A few more thoughts and questions:
1. Dendreon management blamed the weak $80 million Provenge quarter, in part, on a significant increase in the number of patients who cancelled appointments for their first infusions. Dendreon said the "schedule yield" issue became particularly problematic in late June as the quarter ended.
Late June? Hmmm… what could have happened earlier in June to persuade patients to ditch Provenge? Might it have been Johnson & Johnson (JNJ) presenting strong Zytiga "pre-chemo" data at the big ASCO cancer conference just a few weeks earlier?
Dendreon insists that Zytiga is not having an impact on Provenge but common sense argues otherwise. It seems pretty clear that Provenge has a demand problem and it's not going to get any better with Zytiga on a path towards approval in the pre-chemo setting and Medivation's (MDVN) MDV3100 moving fast behind it.2. The deep cost-cutting announced by Dendreon Monday is the right strategic move but doesn't seem to be enough given Provenge's demand problems. Yes, Dendreon can now reach break-even at a $400 million annualized Provenge run rate (down from $500 million in annualized sales) but to get there, the company must grow sales by 25%. From where is that growth going to come? And when? Johnson and his new team won't provide sales guidance for the rest of 2012 and admitted the company's "sales challenges" with Provenge wont resolve until early 2013. The Street has Dendreon doing $385 million in Provenge sales this year. Obviously, that consensus estimate is going to be chopped significantly by the time the stock opens for trading Tuesday. 3. Oncologists hate Provenge. They're not prescribing the drug to their prostate cancer patients so why does Dendreon insist on wasting money and resources trying to convince them otherwise? The company would be more effective if they focused solely on marketing Provenge to urologists. 4. Why are Dendreon sales reps leaving the company in droves? Are they applying for jobs with Johnson & Johnson and Medivation? 5. Dendreon is not going to be acquired. Not anytime soon, anyway, and certainly not for a premium price. Sure, Dendreon dead-enders will try to recycle the old rumors -- Celgene (CELG)! AstraZeneca (AZN)! Amgen (AMGN)! -- but it's just a futile exercise. One day, the Dendreon bulls may get their wish but only if a large pharmaceutical company is able to buy the company at what amounts to a biotech yard sale. --Written by Adam Feuerstein in Boston.
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