Dendreon Tames Short Sellers, Transforms Itself into Old-School Buy-and-Hold Stock

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of a company transitioning toward a more mature, commercial phase, like Cambridge, MA-based Vertex Pharmaceuticals (NASDAQ: VRTX) did earlier this year.

“Having an investor base that wants to work with you is valuable—having a long-term, focused shareholder base supporting the company is important for meeting capital needs,” Schiffman says.

The results of this effort to tame the Dendreon shareholder base have been striking so far. Volatility is down since the Deutsche Bank financing closed on May 13. Shares have steadily climbed from $20.46 that day to $25.49 at yesterday’s close. More than 21 million shares of Dendreon were held in a short position on April 15, out of 100 million shares outstanding in its most recent quarterly report. The number of shares being sold short was almost cut in half over the next two months, down to about 12 million shares, according to data compiled by NASDAQ.

Trading volume has come down quite a bit as well. About 9 million shares a day of Dendreon changed hands over the past three months, but that has dropped to 6 million in the past 10 trading days, according to data compiled by Yahoo Finance. That’s still providing enough liquidity so that big investors can get into a stock without driving up the stock price—an important feature to many blue-blooded funds—but isn’t anything like the superheated environment of the past two years. It was so wild in 2007 that Dendreon, a little company of 200 employees with no products on the market, was the second-most traded biotech stock on the entire NASDAQ that year, behind Amgen, the world’s largest biotech company, which had more than $14 billion a year in revenue.

One of the curious byproducts of this transformation is that Dendreon is now getting a lot higher-caliber questioning from investors. Instead of spending hours of meetings … Next Page »

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3 responses to “Dendreon Tames Short Sellers, Transforms Itself into Old-School Buy-and-Hold Stock”

  1. Steven says:

    From Schiffman’s quote…

    “We have the potential to become a large biotech company. We have 100 percent ownership of our lead product candidate, and we have a platform behind that with many more opportunities,” Schiffman says. “I don’t think we ever should have had the drama that we had the past two years.”

    Luke, Again thanks for the even handed reporting. Just the facts is all I want and I got them in this article.

    So tired of the rif raf….!

    Amgen partnered Epogen world wide including the U.S. and didn’t know what they had until the cancer application was discovered. They fought with J&J for years in court.

    ICOS partnered world wide and IMHO gave up the store to LLY who eventually bought ICOS for a song and left an empty parking lot in Bothel where once a good company stood.

    Imunex had a blockbuster,Embrel, for rheumatoid arthritus that they couldn’t produce in quantity…and therefore could not remain independant.

    Dendreon may have learned from the mistakes of the past. They wish to own all the rights to Provenge in this country and they will be able to manufacture all the Provenge they will need.

    Some interesting possibilities for little Dendreon, that company that never gave up when many others might have.

    Thanks again…Steven

  2. Steve, you make a very astute comment about stumbles that Immunex and Icos made that led them to end up getting acquired rather than remaining independent. Dendreon is in a rare position as a biotech to still be holding onto 100 percent ownership of a drug with $1 billion U.S. sales potential, that has passed Phase III clinical trials.