Comments (4) | Send Message
     
    Dip shit. If this stock goes to $7. I will buy you the Porsche myself. Now head to the bus stop so you wont be late for work at McDonalds. Also tell your girlfriend Scibby Doo to lay off the Big Mac. Who knows maybe Dendreon will come up with a drug to help fat people. I'm sure you & Sciby will be big share holders then. See you at $60 in a few months!

     

    On May 10 10:19 PM Physio wrote:

     

    > I will suck his cock anytime if DNDN goes to 7$ as that will mean
    > 78000$ in my pocket baby. And that means a wonderful baby Porsche
    > Cayman. Now go back eating your mommy.
    11 May 2009, 07:19 AM Reply Like
  • Krapbuster
    , contributor
    Comment (1) | Send Message
     
    Author Scibby is an IDIOT- BEWARE! DNDN Longs eating Sciby for LUNCH LMAO!
    11 May 2009, 02:27 PM Reply Like
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