Dendreon is getting tired of soldiering on alone. As Bloomberg reports, the Seattle-based company is casting about for buyers as its prostate cancer treatment Provenge continues to lag--and Dendreon's stock lags along with it.
The news service's sources say that Dendreon ($DNDN) has tapped JPMorgan Chase to help it troll the market for interested bidders. With the company's market value down by more than half over the past few months--to $400 million, per Bloomberg--the price would be much lower than it might have been a year ago.
Whether that makes Dendreon a bargain is another question. The company's burn rate is high, Bloomberg notes, with cash down to $207.4 million at the end of Q2, from $538.6 million at the end of 2011. And Provenge sales aren't expected to put out the fire. CEO John Johnson said in August that Dendreon isn't expecting the drug to post any kind of sales increase this year. For the first half of the year, sales had declined by 13%.
Once upon a time, not too long ago, Provenge was expected to skate to blockbuster status. But the trouble started even before approval, when the FDA sent Dendreon back to the drawing board for a new late-stage study. Then, once Provenge won the FDA nod, former CEO Mitchell Gold forecast early sales of up to $400 million in 2011, which proved to be a mistake. The company also priced Provenge at $93,000, arguably another mistake.
Thanks to a variety of problems, logistical and otherwise, the personalized injectable treatment failed to establish an early foothold. Johnson & Johnson's ($JNJ) oral treatment Zytiga then came on strong, thwarting Dendreon further. When Gold later announced Provenge's shortfall, Dendreon shares plummeted, and the layoffs began soon after. Now, 2020 sales estimates stand at less than $500 million, Bloomberg notes, down from as much as $4.3 billion early on. And as of April this year, Gold was under Securities and Exchange Commission (SEC) investigation for stock trades made around the time he yanked that optimistic sales forecast.
As the takeover report hit, Dendreon shares gained the most in 9 months. And at least one analyst is on board: "We view this as both plausible and sensible, as the company seeks a way out of the $647 million convertible debt noose tied around its neck," Credit Suisse's Lee Kalowski said in an investor note (as quoted by Bloomberg). But don't expect a slew of suitors, Kalowski added: "[W]e don't foresee a big bidding war."
- read the Bloomberg story
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