Cancer Drugmaker Dendreon (NASDAQ:DNDN) Files Chapter 11 Bankruptcy

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By David Scouts on November 10, 2014 BioPharma

Dendreon Corporation (NASDAQ:DNDN), manufacturer of drugs for prostate cancer, has filed Chapter 11 bankruptcy protection leading to either takeover by firm’s lenders or selling of the company. On Monday, the Seattle based company has declared its total debts of more than $664 million against assets of $364.6 million in a U.S. Bankruptcy Court filing. Bank of New York Mellon has provided majority of credit to Dendreon and holds $620 million in notes.

Dendreon (NASDAQ:DNDN), which produces prostate cancer treatment drug Provenge, has announced on Monday that its planned reformation would enable sustained availability of the cancer treatment drug to doctors and patients. Besides the drug manufacturer claimed that during the restructuring period the firm has sufficient cash to sustain operations.

The company has been able to finalize financial restructuring agreement with its investors possessing almost 84 percent of $620 million in notes maturing in 2016. The plan is that the firm would first explore the prospect of putting it to sale to the buyer who would be willing to ensure Provenge production. However, in case the plan is not successful and the received offers do not fulfill the criteria then Dendreon (NASDAQ:DNDN) would be taken over by lenders after the conversion of their debts to equity. That would make Dendreon a privately held company instead of corporation.

Food and Drug Administration had approved Provenge as the first commercial product of Dendreon. However, later on Provenge became the cause of drugmaker’s financial dilemma. The drug, which develops immunity in patients to battle cancer, was launched in 2010 and analysts predicted that it would be able to generate billions of dollars in revenue. Instead, Dendreon (NASDAQ:DNDN) found itself in huge debts when it geared up to manufacture the wonder drug that can generate billions in sales but that volume of sales remained a dream. In 2012, Provenge sales were about $325.3 million which further declined to $283.7 million in 2013. The sales revenue of Provenge could not materialize as expected because of factors associated with its cost, limited advantages and compensation rates.

While filing bankruptcy, EVP and General Councel Robet L. Crotty declared that when it became evident that longer than expected time would be required for revenue growth, the firm initiated a number of cost curtailment and staff reduction measures in the last couple of years. However, the company realized by summers that those measures were not good enough to provide enough financial strength to the drugmaker. In August, the company cautioned its shareholder about the debt and indicated about the possible inability to repay or refinance its notes in 2016.

Dendreon (NASDAQ:DNDN) nominated W. Thomas Amick as its president and CEO in last summer replacing former CEO John H. Johnson who resigned for personal reasons. On Monday, Dendreon shares lost majority of its value and were trading at 27 cents after losing 67 cents. The shares which closed at $2.99 in 2013 dropped under $1 before this fall and kept on shedding their value throughout the year.