Dendreon Bounces to Life (DNDN)

Was the noise that investors heard this morning the sound of Dendreon (NASDAQ: DNDN) shares bouncing off the bottom?

The Seattle-based biotechnology company reported third-quarter financial results that showed revenues increasing by 21.3% compared to the same period last year. The revenue number of $78 million, however, fell short of the consensus view, which called for $85.8 million. On an adjusted basis, the profit for the quarter came in with a loss $.033, but it did beat Wall Street expectations, which looked for a loss of $0.83.

John H. Johnson, CEO of Dendreon, commented on the third quarter noting, “We delivered strong growth in urology and have continued to improve results in oncology. We are pleased with the progress we’ve made in strengthening our commercial organization.”

For the coming quarter, a consensus of analysts expects the company to lose $0.47 per share, and for the full fiscal year the forecast is a loss of $2.67.

Upon hearing the news, traders and investors leaped out of bed to get an early start on buying shares for the day. The trading day began with the stock opening 49 cents higher than the closing price on Thursday to start the session at $4.24. The stock hit an intraday low of $4.12 in the first 30 minutes of trading. Then the fireworks started. Buyers rushed in before the start of lunch on the east coast and share prices took off for the highs of the day. The stock reached its peak on Friday when traders exchanged shares for $5.10, or gain of nearly 33% from the previous day’s closing price of $3.85. Dendreon shares finished the day with a gain of 16% to close the day at $4.47. Traders exchanged shares at a brisk pace as more than 29 million shares swapped hands, or more than nine times the number traded on an average day.

“Gradual” is not a word that describes the price movement of Dendreon shares over the last 15 months. In August 2011, the company announced it would withdraw earnings guidance for the entire fiscal year due to the failure of marketing and selling of its prostate cancer drug, Provenge. In a matter of days, share prices had tumbled from around $35.00 to $10.00. Since that time, the stock has moved in fits marked by large percentage moves in a short period of time.

Dendreon shares rose over 70% at the beginning of the year to a 52-week high of $17.04. Like water cascading down a series of waterfalls, the stock has declined over the last eight months to a new annual low reached just the other day when shares traded for $3.69. Today’s action was the first positive motion in many months, which might have investors wondering if this is truly a ray of sunshine for share prices, or are more storm clouds gathering beyond the horizon.

Dendreon focuses on developing and commercializing novel treatments for cancer therapies. The company’s main drug, Provenge, is used in the treatment of prostrate cancer. In July, the company announced the layoff of 600 employees at its Seattle, Washington, operations. Dendreon was founded in 1992.

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Published by Alan Masterson

Alan has over 25 years of trading experience in the U.S. equity markets. He began his career in finance working on a program trading desk specializing in over-the-counter stocks. His career progressed from that point to his current position as senior trader on an institutional trading desk. In the evenings, Alan teaches economics at a local community college. He has contributed articles to various publications over the last six years, including feature articles for an economics magazine and various financial blogs. You may contact Alan via his email (alanmasterson@wallstreetpr.com) or his Google+ page (https://plus.google.com/103338576216002376250).

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