Valeant’s bid for Dendreon assets could put it in the oncology business

$296-million bid makes it the 'stalking horse' buyer in Dendreon auction


Having been spurned by Allergan, with which it engaged in an epic takeover battle during 2014 (Allergan wound up accepting a higher bid from Actavis), Valeant begins the new year back on the acquisition trail. Dendreon (Seattle) has been under a Chapter 11 bankruptcy proceeding since November, the latest in a series of reorganizations to stabilize the troubled biotech company, whose only product is Provenge (sipuleucel-T), a cell-therapy treatment for prostate cancer. As the so-called “stalking horse” bidder, Laval, QE-based Valeant will be entitled to certain rights even if it does not ultimately win the business.
 
Novel to the bid is Valeant’s entry into oncology—the company’s main products are in eyecare, dermatology and generics. “We believe that oncology has similar characteristics to our current therapeutic portfolios, such as strong growth, high durability, strong patient and physician loyalty, and a terrific reimbursement regime,” stated J. Michael Pearson, Valeant chairman. “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.”
 
Provenge was something of a sensation in the previous decade, as FDA went back and forth with the company during approval, and prostate cancer patients took to the streets to protest the agency’s caution. Once approved in 2010, the company ran into major reimbursement-authorization roadblocks, and newer prostate treatments came on the scene. From being a “top-10 product launch in 2010,” according to then CEO-Mitchell Gold, the product made a list at FiercePharma in 2012 as “Top ten drug launch disasters” in 2012. For investors in Dendreon, which could have been a billion-dollar company if things had gone well, the effort has been a disaster—but it’s worth noting, as Valeant does, that the product is currently generating $300 million in annual sales. Moreover, Provenge is a type of T-cell immunotherapy, involving the patient’s own cells, that is garnering new attention in oncology research circles at the moment. The company struggled with how to ship patient cells from a healthcare setting, to its manufacturing facilities, then back to the patient, but the experience in setting up that distribution process might hold value for Valeant in the future.