Dendreon reports spike in Provenge sales; shares soar
(Reuters) - Dendreon Corp (DNDN.O) said its high-priced prostate cancer vaccine was gaining acceptance with doctors and provided stronger quarterly sales figures as evidence of new life for a company many investors had written off last year.
Dendreon on Thursday reported better-than-expected fourth-quarter gross Provenge sales of $82 million -- up from $66 million in the prior quarter. It said greater clarity on how U.S. doctors will be reimbursed for the $93,000 treatment had led more oncologists and urologists to use the drug. The news sent Dendreon's battered shares up as much as 55 percent.
"This is meaningfully changing sentiment off extremely low expectations. The outlook for Dendreon is incrementally better today," said RBC Capital Markets analyst Michael Yee, noting that improved sales were helped by more infusion sites coming on line in December.
Dendreon said patients had been treated with Provenge at more than 590 sites, such as hospitals and doctors' offices, representing its greatest quarter-over-quarter growth.
JP Morgan analyst Cory Kasimov, who had been looking for fourth-quarter sales of $76 million, said in a research note that the quarterly sales figures should ease investors fears that Provenge would fail to become profitable.
To do so, it needs to reach about $500 million in annual sales and Kasimov said "it will be important for the product to maintain sequential (quarterly sales) momentum."
Kasimov, noting that the prevailing sentiment toward Dendreon had been "awful," said the company was now "positioned to surprise to the upside in 2012."
SHORT COVERING DRIVING SHARES?
While $82 million in fourth-quarter sales topped diminished Wall Street expectations for Provenge, that is still well off the company's original bullish forecast it withdrew in August. Prior to August, Dendreon had been forecasting 2011 sales of $350 million to $400 million with as much as $200 million of that coming in the fourth quarter. In reality, 2011 full-year sales were about $228 million.
Dendreon shares were up 40.2 percent at $10.65 on Nasdaq in afternoon trading, after climbing as high as $11.74 earlier in the session. However, the shares were trading for around $44 last May and as high as $55 a year earlier after Provenge was approved to much fanfare as the first vaccine shown to extend survival of advanced prostate cancer patients.
Michael Becker, president of MD Becker Partners, a consulting firm for the biotechnology industry, said the market reaction to Thursday's announcement "is more likely due to short covering than renewed confidence in Provenge."
"Provenge missed original guidance for 2011 by $122 million to $172 million," Becker said.
As of mid December, about 21 percent of Dendreon's outstanding shares were held by short sellers betting the shares would fall.
Dendreon had blamed its lackluster sales on physician uncertainty about whether they would be reimbursed for the expensive treatment as well as unfamiliarity with a new class of medicine.
In November, the U.S. Medicare and Medicaid health programs said they will cover the cost of infusing Provenge in addition to reimbursing for the drug itself, providing more clarity for physicians.
"Given our results for the past two quarters, physician and patient interest in Provenge clearly continues to grow," Chief Executive Mitchell Gold said in a statement, crediting an improved reimbursement situation and physician education initiatives for the pickup in sales.
"As we look to 2012, we expect modest quarter-over-quarter growth while we focus on bringing additional clinics on board and converting them into steady prescribers," Gold said.
The company said it had sufficient cash on hand to meet its needs and said it would focus on controlling costs and improving manufacturing efficiency in 2012.
Provenge is expected to face increasing competition in the estimated $9 billion prostate cancer market. That includes Johnson & Johnson's (JNJ.N) Zytiga, which was approved last year. More recently, Medivation (MDVN.O) reported positive data from a late-stage trial of its experimental prostate cancer drug.
(Additional reporting by Zeba Siddiqui and Esha Dey in Bangalore; Editing by Roshni Menon and Gunna Dickson)
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