thestreet.com is bearish on ARNA--again

Adam Feuerstein, thestreet.com's biotech analyst is once again bearish on shares of Arena Pharmaceuticals. He was also bearish on shares of DNDN and HGSI before they appreciated more than 10-fold from their lows. And he was bullish on VVUS before the advisory committee rejected anti-obesity drug Qnexa, tanking shares more than 60% the next day.

http://www.thestreet.com/story/10829837/arena-pharma-deja-vu-danger.html

In other words, his track record for predicting winners and losers is spotty at best.

Meanwhile, the editors of the New England Journal of Medicine and the Formulary journal, the most respected peer-reviewed medical journal and peer-reviewed drug management journal, respectively, were overwhelmingly positive of ARNA's Lorcaserin benefits for obese and morbidly overweight patients, balanced against a clean safety profile.

Mr. Feuerstein is a "Senior Columnist" specializing in biotech and works for thestreet.com, a public company being investigated by the SEC for accounting irregularities.

http://www.zerohedge.com/article/jim-cramers-thestreet-being-investigated-sec

thestreet.com is also a defendant in a lawsuit seeking $250 million in damages for business defamation, product disparagement, and injurious falsehood.

http://wallstreetpit.com/22485-generex-gnbt-launches-250mln-lawsuit-against-thestreet-com-tsmc

For what it's worth, Mr. Feuerstein has a bachelor's degree in political science from Emory University.

See disclaimers in the side bar.

Disclosure: long shares of ARNA.

Beware the analyst with an agenda

http://aschoff.blogspot.com/2007/04/jonathan-aschoff-from-brean-murray-hes.html

Provenge is a drug to help prostate cancer patients in the late stage of disease. Dendreaon[sp] the company that makes Provenge is a bio tech company who recently received a positive recommendation from the FDA advisory committe[sp] that Provenge is safe and the the drug work[sp] to prolong survival.
Aschoff's firm had a sell or 'short' recomendation[sp] on this stock - target price of 1.50.
After the recommendation of the FDA approval pannel[sp] the stock flew up to 18 dollars. Aschoff has been on what seems to be a personal war path against Provenge ever since.
Friedman Billings analyst Jonathan Aschoff says he was just trying to get the real story when he impersonated a doctor in early March.

Here's another article.
http://www.marketrap.com/article/view_article/91112/jim-chanos-jonathan-aschoff-and-more-on-the-dendreon-saga

When the FDA’s advisory panel voted in favor of Provenge, most Wall Street research analysts were predicting a bright future for Dendreon. But as naked short sellers piled on with ever increasing gusto, hedge fund managers continued to whisper in reporters’ ears. And two Wall Street analysts did more than whisper – they shouted, day after day, that Dendreon’s treatment for prostate cancer was doomed.

One of these analysts is named Jonathan Aschoff, and he works for a financial research outfit called Brean Murray Carret & Co. The day after the advisory panel vote, in an interview with Reuters, Aschoff made the long-shot prediction that the FDA would not approve Provenge, but would instead ask Dendreon to supply additional data showing that the treatment was safe and effective–a process that could take years. Soon after, Aschoff told other media outlets that the FDA would set a “dangerous double standard” by approving Provenge because the treatment “did not meet its primary goal in two Phase III trials.”
During the first days of April 2007, Aschoff was everywhere, continuously repeating this notion that the FDA would set a “dangerous double standard” by approving Provenge. On April 9, Aschoff reiterated his “sell” rating for Dendreon, setting a target for the stock at a mere $1.50, which implied that the stock would lose more than 90 percent of its value by the end of the year. Reuters, Associated Press, CNBC and other media dutifully reported Aschoff’s comments as though they shed light on the merits of Dendreon’s prostate cancer treatment.

Aschoff’s performance raises a few basic questions. The first is, how did a Wall Street analyst know that it would be “dangerous” to approve a medical treatment? It is an odd day, indeed, when the media turns to Wall Street for wisdom on matters of science and health.
The second question is, why was Aschoff so confident that the FDA would not approve Provenge? Given that the FDA had followed its advisory panels’ decisions in 97% of cases, and in 100% of cases involving drugs for dying patients, Aschoff’s prediction seemed rather far out. What did he know that the rest of the world did not know?

