Dendreon has never lifted a finger to develop any new drugs for hepatitis C, but now the Seattle cancer drug developer is getting $125 million in cash for its stake in the emerging market for the chronic liver infection.
The company (NASDAQ: DNDN) said today it made the money by selling off the rights to its royalty stream related to boceprevir (Victrelis), a new hepatitis C drug. Dendreon sold the royalty rights to CPP Investment Board.
While Dendreon has always invested its time and money in developing cancer drugs, it obtained the hepatitis C intellectual property through its 2003 acquisition of San Diego-based Corvas International. Corvas had licensed its IP to Schering-Plough, which used it in part to develop boceprevir, a protease inhibitor for hepatitis C. Schering-Plough is now owned by Merck, and Merck started generating revenue from the intellectual property in May when it won FDA approval of the new drug. Dendreon didn’t disclose what percentage it gets from worldwide sales of Victrelis, but the company said it collected $2.9 million in royalties from Merck in the three-month period that ended Sep. 30, according to its most recent quarterly report.
“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,” said Greg Schiffman, Dendreon’s chief financial officer, in a statement.
Dendreon certainly has found itself in a position where it needs to scrape together cash any way it can. The company is on track to fall way short of the $350 million to $400 million sales forecast it had this year for its lone marketed product, sipuleucel-T (Provenge) for prostate cancer. The sales shortfall prompted Dendreon to lose more than 60 percent of its market valuation, and prompted Dendreon to cut 500 jobs back in September. Despite the cost cuts, the company still burned through $106 million of cash in the most recent quarter. It had $568 million in cash and investments left in the bank at the end of September.