Dendreon Priced To Go Out of Business

Jacob Harper |

An analyst at Deutsche Bank downgraded Dendreon Corp. (DNDN) on Aug. 23, lowering the price target on the biotech company all the way to $1 a share. The bank noted that Dendreon has posted disappointing sales of their prostate cancer treatment drug Sipuleucel-T  (trade name Provenge) and is accumulating massive debt, and is in trouble of going under completely.

Duetsche's assessment of the Seattle, Wa.-based biotech was dire. In a note to investors, analyst Robyn Karnauskas wrote, “Per our calculations, even if there is drastic restructuring and significant cost cuts, spending may still outpace [revenue] growth in the near term. Consequentially, we believe that the terms of a debt refinancing may have a negative impact on equity holders.” The company downgraded Dendreon to “sell.” Deutsche had previously held a $6 price target for the stock.

Following Dendreon’s dismal second quarter earnings on Aug. 17, Wedbush Securities analyst David Nierengarten was even more pessimistic than Deutsche, and put his price target of the company at zero. That is, the only option for the troubled company is to file for bankruptcy.

Nierengarten said the company’s flagship product Provenge has always been doomed, as it is too expensive to produce and turn a profit, and thus Dendreon stands no chance of survival.

Dendreon was priced as high as $57.67 a share in April 2010 following the FDA approval of Provenge, and the stock hovered between $30 and $40 until Aug. 4, 2011. On that date the company abandoned its forecast for Provenge, and the stock fell 66 percent that day, and has continued plummeting since.

Dendreon dropped 9.72 percent on the poor analyst forecast to hit $2.88 a share, the lowest the stock has been in over four years.

(image courtesy of Flickr)

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to:


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