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I have a Bachelors Degree in Business Administration and have started up a website with the top 25 biotech stocks. I have been investing in biotech stocks for the last five years, and have done very well. My investing centers around being in long term in biotech stocks, because of the long term... More
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  • Dendreon Slashes Jobs To Keep Itself Afloat 0 comments
    Nov 12, 2013 2:36 PM | about stocks: DNDN

    What: Dendreon (NASDAQ: DNDN) announced today that it has taken efforts to cut 15% of its workforce, because of weak Provenge Sales. The company had Provenge approved by the FDA back in 2010, and has seen declining revenue since. Provenge is an FDA approved drug to treat Men with advanced prostate cancer, using Immunotherapy. In essence the body uses the patients' own immune system to fight the cancer in the body.

    So What: In the press release Dendreon stated that it will be slashing jobs, since it needs to downsize its workforce to keep profitability. With the slashing of the workforce, the company will take a big severance charge for $7.5 million in this quarter -- following quarter. The company believes that slashing these jobs will help the company to reduce operating expenses by $125 million. Dendreon has enacted these reductions, because sales for Provenge did not meet up to the company's expectations. Provenge was expected to make $75 million in sales according to the estimate from analysts, yet only was able achieve $68 million in sales. This 3rd quarter revenue report has left management scrambling, to find a way to reduce costs immediately.

    Now What: With this cost reduction move, the company doesn't expect any benefits to be realized until 1st quarter of 2014. The continued decline in revenue for Provenge along with constant cost-cutting will continue to put a lot of downward pressure on the stock. According to the 8-k Dendreon expects to work on these efforts over the next 6 months, but there are no guarantees in the timeline of cost-cutting. This is because certain labor laws, and regulations may force the company to delay some of the efforts to reduce costs. These delays in essence, could reduce Dendreon's cash position significantly. If you are currently in Dendreon I would say to wait, and see if the company seeks a strategic option to sell itself to another pharmaceutical company. If you are an investor on the sideline, I would say it is best to seek other opportunities in the biotech sector.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Themes: Long Ideas Stocks: DNDN
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