Dendreon, Biotech Cult Firm, Cuts Workers, Posts Earnings--Shares Off 18%

Dendreon (NASDAQ: DNDN), the small biotech firm with a cult following a among Wall St. traders, posted earnings today and slashed its staff.  The stock dropped immediately after the news, and was down nearly 20%.

Dendreon trades over six million shares a day, despite the fact that its market cap is well under $1 billion. The market has lost faith in the company’s prospects and the stock trades at $5 down from a 52-week high of $37.72

The Dendreon layoff announcement said

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.

Based on the firm’s share price, Wall St. is clearly skeptical about management’s claim.

Dendreon’s earnings reinforced concerns. In its earnings report, the firm said

Net product revenue for the quarter was $80.0 million compared to $48.1 million for the quarter ended June 30, 2011, up 66% year over year and down 2.4% on a sequential basis.

Net loss in the second quarter of 2012 was $96.1 million or $0.65 per share, compared to a net loss of $116.0 million, or $0.79 per share, for the same period in 2011. The current period includes approximately $5.2 million in cash and non-cash severance expenses. Excluding these expenses, the company had a net loss of $90.9 million or $0.61 per share.

Dendreon Corporation claims expertise in antigen identification, engineering and cell processing to produce active cellular immunotherapy (ACI) product candidates designed to stimulate an immune response in a variety of tumor types. Its first product, PROVENGE(R) (sipuleucel-T), was approved by the U.S. Food and Drug Administration (FDA) in April 2010.