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 almost 40% 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 $10.62 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. “There’s 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 they’re 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.