Debt-Ridden Valeant Offloads Dendreon for $819.9 Million Cash

Debt-Ridden Valeant Offloads Dendreon for $819.9 Million Cash January 10, 2017
By Alex Keown, Breaking News Staff

LAVAL, Quebec – Valeant Pharmaceuticals continues to sell off non-core assets in an attempt to pay off nearly $30 billion in debt. This morning the company announced it was selling off its equity interests in Dendreon Pharmaceuticals, Inc. to China’s Sanpower Group Co., Ltd. for about $820 million.

Valeant said the proceeds from the sale will be used to “permanently repay term loan debt under its Senior Secured Credit Facility.” The transaction is expected to close in the first half of 2017. Established in 1993, Nanjing, China-based Sanpower Group has become one of the largest, privately-owned conglomerates in China.

"With this sale, we are better aligning our product portfolio with Valeant's new operating strategy by exiting the urological oncology business, which is one of our non-core assets," Valeant Chief Executive Officer Joseph Papa said in a statement. "We are pleased to take this step forward in our divestiture program and are continuing to evaluate transactions to simplify our business and strengthen our balance sheet."

Shares of Valeant are up about 8 percent this morning, trading at $16.56.

Dendreon is the manufacturer of prostate cancer drug Provenge, an autologous cellular immunotherapy approved by the U.S. Food and Drug Administration in April 2010.

Valeant acquired Dendreon in February 2015 for $400 million in a stalking horse bid after the Seattle-based company declared bankruptcy. Dendreon announced bankruptcy on Nov. 10, 2014. Part of the Chapter 11 agreement allowed the company to continue selling its prostate cancer drug Provenge.

At the time of the transaction, Valeant was one of the most prolific dealmakers in the pharmaceutical industry, flexing its M&A muscle at almost every opportunity. J. Michael Pearson, the former CEO of Valeant, said at the time of the deal that Provenge was an oncology treatment that had “imilar characteristics to our current therapeutic portfolios, such as strong growth, high durability, strong patient and physician loyalty, and a terrific reimbursement regime.”

In an effort to pay off its massive debt, Valeant has identified about $8 billion worth of assets to sell. In September, the company put a for sale sign on its subsidiary, iNova Pharmaceuticals.

In August 2015, after a year of struggles that has seen a tremendous loss of revenue, Valeant announced a strategic reorganization. Part of that work is attempting to appease the company’s creditors for failing to meet several financial reporting deadlines, which triggered default notices. Valeant has an estimated debt of $30 billion, largely due to its aggressive M&A practices, which has led the company to look at unloading its non-core assets like iNova and Dendreon.

Valeant’s troubles don’t just extend to its finances. Valeant has been under investigation by the U.S. attorney’s office in New York since last year following news of the Philidor accounting practices became known. The company said it has been cooperating with the federal authorities, but cannot comment on the ongoing investigation. Additionally, Valeant said in a statement, that it cannot comment on possible rumored investigations, such as the Pearson and Schiller possibilities.

In December, Bill Ackman, one of the largest shareholders of embattled Valeant Pharmaceuticals and a member of its board of directors, dumped a big chunk of company stock owned by his investment firm, Pershing Capital Management. Since Valeant’s fall, Ackman and his investors have lost approximately $2 billion, according to reports.

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