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Pharma's Market
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] announcing positive test results on its controversial prostate cancer drug, Provenge, at an oncology conference in San Francisco. And the volatile, little biotech stock was once again trading higher in the wake of a selloff yesterday afternoon on the news we broke about Congress refusing to hold a hearing into the Dendreon saga. The volume was heavy again, too. But it looks like it wasn't the data that might have been causing a bit of a short squeeze in the shares today.
Dendreon has a huge short position. In other words, investors who are betting the stock goes lower. And when there's news that sends the shares higher, those investors have to run to cover their short positions, so they don't get left holding the bag.
Paul Latta, a biotech analyst at McAdams Wright Ragen in Seattle, covers companies primarily based in and around the Northwest. He was telling clients today that the Provenge data is "repackaged" and wasn't news. Latta pointed out what is news is that Visium Asset Management in a Securities and Exchange Commission filing that showed up today at www.sec.gov, has taken a 10 percent stake in Dendreon.
That filing from the New York hedge fund is dated February 12th, but it only appeared online today. The delay isn't unusual. And then, coincidentally, just as I was checking out the filing and reaching out to Visium for comment another filing showed up. This one's from Morgan Stanley which reports that as of Dec. 31, 2007 it took a 6.5 percent stake in DNDN. I called Visium for comment.
The Chief Compliance Officer, Mark Gottlieb, answered the phone and told me the firm has a policy about not talking to the news media--not a surprise. He confirmed it's a hedge fund and I told him I just wanted an explanation why when so many other hedge funds are shorting DNDN, they're going long. He took my name and number. I haven't heard my phone ring and I'm not holding my breath.
You can read the two new SEC filings here.
Nonetheless, Paul Latta has a Hold rating on DNDN because he doesn't think the stock's gonna make a big move unless or until Dendreon strikes a partnership deal on Provenge and/or the interim analysis of the ongoing clinical trial is done in the second half of this year. Dendreon has said it thinks it can go it alone in the U.S., but is looking for an overseas partner on the drug. MWR would like to bank DNDN.
P.S. Because of the last-minute live interview with the New York State Insurance Commissioner Eric Dinallo, my Chantix story did not air on the "Closing Bell" at 3.
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Data is a real-time snapshot *Data is delayed at least 15 minutes