Dendreon lands stalking-horse bid for Provenge from serial acquirer Valeant

Bankrupt Dendreon ($DNDN) has finally found a taker for its flailing cancer vaccine, Provenge. It seems serial acquirer Valeant ($VRX) is ready to foray into oncology--and thinks it can turn the therapy around.

The Canadian drugmaker said late Thursday it had reached a deal to buy the prostate cancer treatment and other assets from Dendreon for $296 million in cash, entering into a stalking-horse agreement that a bankruptcy court must now approve. While the deal is subject to higher bids until Feb. 10, Valeant will pick up an undisclosed breakup fee and be reimbursed expenses if it doesn't win the auction.

For Dendreon, Valeant could end a long period of trying unsuccessfully to sell itself. The company reportedly brought on JP Morgan Chase to find an acquirer back in October 2013, amid weak Provenge sales and cost-control problems. And since then, things have only gotten worse. Last November, Dendreon filed for Chapter 11 bankruptcy protection as it faced $620 million in convertible debt due in 2016.

While improving Provenge sales will come with their fair share of challenges--the vaccine boasts a sky-high price tag and competes with new, more convenient oral rivals Xtandi from Astellas and Medivation, and Zytiga from Johnson & Johnson ($JNJ)--one thing seems certain: Valeant shouldn't have any trouble controlling costs. CEO J. Michael Pearson has a reputation for picking up companies and wringing out every cost he can, and he's had plenty of experience doing it since taking up the helm at the Quebec-based drugmaker.

Most of Valeant's pickups under Pearson have come in the skincare and eyecare fields, though: quickly expanding areas the skipper has targeted for growth. But the way he sees it, oncology shares "similar characteristics" to those therapeutic portfolios, including "strong growth, high durability, strong patient and physician loyalty, and a terrific reimbursement regime," he said in a statement.

Dendreon CEO W. Thomas Amick

As he sets out to right the ship, Pearson has the faith of Dendreon CEO W. Thomas Amick, for one. "We are confident that this process will result in a strong new owner for Provenge, and that patients will continue to receive treatments with no disruption moving forward," he said in a statement. "We thank our employees for their continued hard work, dedication and commitment to serving our physicians and their patients."

- read Dendreon's release
- read Valeant's release

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