Sales of prostate cancer vaccine continue to disappoint
More than 600 jobs will go at Dendreon over the next 12 months as the US biotech restructures its business and prepares to close its manufacturing facility in Morris Plains, New Jersey.
The announcement came as the company posted a net loss of $96m for the second quarter of 2012 following continued disappointing sales of its flagship product Provenge – a personalised vaccine for prostate cancer.
According to Dendreon, the cuts will affect both full-time and contractor positions, and will reduce annual costs by $150m.
The closure of the New Jersey facility, expected to take place in the fourth quarter of 2012, will also bring down the cost of goods sold from 77 per cent of net product revenues to less than 50 per cent.
Provenge manufacturing operations at New Jersey will be transferred to the comapny's facilities in Union City, Georgia and Seal Beach, California.
“With the planned improvement in operations, we believe the new network will have similar capacity as that of our three plants currently, and anticipate that it allows the company to meet expected future demand and growth,” said the company's CEO John Johnson, who recently also took on the position of chair of Dendreon's board.
In addition, Dendreon plans to restructure administrative functions and reduce associated costs by more than 35 per cent over the next year.
Following these measures the company says it will be in a position to start achieving a positive cash flow once net product revenues reach about $100m per quarter, which it expects as early as the first half of 2013.
Provenge was approved in the US in May, 2010, and was hailed as a breakthrough treatment in prostate cancer due to its novel treatment method of using a patient's own immune system to induce a response to fight the cancer.
Sales have not lived up to expectations, however, with CEO Johnson previously explaining that it was not easy to introduce an entirely new treatment paradigm, especially one with as complex a treatment method as Provenge.
Increased future competition is also expected from rival drugs Active Biotech/Ipsen's tasquinimod and Janssen's Zytiga (abiraterone), both of which have shown positive clinical data in treating prostate cancer.