Dendreon Corporation (DNDN): Is Time Running Out for This Fallen Biotech?

Which Drug Is Superior?

Right away, Dendreon Corporation (NASDAQ:DNDN) investors will say that Medivation Inc (NASDAQ:MDVN) is a repeat of Dendreon, and that its $2.2 billion in peak sales potential will never materialize. However, keep in mind that one of Dendreon Corporation (NASDAQ:DNDN)’s chief problems was that they created issues with physicians very soon in the launch process, with spotty coverage and slow reimbursements. Some physicians have not forgotten, but Medivation is doing much better with 98% of Medicare and commercial insurers covering Xtandi.

Aside from a better delivery, Xtandi is also superior to Zytiga because there is no need for steroids while on treatment. Also, at the end of Medivation’s last quarter, with Xtandi early in its launch, Medivation disclosed that 90% of surveyed oncologists were aware of Xtandi. This is far better than what Dendreon accomplished, and is why Xtandi should succeed as the best drug, and is worthy of its $4.25 billion market cap.

Conclusion

I may be wrong, but this looks like the beginning of the end for Provenge and Dendreon. Provenge is a drug of inconvenience, and has already begun to see its sales decline, while the number of patients diagnosed with prostate cancer continues to rise.

Therefore, with Dendreon Corporation (NASDAQ:DNDN) still having to endure the high costs associated with manufacturing and delivering Provenge, I believe its operating margin of negative 83% will continue. I also anticipate that with just $275 million in cash, $86 million in current liabilities, and a net loss of $361 million during the last 12 months, Dendreon will need aggressive financing soon, which will further accelerate its next push lower.

The article Is Time Running Out for This Fallen Biotech? originally appeared on Fool.com and is written by Sherrie Stone.

Sherrie Stone has no position in any stocks mentioned. The Motley Fool recommends Johnson & Johnson. The Motley Fool owns shares of Dendreon and Johnson & Johnson. Sherrie is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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