One more question: Which hedge funds were paying Aschoff’s bills?

Note: shares of DNDN recently peaked above $58 after FDA approval, and have settled in at $36 as of today.

See disclaimers in the side bar.

Disclosure: no current position in DNDN, last exit was at $58. A family member still owns shares of DNDN.

The anatomy of a bear raid

"Expect Massive BEAR RAID this afternoon @ 12 30 pm central last trade 24 suggest you sell short into strength MASSIVE BEAR RAID coming.. TODAY"

- monthaphumchareon, April 28, 2009 around 11 a.m., the same day Dendreon CEO Mitch Gold was presenting Phase III clinical trial results at the American Urological Association for Provenge, an advanced prostate cancer immunotherapy approved by the FDA a year later, April 29, 2010.

"He was roundly mocked until the prediction turned out to be amazingly accurate. The stock plunged from 25 to 8 in 75 seconds. And later that very day, the company presented positive trial results."

- username "andybaron_ym" on an ARNA message board.

Avoid entering stop loss (market) orders to your broker on highly volatile, heavily manipulated stocks. It only telegraphs your intent to predator market makers who will steal your shares at much lower prices in a bear raid. Investors looking to protect their profits in DNDN got stopped out at much lower prices than their intended exit points. Entering a market order was a huge mistake.

This is a very long, but worthwhile read, full of intrigue, danger, greed, power, corruption, organized crime, and malice on Wall Street. Buyer beware.

http://www.deepcapture.com/michael-milken-60000-deaths-and-the-story-of-dendreon/

ARNA analysts

Let's break down who got it right and who got it wrong on VVUS and ARNA.

http://www.streetinsider.com/Trader+Talk/Arena+Pharmaceuticals+%28ARNA%29%3A+Upgraded+to+Overweight+at+J.P.+Morgan/5811273.html

Thumbs up to Cowen & Co. and Piper Jaffray for getting it right, and understanding the importance of safety in FDA approval decisions.

Thumbs down to JPMorgan and Adam Feuerstein of thestreet.com for getting it completely wrong. At least JPMorgan and Adam are smart enough to reverse course on ARNA--after Qnexa's rejection.

Big thumbs down to Rodman & Renshaw analyst Elmer Piros for downgrading ARNA with a price target of $1.

Recall Jonathan Aschoff, a Brean Murray Carret & Co. analyst, at one time had a sell rating on DNDN with a $1.50 price target. DNDN shares recently had a high of over $58.

Is Wall Street crooked? You decide.

FDA approves Provenge

Shares of Dendreon (symbol "DNDN") surged today after the FDA approved Provenge for treatment of advanced prostate cancer. Search DNDN in this blog or Google "Deep Capture Dendreon." It's a fascinating story. It includes an analyst who predicted DNDN shares would tank to $1. Jim Cramer and much of Wall Street were negative on the company when it was trading around $3. Today, it hovers above $45, before trading was halted. Laugh out LOUD!

The company has had a tough, arduous, long road, with many opponents--some crooked, including the FDA, short hedge funds, market makers, investment banks, regulators, analysts, and captured journalists--even organized crime syndicates according to conspiracy theorists. But in the end, the white hats won, and many lives will be saved.

This is not a profit-making celebration--this is a confirmation that patience and conviction are sometimes rewarded. Many long investors suffered for years; using luck and some skill (along with courage), I was able to time the trade so I would only be exposed to regulatory risk for one year.

This rollercoaster is not for the faint-hearted.

See disclaimer on side bar.

Disclosure: entry points for DNDN between $4 - $7 in April 14, 2009. Planning to exit a percentage of position at approximately $45 on April 29, 2010.

Edit: after resumption of trading, DNDN is now trading at $52!

Edit 2: Disclosure: another tranche sold at $57.55 on April 30, 2010, purchased at $7.28 on April 14, 2009.

