(Reuters) - Biotechnology company Dendreon Corp said it would reduce annual costs by $125 million and cut about 150 jobs in a new round of restructuring, as it struggles to boost sales of its flagship cancer vaccine.
The company is watched closely due to the immense potential of cancer vaccines, but sales of Provenge have never really taken off because of limited manufacturing capacity and uncertainty over reimbursements.
Dendreon’s net product revenue, reflecting Provenge sales, fell 13 percent to $68 million in the third quarter ended September 30.
“It appears clearly that competition continues to affect the sales of Provenge ...” Wedbush Securities Inc analyst David Nierengarten said.
The current restructuring is not radical enough to address concerns about weak sales, he said, adding that the current restructuring effort is just “too little and too late.”
High cost and the emergence of easier-to-use rival drugs such as Medivation Inc’s Xtandi and Johnson & Johnson’s Zytiga have hurt sales of Provenge.
Dendreon had cut 600 jobs and closed its New Jersey manufacturing facility in a restructuring in July last year to save about $150 million annually.
The company, in its post-earnings conference call on Tuesday, refused to say whether it would shut more plants.
The benefits of the latest restructuring, which would lower expenses by 20 percent, were expected from the first quarter of 2014, the drugmaker said.
Dendreon said it would have about 820 employees at the end of the restructuring, down from more than 2,000 at its peak.
The company will record a restructuring charge of about $7.5 million in the current quarter and the first quarter of 2014.
Dendreon’s net loss narrowed to $67.2 million, or 44 cents per share, in the third quarter from $154.9 million, or $1.04 per share, a year earlier.
Analysts on average had expected a loss of 42 cents per share on revenue of $76.3 million, according to Thomson Reuters I/B/E/S.
Dendreon shares rose 3 percent to $2.58 on Tuesday on the Nasdaq.
Reporting by Esha Dey and Adithya Venkatesan in Bangalore; Editing by Savio D'Souza and Kirti Pandey