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Dendreon Earnings Suck, But Still Send DNDN Stock Higher

Dendreon (DNDN) stock opened slightly higher this morning, despite the fact that Dendreon earnings for Q3 rolled in even worse than expected.

DNDN stock Dendreon earningsProduct revenue for DNDN — which is to say revenue from its only product, prostate-cancer drug Provenge — fell to $68 million, down 13% from the $77.9 million generated in the same quarter a year earlier. Plus, the pros had projected DNDN sales would be $76.7 million for the quarter.

Dendreon earnings came in 44 cents per share in the red — technically an improvement on the loss of $1.04 per share of DNDN stock took in the same quarter in 2012, though a loss is still a loss. And in this case, it was still a disappointment, as analysts expected the biotech company to “only” lose 42 cents per share of DNDN stock.

The weak Dendreon earnings results for Q3, however, are the least of the company’s problems at this point — as evidenced by the fact that DNDN stock has still lost more than half of its value year-to-date despite this morning’s small bump.

The most troubling thing for DNDN stock owners is been the fact that last quarter’s deteriorating sales of Provenge simply extends a two-year trend of waning sales. That’s bad news for DNDN considering the drug was at one point being ballyhooed as a game-changer in the cancer world.

And unfortunately, Dendreon stock owners may find things are going to get worse before they get better … if they get better at all.

DNDN Stock Owners See Little to Like

DNDN stock investors have to be losing sleep over the fact that sales of Provenge peaked in the first quarter of 2012, at $82.1 million. Although it would be inaccurate to say revenue has fallen every quarter since then for Dendreon, it wouldn’t be inaccurate to say it’s fallen more often than not. DNDN sales have most definitely been in a declining sales trend since that peak.

Last quarter’s revenue of $68 million is just a few thousand dollars away from being the weakest sales DNDN has seen since the company’s product sales peaked in early 2012. That low-water mark is the top line of $67.6 million, seen in the first quarter of this year for.

Point being, there’s a broad, measurable sales downtrend in place here for DNDN. And considering Provenge has been on the market since late-2010, it’s not as if any owners of DNDN stock are willing to adopt a “let’s give it some more time” stance at this point. It’s had time to get going.

If the drug was going to be wildly marketable, this is the time when revenue would be growing exponentially — not fading.

DNDN Has a Plan, But…

Though it was inserted into Tuesday’s Dendreon earnings report as if it was new, cost-cutting measures DNDN discussed in the press release have actually been underway for a while.

For perspective, Dendreon earnings were habitually reported asquarterly losses in the area of 70 cents (or more) per share of DNDN stock between 2010 and late 2012. That has whittled that loss down to less than 50 cents per DNDN share for the past four quarters.

The point: It clearly wasn’t rising sales that led to stronger Dendreon earnings results. It was expense control doing the job, then and now. Still, the fact that DNDN felt the need to redeliver that cost-cutting message in the headline of Tuesday’s press release may underscore that initiative.

But DNDN has also been clear about the hope that it can sell itself to another drugmaker that could perhaps do more (and do so more efficiently) with Provenge and the rest of the Dendreon pipeline. (The company didn’t make mention of it within Tuesday’s Dendreon earnings announcement, though.)

The fact that DNDN explicitly wants to proverbially punt hardly instills confidence in future Dendreon earnings reports.

Even more alarming is that nobody seems interested in buying the DNDN, even though Dendreon stock is currently priced at a palatable 1.25 times its trailing twelve-month sales.

As of this writing, James Brumley did not hold a position in any of the aforementioned securities.

Article printed from InvestorPlace Media,

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