Valeant Starts Chopping Dendreon Employees

Valeant Starts Chopping Dendreon Employees
March 3, 2015
By Mark Terry, Breaking News Staff

The layoffs announced by Canadian firm Valeant Pharmaceuticals International, Inc. on February 23 have started today. Reportedly 77 employees of Seattle-based Dendreon Corporation , whose assets were acquired by Valeant last month, were laid off.

Valeant, based in Laval, Quebec, was chosen as a “stalking horse” bidder when Dendreon, which had declared bankruptcy on Nov. 10, 2014, decided to sell off its assets. The “stalking horse” bid, which is an agreed-upon floor bid, was for $296 million. As part of the deal, Valeant acquired global rights to Dendreon’s Provenge (sipuleucel-T), a treatment for advanced prostate cancer, as well as other assets.

On Feb. 11, 2015 Valeant acquired the company’s assets for $400 million. A competing joint bid was made by US Worldmeds of Mathews, Ky., and New York investment firm Deerfield Management. The joint offer did not meet Valeant’s higher bid.

Of the layoffs, Valeant spokeswoman Laurie Little said in a statement, “Most of these positions were in G&A functions where there was overlap with Valeant’s existing businesses, especially in corporate and back office functions.”

Dendreon reported having 1,475 employees as of early 2012. After it filed Chapter 11 in November 2014, it indicated it had only 698 employees. Of those employees, 507 were salaried and 191 were hourly employees. When it filed bankruptcy, it had more than $664 million in debt and assets valued at $365 million.

Dendreon’s Provenge showed a lot of promise, but was priced at $93,000 for a course of treatment. It was not readily adopted by physicians and it was launched in the midst of the healthcare debates regarding the Accountable Care Act and the overall push for decreased healthcare spending on the part of payers. “Dendreon combined undue optimism in sales projections with excessive risk in its capital structure,” said Erik Gordon, professor at the University of Michigan’s Ross School of Business in a statement. “It is a case of moderate product success and immoderate management failure.”

Valeant indicated that the company had been interested in entering the oncology market, but found it difficult to do so. The acquisition of Dendreon gave the company entrée to the market. “We believe we can accelerate the growth of Provenge over the coming years,” the company reported in a late-February conference call with analysts.

“We believe that oncology has similar characteristics to our current therapeutic portfolios,” said Valeant chair and chief executive officer in a statement, “such as strong growth, high durability, strong patient and physician loyalty, and a terrific reimbursement regime.”

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Last week controversy erupted over the compensation package for Sanofi’s new CEO, Olivier Brandicourt, with several French government officials decrying the amount, calling it "incomprehensible." Brandicourt could walk off with as much as $4.5 million in a “golden handshake” payment in addition to making $4.76 million a year. That base figure is comprised by a fixed annual salary of $1.36 million a year, which is supplemented by a performance-related bonus of between 150 to 250 percent, as well as stock options and performance shares.

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