Dendreon Corporation

Case Overview:

Bolstered by their laboratory research on cell therapy remedies performed at Stanford University School of Medicine, Edgar Engleman and Samuel Strober started Dendreon Corporation (Dendreon). The biopharmaceutical company based in Seattle, Washington received initial funding from Health Care Ventures and entered the market in 1992. Early clinical results for Provenge, a cell-based cancer immunotherapy to treat prostate cancer, resulted in FDA approval. The excitement around Provenge was exceptionally high as this was the first approved cancer treatment that harnessed a patient’s own immune system to fight tumors. When Provenge became available, not only was it Dendreon’s sole drug on the market, it was extremely expensive at $93,000 a treatment. Competitors took this opportunity to aggressively promote their less costly pills as an alternative treatment. Uncertainty surrounding insurance coverage and high manufacturing costs were additional challenges to the cancer treatment most industry analysts initially predicted would be revolutionary. Unable to overcome these obstacles, the demand for Provenge ultimately stalled and fell drastically short of market expectations. In an effort to streamline operations, Dendreon laid off workers and closed its manufacturing facility in New Jersey, but they were unable to avoid the inevitable. Lenders lost confidence and wanted a return on their investment leaving corporate restructuring as the only viable option.

Successful Outcome:

Dendreon’s market capitalization topped $7.5 billion with a stock price in excess of $55.00 per share. Yet, when the company filed for Chapter 11 in the District of Delaware, Dendreon reported $340.2 million in assets and $660.7 million in liabilities. Engaged to provide depository services, Stretto worked closely with Dendreon’s Chief Financial Officer and the company’s turnaround team to facilitate the efficient movement of $450 million. By leveraging its extensive network of banking partners, Stretto identified the right financial institution to handle the cash management for this high balance account which was not subjected to fees. Stretto also assigned a dedicated consultant with nearly 20 years of experience in managing corporate restructuring deposits to provide client service and oversee the day-to-day account management. Collaborating with Stretto’s internal Banking Services Team, Dendreon retained control and avoided disruptions during this crucial time of restructuring. The Plan of Reorganization was subsequently confirmed and Dendreon emerged from Chapter 11. The company was sold to Valeant Pharmaceuticals International, Inc. for $495 million. Two years later, Valeant sold the company to Sanpower Group, a China-based conglomerate, for $820 million in cash, with a plan to pay down $5 billion in debt from divestiture proceeds and free cash flow within 18 months.

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