Dendreon Seeks to Raise More Than $400 Million to Support Prostate Cancer Drug Launch

12/8/09Follow @xconomy

Dendreon is on the prowl for another big round of financing. The Seattle-based biotech company (NASDAQ: DNDN) said today that it is seeking to sell 15 million new shares of stock to investors in an offering that’s being underwritten by JP Morgan Securities and Deutsche Bank.

The company didn’t release any terms of the financing, but this could easily eclipse $400 million. That’s assuming Dendreon sells all 15 million shares, plus 2.25 million more shares being provided to the underwriters. The company’s closing stock price today was $26.64. Assuming investors get their shares at a 5 percent discount to today’s close, or $25.31, then Dendreon could raise about $436 million in new cash, according to my calculations.

Investors have been snapping up Dendreon shares this year, and the company’s appetite for cash has increased as it seeks to make the transition from a company that only had R&D, to a more integrated enterprise with sales, marketing, and commercial-scale manufacturing. The firm is seeking FDA approval and start marketing its first product, sipuleucel-T (Provenge) for men with terminal prostate cancer. Dendreon stock has boomed this year from a low point of $2.55, after it showed in April that its treatment could help men live longer with minimal side effects in a clinical trial of more than 500 patients. The company seized on that momentum to raise $221 million in May, and it has been building up its capabilities to market its drug ever since. The company has said it plans to double in size to about 600 employees.

Dendreon said it plans to use the money to continue building up manufacturing capacity at its Morris Plains, NJ factory, as well as its newer sites near Atlanta, GA and in Orange County, CA.

The company filed an updated prospectus this afternoon with the Securities and Exchange Commission. I’ll be sure to update this space when I find out the final pricing terms of this offering.

[Updated: 3:24 pm Pacific, 12/08/09]. Any way you look at this deal, it’s likely to dwarf the deal Dendreon did earlier this year. The earlier transaction enabled Deutsche Bank to buy 10.7 million shares at $18.45 apiece on May 7, 2009, along with an option to buy 1.3 million more shares, which it exercised the next day, according to a regulatory filing that came out four days later. The closing stock price on May 7 was $19.76, according to data compiled by Yahoo Finance, meaning that Deutsche Bank got the shares at a 6.7 percent discount.

So if Dendreon can sell more shares this time around (17.25 million), and do it at a much higher price than what it commanded in May, then this deal will easily exceed $400 million.

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  • Spock

    The only problem I have with this news, which no one ever seems to address, is why management is able to lie through their teeth and get away with it. Not even 2 weeks ago Gold said “we do not need any additional funds to commercialize Provenge” .. and then today we have more dilution?

  • http://www.xconomy.com/author/ltimmerman/ Luke Timmerman

    Spock–when and where was that comment made? I don’t know for sure, but I can imagine that Gold wouldn’t want to make any public statement about financing in advance of getting the legal documents filed, lest he be accused of not making the proper disclosures about risks that are in today’s shelf registration statement.

  • http://www.sillyseattle.blogspot.com Capt Tom

    I am very proud of Dendreon. They knew they had a good treatment and stuck to it even after most people counted them out. They pushed through the FDA panel in which all but one panelist – a woman who apparently is a feminist and enjoys watching men die the painful death of advanced prostrate cancer – approved. That one woman set them back for a while, but Dendreon came back with undeniable proof that their drug extends lives.

    I am really looking forwards to tests done on patients with less advanced prostrate cancer. Seems to me the earlier you can enlist the body’s defenses in fighting the cancer, the better.

  • Mike Jones

    The 400 million plus is in my opinion the financing prior to the said partnership,

    Normally a large partner wants 10% equity interest prior to sealing the deal.

    Will happen soon in my opinion

    Also look @ vvus, this company is very similar to becoming another dndn.

  • G. Jones

    For the sake of factuality, the ODAC panel reviewing Provenge voted 13-4 in favor of efficacy. The “one woman” referred to in a previous post is an acclaimed oncologist with expertise in prostate cancer. She was not the only prostate cancer expert to vote against. For insights as to why the FDA gave Provenge an “approvable” rating rather then approval in 2007 see the interesting comments by a prominent (and powerful) biostatistican -
    http://www.psa-rising.com/med/immun/provenge-fda-fleming-t-r.html#letter

    Subsequent results of the referred to phase 3 trial would appear to support efficacy and makes approval now very likely.

  • http://www.xconomy.com/author/ltimmerman/ Luke Timmerman

    G. Jones is right, the FDA panel’s vote was 13-4 in favor of Provenge, that it demostrated substantial evidence of efficacy. But the vote wasn’t from the Oncologic Drugs Advisory Committee (ODAC), it was actually the Cellular, Tissue, & Gene Therapies Advisory Committtee (CTGT).

    That vote was obviously a flash point in the controversy from 2007 about whether Provenge was ready to be approved then. I didn’t rehash all that in this financing story, but I tried summing it up back in April when we were awaiting results of the Impact trial of 500 men. Here’s a link to that story.

    http://www.xconomy.com/seattle/2009/04/03/dendreon-saga-heads-toward-climax-as-cancer-drug-aims-to-prove-it-prolongs-lives/