Beleaguered Valeant Pharmaceuticals International, Inc. announced that its affiliate has entered into a definitive agreement to sell all the outstanding equity interests in Dendreon Pharmaceuticals, Inc. to the China based Sanpower Group Co., Ltd.
Shares of Valeant underperformed the Zacks classified Medical-Drugs in the last 12 months with a massive plunge of 82.1% as compared to a 8.6% decline for the industry.
As per the terms of the agreement, Valeant will receive $819.9 million of cash upon completion in lieu of the sale.
The transaction is expected to close in the first half of 2017. We remind investors that Valeant acquired certain assets of bankrupt Dendreon Corporation for $415 million in Feb 2015. The assets acquired from Dendreon included the worldwide rights to the Provenge, an immunotherapy treatment for men suffering from advanced prostate cancer. Provenge was approved in Apr 2010.
Valeant decided to sell the assets to align its product portfolio better with its operating strategy and exit the urological oncology business which is a non core asset for the company. The drug failed to meet the company’s expectations. Valeant plans to use proceeds from the sale of Dendreon to permanently repay term loan debt under its Senior Secured Credit Facility.
Valeant currently carries a Zacks Rank #5 (Strong Sell). Once an acquisition giant, Valeant was caught up in various controversies in 2016-price hike of specialty drugs, erroneous financial reporting and termination of contracts with Philidor Rx Services.
With its new CEO, Joseph C. Papa, Valeant started a rebuilding process. However, the dismal third-quarter results and subsequent lowering of the guidance indicates further trouble ahead. The company is facing generic completion for its neurology products while the dermatology segment is also facing weakness. On the other hand, Bausch + Lomb / International segment is experiencing a decline in product sales due to lower realized prices.
The divestiture of non-core assets should help the company streamline its product portfolio and focus better on core areas of dermatology and pay down debt as well.
Meanwhile, on Nov 8, 2016, Moody’s Investors Service downgraded the company’s credit rating to B3 from B2. A downgrade will increase the company’s cost of borrowing and add to the existing debt burden. With the President-elect Donald Trump’s focus on drug pricing, Valeant will continue to be in the spotlight for pricing of drugs along with companies like Mylan .
Key Picks in the Sector
A couple of better-ranked stocks in the health care sector include Sucampo Pharmaceuticals and Endocyte, Inc. ECYT . Both the stocks carry a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Sucmapo’s earnings estimates increased from $1.03 to $1.22 for 2016 and from $1.30 to $1.74 for 2017 over the last 60 days. The company posted a positive earnings surprise in all of the four trailing quarters with an average beat of 35.5%.
Endocyte’s loss estimates for 2016 narrowed from $1.11 to $1.04, while the loss for 2017 narrowed by two cents. The company posted a positive earnings surprise in all of the four trailing quarters with an average beat of 10.2%.
Zacks' Top 10 Stocks for 2017
In addition to the stocks discussed above, would you like to know about our 10 finest tickers for the entirety of 2017?
Who wouldn't? These 10 are painstakingly hand-picked from 4,400 companies covered by the Zacks Rank. They are our primary picks to buy and hold. Be among the very first to see them >>
Image: Bigstock
Valeant to Sell Dendreon Unit to Sanpower for $820 Million
Beleaguered Valeant Pharmaceuticals International, Inc. announced that its affiliate has entered into a definitive agreement to sell all the outstanding equity interests in Dendreon Pharmaceuticals, Inc. to the China based Sanpower Group Co., Ltd.
Shares of Valeant underperformed the Zacks classified Medical-Drugs in the last 12 months with a massive plunge of 82.1% as compared to a 8.6% decline for the industry.
As per the terms of the agreement, Valeant will receive $819.9 million of cash upon completion in lieu of the sale.
The transaction is expected to close in the first half of 2017. We remind investors that Valeant acquired certain assets of bankrupt Dendreon Corporation for $415 million in Feb 2015. The assets acquired from Dendreon included the worldwide rights to the Provenge, an immunotherapy treatment for men suffering from advanced prostate cancer. Provenge was approved in Apr 2010.
Valeant decided to sell the assets to align its product portfolio better with its operating strategy and exit the urological oncology business which is a non core asset for the company. The drug failed to meet the company’s expectations. Valeant plans to use proceeds from the sale of Dendreon to permanently repay term loan debt under its Senior Secured Credit Facility.
Valeant currently carries a Zacks Rank #5 (Strong Sell). Once an acquisition giant, Valeant was caught up in various controversies in 2016-price hike of specialty drugs, erroneous financial reporting and termination of contracts with Philidor Rx Services.
With its new CEO, Joseph C. Papa, Valeant started a rebuilding process. However, the dismal third-quarter results and subsequent lowering of the guidance indicates further trouble ahead. The company is facing generic completion for its neurology products while the dermatology segment is also facing weakness. On the other hand, Bausch + Lomb / International segment is experiencing a decline in product sales due to lower realized prices.
The divestiture of non-core assets should help the company streamline its product portfolio and focus better on core areas of dermatology and pay down debt as well.
Meanwhile, on Nov 8, 2016, Moody’s Investors Service downgraded the company’s credit rating to B3 from B2. A downgrade will increase the company’s cost of borrowing and add to the existing debt burden. With the President-elect Donald Trump’s focus on drug pricing, Valeant will continue to be in the spotlight for pricing of drugs along with companies like Mylan .
Valeant Pharmaceuticals International, Inc. Price and Consensus
Valeant Pharmaceuticals International, Inc. Price and Consensus | Valeant Pharmaceuticals International, Inc. Quote
Key Picks in the Sector
A couple of better-ranked stocks in the health care sector include Sucampo Pharmaceuticals and Endocyte, Inc. ECYT . Both the stocks carry a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Sucmapo’s earnings estimates increased from $1.03 to $1.22 for 2016 and from $1.30 to $1.74 for 2017 over the last 60 days. The company posted a positive earnings surprise in all of the four trailing quarters with an average beat of 35.5%.
Endocyte’s loss estimates for 2016 narrowed from $1.11 to $1.04, while the loss for 2017 narrowed by two cents. The company posted a positive earnings surprise in all of the four trailing quarters with an average beat of 10.2%.
Zacks' Top 10 Stocks for 2017
In addition to the stocks discussed above, would you like to know about our 10 finest tickers for the entirety of 2017?
Who wouldn't? These 10 are painstakingly hand-picked from 4,400 companies covered by the Zacks Rank. They are our primary picks to buy and hold. Be among the very first to see them >>