Dendreon Merger Rumors Stay Alive (DNDN, SNY, AZN, RHHBY)
As far as whether a deal is really imminent for Dendreon Corp. (NASDAQ: DNDN) in this rumored buyout is coming is still a topic up for debate. We still have a Caveat Emptor flag here, but the trading in this name is just too hard to not notice now that the stock price and market cap is getting so high.
We saw a greater than 10% gain on Monday to where it closed at the highest closing of the year at $27.43. Of course it sold off, but throughout the day Dendreon shares have climbed and the stock is now up 9% at $29.23 on well above average volume.
We have seen over 30,000 options contracts trade hands for the September Calls alone against almost no Put volume. That is over 3 million shares on a fully leveraged basis. What is so interesting is that these options are all set to expire in just over 48 hours. If no deal is announced or leaked out early Friday, then those will all expire as worthless if out-of-the-money or at the intrinsic value if they are in-the-money. So again, this suggests that something is imminent if you only watch stock options.
Again, Sanofi-Aventis (NYSE: SNY) is the most widely thrown out name as a European buyer that can get companies on sale in the U.S. over a weak US Dollar. But Roche (RHHBY) for its Genentech unit and AstraZeneca plc (NYSE: AZN) have been pondered before.
PROVENGE is believed to be getting FDA approval, but this is still not a formally approved event. Roche already took that chance on Genentech ahead of a key independent study ahead of the panel releasing data that was shocking as Avastin turned out to not be good at using in patients with the aim of maintenance or future cancer prevention. The market cap here is now $3.3 billion, and the price is getting to be in the realm of gambling when considering the FDA-risk that is inherent in any pre-revenue stock in the biotech realm. And any merger has to come at a premium to get shareholder approval.
Caveat Emptor!
JON C. OGG
