By Paul Honda
paul@hondareport.com
Wednesday, June 6, 2007

KAMUELA — I know for sure now that I'm a Townie.

Yeah, I lived on the Big Island for nearly a decade. While most people spend their 20s in a party city, I spent most of those years hearing this weird humm as I tried to sleep "early" at midnight.

It was the sound of silence, of course. I eventually adjusted and enjoyed the small-town life in Kona, spending endless hours on the long, lonely stretches of highway around the island. They call it "Big" for a reason, I learned.

I've only been back a few times, far less than I could've imagined. Flying here early in the morning was smooth, and it was odd to see that the car rental kiosks had moved from the terminal area. All because of 9/11, someone told me.

That was fine. It only took a few minutes before my van picked me up for the ride. The driver turned out to be Matt Kaili Sr., whose son, Matt Jr. was one of the few athletes I've ever given a nickname. Back in the early 1990s, Matt Kaili Jr. was a phenomenon. As a running back at Konawaena, he made his mark in a crucial showdown at HPA.

On one play, HPA's defenders — they had a very good defense that season — caught him in the backfield. Someone had missed a block and Kaili was dead to rights. Instead of folding, he made a U-turn, raced to the opposite side of the field and turned the corner. Ahead lay 80 yards of open field. Nobody touched him.

From that moment on, he became Matt "Missile" Kaili. Since I was writer and editor, the nickname stayed in the story and was displayed prominently in the headline. Nobody argued. Everyone in the BIIF knew he had talent.

He was a burner compared to the previous All-BIIF running back, Roman "Rocket" Hao. Roman combined power and nifty footwork, plus good acceleration and power on first contact. Matt was pure adrenaline.

He went on to college, played some football, dealt with a knee injury and got his degree. Matt Sr. says Junior is working locally as a manager. Probably still got some speed.

I checked in at my hotel and caught up with the market, which was down for a second day in a row. It had to stop and catch a breather sometime. I still don't see any signs of a major correction, no indication of a downturn. Earnings are so powerful all over the board, domestically and globally. (More about the market at the tail end of this column.)

Got some work done by afternoon, which led me to where I am right now: Starbucks in Kamuela. I didn't know where it was. I just had a hunch that a town like this would be a perfect location. I recommend the Vanilla Bean Frappuncino. As good as any I've had on Oahu.

And this is how I know I'm a Townie. I could've stopped by any of the local diners, but my mind was on Starbucks the whole time. I've been sucked in. True, the general design of each Starbucks is pretty much the same. I gotta say though, this is the only one I've seen that has a fireplace.

Manic market: I kept a close eye on CROX, which I bought a few shares of recently, and my DNDN. Crocs is probably overbought, probably overvalued despite astronomical growth numbers. But it is still in its infancy as a major player, "only" a 3-billion dollar company with a huge upside ahead. It closed today at 85.20, so I'm up almost 4 bones. Doesn't matter for awhile though, since I could only afford a few shares. I'll care more where CROX is sitting in a year or two.

As for Dendreon, I caught the fever and went against basic fundamental rules (my own) when I bought in. Sure, the FDA has its share of dysfunction and ethical issues. Nobody forced me to buy DNDN shares. Though I'm down big since the FDA's shocking decision to delay Dendreon's Provenge treatment for prostate cancer, I haven't given up or sold a share.

On one hand, prostate cancer advocates see Provenge as a beacon of hope for longer life. The FDA's curmudgeons focus solely on numbers that pertain only to stopping cancer (with toxic chemotherapy) instead of actual quality of life, extension of life.

The biggest problem I have with Dendreon is leadership. Though the science of Provenge is tremendous, the "coaching" leaves something to be desired. The CEO has been spotty at times, not transparent as many great CEOs and coaches are. It's not enough, of course, to shoo me away, but it's another reason why I won't buy more shares any time soon.

That being said, I'm learning a lot about what biotech babies go through. The politics of not partnering with a big pharma company are almost suicidal for any small-cap biotech like Dendreon, and the proof is in the pudding. The best move the company made since the FDA debacle (that agency is full of shenanigans which haven't been seen since Watergate) is the agreement with Merrill Lynch to sell convertible bonds.

This gives Dendreon a much needed infusion of $75 million without a ton of risk. This allows the company to complete its trial/study on Provenge and possibly relaunch work on other novel immunotherapies like Neuvenge for breast cancer.

I went into DNDN thinking big results could happen in weeks. Now, I'm content to wait out this process, whether it hits a milestone this year, next year or 2010. And though I don't want to get more lopsided that I already am, the deal with Merrill Lynch is (no pun intended), bullish. Which means, at $8.26, DNDN shares could be selling at a major discount. Time will tell. I won't rush.

Besides, I'm still glued to Apple, Google, Baidu and Spartan Motors.

Disclaimer: Pupule Paul is long in DNDN and CROX.

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