Loss at DNDN Up on Higher Costs

Dendreon Corp.’s (DNDN) third quarter 2010 loss of 47 cents per share (excluding charges for litigation settlement) was wider than the Zacks Consensus Estimate of a loss of 44 cents per share and the year-ago loss of 23 cents per share (excluding charges for warrant revaluation).

On a reported basis (including special items), the company lost 56 cents per share in the third quarter as against a loss of 40 cents in the year-ago quarter. The wider loss was attributable to higher operating expenses as the company is working on expanding its facilities to market Provenge.

Total revenue in the reported quarter climbed to $20.2 million from $25,000 in the comparable quarter of 2009. The jump was attributable to the launch of Provenge for the treatment of advanced prostate cancer in men. The potential blockbuster drug, for which more than 1,000 prescriptions have been written so far, performed impressively in its first full quarter.

The initial ramp up has been impressive with revenue from Provenge sales being on the rise on a monthly basis. Revenues came in at $5.2 million, $7.2 million and $7.8 million in July, August and September, respectively.

Moreover, revenues from the sale of Dendreon’s growth engine were approximately $9.5 million in October. However, total revenue in the quarter fell short of the Zacks Consensus Estimate of $24 million. We note that Dendreon derived its revenues entirely from collaborative agreements prior to the approval of Provenge.

Dendreon is working towards expanding its facilities for the effective marketing of Provenge. The company raised approximately $630 million in 2009 to accelerate the construction of new facilities in Atlanta, Georgia and Orange County, California and build-out the remaining capacity at its facility in Morris Plains, New Jersey.

The facilities in Atlanta, Georgia and Orange County, California are expected to be operational in mid-2011 and the New Jersey facility in early 2011. Dendreon’s total operating expenses for the quarter jumped 239.9% to $87.7 million.

Revenue Forecast for Provenge

Dendreon provided a projection regarding revenues from Provenge sales both for 2010 and 2011. The company projects 2010 revenues from Provenge in the range of $46 million – $47 million. For 2011, the biotech company forecasts revenues in the range of $350 million – $400 million.

Approximately 50% of 2011 sales are expected to be generated in the final quarter of the year taking into account a standard FDA review period and clearance of the new manufacturing facilities at Dendreon.

Currently, we have a long-term neutral stance on the stock supported by the Zacks #3 Rank (short-term Hold rating) carried by the company.

DENDREON CORP (DNDN): Free Stock Analysis Report

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