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Dendreon slips as Wall Street reviews cost cuts

NEW YORK (AP) -- Shares of Dendreon slipped Wednesday as the company got a new assessment in the wake of disappointing sales of its prostate cancer treatment and another round of job and expense cuts.

THE SPARK: On Tuesday, the company said sales of its prostate cancer therapy Provenge declined 13 percent in the third quarter. It reported $68 million in sales of Provenge, about $8 million less than analysts expected.

Dendreon Corp. also said it plans to eliminate around 150 jobs and $125 million in annual spending. It will have about 820 employees when the cuts are complete.

THE BIG PICTURE: Provenge is designed to train a patient's immune system to fight cancer. Dendreon launched Provenge in 2010 and many analysts expected annual sales to reach into the billions. While some analysts are still optimistic about the treatment's prospects, sales have not lived up to their expectations in the three years since the drug reached the market. Concerns about its high cost, limited benefit and reimbursement rates hurt sales, and Provenge is now facing competition from recently-approved drugs.

Sales of Provenge have totaled about $153 million over the last four quarters.

The Seattle company said its business has gotten stronger in the last two months, and more patients signed up for treatment in October than in any other month in 2013.

In 2012, Dendreon eliminated 600 jobs, closed a manufacturing plant and reorganized some administrative work as part of a plan to eliminate $150 million in annual spending.

The company said it had around $233 million in cash and cash equivalents at the end of the quarter.

THE ANALYSIS: William Blair & Co. analyst Y. Katherine Xu said after the cost cuts go into effect, Dendreon could be profitable if Provenge sales reach $90 million to $95 million per quarter. Xu now expects annual sales to peak at $1.09 billion in 2025. She had expected sales to peak in 2017. She rates the stock "Underperform" with a $2 price target.

Stifel Nicolaus analyst Joel Sendek said he thinks the company won't launch Provenge in Europe and will be bankrupt by the end of 2014. He kept a "Sell" rating and has no price target.

The company did not immediately respond to a request for comments.

SHARE ACTION: In morning trading Dendreon stock lost 7 cents, or 2.6 percent, to $2.51 in late morning trading.

Shares gained as much as 9.2 percent during the day Tuesday. They closed up 8 cents, or 3.2 percent, at $2.58. The stock has lost 40.5 percent of its value since Aug. 8.