Dendreon, a prostate cancer drug developer is seeking Chapter 11 bankruptcy protection.
Dendreon’s Bankruptcy Filing
Seattle based Dendreon Corp. is responsible for the creation of prostate cancer treatment Provenge. The company listed more than $664 million in total debts and $364.6 million in assets in its recent U.S. Bankruptcy Court filing. The filing is not supposed to disrupt its delivery of the drug to doctors and patients, but rather, the restructuring will allow for continued service.
Chapter 11 Bankruptcy Protection
Protection will either be through the sale of the entire company to a buyer that will continue to produce Provenge, or a takeover by its lenders. In the latter scenario, lenders will convert their debt to equity in order to take over the then privately held company. An agreement has been reached in terms of the financial restructuring. Investors will hold about 84 percent of the $620 million in notes due in 2016.
Problems With Provenge
The company’s financial troubles come as result of failed sales of Provenge, its first commercially approved drug that was released in 2010. Each dose of Provenge is customized to use a patient’s own immune system to fight cancer. While analysts initially expected the drug make billions in annual sales, it seems those sales never materialized. Last year Provenge generated only $283.7 million. The drug generated $325.3 million in 2012, marking a sharp decrease. Additionally, the cost of the production of the drug, paired with the limited benefit and reimbursement rates have also proven difficult for the struggling drug maker.
Over the past few years, the company has made a series of staff as well as other cost-cutting measures. According to general counsel, Robert Crotty, by early summer 2014 it was clear that the cost-cutting measures the company had already taken would not make Dendreon “independently viable with its existing capital structure.”