) reported second-quarter 2013 loss (including stock-based
compensation expenses and depreciation) of 41 cents per share,
narrower than the Zacks Consensus Estimate of a loss of 43 cents
and the year-ago loss of 59 cents per share. The narrower loss
was attributable to lower operating costs incurred in quarter.
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However, the company's share price was down significantly
following the second quarter results. The primary reason for the
fall in share price was because of the management's statement
made at its second quarter conference call that its 2013 Provenge
sales will not be able to beat the 2012 sales figure of $325.3
Dendreon's sole marketed product Provenge, a therapeutic vaccine
for treating advanced prostate cancer, was launched in the U.S.
in May 2010.
Quarter in Details
Total revenues in the reported quarter declined 8.3% year over
year to $73.3 million. The decrease was primarily due to lower
product sales. Revenues were also short of the Zacks Consensus
Estimate of $75 million.
Dendreon reported net product revenues of $73.3 million, down
8.4% from the comparable quarter of 2012. Provenge sales during
the reported quarter were however up 8.4% on a sequential basis.
The year-over-year decline in Provenge sales was due to the
entrance of Zytiga in the prostate cancer market. Moreover,
Provenge sales were impacted by the compendium listing for
Meanwhile, Dendreon has completed enrolling patients for a phase
II sequencing study on Provenge and Zytiga. The company expects
monitoring data from the study in 2014. The company also intends
to begin a phase II sequencing study on Provenge and Xtandi by
the end of this year.
Dendreon's research & development (R&D) expenses in the
reported quarter were $18.2 million, down 7.8%. Selling, general
& administrative (SG&A) expenses for the second quarter
decreased 16.7% to $66.8 million.
We note that in July last year the company initiated a
restructuring plan. The company anticipated full benefits to be
realized in the third quarter of 2013. However, at the second
quarter conference call, management stated that cost of goods
sold in the third quarter of 2013 will not be below 50% of total
revenues as was expected earlier. Instead it believes cost of
goods sold in the third quarter to be at par with the second
quarter 2013 level (59.7% of total revenues).
During the reported quarter, the Committee for Medicinal Products
for Human Use (CHMP) of the European Medicines Agency (EMA)
recommended the approval of Provenge in the EU for the treatment
of asymptomatic or minimally symptomatic metastatic
(non-visceral) castrate resistant prostate cancer in adults.
Dendreon also received a positive opinion from the EMA's
Committee for Advanced Therapy (CAT) for its marketing
application for Provenge. A final decision from the EU regulatory
authorities on the approval of Provenge is expected by the end of
We are disappointed with Provenge sales in the first half of the
year. The company's projection that 2013 sales of the drug will
not surpass the 2012 figures is also concerning. We believe that
the successful commercialization of Provenge is crucial for the
financial performance of Dendreon. We remain concerned about
Dendreon's high dependence on Provenge for growth.
Dendreon carries a Zacks Rank #3 (Hold). Meanwhile companies such
Biogen Idec Inc.
Gilead Sciences Inc.
) currently look better positioned with a Zacks Rank #1 (Strong