Stock Profile: Dendreon (DNDN) with Reni Benjamin of Rodman & Renshaw

Dendreon is a stock with an interesting history that includes at least one radical short-selling conspiracy theory. Yesterday, Dendreon's valuation fell more than 60% in after-hours trading following a negative earnings release that caught investors and analysts off guard. We spoke with Dr. Reni Benjamin, senior biotechnology analyst at Rodman & Renshaw to get the details on the downward spike and what it means for Dendreon moving forward. A downward spike of that magnitude, post-earnings, suggests that investors were misled. But Benjamin takes it easy on the company's management:

"Management credibility is definitely damaged. But in their defense, this is a novel therapeutic, and there are a lot more logistical issues involved and you have to give them some leeway as they try to work through these issues. Their bullish outlook, however, has definitely been destroyed."

Dendreon's flagship product, Provenge, has lost the "blockbuster" image that the company was enjoying leading up to this earnings release. Benjamin also outlined fundamental issues with the company:

"Dendreon fell for a number of company-specific reasons. One, the company removed their guidance for the year, which was previously 350 to 400 million. They removed it because they no longer believe they can achieve it and more importantly, they no longer have the clarity to say what they will be able to achieve. Uncertainty is one of the things Wall Street hates most."

The company also identified several issues that have made for lackluster sales of Provenge. These issues included a novel Medicare reimbursement scheme that physicians are still getting used to, ease of use of the drug, and trouble identifying eligible patients. Benjamin pointed out, however, that this sort of volatility is common in the biotechnology market. In the long term, he expects value will creep back up. Listen to the full discussion for details.