Wednesday afternoon, Dendreon Corporation (DNDN) got the "all clear" from Medicare for coverage of its breakthrough cancer treatment, Provenge. The agency's decision memo is technically a "proposed draft", subject to a 30 day comment period and possible revision before a "final determination" on or before June 30, 2011. But for all intents and purposes, the language and supporting reasoning of the memo make clear that coverage by Medicare for Provenge is going to happen.

Coverage breakthrough

For Dendreon this is huge. Shares traded into the 50's immediately after FDA approval of Provenge in April 2010. They then drifted into the 40's after the initial spike, and were knocked as low as the 24's after-hours on June 30, 2010 when Medicare announced that it was going to conduct a review of coverage. This price action was certainly understandable, since most men who suffer from the labeled indication for Provenge--late stage metastatic

We first advocated buying Kendle International (KNDL) back in November, when the shares were trading around $9. After climbing close to $13, Kendle's shares were pounded after a lackluster earnings report and analyst downgrades. Now, the shares are back below $9.

Whenever stocks in our portfolio make precipitous moves, we take the opportunity to re-evaluate our positions. After examining Kendle's Q4 earnings report, we have started to add more KNDL shares to our portfolio. We'd like to update our initial rationale for buying the shares and give a few more reasons why we think the valuation is compelling right now. Here are a few new reasons why we like Kendle:

Honest, Capable Management

We find cheerleading, exuberant management teams to be nauseating, and these sorts of teams all-too-often prove themselves to be dishonest. Kendle's management team tends to faithfully report on the company's performance and to conservatively predict its future.

There's something about a high-flying stock with the type of technology that only a Martian could engineer that piques the interest of most investors. That's because these equities have a lot of growth behind them, and that is where the action is if you want to make money. Warren Buffett suggests to stay within your "circle of competence," which basically translates into, "invest in what you know" -- but that is difficult in the space-age world in which we live, where technology advances at the speed of light.

Illumina (ILMN) is one of those stocks that seems to have invaded us from the outer limits. The maker of next-generation DNA sequencers has had a torrid advance in the last six years, rising from $2 in 2005 to its current price of $70. Illumina has always intrigued me and I've followed it closely for years, but have refrained from buying it

Last week, Exelixis (EXEL) presented updated results for its lead agent cabozantinib (also known as XL184 or “cabo”). Cabo had become a closely watched agent last year after demonstrating unique and unprecedented activity in prostate cancer patients, leading to either partial or complete resolution of bone scans in 19 out of 20 patients. This effect had never been seen with any of the approved or investigational agents for prostate cancer, leading to widespread enthusiasm but also some skepticism.

Following last week’s data, it is now safe to say cabo has a real effect on bone metastases. The data set included 100 response evaluable patients, 62 of whom were evaluable for bone response. 85% of these patients experienced partial or complete resolution of their bone scans (the bone mets shrank or disappeared), 13% had stabilization and 2% (1 patient) had progression. Cabo had a profound effect on bone pain as well

On Friday, biotech company Genzyme (NASDAQ:GENZ) announced three-year follow up data from patients enrolled in the phase 2 trial of its enzyme deficiency drug, eliglustat tartrate.

The announcement comes two days after French pharmaceutical giant Sanofi-aventis (NYSE:SNY) announced it has agreed to acquire Genzyme for about $20.1 billion, or $74 a share. The deal is slated to close in the second quarter.

Eliglustat tartrate, an oral pill, is used to treat Gaucher disease type 1. Patients with Gaucher disease type 1 suffer from an enzyme deficiency that cause cells to gather in parts of the body, mainly in the spleen, liver, and bone marrow. The accumulation of the cells may lower blood cell count, and may cause spleen and liver enlargement, excessive bleeding and bruising, and bone disease.

Genzyme said that all of the patients met at least three of the four therapeutic goals, which included spleen and liver volume,

Biotech company United Therapeutics (NASDAQ:UTHR) said Tuesday it swung into fourth quarter profit as revenues grew by 53%.

For the fourth quarter, the Maryland-based company reported a net income of $9.5 million, or 15 cents a share, compared to a net loss of $3.3 million, or 6 cents a share, for the year ago period.

