Dendreon once had 2,000 employees at its peak, less than three years ago. Its stock was once over $40 a share. Analysts once predicted its prostate cancer drug would rake in billions in sales every year, with no generic competition in sight.
Today, it’s down to 820 employees, its stock is under $3, and it’s doing another mass layoff just to hold onto its diminishing cash reserves.
The Seattle-based biotech company (NASDAQ: DNDN) said today in its quarterly financial report that it is cutting 150 jobs, or about 15 percent of its workforce. The cuts will cost Dendreon about $7.5 million in severance and termination benefits, but once that near-term hit is out of the way, it should save the company $125 million in cash operating expenses, the company told investors.
The cuts come at a vulnerable moment for Dendreon. The company is hunting around for someone to buy it, according to a recent report in Bloomberg News. Net product sales for its lone marketed product, sipuleucel-T (Provenge), were just $68 million in the quarter that ended Sept. 30—a 12 percent drop from the same period a year ago. Dendreon’s financial position has deteriorated rapidly this year, as it ended September with $233 million in cash plus short and long-term investments—down from $430 million when the year began.
Dendreon CEO John Johnson said in a statement that he wants to get the company on the path to profitability more quickly, but he didn’t provide any timeline for when that might happen.
Dendreon’s rapid fall from grace, ironically, coincides with a moment of great optimism in its field of cancer immunotherapy. Bristol-Myers Squibb, Merck, and Roche/Genentech have all presented tantalizing data this year with next-generation treatments that unleash the power of the immune system on tumors. While these drugs are still in the early stages of clinical testing, the newer treatments offer the potential to work against multiple tumor types and to keep tumors at bay for a long time. They also are conventional injectable antibodies, which don’t have any of the costs and logistical hassles associated with Dendreon’s treatment, which is essentially personalized based on a draw of each patient’s blood.
The Dendreon story a few years ago was about how it overcame all the odds to achieve a historic first—the FDA approval of sipuleucel-T in April 2010. It was the first approved treatment that actively stimulates the immune system to fight cancer cells like an invading virus. Despite clinical data that showed the drug could extend lives with minimal side effects, Dendreon has never come close to living up to the multi-billion dollar sales projections many analysts put on the drug. It was unable to convince many doctors to prescribe the product, partly because of doubts about its clinical trial data, lack of experience in sales/marketing, and reimbursement questions in the early going. While Dendreon was struggling to get momentum, tough competing drugs from Johnson & Johnson and Medivation have swooped in to grab market share.
The layoffs also represent another painful blow for Seattle’s biotech cluster. Last week, Bristol-Myers Squibb said it was cutting 20 jobs at its ZymoGenetics R&D center in Seattle and getting out of hepatitis C research—one of the main reasons it bought ZymoGenetics three years ago. The ZymoGenetics site will now have about 130 employees, down from 275 when Bristol-Myers took over in early 2011.