Biotech giant buys stake in Dendreon
Seattle Times business reporter
Dendreon has struck a deal in which one of the biotech industry's leading companies, Genentech, will potentially pay more than $110 million to team up and develop cancer drugs aimed at a specific gene.
Terms of the deal weren't fully disclosed, but it will give Dendreon cash and expertise to move into a new class of drugs.
Under the deal, Genentech is buying an equity stake in Dendreon and paying an upfront fee and a series of milestone payments that kick in as experimental drugs progress. The news continued the Seattle biotech company's quick reversal of fortune.
One week ago, Dendreon was left for dead by many investors, who considered the company worth less than its cash in the bank. Its stock was trading at around $1.50.
But Friday, the stock shot up 45 percent when Dendreon showed that a significant number of prostate-cancer patients in a pivotal clinical trial lived longer on one of its drugs. Yesterday, the Genentech deal pushed Dendreon stock up $1.06, or 34 percent, to close at $4.14 on heavy trading.
Dendreon Chief Business Officer Mitchell Gold pointed out the company also isn't giving away the farm to Genentech to get the money. The company will keep rights to co-promote future products in the U.S. It will conduct some of the early clinical trials and will hang on to a double-digit chunk of future profits. Genentech will pay for the most expensive clinical trials and be responsible for manufacturing. It will share in the profits.
"There's a lot of buzz," Gold said. "It's palpable around the office.
"This is great news for Seattle because this is a company that was written off and now, a week later, has new life in its lead drug candidate and a blockbuster partnership."
Page Sargisson, a spokeswoman for Genentech, said her company has the scientific ability and the money to try several simultaneous approaches to develop drugs homing in on Dendreon's gene. She said prostate cancer will be the first target.
Encouraging as the work has been, both companies are well aware that it is years away from translating into a clinically proven drug.
Genentech has experience in genetic approaches to cancer: Its blockbuster breast-cancer drug, Herceptin, zeroes in on a gene that is active in about one-fourth of breast-cancer patients. The drug doesn't work for the rest.
Dendreon believes its gene is unusual because it is common in cancer cells and seldom found in healthy cells.
The companies' next job is to create antibodies or conventional chemical compounds that will kill cancer cells.
Gold said it could be two more years before that work is tested in humans.
Mark Monane, an analyst with Needham & Co., said the news was significant because it diversifies Dendreon, allowing it to move forward on several approaches to drugs, some of which are more proven in the eyes of investors than Dendreon's method of stimulating the immune system. Luke Timmerman: 206-515-5644 or firstname.lastname@example.org