Dendreon files for Chapter 11 protection

January 2015 | DEALFRONT | BANKRUPTCY & CORPORATE RESTRUCTURING

Financier Worldwide Magazine

Dendreon Corp filed for Chapter 11 bankruptcy protection in November, listing debts of more than $664m and assets of more than $364m in its court documentation. At the time of filing, the company had around $100m in cash and did not believe that it needed to raise additional financing in connection with the restructuring.

According to Dendreon, a company which manufactures the prostate cancer treatment Provenge, the filing will enable the firm to continue to operate as normal as it attempts to sell itself to a buyer that will continue to produce Provenge. The company’s reorganisation plan, completed at the US bankruptcy court in Delaware, states that Dendreon should be sold for no less than $275m. Dendreon unsuccessfully tried to sell itself in late 2013. No formal bids were ever received despite several interested parties completing due diligence. In the event that the firm receives no qualifying bids, Dendreon will attempt to continue as a standalone company moving forward. Should the firm remain a standalone operation, all common stock in the previous Dendreon will be cancelled. Prior to the filing, Dendreon reached an agreement on the restructuring with holders of around 84 percent of the company’s debts.

Dendreon has confirmed that it will continue to supply patients with Provenge throughout the bankruptcy hearing. Provenge first came to market in 2010, however the prohibitive cost of a full course of the drug, at around $93,000, has greatly affected sales of the medications. Provenge utilises the body’s immune system in order to help combat the spread of prostate cancer. The vaccine collects and retrains white blood cells, teaching them to attack cancerous cells.

Dendreon also announced that it has held talks with the US Food & Drug Administration in an attempt to automate the production process of Provenge. This would dramatically increase efficiency while helping to drive down the cost of the medication. Dendreon had hoped to see sales of Provenge reach $4bn per year, however 2014 sales are expected to be around $300m, a slight increase on 2013 but still well below the company’s projections. Regardless of the improved sales, the company is still believed to have lost around $22m in Q3 2014 alone.

Seattle-based Dendreon, which has been restructuring for a number of years, was forced to file for Chapter 11 protection to address an outstanding $620m convertible debt which is due in 2016. At the time of filing, the firm employed around 700 employees at locations in Seattle and New Jersey. The firm’s delicate financial situation has necessitated cuts to its workforce. In the years leading up to the filing, Dendreon was required to significantly reduce staff levels, cutting around 750 full time and contractor positions. The company was also required to sell one of its New Jersey manufacturing facilities. Furthermore, since 2011, Dendreon has changed its chief executive twice.

“Whether the restructuring takes the form of a stand-alone recapitalisation or a sale of the Company or its assets, we are confident that this process will allow Provenge to remain commercially available to the patients and providers who have come to rely on this revolutionary personalised cancer immunotherapy,” said W. Thomas Amick, president and chief executive of Dendreon. “We are pleased to have the support of a substantial majority of our Senior Noteholders through this restructuring and sale process. We thank our employees for their continued hard work and dedication and for their commitment to help deliver Provenge to patients who are in need of immunotherapy.”

The development of a rival prostate cancer vaccine at biotechnology company Bavarian Nordic could also threaten Dendreon’s future profitability. The firm had intended to launch Provenge in Europe, however the medication’s reception in the US appears to have put an end to the company’s expansion plans.

Richard Tennant