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Originally published August 11, 2014 at 4:28 PM | Page modified August 13, 2014 at 9:46 AM

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Dendreon: ‘No guarantee’ for current stockholders

Struggling Seattle biotech Dendreon acknowledged for the first time Monday a “significant risk” that it won’t be able to pay off or refinance more than half a billion dollars in debt due in 2016, which “could result in leaving our current stockholders with little or no financ


Seattle Times deputy business editor

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Dendreon acknowledged for the first time Monday a “significant risk” that it won’t be able to pay off or refinance more than half a billion dollars in debt due in 2016, adding in a regulatory filing that alternative restructuring moves “could result in leaving our current stockholders with little or no financial ownership.”

The struggling Seattle biotechnology company did not publish a quarterly earnings release and hold a conference call with analysts, as it has done for years. Instead, on Monday it simply filed with the Securities and Exchange Commission its financial report for the quarter, ending June 30.

The looming mountain of debt maturing in January 2016 totals $620 million in principal. Those notes were issued when Dendreon stock was flying high and it seemed possible that debtholders would someday choose to convert their notes into stock at $51.24 a share.

But Dendreon, after losing momentum for its pioneering cancer drug Provenge in the face of newer therapies, now trades at just above $2 a share. That means conversion is “unlikely,” the company said Monday.

The company’s regulatory filing warned that even with improving revenues and reduced costs, “there is a significant risk that, while we believe we have sufficient cash to meet our ordinary course obligations for at least the next 12 months, we will not be able to repay or refinance the 2016 notes.”

It said the board will consider strategic alternatives.

The quarterly report shows Dendreon’s net product revenue was $82.2 million, up 12 percent from the year-earlier quarter. Its net loss was $15.3 million, or 10 cents per share, a significant improvement from its $68.9 million loss in last year’s comparable quarter.

Analysts were projecting a loss of 20 cents a share. Those analysts also set an average target price of $3.26 for the company, according to Bloomberg.

But one analyst came to a much harsher verdict. Last summer Wedbush Securities’ David Nierengarten said his target price was zero, predicting that Dendreon’s massive debt would preclude any acquisition or conversion deal that would preserve value for existing shareholders.

The quarterly report comes days after Dendreon named retired biotech executive W. Thomas Amick, 71, as president and CEO following July’s decision by John H. Johnson to step down.

The filing also says Dendreon paid unidentified advisers $3.7 million in the first six months of 2014 for advice on restructuring its balance sheet.

Rami Grunbaum: rgrunbaum@seattletimes.com



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