Dendreon announced its restructuring plan today to reduce its burn rate given the slower than expected uptake of the newly approved Provenge for the treatment of prostate cancer. The plan calls for the company to lay off 500 persons or about 25% of the total work force. Among the casualties is the Dendreon COO, Hans Bishop.
Dendreon reassured investors that it still has $600 M in cash and equivalents on hand, and that its run rate would be reduced from $390-$400 M to about $300 M annually. Dendreon says it can hit cash flow break even with sales of $500 M a year. Currently, Dendreon has sold $77.6 M in all of 2011 with sales of $22 M in August. Some analysts question Dendreon, with its reimbursement problems for a $93,000 drug, can hit sales higher than $450 M before 2021. Dendreon pulled its sales estimate for $350-$400 M in 2011 at its last quarterly conference call and was punished by investors to the tune of losing $3.5 B from its market valuation.
"While the last month has been difficult for our employees, these cost reductions are necessary to ensure the long-term growth of our compnay," said Dendreon CEO Mitch Gold. See Xconomy.
Posted by Bruce Lehr Sep 8th 2011.