10/10/2011
Dendreon seeking acquisitions following lackluster drug launch, industry sources say
Dendreon (NASDAQ:DNDN) is looking to acquire a cancer vaccines company in light of recent setbacks with the launch of its prostate cancer vaccine Provenge, according to industry sources.
Provenge, a cellular immunotherapy for the treatment of hormone refractory prostate cancer, gained FDA approval in April 2010.
Dendreon announced in August that sales of Provenge in the second quarter of this year totaled about USD 50m, well below Wall Street expectations and company projections. Company shares have fallen more than 70% to date, since the news.
In September, the Seattle, Washington-based biotechnology company said it would eliminate 500 jobs, or more than a quarter of its workforce, as it reduces costs to account for disappointing Provenge sales.
The poor launch was the result of a combination of limited utility, high pricing and poor marketing, said one of the industry sources, a banker following the company.
Dendreon would not return comment.
“If they went out and acquired a smaller company, that would be a very smart thing to do. In the past, when you had a poor launch, a company could still recover. Nowadays, when a launch doesn’t do well -- you’re just flat-lined,” a second banker said.
Dendreon raised USD 540m via a convertible notes offering in January this year and had cash and cash equivalents of around USD 600m at the end of September.
The second banker noted that, despite Dendreon’s failure with Provenge, it does not necessarily mean other targets in the cancer vaccine space are lackluster. There are still companies out there developing vaccines that are not autologous cancer vaccines, he said.
An industry source noted that one of Dendreon's main challenges will be its ability to compete against new drugs coming to market, particularly from immunotherapy treatments.
A separate person familiar with the company said Dendreon is seeking to use a portion of those funds to acquire a company in the cancer vaccine space. This person noted that Dendreon’s current dendritic cell cancer vaccine technology platform is old compared to its industry peers, and it is currently reaching out to potential targets in the industry.
One cancer vaccines company has already been approached, with an intent to acquire, the person familiar said. Dendreon is currently hiring an external business development team to help boost its pipeline, the person familiar said.
An industry source said the company was in discussions with a potential target this summer that was developing a treatment for GBM (glioblastoma multiforme), or brain cancer. Without a premium, the target was in the USD 50m range and had a Phase II GBM asset.
ImmunoCellular Therapeutics (OTC:IMUC) is developing a Phase II GBM candidate. The company has a market cap of USD 47m. Oncologists interviewed by this news service have noted that the drug has a better profile than Celldex’s competing agent, CDX- 110.
Pfizer (NYSE:PFE) terminated its partnership with Celldex late last year. Northwest Biotherapeutics (OTC:NWBO) and TVAX Biomedical are also developing a GBM candidate.
Dendreon has a few challenges ahead, mainly the limited number of physicians who can prescribe the drug, the industry source said.
"The cost of manufacturing is also very high; I don't believe it is priced out of the market because with reimbursement it's not all coming out of the patient's pocket," this industry source said.
Provenge, which costs USD 93,000 for a course of treatment, is approved by Medicare for reimbursement.
Dendreon has a current market cap of USD 1.31bn.
by Kimberly Ha, Abigail Moss and Matthew Smith
AI
