Dendreon slashes staff and closes facility
pharmafile | July 31, 2012 | News story | Manufacturing and Production, Sales and Marketing | Dendreon, M&P, Provenge, prostate cancer
Cancer vaccine specialist Dendreon has said it will slash 600 jobs and close one of its three manufacturing facilities in the face of continuing slow uptake of Provenge.
The company’s plant in Morris Plains, New Jersey, is the one to be axed, with facilities in Atlanta, Georgia, and Seal Beach, California, now meeting prostate cancer vaccine Provenge (sipuleucel-T) demand on their own.
The announcement was made at the same time as Dendreon reported second-quarter financial results, with Provenge sales of $80 million, up 66% year-on-year but down a little from the prior quarter.
The company posted a net loss of $96 million in the quarter, and attributed the slowdown in sales in part to turnover in its salesforce.
Dendreon’s recently-appointed chairman John Johnson said on a conference call that he was “not satisfied with the commercial performance of Provenge” and believes “more men with advanced prostate cancer should be benefiting from the product”.
The latest cull is the second at the company in a year, with 25% of its workforce – some 500 staff – shown the door last September. Closing the Morris Plains facility and laying of the 600 workers – both staff and contractors – will take around 12 months to complete, according to the firm.
Johnson told investors that, with greater understanding of the Provenge manufacturing process developing over recent months, it has become clear that Dendreon can meet demand for up to $1 billion in sales for the vaccine from just two facilities.
The company is also planning to introduce automation to the Atlanta and Seal Beach plants over the next couple of years in order to boost capacity still further.
Provenge is relatively complex to make, as the therapy involves taking immune cells from patients, exposing them to a prostate cancer antigen in a Dendreon production facility and then re-injecting them into the patient.
Axing the New Jersey facility will cut the cost of goods sold for Provenge from 77% to 50% of revenue and cut costs by $150 million a year, allowing Dendreon to be cash flow-positive once Provenge sales reach $100 million per quarter, he added.
Dendreon’s chief financial officer Joe DePinto said potential usage of Provenge is still ramping up, with 115 new infusing accounts signed in the quarter, bringing its tally to 687, while acknowledging that the challenge is driving adoption of the technology within its existing customer base.
To achieve that the company has hired key account managers to handle larger clients from a sales perspective, and deployed a fieldforce of nursing staff to make sure that Provenge infusions are actually delivered to patients once booked.
“We have set Dendreon on a new course to accelerate profitability and future growth,” added Johnson.
Phil Taylor
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