Dendreon said Tuesday that it sold its royalty interest in Merck & Co.’s hepatitis C drug Victrelis (boceprevir) for $125 million in a move that is expected to strengthen the company’s cash holdings. "The sale of the Victrelis royalty interest allows the company to strengthen our cash position, and enables us to further invest in our core business initiatives," commented Dendreon CFO Greg Schiffman.
The drugmaker expects to close the deal by the end of the year. Dendreon declined to disclose what percentage its gets from worldwide sales of the therapy, which was approved in the U.S. in May and in the EU in July, but said it collected $2.9 million in royalties from Merck for the quarter ended September 30. Victrelis generated sales of $31 million in the third quarter.
Dendreon CEO Mitchell Gold said Tuesday that the company had $560 million in capital at the end of the third quarter, but the company previously reported widened losses on expenses stemming from a restructuring effort under which 25-percent of the firm’s employees were laid-off. Analysts estimated that Dendreon will report an adjusted loss of $423.4 million for the full year.
The company has also faced growing pressure regarding lower-than-anticipated sales of its Provenge (sipuleucel-T) prostate cancer therapy. According to reports, the company is expected to fall far short of the $350 million to $400 million it had forecast this year for the therapy due to low physician adoption and concerns about reimbursement from Medicare and health insurers. ISI Group analyst Mark Schoenebaum noted that the $125 million upfront cash payment from the royalties sale "limits downside risk in case (Provenge) revenue ramp is slower than expected."
Echoing these sentiments, Wedbush Securities analyst David Nierengarten remarked that "it’s a good move by them. It extends the cash runway that they have to achieve profitability before the equity markets need to be tapped."