Not a Healthy Bet

According to a filing with the Securities and Exchange Commission (SEC), Deerfield Management controls 7.9 million shares of Dendreon (DNDN), a biotechnology company. James Flynn manages Deerfield, which is a healthcare focused fund. According to our database of 13F filings, it had not owned any equity in the company at the end of September (see its top stock picks here). Dendreon's market capitalization is only about $870 million, but on average, more than 4 million shares have traded per day in the last three months. The current stock price is about $5.75. This suggests that investors have plenty of dollar volume to enter and exit any positions.

Dendreon's current products and products in development focus on treatments for a variety of cancers. The stock has declined 84% in the last two years, with a large collapse in the price coming in August 2011 when it became clear that Provenge, its lead product, would come in far short of sales expectations. Provenge is still Dendreon's primary source of revenue as sales of the drug did increase by 21% in the third quarter of 2012 compared to the same period in 2011. However, net losses have been more or less unchanged and the revenue increases have been offset by cost-of-product revenue as well as ongoing restructuring, contract and impairment charges. Some of these restructuring charges are a result of cost reduction initiatives. For example, Dendreon will be closing one of its three Provenge production facilities. In the first nine months of 2012, Dendreon lost $2.39 per share, compared to $2.58 per share at the same point a year earlier. The company has underperformed earnings expectations and so the stock is down 51% in the last year....309 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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