##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, DC 20549
 FORM 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2009
 or
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 FOR THE TRANSITION PERIOD FROM  TO
 Commission File Number: 000-30681
 DENDREON CORPORATION
 (Exact name of registrant as specified in its charter)
 DELAWARE
    
    22-3203193(State or other jurisdiction of incorporation or organization)
    
    (IRS Employer Identification No.)3005 FIRST AVENUESEATTLE, WASHINGTON
    
    98121(Address of registrants principal executive offices)
    
    (Zip Code)
 (206) 256-4545
(Registrants telephone number, including area code)
 þ o
 o o
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer o
    
    Smaller reporting company o(Do not check if a smaller reporting company)
 o þ




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##### 



DENDREON CORPORATION
 INDEX
 PAGE NO.PART I. FINANCIAL INFORMATIONItem 1. Financial Statements
    
    
    3Balance Sheets as of June 30, 2009 (unaudited) and December 31, 2008
    
    
    3Statements of Operations for the Three Months and Six Months Ended June 30, 2009 and 2008 (unaudited)
    
    
    4Statements of Cash Flows for the Six Months Ended June 30, 2009 and 2008 (unaudited)
    
    
    5Notes
to Consolidated Financial Statements
    
    
    6Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    17Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    26Item 4. Controls and Procedures
    
    
    26PART II. OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    27Item 1A. Risk Factors
    
    
    28Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    43Item 4. Submission of Matters to a Vote of Security Holders
    
    
    43Item 6. Exhibits
    
    
    44SIGNATURES
    
    
    45EXHIBIT INDEX
    
    
    46EX-10.1EX-10.2EX-31.1EX-31.2EX-32
  2




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##### Table of Contents



PART I. FINANCIAL INFORMATION
 
 ITEM 1. FINANCIAL STATEMENTS
 DENDREON CORPORATION
 
 BALANCE SHEETS
 (In thousands, except share data)
 (consolidated)
 June 30,
    
    
    December 31,2009
    
    
    2008(Unaudited)ASSETSCurrent assets:Cash and cash equivalents
    
    $
    266,122
    
    
    $
    59,523Short-term investments
    
    
    21,334
    
    
    
    45,638Restricted cash
    
    
    4,882
    
    
    
    3,853Prepaid antigen costs
    
    
    18,975
    
    
    
    Prepaid expenses and other current assets
    
    
    2,692
    
    
    
    1,867Total current assets
    
    
    314,005
    
    
    
    110,881Property and equipment, net
    
    
    34,027
    
    
    
    28,150Long-term investments
    
    
    
    
    
    
    3,386Long-term restricted cash
    
    
    2,030
    
    
    
    2,030Debt issuance costs and other assets
    
    
    2,641
    
    
    
    2,757Total assets
    
    $
    352,703
    
    
    $
    147,204LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable
    
    $
    1,263
    
    
    $
    237Accrued liabilities
    
    
    6,223
    
    
    
    6,004Accrued compensation
    
    
    3,376
    
    
    
    3,686Deferred revenue
    
    
    82
    
    
    
    82Warrant liability
    
    
    117,607
    
    
    
    14,190Current portion of capital lease obligation
    
    
    716
    
    
    
    Current portion of facility lease obligation
    
    
    244
    
    
    
    219Current portion of long-term debt
    
    
    668
    
    
    
    2,194Total current liabilities
    
    
    130,179
    
    
    
    26,612Deferred revenue, less current portion
    
    
    273
    
    
    
    314Capital lease obligation, less current portion
    
    
    1,077
    
    
    
    Facility lease obligation, less current portion
    
    
    7,893
    
    
    
    8,022Convertible senior subordinated notes
    
    
    52,535
    
    
    
    85,250Commitments and contingencies (Note 9)Stockholders equity:Preferred stock, $0.001 par value; 10,000,000 shares authorized, no shares issued or outstanding
    
    
    
    
    
    
    Common stock, $0.001 par value; 250,000,000 shares authorized, 113,367,532 and 95,577,664
shares issued and outstanding at June 30, 2009 and December 31, 2008, respectively
    
    
    112
    
    
    
    95Additional paid-in capital
    
    
    865,969
    
    
    
    590,159Accumulated other comprehensive income
    
    
    59
    
    
    
    45Accumulated deficit
    
    
    (705,394
    )
    
