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Posted on 4 August 2011 | 4,875 views

Dendreon Stock Decimated on Provenge Sales

Dendreon (Stock Symbol: DNDN) was decimated today, August 4, 2011 after the company’s second-quarter results fell well short of Wall Street expectations on disappointing sales of its Provenge prostate cancer drug.

The stock closed at $11.69, down 67.38%, on volume of more than 59 million shares.

The Seattle-based company also withdrew its revenue outlook for the rest of the year, citing reimbursement issues.

Provenge sales in the quarter totaled $49.6 million, including a nearly $2 million reserve for chargebacks and rebates, but far short of Wall Street’s expectations that ranged from $55 million to $60 million.

Even with $50 million in revenue last quarter, the company still wasn’t even close to cash flow positive, spending over $100 million in cash. At that rate, the company would be out of cash in about six quarters.

Overall, the company lost $114.6 million, or 79 cents a share, in the three months ended June 30, missing the average estimate of analysts polled by Thomson Reuters for a loss of 71 cents a share.

The company withdrew its previous guidance calling for 2011 Provenge sales in the range of $350 million to $400 million and said it now expects “modest” quarter over quarter revenue growth for the remainder of this year. It also plans to take steps to reduce expenses, including an unspecified amount of layoffs.

The company is also planning on scaling back expenses, and some of the start-up costs will go away, assuming the third manufacturing plant is approved later this summer.

Dendreon has had its shares of ups and downs, including a “Bear Raid” on its stock and before the recent news, it was up 1,341% since the 2008-2009 crash with Provenge.

Until we get some visibility on sales ramp and expenses, Dendreon is going to be really hard to value. Fortunately, investors have plenty of experience with volatility from Dendreon’s pre-Provenge-approval days.

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