Generex sues thestreet.com for defamation

Generex filed a $250 million lawsuit against thestreet.com and Adam Feuerstein for business defamation, product disparagement,and injurious falsehood.

http://finance.yahoo.com/news/Generex-Launches-250000000-pz-450844841.html?x=0

Jim Cramer, TV host of CNBC's Mad Money, is co-founder and Chairman of thestreet.com. I blogged about thestreet.com's problems with the SEC in this entry.

Note that Feuerstein was also bearish on Dendreon when it was $4 a share, and it is now hovering around $40. I blogged about purchasing shares of DNDN despite bearish sentiment from many analysts here.

The takeaway message is don't rely on so-called experts or pundits. As always, do your own due diligence.

Disclosure: no position on GNBT. Long DNDN shares.

Missed on ONTY

Shares of ONTY gapped up this morning on positive preliminary results for Stimuvax, a lung cancer immunotherapy.

http://www.tradingmarkets.com/.site/news/TOP%20STORY/2383852/

Based on this article reporting positive results on breast cancer clinical trials, I contemplated purchasing some ONTY shares over the weekend. However, it soared over 30% this morning before I could get my buy order filled. I will hope for a pullback, as ONTY has as much, if not more upside potential than DNDN, the prostate cancer immunotherapy company we profited from back in April.

DNDN's Provenge had a 22.5% overall survival benefit above advanced prostate cancer (PC) patients on placebo, and patients on Provenge lived 4.1 months longer on average, which is significant considering late-stage PC life expectancies are short. Once approved by the FDA, which now appears likely, Provenge will extend the lives of many PC patients, and labeling will be extended to early-stage PC patients, further increasing the 90% success rate for that segment.

In June, ONTY announced a 17.3 month median survival benefit for Stage IIIB non-small cell lung cancer patients above those on placebo. With multiple shots on goal with Stimuvax (lung, breast, prostate, and colorectal cancers), and a healthy pipeline of other oncology drugs, ONTY shares have some serious long-term upside potential.

This is not a recommendation.

Disclosure: I have no position in ONTY, and a long position in DNDN.

Dendreon revisited

Adam Feuerstein, an analyst on the street.com, who was previously bearish on DNDN, offers the following bullish analysis on Dendreon:


http://www.thestreet.com/story/10503521/1/dendreons-gold-whats-next-for-provenge.html

Interesting tidbit on commercialization prospects:

"Most people are modeling Provenge along the lines of Erbitux now," said Gold, referring to the cancer drug from Eli Lilly(LLY Quote) and Bristol-Myers Squibb(BMY Quote). "I think Erbitux costs around $80,000 a year now. ... I'm not saying that's going to be the Provenge price, but that's what analysts and people on the Street have in their heads when thinking about a Provenge price.

"If you use that assumption and say that the market size is 100,000, men then the total commercial market opportunity for Provenge is $8 billion."

Gold on Provenge in Europe:

"We have only had superficial high-level discussions with the Europeans, so the European regulatory strategy and European commercial plans are things that we're really going to look for a partner to oversee. Dendreon is going to focus on the U.S. market. "

Gold on signing a partnership for Provenge or entertaining acquisition offers for the entire company:

"We are committed to commercializing Provenge ourselves in the U.S. and finding a partner outside the U.S. ... If someone puts an offer on the table for the entire company we have a fiduciary responsibility to consider it, but that's not how we're building the company or how we're planning on building the immunotherapy franchise.

I'm thinking a buyout offer of $300 a share seems reasonable. :-)

Even though myself and several of my friends and family bought DNDN in the single digits, I'm already regretting selling some shares at $25.

This is not a recommendation. Do your own diligence. Investing in equities are inherently risky, especially the volatile biotech sector. Good luck to all.

