Dendreon Files for Bankruptcy as Cancer Drug Disappoints

Updated on

Dendreon Corp., the maker of prostate-cancer drug Provenge, filed for bankruptcy protection, potentially wiping out shareholders in a company that pioneered the use of patients’ immune systems to fight tumors.

The agreement calls for a recapitalization of Dendreon, or a sale of the company or its assets, the Seattle-based drugmaker said in a statement today. The company and its U.S. subsidiaries filed Chapter 11 petitions in U.S. Bankruptcy Court in Delaware.

Provenge, approved in 2010 as the first so-called immunotherapy, was designed to treat patients with advanced-stage prostate cancer, the second-leading cause of cancer deaths among men in the U.S. The drug never lived up to expectations because it’s cumbersome to administer and cost $93,000. The treatment involves extracting white blood cells from a patient, mixing them with vaccine components and delivering the combination as an infusion.

Dendreon said it plans to continue operations during the restructuring and will provide Provenge to patients. The company has about 700 employees in Seattle and Bridgewater, New Jersey, after cutting about 750 full-time and contractor positions in 2012 and 2013 and selling a New Jersey plant.

The drug generated sales of $283.7 million last year. When Provenge was approved in 2010, analysts projected the treatment could generate $4.3 billion in annual sales by 2020. Now, they predict $378 million, based on two estimates compiled by Bloomberg.

Skadden, Arps, Slate, Meagher & Flom LLP is Dendreon’s law firm. AlixPartners LLC is providing financial advice and Lazard Ltd. is serving as investment bank, the drugmaker said.

Noteholders’ Agreement

In July the company began negotiating with Deerfield Management Co., which holds about 36 percent of the $620 million in convertible notes Dendreon issued in 2011, General Counsel Robert L. Crotty said in a bankruptcy court affidavit.

Investors holding about 84 percent of those notes have agreed to the restructuring, Dendreon said. The company will either sell itself through a court-supervised auction with the proceeds going to the noteholders, or, if no qualified bids come through, the noteholders will take ownership.

The company listed debts of more than $664 million and assets of more than $364 million in the bankruptcy filing. As of November, the company had about $100 million in cash, Crotty said.

Share Plummet

Dendreon fell 81 percent to 18 cents at 4 p.m. in New York, giving the Nasdaq-listed company a market value of about $29 million.

The stock, which reached $55.43 in 2010, plunged in August when the company said it may not be able to refinance or repay bondholders, and that it was weighing alternatives that would wipe out stockholders. The company, whose market value once topped $7 billion, unsuccessfully sought a buyer last year.

Provenge competes with the oral drugs Xtandi, for which Astellas Pharma Inc. and Medivation Inc. split profits, and Johnson & Johnson’s Zytiga.

The case is In re: Dendreon Corp., 14-12515, U.S. Bankruptcy Court, District of Delaware (Wilmington).

Before it's here, it's on the Bloomberg Terminal. LEARN MORE