) recently sold its immunotherapy manufacturing facility (IMF) to
Novartis Pharmaceuticals Corporation
) for $43 million in cash. The manufacturing facility was based
in Morris Plains, New Jersey.
Dendreon's Morris Plains facility has the capability to
manufacture Provenge, the first cellular immunotherapy approved
in the US for the treatment of asymptomatic or minimally
symptomatic metastatic castrate resistant prostate cancer.
In July this year, Dendreon announced a restructuring plan for
12 months. It was during that time the company decided to close
down its Morris Plains unit. The company decided to operate
through its Union City, GA and Seal Beach, CA facilities, which
have a manufacturing capacity of approximately $1 billion of
Provenge and can be doubled with the implementation of
The company planned to reduce the number of employees by 600
(both full-time and contractual). The restructuring initiatives
are expected to yield savings of approximately $150 million per
year. The company expects to see the results of these initiatives
from the first half of 2013 although the full benefit is expected
in the third quarter of 2013.
We believe Dendreon's strategic restructuring plan may help
the company to swing to profitability. Dendreon's growth is
dependent on its prostate cancer drug Provenge. Hence, the
successful commercialization of Provenge is crucial for the
financial performance of Dendreon.
However, Provenge sales have failed to live up to management
as well as investor expectations. We remain concerned about
Dendreon's high dependence on Provenge for long-term growth.
We currently have a Neutral recommendation on Dendreon. The
stock carries a Zacks #3 Rank (Hold). Other stocks in the pharma
sector that carry a Zacks #1 (Strong Buy) Rank are
DENDREON CORP (DNDN): Free Stock Analysis
NOVARTIS AG-ADR (NVS): Free Stock Analysis
REPLIGEN (RGEN): Free Stock Analysis Report
TARGACEPT INC (TRGT): Free Stock Analysis
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