CEO Mitch Gold didn't waste much time cashing in on the big jump in his company's stock price.
Gold sold more than $2.2 million in company stock on Monday, according to a Form 4 filed Wednesday with the
Securities and Exchange Commission
His stock sale came two trading days after an FDA advisory panel voted to
recommend approval for the company's Provenge prostate cancer vaccine. The positive panel vote sent Dendreon shares soaring about 200%.
The FDA will issue its final approval decision on Provenge on or before May 15.
In recent trading, Dendreon shares were up $2.66, or 17%, to $17.71.
Interpreting insider selling can be a tricky thing. Is Gold simply rewarding himself -- justifiably -- for overcoming a slew of doubters and getting Provenge to within inches of the finish line?
Or is the CEO hedging his bets, taking the easy money now because he's worried the FDA might reject Provenge next month?
Dendreon spokeswoman Monique Greer says it's the former. Dendreon insiders haven't had the opportunity to sell significant stock in a long time, so a short trading window was opened after last week's FDA advisory panel as a reward for management and employees. That trading window is now closed, she adds.
Gold exercised options and sold about 202,000 total shares on Monday. On a net basis, he reduced his holdings of Dendreon's stock by 25% to 189,000 shares, according to the filing. That figure doesn't include Gold's stock-option holdings.
In the wake of the sale, Gold controls about 900,000 shares, which includes stock owned outright and stock options. He sold about 20% of his holdings, says Greer. "It's a relatively small amount, and Mitch
Gold still has a major stake in the company. He's never done anything like this before. It's perfectly understandable and not an unusual business practice," she adds.
I'm on record as predicting a Provenge approval on May 15 by the FDA. I gave it 80% odds, which also means I understand there's risk to this bullish thesis. It's therefore perfectly reasonable for investors to take profits or otherwise hedge their bets going into next month's big decision date.
But does that include Dendreon's CEO? Does he deserve the same consideration?
Honestly, I have mixed feelings about it. Gold deserves kudos for preparing his team for last week's FDA meeting; they did a great job -- certainly better than many expected. Provenge looks close to approval, and Dendreon employees, including Gold, deserve to be rewarded.
But the timing of Gold's sale sends a bad signal to investors. It doesn't fill me with warm, fuzzy -- or confident -- feelings. If I were in Gold's shoes (and I'm most decidedly not), I would have waited for the FDA decision before selling shares.
That's just me -- I'm not here to tell Gold that he screwed up or that he did the right thing. I still like Dendreon. I still like Provenge, and I think it gets approved on May 15.
But I'm definitely more nervous today than I was yesterday.
Adam Feuerstein writes regularly for RealMoney.com. In keeping with TSC's editorial policy, he doesn't own or short individual stocks, although he owns stock in TheStreet.com. He also doesn't invest in hedge funds or other private investment partnerships. Feuerstein appreciates your feedback;
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