The Strange Case of DNDN!

Discussion in 'Stocks' started by stonedinvestor, Apr 11, 2008.

  1. Mining biotech for ideas is a lot like trying to leave the mob.... they keep pulling you back in... havinmg spent many years tied up with Provenge and DNDN I am numbed to the point of not caring. But since I made such a hoopla over Antigenics selling stock where the price was, I must talk about DNDN's strange deal with a " mysterious " investor. First though some of the inside turmoil--

    Lawmakers and citizens advocates have questioned whether two members of the FDA's advisory committee who opposed the approval of Dendreon's prostate cancer treatment - Howard Scher of the Memorial Sloan-Kettering Cancer Center and Maha Hussain of the University of Michigan - had conflicts of interest. Among them, Scher was advising a venture capital firm that owned a stake in Novacea, which was developing another prostate cancer drug. Pharmalot reports that Schering-Plough pulled out of a collaboration with Novacea Wednesday, after a clinical trial found there was a higher death rate among patients taking Novacea's therapy, compared with those taking a standard treatment.

    Now the financing -Dendreon raises $46 million from unnamed investor


    Dendreon Corp. of Seattle said Thursday that it would raise about $46 million from the sale of stock and warrants to an unnamed institutional investor -- an amount that the biotech company said would ensure that it would have more than enough cash to bring its prostate cancer treatment Provenge to market, even if federal approval stretches into 2009.

    The deal surprised the company's many watchers, both because there was no indication that Dendreon needed to immediately raise the additional money and because of the deal's unusually favorable terms.

    The institutional investor, which asked Dendreon not to disclose its name, will buy 8 million shares of the company's stock at a 17 percent premium to its closing price Wednesday. In addition, the investor will purchase 8 million warrants that the buyer can exercise at $20 -- a price that Dendreon stock reached only last spring when it appeared that Provenge was headed for approval. It has since dropped precipitously.

    Greg Schiffman, Dendreon's chief financial officer, said that the institutional investor approached Dendreon to make the transaction.

    "It's an institutional investor that certainly has an interest in the biotech space," he said. In a follow-up e-mail, Schiffman said that the investor had indicated to Dendreon that it was long on the stock and that it already owned shares of Dendreon in one of its funds.

    Schiffman said that the premium the investor was willing to pay indicated that the "investor was really bullish on the (Dendreon) story."

    Last May, the Food and Drug Administration said that Dendreon had to provide additional clinical data demonstrating Provenge's impact on patient survival before it approved the therapy. The company has since completed enrollment in a trial that Dendreon hopes will generate the additional data the FDA asked for. Interim results are expected later this year.

    The FDA indicated that if the interim results are positive, it will once again review Provenge for approval. Otherwise, Dendreon will have to wait until the second half of 2009, when final results are expected.

    Dendreon's Schiffman said that the influx of money would give Dendreon enough cash to fund its operations even if the interim results are negative and the company has to wait the additional year.

    Schiffman said the company had access to an equity credit line but knew it would have to raise more money at some point if interim results weren't successful.

    As of Dec. 31, the company had roughly $120 million in cash, cash equivalents and short- and long-term investments, although it also can borrow money. Dendreon has said that it will spend about $80 million this year.

    In a statement, the company said it also would use the proceeds from the new investment -- which amount to roughly $46 million, after fees -- for a variety of purposes, including possibly to "acquire complementary technologies or products, although we currently have no agreements or commitments in this regard."

    Schiffman said that the language was standard and that, although the company is "always paying attention to what is happening in the market, there is nothing specific."

    David Miller, the president of Biotech Stock Research in Seattle, said he was surprised by the deal.

    "I figured they were done raising money," he said. "If somebody wants to give you money on decent terms, why not?

    "The fact that they have additional money means they will be able to accelerate preclinical programs, which we like."

    Investors applauded the transaction Thursday, despite the fact that the deal will add 8 million shares to Dendreon's float and therefore dilute its holdings. The company's stock increased almost 4 percent, or 20 cents, to close at $5.28 on the Nasdaq Stock Market. After hours, the shares jumped more than 8 percent.

    Jon Najarian, the co-founder of, who said his company tracks unusual movements in stocks and options, said he bought 17,000 of Dendreon's shares Thursday.

    "Because of this financing, Dendreon could be in a better position to renegotiate their future," Najarian said. He said that he typically purchases Dendreon shares when they dip to $5 and sells at $7.

    Well here we go the optionmonster has bought 17,000 shares.... so against my wishes, DNDN is back on the stonedinvesting bio dartboard .~si