Exploring Chances of Dendreon Rumors (DNDN, SNY, AZN)
We have been digging into ‘rumors’ of a Dendreon Corp. (NASDAQ: DNDN) buyout. We would stress that Dendreon has been the subject of rumors before as both a partnership or stake-taken deal, and sometimes as merger-buyout bait, several times in the past. As with all rumors and with all ‘hope’ trades like this, Caveat Emptor!
That being said, the stock volume is exponential, but the most impressive activity is in the SEPT-2009 call options. The reason this is of such notice is because the September options expiration date is only four short days out, meaning that the bets for or against a deal would suggest an “imminent” timing if it was accurate.
We noticed a blurb out there today noting that Sanofi-Aventis (NYSE: SNY) was the likely party…IF… the rumor is correct. In the past we have also heard of Roche/Genentech as a potential rumored buyer. One name also thrown out as an acquirer of small to mid-cap biotech companies is AstraZeneca plc (NYSE: AZN). To date, all such rumors have been unfounded and never materialized. We would also note that with shares up above $26.50, they are also back very close to the old intra-day high of $27.40. The old high closing levels were $26.08 on June 19… On April 29 this hit the $27.40 intra-day high but the close was $22.94; and the last day this hit $27.00 was June 7, but it closed at $25.74.
The biggest hurdle to date is that a buyer would be forced to pony-up much more cash than today’s price. The buyer is also taking a big FDA event-risk as PROVENGE is still ‘believed to be approvable’ and has not received FDA approval as a last line of defense for men with advanced prostate cancer. Roche took that risk with Genentech, and while everyone believed that the endpoint was likely it turned out to not be the case.
Anything is of course possible in the land of the biotech rumor-mill. Again, Caveat Emptor!
JON C. OGG
