Dendreon’s 24-Hour Countdown With Options (DNDN)

Using stock options in Dendreon Corp. (NASDAQ: DNDN) shows that the expectations of major price moves  have not let up, and the company’s stock is trading up yet again ahead of the data due to be released on Tuesday at the American Urological Association in Chicago.  The data, due to post shortly before the close, could formalize the make-or-break status of PROVENGE for the treatment of advanced prostate cancer.  And therefore, the company.  This will hopefully be the first formal data after the company said that its IMPACT study of PROVENGE for advanced prostate cancer met endpoints and was consistent with prior findings.  Again, no formal details nor any formal statistics have yet been offered.  We have the baseline endpoint goal for statistical significance as being 22% and a survival benefit of roughly 4 and-a-half months.

Dendreon stock options are extremely expensive, and extremely volatile.  The May 15, 2009 call options at the $22.50 (closest out of the money call) cost $3.75 today.  The May $21 PUTS cost $3.75 and the $22.50 PUTS cost $4.50, so we would look at a blend of the two strikes to be slated against the calls if you wants a synthetic straddle in the options.  Based upon that notion, a synthetic speculative straddle would cost almost $7.90.  In short, those speculators betting on both sides of the volatility would need to see right at $30.00 or higher OR right at $14.00 or lower to break even on the trade.

The data due tomorrow is as follows:

• April 28, 2009, 2:20 PM CDT (3:30 PM EST) “A randomized, double-blind, placebo-controlled, multi-center, phase III trial of sipuleucel T in men with metastatic, androgen independent prostatic adenocarcinoma (AIPC).”
• April 28, 2009, 10:30 AM to 12:30 PM CDT (11:30 AM to 1:30 PM EST) Abstract #1408: “Preclinical Evaluation of the TRPM8 Ion Channel Agonist D-3263 for Benign Prostatic Hyperplasia.” Poster presentation to occur in the Benign Prostatic Hyperplasia
• April 28, 2009, 4:30 PM CDT (5:30 PM EST) IMPACT data webcast conference call.

Because this stock has been so volatile and because the data is this highly anticipated (and controversial), we would advise you that shares could be halted for trading Tuesday.  We do not know if the shares will be halted all day or not, but we would expect a “HALT: NEWS PENDING” status to be issued by NASDAQ at some point on Tuesday.

Shares are up almost 10% at $22.00 today.  The intra-day high was $22.07, and we have a 52-week high of $22.10.  Be advised that this was trading up as high as around $24 or $25 pre-market on April 14, 2009 when this was up 200% intra-day.

To access the live conference call, dial 1-877-675-4753 (domestic) or 719-325-4864 (international). The call also will be audio webcast and will be available from the Company’s website at www.dendreon.com under the “Investor/Webcasts and Presentations” section.

JON C. OGG