Dendreon To Lay Off 500 As Provenge Sales Disappoint Print E-mail
By Peter Loftus, Dow Jones Newswires   
Thursday, 08 September 2011 17:58
fda calendarDrug maker Dendreon Corp. (Nasdq:DNDN) said Thursday it will lay off 500 employees--about one-fourth of its work force--to cut costs in response to lower-than-expected sales of its new prostate-cancer treatment Provenge.

The layoffs are part of a restructuring Dendreon is undertaking in the wake of its surprising revelation last month that sales of Provenge, which was approved in 2010 after a lengthy U.S. regulatory process, had slowed due to difficulties experienced by smaller physician practices in getting timely reimbursements from health plans for administering Provenge. Some experts also believe low demand and emerging competition may be hurting Provenge sales.

The drug, which enlists the body's immune system to fight cancer, costs about $93,000 for a standard course of treatment.

The job cuts primarily affect Dendreon's manufacturing workers, but also other functions including back-office departments.

Dendreon Chief Executive Mitchell Gold said on a conference call with analysts that physician practices want to see more evidence that the reimbursement picture has improved "before they more broadly adopt Provenge."

Dendreon said Thursday it recorded $22 million in gross revenue for August, up 16% from July, and expects modest quarter-over-quarter growth as it works to spread the word among physicians that reimbursement for Provenge is improving, following actions taken by the federal Medicare health plan for the elderly.

Additionally, the Seattle-based company said it had cash, cash equivalents, and short- and long-term investments of about $600 million as of Aug. 31. With the layoffs and restructuring, Dendreon expects to have sufficient cash to enable it to achieve a cash-flow break-even position in the U.S. at an annual run rate of about $500 million in revenue.

Dendreon reported onl... Read More at Wall Street Journal



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