Lost in the multitude of "junk" stocks rising 30-50% in single sessions last week as speculative fever hit a high pitch, the story of Dendreon (DNDN) was somewhat lost in the mix. (Apr 14: Dendreon Cancer Vaccine Appears to be a Success; Analysts Miss It) Most weeks Dendreon's performance would stick out like a sore thumb but many Tom, Dick, and Harry $2 stocks were surging for no good reason...

I mentioned in the Apr 14th piece that a reader had emailed me about this name... I often get reader suggestions and generally take at least a quick glance. Basically, anything under $5 I don't look at (most mutual funds don't even allow their managers to invest in such merchandise) but usually stocks below $5 are there for a reason; and it's not a good reason.

In the comments section of that entry a reader said it would be interesting for the person who nominated Dendreon to step up - so I asked for an explanation of the thought process of how they found the stock, how long they have been following it, and what they believe the future of the stock will be. Below I will copy over the response. But first let me show you the content of the original email to me, dated March 13th, 2009

By the way, one of the prostate cancer vaccine company will be giving the long awaited phase III results. company is DNDN and you can make lot of money currently it is depressed under 4. There is a potential to hit big may be closer 20 bucks if results are favorable. Interim results they announced few months back and they had achieved 20% survival benefits and the targe is 22%. The results will be announced by April end. But most likely it is gonna be around mid April.

I have never contacted you and would like to do a favor by letting you know about it as you have been providing very good info.

Now I am not one to turn down favors, but trust me I get a lot of sub $5 stock favors on a weekly basis ;) Frankly I did not even look into it once I saw the price and sector - I don't do biotech except for a handful of large cap stocks from time to time, and even those are frightful as a FDA decision here, or a recall there can destroy your capital in minutes. Obviously in retrospect this was one favor I should of cashed in on. Aside from showing egg on my face the purpose of this post is perhaps to give hope to non daytraders, show how this story was dug up, show the value of serious patience (I lack this at times), and most importantly forward looking there is a very good chance the story is just beginning.

Below is the background by reader Inkisar who brought DNDN to my attention. He is a Software Engineer by profession but have been investing in stocks for about ten years as part-time. Below is his thought process on how he found the stock, thought it was not just another biotech gamble, and why he continues to hold the stock.

(Sorry for the font changes; this has been copied from various source data - everything below this is Inkisar's commentary)
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I am not a day trader and I focus on stocks invoved in emerging technologies in biotech and alternate energy. Though it takes quite long to benefit from investment but it does pay off big time.

But to cover my cost, I do take profits around significant news leaving the core position until final results. I am a regular reader of Mark's Fund My Mutual Fund column and benefited by trading in APWR.

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In 2006 I started looking into biotech companies with disruptive technologies. While researching, I noticed the following companies with huge potential.

Sirna Theurapeautics - Involved with RNAi technology to treat diseases by manipulating gene expressions. It was acquired by Merck in 2006.

Dendreon - Involved in developing immunotherapy vaccine for Prostrate Cancer. Currenty therapies include Chemotherapy.

I did invest in Sirna but unfortunately didn't hold the stock until its acquisition by Merck. I started buying Dendreon Stock in early 2006 when it was in 5 dollar range and rode into the 2007 spike when an Advisory Committee voted unanimously in favor of Dendreon. Unfortunately FDA denied approval acting against the committee's decision and stock collapsed after reaching around 20 dollars. It was a temporary set back as FDA had asked for more data. Sold all my positions around 7 dollar for a little profit expecting further downside as analysts were not hopeful of the innovative vaccine and data was not going to be available until after couple of years. Subscribed to David Miller's biotech analysis and kept following the company. Couple of other competitors like Cell Geneses failed badly leaving just Dendreon in the race of vaccine. I was waiting for dips and started buying the stock back in dollar 3-4 range earlier this year as I was sure to witness another round of upside volatility close to the announcement of results. Last year Dendreon had taken a peak of data and they were at 20% while the target agreed by FDA was 22%.