Tags: Dendreon | cancer | vaccine | bankruptcy

Dendreon Files for Bankruptcy as Cancer Vaccine Disappoints

Monday, 10 Nov 2014 12:47 PM

Dendreon Corp. filed for Chapter 11 bankruptcy protection after sales of the world's first cancer vaccine fell short of expectations and left the company deep in debt.

More than two-thirds of the company's market value was wiped out in early trading on Monday.

Seattle-based Dendreon said it had agreed terms of a financial restructuring with certain bond holders that may involve a standalone recapitalization or the sale of the company or its assets.

After its approval by U.S. regulators in 2010, hopes were high that Provenge, Dendreon's only drug on the market, would become a blockbuster.

But adoption of the drug, an injection to reprogram the immune system to attack advanced prostate cancer cells, was hindered by its hefty price tag and uncertainty over insurance coverage.

The high cost of manufacturing also hurt margins, while Xtandi, jointly marketed by Medivation Inc. and Astellas Pharma Inc., and Johnson & Johnson's Zytiga, both orally administered, emerged as competitors.

"The business is fundamentally unprofitable so, without a change to efficiencies in the manufacturing process, it's really difficult to see them coming back as a standalone company," said Wedbush Securities analyst David Nierengarten.

Dendreon's shares fell as much as 74.5 percent to 24 cents on Monday, a far cry from their peak of $57.67 in April 2010, after Provenge won U.S. approval.

The announcement, said Nierengarten, is a cautionary tale for other developers of cell therapies derived from a person's own cells: keep manufacturing costs under control.

The emergence of Bavarian Nordic A/S's experimental prostate cancer vaccine, cheaper to manufacture, with a price expected to be in line with rival therapies, could also spell the end of Provenge, he said.

Dendreon said senior noteholders would support a plan to convert all 2016 notes to common equity of the reorganized company.

Dendreon had $660.7 million in liabilities and $340.3 million in assets as of Sept. 30, according to the court filing. As of Nov. 7, it had $100 million in cash.

"With a large debt balance and high management turnover, the writing had been on the wall for some time that this was a possibility," said Cowen and Co analyst Eric Schmidt said.

Dendreon Chief Executive W. Thomas Amick said Provenge would remain commercially available throughout the restructuring process.

© 2017 Thomson/Reuters. All rights reserved.

 
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Dendreon Corp. filed for Chapter 11 bankruptcy protection after sales of the world's first cancer vaccine fell short of expectations and left the company deep in debt.
Dendreon, cancer, vaccine, bankruptcy
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2014-47-10
Monday, 10 Nov 2014 12:47 PM
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