Dendreon Corporation
(
DNDN
) reported fourth-quarter 2012 loss (including stock-based
compensation expenses) of 40 cents per share, narrower than the
Zacks Consensus Estimate of a loss of 55 cents and the year-ago
loss of 48 cents per share.
Dendreon's full year 2012 adjusted loss per share of $1.87 was
narrower than the Zacks Consensus Estimate of a loss of $2.89 and
the year-ago loss of $2.54. Revenues for the year 2012 were down
4.7% year over year to $325.5 million. Revenues were however
ahead of the Zacks Consensus Estimate of $322 million.
Quarter in Details
Total revenue in the reported quarter declined 57.7% year over
year to $85.5 million. The decline was attributable to the
massive reduction in royalty revenues in the final quarter of
2012. Dendreon sold its ownership in a royalty stream related to
Merck & Co. Inc.
's (
MRK
) sales of Victrelis for $125 million in the fourth quarter of
2011.
However, revenues in the reported quarter benefited from a
rise in Provenge sales. Revenues were above the Zacks Consensus
Estimate of $82 million.
Dendreon's sole marketed product is Provenge (sipuleucel-T), a
therapeutic vaccine for treating advanced prostate cancer, which
was launched in the US in May 2010.
Dendreon reported net product revenues of $85.5 million, up
11% from the comparable quarter of 2011. Product revenues were up
9.6% sequentially.
Research & development (R&D) expenses were $19
million, up 1.5%. Selling, general & administrative
(SG&A) expenses for the fourth quarter decreased 3.4% to
$73.5 million.
Restructuring Initiatives
We note that in July last year the company initiated a
restructuring plan. The company expects to reap the results of
these initiatives from the first half of 2013 and anticipates
full benefits to be realized in the third quarter of 2013.
In Dec 2012, Dendreon sold its immunotherapy manufacturing
facility (IMF), based in Morris Plains, New Jersey, for $43
million in cash. The company expects to reduce its cost of goods
sold by 50% at the beginning of the third quarter of this year.
The company also expects a significant decrease in total expenses
as the restructuring benefits will come into effect.
Provenge Update
Management noted an improvement in the reimbursement
environment. The physicians are more comfortable prescribing
Provenge, as the average time to payment for physicians remains
less than 30 days.
The company managed to add 61 net new accounts during the
reported quarter taking the total of infusing accounts to 802
since its launch.
Currently approved prostate cancer treatments include
Johnson & Johnson
's (
JNJ
) Zytiga, which has been putting up an impressive performance.
Moreover, the prostate cancer market saw a new entrant in Aug
2012 in the form of
Medivation
's (
MDVN
) Xtandi (enzalutamide).
Pipeline Update
We remind investors that Dendreon is currently conducting
several phase III and phase II clinical trials in the advanced
prostate cancer area. Dendreon also completed treatment of the
first patient in an open-label study of Provenge in the EU. The
company expects a decision in mid-2013.
Our Take
The successful commercialization of Provenge is crucial for
the financial performance of Dendreon as it can drive the company
to profitability. We prefer to remain on the sidelines until we
see meaningful improvement in Provenge sales. We also remain
concerned about Dendreon's high dependence on Provenge for
long-term growth.
Dendreon carries a Zacks Rank #3 (Hold). Meanwhile, Medivation
carries a Zacks Rank #2 (Buy).
DENDREON CORP (DNDN): Free Stock Analysis
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