Dendreon changes hands—again—in $868M deal that keeps seller Sanpower in the game

Sanpower promised that Dendreon’s net profits will grow to CNY 660 million ($96.5 million) by 2020. (Dendreon)

About a year after acquiring Dendreon from Valeant Pharmaceuticals for $820 million, China’s Sanpower Group has resold the Provenge maker in a deal worth 5.97 billion Chinese yuan ($868 million). But it doesn’t mean Sanpower has abandoned Dendreon completely.

Nanjing Cenbest—one of China’s largest retailers, which recently branched out into healthcare—bought Dendreon by issuing Sanpower, already its largest shareholder, 180 million additional shares of its Shanghai-listed stock at 33.02 Chinese yuan ($4.80) apiece. The deal will give Dendreon easier access to funding for expansion down the road, said the company's chairwoman, Grace Xu, perhaps into CAR-T or other cell therapies, an area where the company is currently eyeing deals.

It's Dendreon's third sale in three years as the company has labored to create a niche for its prostate cancer therapy Provenge. Valeant snapped up the biotech's assets out of bankruptcy in 2015 for $495 million and sold the operation to Sanpower in January 2017, less than two years later. Though Sanpower has itself quickly resold the Provenge maker, it maintains a large stake in the firm.

Based on the stock's closing price on Aug. 1, the actual value of those Cenbest shares was about 60% less than when the deal was first announced late last year. The huge gap stemmed from a sharp drop in Cenbest’s stock since June, weeks after the securities regulatory body gave the deal a green light. But Sanpower followed through anyway, a move Xu said demonstrates confidence in the biotech and its new owner.

“Sanpower believes in the long-term value that Dendreon could provide and create for the Cenbest shareholders, hence decided to honor the promised pledge, regardless of a loss given the current stock price,” Xu, who is also a senior VP overseeing healthcare at Sanpower, told FiercePharma.

RELATED: Dendreon chairwoman figures Provenge growth, infrastructure can pave its way into CAR-T

Calling Dendreon “a critical component” of privately owned Sanpower’s healthcare business, Xu said injecting Dendreon into a public company “will not only enable Dendreon to operate collectively with our other healthcare assets such as cord blood banks, stem cell research and development, but also provide a financial pathway to support Dendreon’s further pipeline development and BD projects.”

Prostate cancer vaccine Provenge is Dendreon’s only approved product. For 2017, Provenge achieved its sales target of more than $330 million, Xu told FiercePharma in March at the 9th Annual China Healthcare Investment Conference.

“Provenge is a mature, long-lived asset with natural barriers to entry,” said Xu at the time. “It is significantly underpenetrated today, with only 8% penetration, allowing for substantial upside.”

Dendreon is currently evaluating Provenge to treat prostate cancer at an early stage—a market Xu said is four times the size of the metastatic castration-resistant form of the disease—and is working to get the treatment approved in China. Also, because Dendreon has the entire infrastructure and R&D capabilities in immunotherapy, Xu said it could easily move into the hot area of cell therapies like CAR-T or TCR-T, and the company is actively looking to in-license or purchase a candidate in the field.

Sanpower promised that Dendreon’s net profits from 2018 to 2020 would not fall below CNY 530 million ($77.5 million), CNY 600 million and CNY 660 million, respectively, Cenbest said in a disclosure statement. That’s compared with Dendreon’s net profit of CNY 446 million for 2017.

With this transaction, Sanpower’s holding in Cenbest has increased from 33.10% to 42.43%, reinforcing its position as the company's largest shareholder. However, its Cenbest stake has been frozen by court order as the company works to sort out some debt problems.