Putting a Value on Provenge

Updated from 2:07 p.m. EDT

Last week, reader J.D. emailed to ask about Dendreon(DNDN Quote). Specifically, he wanted to know how I came up with a valuation for the company's prostate cancer vaccine Provenge.

"I'd like to learn more about how to value a company's pipeline," he wrote. "I'd like to gain some insight into how you might determine how much a successful drug could actually add to the bottom line."

Great question, J.D., and timely with Dendreon set to go in front of a Food and Drug Administration advisory panel on March 29. Prompted by J.D.'s email, I sat down this week and built a revenue model for Provenge. ...