Will Dendreon Ever Make Money?

On Thursday, Dendreon (NASDAQ: DNDN  ) will release its latest quarterly results. The key to making smart investment decisions on stocks reporting earnings 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 fallen from grace since its Provenge prostate-cancer treatment received Food and Drug Administration approval three years ago. Investors had banked on the drug becoming a hot seller, but the anticipated ramp-up in revenue hasn't materialized nearly as quickly as shareholders had hoped. 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.

Stats on Dendreon

Analyst EPS Estimate

($0.48)

Year-Ago EPS

($0.70)

Revenue Estimate

$80.15 million

Change From Year-Ago Revenue

(2.3%)

Earnings Beats in Past 4 Quarters

1

Source: Yahoo! Finance.

Can Dendreon cure what ails it this quarter?
Analysts have only gotten more pessimistic about Dendreon and its earnings in recent months. They've added a nickel per share to their loss estimates for the first quarter and widened their loss figures for the full 2013 and 2014 years as well. The stock has fallen more than 20% since the end of January, adding to poor performance from 2011 and 2012.

The primary culprit for Dendreon over the past several years has been the high price tag for Provenge. With the financial risk that comes from taking on the $93,000 treatment without absolute guarantees of insurance reimbursement, patients and medical professionals have shied away from the treatment.

But looming larger is the specter of increased competition in prostate cancer. Late last month, Medivation (NASDAQ: MDVN  ) got a favorable opinion from an advisory panel for the European Medicine Agency for its Xtandi treatment, which will expand the drug's reach beyond the U.S., where the FDA approved Xtandi last August. Moreover, Johnson & Johnson's (NYSE: JNJ  ) Zytiga saw sales grow 72% in the company's first-quarter report, with even faster growth internationally. Essentially, what the success of Dendreon's rivals shows is that the company is running out of time to carve out its niche in the industry.

Dendreon did manage to get one potential problem behind it, settling a securities class action lawsuit for $40 million. With 95% of that coming from insurance carriers, Dendreon won't suffer a major cash hit, which is an important victory given the company's persistent losses and consequent drain on cash.

In Dendreon's quarterly report, watch for news on where Provenge stands in the company's attempt to get EU approval for the drug. If Europe comes on board, then it might finally provide the sales boost that investors have waited years to see.

Find out more about whether Dendreon investors setting themselves up for more disappointment by reading our new premium research report on Dendreon. Inside, you'll get key answers to your questions about the drug company as well as an outline on just how Dendreon intends to regain its former glory. Claim your copy 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 (0) | 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.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2413527, ~/Articles/ArticleHandler.aspx, 10/2/2014 12:47:58 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement