Wider Loss for Dendreon

Last week, Dendreon Corp. (DNDN - Analyst Report) reported a second-quarter loss of $126.7 million or $1.20 per share, which was significantly wider than the Zacks Consensus Estimate of a loss of 16 cents. The company reported a loss of $16.5 million or 18 cents per share in the year ago quarter. The increase in loss for the reported quarter was primarily due to a $105.8 million loss on the sale of warrants in April.

Revenues for the quarter came in at $25,000, compared to $26,000 in the year-ago quarter. Operating expenses for the quarter stood at $20.9 million, which represented a 12.4% increase over the year-ago quarter. The higher operating expenses were attributable to increased general and administrative expenses for the quarter as the company gears up for an approval by the U.S. Food and Drug Administration (FDA) of its key product candidate, Provenge, a therapeutic vaccine candidate being developed for the treatment of prostate cancer.

As a reminder, Dendreon reported positive phase III results for Provenge in April 2009. Provenge boosted survival rates in men with advanced prostate cancer beyond any currently available treatments.

Dendreon intends to file an amendment to its existing Biologic License Application (BLA) in the fourth quarter of 2009. We believe that the FDA will approve Provenge in the first half of 2010 based on the positive late-stage study results. We also expect the company to announce a partner for Provenge in Europe soon while Dendreon itself will market the drug in the U.S. We believe Provenge could have blockbuster potential if it is approved by the regulators.

Prostate cancer is the most common non-skin cancer in the U.S. and the third most common cancer worldwide. The American Cancer Society estimates that in this decade about 190,000 new cases have been diagnosed each year and almost 30,000 of them were men.

We believe the approval of Provenge is critical for the financial performance of the company since the product has blockbuster potential and the successful commercialization of the drug can drive a company of Dendreon’s size to strong profitability.