Dendreon: A Cautionary Tale For Biotech Investors
Although investors have profited handsomely from biotechnology stocks over the past couple of years, Dendreon (NASDAQ:DNDN) shareholders have not been as fortunate. The iShares US Healthcare ETF (NYSEARCA:IYH), a common barometer for the overall health of the healthcare industry, has generated a 62 percent return over the past 2 years. During the same period, shares of Dendreon have dropped in value by more than 50 percent.
Dendreon is a biotechnology company focused on the discovery, development, commercialization, and manufacturing of novel cancer therapeutics. The company produces active cellular immunotherapy product candidates designed to stimulate an immune response in a variety of tumor types. Shares of the company began to rise in early 2009 after the company announced positive data from its Phase 3 trial for Provenge, the company’s treatment for prostate cancer. The share price continued to climb for much of 2009 and into 2010 when the company finally received an FDA approval.
The share price history represents a cautionary tale for all biotechnology investors. Prior to April 2009, Dendreon’s share price had been trading in the single digits for much of its history. In fact, prior to the Phase 3 trial update, shares were actually trading below $3. The shares then soared as high as $54.06 immediately following the FDA approval. After the approval, shares hovered between the mid 30s to low 40s before eventually beginning their massive descent.