Dendreon Corp. (DNDN) has finally capitulated on its crippling and longstanding debtload, filing Chapter 11 bankruptcy in Deleware on Monday after seniro holders agreed to convert the debt to common equity. According to the company, a restructuring under Chapter 11 may take the form of a complete, stand-alone recapitalization or sale of the company or its assets. The $640 million in debt would have come due in January of 2016.
The debt-to-equity conversion means tremendous dilution for existing shareholders: DNDN fell 70% to $0.30 on Monday morning.
As the company begins a court-supervised sale process, Provenge (sipuleucel-T) will remain on the market, supported by Dendreon’s $100 million in cash, equivalents and investments as of November 7. Provenge generated $73 million in revenue in the third quarter of this year, though the drug’s impact on the bottom line has always been marginal given its high production cost. Widepsread adoption in prostate cancer has also been elusive, a result of marginal benefit to patients and the financial burden on providers, who must front the cost of Provenge prior to being reimbursed.
Holders of 84% of the $620 million in convertible senior notes (due January of 2016) have agreed to convert the bonds to common equity in DNDN.
