Struggling Dendreon has tried streamlining its manufacturing process for cancer vaccine Provenge. It’s tried laying off hundreds of employees, cutting operating costs and raising capital. And it’s tried putting itself up for sale. But no dice: The company is still swimming in a sea of debt that Monday spurred it to file for Chapter 11 bankruptcy protection.
Dendreon’s prepackaged bankruptcy includes another attempt to sell itself, via an auction with qualifying bids starting at $275 million–a far cry from the price it hoped to get back when Provenge was expected to soar to blockbuster sales.
It also has struck a deal with note holders to convert their debt into shares. The Washington-based biotech owes $620 million in convertible debt due in 2016. In the meantime, Dendreon intends to continue operations, and it’ll continue providing Provenge to patients, it said.
Analysts expected big things from the Seattle company when Provenge became the first cancer vaccine to win FDA approval. But multiple hurdles–including a hefty $93,000 price tag and stellar launches from new, more convenient rivals Xtandi from Astellas and Medivation, and Zytiga from Johnson & Johnson ($JNJ)–prevented the treatment from living up to its potential: Analysts have revised their 2020 annual sales estimates from $4.3 billion to $378 million, Bloomberg notes.
Now, “the company has concluded that even if it was able to successfully realize its current operating projections, it would likely be unable to repay or refinance the 2016 notes when they mature and, as such, the business would not be viable on a standalone basis absent a strategic transaction or restructuring of its debt,” its 8-K says.
Dendreon has tried the whole “sell itself” thing before. Last year, it enlisted JPMorgan and Merrill Lynch to conduct a “broad confidential auction process,” but no suitors emerged. And this spring, the company “discussed the possibility of a combination with two separate third parties,” but talks didn’t advance beyond the early stages, it said in a court filing.
This time, Lazard got a head start on its behalf, reaching out to 40 potential buyers beginning this September. Part of the goal was to afford potential buyers “time to evaluate the opportunity in advance of any in-court sale process,” Dendreon said.
By Carly Helfand