Will Insurers Determine Dendreon's Success?

Today, health-care analysts David Williamson and Brenton Flynn look at one of the most popular and controversial stocks in health care, Dendreon. 

Favorable news about insurance coverage sent shares of the company about 10% higher today, but they eventually retreated a bit by market close. 

Investors are increasingly seeing insurers being a major driver of biotech stocks everywhere, with the decision to insure or not being a make-it-or-break-it moment for those companies. Today Dendreon got a big break, but this is hardly the sort of decision investors can bank on.

Arena Pharmaceuticals is one recent success story in the industry after gaining FDA approval for its innovative obesity drug. While the future looks bright for Arena, there are still plenty of obstacles ahead. In our brand-new premium research report on Arena Pharmaceuticals, we walk investors through the must-know opportunities and threats facing the company. Since key news can develop quickly, we're also including a full year of updates for those who sign up. Click here now to learn more.

Brenton Flynn and Dave Williamson have no positions in the stocks mentioned above. The Motley Fool owns shares of Dendreon and Johnson & Johnson. Motley Fool newsletter services recommend Johnson & Johnson. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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  • Report this Comment On October 02, 2012, at 5:14 PM, lebronz wrote:

    Bravo Bill & Ted!

    I'll add FACTS that wallstreet & mainstream articles (including Motley Fewls) refuse to focus on:

    Here are quarterly Provenge sales revenue since launch upon FDA approval back in April, 2010.

    Q2/10: $2.8MM (30 dying men treated with Provenge)*

    Q3/10: $20.2MM (215)*

    Q4/10: $25MM (269)*

    Total 2010 Revenue: $48MM (514)*

    Q1/11: $28MM (301)*

    Q2/11: $49.6MM (533)*

    Q3/11: $64.3MM (691)*

    Q4/11: $77MM (828)*

    Total 2011 Revenue: $219MM (2353)*

    Q1/12: $82MM (882)*

    Q2/12: $80MM (861)*

    Q3/12: TBD

    Q4/12: TBD

    Total 2012 Revenue Pace: $322MM (3464)*

    So here is year over year sales growth since FDA approval:

    2010: 48 million in Provenge sales rev

    2011: 219 million in Provenge sales rev

    2012: 322 million in Provenge sales rev

    Like you keep saying Dave, "Pretty weak sales growth huh? Even tho numbers say otherwise. Pretty weak sales growth even when DNDN had to deal with the Medicare CMS reimbursement political process from June 2010 to June 2011 (rofl).

    Just because dndn pulled guidance in 2011 or fail to hit the manipulated analyst sales estimates, doesn't mean Provenge sales arent growing.

    Good video though Dave; I like the way your thumbs come together to indicate authority or knowledge on a particular biotech company.

    More facts from the American Cancer Society:

    *1-2 million men have prostate cancer (pc) in the U.S.

    *271,740 men will be/have been diagnosed with pc this year.

    *6% or about 60,000 men from the 1-2 million man pool are living with mCRPC (Provenge label). Mark Frolich just said in an article today that the number is 60-80,000 men. I will use the lower figure going forward. I always believed it was 100,000 men still living with mCRPC in the U.S. Robin Karnuskas from Deutsche once said 70,000 men in an article. (

    *30-35,000 men are "newly diagnosed throughout a year" with mCRPC from the 1-2 million man pool (Provenge label).

    *30,000 men die each year from pc.

    *The baby boomer influx over the next 2-8 years only sustains or increases these numbers.

    *The European population of men with PC is similar to the U.S (EU approval of Provenge is up 4 decision next Summer, 2013).

    When dndn makes the small move of treating 860 men per quarter to 1076 men per quarter they hit breakeven revenue rate of 100million.

    Treating 1076 men per quarter or a yearly rate of 4,304 men BARELY makes a dent in the treatment population of 30,000 men newly diagnosed with mCRPC throughout a year.

    And we're not including the 60,000 population of dying men currently living with mCRPC disease!

    Wallstreet hedgefunds/institutions realize the enormous market size this company owns and want all 154 million outstanding shares for themselves. Their greedy tactic is to spread and surround DNDN in FUD (fear, uncertainty, & doubt). Every article threatens growing competition will drive Provenge sales downward. We know (you still don't obviously), however, that ethical doctors will "sequence" the availabe therapies to prolong the dying mans life to the MAX!

    Every article, including Fewl articles, talk about plant closings and layoffs; But astute investors know that DNDN has 2 other, brand new, 155,000 square foot mfg facilities in CA and GA. Each facility has 36 hoods each and can support up $1B in Provenge and $2B with automation.

    Wallstreet has been steadily shorting shares to support this FUD since March 1st of this year to today (short interest has steadily climbed from 31 million to 43 million respectively). They have not covered either which indicates the shorting is simply price manipulation over time. The BULL RAID the other day from the Aetna news collected shares and then shorting has continued to incur losses for those that had auto-buys established.

    Institutional interest remains at 61% or 94 million shares out of 154 million as of 6/30/2012. Next institutional holdings release date is November 15 for Q3.

    In ending Dave,

    Expect the depressed share price to remain the rest of 2012 because CEO Johnson won't do another secondary. Greedy institutions will continue to "short to distort" to accumulate shares from the weak retail holders. You should keep buying and you should tell everyone about this opportunity if you're as ethical as you seem to be in your cool red sweater.

    The depressed stock price works for CEO Johnson too (former IMclone CEO appointed by corporate raider Carl Icahn who sold IMclone to Eli Lilly for $6.5B back in Oct, 2008) to offer valuable equity/stock incentives to new hires as dndn goes through restructuring and also end of the year stock rewards to his directors & other officers.

    Since coming into office back in Feb, CEO Johnson has established his underpromise this year - to overdeliver next year strategy to a tee. This is in the interests of the TOP 10-20 Institutional shareholders/hedge-fund analysts.

    CEO Johnson will overdeliver or announces his breakeven revenue surprise or bust through breakeven revenue surprise (>$100 million) during Q1 or Q2/2013 (along w/ reduced cogs) on April 30th or July 30th respectively.

    The EU decision is expected by in June/July timeframe and DNDN becomes a growth story like Celgene back when they launched Revlimid from that point onward.

    In the mean time, expect near-term Q3 results reported on October 30th to be mediocre like Q2. This gives you another opportunity to make a questionable video about struggling DNDN.

    Oh, and the stock price will touch $3.99 as institutional shorts short even more upon Q3 results release causing any weak retail or small tutes to sell their shares. Expect the major hedgie "short to distort shananigans" continue this year Dave.


    No reply necessary Dave as astute people at Motley don't respond to their one and only fan.


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