Dendreon Corp. (NASDAQ: DNDN) has been down and out, and now the company is going to try a restructuring strategy after earnings, in an effort to save it from the worst case scenario. The prostate cancer treatment maker saw cancer sales drop in its earnings report, but the restructuring is giving traders and investors some incentive to buy. It may be forcing short sellers out as well.

We would be very concerned about the sales here, more than the actual earnings report. Dendreon said that net product revenue for the quarter was $68.0 million, compared to $77.9 million for the same quarter in 2012. This is entirely based on Provenge sales as a last line of defense in metastatic prostate cancer. This feels almost catastrophic on the surface, as it is a drop of almost 13%.

Dendreon’s net loss in the third quarter was $67.2 million, or -$0.44 per share, and that is narrower than the loss of $154.9 million, or -$1.04 per share, a year ago. Again, it is the drop in product sales that should spook people here. The caveat is simple. CEO and Chairman John Johnson is trying to convey a much different message. He said:

We have seen a strengthening of our business during the past two months. In fact, in October, we saw more patient enrollments than any other month this year. Should these enrollments convert to infusions at our historical rate, we expect that this will bring benefit to both the fourth quarter of this year and the first quarter of next year. … Accelerating the path to profitability has been a top priority for Dendreon.

So, we are concerned about falling sales. The CEO is talking the trajectory up ahead. Here are the details of the restructuring plan:

• Remove more than $125 million in cash operating expenses from the 2013 run rate, or about 20% of expenses.
• Cost of goods sold expenses are expected to decline by approximately $30 million.
• Dendreon will have approximately 820 employees, down from more than 2,000 employees at its peak.
• The plan will be implemented immediately, with the expectation that the net benefits will begin to be realized as early as the first quarter of 2014.
• The focus will remain on reducing costs without compromising quality.
• Dendreon will spend more efficiently and manage its balance sheet.

Dendreon also said that it had $233.3 million in cash and cash equivalents at the end of September. Dendreon’s market cap is $409 million, after a 7% gain to $2.68 in early Tuesday trading. While the 52-week range is $2.23 to $7.22, this stock used to trade at share prices exponentially higher.

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