Dendreon, maker of cancer treatment, seeks Chapter 11 protection

Chapter 11 bankruptcy can provide a number of debt relief options for a company. In many cases, it is possible to continue operations while the business is restructured.

That is the plan for Dendreon Corp., the maker of Provenge, a prostate cancer treatment. Dendreon, which is based in Seattle, will continue making and delivering Provenge while the company seeks a buyer. According to its filing in U.S. Bankruptcy Court, the company has $364.6 million in assets and $664 million in debts, with Bank of New York Mellon being the largest creditor. 

Dendreon's debt problems are actually linked to Provenge, which is the company's first commercially approved drug. The treatment is unlike traditional chemotherapy drugs in that it uses patients' own immune systems rather than attacking healthy and cancerous cells alike. Provenge was expected to generate billions in sales after its launch in 2010, but in 2013 revenue from the drug came to only $283.7 million.

Along with low reimbursement rates, the immense cost of producing the drug led Dendreon to seek Chapter 11 protection. If the business doesn't draw a qualified bidder, then the lenders' debts will be converted to equity, and Dendreon will become a privately held company.

Agreements on financial restructuring have already been reached with the drug maker's investors.

An ABC News article has more on how the bankruptcy filing has affected the value of Dendreon's shares.

Filing Chapter 11 bankruptcy results in an automatic stay that stops creditor actions. In one of our previous posts, we discussed how another drug maker used Chapter 11 to prevent a creditor from seizing the company's assets.

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