Shares of Dendreon Corp. sank Wednesday after a Jefferies & Co. analyst said the company's prostate cancer therapy Provenge will be eclipsed by two newer competitors.
THE SPARK: Analyst Biren Amin started covering Dendreon shares with an "Underperform" rating and a price target of $5 per share. Amin said Dendreon is struggling to improve sales of Provenge and he believes it will be surpassed by Johnson & Johnson's drug Zytiga and by Medivation Inc. and Astellas Pharma's drug candidate MDV3100.
"Provenge (will) be relegated to a niche position by competition in a lucrative market with anemic sales," he said. Amin wrote that peak sales of Provenge will be less than $600 million per year.
THE BIG PICTURE: The Food and Drug Administration approved Provenge in April 2010. It uses the body's own immune system to fight cancer, and it is used to treat prostate cancer that has not responded to other treatments. Analysts once expected sales would reach $1 billion per year, but sales have been disappointing. Dendreon reported about $82 million in revenue in the first quarter, almost all of it from sales of Provenge.
Zytiga was approved in April while MDV3100 is being studied in late-stage clinical trials. Both drugs are pills that are intended to be taken once per day. Provenge is an infusion given over the course of several weeks. A round of treatment with Provenge costs about $93,000.
The company said it was preparing a comment.
SHARE ACTION: With the markets moving lower in afternoon trading, Dendreon shares fell 47 cents, or 6.1 percent, to $7.23. The stock is down about 48 percent since Feb. 27, when Dendreon issued a disappointing first-quarter forecast for Provenge sales. The stock has lost about 78 percent of its value since the company withdrew an earlier sales outlook for Provenge in early August.