    
    (563,293
    )Total stockholders equity
    
    $
    160,746
    
    
    $
    27,006Total liabilities and stockholders equity
    
    $
    352,703
    
    
    $
    147,204
  3




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##### Table of Contents



DENDREON CORPORATION
 
 STATEMENTS OF OPERATIONS
 (In thousands, except per share amounts)
 (consolidated)
 (Unaudited)
 Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Revenue
    
    $
    25
    
    
    $
    26
    
    
    $
    55
    
    
    $
    57Operating expenses:Research and development
    
    
    13,321
    
    
    
    13,193
    
    
    
    25,119
    
    
    
    26,671General and administrative
    
    
    7,608
    
    
    
    5,420
    
    
    
    12,825
    
    
    
    11,095Total operating expenses
    
    
    20,929
    
    
    
    18,613
    
    
    
    37,944
    
    
    
    37,766Loss from operations
    
    
    (20,904
    )
    
    
    (18,587
    )
    
    
    (37,889
    )
    
    
    (37,709
    )Other income (expense):Interest income
    
    
    196
    
    
    
    951
    
    
    
    529
    
    
    
    2,088Interest expense
    
    
    (213
    )
    
    
    (1,246
    )
    
    
    (1,324
    )
    
    
    (2,777
    )Gain (loss) from valuation of warrant liability
    
    
    (105,796
    )
    
    
    2,368
    
    
    
    (103,417
    )
    
    
    2,368Net loss
    
    $
    (126,717
    )
    
    $
    (16,514
    )
    
    $
    (142,101
    )
    
    $
    (36,030
    )Basic and diluted net loss per share
    
    $
    (1.20
    )
    
    $
    (0.18
    )
    
    $
    (1.41
    )
    
    $
    (0.41
    )Shares used in computation of basic and diluted net loss per share
    
    
    105,880
    
    
    
    91,217
    
    
    
    100,851
    
    
    
    87,265
  4




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DENDREON CORPORATION
 
 STATEMENTS OF CASH FLOWS
 (In thousands)
 (consolidated)
 (Unaudited)
 Six Months EndedJune 30,2009
    
    
    2008Operating Activities:Net loss
    
    $
    (142,101
    )
    
    $
    (36,030
    )Adjustments to reconcile net loss to net cash used in operating activities:Depreciation and amortization expense
    
    
    2,170
    
    
    
    2,893Non-cash stock-based compensation expense
    
    
    6,513
    
    
    
    3,150Loss (gain) on valuation of warrant liability
    
    
    103,417
    
    
    
    (2,368
    )Gain on sale of fixed assets
    
    
    
    
    
    
    (5
    )Changes in operating assets and liabilities:Prepaid antigen costs
    
    
    (18,975
    )
    
    
    Amortization of securities discount and premium
    
    
    (9
    )
    
    
    (49
    )Restricted cash related to operating lease
    
    
    
    
    
    
    1,258Prepaid expenses and other assets
    
    
    (709
    )
    
    
    1,245Accounts payable
    
    
    1,026
    
    
    
    1,982Deferred revenue
    
    
    (41
    )
    
    
    (42
    )Accrued liabilities and compensation
    
    
    (91
    )
    
    
    (6,138
    )Net cash used in operating activities
    
    
    (48,800
    )
    
    
    (34,104
    )Investing Activities:Maturities of investments
    
    
    27,713
    
    
    
    26,233Purchases of investments
    
    
    
    
    
    
    (35,007
    )Restricted cash
    
    
    (1,882
    )
    
    
    Purchases of property and equipment
    
    
    (6,254
    )
    
    
    (2,245
    )Net cash provided by (used in) investing activities
    
    
    19,577
    
    
    
    (11,019
    )Financing Activities:Proceeds from common stock offering, net of financing costs
    
    
    220,810
    
    
    
    45,991Proceeds from release of security deposit associated with debt
    
    
    853
    
    
    
    Payments on capital lease obligations
    
    
    
    
    
    
    (581
    )Payments on long-term debt
    
    
    (1,526
    )
    
    
    (2,717
    )Payments on facility lease obligation
    
    
    (104
    )
    
    
    (82
    )Net proceeds from exercise of stock options and other
    
    
    15,117
    
    
    
    (32
    )Issuance of common stock under the Employee Stock Purchase Plan
    
    
    672
    
    
    
    445Net cash provided by financing activities
    
    
    235,822
    
    
    
    43,024Net increase (decrease) in cash and cash equivalents
    
    
    206,599
    
    
    
