In August, a Wall Street analyst placed a headline-grabbing $0 price target on the stock of struggling cancer vaccine manufacturer Dendreon ($DNDN). Now, Dendreon has reportedly hired JP Morgan Chase to find someone who sees more value in the company and is willing to back their belief by acquiring the business.
The search for a buyer, first reported by Bloomberg over the weekend, follows quarter after quarter of problems for Dendreon and its once-hyped prostate cancer vaccine Provenge. Sales of the vaccine are down 13% over the first half of the year, and past predictions of it becoming a blockbuster now look like pipe dreams. The weak sales--coupled with ongoing difficulties controlling costs--have caused Dendreon to burn through cash. At the end of 2011 Dendreon was sitting on $538.6 million. As of June, it was down to $207.4 million.
With many doubting whether Dendreon can turn the business around, reports of a possible sale were well received. Shares in the company experienced their biggest jump in 9 months. "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 analyst Lee Kalowski wrote in a research note seen by Bloomberg. It was concerns about how Dendreon can afford to pay the convertible debt that led to another analyst placing a $0 price target on the biotech.
Sales in Europe are one way Dendreon could surpass analyst expectations. Provenge won approval in Europe in September, but the fragmented reimbursement landscape means this is just one step towards selling the vaccine. This week Dendreon laid the groundwork for commercial launches by signing up PharmaCell as its contract manufacturing organization. Netherlands-based PharmaCell has worked with Dendreon since 2011. Dendreon built its own plants in the U.S., but was left with excess capacity when sales disappointed. The New Jersey facility was sold to Novartis ($NVS) in December.
- read Bloomberg's report
- check out FiercePharma's take
- here's the CMO news