* Q3 EPS net loss $1.00
* Q3 Provenge sales $66 million
* Shares fall 23 percent
By Bill Berkrot
Nov 2 (Reuters) - Dendreon Corp forecast only modest sales growth for its Provenge prostate cancer vaccine for the next several quarters, and its shares fell 23 percent.
The drug began selling in May of 2010 amid much fanfare after it increased survival in clinical trials, but has so far been a disappointment in part due to physician uncertainty over reimbursement for the high-price treatment.
Dendreon, which had previously disclosed Provenge sales for July and August, reported gross third-quarter sales of about $66 million, slightly ahead of analysts’ average expectation of $63 million.
It said October Provenge sales were $26.4 million, but estimated a likely decline in November due to the Thanksgiving holiday.
Dendreon shocked investors in August when it withdrew its long-held bullish full-year sales forecast for the vaccine and said it instead expected only modest quarter-over-quarter revenue growth for the rest of the year. On Wednesday, it extended that view well into 2012, and perhaps beyond as it did not specifically define several quarters.
“I don’t think anyone really knows where this drug is heading,” said Cowen and Co analyst Eric Schmidt, calling positive comments by the company “hope and not confidence.”
Schmidt expressed concern over the erosion in Dendreon’s gross margin for the quarter, calculating that it went from 42 percent in the previous quarter to about 10 percent.
“We didn’t expect nearly as much gross margin deterioration,” he said. “Can you really make a business unless that gross margin dramatically improves?”
Dendreon shares fell to $8.05 in extended trading after closing at $10.46 on Nasdaq.
The Seattle-based biotechnology company posted a net loss of $147.1 million, or $1.00 per share, compared with a loss of $79.3 million, or 56 cents per share, a year earlier.
Dendreon said by the end of the third quarter about 470 sites had either infused Provenge or had scheduled their first patient to receive the vaccine, which costs about $93,000 for a course of three treatments.
The company had forecast 2011 revenue of $350 million to $400 million with about half coming in the fourth quarter, when all three of its production plants would be up and running and capacity constraints would no longer be a problem.
After pulling that forecast Dendreon’s stock lost about two-thirds of its value, and the company announced the departure of its chief operating officer and said it would cut 500 jobs in a restructuring.
Unlike traditional vaccines that prevent disease, Provenge stimulates a patient’s own immune system to attack tumor cells, creating a new way to approach prostate cancer treatment.
In withdrawing the bullish outlook Dendreon blamed the slow sales ramp on slow physician acceptance and uncertainty that they would be reimbursed for the expensive treatment.
Dendreon said far more doctors were now aware of the positive Medicare and Medicaid coverage decisions and it believes that will translate into greater acceptance of Provenge.