About Dendreon's Earnings 'Miss' Print E-mail
By Vinny Cassano   
Monday, 08 November 2010 00:00

Dendreon reported sales results for the third quarter last Thursday afternoon, and the 'miss' in earnings compared to estimates caused a minor selloff on Friday, although the four percent drop was not backed by significant volume.

Revenue from Provenge, the first approved cancer immunotherapy treatment, was reported as $20.2 million, although analyst estimates had predicted sales closer to $23 million with losses less than the nearly $80 million reported - mostly due to the increase in infrastructure spending.

Dendreon Reports Third Quarter 2010 Financial Results

Provenge sales are growing, as demonstrated by the month-over-month increases, although the company is still struggling to keep up with demand as the manufacturing capability is expanded.  That is a temporary challenge, and once the company is at full capacity, then the difficulties supplying the increasing demand will disappear. 
It'll be worth watching to see if DNDN continues to trade down on this news, and it's my belief that any downtrend should be used as a buying opportunity, because the dips in price will only be temporary, barring any unforeseen negative developments. 
Provenge is predicted by many to rake in as much as a billion dollars a year in as quick as few years down the road - if the production capacity takes place at an expected rapid rate - with sales upwards of $300-$400 million for next year alone likely.  With potential like that, it's hard to see impatient investors bailing out of DNDN after these quarterly results, but such is the game of investing.
Dendreon has traded with volatility over the months since approval, but all indicators are that Provenge will become a blockbuster product, regardless of the slow ramp-up of production.  Any trading to the downside - especially if it breaks thirty bucks again - should be looked at as buy time.
One of the better long term holds out there in the realm of cancer immunotherapy stocks, in my opinion, especially if it goes on sale again. 
Remember, DNDN is no longer speculative - this is a big player with a big product.

Vinny also authors the popular stock investing blog VFC's Stock House.

Disclosure: Long DNDN

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