Dendreon's debt plans could leave stockholders in the lurch

Shareholders knew Dendreon ($DNDN) had debt problems. What they did not know until Monday was that the cancer vaccine maker is considering moves that could leave them empty-handed.

According to the Seattle-based biotech, there's a "significant risk" that the company won't be able to repay or refinance $620 million in notes due in 2016. Thus, it's considering alternatives to repaying those notes in cash--including those that could leave current stockholders "with little or no financial ownership of Dendreon," it said in an SEC filing.

And while the company says its board will consider any strategic options that third parties may present, "there can be no guarantee that any such alternative will provide value" for investors, it said.

Things have gone downhill for Dendreon since the immuno-oncology vaccine Provenge stumbled out of the gate in 2010, disappointing analysts--some of whom had forecast billions in sales. The vaccine's eye-popping $93,000 price tag, manufacturing tie-ups, and competition from newcomer prostate cancer drugs Zytiga and Xtandi helped bring the vaccine down and cast a dark cloud over the entire cancer vaccine field.

CEO W. Thomas Amick

And despite Dendreon's best efforts to turn things around, it's still sinking: On Monday, the company reported a net loss of $15.3 million, though revenues--primarily driven by Provenge sales--did increase to $82.2 million from $73.3 million in the year-ago quarter.

Now, with CEO John Johnson headed for the exit, it will be up to the incoming W. Thomas Amick to right the company's course. Amick, a Johnson & Johnson ($JNJ) vet, launched Procrit at the New Jersey pharma giant and built J&J's oncology franchise into a multibillion-dollar operation, Dendreon said in an announcement late last month.

- here's the SEC filing

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