By Scott Rubin, Benzinga Staff Writer
The share price of biotech firm Dendreon (DNDN) plunged on Tuesday after the company released its second-quarter earnings results and announced a restructuring plan that will trim 600 jobs. In afternoon trading, Dendreon was down around 23%. The company hit a new 52-week low earlier in the session at $4.75.
The strategic restructuring will cut 600 jobs, or 41% of the company's workforce. Under the plan, Dendreon's Morris Plains, N.J., facility will be closed. The restructuring is projected to result in annual cost savings of about $150 million, and Dendreon's goal is to reduce its cost of goods sold to less than 50% of revenue. The full implementation of the plan is expected to take around 12 months.
"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.
For the first quarter, Dendreon reported a net loss of $96.14 million or $0.65 per share, vs. a loss of $115.99 million or $0.79 per share in the year-ago period. On an adjusted basis, which is comparable to analysts' consensus, the company reported a net loss of $60.21 million or $0.41 per share, from $85.04 million or $0.58 per share in last year's second quarter. This compares to analysts' consensus EPS estimates calling for a loss of $0.59.
Revenues in the period were up 66% to $79.99 million vs. $48.16 million in last year's corresponding quarter. Despite the strong growth, Dendreon's revenues missed Wall Street consensus expectations of $85.78 million.
In the wake of the revenue miss, analysts at both JPMorgan and Deutsche Bank downgraded the stock. The JPMorgan analysts slashed Dendreon from Overweight to Neutral and also lowered the price target from $15.00 to $8.00.
Deutsche Bank analysts lowered its rating on the stock from Buy to Hold with a $7.00 price target. They wrote that "Q2 introduces infrastructure risk -- no need to accumulate now." The firm also lowered its estimate for peak Provenge sales to $600 million.
The potentially harshest analysis of Dendreon came from Jonathan Aschoff at Brean Murray Carret & Co. He reiterated his Sell rating on the stock and cut the price target from $4.00 to $2.00. The report was titled, "[Dendreon] Reports Q2 2012 Results and Restructures: Still Not A Contender -- Not Now, Not Later."
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