Seeking Alpha
Growth, momentum, long-term horizon, newsletter provider
Profile| Send Message|
( followers)  

Dendreon announced some positive news last week that significantly boosts the company's short-term potential and adds to the already lofty expectations for its long-term growth prospects.

Since receiving FDA approval for Provenge, its prostrate cancer drug, early last year, Dendreon has been unable to capitalize on the full market potential for the product because the company's manufacturing capacity has been unable to meet the robust consumer demand for the product.

That changed last week when the FDA approved 36 additional workspaces at the company's New Jersey facility, a significant increase over the 12 that were already in place and working at 100% capacity.

The approval of the New Jersey plant will still limit the overall ability of Dendreon to meet the demand for Provenge, but the FDA approval of the New Jersey expansion offers positive indications that the upcoming approvals of facilities in both Georgia and Los Angeles should go off without a hitch.

At that point, production should be ramped up enough to make Provenge the huge market blockbuster that many have predicted.

Provenge sales came in at $25 million for the fourth quarter of 2010, and it should be assumed that the first quarter will produce similar results, but with the approval in Jersey, it's probable that Dendreon could produce roughly $100 million worth of the vaccine in the second quarter of 2011, putting the company well in line for its fourth quarter projections of raking in up to $200 million in Provenge sales for the quarter.

That also assumes, however, no setbacks or delays with the approvals of the facilities in LA and Georgia.

The heavy losses posted in 2010 could chiefly be attributed to the costs involved with the manufacturing expansion and the Provenge commercial launch, but expectations have Provenge becoming a billion dollar baby for Dendreon on an annual basis.

If all goes as smoothly with the FDA as did the Jersey expansion approval, that time could come as early as next year.

Dendreon was a company doubted by many for years (including some who jumped on the bandwagon at an the opportune time - after approval) as Provenge developed through the late stage pipeline, and there are still those out there who believe the best days for this company have passed.

While that may be somewhat true in terms of potential percentage gains in share price - since the days of DNDN for $3 are finished - the golden age for Dendreon may still be in its infant stages.

The company can still look forward to full commercialization in the US, expansion on the international markets, and the advancement of the remaining pipeline products.

The Dendreon story is still developing, and slowly all the logs are being put in place, and for that reason, DNDN still holds all the potential of a long term winner.

At the end of the day, this is a company that was the first to bring a groundbreaking new immunotherapeutic cancer treatment to market, and that's an item not too shabby to have on a resume.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Source: Dendreon's Golden Age Is Still in Its Infancy