Shares of Dendreon Corp. (DNDN: Quote) plunged more than 19 percent in extended trade on Monday after the biotechnology company announced that it will cut 600 jobs or 41 percent of its employees as part of a strategic restructuring plan announced today.
The company also reported a loss for the second quarter that narrowed from last year, reflecting strong double-digit revenue growth. However, quarterly revenues missed analysts' expectations.
The company announced the restructuring plan to accelerate its path to profitability and future growth. The plan will see re-configuring of Dendreon's manufacturing model with the closure of Morris Plains, NJ facility, restructuring of administrative functions and strengthening of the company's commercial functions.
The restructuring will lead to projected annual cost savings of about $150 million, with primarily headcount reductions of more than 600 positions, including contractors, over the next year. The company also looks to reduce cost of goods sold to less than 50 percent of net product revenue.
The company will begin to implement the restructuring immediately, with full implementation expected to take 12 months. It anticipates net benefits from the restructuring initiatives to begin appearing in financial results as early as the first half of 2013.
"We believe the strategic restructuring plan announced today will accelerate our path to profitability and future growth as we execute on our core mission of providing PROVENGE to patients around the world," Chairman, President and CEO John Johnson said in a statement.
The Seattle, Washington-based developer of therapeutics for cancer treatment posted a net loss of $96.14 million or $0.65 per share for the second quarter, narrower than $115.99 million or $0.79 per share in the prior-year quarter.
Excluding items, adjusted net loss for the quarter also narrowed to $60.21 million or $0.41 per share from $85.04 million or $0.58 per share in the year-ago quarter.
On average, 22 analysts polled by Thomson Reuters expected the company to report a loss of $0.59 per share for the quarter. Analysts' estimates typically exclude special items.
Revenues for the quarter surged 66 percent to $79.99 million from $48.16 million in the same quarter last year, and but missed twenty-one Wall Street analysts' consensus estimate of $85.78 million.
Dendreon's first product 'Provenge' was approved by the U.S. Food and Drug Administration in April 2010, as the world's first autologous cellular immunotherapy for the treatment of prostate cancer.
"By re-configuring our manufacturing model, strengthening our commercial organization and lowering our overall cost structure, we believe we can deliver value to our shareholders and our physician customers and their patients," Johnson added.
DNDN closed Monday's regular trading session at $6.18, down $0.06 or 0.96% on a volume of 6.19 million shares. The stock plunged a further $1.20 or 19.42% in after-hours trading.
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by RTT Staff Writer
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