SAC Capital May Have Lost $196 Million on Dendreon Plunge

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SAC Capital May Have Lost $196 Million on Dendreon Plunge
Steven Cohen, founder and chief executive officer of SAC Capital Advisors LP. Photographer: Ronda Churchill/Bloomberg

SAC Capital Advisors LP, the $14 billion hedge fund run by billionaire Steven A. Cohen, may have a one-day paper loss of about $196 million from its stake in Dendreon Corp., the drugmaker that plunged the most ever after it withdrew its 2011 revenue estimate.

SAC Capital owned 8.2 million shares of Seattle-based Dendreon as of March 31, making it the biggest shareholder, according to a regulatory filing. Dendreon fell 67 percent, or $23.87, to $11.97 at 3:15 p.m. New York time in Nasdaq Stock Market trading, the largest decline since its initial public offering in June 2000.

Chief Executive Officer Mitchell Gold said in a statement yesterday that the company was educating doctors about prostate-cancer drug Provenge and a decision last month by the U.S. Medicare and Medicaid program to pay for the $93,000 treatment. Billionaire George Soros, who last week told clients he will be return their money, also had a stake in Dendreon.

SAC Capital’s CR Intrinsic unit held 625,000 shares of Dendreon as of the end of the first quarter, according to a filing. Jonathan Gasthalter, a spokesman for the Stamford, Connecticut-based hedge fund, declined to comment.

Soros Fund Management LLC in New York held 4.7 million shares as of March 31, according to filings. Citadel LLC, Balyasny Asset Management LP, both in Chicago, and Millennium Management LLC, Healthcor Management LP and Visium Asset Management in New York were among the hedge funds that also owned Dendreon stock, according to filings.

Revenue Forecast

Dendreon previously estimated annual revenue of $350 million to $400 million. The company believes the market size for Provenge is substantial, though it expects only modest increases in sales each quarter for the remainder of the year, Gold said in the statement.

The main stumbling block for Provenge is the lack of knowledge about insurance coverage, he said. The Centers for Medicare & Medicaid Services issued a final ruling in June saying the $93,000 treatment is “reasonable and necessary” for men with advanced prostate tumors resistant to hormone therapy who have minimal or no symptoms.

The agency’s decision “will have a significant impact on increased physician adoption,” Gold said in the statement. “However, we believe this will take time, and for the remainder of 2011, the launch trajectory will reflect a more gradual adoption of Provenge as physicians gain confidence in this positive reimbursement landscape.”

$48 Million Sales

Provenge, the first approved therapy that trains the body’s immune system to attack cancer cells as if they were a virus, generated $48 million last year. Analysts surveyed by Bloomberg expected revenue to reach $370 million this year if the company boosts its capacity by expanding a New Jersey plant and adding new manufacturing sites in Los Angeles and Atlanta.

Instead, the drugmaker will reduce its expenses and eliminate positions to meet the lower demand for the product, Gold said yesterday. The company didn’t specify how many jobs would be lost.

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