US biotech Dendreon has said it will cut around a quarter of its workforce after conceding that its prostate cancer immunotherapy Provenge would not meet sales expectations.

Earlier Dendreon had predicted that Provenge (sipuleucel-T) - its only marketed product - would achieve sales of $300-$400 million this year, but in the first half the drug had brought in only $75 million.

Part of the reason for the slow take-up of the drug is attributed to difficulties in securing timely reimbursement for Provenge treatment.

That situation was expected to improve from June, when the Centers for Medicare and Medicaid Services (CMS) clarified its position on reimbursing on-label use, but the company says there has been a lag in uptake while doctors wait to see if reimbursement has become easier and more timely.

"We believe that the improved reimbursement landscape and our comprehensive plan to educate physicians, coupled with the meaningful clinical benefit that Provenge provides to patients, creates a strong market opportunity," said the firm's chief executive Mitchell Gold.

August gross revenues of $22 million suggest that some improvement in take-up may be occurring, albeit too late to avoid the restructuring exercise, which will cost the firm some $21 million. As of August 31 Dendreon was still sitting on cash and investments totalling around $600 million.

The company has undertaken a major expansion of its manufacturing network in anticipation of a ramp-up in Provenge sales, bringing facilities online in New Jersey, Atlanta and Los Angeles, but these new plants will bear the brunt of the lay-offs accounting for around 80% of the job cuts. 

Dendreon has also terminated a manufacturing and supply deal with GlaxoSmithKline, which had been contracted to produce and supply the antigen used in Provenge. The drug is designed to induce an immune response against prostatic acid phosphatase (PAP), an antigen expressed in most prostate cancers.

At the time the deal was signed, Dendreon said it was concerned that it would not have enough capacity to meet patient demand for Provenge.