Jul 30, 2012
Mike Tanner

Dendreon Cutting 600 Jobs, Closing NJ Plant As Sales Fall Short

7/30/12Follow @ldtimmerman

Dendreon logo

Dendreon’s new management team is making some drastic cuts in a bid to keep its cancer immunotherapy business going, after the company stumbled in its early marketing days and now faces an increasingly serious competitive onslaught.

The Seattle-based biotech company said today it is cutting 600 jobs full-time and contractor jobs over the next 12 months, and closing its original Morris Plains, NJ, factory, in a bid to save about $150 million a year in costs. By making those cuts, Dendreon said it should achieve positive cash-flows once it reaches $100 million per quarter in sales of sipuleucel-T (Provenge). The company didn’t say when it expects to become profitable.

The cutbacks were timed to coincide with Dendreon’s second quarter financial report, which fell short of Wall Street expectations. The company generated $80 million in net product sales during the quarter, which is less than the $82 million in net sales it reported in the first quarter. Dendreon had been projecting moderate single-digit percentage growth in sales, and Wall Street had been expecting about a 4 percent increase in sales, according to analyst Mark Schoenebaum.

As of February 23, Dendreon had about 1,475 employees, according to its annual report with the Securities and Exchange Commission. Although Dendreon didn’t say in today’s statement how many employees it has now, its headcount should be down about 40 percent from that level. This latest round of layoffs comes after the company got rid of 500 people last September, when it publicly acknowledged it would fall far short of its 2011 sales goal for the immune-boosting prostate cancer drug.

Dendreon made history when it won FDA approval in April 2010 for Provenge, the first treatment of its kind designed to actively stimulate the immune system to fight cancer. The drug has shown an ability to extend lives of patients, but it has stirred controversy with a high price of $93,000 per patient, and it has been logistically tricky for physicians to get comfortable with because of some early confusion about whether it would be adequately reimbursed by insurers. Johnson Johnson and Medivation have also made strides in clinical trials with pills for prostate cancer patients that have also shown an ability to extend lives.

Dendreon plans to discuss the cutbacks, and its second-quarter results, in a conference call with investors at 4:30 pm Eastern/1:30 pm Pacific. I’ll have more details later today after the call.

Luke Timmerman is the National Biotech Editor of Xconomy. E-mail him at ltimmerman@xconomy.com Follow @ldtimmerman

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