cole,
oh my god... tell everyone on GTEM thread that if you cash ot at .27 and buy DNDN in the am, everyone will come out whole.
heres some more dd on DNDN
Re: Is intelligent debate allowed here?
"A. As an autologous therapy, won't the operational costs be significantly higher due to patient specific samples? If they plan on charging 'similar to other cancer treatments' and are around the $45,000 per patient, won't margins be significantly lower than other cos with cancer drugs? I've seen a lot of valuations based off revenue streams, but nothing at all concrete regarding operating income, EBITDA, margins, etc."
At around the $45,000 charge, the company has indicated previously that 70% margins are a realistic goal. Your reasoning is flawed because you mistakingly assume that the autologous procedure is expensive. Other than the cost of shipping, which is really insignificant, there is nothing in the process that makes it prohibitively expensive in relation to the charges. The process is fully automated and keeping track of each patient's blood is not an expensive issue given today's technologies...
"B. Assuming the FDA approves, and assuming a well negotiated ROW, what type of AIPC market penetration do you think would be required to justify a valuation of $4bn? If margins are significantly lower due to complex distribution, do you think Wall. St. will go with market competitive valuations on revenue?"
As answered in "A" above, the margins are expected to be at the 70% level so Market cap valuations of the order of 7 times sales are extremely reasonable in this business. As for market penetration, I think we will approach full market penetration very quickly (matter of months) as long as the patients are made aware of the opportunity for them to fight the cancer without suffering the horrible side effects of chemo. You can easily see by working out the numbers that your $4 billion valuation would be easily achievable in the first few months following approval and the only limiting factor will be the manufacturing which is currently limited to 12 bays capable of about 10,000 treatments per year. However, those bays can be replicated and increased to meet demand in a matter of a few months...
"C. Obviously, you all watched the panel do something that was unprecedented and unique in voting 13-4 for efficacy on a cancer immunotherapy. While history would indicate that the FDA would give approval, certainly there must be a wee bit FUD (as you like to call it) that the FDA can also do something unique in the handling of the final decision"
"Wee bit" is the right word here and that "wee bit" is about a 1% chance of the FDA requiring 9902b results before full approval. There is also what I consider a conditional approval whereby the FDA approves but not allow marketing until 9902b is fully enrolled. That I think has a 4% chance of happening and will simply delay marketing by a mere few months at most. Otherwise, I think we have a better than 95% chance of full approval as was evident from listening to the advisory panel meeting and noting that it was the people in charge of the CBER division at the FDA who intervened regarding the efficacy debate and changed the wordings of the question to make sure we get the endorsement of the panel. Perhaps you should listen to the panel debate to convince yourself instead of simply taking our word for it...
D. 9902B was the first trial to use supply from the manufacturing facility. If the interim results from 9902B are unsuccessful in accordance with FDA reporting requirements, wouldn't you agree that Provenge would be pulled from market and the antigen cassette technology platform would be forever rendered as unacceptable for future submissions such as Neuvenge that use the same platform?
Given the results of 9901 and 9902a, and given that the primary end point of 9902b, which has much larger enrollment than 9901 and 9902a, is actually the same cox regression analysis for survival which demonstrated a survival advantage in 9901/9902a with a p=0.0006, the possibility of 9902b disappointing falls at the same chance level of a meteorite hitting Seattle and destroying Dendreon, so I would not worry about that if I were you, nor would I seek solace from such an occurrence if I were a short...
"E. I think the one thing we should certainly agree on is that Mitchell Gold is out of his league. I've researched his history, and I think he's out of his league in terms of running a business."
When it comes to protecting shareholder value on a continuous basis, Dr. Gold has demonstrated a lot of inadequacies over the years Vis a Vis Wall-Street. However, he has kept his eye on the ball when it comes to the approval process with the FDA and you simply can not argue with success! Additionally, he seems to have surrounded himself with a strong team for running this business and, judging from how the FDA was handled, he seems to be smart enough to allow the people that are more knowledgeable than him to handle the specific tasks at hand. If I were you, I would not take a short bet on DNDN because of Gold because I think he has been successful so far on the important matters and I also think that Provenge and DNDN will succeed with or without Dr. Gold...
"F. Has anyone seen a single credential on any hired sales managers? While Provenge will 'sell itself' to some, you are investing in a sales team you know nothing about and that which has never sold a cancer immunotherapy. What do you know of their marketing strategies other than dropping a 100 reps around the country to deal with 40,000 individual treatments?? Any complications with the complicated distribution methodology would create operational overhead not built into any valuation models I have seen."
Perhaps your confusion here is a result of you being uninformed. I suggest you check the credentials of James Caggiano, the VP in charge of sales and marketing who actually left Abbott to join DNDN and who has previously led successfully the major sales force for Lupron in the treatment of androgen dependent prostate cancer. After you check his credentials, as well as those of his support team, you will conquer with me that your fears here are also unfounded...
"G. A manufacturing facility that has yet to be built out, a marketing team nobody knows yet, an unknown amount of overhead and maintenance and the longs believe this is the next DNA?"
Again you are uninformed here! The manufacturing facility has already been built in NJ and is already producing the processing samples. It is true that it currently only has 12 bays for processing but these are carbon copies of each other and can be easily replicated in a matter of months. In fact, this is the beauty of this process because a "pilot plant" can actually be quickly expanded into a major manufacturing plant without having to draw up new designs and make new constructions. Your other concerns here have already been addressed above so I am not sure why you keep repeating them... As for DNDN being the next DNA, the facts are that DNA's major source of income has been cancer treatment lately, and in a matter of a few years DNDN will more than surpass DNA in that category as the world realizes that the immunotherapy approach of DNDN is by far a better approach than what is currently available to combat this insidious disease..
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As for you buying puts lately as a trade, you did good in the short-term and I think most would agree that when we hit $25 coming from $4, a slight momentary pull back on profit taking and hedgie manipulation was not unexpected. Going forward however, I hope you will do your research and conquer with me that full FDA approval is around the corner and a stock price of $70 following that is not an unreasonable proposition. Perhaps there will be a few more days of "FUD" ahead of us but this will soon change and I hope you will see the light in time to go long the stock and enjoy the ride upwards...
