Biotech Earnings Checkup: CLDX, DNDN, OPX

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Earnings are the lifeblood of a company. They speak to a company's past, present, and most importantly for investors, future. And they give an important window into the overall health of a company. So, with that in mind, let's dig into the earnings reports for three biotechs, CellDex Therapeutics, (NASDAQ: CLDX  ) , Dendreon Corp. (NASDAQOTH: DNDNQ  ) and Opka Health, (NYSE: OPK  ) , that reported Monday and consider their current state of affairs.

CellDex falls hard after beating estimates?
Despite beating Wall Street revenue estimates by $330,000 and narrowly beating earnings per share estimates by $0.01, shares of CellDex fell over 10% Monday. So, what happened?

For starters, revenue for the year fell to $4.1 million, a 74% decrease year over year due mostly to a decrease in royalty revenue for Rotarix. With a number of drugs progressing in clinical trials, CellDex saw R&D expense climb by 30% year over year. Planning for the company's lead clinical candidate rindopepimut's possible commercial launch also drove operating expenses up nearly 40% year over year.

Because of these increasing costs and loss of royalty revenues, net loss rose to $81.6 million for 2013, compared to $59.1 million in 2012. Although this widening loss may have played a role in CellDex's fall Monday, I suspect that the company's stately $2 billion market cap may be partly to blame, as well. Put another way, that's a substantial market cap for a developmental stage company, which will require a strong launch for rindopepimut to maintain. 

On the bright side, CellDex ended the year with cash and marketable securities of $303 million after raising $181.5 million in the quarter via an underwritten financing and the exercise of stock options. The company should thus have sufficient access to liquid resources until 2016.

Dendreon is making its case for turnaround story of the year in biotech
After being written off for dead by Wall Street, Dendreon is finally starting to pare its operating losses and showing signs of stability in Provenge sales. The company is seeing increasing sales in both large oncology and academic accounts that should provide more steady revenue sources going forward. Wall Street rewarded Dendreon Monday with a rally that saw shares gain by over 20% during the session. 

Turning to the actual numbers, adjusted net product revenue for the quarter came in at $74.8 million, compared $68 million for the third quarter of 2013. Net loss also shrank for the year to $1.95 per share, compared $2.65 per share a year ago. Dendreon ended the year with $199.4 million in cash and short/long term investments, down from $429.8 million a year ago.

Dendreon's feet are not out of the proverbial fire, however. Despite growth in overall account numbers, net revenue for 2013 still fell by approximately 12% compared to 2012, the company has a lot of debt on its balance sheet, and it is quickly burning cash. The good news is that it's looking more and more likely that Provenge will soon be commercially available in Europe—giving the company yet another market to tap for revenue. 

Opko Health narrowly beats estimates
Opko Health gave investors a mixed bag in terms of 2013 fourth quarter earnings Monday, narrowly beating earnings per share estimates by $0.01 but missing on revenue by almost $3 million or 12.7%. Digging into the details, Opko saw fourth quarter revenue increase by 30% compared to a year ago, and annual revenues nearly double to $96.5 million. The company ended 2013 with cash and cash equivalents of $185.8 million, which should be a sufficient cash reserve for at least the next 12 months.

Because of growing R&D expenses, net loss for the fourth quarter shot up to $16.8 million compared to a net loss of $1.1 million for the same period a year ago. For the full year, net loss grew notably to $114.8 million compared to $31.3 million in 2012.

These significant losses weren't for naught, however. Opko is currently finalizing the commercial launch of its next generation prostate cancer diagnostic test, 4Kscore. And the second late-stage trial for the company's experimental Vitamin D therapy Rayaldy completed patient enrollment recently.

That said, Opko is still trading upwards of 9 to 10 times annual revenue, so it's key that 4Kscore has a strong commercial launch. 

CellDex, Dendreon and Opko Health may have a bright future, but they may struggle to keep up with this stock.
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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 March 06, 2014, at 9:58 PM, afeo wrote:

    Okay I am sorry...but it is OpkO, and the ticker is OPK. Thank you.

  • Report this Comment On March 07, 2014, at 7:54 AM, MTherami wrote:

    RE: Dendreon

    PROVENGE will not be available in Europe soon. The company basically announced that it has not found a big pharma partner to help them distribute PROVENGE in the EU. As a result, they have to "go it alone". The CEO, John Johnson, has had to admit that they will not be able to treat the first patient until Q4 of 2014. Therefore, the EU will contribute nothing to 2014 results. Dendreon will recognize some EU sales in 2015; however, until automation is implemented (likely not until 2016 in EU), it is unlikely that the company will be in a position to convert those revenues into profits.

    The worse news that came out the this conference call was guidance for Q1 2014 sales. CEO, John Johnson, reported that Q1 2014 sales would be in line with the prior year result. That represents nearly a 10% decline in sales from Q4 2013 to Q1 2014 (from $74.8 million to $67.5 million). Management has misled the public regarding the effectiveness of the DTC marketing campaign.

    Dendreon has enough cash to make it through 2014 into 2015. However, a significant cash infusion will be required for the company to continue operations in 2015. It appears that the CEO of Dendreon has resorted to attempting to pump up the stock price with misleading press releases and an appearance on CNBC, so as to position the company to gain the most favorable return on a secondary stock offering.

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George Budwell

George Budwell has been writing about healthcare and biotechnology companies at the Motley Fool since 2013. His primary interests are novel small molecule drugs, next generation vaccines, and cell therapies.

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Related Tickers

8/28/2015 4:00 PM
CLDX $15.36 Up +0.25 +1.65%
Celldex Therapeuti… CAPS Rating: ****
DNDNQ $0.03 Down +0.00 +0.00%
Dendreon Corp CAPS Rating: **
OPK $11.42 Up +0.30 +2.70%
Opko Health, Inc. CAPS Rating: **