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Sanpower Group Completes $820M Dendreon Buy

Dendreon Pharmaceuticals LLC received the Food and Drug Administration’s thumbs-up for its prostate-cancer therapy Provenge in 2010, and analysts projected $4.3 billion in annual sales by 2020, yet it was a blockbuster that failed to premiere.

The company filed for bankruptcy and was acquired by Valeant Pharmaceuticals International Inc. in 2015 for $495 million. Two years later it was sold again for $819.9 million to the privately held Nanjing-based Chinese conglomerate Sanpower Group Co. Ltd. The deal was announced in January and recently closed.

As part of the sale, Dendreon’s headquarters moved from Bridgewater, N.J., to Seal Beach, where it had an existing manufacturing facility.

“It is the second sale, and things are a lot different,” said Chief Executive James Caggiano. “When Valeant bought Dendreon, it was a struggling, declining asset. Sanpower bought a growing, robust company. We have a lot of room to grow, and Sanpower is a great partner.”

Caggiano joined Valeant in 2015 as senior vice president and general manager, and most recently served as president of Dendreon. He was promoted to chief executive in conjunction with the sale.

Prior to rejoining Dendreon—he initially joined Seattle-based Dendreon Corp. in 2004 as vice president of sales and marketing, from his prior role at Abbott Laboratories—Caggiano served as vice president of health sales and marketing at Allergan Medical, a division of what’s now Allergan PLC.

Dendreon is Sanpower’s first acquisition in the U.S. healthcare sector. Sanpower Chairman Yuan Yafei said, “Dendreon brings unique strategic value to our portfolio … We will work with the relevant authorities to bring Provenge to other markets, especially to China and Southeast Asia.”

Sanpower, formed in 1993, invests in five primary sectors: finance, retail, information services, medical services and healthcare and real estate. It has 100,000 employees worldwide.

Sanpower has been acquiring healthcare assets in recent years, including senior care company Natali in Tel Aviv, Israel, New York Stock Exchange-listed China Cord Blood Corp. in Hong Kong—the largest cord blood bank in the world, according to Sanpower—and several hospitals.

Yuan said Sanpower wants to become a leader in stem cells and immuno-oncology, and that the acquisition of Dendreon coupled with its cord blood bank provides the foundation for precision medicine.

Sanpower and China CITIC Bank announced the formation of a RMB20 billion, approximately $2.9 billion, healthcare industry M&A fund in January. The firms said the fund will support Sanpower’s push into healthcare, expanding through “biomedical, hospitals and elderly healthcare sectors,” the company said in a statement.

Caggiano said that while Sanpower holds worldwide rights to Provenge, Sanpower has maintained a hands-off policy on Dendreon’s U.S. operations.

“This is a strategic play for Sanpower,” said Caggiano. “We’ve proven we can turn around the business in the U.S., and given the transportation time required for the therapy, the U.S. manufacturing will always be here. Sanpower is already doing regulatory work to get the product approved in China.”

The Dendreon team will remain in place following the closing.

Caggiano said Dendreon will operate as a “stand-alone company” under the new ownership, and it will continue the growth trajectory it has established over the last two years by refocusing marketing efforts around urologists rather than oncologists.

“The [original] marketing strategy was misguided—teaching oncologists how to [administer the therapy] and teaching urologists how to refer patients [with prostate cancer] to oncologists,” said Caggiano. He said the teaching should focus on urologists, who are “the quarterback” of prostate cancer care.

Since being purchased by Valeant and changing its commercialization strategy, prescriptions for Provenge grew more than 10% from 2015 to 2016. It has treated more than 20,000 men since it was approved by the FDA in 2010, the company said. He did not disclose sales figures.

Caggiano estimated there are about 43,000 men a year in the U.S. entering later stage prostate cancer, for which Provenge is an approved vaccine. He noted that if the company gains FDA approval to treat patients in earlier stages of the disease, the potential market will add another 130,000 men a year.

At the height of Provenge optimism in 2010, the publicly traded Dendreon had a market cap approaching $7 billion.

Personalized Immunotherapy

Provenge is an immuno-oncology drug designed to stimulate a person’s own immune system against cancer. The product is made from each patient’s own immune cells—white blood cells are extracted, blended with a protein that is intended to stimulate and directed to fight against prostate cancer, and infused back into the patient as a vaccine. The therapy is administered in three doses with one to two weeks between each dose. A full treatment course costs $93,000, according to analyst reports.

Dendreon said Provenge was the first FDA-approved personalized immunotherapy for cancer, and remains the only personalized immunotherapy in the world approved for human use.

“What some [urologists] didn’t get was this isn’t chemotherapy, it’s a straightforward infusion therapy, and we take care of all the complex stuff,” said Caggiano. He said the company has 18 hours to get a patient’s immune cells to its manufacturing facilities in Seal Beach or Union City, turn the cells into Provenge within 36 hours and get it into a patient’s arm in 18 hours.

The product faces the expiration of the last meaningful patents next year, but Caggiano said the complicated manufacturing process will make it very difficult for copycat drugs to compete.

Dendreon has an approximately 180,000-square-foot facility in Seal Beach and another 152,000-square-foot manufacturing facility in Union City. It has nearly 500 employees, including off-site support personnel and nurses. The company plans to hire additional employees to support manufacturing needs.

“We will be expanding. We have about 140 [employees] in Seal Beach, and we are looking to grow that number to 180 or 190 by the end of this year,” he said.

Provenge is currently approved for the treatment of “minimally symptomatic metastatic” prostate cancer, a later stage of the disease. Caggiano said the company plans to enter clinical trials to support using the product at an earlier stage.

Provenge sales were about $300 million last year.

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