In New York, you may have heard about the company, Dendreon, which has now filed for Chapter 11 bankruptcy protection. The company, a prostate cancer drug developer, has decided to seek bankruptcy protection with a plan that will lead to the sale of the company or a takeover by its current lenders.
The company, which is based in Seattle, has listed over $664 million in debt with only $364.6 million in assets. Its largest creditor is Bank of New York Mellon, which it reportedly owes $620 million. The company is known for the prostate cancer treatment Provenge.
One of the main concerns with a drug company going out of business or going bankrupt is the risk to patients who are benefitting from the use of the company’s drug. The company has reported that because of the way it’s restructuring the business, patients will still be able to receive the drug. The drug creator has also reported that it has enough money to support itself throughout the restructuring process.
The goal of this Chapter 11 bankruptcy is to eventually sell the company to a buyer who would produce Provenge for patients and medical care in the future. If the sale is not possible, then the lenders will take over, converting the debt into equity and making Dendreon a privately held company.
Why has the drug company gotten into such trouble with debt? Part of the issue is the drug Provenge, unfortunately. The drug is costly, the news reports, and it has limited benefits. It allegedly also has inadequate reimbursement rates, which puts the company in a troubling position of debt instead of profit.
Source: Komo News, “Seattle’s Dendreon files for Ch. 11 bankruptcy protection” Tom Murphy, Nov. 10, 2014by