Dendreon Corp. (DNDN), the maker of the prostate-cancer drug Provenge, gained the most in nine months after Bloomberg News reported the company is seeking a buyer.
Dendreon jumped 13 percent to $2.85 at 9:44 a.m. New York time after reaching $3.02 in its biggest intraday increase since Jan. 11. The shares of the Seattle-based company had fallen 52 percent this year through Oct. 25.
Dendreon is working with JPMorgan Chase & Co. (JPM) to find suitors, according to a person familiar with the matter, Bloomberg News reported Oct. 25. The company, whose market value once topped $7 billion, has failed to meet expectations for sales of Provenge, and its market capitalization hovered at about $400 million before the report.
“We view this as both plausible and sensible, as the company seeks a way out of the $647 million convertible debt noose tied around its neck,” Lee Kalowski, an analyst with Credit Suisse (CSGN), wrote in an Oct. 27 research note. “But Dendreon is facing notable commercial and financial struggles and we don’t foresee a big bidding war.”
Dendreon said in early August that sales of Provenge, its sole marketed product, wouldn’t increase this year as forecast. When the treatment won approval in 2010, analysts projected the drug could generate $4.3 billion in sales by 2020. Today the estimate for that period has shrunk to $476.5 million.
Dendreon, led by Chairman and Chief Executive Officer John Johnson, has burned through money for at least six straight quarters. Cash and short-term investments had dropped to $207.4 million as of June from $538.6 million at the end of 2011.
Andy Brimmer, a spokesman for Dendreon with Joele Frank Wilkinson Brimmer Katcher, on Oct. 25 declined to comment on any sale process. A JPMorgan spokeswoman also declined to comment.
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