Palm Beach, FL 1/6/12 (StreetBeat) -- Shares of Dendreon Corp. (Nasdaq: DNDN) jumped again on Friday, a day after the drug developer said sales of its prostate-cancer therapy Provenge kept growing in the fourth quarter.THE SPARK: The Seattle company announced Thursday before markets opened that Provenge revenue climbed to $82 million in the quarter, better than the projections of several analysts. That represented a 25 percent increase over sales in the previous quarter and more than triple the drug's total from the fourth quarter of 2010.
The drug's annual revenue total of $228 million fell far below an old forecast for $350 million to $400 million that Dendreon withdrew in August.
THE BIG PICTURE: Provenge is used as a treatment for prostate cancer that has not responded to previous therapies. The drug is designed to train a patient's immune system to fight the cancer. It was approved in April 2010, and it is the company's only marketed product.
A round of treatment with Provenge costs $93,000, and Medicare conducted a long review of the drug before deciding to cover it in June.
THE ANALYSIS: Wedbush analyst David M. Nierengarten said the better-than-expected sales appear to be driven by an unexpectedly large jump in the number of clinics signed up to infuse Provenge. He expects a return to more moderate, quarter-to-quarter growth rates of less than 10 percent in the coming quarters.
"It is likely that the incremental clinics represent the 'waiters' who watched how their peers established reimbursement practices," Nierengarten wrote in a Friday morning research note.
William Blair analyst Y. Katherine Xu said Provenge could face tough competition if other options like Johnson & Johnson's Zytiga receive regulatory approval.
"Despite encouraging growth in the fourth quarter and a potential upswing in early 2012, we continue to be concerned with Provenge's eventual potential and profitability, and believe the surge in the stock today based on the fourth-quarter (announcement) is unjustified," the analyst wrote in a Thursday research note.
SHARE ACTION: The stock jumped about 40 percent Thursday to close at $10.62. Shares then climbed another 7 percent, or 75 cents, to $11.37 Friday morning while broader trading exchanges were down slightly.
Dendreon shares traded above $30 for much of 2011 before they plunged in August after the company withdrew its 2011 revenue forecast, citing reimbursement concerns.
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