Four solid biotech stocks for 2010

OFDMGuy

(1) DNDN
FDA approval of Provenge may occur anytime between Feb. and end of April. After Provenge Phase III study meeting statistical end points last April, DNDN has been trading sideway for rest of 2009. The management is doing all the right moves, including addition of Hans Bishop (former President of Bayer) as COO and Ian Clark from Roche to BoD. Dendreon recently did a stock offering at $24.75, so the company is in strong cash position. The only risk is that FDA may delay the approval due to potential manufacturing issues. Based on my own following of the company since 2006, Dendreon should have learned its lesson from 2007, and manufacturing issue should not be a concern. Unlike many other biotech companies, Dendreon is holding world-wide right to Provenge and its cassette platform technology can be applied to other forms of cancers. Since the company is slow to sign its ROW partner and launch clinical trials for other cancers, my own assessment is that Gold Mitchell, Dendreon's CEO, is looking to sell the entire company. I believe the bidding price will start from $65 minimum. It is worth to mention that Dendreon's CFO Schiffman, who came from Affymetrix, is one of the best out there.

(2) ELN
Phase III study result in Alzheimer's disease will be released end of 2010. Since Medivation (MDVN) will release its Alzheimer's Phase III study in Q2,  one should expect ELN to have a sympathy move along before a its own runup towards year end. ELN is still dirt cheap here and should be aggresively accumulated. A smart trading plan is to trade around a core position so that you are going through Phase III announcement with free tickets.

(3) VNDA
VNDA was a star for 2009. It went from $1 to $16! The stock was punished unfairly recently because a widely anticipated buyout didn't happen. Instead, Novartis will market Fanapta, the drug which has been fully approved by FDA, in a 12 billion dollar market. Vanda will receive 400M+ cash from Novartis plus double digit royalties. The stock is dirt cheap right now at $11.25 per share with only 300M market cap. In 12-month, VNDA will likely trade north of $22. Check out of the options insiders recently got. This is a very safe play, one can consider overweight his portfolio.

(4) HGSI
What can I say more about HGSI. It was one of the biggest winners in biotech sector in 2009. GS recently did a stock offering for HGSI and it hardly caused a dent on the stock price. HGSI is currently trading above $30 solidly, and I expect the stock to print $50 in a not-so-distant future.

Disclaimer: I own DNDN and VNDA shares, and trade HGSI & ELN frequently.

LLN

Thanks,

Jeff

I like ELN for the long term