Biotech Values

[AlpineBV_Miller]

Almost every company I've ever asked has told me the dollar figure of their manufacturing capacity. Other analysts have said the same thing (I've talked about this very issue with about half the analysts covering DNDN). Granted, it is usually "we can address the entire $XXX million/billion market place with this mfg process", which is a little different.

And I didn't say they haven't disseminated dollar figures. I said they have disseminated figures for maximum capacity of their facilities.

Let me see if I can explain this because there is a TON of confusion about this out there.

Dendreon has a per-patient price range in mind. At the lower end of this price range, their maximum capacity for their mfg plants is $1.5B. At the highest end of the product pricing range, the maximum capacity of their mfg is $2.5B.

Let's say they price at the minimum. Dendreon will have capacity for $1.5B in sales. This does not mean their sales forecast is $1.5B. It does not mean they will sell $1.5B.

For example, Dendreon could sell $500M of Provenge from manufacturing plants capable of $1.5B in sales. The remaining $1B in capacity could be for future products or maybe they just screwed up.

Dendreon needs multiple manufacturing locations for logistical reasons, so there is a reason to build multiple plants OTHER than to handle 100% of market. Three locations makes it less likely weather is an issue. It allows fail-over redundancy. It allows for a bigger window for things to go wrong with regional mfg centers because they will serve doctors in close proximity. It allows the company to meet peak demand spikes even though average demand will not be equal to full capacity.