Cancer vaccine maker Dendreon’s
(DNDN) short rally this year just went south.
The company’s shares are down 18% Monday after Dendreon execs said sales of the company’s Provenge for prostate cancer were soft in January and won’t muster more than single-digit revenue growth in the first quarter.
Shares of Dendreon were rising since early January when the company said Provenge sales were suddenly booming. In a preview of fourth-quarter results
, Dendreon said Provenge sales jumped 25% from the third quarter and 230% from the fourth quarter of 2010.
Given the company’s very disappointing sales earlier in 2011, the stock rallied on the pre-announced earnings. The shares continued to rise after the company named new CEO John Johnson and released research data showing Provenge’s benefits treating prostate cancer.
But that surge in sales in the fourth quarter, particularly December, didn’t continue into January, Dendreon officials said today. (The company actually blamed the spike in December sales for soft growth in January.)
Johnson insisted he’s confident in Provenge’s potential though he’s reticent to forecast sales this year.
“I’m very confident in the future of Provenge,” Johnson told investors on a conference call today, while reminding them repeatedly that he’s been on the job for 27 days.
For now, there’s a big focus on cost cutting, preserving cash, and making sales calls to more oncologists and urologists. After losing about $338 million ($2.31 a share) last year, the company said
it had almost $618 million in cash at the end of 2011. Provenge sales were $77 million in the fourth quarter and $213.5 million for the full year.
Approved for sale in the US in 2010, Provenge was once believed to be a future blockbuster -- a product that would eventually generate $1 billion or more in a year. Unlike other treatments for prostate cancer, Provenge is an immunotherapy -- a vaccine that triggers the body’s immune system to fight the disease. When the company admitted in August that sales were not hitting targets, Dendreon’s stock nose-dived. (See Dendreon’s Stock Plunges on Low Provenge Sales
While the stock is still up this year, trading at $12.20 midday Monday, the shares are nowhere close to rebounding from last August. The stock traded at almost $36 a share just before the plunge.
In prepared remarks today, Johnson said, “Dendreon has embraced the challenge of introducing an entirely new treatment paradigm for an entirely new market and has made important progress towards establishing Provenge as the foundation for care.”
But other companies are working on their own immunotherapies for cancer -- more than 40 medicines are being tested, according to biotechnology industry consultant Michael Becker.
Becker says Dendreon’s problems shouldn’t be an indictment on all immunotherapies, which he says hold potential as effective treatments.
“Investors are learning more about distinctions among various cancer immunotherapy approaches and that approval of Provenge isn't the only success story for the field,” he says.
No positions in stocks mentioned.
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