Dendreon restructuring to cost 600 jobs
Dendreon reported its second-quarter sales declined from the first quarter and said it will slash costs by cutting 600 jobs and closing its New Jersey plant.
Dendreon said Monday it will slash costs through a "strategic restructuring" that includes cutting 600 employees and contractors during the next 12 months.
The Seattle biotechnology company plans to shutter its New Jersey processing center, the first of three it built to handle the delicate process of energizing a prostate-cancer patient's own immune cells to better fight cancer when reinfused into the patient.
The company said it also expects to reduce administrative costs by more than 35 percent over the next 12 months, which could affect its Seattle operations.
Dendreon stock declined 18 percent to $5.04 in extended trading after closing at $6.18.
Even before that drop, the stock had plunged 83 percent in the past 12 months as the company forecast only "modest" growth and faced a strengthening challenge to its Provenge therapy from Johnson & Johnson's medicine Zytiga.
It's the second time in a year Dendreon has made sharp cuts.
Last August, it announced "across the board" layoffs after reporting disappointing sales; the 500 cuts that followed included 100 here.
In February, Dendreon reported 1,475 employees. Most of the latest job cuts will be at the Morris Plains, N.J., center, but the company isn't giving further details, a spokeswoman said.
The restructuring news came as Dendreon announced its second-quarter revenue was $80 million — down 2.4 percent on a sequential basis from the first quarter.
Sales for the quarter were up 66 percent compared with the second quarter of 2011.
Its net loss in the second quarter of 2012 was $96.1 million, or 65 cents a share, compared with a net loss of $116 million, or 79 cents a share, for the year-earlier period.
Dendreon, which this year moved its corporate headquarters into downtown's prominent Russell Investments Center skyscraper, said it expects to reduce costs by approximately $150 million annually.
Once the restructuring is complete in 12 months, Dendreon said it "will be positioned to be cash flow positive when net product revenue reaches approximately $100 million in a quarter."
"These changes are necessary and essential," Dendreon Chairman and CEO John Johnson, said on a conference call.
"Today we set a new course for Dendreon," said Johnson, who took the helm in February.
He blamed some of the sales slowdown from the first quarter on turnover in the sales force and said the company is "rebuilding the sales team really from the ground up."
Research-and-development costs will remain at $20 million a quarter, Chief Financial Officer Greg Schiffman said on the call.
The company also has processing centers in Seal Beach, Calif., and Union City, Ga. With improved efficiency in its production processes, it can produce up to $1 billion in Provenge annually at those two facilities, executives said.
Information from Bloomberg News was included
in this report.