Dendreon, the once high-flying Seattle biotech company, plans to lay off 600 employees following poor sales of Provenge. Here's the story from the Associated Press.:
SEATTLE (AP) — Biotech drugmaker Dendreon Corp. said Monday that it will cut about 600 jobs following disappointing sales of its expensive prostate cancer drug Provenge.
The company also will close its Morris Plains, NJ, manufacturing facility and reorganize administrative work as part of the plan to save the company $150 million annually. The cuts will affect full-time and part-time staff. They will take effect over the next year.
Dendreon said two remaining manufacturing sites in Union City, Ga., and Seal Beach, Calif., should be able to meet demand for Provenge production.
Provenge won U.S. approval in April 2010 and was the first drug designed to use the body's own immune system to fight cancer. Regulators approved the drug for prostate cancer that has not responded to other treatments. Analysts once expected sales to reach $1 billion per year, but sales have not matched those expectations. Analysts have blamed the drug's time-consuming production process, which takes several weeks, not to mention its $93,000 price tag.
"This restructuring sets a new course forward for Dendreon, accelerating our path to profitability and future growth," said CEO John H. Johnson.
The announcement came as the company reported second quarter earnings that missed Wall Street's forecast.
Dendreon posted a net loss of $96.1 million, or 65 cents per share, compared to a loss of $116 million, or 79 cents per share, in the second quarter of 2011. Sales of Provenge, the company's only marketed product, were nearly $80 million, up from $48 million a year ago.
Analysts polled by FactSet expected a loss of 60 cents per share on sales of $85.2 million.
Analysts have speculated that Provenge could soon be eclipsed by two newer competitors: Johnson & Johnson's drug Zytiga and by Medivation Inc. and Astellas Pharma's drug candidate MDV3100.
Shares of Dendreon Corp. fell 6 cents to close at $6.18. The company's earnings and reorganizing plans were announced after the market closed. Trading in Dendreon shares was halted.