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In afterhours trading yesterday, shares of Dendreon (DNDN) went on a roller coaster ride that saw prices drop from its closing price of $33.39 to below $30 in a matter of minutes. Within the next half hour the stock once again reached its closing price and proceeded to trade all the way up to $33.89, up $0.50 cents from the day’s close. On what other stock would you see the following two articles posted within minutes of each other? the first of which sent Dendreon on it’s wild plunge:
- Dendreon’s Provenge questioned in NEJM–a story about how an editorial in the New England Journal of Medicine (NEJM) which questioned Provenge’s efficacy.
- Dendreon Gets Some Respect–an article about how the very same NEJM laid to rest any lingering doubts on Dendreon’s Provenge ability to treat prostate cancer.
So the ominously titled article, written by Adam Feuerstein over at TheStreet.com, came out moments before the real news and led to an instantaneous 15% haircut in Dendreon’s shares afterhours. Meanwhile, two minutes later, the real news reached the press. NEJM not only did not question Provenge, it turns out that the NEJM wrote a very respectable review about the results from Dendreon’s trial. According to Matthew Harper at Forbes:
Seeing the Provenge results in black and white in the New England Journal is likely to clear up lots of remaining doubts. It helps that Philip W. Kantoff, a well-respected prostate cancer researcher at the Dana Farber Cancer Institute, is the study’s lead author.
Although the contrasts in the headlines are striking, they are unfortunately far from unusual in Dendreon. In terms of medical treatment, the “old guard” of medicine tends to look cynically at new, different forms of treatments. That alone generates an inherent emotive element to what Dendreon does. But that’s only part of the equation. For years now there has been a substantial short interest the stock and a gross amount of misleading news stories and drastic fluctuations in the stock’s price.
Either Feuerstein and TheStreet.com are fed their news from sources who have a vested interest in manipulating Dendreon’s share prices, or Feuerstein did not do his research. To proffer an editorial as news, in which Feuerstein acknowledges that “none of the criticisms leveled…are particularly new or surprising,” makes his article headline both misleading and questionable ethically.
Disclosure: Long shares of DNDN
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It seems to me Feuerstein is just the ultimate naysayer.
Yeah he seems like he's put out a lot of misleading articles on DNDN and other biotech stocks.
Frankly, both articles were sloppy.
I agree with you that the Herper (not “Harper”, BTW) had a better journalistic slant in that in the long run, getting the IMPACT data published by the NEJM will count for more than a hack-job editorial. But Herper totally missed the editorial, which journalistically is an egregious error and did his readers a serious disservice.
Feuerstein gets a bum rap from the Dendreonites, who see everything he does through black-colored glasses. He is usually pretty reasonably balanced; he was the first mainstream journalist to publish a revenue model showing how Dendreon could reach and exceed $1 billion back in early 2007. Of course, a Dendreonite zealot told me this was just to drive the price up so his buddies could get a better price to short it at. :-)
You and I may have made a different choice, but Feuerstein’s journalistic choice to lead with the editorial is perfectly legitimate. Yeah, the editorial was a poorly researched hack full of already-refuted objections…but the fact that a NEJM editorial questioned the efficacy of Provenge clearly is news. And now that the market has had a day or so to digest the information, DNDN stock is down again, so arguably Feuerstein’s journalistic judgment is more on target than yours, mine and Herper’s. FWIW, when Feuerstein and Herper disagree, I more often agree with the former.
Having said that, I do think Feuerstein was sloppy, too. While he did at least point out the the NEJM had published the IMPACT study in addition to the editorial (which puts him ahead of Herper), he failed to mention the salient fact that it is typical for that publication to print opinion pieces designed to poke holes in the studies in the same issue. It is their way of providing balance and stimulating discussion. Therefore while the editorial was legitimate news, by omission Feuerstein implied it was a shock and a surprize; it was neither.
Brad Hessel (long DNDN common and calls)
I have no position in this stock, but I have never seen a stock that gets manipulated more than this one. The problem is that this stock is so easily manipulated that people have every reason to put out a bogus story, a fake rumor or a poorly researched artivle to move the stock a ton. Its sad really and its not going to stop
Brad:
You make some excellent points there, and I largely agree. My big problem with Feuerstein is that the title is incredibly provocative and implies that NEJM itself questioned Provenge, when in reality NEJM released a predominantly favorable take on Provenge, while also publishing a negative editorial for the sake of balance. People can editorialize all they want, but a peer reviewed publication in the very same journal should carry more clout.
What bothers me is that I don't really think Feuerstein read the NEJM and found the two articles. Someone most likely provided him with the info and a lead and he published his headline without knowing the full story in an effort to be “first.”
Thanks for your comment Brad.
Best,
Elliot
Yep it's pretty scary how much misinformation there is. It makes it very hard for investors in this technology to comfortably stick with their positions. There is always an inherent risk element when investing in young biotechnology; however, this stock takes the risk to a whole new level.