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To: allen menglin chen who wrote (106011)	7/12/2000 9:42:26 AM
From: H James Morris	Read Replies (1) \| Respond to of 164684

>James, hope u can start sharing your bear picks Allen, The only current bear pick I have is Crossroads (Crds). Btw I still love IPO's. > New York, July 11 (Bloomberg) -- If William Tanner didn't work at SG Cowen he probably wouldn't have published a research report on Dendreon Corp. today. He said he would have waited a year or more to assess the effectiveness of Dendreon's prostrate cancer vaccine. Because SG Cowen helped manage the company's share sale, however, the biotechnology analyst moved faster, recommending investors buy shares of Dendreon. ``It's a given that if you do the investment banking and get the banking fees, then you'll provide investment coverage,'' said Tanner, who began coverage 25 days after the IPO. The other two brokerages that helped arrange the share sale - - Prudential Vector Healthcare Group, a unit of Prudential Securities Inc., and Pacific Growth Equities Inc., a San Francisco- based firm -- also recommended investors buy shares of Dendreon today. Robert Toth, Prudential Vector's biotechnology analyst, started the stock with a ``strong buy'' rating and said shares could reach 31 within 12 months. Thomas Dietz of Pacific Growth began coverage with ``strong buy'' and a price target of 34. Dendreon rose 2 3/16, or 13 percent, to 19 5/16, giving the stock a 95 percent gain from its June 16 IPO price of 10. If his firm hadn't underwritten Dendreon's shares, he would have deferred coverage until the company submitted an application to the Food and Drug Administration for its prostate cancer vaccine Provenge, or until test results showed conclusive results, Tanner said. Toth and Dietz weren't available to comment. Trading and Research For a Fee Underwriters agree to buy and distribute shares of a newly public company. That can be risky, because these firms could be left holding shares that are worth less than they paid if there's little demand from investors. The underwriters also issue research reports on the companies to investors, and make a market in the stock after the sale so that investors can easily buy and sell shares. For those services, underwriters receive a fee of about 7 percent of the value of the initial public offering. Seattle-based Dendreon raised $45 million in its IPO on June 16, after lowering its initial price to 10 from a range of 12 to 14. If the underwriting fee was 7 percent, it would give Dendreon's three underwriters almost $3.2 million to divide. Prudential received 50 percent of the fee for taking the lead position, Tanner said, while SG Cowen received 30 percent and Pacific Growth received 20 percent. Tanner and the other analysts published their research on the first day they were allowed by Securities and Exchange Commission rules, which require underwriters to wait 25 days after an IPO to publish research. He couldn't wait much longer. ``The companies (you underwrite) won't be pleased if you don't'' release the report as soon as possible, Tanner said. ``If you're not supporting the stock on the first day you can, it looks like you're disinterested.'' Doing a Service The analyst said he was doing a service for investors by releasing his report before the company's drug results are known. ``You're helping them out,'' said Tanner, who worked as a molecular biologist doing diabetes-related research until he became an analyst about four years ago. ``If you had infinite confidence these companies would be successful, you'd do it before the data comes out,'' Tanner said, and he's ``absolutely'' confident the company will be successful. ``The company stands out for having the best clinical data so far,'' he said. ``We're confident they'll show that their strategy will work to treat cancers and there'll be a broader opportunity above what's going on with prostate cancer and myeloma,'' which is a blood-borne cancer. Tanner, 42, received a doctorate from Texas A&M University in 1988. He follows 13 companies, including Millennium Pharmaceuticals Inc. and Protein Design Labs Inc., from his Boston office, and has a ``buy'' or ``strong buy'' recommendation on all of them. He forecasts that Dendreon shares could reach 26 by the end of the year, a 51 percent gain from yesterday's closing price of 17 1/8. The stock didn't earn a ``strong buy'' recommendation primarily because the shares already have risen so much since they began trading. ``It's up double from where the IPO came in,'' he said. It's too early to tell yet, though, just how big a success its vaccines will be. ``They should have some good data in the next year,'' Tanner said. Jul/11/2000 18:08 ET