Dendreon's New Stock Offering Takes Advantage of Provenge Decision Uncertainty

Dendreon (DNDN) is taking advantage of the period of uncertainty before the FDA renders a May 1, 2010, decision on its Provenge prostate cancer treatment by raising money from a new stock sale. Dendreon shares fell today after the company announced it would dilute its 115.94 million outstanding shares with 15 million new ones. The company is hoping to raise about $400 million from the new offering to pay for new or upgraded facilities in Atlanta, California and Morris Plains, N.J. According to the offering document, Dendreon expects to offer the stock at $27.07, and the resulting dilution per share to new investors will lower the price to $23.12.

Investors in Dendreon will take the hit in their stride. As BNET has noted before, this company has essentially become an act of faith for those who believe that Provenge will become a blockbuster that could sell $1.2 billion to $2.5 billion in revenues.

CEO Mitchell Gold didn't wait for the new stock to sell some of his shares, however. In April he exercised 542,928 options priced at $4.41 - $9.25 per share and sold 600,000 shares and generating $14.9 million before costs. Since then, he's disposed of several other small tranches -- three lots in October alone -- and netted another $223,122 at prices between $22.99 and $29.51. Some of the sales appear to be scheduled.

He might as well. It will be a disaster for Dendreon if the FDA rejects Provenge. As this SeekingAlpha blogger notes:

If Provenge is once again pushed aside by the FDA, then I would expect to see a public outcry larger than the one that was ignited in 2007 that saw patients and investors alike join forces to lobby the agency for answers.

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