    (2,099
    )Cash and cash equivalents at beginning of year
    
    
    59,523
    
    
    
    75,721Cash and cash equivalents at end of period
    
    $
    266,122
    
    
    $
    73,622Supplemental Disclosure of Cash Flow Information:Capital expenditures financed through capital lease
    
    $
    1,793
    
    
    $
    
  5




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DENDREON CORPORATION
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (Unaudited)
 1. BUSINESS, PRINCIPLES OF CONSOLIDATION AND BASIS OF PRESENTATION
 Business
 ®
 Principles of Consolidation
  Basis of Presentation
  Net Loss Per Share
  6




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##### Table of Contents



2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 Prepaid Antigen Costs
  Research and Development Expenses
  Accounting for Stock-Based Compensation
     7




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Employee Stock Options
    
    Employee Stock Purchase PlanFor the Three Months ended June 30,
    
    For the Three Months ended June 30,2009
    
    2008
    
    2009
    
    2008Weighted average estimated fair value (A)
    
    
    N/A
    
    
    
    N/A
    
    
    $
    3.37
    
    
    $
    1.27Weighted Average AssumptionsDividend yield (A,B)
    
    
    N/A
    
    
    
    N/A
    
    
    
    0.0
    %
    
    
    0.0
    %Expected volatility (A,C)
    
    
    N/A
    
    
    
    N/A
    
    
    
    158
    %
    
    
    48
    %Risk-free interest rate (A,D)
    
    
    N/A
    
    
    
    N/A
    
    
    
    0.63
    %
    
    
    2.2
    %Expected life (A,E)
    
    
    N/A
    
    
    
    N/A
    
    
    1.25 years
    
    0.5 years
 Employee Stock Options
    
    Employee Stock Purchase PlanFor the Six Months Ended June 30,
    
    For the Six Months Ended June 30,2009
    
    2008
    
    2009
    
    2008Weighted average estimated fair value
    
    
    N/A
    
    
    $
    4.34
    
    
    $
    3.37
    
    
    $
    1.27Weighted Average AssumptionsDividend yield (A,B)
    
    
    N/A
    
    
    
    0.0
    %
    
    
    0.0
    %
    
    
    0.0
    %Expected volatility (A,C)
    
    
    N/A
    
    
    
    91
    %
    
    
    158
    %
    
    
    48
    %Risk-free interest rate (A,D)
    
    
    N/A
    
    
    
    2.5
    %
    
    
    0.63
    %
    
    
    2.2
    %Expected life (A,E)
    
    
    N/A
    
    
    4.5 years
    
    1.25 years
    
    0.5 years
 
 (A)
    
    During the three and six months ended June 30, 2009 and the three months ended June 30, 2008,
we did not grant stock options; therefore the above-described assumptions and the weighted
average estimated fair value are not applicable during this period.(B)
    
    We have not paid dividends in the past and do not plan to pay dividends in the near future.(C)
    
    The expected stock price volatility is based on the historical volatility of our stock.(D)
    
    The risk-free interest rate is based on the implied yield available on U.S. Treasury
zero-coupon issues with a term equal to the expected life of the award on the date of grant.(E)
    
    The expected life of the options represents the estimated period of time until exercise and
is based on historical experience of similar awards, giving consideration to the contractual
terms, vesting schedules and expectations of future employee behavior. The expected life of
awards under the employee stock purchase plan represents the purchase period under the plan.  Shares
    
    Weighted-Average
    
    Weighted-AverageSubject to
    
    Exercise Price per
    
    Remaining
    
    Aggregate IntrinsicOptions
    
    Share
    
    Contractual Life
    
    ValueOutstanding, January 1, 2009
    
    
    4,877,268
    
    
    $
    6.99Granted
    
    
    
    
    
    
    Exercised
    
    
    (2,100,497
    )
    
    
    7.23Forfeited
    
    
    (179,837
    )
    
    
    7.28Outstanding, June 30, 2009
    
    
    2,596,934
    
    
    $
    6.79
    
    
    
    6.49
    
    
    $
    47,310,840Exercisable, June 30, 2009
    
    
    1,738,895
    
    
    $
    7.53
    
    
    
    5.74
    
    
    $
    30,397,772
  Restricted Stock Awards
  8




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2009
    
    
    2008Weighted
    
    
    
    
    
    
    WeightedAverage
    
    
    
    
    
    
    AverageGrant
    
    
    
    
    
