Dendreon ($DNDN) has at least been consistent. It missed analyst expectations in the first quarter after Provenge went on sale, and has continued to disappoint ever since. The latest results are no exception. Sales fell almost 10% short of expectations, prompting Dendreon to prepare a fresh batch of pink slips.
In the latest round of layoffs, Dendreon plans to save $125 million in operating expenses by cutting its headcount by 15%. About 150 full-time employees are set to lose their jobs over the next 9 months as Dendreon cuts its R&D and marketing budgets in a bid to achieve profitability. The cuts come 16 months after Dendreon outlined plans to lay off more than 600 staff to generate savings of $150 million. Headcount is now shrinking to 820, down from 2,000 at its peak in 2011.
Since that peak, Dendreon has struggled with reimbursement, manufacturing costs and competition from Johnson & Johnson's ($JNJ) Zytiga and Astellas' Xtandi. Dendreon CEO John Johnson said competition had eaten into third-quarter Provenge sales. Vacancies in the sales team--caused by a spate of departures in the second quarter--also negatively affected revenue. Dendreon has since refocused its remaining sales staff on its large accounts, and thinks this strategy contributed to a rare positive in the results.
The number of clients with an annual run rate in excess of $1 million grew in the quarter, reaching its highest level since competitors cut Provenge's share of the prostate cancer market. Dendreon also talked up its performance in October, when it enrolled more patients than in any other month this year. If these enrollments convert into Provenge patients at the expected rate, Johnson said Dendreon will receive a bump in sales over the next two quarters. Dendreon is refusing to give guidance on sales, though.
Management's silence follows years of ever-decreasing expectations. Analyst estimates began dropping even before Provenge went on sale, and a string of disappointing quarters has driven them lower and lower. Last month, Bloomberg reported Dendreon is seeking a buyer, but as a loss-making business with $546 million of convertible bonds due in 2016, its attractiveness is questionable. Johnson said he will give details of how Dendreon will address the debt timebomb in the next quarterly results.
Analysts, meanwhile, are already wondering where the ax will fall next, and questioned Johnson about whether the closure of a manufacturing plant is being considered. Johnson declined to discuss the topic.