Posted 8/17/2011 2:15 PM (GMT 0)
This from The Motley Fool:
"Dendreon was put through the wringer several times getting its prostate cancer therapy Provenge approved by the regulatory agency. Investors who stuck with the company had a right to expect that once it came to market management's promises of sales of $350 million to $400 million annually would pan out. Instead, yesterday they got platitudes that Provenge should see "modest growth" in the third and fourth quarters on the $78 million it generated in the first half of the year.
Not even Medicare's decision to pay for the drug could overcome the "buy-and-bill" method of reimbursement. Doctors first have to shell out the $93,000 cost of the treatment, then bill the insurance companies for reimbursement, and apparently, not many are willing to do so. Dendreon contrasted Provenge with Yervoy, Bristol-Myer Squibb's (NYS: BMY) treatment that costs $120,000, but is eligible for prior approval from insurers, so doctors know ahead of time they'll be reimbursed. That level of certainty is not there with Provenge.
Although management insists demand is not a problem, Dendreon is cutting employees, which makes it seem like there's not enough support for having plenty of staff to meet it. There's also new competition from Zytiga, a prostate cancer treatment made by Johnson & Johnson, that costs just $5,000 a month for eight months with not dissimilar survival rates. Dendreon is of the mind the traction J&J is enjoying thus far won't last.
Investors were spooked by all this talk and made Dendreon the worst performing stock yesterday among many lousy performers. But highly rated CAPS All-Star zzlangerhans it was that broader sell-off that contributed to Dendreon's own demise and he's betting it was a bit overdone...