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Dendreon (DNDN) Q3 2010 update

|Includes: Dendreon Corporation (DNDN)

Dendreon (NASDAQ:DNDN) closed at $35.07 on November 5th, 2010.

I just finished listening to the Q3 2010 update (unfortunately I could not find a transcript online)

My key takeaways were the following:

  • Revenue guidance of 350MM to 400MM for 2011
  • One half (175MM-200MM) is expected in the 4th Quarter 2011 (full capacity)
  • Implied revenue guidance of 700MM-800MM for 2012
  • Expansion in New Jersey is on track and will be ready for FDA review shortly (planned operation for March 2011) 
  • Construction of facilities in Atlanta and Los Angeles are on track and are almost complete
  • Finish the year with 250MM Cash and Cash Equivalents
Based on the new revenue guidance, I have updated my spreadsheet to include these new figures.  Feel free to download and play around with the numbers for yourself

docs.google.com/leaf?id=0B91Wluk5zm-ZMTc...

Using the numbers from 2012, the range of prices are $29.54 to $37.98 (not discounted) and discounted at 10% are $26.59 to $35.94.

The reason why I still like DNDN long, even though the valuation is not much higher than the current stock price is for the following reasons.  The valuations do not take into account any sales outside of the United States, as the timing of those sales are unknown.  Secondly, the valuation does not take into account any additional sales for uses in the future (for other prostate cancers or other cancers in general).

Disclosure: Long DNDN

My strategy is to try to buy DNDN at a price closer to the low end of the valuation, which is why I am selling puts at $25 (net long the stock as I would be required to buy the stock at $25).  Please note that I sell only cash covered puts and not naked puts.