This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

The Next Moves For 2 Spiking Biotech Stocks

​Chris Lau, Kapitall: Quarterly earnings caused a spike in two biotechnology firms, but in different directions last week: Dendreon (DNDN) and Idenix Pharmaceuticals (IDIX). Dendreon makes Provenge, an immunotherapy for prostate cancer. Idenix makes antiviral drugs. Both companies disappointed on earnings, so why did they move in different directions?

[Read more from Kapitall: 6 Banks Under Fire For Clearing Payday Loans]

What happened to Dendreon

Dendreon lost $0.45 per share on revenue of $73.3 million. Both figures badly missed consensus estimates. A big problem for Dendreon in Q2 2013 was operational execution. Dendreon noted the competitive environment it faced in its second quarter was similar to the previous one. The company did not expect its drug, Provenge, to meet its sales targets, due to stagnant growth. Overall growth is not anticipated to beat estimates in the second half of this year.

The company’s cash burn was also alarmingly high. Dendreon’s cash (and cash equivalents) dropped from around $430 million to $281 million. Investors should expect the pressure of weak sales and deteriorating cash to be negative for Dendreon.

On the contrary, the reaction to a light quarterly earnings report for Idenix Pharmaceuticals was positive:

Idenix earned $112,000, missing estimates by $58,000. The company lost $0.22 per share in its second quarter, though this beat consensus estimates by a penny. Shares may have risen because investors were comforted with plans for a regulatory submission. Idenix is planning to initiate clinical trials for a new hepatitis C drug, a uridine nucleotide prodrug inhibitor. Gilead Sciences (GILD) is an example of a company that has developed an effective hepatitis C treatment. If Idenix succeeds in the same way, shareholders will be rewarded greatly.

Compared to Dendreon, Idenix has a healthy balance sheet. The firm ended its second quarter on June 30, 2013 with $177.6 million in cash and cash equivalents.

Expect unchanged stock direction

The prospects for Dendreon are deteriorating, so investors should expect the downward trend in the biotech stock to continue. Conversely, Idenix still has a healthy balance sheet for developing its hepatitis C vaccine portfolio well into the next year. A release of positive clinical trial data could give its shares further upside.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Try it NOW
Only $9.95
Try it NOW
14-Days Free
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
SYM TRADE IT LAST %CHG

Markets

DOW 17,712.66 +34.43 0.19%
S&P 500 2,061.02 +4.87 0.24%
NASDAQ 4,891.2190 +27.8570 0.57%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs