Dendreon Corporation (DNDN): Is Time Running Out for This Fallen Biotech?

Page 1 of 2

Dendreon Corporation (NASDAQ:DNDN)There’s a lot to notice from Johnson & Johnson (NYSE:JNJ)’s earnings — the company announced a very solid quarter. But the one thing that really stood out is the high sales that the company produced from its prostate cancer drug Zytiga. Does Zytiga’s succes further indicate that time is running out for Dendreon Corporation (NASDAQ:DNDN)’s Provenge?

Zytiga’s not slowing down

Johnson & Johnson (NYSE:JNJ)’s total sales for the quarter were $17.88 billion. But one of its largest segments, global pharmaceuticals — with $7 billion in sales — grew 12% year over year. The primary reason for this growth was the continued strength of new product launches from Xarelto (an anticoagulant), Incivo (which treats hepatitis C), and of course, Zytiga.

For the second quarter, sales of Zytiga were $395 million. This represents a 70% year-over-year gain for the blockbuster cancer drug. Furthermore, it represents 71% growth for the first six months of 2013.

Now, in regards to Johnson & Johnson (NYSE:JNJ)’s long-term stock performance, Zytiga has little meaning. Analysts project peak sales of $1.8 billion by 2015, which is fairly small in comparison to the company’s near $70 billion in annual revenue. However, these sales are crushing for Dendreon Corporation (NASDAQ:DNDN).

Connecting the dots

Dendreon Corporation (NASDAQ:DNDN) markets Provenge, which also targets late-stage prostate cancer patients. In 2011, it was one of the only drugs for this disease on the market, and analysts projected peak sales over $1 billion. However, analysts and investors have since feared how the company would respond to both Zytiga and Medivation Inc (NASDAQ:MDVN)’s new prostate cancer drug Xtandi.

Last quarter, for the first time since Provenge’s launch, sales of the drug declined year over year. The 17.6% decline was not expected, and management was honest about the impact of new competition. At the same time, while sales of Provenge were just $67.6 milllion, Zytiga’s sales grew more than 70% to $344 million. This showed a direct correlation between the declines of Provenge and the success of Zytiga.

Now, in this most recent quarter, sales of Zytiga have grown even more rapidly, at nearly $400 million. Therefore, common sense suggests more pain for Dendreon Corporation (NASDAQ:DNDN). Moreover, sales of Medivation Inc (NASDAQ:MDVN)’s Xtandi were $75.4 million in the U.S. alone. This represented an increase of $18 million over the prior quarter. This shows that both Xtandi and Zytiga are gaining traction, while Provenge may be seeing the beginning of its end.

Why is Provenge lagging?

Retail investors unfamiliar with the story might wonder why Provenge is falling behind. Also, why is Provenge stuck with annual sales of $311 million, while Zytiga and Xtandi have peak sales outlooks of $1.8 billion and $2.2 billion, respectively?

First, all three drugs treat advanced stages of prostate cancer, and all three extend life in a range of three to five months. However, Provenge is an immunotherapy, meaning it targets specific antigens that are expressed by the cancer. By attacking the antigen, the immune system can then work to fight the disease.

Xtandi and Zytiga work differently. They both work to stop the production of hormones that that aid in the growth of the tumor. Thus, while all three add life to patients, both Zytiga and Xtandi actually reduce the growth of tumors; Provenge does not.

Also, Provenge is significantly more expensive. It must be given in a hospital setting with an IV drip. It also requires a blood draw for each dose of Provenge, since the treatment can not be frozen or stored. Both Xtandi and Zytiga are in pill form, meaning no IV and fewer trips to the hospital with lower patient and physician costs. These advantages combined have led Xtandi and Zytiga to emerge as clear winners, while Provenge appears obsolete.

Page 1 of 2
blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 44 percentage points in 21 months Learn how!

Lists

The Top 10 States With Fastest Internet Speeds

10 Best Places to Visit in USA in August

Top 10 Cities to Visit Before You Die

Top 10 Genetically Modified Food In the US

15 Highest Grossing Movies Opening Weekend

5 Best Poker Books For Beginners

10 Strategies Hedge Funds Use to Make Huge Returns

Top 10 Fast Food Franchises to Buy

10 Best Places to Visit in Canada

Best Summer Jobs for Teachers

10 Youngest Hedge Fund Billionaires

Top 10 One Hit Wonders of the 90s

Fastest Growing Cities In America

Top 10 U.S. Cities for Freelancers

Top 9 Most Popular Free iPhone Apps

Top 10 Least Expensive Private Business Schools in the US

Top 15 Most Expensive Countries in the World – 2014

Top Businesses to Invest In

Top 5 Things You Might Be Doing Wrong With Your Business

Top 5 Strategic Technology Trends in 2014

Top Rags to Riches Stories

Parenting Behavior That Promotes Future Leaders

Top 5 Mistakes Made by Small Businesses

Top 5 Most Common and Potentially Devastating Financial Blunders

Top 5 Highest Paying Jobs for Web Designers

Top 6 Most Respected Professions that Also Pay Well

Top 5 Pitfalls Investors Should Avoid

Top 6 Lawyers and Policy Makers Under 30

Top 6 New Year’s Resolutions for Entrepreneurs

Top 7 Locations to Check in on Facebook

Top 5 Mistakes made by Rookie eBay Sellers

Top 7 eBook Publishers in 2013

Top 6 Health Industry Trends in 2014

5 Lessons for Entrepreneurs from Seth Godin

Top 5 Success Tips from Jordan Belfort – the Wolf of Wall Street

Best Master’s in Finance Degree Programs

Top 6 Earning Celebrities Over 50

The most expensive sports to play

Top 7 Earning Celebrities Under 25

Best 7 Online Courses to Take: Free Finance MOOCs

Top 6 Bad Habits that Promote Failure

20 Most Valuable Soccer Teams in the World in 2013

12 Most Expensive Countries for Foreign Students

Top 30 Most Influential Women in the World

Top 20 Most Expensive New Year Eve Shows

Top 5 Best Vocational Careers

Top 10 Jobs for 2014 by Salary Gain (Predictions)

Top 5 Digital Trends for 2014

Top 6 Things You Can Do To Increase Your Productivity

Top 9 Trending Smartphones in 2013

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!