Why Dendreon Shares Soared

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 oncology-focused biotech company Dendreon (Nasdaq: DNDN  ) vaulted higher by as much as 32% after reporting third-quarter earnings results.

So what: For the quarter, Dendreon noted a 27% increase in sales of its late-stage prostate cancer treatment, Provenge, to $77.9 million. Dendreon also announced that revenue from community oncologists is leveling off, which is good news. In spite of large one-time costs associated with its restructuring that resulted in a wider loss than expected, it did reduce expenses by 20% and expects to save $150 million annually once its job cuts and restructuring is complete.

Now what: Instead of running out of the gate, Provenge continues to limp. The biggest obstacle remains the treatment's hefty $93,000 price tag, as well as its numerous competitors, including Johnson & Johnson's (NYSE: JNJ  ) Zytiga and Sanofi's (NYSE: SNY  ) Jevtana (which are both approved in Europe too), as well as the newly FDA-approved Xtandi from Medivation (Nasdaq: MDVN  ) . In order for Dendreon to head higher, it's going to need to gain European approval for Provenge and it'll need more favorable actions from insurers like Aetna (NYSE: AET  ) , which expanded its coverage of Provenge last month. The road is tough, but I feel Dendreon will eventually be successful.

Craving more input? Start by adding Dendreon to your free and personalized watchlist so you can keep up on the latest news with the company.