Valeant seeks to buy Dendreon's cancer vaccine, other assets for US$296 million

LAVAL, Que. – Valeant Pharmaceuticals International has offered US$296 million cash to buy the worldwide rights to the Provenge prostate cancer vaccine and other assets of U.S. drugmaker Dendreon Corp., which is in U.S. bankruptcy court.

Quebec-based Valeant (TSX:VRX) would be entitled to an unspecified break-up fee and expenses if it is outbid in a court-supervised auction that could take place in a couple of weeks.

Dendreon’s Provenge had about US$300 million of sales in 2014 and Valeant chief executive Michael Pearson says the bid could be as an economic way to enter the oncology market.

Dendreon filed for Chapter 11 creditor protection under the U.S. Bankcruptcy Act in November and said it was aiming to have a court-supervised auction of its assets in February.

Douglas Miehm of RBC Capital Markets says a winning bid could lead Valeant look for other cancer treatment acquisitions. However, he says most of these fetch high prices, beyond what Valeant would likely be willing to pay.

A Dendreon acquisition would be the first notable transaction for Valeant since its attempted hostile takeover of Botox-maker Allergan, which instead accepted an offer worth about US$66 billion from Actavis.

Valeant recently said it would focus on smaller private acquisitions in 2015, but wouldn’t rule out a large transaction if the price is right.

Valeant expects this year’s revenue will be 14-15 per cent higher than in 2014 and that earnings and cash flow will grow at an even faster pace.