Taking profits

And in these skittish markets, I'm not ashamed. Took some profits on TBT, up 50% due to rising 30-year T-bond rates (TBT is a double short ETF betting on rising bond yields and declining bond prices). It gapped up today and could break out, so I kept some on the table. But with a 50% profit, I had to take some off the table. If the Fed goes through with quantitative easing and monetizes that debt, they could temporarily drive bond prices up and yields down. Long-term, I'm still bearish Treasury bonds, so I will wait for another good entry point to buy TBT. But with volatile markets, you take your winners and cut your losers. Buy and hold won't work going forward (it didn't work in the last decade either).

Also, I cashed out partial positions in a uranium stock (up 25%), and of course DNDN this morning for a better than 300% pop. Notice I said "partial", as I am merely taking some profits, but letting the house money ride. Most professional traders average in their buys, and average out their sells, because no one can buy at the absolute bottom or sell at the absolute top. Don't blow your wad with one initial big trade. And don't get discouraged if the price drops a little as soon as you buy, or goes up a little when you sell. Knowing when to sell is as important as knowing when to buy.

The reflation play is still intact, and I will be looking to buy into dips on hard assets (commodities, precious metals, energy). We are in the throes of a bear market rally, but I certainly don't want to stand in the way of stampeding longs. When I hear talk of the beginning of a new bull market, I'll know this rally would have been a head fake, at which point I will buy some appropriate puts. If I miss the big decline--oh well. NOT losing money in this market is like a win.

I also want to get liquid and keep my powder dry, as another biotech opportunity is presenting itself. This may not be another DNDN blockbuster, but FDA approval seems imminent. Stay tuned.

In the "couda, wouda, shouda" department...

Most investors who stayed the course with DNDN yesterday, and did NOT put any stop market orders in place turned a profit, averting a total disaster by not having shares sold away to market makers looking to take out nervous retail investors.

But this was a "black swan" scenario that I did brainstorm--but did not carry out in practice, because I stupidly didn't think a bear raid of that magnitude would happen.

I could have purchased more shares cheaply by placing a good till canceled (GTC) limit buy order (usually good for 30 days) at $7.50, $10, $12.00 etc, or wherever I thought it might drop to. I actually brain stormed every scenario, even selling puts (buying at the strike price), but decided against it as I didn't think it would happen.

Another stupid non-decision on my part, because that's exactly what happened.

But to reiterate: always use limit orders, whether to buy, sell, or stop loss...always, especially in volatile markets. When implementing a stop loss order, do not tell your broker what your price is, and always use a stop limit order if you're going to put in a stop loss. A few readers of my blog have already told me this piece of advice has already saved them thousands of dollars.

Manipulation

In a sure sign that shares of DNDN were manipulated from $24 down to $12 before being halted in the afternoon, shares opened above $25 in after hours trading after the halt, after a great conference call. Shorts got a reprieve, cross trading with other funds, market makers took out the weak retail longs, and Wall Street was richer, even those that bet wrong. The losers were the longs who had stop-market orders filled.

There should be an investigation by the SEC, but my hopes are dim. NASDAQ did a quickie investigation for possible "erroneous trades" before declaring all trades stand. How does one make a 2 million share "erroneous trade"?

As for DNDN itself, I'm looking to take some profits off the table, and keeping a core holding for long-term growth. If folks held on with no stop loss orders, you're still green (up) today. I told you to expect fireworks today!

NASDAQ investigating

Share of DNDN dropped 45% before being halted--prior to their announcement of Provenge results at the AUA. NASDAQ allegedly launched an investigation, according to CNBC. This is an obvious case of stock price manipulation, and some parties will be prosecuted--probably short-sellers looking for an escape from losing positions.

Investors/traders with stop loss orders got taken out--at much lower prices than they planned, and will have legitimate complaints. Whether they can recoup their shares or money is yet to be determined, but this only validates what I have been reiterating all along: never, ever tell your broker what your stop loss limits are--you will be taken out of your position by unscrupulous market makers and large funds. Keep the stop loss in your head. There are numerous stop loss orders, including stop-limit and stop-market orders which you should be aware of, but I will never tell them to my broker, despite conventional wisdom claiming stop-loss orders are necessary for risk management. Often, stop loss orders are disastrous, as today's action in DNDN painfully illustrated.