Will the Last Interested Person in Dendreon Turn Out the Lights?

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Dendreon Corp. (NASDAQ: DNDN) is getting crushed, and the share price is down to levels not seen in a decade. The company’s reported Provenge sales were again unimpressive. What is amazing is that the volume is not off the charts. This just feels like one of those instances where investor interest has died.

Net product revenue for the quarter was $68.8 million, compared to $67.6 million in the first quarter of 2013. The net loss in the first quarter of 2014 was $36.4 million, or $0.24 per share, compared to a net loss of $72.0 million, or $0.48 per share, for the same period in 2013. Thomson Reuters had the consensus estimates at -$0.28 per share and revenues of $69.2 million.

This is a moderate miss on sales, but a key downgrade is adding fuel to the fire. The independent firm Maxim Securities downgraded Dendreon to Hold from Buy, but the rating might indicate an “extreme short sell” rating because the price target was cut to $1 from $4 in the call. In short, Maxim sees it losing another half of its value.

Dendreon’s highlights even sounded good, but the stock reaction signals something else entirely. Some positive highlights were that cost of goods sold fell, its SG&A dropped by more than one-third and its cash burn of $30 million keeps going lower. Its large accounts grew from 54 a year ago to 93 now.

As of March 31, 2014, Dendreon had approximately $170 million in cash, cash equivalents and short-term and long-term investments.

The company’s quote might sound positive in trends, but the result was just not impressive. John Johnson, who is chairman, president and chief executive officer of Dendreon, said:

This was the first quarter since the introduction of competition where we saw revenues grow as compared to the prior year, which confirms the progress we are making on a year-over-year basis. Achieving our first quarter results with fewer headcount, reduced expenses and streamlined marketing spend compared to the first quarter of last year speaks to our more efficient use of resources. We continue to work to accelerate our path to profitability, and remain focused on becoming cash flow breakeven as soon as possible… During the first quarter, we saw our enrollments increase on a sequential basis. After stabilizing PROVENGE sales in the face of competition, we expect the second quarter to improve from the first quarter, as it did last year. With the increasing amount of data surrounding PROVENGE along with a broader understanding of immunotherapy in cancer, we continue to see KOL support strengthening for PROVENGE, particularly in Europe following a successful European Association of Urology (EAU) meeting and the inclusion of PROVENGE in the new EAU prostate cancer guidelines.

Dendreon shares were down almost 13% at $2.10 in late afternoon trading. Even with an hour to go, trading volume was a mere 4.8 million shares, versus an average day’s volume of 3 million shares. What seems to be happening here is that investors and traders alike are simply skipping Dendreon, just like many patients and many doctors are skipping Provenge. With it under $5 and with such a volatile history, it seems likely to assume that this is on a do-not-short list at many firms. With more than 40 million shares counted as short in its short interest, even that figure is down handily from the nearly 60 million shares last October.