So let’s talk Dendreon (NASDAQ:DNDN). It’s a unique play heading into the spring. For those who are not familiar, they manufacture a drug by the name of Provenge which treats prostate cancer. In the spring of 2007 they shot up from around $5 to $20 on the belief of FDA approval. The FDA had different thoughts and wanted to see more info. DNDN collapsed back below $5. The Dendreonites were born. If you want to see something both amusing and horribly pathetic, go to the Yahoo chat room for DNDN. I have never seen so much nonsense in my life.
In the spring of 2009, they returned the results of the latest trial, which hit the benchmark requirements the FDA demanded, and the stock shot up to the mid $20s and has traded pretty much between $23-$30 since then.
But here is where it gets interesting- the FDA has announced they will make their decision on or before May 1st, 2010. The herd believes approval is imminent, which I agree with, but there are no sure things. I take that back- there is one sure thing- DNDN will not be trading $28 in May. If they don’t get approval the stock will tank. If they do get approval you will get a nice rally partially fueled by short covering. The possibility also exists that they have a partner lined pending approval. No major firm will commit billions of dollars to a drug without approval. Regardless, the May 2010 options keep you in the game. Puts, calls, or the straddle- a very volatile situation is lining up with a great deal of profit potential. Take a look.
Disclosure: No position