Poor Provenge
Dendreon Corporation (NASDAQ:DNDN) tried to spin its second-quarter financial results as positively as it could. The market wasn’t buying the spin, though. Shares for the pharmaceutical company plunged 26% for the week.
The problems stem from prostate cancer drug Provenge. While second-quarter sales picked up compared with the previous quarter, they were still down 8.3% year over year. As a result, Dendreon Corporation (NASDAQ:DNDN)’s net loss of $0.45 per share missed the average analysts’ estimate of a $0.42-per-share loss.
Management pointed to as many positives as they could, including a positive opinion from Europe’s Committee for Medicinal Products for Human Use and highest-ever sales in urology. Those positives weren’t enough to overcome the stark financial reality that sales for Provenge will still fall in 2013 from 2012 levels.
A miss, and two on the way
Robert Mulroy, CEO of Merrimack Pharmaceuticals Inc (NASDAQ:MACK), said his company was “pleased with a strong quarter of progress” in the press release announcing second-quarter results. Investors weren’t as pleased. Shares fell 9% this week, with most of the drop occurring after the second-quarter update was announced.
Merrimack Pharmaceuticals Inc (NASDAQ:MACK) reported a net loss for the quarter of $0.31 per share. Analysts expected a loss of $0.28 per share. That miss only partially explained investors’ disappointment. Merrimack Pharmaceuticals Inc (NASDAQ:MACK) also reported some negative news with one of its clinical studies.
The company, along with development partner Sanofi SA (ADR) (NYSE:SNY), has several studies under way for cancer drug MM-121. Merrimack Pharmaceuticals Inc (NASDAQ:MACK) said that interim review of two of those studies, one in ovarian cancer and another in wild type non-small-cell lung cancer, suggested that primary endpoints would not be met. These setbacks probably affected the stock more than the earnings miss did.
Multiple factors
Novavax, Inc. (NASDAQ:NVAX) shares fell 12% for the week. Like Merrimack Pharmaceuticals Inc (NASDAQ:MACK), the company failed to meet analysts’ expectations for earnings. Also like Merrimack, there’s a little more to the story than just financial results.
In the case of Novavax, Inc. (NASDAQ:NVAX), part of the problem stems from questions about contractual revenue coming from its partner, BARDA. Another issue is that the company seems likely to conduct additional phase 1 trials for avian flu vaccine Matrix-M, which it picked up with the acquisition of Isconova.
Of course, reporting a 51% year-over-year decrease in revenue during the second quarter doesn’t look great, either. Getting the BARDA revenue flowing in will help out on that front. Positive clinical results from vaccines in the pipeline could also help shares rebound.
Toughest road ahead
Because they’re still clinical-stage companies, Merrimack Pharmaceuticals Inc (NASDAQ:MACK) and Novavax, Inc. (NASDAQ:NVAX) can expect downturns like they experienced this week. However, they can just as easily surge on good clinical news.
Dendreon Corporation (NASDAQ:DNDN) seems to have the more difficult path. Even though the company has a product that is generating revenue, those sales continue to disappoint. The market is much more forgiving of early stage biotechs without a product on the market than it is for a company that consistently disappoints after its product launches.
While Dendreon Corporation (NASDAQ:DNDN) still has some hope that sales for Provenge can grow, it’s going to be a tough road ahead. I think it has the highest chance for a horrendous week to turn into a horrendous year.
The article 3 Horrendous Health-Care Stocks This Week 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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