Seattle biotech Dendreon said Thursday it will lay off about 100 employees in Seattle and another 400 at three manufacturing plants in New Jersey, Atlanta and Los Angeles.
Barely a month ago, Dendreon was Seattle’s hottest and most valuable biotech company.
Now its stock is down 68 percent, and Thursday it said it is laying off a quarter of its workforce to cope with slower-than-expected sales of its only drug.
Slashing 500 jobs, about 100 of them in Seattle, will cost about $21 million in the short term, but should slow the rate at which Dendreon spends its capital, executives said Thursday. The company had cash and investments of $600 million on Aug. 31.
“I can’t tell you how difficult it is to let 500 people go, particularly in our plants where they’ve been performing so well,” CEO Mitch Gold said on a conference call with analysts.
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Dendreon rocketed to about 2,000 employees as it geared up to sell the prostate-cancer therapy Provenge; as recently as this spring it was telling analysts sales would quickly ramp up to as much as $400 million this year.
Most of its recent hires were at manufacturing facilities in New Jersey, Atlanta and Los Angeles, and that’s where 80 percent of the layoffs will be.
“When we realized we would not be on a run rate of $175 million to $200 million in the fourth quarter, we had to reduce the head count in our plants to a more gradual ramp,” Gold said in a telephone interview.
Another 100 people will lose their jobs in Seattle, where Dendreon recently moved to new headquarters in eight high-level floors of downtown’s 42-story Russell Investments Center. Its research labs moved to subleased space in South Lake Union.
Gold declined to say how many people work at Dendreon’s headquarters office, but said the layoffs here are of back-office personnel, such as human resources and finance.
“It won’t impact sales and marketing at all,” Gold said.
One high-profile departure is Chief Operating Officer Hans Bishop.
Dendreon reported in early August that quarterly gross revenues were only $51 million, about $7 million short of analysts’ expectations, and it withdrew earlier projections that sales for the year would soar to $350 million or $400 million.
The company said Thursday its gross sales for August were about $22 million, and predicted “modest quarter-over-quarter growth.”
On Tuesday it disclosed the cancellation of a contract calling for GlaxoSmithKline to supply large quantities of the antigen that’s used in its Provenge therapy.
Some doctors have been reticent about prescribing Provenge, because they are not sure how quickly they will be reimbursed. It sometimes took three to five months for Medicare to reimburse them, Gold said.
In the past month, Medicare has begun expediting claims for Provenge, and the average time for reimbursement has fallen to 30 days.
“It’s a huge positive shift in the way physicians are getting paid, and we think it will break down some of the key barriers to adoption for Provenge,” Gold said.
Dendreon also has identified just over 1,000 prostate specialists who account for more than 80 percent of prostate-cancer prescriptions, and it plans to focus its sales efforts on them.
“We knew the group was fairly concentrated, and we’re now able to target it more efficiently,” Gold said.
Provenge costs about $93,000 for a three-stage course of treatment. It increases the median survival time of patients by four months, according to the U.S. Food and Drug Administration.
Melissa Allison: 206-464-3312 and email@example.com