Biotech investors will be well-aware of the Dendreon (NASDAQ:DNDN) story – its rise to glory from 2009 to 2011 and subsequent fall from grace over the last year and a half. The stock was punished by investors following the commercial short-comings of its much-hyped prostate cancer therapy Provenge, which never produced the multi-million dollar sales that many had been expecting in its first year on the market. DNDN finally found its bottom in November of 2012, bouncing off of support around $4.00 before beginning a move higher in the two subsequent months; shares are up roughly 50% since and gained 15% in the back half of this week.
Dendreon is one of biotech’s most controversial stocks, with valid arguments in both the bullish and bearish camps. However, with earnings set to be released in late February (assuming that Dendreon keeps to its historical pattern), investors will have to wait until then to have an update regarding the company’s core business. However, Dendreon has reported a key piece of news, which combined with the company’s immense short interest (30% of float), is likely to have played a key role in driving the company’s stock higher recently. On December 20, Dendreon announced that it had sold its New Jersey manufacturing plant to Novartis Pharmaceuticals (NYSE:NVS) for $43 million, giving the company’s balance sheet an immediate boost. Dendreon ended Q3 2012 with $445.069 million in cash & investments, and with operating cash burn totaling $154.582 million for the first 9 months of 2012, an infusion of cash is a positive step in the new management team’s plan of turning the company around.
Dendreon is also set to present at JPMorgan’s healthcare conference on Monday, January 7, at 3:30 P.M. Pacific time, and with Dendreon closing up 3.8% on volume of well over 7 million shares on Friday (compared to average daily volume of around 4.2 million shares), its possible that traders are anticipating upbeat commentary from the company during its presentation. That sentiment, plus a number of bullish Seeking Alpha articles, likely helped to lift shares in the new year. We note that for the last few years, the JP Morgan conference has resulted in a slight rally for the healthcare sector. You can read our previous coverage of DNDN by clicking here.