Bernstein upgrades Dendreon to outperform, shares jump

Fri Jan 11, 2013 9:07am EST

(Reuters) - Sanford C. Bernstein upgraded Dendreon Corp DNDN.O to "outperform" from "market-perform" and said the drugmaker could be one of the best performers in 2013, sending its shares up 15 percent before the bell.

Analyst Geoffrey Porges said the company's prostate cancer treatment, Provenge, would return to modest but steady growth.

Dendreon's stock lost about 60 percent of its value last year due to disappointing sales of Provenge, launched in April 2010.

However, the competitive landscape was stabilizing, Porges said, citing feedback from urologists who prescribe Provenge.

"Our interviews all suggested steady increases in expected use (of Provenge) among these busy community urology practices; none of the physicians expected to reduce their use, and most expected to use Provenge in combination with Xtandi in the future, and saw little threat from Zytiga," Porges said.

The brokerage forecast peak revenue of $799 million for Provenge by 2017 and 13 percent sales growth for 2013.

Provenge's disappointing sales led Dendreon to give the pink slip to about 600 employees and close one of its three manufacturing plants.

Challenges to Provenge's success also included competition from easier-to-use products such as Medivation Inc's (MDVN.O) Xtandi and Johnson & Johnson's (JNJ.N) Zytiga.

"The last 18 months have seen the progressive disaster of poor forecasting, reimbursement challenges, slowing revenue growth, insider selling, excessive cash burn, shareholder class action suits, changes in management and board membership and finally restructuring," the brokerage said in a note to clients.

Dendreon shares, which use to sell for as much as $54.06 when Provenge was approved, closed at $5.10 on Thursday on the Nasdaq.

(Reporting by Vidya P L Nathan; Editing by Sreejiraj Eluvangal)

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