Dendreon Restructures as Net Losses, Product Revenues Shrink
Hurt by continued disappointing sales of its prostate cancer vaccine Provenge® (autologous peripheral blood mononuclear cells activated with PAP-GM-CSF or sipuleucel-T) despite an uptick in patient enrollment, Dendreon said today it will restructure its operations with the goal of cutting its costs by 20%, for a savings of $125 million.
Dendreon, which carried out a cost-cutting initiative more than a year ago, said the new restructuring will leave the company with about 820 employees, down from more than 2,000 at its employment peak. A company press release did not say how many jobs would be eliminated.
To achieve the planned savings, Dendreon said, it will cut costs from all expense categories. Cost of goods sold (COGS) expenses are expected to decline by approximately $30 million, the company projected.
“Our plan enables us to slow our cash burn and be better positioned to achieve profitability while continuing to make strategic investments in manufacturing automation, select European initiatives, and ongoing clinical development programs, including our combination and sequencing studies,” John H. Johnson, Dendreon’s chairman, president, and CEO, said in a statement. “We are confident that with the successful execution of our plan, we can create value for shareholders, physicians, and patients."
Dendreon announced the restructuring as part of its release of third-quarter results. The company finished Q3 with a reduced net loss of $67.2 million, compared with $154.9 million a year earlier—but net product revenue, driven by Provenge sales, also fell, to $68 million, down 12.8% from $77.9 million for the third quarter of 2012.
Sales have struggled due to competition from prostate cancer drugs by Johnson & Johnson and Medivation, as well as Provenge’s $93,000 price tag. Dendreon has defended its pricing of Provenge by citing its novelty as a first-in-class, personalized autologous immunotherapy, its shorter duration of use than other cancer drugs, and its success in extending median overall survival beyond two years.
On a brighter note, Dendreon said it had enrolled its largest number of patients in October compared with any month this year, and had seen an uptick of patient enrollments over the past two months.
“Should these enrollments convert to infusions at our historical rate, we expect that this will bring benefit to both the fourth quarter of this year and the first quarter of next year,” Johnson added.
Also during the third quarter, Dendreon won marketing authorization from the European Union, which should boost sales for the prostate cancer drug by allowing the commercialization of Provenge in all 28 EU countries as well as Norway, Iceland, and Liechtenstein.