    
    GrantStock
    
    
    Date
    
    
    Stock
    
    
    DateAwards
    
    
    Fair Value
    
    
    Awards
    
    
    Fair ValueOutstanding at beginning of period
    
    
    1,462,936
    
    
    $
    6.13
    
    
    
    1,449,687
    
    
    $
    5.96Granted
    
    
    1,247,247
    
    
    
    4.72
    
    
    
    531,888
    
    
    
    6.37Vested
    
    
    (293,529
    )
    
    
    5.52
    
    
    
    (293,828
    )
    
    
    5.98Forfeited or expired
    
    
    (87,319
    )
    
    
    5.69
    
    
    
    (114,322
    )
    
    
    6.30Outstanding at end of period
    
    
    2,329,335
    
    
    $
    5.47
    
    
    
    1,573,425
    
    
    $
    6.06
  Fair Value
  
    
    Long-lived assets measured at fair value due to an impairment assessment under SFAS No. 144,
Accounting for the Impairment or Disposal of Long-Lived Assets; and
 
    
    Asset retirement obligations initially measured under SFAS No. 143, Accounting for Asset
Retirement Obligations.
   9




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Warrant Liability
   3. RECENT ACCOUNTING PRONOUNCEMENTS
 
   New Accounting Standards Not Yet Adopted
  10




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##### Table of Contents



4. FAIR VALUE MEASUREMENTS
      Quoted Prices in
    
    
    SignificantActive Markets
    
    
    Other
    
    
    SignificantAmortized
    
    
    Unrealized gain
    
    
    
    
    
    
    forIdentical
    
    
    Observable
    
    
    Unobservablecost as of
    
    
    (loss) as of
    
    
    Balance as of
    
    
    Assets
    
    
    Inputs
    
    
    InputsDescription
    
    June 30, 2009
    
    
    June 30, 2009
    
    
    June 30, 2009
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)Assets:Money Market
    
    $
    22,805
    
    
    $
    
    
    
    $
    22,805
    
    
    $
    22,805
    
    
    $
    
    
    
    $
    Commercial paper
    
    
    32,773
    
    
    
    (3
    )
    
    
    32,770
    
    
    
    
    
    
    
    32,770
    
    
    
    Corporate debt securities
    
    
    9,933
    
    
    
    17
    
    
    
    9,950
    
    
    
    
    
    
    
    9,950
    
    
    
    Government-sponsored enterprises
    
    
    108,506
    
    
    
    29
    
    
    
    108,535
    
    
    
    
    
    
    
    108,535
    
    
    
    U.S. Treasury Note
    
    
    109,729
    
    
    
    16
    
    
    
    109,745
    
    
    
    
    
    
    
    109,745
    
    
    
    Total financial assets
    
    $
    283,746
    
    
    $
    59
    
    
    $
    283,805
    
    
    $
    22,805
    
    
    $
    261,000
    
    
    $
    Liabilities:Warrants
(Footnote 10 - Equity)
    
    
    
    
    
    
    
    
    
    $
    117,607
    
    
    $
    
    
    
    $
    
    
    
    $
    117,607Total financial liabilities
    
    
    
    
    
    
    
    
    
    $
    117,607
    
    
    $
    
    
    
    $
    
    
    
    $
    117,607
   Three Months
    
    
    Six Months
    
    
    YearEnded
    
    
    Ended
    
    
    EndedDescription
    
    June 30, 2009
    
    
    June 30, 2009
    
    
    December 31, 2008Beginning balance
    
    $
    11,811
    
    
    $
    14,190
    
    
    $
    Purchases, issuances, and settlements
    
    
    
    
    
    
    
    
    
    
    14,561Total loss (gain) included in net loss (1)
    
    
    105,796
    
    
    
    103,417
    
    
    
    (371
    )Ending balance
    
    $
    117,607
    
    
    $
    117,607
    
    
    $
    14,190
 
 (1)
    
    The loss for the three and six months ended June 30, 2009 relates to the revaluation of the
warrant liability from December 31, 2008 through June 30, 2009. The loss is reflected in our
consolidated statements of operations as a component of other expense. 11




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5. INVESTMENTS
  Cost or
    
    
    FairAmortized
    
    
    MarketCost
    
    
    Value(In thousands)June 30, 2009Due in one year or less
    
    $
    21,275
    
    
    $
    21,334Due after one year through two years
    
    
    
    
    
