What's the biggest sign that a company's earnings release is meaningless? It issues the press release while the market is open.
Dendreon (Nasdaq: DNDN) announced back in January that 2010 sales were "approximately $48 million," and sure enough, the company reported sales of $48.057 million an hour before the market closed yesterday.
Fortunately the company has stopped reporting monthly sales, so there really weren't any pressing financial issues to report. Dendreon is still unprofitable, losing $91 million -- nearly four times revenue -- in the fourth quarter.
Not that anyone cares. It's Dendreon's future that matters.
Its current manufacturing facility is running at full capacity, but the company expects to increase manufacturing of its prostate cancer treatment, Provenge, tenfold over the next year. Dendreon should hear from the Food and Drug Administration about whether the agency has cleared the expanded capacity at its New Jersey plant later this month. The L.A. facility is complete, and the company should hear about that one at the end of June. The third facility in Atlanta is on track to be submitted shortly and approved four months after that. Assuming everything is approved, Dendreon is looking for sales of $350 million to $400 million this year.
Will all that extra capacity get Dendreon to profitability? Not this year. The company is spending $60 million to get the drug approved and ready for launch in Europe and ramping up a sales force isn't cheap. You've got to spend money to make money.
The total loss for the ongoing U.S. activities is expected to be between $80 million and $120 million this year. If you assume Dendreon can increase Provenge sales by $400 million in 2012 compared to this year's projection, it might be able to cover those costs and be profitable next year -- at least for the U.S. facilities.
At that point, the biggest worry won't be manufacturing capacity, but alternative treatments. Johnson & Johnson's (NYSE: JNJ) abiraterone and Exelixis's (Nasdaq: EXEL) cabozantinib are hot on Provenge's tale. And sanofi-aventis' (NYSE: SNY) Jevtana is already approved for a later stage of prostate cancer, but it seems safe to assume that Sanofi will go after the patients that would also be candidates for Provenge as well.
At least future earnings releases should be more exciting than this one. Let's just hope Dendreon keeps them after hours.
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