Sale of plant to Novartis doesn't reverse Dendreon's ill fortunes

Biotech Dendreon ($DNDN), the maker of prostate cancer vaccine Provenge, continues to struggle with earnings even after undertaking a restructuring program which included unloading one of its manufacturing plants.

The company reported a $72 million loss for the quarter as product sales fell 18% in the quarter to $67.6 million. According to Reuters, uptake of the expensive drug, which can cost $90,000 a year for some patients, has been slowed in part by questions over manufacturing capacity.

Late last year, Dendreon sold a plant in New Jersey to Novartis ($NVS) for $43 million, but it still operates two U.S. manufacturing facilities. The sale allowed Dendreon to "monetize" the 173,000-square-foot plant in Morris Plains, NJ. More importantly, it allowed the biotech to slash 300 jobs. Novartis picked up about 100 of the workers with the purchase and will use the facility to support both clinical and commercial production of potential new products/personalized cell therapies.

Dendreon has said it can ramp up production at plants in Seal Beach, CA, and Union City, GA, and in so doing reduce its cost of goods from 77% to less than 50%, even as it doubles production at those two plants without sacrificing quality. That would only be needed if sales of Provenge escalate.

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