Dendreon is on the prowl for another big round of financing. The Seattle-based biotech company (NASDAQ: [[ticker:DNDN]]) said today that it is seeking to sell 15 million new shares of stock to investors in an offering that’s being underwritten by JP Morgan Securities and Deutsche Bank.
The company didn’t release any terms of the financing, but this could easily eclipse $400 million. That’s assuming Dendreon sells all 15 million shares, plus 2.25 million more shares being provided to the underwriters. The company’s closing stock price today was $26.64. Assuming investors get their shares at a 5 percent discount to today’s close, or $25.31, then Dendreon could raise about $436 million in new cash, according to my calculations.
Investors have been snapping up Dendreon shares this year, and the company’s appetite for cash has increased as it seeks to make the transition from a company that only had R&D, to a more integrated enterprise with sales, marketing, and commercial-scale manufacturing. The firm is seeking FDA approval and start marketing its first product, sipuleucel-T (Provenge) for men with terminal prostate cancer. Dendreon stock has boomed this year from a low point of $2.55, after it showed in April that its treatment could help men live longer with minimal side effects in a clinical trial of more than 500 patients. The company seized on that momentum to raise $221 million in May, and it has been building up its capabilities to market its drug ever since. The company has said it plans to double in size to about 600 employees.
Dendreon said it plans to use the money to continue building up manufacturing capacity at its Morris Plains, NJ factory, as well as its newer sites near Atlanta, GA and in Orange County, CA.
The company filed an updated prospectus this afternoon with the Securities and Exchange Commission. I’ll be sure to update this space when I find out the final pricing terms of this offering.
[Updated: 3:24 pm Pacific, 12/08/09]. Any way you look at this deal, it’s likely to dwarf the deal Dendreon did earlier this year. The earlier transaction enabled Deutsche Bank to buy 10.7 million shares at $18.45 apiece on May 7, 2009, along with an option to buy 1.3 million more shares, which it exercised the next day, according to a regulatory filing that came out four days later. The closing stock price on May 7 was $19.76, according to data compiled by Yahoo Finance, meaning that Deutsche Bank got the shares at a 6.7 percent discount.
So if Dendreon can sell more shares this time around (17.25 million), and do it at a much higher price than what it commanded in May, then this deal will easily exceed $400 million.
