There will be no auction for bankrupt biotech Dendreon (NASDAQ: [[ticker:DNDNQ]]). Valeant Pharmaceuticals (NYSE: [[ticker:VRX]]) has made the only bid for the Seattle company, and with a bankruptcy judge’s approval the bid will become a $400 million acquisition.
Dendreon entered Chapter 11 bankruptcy last fall after a long spiral downward.
Valeant first bid $296 million in late January to set a minimum for a potential auction, and it appeared one might be coming. Dendreon’s lawyers said in court papers that “several bidders” had asked for more time to put an offer together. A few days later, Valeant bumped up its bid to $400 million, and no other suitor has emerged. Valeant announced late Tuesday its acquisition of Dendreon should close by the end of February, pending court approval.
Once considered the next cornerstone of Seattle’s biotech community, the firm received the first FDA for a cell-based cancer immunotherapy in 2010. Its sipuleucel-T (Provenge) was a prostate cancer therapy that required extracting cells from a patient, shipping them to a processing center, genetically engineering them, and shipping them back to be re-infused into the patient.
Dendreon got good marks for making the complicated logistics work, but not much else went right. Marketing struggles, reimbursement questions, a high $93,000 price tag, and other issues hamstrung Provenge’s launch. While Dendreon took on hundreds of millions of dollars in debt, new prostate cancer drugs like abiraterone (Zytiga) and enzalutamide (Xtandi) grabbed market share.
Deerfield Management is Dendreon’s largest lender. It holds 36 percent of the $620 million in notes coming due in 2016.
Provenge generated $300 million in sales last year. Abiraterone, by comparison, generated $1.07 billion in sales in the first half of 2014 alone.
At the time of Valeant’s initial bid of $296 million in late January, chairman and CEO J. Michael Pearson called a potential Dendreon acquisition an “economic way” for his company to enter the oncology space. Valeant is one of the drug industry’s most aggressive acquirers, often for generic drugs and other commercial products that don’t require much research staff and support.
“We believe that oncology has similar characteristics to our current therapeutic portfolios, such as strong growth, high durability, strong patient and physician loyalty, and a terrific reimbursement regime,” Pearson said in a statement. “We have not previously found an economic way to enter this market, but with the unique dynamics of this situation, we believe that this transaction will create significant shareholder value.”
