Lexicon Pharmaceuticals, Inc. (LXRX), Merck & Co., Inc. (MRK): The Worst-Performing Biotech Stocks of the Last Decade

3. Dendreon Corporation (NASDAQ:DNDN)
If the 10-year period we were looking at ended in 2011, Dendreon Corporation (NASDAQ:DNDN) would come out looking really good. For the last decade, though, that’s not the case at all. Shares slumped 26% over the past 10 years.

The good, the bad, and the ugly for Dendreon all tie back to Provenge, the company’s prostate cancer drug. Back in 2010, one analyst predicted peak annual sales for Provenge of up to $4 billion. That kind of forecast can pump air beneath a biotech stock’s wings (and did so for Dendreon). Unfortunately, analysts’ forecasts can be dead wrong.

As it turned out, physicians were reluctant to prescribe Provenge primarily because they weren’t confident that payers would cover the expensive drug. Sales got off to a slow start and didn’t ramp up to expected levels even as more time went by. Dendreon’s stock went into a free fall.

Long-suffering shareholders see hope now that the Committee for Medicinal Products for Human Use, or CHMP, has recommended that Provenge be approved for sale in Europe. However, Dendreon faces stiff competition in marketing Provenge against Medivation Inc (NASDAQ:MDVN)‘s Xtandi and Johnson & Johnson (NYSE:JNJ)‘s Zytiga. Analysts expect both drugs to eventually hit annual sales of around $2 billion. Only time will tell if these targets are right — and if Dendreon can mount a comeback.

The decade ahead
Could the next 10 years be better than the last decade for these three biotechs? Sure. However, the prospects vary for each company.

I think Lexicon’s pipeline and partnerships with big players like Merck & Co., Inc. (NYSE:MRK) — and its horrible performance over the past several years — make it the most likely to improve. It wouldn’t be too surprising if Lexicon or Sequenom caught the eye of a larger company looking to make an acquisition. Dendreon has a formidable challenge, though. I’m more pessimistic about its chances, but anything is possible.

The article The Worst-Performing Biotech Stocks of the Last Decade originally appeared on Fool.com and is written by Keith Speights.

Fool contributor Keith Speights has no position in any stocks mentioned. The Motley Fool owns shares of Dendreon.

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