Valeant lead bidder for troubled Dendreon

Ambitious Canadian pharma company Valeant has emerged as the lead bidder for the troubled company Dendreon and its ailing cancer vaccine Provenge.

Valeant has made an initial bid of $296m in cash for Seattle-based Dendreon, which filed for bankruptcy at the end of 2014 as sales of its lead product Provenge (sipuleucel-T) for prostate cancer fell short of expectations.

The bid comes a month after Dendreon first went to auction with a minimum price of $275m but with no initial 'stalking horse' bidder.

This place has now been taken by Valeant, which has built its business the past few years with a series of targeted global acquisitions, including a $2.6bn to takeover dermatology firm Medicis.

Valeant's main interest in 2014 was Botox manufacturer Allergan. However, Allergan resisted Valeant's advances for several months and eventually ended them in November last year after agreeing a $66bn deal with Actavis.

The Dendreon bid puts Valeant back on the acquisition trail, although it could be seen as a risky deal considering the inability of Provenge to gain a sure foothold in the prostate cancer market due in part to its high price, complex treatment process and competition from cheaper conventional drugs such as Johnson & Johnson's Zytiga (abiraterone) and Astellas/Medivation's Xtandi (enzalutamide).

Provenge's uneasy path was compounded last month when the UK cost-effectiveness watchdog NICE deemed the drug too expensive for use on the NHS in England and Wales.

Despite these concerns Valeant sees potential in the product, which was one of the first cancer immunotherapies to hit market when it was approved in 2010 and now sees itself as part of a rapidly growing class of therapy.

J Michael Pearson, chairman and CEO of Valeant said: “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.

He added: “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."

Valeant's role as a stalking horse bidder, and the sale itself, are subject to approval by the bankruptcy court. Completion of the transaction remains subject to higher or better offers for Dendreon.