Analyst Bulls Up on Dendreon (DNDN, AMGN)

February 23, 2011 · Filed Under analyst calls, Cancer, dendreon 

A bullish research call on Dendreon Corporation (NASDAQ: DNDN) by Gleacher & Co. has so far been unable to prevent some pullbacks along with a broader market that is spooked by international geopolitical events.  Still, the research does lend credence to further upside for Dendreon based on its Provenge.  While not a target in the research call, we would throw out that there is some new indication from Amgen Inc. (NASDAQ: AMGN) in the war against prostate cancer as well.

Gleacher & Co. this morning initiated coverage of Dendreon with a “Buy” rating and assigned a $42.00 price target.  The report from analyst Ying Huang notes, “we are encouraged by the survey results indicating that 40%-50% of castration-resistant prostate cancer (CRPC) patients in the US will be treated with Provenge.”  Furthermore, the call indicates that Provenge will become a blockbuster drug with sales north of the $ 1 billion mark, with a projected peak of roughly $2.2 billion in worldwide sales for Provenge.  This based on no off-label usage as well.

The firm surveyed 47 physicians, 35 urologists and 12 medical oncologists, who collectively treat more than 17,000 patients with metastatic castration-resistant prostate cancer.  The indication is that medical oncologists give higher ratings to the safety and efficacy of Provenge than urologists.  The oncologists projected that the use of Provenge will be in 50% of eligible CRPC patients versus a 39% projection by urologists.

All in all, Huang sees a 30% U.S. market penetration and a 15% E.U. market penetration.  Huang sees FDA approval of a new manufacturing plant and believes that the CMS will ultimately approve the $93,000 cost for the approved label usage but not for off-label usage.

Dendreon shares are currently down 1.2% at $32.17 but the stock was in positive territory this morning above $33.00 per share.  The implied upside from today’s level would be more than 30% to the Gleacher & Co. target price of $42.00 per share.

As a reminder, Dendreon has been called a takeover candidate by some.



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