Dendreon Tests Resistance on Earnings Report, Provenge Expanding to Europe

Joel Anderson  |

Dendreon Corporation (DNDN) is soaring on the first trading day of March, gaining as much as 19.8 percent on very heavy volume. Driving the bounce for the small-cap pharmaceutical is a Q4 2013 earnings report that showed losses that were not as wide as analyst expectations and the announcement that a key prostate cancer therapy would be available in Europe.

Earnings Report Shows Losses, Still Impresses

Dendreon’s earnings report was issued before market open on Monday, and the results impressed despite showing wider losses than in the year prior.

The company reported losses of $0.17 a share for Q4, which was well ahead of the Capital IQ consensus estimate of $0.24 a share loss. Revenue decreased 8.3 percent year-over-year to $74.8 million, but this was also ahead of consensus estimates of $72.89 million.

Year-end results showed revenue declining 12.8 percent year-over-year, but year-end losses of $1.95 a share was a significant improvement over 2012’s loss of $2.65 for the year.

“During the fourth quarter, our results were driven by strong growth in our oncology accounts as well as improvements in urology and academic accounts,” said Chairman, President, and CEO John H. Johnson. “To bolster our efforts to improve the top line, we have a new commercial model in place and have identified additional efforts to further improve commercial effectiveness. Profitability remains our key goal, and we successfully reduced our costs of goods sold on a pro-forma basis to 51% in the fourth quarter. … We expect our first quarter 2014 revenues to be consistent with our first quarter 2013 results. We continue to be on track on our restructuring and cost reduction plan to accelerate the path to profitability. We are focused on becoming cash flow breakeven as soon as possible.”

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Provenge Expanding to Europe

As is often the case for pharmaceutical companies, the promise of future earnings appeared to be more important to Wall Street than the current lack of profits. And for Dendreon, this meant that the expansion of prostate cancer treatment Provenge to Europe, starting with Germany and England, helped drive the stock higher.

"Bringing PROVENGE commercially to Europe marks a major milestone for Dendreon," said John H. Johnson. "Both urology and oncology key opinion leaders in Europe have expressed a desire to have PROVENGE available to their patients and it is evident that there is pre-market demand as the first - and only - personalized immunotherapy approved for the treatment of mCRPC. We are pleased to be able to make PROVENGE available to oncologists and urologists and their prostate cancer patients in this important market."

Stock Tests Resistance Again

Dendreon was trading heavily early on Monday, clearing 15.5 million shares before noon, more than five times its average daily volume. The gain in value pushed shares up against an important resistance level at about $3.50 a share. After reaching $3.46 a share, the stock retreated as the day wore on, hovering around $3.30 a share or just under 15 percent gains.

The level was established in mid-September soon after the stock took a nosedive in mid-August after disappointing sales results were reported for Provenge. That sell-off took Dendreon from a peak of $5.25 a share to under $3.25 apiece. The dire predictions about the company’s future, though, appeared too severe as the fall wore on. The stock rallied on three occasions since August to test the $3.50 a share resistance level.

However, while Monday’s gains failed to break through that resistance level, they were significant in a few other ways. The gains meant that the stock broke through its 200-day SMA, and broke past a second downward-sloping resistance line that had formed last August, crossed $3.50 a share in mid-January, and had appeared to cap gains at about $3.00 a share in recent weeks.

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