Dendreon Jumps 30% on Provenge Sales

It's early in the year, but it looks as though Dendreon (NASDAQ: DNDN ) is
making a serious bid to return to respectability. Shares of the Seattle-based
biotech firm soared more than 30% Thursday as the company reported that sales of
its cancer drug Provenge were about $82 million. That figure was more than both
analysts and the company itself expected. "We believe that the improved
reimbursement landscape, along with our improved sales execution and physician
education initiatives, are contributing to the increased use of Provenge in the
community urology and oncology settings," president and CEO Mitchell H. Gold
said in a company news release. "We had a strong fourth quarter that exceeded
our expectations. As we look to 2012, we expect modest quarter-over-quarter
growth while we focus on bringing additional clinics on board and converting
them into steady prescribers." At $10.46 a share, the company still has a
steep climb to reach the $54-plus price the shares were commanding in May 2010.
Even as recently as last August, Dendreon was trading at $35. That's when the
bottom fell out as the company dramatically cut its sales forecast for Provenge.
Disappointed investors abandoned the stock in droves, cutting the price by
two-thirds in a single day. Then in November, when Dendreon forecast that sales
of the drug that month would be lower than October's $26.4 million, investors
took the company to the whipping post once more, beating the price down to its
52-week low of $6.46. The outlook for the once heralded blockbuster looked grim,
indeed. Now, with full-year revenue of about nearly $230 million, Provenge and
Dendreon have been vindicated to some degree. "Theres a lot of exuberance
today," Joseph Pantginis, an analyst for Roth Capital Partners in New York,
told Bloomberg in a telephone interview. "The most important thing is that
people are gathering some comfort because they look like theyre on the right
track with regard to reimbursement. That had been a major overhang." David
Nierengarten, a San Francisco-based analyst with Wedbush Securities Inc., was
less sanguine about the drug's prospects. "A large source of the surprise
here is because they signed up more accounts than probably they, or anyone,
expected," he told Bloomberg . "But the repeat business here is not going to
sustain this kind of quarter-over-quarter growth in the future." Once seen as
a potential blockbuster, Provenge was approved in April 2010 as the first
therapy in the U.S. that trains the body's immune system to attack prostate
cancer cells as if they were a virus. The treatment, which costs $93,000, was
cleared for patients with advanced cases of the disease after Dendreon's
three-year effort to persuade the FDA to back the medicine. Concerns centering
on government reimbursement have dogged sales of Provenge. Doctors don't like
the fact that they have to lay out the $93,000, then wait for reimbursement from
payers. As of this writing, Barry Cohen did not hold a position in any of the
aforementioned stocks.