Dendreon Corp. (DNDN:US), maker of the prostate cancer drug Provenge, said it would eliminate more than 600 jobs and reduce costs by $150 million during the next 12 months as it seeks to reach profitability.
Dendreon also will close a manufacturing plant in Morris Plains, New Jersey, with the goal of cutting cost of goods sold to less than 50 percent of product revenue from its current level of 77 percent, the Seattle-based company said today in a statement.
“These changes are necessary and essential,” John H. Johnson, chief executive officer, said on a conference call. “Today we set a new course for Dendreon.”
Provenge was approved in April 2010 as the first therapy in the U.S. that trains the body’s immune system to attack cancer cells as if they were a virus. The treatment, which costs $93,000, was cleared for patients with advanced cases of prostate cancer after a three-year effort to gain regulatory backing. Johnson, a former executive with Savient Pharmaceuticals Inc. (SVNT:US), was chosen in February to succeed Mitchell Gold as CEO, putting him in charge of boosting sales of the drug.
Dendreon’s second-quarter net loss narrowed 17 percent to $96.1 million, or 65 cents a share, from a loss of $116 million, or 79 cents, a year earlier, the company said today in a separate statement. Revenue gained 66 percent to $80 million from a year earlier, though missed the $85 million estimate of 20 analysts in a Bloomberg survey.
Johnson said he wasn’t satisfied with the company’s revenue for the quarter, blaming turnover among sales representatives starting last year as part of the problem.
“We found that those territories that experienced turnover were down 30 percent in quarter-over-quarter sales in Q2, versus those with a sales rep throughout the quarter,” he said.
The personnel issues also lead to a higher-than-normal cancellation rate of drug infusions at the end of June, twice what the company expected, he said.
Dendreon declined 18 percent to $5.04 in extended trading at 6:20 p.m. New York time after closing at $6.18. The company’s stock has plunged 83 percent in the past 12 months as it said growth will be “modest” and Johnson & Johnson (JNJ:US)’s rival medicine Zytiga helped high-risk prostate cancer patients in a study.
“It’s telling that they’re losing sales personnel,” David Nierengarten, a San Francisco-based analyst with Wedbush Securities Inc., said in an e-mail. “And that infusion cancellations coincidentally occurred after J&J released the pre-chemo data for Zytiga.”
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