July 30, 2012--Dendreon Corporation (Nasdaq:DNDN) today announced a strategic restructuring plan designed to accelerate the Company’s path to profitability and future growth. The plan includes re-configuring Dendreon’s manufacturing model with the closure of its Morris Plains, NJ manufacturing facility, restructuring administrative functions and strengthening the Company’s commercial functions.
As a result of the restructuring, the Company expects to reduce costs by approximately $150 million annually, including a reduction in headcount of more than 600 full-time and contractor positions over the next 12 months. Full implementation of the restructuring is expected to take 12 months. Once implemented, the Company believes it will be positioned to be cash flow positive when net product revenue reaches approximately $100 million in a quarter. With this restructuring, Dendreon expects to reduce its cost of goods sold (COGS) to less than 50 percent of net product revenue following the closure of the Morris Plains, NJ facility, down from 77 percent for the quarter ended June 30, 2012. Dendreon expects it may be able to continue to reduce COGS through ongoing operational efficiencies, automation, systems improvements and increased sales over time. The Company will begin to implement the restructuring immediately and expects net benefits associated with these restructuring initiatives to begin to appear in its financial results as early as the first half of 2013.
“This restructuring sets a new course forward for Dendreon, accelerating our path to profitability and future growth,” said John H. Johnson, Dendreon chief executive officer, president and chairman. “Since we first launched PROVENGE, we have continued to look for ways to improve the methods of producing and distributing the first autologous cellular immunotherapy for cancer more efficiently. With efficiency gains in plant utilization, we can now reconfigure our manufacturing network to lower costs across our organization, while continuing to deliver the same quality product and high levels of service our customers expect from us. With the planned improvement in operations, we believe the new network will have similar capacity as that of our three plants currently, and anticipate that it allows the Company to meet expected future demand and growth. In addition, we will continue to capitalize on opportunities to become more efficient and reduce our administrative expenses.