Small-Cap Spotlight: A Look at Crocs and Dendreon

Early this month, however, shares fell back to the $6 area when Dendreon received an approvable letter from the FDA that requested additional data on Provenge, momentarily extinguishing the bulls' hopes that a product could go to market anytime soon.

And just when it seemed the news flow had stopped, Dendreon announced on Thursday morning that the FDA would accept either a positive interim or final analysis of survival from the company's ongoing IMPACT study (already in progress) as sufficient for its request for additional data.

The announcement gave clarity to the timing behind a potential approval of Provenge, as Dendreon has said that it expects to complete enrollment in the IMPACT study by year's end, with interim survival results expected in 2008. In addition, the FDA's acceptance of data from an already in-progress study means that Dendreon won't have to pony up more cash to start a whole new trial. Shares rallied back above $10 on the news, fueled in part by massive short-covering.

With all this news causing shares to trade up and down and up again, should investors be putting their money into this stock? I'm going to say no, but the reasoning takes a bit of explanation. Most important, readers should understand all of the factors that have made Dendreon one of the most volatile stocks in the market over the past two months.