Dendreon layoffs affect 100 in Seattle

Citing slower than expected sales of its only drug, Seattle biotech company Dendreon announced it was laying off one-quarter of its workforce, including 100 people in the Seattle area.

Most of the 500 layoffs will be at manufacturing centers in New Jersey, Georgia and California. The companys workforce ballooned to 2,000 as it prepared for a major surge in demand for its prostate cancer therapy, Provenge. That surge turned out to be a ripple and sales could not support the size of the companys workforce.

One of the bigger problems for the company has been physician confidence in reimbursement for the expensive drug. A three-round infusion treatment of Provenge costs $93,000, and until Medicare began expediting claims last month it took doctors three to five months to get reimbursed after providing the treatment to patients.

Dendreon has suffered a rapid change in fortune over the past several months. Earlier this spring, company officials told analysts they expected sales to increase to $400 million this year. As late as July, Dendreon stock was trading at $40 a share. Then, in early August, the company announced quarterly gross revenues of $51 million, $7 million less than predictions, and withdrew earlier predictions for yearly sales. At the end of trading on Sept. 9, shares were selling at $11.40 each. Earlier this month, GlaxoSmithKline canceled a major contract with Dendreon to manufacture the antigen in the drug because of unforeseen delays and implementation difficulties in achieving (its) commercial purpose.

While the last month has been difficult for our employees, these cost reductions are necessary to ensure the long-term growth of our company, and I am grateful to our dedicated and passionate employees who are the driving force behind Dendreon, CEO Mitchell Gold said in a statement.

Chief operating officer Hans Bishop departs as part of the company restructuring. As of August 31, the company had $600 million in cash and investments.