Dendreon fraught with challenges faced by Provenge

INDIANAPOLIS (AP): With a 60% plummet in Dendreon’s shares on Thursday, industry analysts revealed that Provenge, the company’s only marketed drug, may be fraught with many more challenges than those actually acknowledged by the company.
Dendreon withdrew its revenue forecast for 2011 citing reimbursement concerns, late Wednesday.

Rather than reimbursement issues, Provenge is facing concerns due to lack of demand and high costs, said Brean Murray, Carret & Co. analyst Jonathan Aschoff. Doctors and patients are quite unimpressed with its performance, say analysts.
The shares of the company were demoted from “buy” to “sell” by Aschoff, followed by a crash of its target cost from $60 from $6.

Because payers are unsure about reimbursements for the expensive Provenge, Dendreon is apparently anticipating only “modest” sales of the drug over the second half of 2011. Provenge sales estimated to be between $350 million and $400 million were withdrawn by Dendreon.

On Wednesday, the company said that the second quarter sales of Provenge amounted to $51.4 million, or $49.6 million including discounts to federal and state programs like Medicaid. That fell short of Wall Street estimates.
Astonished by the announcement, the price target on the company’s stock was reduced from $36 to $14 by Citi analyst Dr. Lucy Lu.

“We believe the Street mis-modeled the market potential of the drug and the primary issue is lack of demand under the current standard of care for advanced prostate cancer in the U.S.,” Lu wrote.
Provenge obtained FDA approval in April 2010. A single round of treatment that costs $93,000 is said to be covered by Medicare.

In electronic trading on Thursday, Dendreon shares dropped $22.13 to $13.71.

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