Why Dendreon Shares Plummeted

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of drug developer Dendreon (Nasdaq: DNDN  ) plunged 21% on Tuesday after its quarterly results and outlook disappointed Wall Street.

So what: Dendreon's first-quarter loss narrowed to $103.9 million (versus a loss of $112.8 million in the year-ago period), but modest sales of its prostate cancer treatment Provenge, coupled with an equally uninspiring full-year outlook, are reigniting concerns over its prospects going forward. Management said it would take "time and significant education" to see higher adoption rates for Provenge, but the continued losses and weak sales are weighing on investor patience.   

Now what: Dendreon expects second-quarter sales growth in the low single digits and sees only modest growth for the rest of 2012. "We continue to work on generating data for Provenge and our pipeline," CEO John Johnson reassured analysts on a conference call, "and we are preparing Provenge for global expansion." While Dendreon remains just too volatile for average Fools, today's big pullback -- the stock is now off a whopping 80% from its 52-week high -- might be an attractive opportunity for biotech-savvy bargain hunters.

Interested in more info on Dendreon? Add it to your watchlist.

Fool contributor Brian Pacampara owns no position in any of the companies mentioned. The Fool owns shares of Dendreon. Try any of our Foolish newsletter services free for 30 days.

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  • Report this Comment On May 08, 2012, at 3:55 PM, techperson wrote:

    DNDN has beaten analysts' revenue estimates for the last four quarters, and did it again in March. The new management is sandbagging to make it easy to surprise to the upside and build credibility. They admitted to surprising strength in the month of March, but said they didn't want to say it will continue. They said if they get a pop in usage out of AUA and ASCO, they wouldn't want investors to think it is repeatable. R-i-i-i-g-h-t.

    Look for another "surprise" when they announce the June quarter.

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