Four years ago, Dendreon (DNDN) was the darling of the biotech sector with a promising cancer vaccine awaiting FDA approval and a stock price sitting above $50 a share.
Today, Dendreon sits just above $2 and CEO John Johnson is out the door after resigning for what the company calls "personal reasons." Cantor Fitzgerald analyst Maria Goldstein asks if this is "a step down or a step forward" for the financially troubled biotech firm.
She writes:
On the one hand, Johnson’s departure was unexpected. Yet on the other hand, the company is at a critical juncture with modest cash left, a large debt overhang and struggling commercial operations that has yet to fully gain buy-in from the clinical community that it serves. With major layoffs already occurring, and losses of the CFO and the head of commercial operations in the past year, perhaps Johnson’s departure is not so unexpected. Nonetheless, we think the only question really to be answered is whether Mr. Johnson’s exit will force a meaningful change in the sales trend for Provenge.
Since it was approved by the FDA in 2010, Provenge, Dendreon's cancer vaccine, has failed to live up to once lofty sales expectations.
Johnson arrived in February following the departure of Mitch Gold promising to turn the company around. Provenge sales, however, never accelerated and the company remains crushed under the weight of enormous debt.
Roth Capital Partners analyst Joseph Pantginiss reiterated his Sell rating, arguing that a turnaround is impossible. He writes:
We believe the commercial hurdles, competitive landscape and behemoth debt makes this goal virtually insurmountable. Reiterate Sell and we are lowering our price target to $0.50 from $1…It is unfortunate that Dendreon’s struggles continue and we remain skeptical whether new potential leadership can overcome these hurdles in a timely manner.
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