Excluding non-cash charges, earnings came in at $72.4 million, or $1.17 per diluted share for the period, beating analyst estimates of 62 cents a share. That compares to $36.2 million, or 62 cents per diluted share, for the prior year period.

Meanwhile, revenues were $166.5 million, up from $108.9 million a year ago, but fell short of the $174.9 million expected by analysts.

Sales of the company’s Remodulin, a

Alexion Pharmaceuticals (ALXN) reported revenues and major developments in its 2010 4th quarter report. Revenue continued climbing at a rapid clip, 2010 net product sales increased 40 percent to $541.0 million, compared to $386.8 million in 2009 and is projected to grow to between $715-$735 million in 2011. In 2010 non-GAAP net income increased 54 percent to $167.3 million compared to 2009 non-GAAP net income of $108.4 million. Alexion also updated on its recent acquisitions and pipeline progress.

For years the subject of buyout speculation, Alexion has remained a standalone company. With only a single product treating one indication, the company has built what is likely to be a billion dollar franchise. Its $8 billion market cap is now more than half that of biotech heavyweight, Biogen Idec (BIIB).

Soliris was approved for the treatment of PNH in 2007 in the U.S. and Europe, and early 2010 in Japan; the

Shares of Sigma-Aldrich (NASDAQ:SIAL), a company that makes biochemicals and equipment used in life science research, dropped 6% on Wednesday after fourth quarter results fell short of analyst estimates.

For the fourth quarter, the St. Louis-based company earned $94 million, or 76 cents per diluted share, compared to $93 million, or 75 cents per diluted share, for the year-ago period.

Revenues were $582 million, up from $573 million, driven by a 3% and 4% growth in the research and the fine chemicals businesses, respectively.

The results fell below analyst estimates of 80 cents a share on revenues of $587 million.

For the full year, the company earned $384 million, or $3.12 per diluted share, on revenues of about $2.3 billion. In 2009, the company earned $347 million, or $2.84 per diluted share, on revenues of $2.1 billion.

At year end,

Simulations Plus, Inc. develops and produces software for use in pharmaceutical research and education, as well as provides contract research services to the pharmaceutical industry. Its software products include ADMET Predictor that offers numerical models for predicting absorption, distribution, metabolism, excretion, and toxicity properties of chemical compounds from their molecular structures; MedChem Studio, a tool for medicinal and computational chemists for data mining and designing new drug-like molecules; DDDPlus, a software program that is used by formulation scientists to reduce the number of cut-and-try attempts to design new drug formulations, as well as to design in vitro experiments to mimic in vivo conditions; and GastroPlus that simulates the absorption, pharmacokinetics, and pharmacodynamics of drugs administered to humans and animals. The company also provides contract research and consulting services in the areas oral absorption and pharmacokinetics.

In addition, it develops and sells interactive, educational software programs that simulate science experiments conducted

I wanted to share some thoughts about high risk, high reward biotechs in 2011. Eighteen months ago at optionszone.com – on July 8, 2009 – I recommended five stocks, ostensibly involved in biotech but essentially cutting edge medical products companies.

Here is how they have done:

Cepheid (CPHD): Up 168% from $8.83 to $23.65

Cerus (CERS): Up 261% from $.86 to $3.11

Curis (CRIS): Up 127% from $1.33 to $3.02

Illumina (ILMN): Up 122% from $31.10 to $69.04

Questcor (QCOR): Up 202% from $5.06 to $15.29

Do I have your attention? All five of these stocks have legs but the run has been so great and grand for some of them I have modified the list for 2011. And, since the market has been kind to you the past twenty seven months, these are all very high risk, stop your heart stocks facing major binary events that could make or

Previously I had written about Synergy Pharmaceuticals (SGYP.OB) and the current status of its drug trials. Biotechs that advance out of successful Phase II/III trials have the best opportunity for significant increases in shareholder value. In the case of Synergy, the company provided a very important update to its testing schedule on Friday. When I last reported on Synergy in November, the company was planning its next Phase IIb trials. Typically Phase IIb trials are specifically designed to study efficacy (how well the drug works at the prescribed dose(s)). Now on Friday the company made this announcement.

