Posted by Posted by VFC on Jan 10, 2012

After opening the year on the highlight list of hot-running stocks, the high-volumed surge of Dendreon (DNDN) continued again on Monday with another dollar price increase and a close of $13.31.  That all came to fruition in just five trading sessions after DNDN closed 2011 at $7.60.

The rapid price action followed an announcement by the company that Provenge sales for the fourth quarter beat expectations and were 25% higher than the previous quarter.  It's fair to note, however, that the exceeded expectations were actually revised from the company's original projections, which had full year 2011 sales rolling in to the tune of between $350-500 million, with a large chunk of that supposed to have come in the fourth quarter.  Those numbers were revised late this past summer when it became apparent that Provenge sales were stuttering.

While Provenge, approved in May of 2010 as an immunotherapeutic treatment for cancer, may rebound this year on the market with reimbursement concerns put to rest, there will always be the doubters out there, as noted by an analyst from William Blair this week. 

Like the neighbor who didn't get invited to the party and therefore has to come over and ask that the music be turned down, Y. Katherine Xu rained on the DNDN parade on Monday by pointing out that even with the solid success of Provenge in the fourth quarter, there's still much doubt surrouding its future.

“Despite encouraging growth in the fourth quarter and a potential upswing in early 2012, we continue to be concerned with Provenge’s eventual potential and profitability, and believe the surge in the stock today based on the fourth-quarter preannouncement is unjustified,” noted Xu.

It's always wise to entertain both sides of any story, and to take some money off the table in any rapid and significant price increase, but this sounds a bit more like, "hey, wait, my buddies either missed the boat or are not done buying in yet, so hold your horses."

You've got to love the analysts.  William Blair also tagged BioDelivery Sciences (BDSI) with an 'outperform' rating last week, after BDSI had already released solid news and had already outperformed just about every other stock this year by more than doubling within days of the new year's open.  Where are these guys when you're looking for an 'in' ahead of time?

Also noteworthy, Dendreon presented at the J.P. Morgan Healthcare Conference on January 9.  A full transcript of that presentation could be found at the Seeking Alpha website and it's a worthy read as  President and CEO Mitch Gold summarized the events of 2011 and outlines the way-ahead for 2012.

I'm always a believer in taking some money off the table in the midst of quick runs such as the one experienced by DNDN to open the year, but given the possible fourth quarter momentum gain in Provenge sales, it's arguable that this run could have legs.

Disclosure:  Long DNDN.

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