Dendreon (DNDN) Drop Overdue

I’m a long term bear, but there’s no double-dip on the horizon, just endless slog. Thus, I’m buying here.

As per Dendreon (DNDN), the stock that lost 65% of it’s value yesterday based on lower earnings guidance, I think it was well overdue. It had a $6B market cap based on no current earnings and one drug, Provenge, which was shown to increase the age of prostate cancer victims by 4.1 months. The price tag is a staggering $93k, which supposedly was going to be paid by US taxpayers, as by law Medicare does not take into account a drug’s cost when considering if it will pay for it (which they said they would)!

I think we are broke enough to tell men if they don’t have and want to spend the $93k, you’re just going to have to die earlier. The FDA study shows people living 25 rather than 21 months, which I don’t think is a good buy. I would bet most people would rather leave their family $93k more than live in agony another 4 months, but in our crazy health care market no one pays for anything out-of-pocket, so they feel insulted to actually have to make the decision. If we really just wanted to prioritize life enhancing dollars, we could increase it more than 4 months by simply giving everyone access to aerobics classes and a dietitian, which would cost much less.

About Eric Falkenstein 136 Articles

Eric Falkenstein is an economist who specializes in quantitative issues in finance: risk management, long/short equity investing, default modeling, etc.

Eric received his Ph.D. in Economics from Northwestern University , 1994 and his B.A. in Economics from Washington University in St. Louis, 1987

He is the author of the 2009 book Finding Alpha.

Visit: Eric Falkenstein's Website

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