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 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

Shopaholics Rejoice: The 12 Biggest Malls in the World

Fright Night: 10 Horror Movies Based on True Stories

Mach Mania: The 10 Fastest Jets in the World

Military Heavyweights: The 10 Countries with the Most Tanks

All In: The 7 Richest Poker Players in the World

Abracadabra: The 10 Best Magicians in the World

The 10 Richest Asian Countries in the World in 2014

Eyes in the Sky: 10 Things You Need to Know About Drones

Rising Stars: The 6 Best Silicon Valley Startups

Military Muscle: The 5 Most Advanced Armies in South America

All that Glitters: The 7 Most Luxurious Jewelry Brands in the World

5 Things You Didn’t Know About ISIS but Should

Empowering Your Money: The 5 Best Energy Stocks to Invest In

The 11 Best Android Apps You Can’t Get on iOS

The 10 Most Important International Conflicts in 2014

Mood Enhancers: The 20 Most Uplifting Songs of all Time

Lover Beware: The 8 Countries that Cheat the Most

Breath of Fresh Air: The 25 Countries with the Best Air Quality on the Planet

Singles Beware: The 8 Worst Mistakes Made on First Dates

Healthy and Happy: The 10 Countries with Lowest Healthcare Costs

The 6 Best Company Team Building Activities to Build Workplace Camaraderie

Ships Ahoy: The 10 Busiest Shipping Ports in the World

10 Productivity Tips to Save You Time and Help You Do More With Less

Grab a Bite: The Most Popular Fast Food Restaurants in America

Friday Night Thirst: The 10 Most Popular Cocktails in the World

The 6 Greatest Unsolved Mysteries We May Never Figure Out

7 Useless Products You Never Should’ve Bought

The 5 Reasons Why You’re Single and Miserable

The 7 Most Addictive Foods in the World We Can’t Stop Eating (Even Though We Should)

5 Amazing Places You Can Swim with Dolphins

The Top 7 Most Livable Countries In The World

The 10 Most Expensive Baseball Cards Ever Pulled From A Pack

The 5 Easiest Second Languages to Learn for English Speakers

Silver Spoon: The 6 Richest Families in the World

The 20 Countries with the Largest Prison Populations in the World

The Top 10 Richest Actors in the World

The 10 Best Airline Stocks to Invest In Before They Fly Too High

Burger Kings: The 10 Most Expensive Burgers in the World

The 10 Most Ethnically Diverse Countries in the World

The 10 Most Exclusive Credit Cards in the World

The 10 Most Expensive Cruise Ships in the World

The 10 Fastest Supercomputers in the World

The 10 Best Countries for Doing Business 2015

6 Most Expensive Fruits In The World

10 Worst Airlines in the World

The 10 Biggest Tax Havens in the World to Stash Your Money

The 15 Most Murderous Countries in the World

10 Largest Colleges in the World: Bigger Isn’t Always Better

Comedians in Cars Getting Coffee: The 6 Comedians Seinfeld Needs to Interview

Easy Money: The 10 Most Successful Investors in the World Today

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!