    
    $
    21,775
    
    
    $
    21,334December 31, 2008Due in one year or less
    
    $
    45,576
    
    
    $
    45,638Due after one year through two years
    
    
    3,403
    
    
    
    3,386$
    48,979
    
    
    $
    49,024
   Cost or
    
    
    Gross
    
    
    Gross
    
    
    FairAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    MarketCost
    
    
    Gains
    
    
    Losses
    
    
    Value(In thousands)June 30, 2009Corporate debt securities
    
    $
    9,934
    
    
    $
    25
    
    
    $
    (9
    )
    
    $
    9,950Government-sponsored enterprises
    
    
    8,933
    
    
    
    29
    
    
    
    (2
    )
    
    
    8,960U.S. Treasury Note
    
    
    2,408
    
    
    
    16
    
    
    
    
    
    
    
    2,424$
    21,275
    
    
    $
    70
    
    
    $
    (11
    )
    
    $
    21,334December 31, 2008Corporate debt securities
    
    $
    22,360
    
    
    $
    54
    
    
    $
    (154
    )
    
    $
    22,260Government-sponsored enterprises
    
    
    16,285
    
    
    
    110
    
    
    
    (25
    )
    
    
    16,370U.S. Treasury Note
    
    
    10,334
    
    
    
    60
    
    
    
    
    
    
    
    10,394$
    48,979
    
    
    $
    224
    
    
    $
    (179
    )
    
    $
    49,024
 12




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Less Than 12 Months
    
    
    12 Months or More
    
    
    TotalGross
    
    
    
    
    
    
    Gross
    
    
    
    
    
    
    GrossFair
    
    
    Unrealized
    
    
    Fair
    
    
    Unrealized
    
    
    Fair
    
    
    UnrealizedValue
    
    
    Losses
    
    
    Value
    
    
    Losses
    
    
    Value
    
    
    Losses(In thousands)June 30, 2009Corporate debt securities
    
    $
    679
    
    
    $
    (8
    )
    
    $
    1,029
    
    
    $
    (1
    )
    
    $
    1,708
    
    
    $
    (9
    )Governmentsponsored enterprises
    
    
    1,998
    
    
    
    (2
    )
    
    
    
    
    
    
    
    
    
    
    1,998
    
    
    
    (2
    )Total
    
    $
    2,677
    
    
    $
    (10
    )
    
    $
    1,029
    
    
    $
    (1
    )
    
    $
    3,706
    
    
    $
    (11
    )
 Less Than 12 Months
    
    
    12 Months or More
    
    
    TotalGross
    
    
    
    
    
    
    Gross
    
    
    
    
    
    
    GrossFair
    
    
    Unrealized
    
    
    Fair
    
    
    Unrealized
    
    
    Fair
    
    
    UnrealizedValue
    
    
    Losses
    
    
    Value
    
    
    Losses
    
    
    Value
    
    
    Losses(In thousands)December 31, 2008Corporate debt securities
    
    $
    12,756
    
    
    $
    (143
    )
    
    $
    2,004
    
    
    $
    (11
    )
    
    $
    14,760
    
    
    $
    (154
    )Government-sponsored enterprises
    
    
    4,629
    
    
    
    (25
    )
    
    
    
    
    
    
    
    
    
    
    4,629
    
    
    
    (25
    )Total
    
    $
    17,385
    
    
    $
    (168
    )
    
    $
    2,004
    
    
    $
    (11
    )
    
    $
    19,389
    
    
    $
    (179
    )
  6. PROPERTY AND EQUIPMENT
  June 30,
    
    
    December 31,(in thousands)
    
    2009
    
    
    2008Furniture and office equipment
    
    $
    1,191
    
    
    $
    1,188Laboratory and manufacturing equipment
    
    
    11,575
    
    
    
    11,427Computer equipment and software
    
    
    10,214
    
    
    
    10,134Leasehold improvements
    
    
    15,482
    
    
    
    15,478Buildings
    
    
    1,730
    
    
    
    1,730Construction in progress
    
    
    22,817
    
    
    
    15,13263,009
    
    
    
    55,089Less accumulated depreciation and amortization
    
    
    (28,982
    )
    
    
    (26,939
    )$
    34,027
    
    
    $
    28,150
   13




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7. ACCRUED LIABILITIES
  June 30,
    
    
    December 31,(in thousands)
    
    2009
    
    
    2008Clinical trial costs
    
    $
    1,677
    
    
    $
    1,700Deferred rent
    
    
    1,032
    
    
    
