Jul 31, 2012 11:38 AM EDT

Dendreon: Cutting More Than 600 Jobs, Closing Its New Jersey Facility

After a lengthy review process was approved in 2010 for its prostate cancer fighting drug, Provenge. Pharmaceutical company Dendreon Corp. (DNDN) announced that the company will be cutting more than 600 jobs over the next year, due to slow sales of its prostate-cancer treatment.

"Since we first launched Provenge, we have continued to look for ways to improve the methods of producing and distributing the first autologous cellular immunotherapy for cancer more efficiently," Chairman and Chief Executive John H. Johnson said in a statement. He added the company is confident in the long-term opportunities for provenge.

Shares of the company fell 19% to $5 in after-hours trading Monday. The stock, which was above $37 as recently as last August when it revealed reimbursement problems with its Provenge cancer treatment, was halted in after-hours trading until its conference call with analysts is ended.

Dendreon said it will reconfigure its engineering model and close its Morris Plains, N.J., manufacturing facility. The restructuring efforts, implemented immediately, should reduce the company's costs by about $150 million annually. Dendreon expects benefits from these efforts as early as the first half of 2013.

According to data from FactSet, the potential layoffs represent about 41% of Dendreon's 1,475 employees; the latest workforce reduction comes after Dendreon in September said it would lay off 500 employees to cut costs in response to lower-than-expected sales of its Provenge prostate-cancer drug. These layoffs are said to furthermore hurt the economy.

Also, Provenge is facing amplified competition from Johnson & Johnson's (JNJ) treatment, Zytiga, which is given to patients in the form of a pill. Dendreon's Mr. Johnson tone downed the impact of Zytiga on the company's results.

"We don't see Zytiga as an either/or [treatment]. We see the product as complementary," Mr. Johnson said on the call with analysts. "Our market research on it today in the second quarter doesn't show that Zytiga has moved significantly in this quarter."

For the most recent period, Dendren reported a loss of $96.1 million, or 65 cents a share, compared with a year-earlier loss of $116 million, or 79 cents a share. Excluding amortization, restructuring expenses and other items, Dendreon's per-share loss narrowed to 41 cents from 58 cents.

Revenue jumped 66% to $80 million.

Analysts polled by Thomson Reuters had projected a per-share loss of 59 cents and revenue of $86 million.

Dendreon steadily had been guiding for modest quarter-over-quarter sales growth for Provenge, though on a sequential basis, the company's revenue fell 2.4% from the first quarter.

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