Strategy

Valeant Sells Dendreon, Other Assets for $2B

The sales of Dendreon and three skincare brands will help the troubled drug maker to reduce its $30 billion debt burden.
Matthew HellerJanuary 11, 2017
Valeant Sells Dendreon, Other Assets for $2B

In what could be first of a series of divestitures, troubled drug maker Valeant Pharmaceuticals is selling its Dendreon cancer treatment business and three skincare products for $2.12 billion to pare down its more than $30 billion in debt.

The businesses sold for several multiples more than what Valeant paid for them, cheering investors, who drove its stock up 6.8%, to $16.40, in trading Tuesday.

“Such success is a welcome change of pace for Valeant, which had said last year that it was looking to sell off as much as $8 billion in assets — or more if the price was right — in order to pay down its heavy $30 billion debt burden,” Fortune reported.

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The stock had plunged more than 90% since August 2015 amid intense criticism of Valeant’s drug pricing practices and investigations into its ties to drug distributor Philidor Rx Services.

French cosmetics group L’Oreal is buying the skincare brands — CeraVe, AcneFree and Ambi — from Valeant for about $1.3 billion in cash, while the Dendreon unit will be sold to China’s Sanpower Group for $819.9 million.

After acquiring the bankrupt Dendreon in 2015 for about $495 million, Valeant is making a 66% return on its investment. It paid a combined $150 million for the dermatology products.

Dendreon’s first and only commercialized product is Provenge, an prostate cancer treatment approved by the U.S. Food and Drug Administration in 2010.

“We are better aligning our product portfolio with Valeant’s new operating strategy by exiting the urological oncology business, which is one of our non-core assets,” Valeant CEO Joseph Papa said in a news release. “We are pleased to take this step forward in our divestiture program and are continuing to evaluate transactions to simplify our business and strengthen our balance sheet.”

Fortune noted that the company “needs to raise a lot more cash in order to accomplish its goal of paying down $5 billion in debt by early next year.” Valeant could also use some of its free cash flow to reduce debt, Fortune added, but “it will certainly go faster if Valeant can continue to flip assets at major premium prices.”