Turnaround opportunity for Dendreon (DNDN)?

For those who follow the biotechs, they probably know very well about Dendreon (DNDN), the only company which has successfully made an oncology vaccine that can prolong life for prostate cancer patients. Two years ago when DNDN was submitting the indication for approval, I actually watched the discussion of the ODAC, a FDA advisory board for oncology products where external experts provide their opinions and recommendations. The debate and vote were not straightforwardly positive for DNDN. I bet DNDN could not win an approval immediately, so I shorted DNDN. Of course I was wrong. It got the approval and the stock went wild. See the chart below. DNDN jumped from around $7-8 pre-approval to mid $20s instantly. I heard a biostats guy in BMS bet with over $100k for its approval and instantly became a millionaire. Given the high expectations for the success of the company, the stock went up further to its peak of over $50. Unfortunately everything is history now. In less than 2 years, its stock plunged over 70% to $7 or so, back to its pre-approval level! I wish the BMS guy already cashed in the huge profits before the plunge.

What went wrong with DNDN? The poor judgement and execution by the top management of the company is the key factor for its failure. The prostate vaccine is extremely expensive, something like $90K for a course. The problem is that physicians or patients will need to pay first from their own pocket while waiting for reimbursement that may or may not be approved. Of course there is a huge reluctance for anyone who has to pay such kind of money without knowing if they will get it back. So the sales of the vaccine, its only product, fall hugely short of expectation. Given the very high expectation already priced in the stock price, of course investors are extremely nervous and upset. So they simply run.

When everyone runs away, I start to become interested actually. Heck, this is a company with a still promising oncology product which has shown life-saving benefits. Does it make any sense that its share price is at its pre-approval level, almost like it hadn't got the product approved? I have a hard time to believe it. More importantly it seems the company management has realized where the problems are and are make great efforts to tackle them. Based on the latest earning call, significant improvement has been made in this front and likely sales will get much improved moving forward. I think there is a good opportunity here, especially when the sentiment for the company is extremely pessimistic. Any improvement in revenues will likely beat the very low earning expectation, which will trigger another run-up of the stock price. I think this is a good speculative opportunity for a positive turnaround for Dendreon.