Dendreon ($DNDN) CEO John Johnson says the company is setting a new course to profitability. It just doesn't include its New Jersey manufacturing plant and 600 employees company wide.
The Seattle maker of prostate cancer drug Provenge announced the restructuring plan to save $150 million over the next 12 months. It says in a press release that by closing the Morris Plains plant and ramping up production at plants in Seal Beach, CA, and Union City, GA, it can reduce its cost of goods from the current 77% to less than 50%.
In a call with analysts, Johnson said, "After careful analysis we have determined that we can deliver up to $1 billion of Provenge from our two manufacturing facilities in Georgia and California without impacting quality or customer service, thereby lowering our cost of goods." He said the company has learned in the last 6 months about some automation improvements it can make that will allow it to double production at the two plants.
The company refused to say how many people work at the Morris Plains plant or how many of the cuts would come from administrative ranks, reports the Puget Sound Business Journal.
Johnson took over as CEO earlier this year, replacing Mitch Gold, as the company stumbled. It has faced resistance from doctors to prescribing Provenge over the $93,000-a-year price of the treatment.
The plant closing was announced at the same time that the company released its earnings, showing a loss of 65 cents a share in the second quarter that ended June 30, less than the 79 cents a share loss a year earlier. The company's stock price has fallen more than 80% over the last 12 months, Bloomberg reports, in the face of potential competition from Johnson & Johnson's ($JNJ) Zytiga.