UPDATED: Valeant grabs Provenge and other Dendreon assets with raised $400M bid

Valeant CEO J. Michael Pearson

It's official: Valeant ($VRX) will be the new owner of Dendreon's ($DNDN) Provenge.

The Canadian pharma will nab the struggling prostate cancer vaccine and the Seattle biotech's other assets for $400 million in cash, it said Tuesday. The companies will seek court approval Feb. 20, and they expect to close the deal by the end of the month.

The $400 million price is about 30% higher than Valeant's initial stalking-horse bid. Last month, the Quebec-based drugmaker offered up $296 million to kick-start the auction, but it boosted its bid when other buyers stepped in. Kentucky's US Worldmeds and New York investment firm Deerfield Management--a major Dendreon creditor--placed a rival bid, but they didn't top Valeant's raised offer, Reuters reports.

It's another conquest for Valeant CEO J. Michael Pearson, a serial acquirer whose deals have mainly come in the quickly expanding skincare and eyecare fields. But the way he sees it, the oncology business shares "similar characteristics" with those specialty portfolios, including "strong growth, high durability, strong patient and physician loyalty, and a terrific reimbursement regime," he said in a statement.

Turning Provenge sales around won't be easy--the cancer vaccine comes with a sky-high price tag, manufacturing challenges and two hot new oral competitors. Johnson & Johnson's ($JNJ) Zytiga, along with Xtandi from Astellas and Medivation ($MDVN), have entrenched themselves in the prostate cancer market while Dendreon floundered. Plus, Valeant will have to build up an oncology marketing team and salesforce.

One thing seems certain: Cost cuts are on the way. Dendreon has struggled with cost control, and Pearson is notorious for wringing every spare penny from his buyout targets as he folds them in.

But buying assets out of bankruptcy has its financial perks, giving Valeant room to maneuver, Pearson says. "We have not previously found an economic way to enter this market, but with the unique dynamics of this situation, we believe that this transaction will create significant shareholder value," he said in January.

- read Valeant's release
- get more from Reuters

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