Synergy Pharmaceuticals, Inc, a developer of new drugs to treat gastrointestinal (GI) disorders and diseases, today announced that the next clinical trial of plecanatide to treat chronic idiopathic constipation patients, planned to begin in the second quarter of 2011, has been designed as a Phase II/III trial.

This change should not be lost

Specialty pharma business Impax Laboratories (NASDAQ: IPXL) confirmed Friday that Abbott Laboratories (ABT) and an Abbott subsidiary filed suit against the company for patent infringement, in connection with a generic version of Simcor extended-release tablets, a drug used to reduce elevated cholesterol levels.

California-based Impax said it filed for an abbreviated new drug application (ANDA), containing a "paragraph IV certification", for a generic version of Simcor with the U.S. FDA.

Following receipt of notice from the FDA that it accepted the ANDA application, the company said it notified the new drug application holder and patent owner (Abbott

Canadian biopharmaceutical company Bioniche Life Sciences (BNHLF.PK) said Monday that it is offering up to 20 million new common shares, under two concurrent financings to be held in Canada and Australia.

The share offer in Australia is the lead-up to our plan to list the company on the Australian Securities Exchange,

said chairman, president and CEO Graeme McRae.

The company has a solid and growing Animal Health business in Australia, and a loyal and long-term shareholder base there. The listing will provide investors with greater liquidity, and is an excellent opportunity

Aoxing Pharmaceutical (AMEX: AXN) announced the SFDA granted a Manufacturing License to its joint venture, Hebei Aoxing API Pharmaceutical Company, Ltd. Aoxing expects to begin commercial production at the JV next year. The JV’s first product will be the API for naloxone hydrochloride, an opioid antagonist administered to counteract the effects of narcotic drug overdose.

The JV, owned 51% by Aoxing, is a partnership with Macfarlan Smith Ltd, the Hong Kong subsidiary of Johnson Matthey Plc., a specialty chemical company headquartered in Great Britain.

The two parent companies will contribute $15 million in capital to the JV over five years. Macfarlan will supply technology expertise and an unspecified portion of the capital to the joint venture. Hebei Aoxing Pharma will add capital, fixed assets and its API manufacturing licenses. The JV was announced in October of 2009.

Aoxing has a license to produce narcotic drugs in the PRC, one of

On November 3, 2009, Novartis (NYSE: NVS) announced it would pay $125 million for an 85% stake in vaccine maker Zhejiang Tianyuan Bio. One year later, the transaction has still not been approved, casting some doubt over whether it will ever be closed. Although the deal stipulated just one year for completion, it also locked up Zhejiang Tianyuan for 18 months, implying that the acquisition is not completely dead.

There is some speculation that China authorities want more technical support from Novartis, while Novartis wants more financial incentives from the government. These rumors are attributed to unnamed sources, and no official spokespeople have commented on the situation.

Tianyuan has an order for 20 million doses of swine H1N1 influenza vaccine. Novartis supplied 150 million doses of the H1N1 vaccine during last year’s outbreak, showing how closely the companies fields of expertise are to each other.

According to sources, Tianyuan produced

Aastrom Biosciences’ stem-cell therapy for treating critical limb ischaemia (CLI) had a happier outcome then its gene therapy competitor Vical in that the stem-cell approach reported positive clinical data last week (Gene therapy suffers another blow as Temusi crashes out). Unfortunately, the stock market reaction was strikingly similar.

After a doubling of Aastrom's (ASTM) share price over the last three weeks to $4.20, investors took their profits and ran; the stock tumbled 35% to $2.71 on November 18 when encouraging interim phase IIb results were announced for Aastrom's CLI candidate. It may not have helped that the Michigan group recently signalled that dilutive share offerings are likely in the not-too-distant future to help fund a phase III trial.

Positive signs

Aastrom uses patients’ bone marrow to manufacture its vascular repair cells product to generate regrowth of blood vessels in patients with (CLI), a disabling condition that results in a majority