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Dendreon (DNDN) Q1/13 Results, Pricing The Therapy Is Still The “electronic” Collar On This Dog's Neck – SELL

Net loss of $72 million, or $0.48 per share

Net loss was $72 million or $0.48 per share, compared to $103.9 million, or $0.70 per share for Q1/2012. The decrease in net loss for the 2013 is primarily due to decreased costs associated with SG&A expenses.

Net revenue from DNDN's Provenge sales was down significantly, -18.3%, at $67.5 M in Q1/13 compared to $81.9 M for Q1/12. DNDN management pointed to competition from J&J's Zytiga and Medication's Xtandi as a key factor, with additional factors including the loss of patients post chemo, patients seasonality, and benefit verification.

R&D expenses increased to $18.4 M compared to $17.3 M for Q1/12. SG&A expense for the Q1/13 decreased to $62.4 M, as compared to 95.3 M for Q1/12.

  • DNDN had a total of $337.3 M in cash, cash equivalents, and investments compared to $429.8 M in cash and cash equivalents at 12/31/12.

Q1/13 Highlights

  • Continued new physician interest in PROVENGE®(sipuleucel-T):
  • Added 33 net new accounts in the first quarter, bringing total number of accounts that have infused to 835
  • Demonstrated positive early indicators in effectiveness of direct-to-consumer advertising:
  • Addresses significant need for patient education and awareness
  • First national TV commercial aired March 7
  • Patients contacting DNDN directly for more information, resulting in a significant increase in call center and relationship marketing activity
  • Continued improvement in reimbursement landscape for physicians:
  • Reported average time to payment remains less than 30 days for physicians
  • Continued progress with strategic restructuring:
  • DNDN believes it can reduce cost of goods sold (COGS) to below 50% of net product revenue in the third quarter 2013 at its current forecast levels
  • Already seeing net benefits in financial results associated with the restructuring initiatives and expect full benefits realized in the third quarter of 2013
  • Continued focus on expanding clinical data:
  • Presented data at AUA that further analyzed Phase III IMPACT data to identify prognostic variables that may support early administration of PROVENGE after diagnosis of metastatic castrate resistant prostate cancer
  • Actively evaluating partnering strategies for European expansion; continuing to enroll patients in the sipuleucel-T European Union open-label study; expect a regulatory decision in Europe in the second half of 2013
  • Completed enrollment of PROVENGE and ADT sequencing study; presented initial data at ASCO-GU and expect to present additional data in 2013
  • Completed enrollment of PROVENGE and Zytiga®(abiraterone) sequencing study; presented initial data at ASCO-GU and expect to present additional data in 2013
  • Supporting 19 novel investigator initiated trials (IITs) to advance understanding of immunotherapy and the treatment of advanced prostate cancer
  • Named steering committee for P2 trial for sequencing PROVENGE with Xtandi® (enzalutamide) and expect to begin enrolling patients in Q4/13

Bottom Line: DNDN is DOWN -$0.07 to $3.96 post-earnings from a "thrashing"! Closed at $4.03 on 5/9/13 - let it free fall … but… could a potential $3.50 - $3.65 share price represent - a serious buying potential - I'd take that bet twice but with also a therapy pricing reduction - which I believe is coming!

Pricing the therapy is still …the "electronic" collar on this dog's neck! Love the cash position but hate the campaign to bury the company hoping the direct-to-consumer campaign which began in March to educating potential patients in the mCRPC market employing enhanced sales messaging responds better with customers … for the quarter for Dendreon was absolutely dreadful. Revenues completely fell apart, falling well below even the most bearish of analysts' and whisper numbers. The company's Q2 revenue guidance detailed another year-over-year drop. The company also burned through a substantial portion of its cash and investments pile. Xtandi is approved for patients who haven't been helped by chemotherapy. Zytiga and Xtandi are pills, while Provenge is given in three infusions over the course of four weeks. Provenge is approved for men whose cancer has spread elsewhere in the body and has not responded to hormone therapy or radiation. It is designed to train a patient's immune system to fight prostate cancer and a round of treatment costs $93,000. All the negativity will drive DOWN the stock

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