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Dendreon files for bankruptcy protection

Follows poor sales of cancer vaccine Provenge

dendreon logoCancer vaccine company Dendreon has put itself up for sale for the second time in as many years after filing for bankruptcy protection.

The company - which did not flush out any interested parties when it looked for buyers last year - has put a price tag of $275m or more for the business and says it will continue to operate in the interim "as we seek to complete the sale of our assets or a plan of reorganisation or liquidation."

The company has struggled with low sales of its Provenge (sipuleucel-T) prostate cancer vaccine since it was launched in 2010, thanks to a hefty price tag and competition from cheaper conventional drugs such as Johnson & Johnson's Zytiga (abiraterone) and Astellas/Medivation's Xtandi (enzalutamide).

Provenge is an autologous immunotherapy, which involves taking immune cells from patients, exposing them to a prostate cancer antigen in a Dendreon production facility and then re-injecting them into the patient. It is the company's only marketed product.

The relatively complex production required for the product has kept its price high - at around $93,000 per course - and introduced a reimbursement barrier with some US payers who baulked at the cost of gaining a four-month improvement in median survival.

Sales of the cancer vaccine were $325m in 2012, slipped to $286m last year and - according to Dendreon's latest financial report - made $224m in the first nine months of this year, marginally up on the same period of 2013.

The big hurdle facing the company was $620m in convertible notes - raised when the company was expecting blockbuster sales of Provenge - along with $5.6m in interest that became payable yesterday (November 10).  Holders of the notes have however agreed to convert their notes into stock in the reorganised company under the bankruptcy plan.

The bankruptcy filing comes despite the company slashing staff and closing a manufacturing facility in New Jersey to reduce its cash burn.

Dendreon is in the process of discussing with the FDA ways to introduce automation into the production process to try to make the process more efficient and allow it to reduce the cost of goods sold (COGS) to around 30% from its current level of 50%. Prior to the closure of the New Jersey facility, its COGS were running at 77%.

Wedbush Securities analyst David Nierengarten told Reuters that Dendreon "is fundamentally unprofitable so, without a change to efficiencies in the manufacturing process, it's really difficult to see them coming back as a standalone company."

He also said a new prostate cancer vaccine in development at Bavarian Nordic which should be cheaper to make - could also pose a major competitive threat to Provenge.

As recently as May, the company was talking about expanding the market for Provenge beyond the US and into Europe, where it was approved for marketing last September, saying it planned to start sales in Germany and the UK with the help of contract manufacturing organisation PharmaCell, and hoped to start treating its first EU patient before year-end.

Dendreon's shares lost three quarters of their value yesterday in the wake of the announcement, ending the day at $0.24.

Article by
Phil Taylor

11th November 2014

From: Sales

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