Dendreon Earnings: An Early Look

Earnings season is now starting to wind down, with most companies already having reported their quarterly results. But there are still some companies left to report, and Dendreon (NASDAQ: DNDN  ) is about to release its quarterly earnings report. The key to making smart investment decisions with stocks releasing their quarter reports is to anticipate how they'll do before they announce results, leaving you fully prepared to respond quickly to whatever inevitable surprises arise. That way, you'll be less likely to make an uninformed kneejerk reaction to news that turns out to be exactly the wrong move.

Dendreon has been waiting a long time for its Provenge treatment for prostate cancer to take off, but success has been slow in coming for the small biotech. Is this quarter finally going to give Dendreon the breakout it's been looking for? Let's take an early look at what's been happening with Dendreon over the past quarter and what we're likely to see in its quarterly report on Monday.

Stats on Dendreon

Analyst EPS Estimate

($0.56)

Year-Ago EPS

$0.26

Revenue Estimate

$82.9 million

Change From Year-Ago Revenue

7.7%

Earnings Beats in Past 4 Quarters

1

Source: Yahoo! Finance.

Will Dendreon cure its ills this quarter?
Analysts haven't budged on their estimates for Dendreon, but they aren't terribly optimistic about its future prospects. With losses projected throughout 2013, it's unclear why shareholders remain excited about the stock. Yet a share-price advance of more than 30% suggests hope for better news in the future.

Dendreon has given investors an up-and-down ride over its history, as early expectations for Provenge turned out to be overly optimistic. In fact, on several occasions last year, Provenge actually saw sales fall sequentially from quarter to quarter. This quarter's estimate is for modest growth, but at nothing like the pace investors had hoped for when Provenge got FDA approval.

But Dendreon isn't giving up. It's trying to bolster sales by promoting Provenge as a complementary therapy to competing drugs Xtandi from Medivation (NASDAQ: MDVN  ) and Johnson & Johnson's (NYSE: JNJ  ) Zytiga. Yet with Provenge's high cost, Fool health-care analyst David Williamson believes that Provenge will have to demonstrate a huge survival benefit to justify the expense in combination with the price of Zytiga and Xtandi.

Moreover, the company is trying to restructure itself to earn some breathing room as it faces a substantial negative cash-burn rate. By selling off a New Jersey manufacturing plant to Novartis (NYSE: NVS  ) for $43 million and implementing layoffs, the company will cut $100 million off its break-even point, taking some of the pressure off Provenge to produce big sales gains. Nevertheless, analyst firm Maxim Group downgraded the stock on expectations that competition will prove the finishing blow to Dendreon.

In Dendreon's report, Provenge sales figures will again take center stage, but also watch for strategic comments on how the company plans to deal with rising competition in the cancer space. Without strong action from management, Dendreon may never fully recover from its woes.

Will Dendreon ever recover?
Shares of Dendreon have surged in recent months, but many wonder whether investors are just setting themselves up for more disappointment. Our new premium research report on Dendreon looks at that issue with an in-depth look at the company and how it expects to regain its former glory. Claim your copy, and a year of free analyst updates, by clicking here now.

Click here to add Dendreon to My Watchlist, which can find all of our Foolish analysis on it and all your other stocks.


Read/Post Comments (2) | Recommend This Article (1)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On February 24, 2013, at 12:05 PM, clifffiscal wrote:

    Doctors are just beginning to use Provenge at an earlier point in the disease and sequencing with other drugs is at an early point as well. There is very encouraging data emerging that the long-term effect with Provenge continues for years which should be extremely important when patients are making treatment choices. Analysts are not currently considering this long-term benefit at all.

  • Report this Comment On February 24, 2013, at 1:30 PM, djtherex wrote:

    as usual, just another hit piece from the Fools. You concentrate on competition for Provenge while totally ignoring the Eu decision coming soon and the entire cassette technology platform and patents that will be used to develop many other treatments for other form of cancer as well as the fact that Provenge itself is highly effective with minimal side effects unlike its so called "competitors." Wake up or at least be balanced for once in your comments before you are seen for what you really are; a short sellers rag that is more dedicated to your own agenda than to telling the truth.

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