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Dec 20, 2012

Troubled Dendreon Sells Off NJ Plant

  • Dendreon today said it sold to Novartis its immunotherapy manufacturing facility in Morris Plains, NJ, for $43 million cash—the latest move by the troubled prostate cancer drug developer to right its own ship following more than a year of weaker-than-expected sales.

    “Dendreon continues to make progress in improving our financial strength, and this transaction is aligned with that goal as we work to build value for our shareholders,” John H. Johnson, Dendreon’s chairman, president, and CEO said in a statement.

    He added that about 100 existing employees will keep their jobs and work under Novartis, which will use the 173,100-square-foot plant to help grow its immunotherapy operations and develop new treatments. It was not known if the 100 represented all or a portion of the workforce at the plant, which opened in 2009.

    Novartis has moved in recent months to expand its presence in the field: on August 6, the firm said it was giving $20 million to University of Pennsylvania toward creation of a Center for Advanced Cellular Therapies, under a new R&D alliance designed to advance novel T-cell immunotherapies against cancer.

    Dendreon said July 30 it would close its manufacturing of Provenge® at the plant during the fourth quarter of this year, as part of a strategic restructuring plan designed to cut costs by about $150 million annually—including by eliminating more than 600 full-time and contractor positions over 12 months—in order to bring the company to profitability and future growth. The company said at the time it would consolidate Provenge production in its plants in Union City, GA, and Seal Beach, CA.

    In its third-quarter 2012 results, reported last month, Dendreon recorded $78 million in sales for its sole product Provenge, up 27% from the year-ago quarter. Even better for the company, it added during Q3 54 net new accounts from doctors agreeing to use the drug, bringing its total number of infusing accounts to 741.

    However, Dendreon finished Q3 2012 with a $154.9 million net loss, due to a one-time charge of about $81 million related to cash and non-cash restructuring expenses. Even worse, for much of this year the company bled significant assets: As of Sept. 30, Dendreon had about $445.1 million in cash, cash equivalents, and short-term and long-term investments, down about 28% from $617.7 million as of December 31, 2011.

    Dendreon’s immunotherapy plant sale to Novartis was one of two actions taken in recent days by the company to shrink its real estate holdings. On December 14, Denderon listed for sublease via Officespace.com four of eight floors totaling 90,000 square feet that it originally leased for its new headquarters in downtown Seattle, at the Russell Investments Center. The company leased the eight floors in March 2011, on the eve of Provenge hitting the market.


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