Dendreon's press releases have a definite broken-record sound. After posting another round of disappointing sales and earnings, the company is once again cutting jobs and costs. This time, it's 15% of the workforce, or about 150 jobs, and $125 million in spending.
The backstory to these cuts is familiar by now: Dendreon ($DNDN) rolled out a highly anticipated prostate cancer therapy, Provenge, and slated some serious sales projections. For a variety of reasons--reimbursement decisions slow in coming, doctors shy of up-front costs, production that needed time to ramp up--the drug fell short of those forecasts. Far short. And Dendreon began a series of retrenchment moves.
Just to illustrate the scale of those cuts, Dendreon once employed 2,000 people. Its workforce will stand at about 820 after the latest round, the company said.
CEO John Johnson talked up the latest cuts as a step toward revamping the company for a light-and-fast approach to the future. "[W]e 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," Johnson said, adding that the cost reductions will help fund automated manufacturing and clinical development.
The cuts also could be a sort of staging move. The company reportedly put itself up for sale last month, and preemptive layoffs could help make it more attractive, pro forma-wise. And it saves a potential buyer the effort of making those job cuts after a deal closes. Not to mention the fact that lower costs mean less spending while Dendreon scouts for a buyer.
Though Provenge sales were down for the quarter once again--to $68 million from $78 million last year--Johnson maintained that the company's business has strengthened over the past two months, more or less since the third quarter ended. "In October, we saw more patient enrollments than any other month this year," he said. If those enrollments translate into actual sales at the rate they usually do, "this will bring benefit to both the fourth quarter of this year and the first quarter of next year," he said.
Dendreon is plugging away at research looking at Provenge in sequence with the very competitors that are now interfering with its growth. It's looking at Provenge and the Astellas/Medivation ($MDVN) drug Xtandi, and Provenge and Johnson & Johnson's ($JNJ) Zytiga. It's also looking for biomarkers to predict Provenge response. If the company can hunker down in the meantime, Johnson suggests, a turnaround could follow. Anyone want to take bets on that?
- read the release from Dendreon (PDF)
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