With a new plan aiming at “accelerating the path to profitability,” drugmaker Dendreon Corp. (DNDN) announced with its third-quarter earnings report on Tuesday that it is cutting 150 jobs, or about 15 percent of its workforce, in a bid to save $125 million in operating costs after sales of Provenge, its flagship prostate cancer drug, slipped in the past three months.
During the quarter ended September 30, the Seattle-based company reported revenue of $68 million, down 12.8 percent from $77.9 million in the year prior quarter. Net loss for the quarter was $67.2 million, or 44 cents per share, compared to a net loss of $154.9 million, or $1.04 per share, in the third quarter last year.
Wall Street expected Dendreon to post a loss of 42 cents per share on revenue of $75 million.
The quarter ended with the company having $233.3 million in cash, cash equivalents and investments.
Approved in 2010, Provenge is Dendreon’s only FDA-approved drug. It is an autologous cellular immunotherapy indicated for the treatment of asymptomatic or minimally symptomatic metastatic castrate resistant prostate cancer. Drugs that use the body's own immune system to fight cancer have been closely watched in recent years for their potential to reshape oncology treatments from today’s standards of care, which typically include “poisoning” the body with tumor-destroying drugs. Northwest Biotherapeutics, Inc. (NWBO) has seen shares spike in the past week with its DCVax, a cancer vaccine in late-stage clinical trials.
At its peak, Dendreon had more than 2,000 employees, but a series of layoffs, including the latest, will take the company down to 820 staffers. In July 2012, Dendreon announced a restructuring plan that eliminated more than 600 jobs in a bid to save $150 million in annual expenses.
The valuation of the company at its peak was more than $7 billion, a market cap that has now been chopped to under $430 million. Once expected to revolutionize cancer treatments with sales projected in excess of $4 billion annually, Provenge sales have not topped $83 million in a quarter yet.
“…we are restructuring the Company and implementing additional cost reductions to enable Dendreon to succeed as a leaner, more nimble biotechnology company focused in immuno-oncology. Our plan enables us to slow our cash burn and be better positioned to achieve profitability while continuing to make strategic investments in manufacturing automation, select European initiatives and ongoing clinical development programs, including our combination and sequencing studies,” said John H. Johnson, chairman, president and chief executive officer of Dendreon, in a statement today.
Dendreaon saw more patient enrollments in October than any other month this year. If those enrollments convert to infusions at historical rates, it should benefit the current and next quarter, according to Johnson.
The restructuring move is likely an attempt to make the company more attractive, should an acquisition-hungry biotech come calling. Last month, Bloomberg reported that Dendreon hired JPMorgan Chase & Co. (JPM) to find a potential suitor. Although Provenge sales have greatly disappointed, investors will be watching to see if JPM can find a buyer with the company trading at roughly 1.3 times trailing-twelve months' revenue.
During the third quarter, Provenge was granted marketing approval in the European Union. Dendreon has agreed with PharmaCell to be the Contract Manufacturing Organization for the EU and says it is in discussions with potential partners for the launch of the drug.
Shares of DNDN have nosed ahead by 3 percent in Tuesday morning action, up to $2.58 per share. Over the course of 2013 so far, shares are down by about 50 percent.
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