Dendreon's Five Day 25% Fall (DNDN)

If you were waiting for a pullback on Dendreon Corp. (NASDAQ:DNDN) shares, here's your chance.  In just five trading sessions Dendreon shares have dropped from $34.50 to $26, and today they have managed to get back to $27.80.  Buy on the dip or could more pain be coming?

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Dendreon shares have gone from $55 to $27 since May, just like that the stock has lost about half of its value after it seemed the company's Provenge drug could do no wrong.  The FDA gave Provenge the green light in May, thus the $55 stock price, but since that time its lost some steam.

A big hit came last week when Medicare said they were going to take the next year to decide if Uncle Sam would pay the treatment.  The review process will include a one-month public-comment period and a proposed decision by the end of next March before a final decision is issued before the end of next June.

So is that worth tanking shares by 25% in just one week?

It is when Provenge costs over $90,000 to administer for just one patient.  As a product, everyone is happy the FDA said yes to Provenge, but to pay for it, well, if the Street isn't happy with the Powers-that-Be, namely Medicare, how can you expect DNDN shares to recover?

Expect volatility if you are investing in DNDN, if its shares should hit a new 52-week low, then it may be time to act, otherwise you are best just keeping an eye on the stock and looking for a low entry point.

Disclaimer: No positions in any of the securities mentioned in this publication.