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Thursday, June 14, 2012 - Page updated at 06:30 p.m.

Dendreon shareholders complain about stock losses

By Rami Grunbaum
Times deputy business editor

Dendreon shareholders strafed the Seattle biotechnology company's leadership with criticism at Wednesday's annual meeting, upset at the stock's 82 percent decline in the past year.

But new CEO John Johnson seemed unruffled by the barrage, and may have scored some points with investors by hinting that Dendreon may find a marketing partner for its Provenge cancer therapy in Europe, rather than going it alone.

"You all ought to be fired for cause," longtime stockholder and Seattle resident Charles Heffernan told the management team when he got the microphone.

"There's nobody present here today who isn't in awe" of Dendreon's scientific accomplishment, he said. But the leadership's "actions and inactions ... have put this company at risk.

"It has cost us all hundreds of thousands of dollars, and in some cases millions."

Rob Walker, a prostate-cancer survivor who said he owns 110,000 shares, got a laugh from fellow shareholders when he said, "I do wish I was as good at selling stock as some of the executives of the firm."

He said Dendreon's shares, which have plunged from a mid-2011 high above $40 to recent levels around $7, would have held up better "if the company hadn't been too optimistic and burned people."

Twelve months ago, longtime Dendreon CEO Mitch Gold was reaffirming his earlier projections that Provenge, approved by the Food and Drug Administration in April 2010, would top $350 million in 2011 sales.

That breathtaking outlook for a sixfold sales increase caught Wall Street's attention, with JPMorgan analysts calling Dendreon "our top stock pick for 2011."

But by August, Dendreon had dropped all forecasts after reporting disappointing six-month sales of only $80 million. It soon announced layoffs of 500 people, about a quarter of its work force, and in February replaced Gold with Johnson, a veteran pharmaceutical company executive.

Sales for 2011 came in at only $213 million.

Johnson told shareholders his immediate priorities are increasing sales of Provenge and reducing its manufacturing cost.

The company has 100 salespeople promoting the treatment to oncologists and urologists, and Johnson said he's encouraged by the results.

"The long-term future for Provenge is bright," he said.

Johnson downplayed the latest setback for Dendreon — positive clinical trial results reported earlier this month for two other prostate cancer therapies, Zytiga from Johnson & Johnson and MDV3100 from Medivation.

The results prompted some analysts to downgrade their outlook for Dendreon. "We worry that Provenge may increasingly struggle to maintain relevance," wrote analysts at Robert W. Baird, who nonetheless predict sales of $618 million this year.

Johnson, however, told shareholders he sees other therapies as complementary, not necessarily a threat.

He predicted "physicians will layer on therapies" and may use Provenge early in the treatment progression to rev up the patient's immune system, utilizing other treatments later.

Wedbush Securities analyst David Nierengarten disagreed, predicting urologists will prefer the rival therapies because they utilize a familiar approach — hormone manipulation — and are simpler to use. ""I see a diminishing role for Provenge going forward," he said in a telephone interview.

Local biotech analyst David Miller, who attended the meeting, said he'd expected some harsh words from stockholders. What he heard that was new, said Miller, was Johnson's suggestion that if Provenge is approved by the European Union in mid-2013 as expected, the company will consider a partnership to market the drug there.

That's positive news, Miller said, because with the EU's tighter medical reimbursement controls, Dendreon won't be able to collect as much for Provenge as it does in the U.S.

Dendreon's volatile stock closed up 86 cents, or nearly 14 percent, to $7.11 Wednesday. A little-known research firm, Summer Street Research, began coverage with an $18 price target, nearly twice the $9.93 consensus of 30 other analysts surveyed by Bloomberg News.

Rami Grunbaum: 206-464-8541 or

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