(Reuters) - Shares of Dendreon Corp DNDN.O tumbled 20 percent on Tuesday after the biotechnology company continued to report disappointing sales numbers for its key drug amid doubts about a turnaround in the face of expected new competition.
Sales for Dendreon’s Provenge, which was approved in 2010 as the first therapeutic cancer vaccine to use a patient’s immune system to attack cancer, fell about 2.5 percent to $80.0 million for the second quarter from the previous quarter.
That fell short of analysts’ consensus of about $85 million.
Provenge, which costs $93,000 per treatment, has reported disappointing sales since its launch. They have been hurt in part due to a cumbersome manufacturing and administration process and uncertainty over reimbursement.
Dendron shares fell to $4.94, making the stock one of the top percentage losers on the Nasdaq. About 9 million shares changed hands within the first 20 minutes of trading.
The company on Monday said it would close one of its three plants and cut more than 600 jobs over the next 12 months to reduce annual costs by about $150 million.
“Dendreon announced a much-anticipated facility shut-down, although the Street was not expecting the closing of the company’s largest manufacturing facility,” said Barclays analyst Ying Huang in a note, halving the price target on the stock to $6.
Provenge faces increased competition from easier-to-administer drugs, such as J&J’s (JNJ.N) recently released Zytiga and Medivation Inc’s MDVN.O enzalutamide, which is moving closer to approval.
“Physicians have difficulties assessing whether Provenge works, in absence of defined biomarkers reflective of the efficacy of the immunotherapy,” said Roth Capital Partners analyst Joseph Pantginis.
The analyst cut his price target on Dendreon to $5 from $6.70 and cut U.S. peak sales estimates for Provenge to $500 million from $640 million.
Reporting by Prateek Kumar in Bangalore; Editing by Don Sebastian