Dendreon drama: Gains are holding strong
Today's Financial News - Posted April 29, 2009
It is a good day for Wall Street and an even better day for Dendreon shareholders. Thanks to the Fed staying put and some good news about a cancer drug, investors have plenty of reasons to smile.
By Andrew Snyder, TodaysFinancialNews.com
Baltimore – (TFN): Wall Street likes few things better than a government report that says, “We ain’t touchin’ nothing.” The more Washington stays out of the equities market, the happy investors will be.
That is exactly the case this afternoon as the Fed emerges from its latest huddle and says , “The pace of contraction appears to be somewhat slower.” Even better, it is taking no action, leaving target rates right where they are. The best news of all, however, is that Bernanke has not decided to print any more money.
Investors across the board are celebrating as the indices surge today, but few investors are breathing a bigger sigh of relief than Dendreon (NASDAQ:DNDN) shareholders. After some rogue trades and a halt to trading yesterday afternoon, the biotech’s investors were left wondering if their huge monthly gains were going to vanish even faster than they came.
If you have not been following the Dendreon story, here’s a quick summary. On April 14, the company told Wall Street its prostate-fighting drug, Provenge, proved to increase survival rates. It did not give many details, however, telling investors to wait until April 28.
Between then and now, shares surged by over 250%. But then came yesterday’s highly anticipated announcement. As shareholders wondered how good the official results would be, the stock suddenly plummeted, the whole way down to $11.81, down 69%. Even worse, NASDAQ halted traded.
It was enough to make even the steadiest of investors beg for a stiff drink.
Celebrate with a drink
Fortunately, it turns out there was nothing to worry about. NASDAQ looked into the trades under its “clearly erroneous” rule and decided to let the two minutes worth of ultra-low trades stand. Meanwhile, after today’s opening bells, shares were right back in range with yesterday’s action.
The company’s Provenge announcement was in line with expectations. While far from a cancer cure, the drugs ability to extend the median prostate-cancer patient’s life by 4.1 months is considered a great success by the industry.
If you missed out on the spectacular triple-digit run this month, do not buy shares of the company today expecting to cash in on the tail end of the action. Shares of Dendreon have gotten a lot of attention over the last month and will likely shed some points if the overall markets show even a hint of weakness over the next few weeks.
When investors cash in their gains and share price dips, that is the time to buy. Look for buying opportunities below $19 per share.
Sure, the nation’s GDP dropped by a significantly stronger-than-expected 6.1% last quarter, but that’s old news already. The markets are way past caring about actual economic data. Wall Street merely wants Washington to stay away. As long as that happens, like we have today, the markets will be happy.
For the first time in a long time, we can thank Washington for putting some extra dough in our accounts today.
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