This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Biotech Stock Mailbag: Dendreon's Aftermath

Stocks in this article: DNDN SPPI PATH VRTX SGEN ALTH AMAG

BOSTON ( TheStreet) -- I typically write the bulk of the Biotech Stock Mailbag on Thursday, so as I type, the markets are in meltdown and a conflagration has consumed the biotech sector. Memo to Dendreon (DNDN) CEO Mitch Gold: Nice timing, my friend. Real nice.

It's unfair to lay all the blame for the "end of biotech as we know it" at Dendreon's doorstep, but I don't believe we'd be experiencing such a sharp, swift and broad selloff had Dendreon pulled off a normal quarter. The Provenge miscue spooked a lot of biotech investors who were already on edge.

In my Dendreon column Thursday, I wrote, "The ill effects of the Dendreon debacle will unfortunately spread beyond the company's stock price and its shareholders to infect the entire biotech sector."

To which Brandon M. comments, "Disasters of this magnitude raise the question of whether the biotech sector is even investable for individuals/home gamers because even if you pick the right company, right drug and get the timing correct through the myriad of approvals with the FDA etc., the follow-on execution risks are just as daunting…

"How many times does lightning have to strike in a biotech stock for people to make enough money to offset all the misses? Well, for those who play on the wrong side, the ratio just went the wrong way ... again. Doesn't this raise a fundamental question as to whether the commercial development model needs tweaking as far as capital markets are concerned? If Provenge is a miracle drug but withers on the vine because it costs $93,000, where are we?"

I've reached a point at which it feels safer not to recommend, write about or even whisper the name of a biotech company about to embark on a drug launch. Dendreon may turn out to be the biggest biotech drug-launch flop in history, rivaling the Medimmune Flumist disaster (thanks for reminding me of that one, Lazard's Joel Sendek); or if you want to extend the category, there's the Pfizer (PFE)- Nektar Therapeutics (NKTR) Exubera fiasco.

Biotech investing is hard, but biotech investing after a drug approval and/or right before a drug launch has become impossible, unless you're short, which seems as risk-free as investing in T-bills, with much higher returns.

I thought Amag Pharmaceuticals (AMAG) would do well launching Feraheme. Wrong! I was bullish on Allos Therapeutics (ALTH) going into the Folotyn launch. Wrong! More recently, I thought Optimer Pharmaceuticals (OPTR) would hold up well as preparations for the Dificid launch gets under way. Wrong again!

I finally learned my lesson and got one right with Seattle Genetics (SGEN), warning folks that the stock was expensive ahead of the likely approval of Adcetris later this month.

Brandon raises a good question. The relationship between the capital markets, i.e., investors and companies entering the commercial phase of their lifespan does seem broken. Why? I don't know for sure, but it may relate to the shortsighted or short-term nature of biotech investing these days. Long-term investing seems extinct, with investors morphing into traders only interested in the next catalyst -- clinical trial results, FDA advisory panels, drug approval decisions.

1 of 6

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 17,922.00 +117.20 0.66%
S&P 500 2,074.48 +3.83 0.18%
NASDAQ 4,774.5290 +9.1490 0.19%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs