Dendreon announces 500 job cuts to offset spending

SEATTLE: Earlier on Thursday, Dendreon Corp. announced that it would do away with 500 jobs, or lay-off over 25% of its staff, in an attempt to enable cost cutting in order to offset poor sales of Provenge, the company’s drug candidate for prostate cancer.

According to Dendreon, Hans Bishop Chief Operating Officer will be leaving the company. Although Dendreon noted that job slashes will come at a cost of $21 million, the company did not comment on how much it is expected to save through this move. The company is said to have 1,915 employees as of June 30, and Bishop has been its COO since December 2009.

The company reported Provenge sales of $22 million in August, which was a considerable hike up from $19 million in July.
Provenge, Dendreon’s only marketed product, is intended to train the immune system to combat cancer.

Net sales amounted to nearly $120.5 million through August. At some point Dendreon had expected the 2011 sales to rise $350 million to $400 million with most profits in the fourth quarter, but it now anticipates much slower growth.

A round of treatment with Provenge costs $93,000. Dendreon said that drug sales are hit due to concerns about government reimbursement, and Medicare recently confirmed it will cover the therapy.

According to Dendreon, the jobs cuts will enable it to cope up with about $500 million in annual sales of Provenge. The company declared that it had $600 million in cash and cash equivalents.

Dendreon shares have declined 69.6 percent since Aug. 3. On Thursday, company shares slipped 74 cents, or 6.3 percent, to $10.88 but the stock jumped 50 cents, or 4.6 percent, to $11.45 in aftermarket trading.