Dendreon: Merriman raises their '10 Provenge sales est by ~40% following Analyst day; valuation does not recognize Provenge market potential  (26.90)

Merriman notes that yesterday, DNDN hosted its highly anticipated Analyst Day where the co indicated that the sBLA for Provenge is expected to be submitted by mid-Nov and a PDUFA date is expected in mid-2010. upon the anticipated launch of Provenge in mid-2010, the New Jersey manufacturing facility will be at 25% capacity. Dendreon has given product rev guidance for Provenge for the first time saying that sales for 2H10 will range from $60-125 mln. They have raised their '10 Provenge sales est to $70 mln from $49.8 mln. The co also indicated that cost of goods sold (COGS) will be approximately 30% which is in line with their current est, and that COGS could be reduced to 20% over time due to efficiencies. The current valuation recognizes the positive Phase III data; however, it does not truly recognize the true market potential of Provenge in prostate cancer nor a key upcoming catalyst for DNDN; either a partnership for Provenge or an outright acquisition of the co. They see a $49-50 tgt range.