Dendreon Corporation Gets $296 Million Cash Bid From Deal-Hungry Valeant for Provenge Assets as Bankruptcy Auction Looms

Dendreon Corporation Gets $296 Million Cash Bid From Deal-Hungry Valeant for Provenge Assets as Bankruptcy Auction Looms
January 30, 2015
By Mark Terry, BioSpace.com Breaking News Staff

Laval, Quebec-based Valeant Pharmaceuticals International, Inc. announced Jan. 29, 2015 that it will be a “stalking horse” as part of a deal to acquire assets of Dendreon Corporation for $296 million. As part of the deal, Valeant will purchase global rights to Dendreon’s Provenge (sipuleucel-T), a treatment for advanced prostate cancer, and other assets.

A “stalking-horse bid” is an initial bid chosen from a pool of bidders by the bankrupt company. Essentially it sets a low threshold in order to avoid low bids on assets.

Seattle-based Dendreon announced bankruptcy on Nov. 10, 2014. The agreements filed under Chapter 11 indicated the restructuring would be either a standalone recapitalization or a company or company asset sale. Part of the deal allowed Dendreon to continue marketing Provenge without interruption.

As part of Valeant’s agreement, if does not come out as the final bidder, it will be entitled to a break-up fee and expense reimbursement.

“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,” said J. Michael Pearson, Valeant chairman and chief executive 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.”

Provenge shows great promise in cancer treatment, but analysts found the drug’s high price to slow adoption. Typically the compound is priced at $93,000 per patient. Shortly after initial marketing, Dendreon projected Provenge sales of $350 to $400 million. By the end of the second quarter in 2011, the drug had only made $49.6 million in sales. A combination of high price and uncertainty over physician reimbursement provided strong headwinds the company was unable to overcome.

Interestingly, this deal seems to fly in the face of speculation that Valeant was going to drop its growth-by-acquisitions strategy reported in December 2014. Since 2008 Valeant has acquired more than 100 smaller companies.

Notably, in 2014, Valeant was tangled in a takeover bid of Allergan Inc. with New York hedge fund Pershing Square Capital Management. The Botox maker repeatedly fought off the bid, but the attempt inspired a Security and Exchange Commission (SEC) investigation into allegations of insider trading.


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