    1,089Accrued property and equipment
    
    
    1,019
    
    
    
    895Accrued legal costs
    
    
    320
    
    
    
    286Other accrued liabilities
    
    
    2,175
    
    
    
    2,034$
    6,223
    
    
    $
    6,004
 8. CONVERTIBLE SENIOR SUBORDINATED NOTES
      9. COMMITMENTS AND CONTINGENCIES
  14




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McGuire v.
Dendreon Corporation, et al. McGuire, et al. v. Dendreon Corporation, et al
 Mountanos v. Dendreon Corporation, et al. McGuire v. Dendreon Corporation, et al McGuire v.
Dendreon
 Loh v. Gold,
et al. McGuire v. Dendreon
  15




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Loh v. Gold
  10. EQUITY
    16




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11. COMPREHENSIVE LOSS
  Three months ended
    
    
    Six months endedJune 30,
    
    
    June 30,(in thousands)
    
    2009
    
    
    2008
    
    
    2009
    
    
    2008Net loss
    
    $
    (126,717
    )
    
    $
    (16,514
    )
    
    $
    (142,101
    )
    
    $
    (36,030
    )Net unrealized gain (loss) on securities
    
    
    60
    
    
    
    (81
    )
    
    
    14
    
    
    
    32Comprehensive loss
    
    $
    (126,657
    )
    
    $
    (16,595
    )
    
    $
    (142,087
    )
    
    $
    (35,998
    )
 12. SUBSEQUENT EVENTS
    
 ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
    17




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OVERVIEW
         18




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tm
 CRITICAL ACCOUNTING POLICIES AND ESTIMATES
    Prepaid Antigen Costs
  Fair Value
  
    
    Long-lived assets measured at fair value due to an impairment assessment under SFAS No. 144,
Accounting for the Impairment or Disposal of Long-Lived Assets; and
 
    
    Asset retirement obligations initially measured under SFAS No. 143, Accounting for Asset
Retirement Obligations.
  19




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Warrant Liability
   Recent Accounting Pronouncements
 
  20




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New Accounting Standards Not Yet Adopted
 TM
 RESULTS OF OPERATIONS FOR THE THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 2009 AND 2008
 Revenue
  Research and Development Expenses
   Three months ended
    
    
    Six months endedJune 30,
    
    
    June 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Clinical programs:Direct costs
    
    $
    1.1
    
    
    $
    2.6
    
    
    $
    2.5
    
    
    $
    5.5Indirect costs
    
    
    11.6
    
    
    
    9.6
    
    
    
    21.6
    
    
    
    19.3Total clinical programs
    
    
    12.7
    
    
    
    12.2
    
    
    
    24.1
    
    
    
    24.8Discovery research
    
    
    0.6
    
    
    
    1.0
    
    
    
    1.0
    
    
    
    1.9Total research and development expense
    
    $
    13.3
    
    
    $
    13.2
    
    
    $
    25.1
    
    
    $
    26.7
  21




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
    
    the timeframe over which our programs are likely to be completed;
 
    
    whether they will be completed;
 
    
    if they are completed, whether they will provide therapeutic benefit or be approved for
commercialization by the necessary regulatory agencies;
 
    
    to what extent a product may generate commercial demand and be viewed favorably by
physicians; or
 
    
    whether, if approved, the manufacture of these products will be scalable to meet
commercial demand.
 General and Administrative Expenses
  Interest Income
  Interest Expense
  Warrant Liability
  LIQUIDITY AND CAPITAL RESOURCES
 Cash Uses and Proceeds
  22




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
    
    the development of marketing, manufacturing, information technology and other
infrastructure and activities related to the commercialization of Provenge,
 
    
    working capital needs,
 
    
    expanding our manufacturing capabilities, including the build-out of two new facilities
in Atlanta, Georgia and Orange County, California,
 
    
    increased personnel needs, and
 
    
    continuing our internal research and development programs.
  Credit Financings
  Office Leases
   23




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Manufacturing Facilities Leases
  
    
    leases for two new manufacturing facilities to be constructed or built-out in Atlanta,
Georgia and Orange County, California that will total approximately 340,000 square feet of
manufacturing space; and
 
    
    a construction agreement for the completion of Phases II and III of our New Jersey
Facility.
       24




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Production and Supply Expenses
  Financings from the Sale of Securities and Issuance of Convertible Notes
 Equity Offering Proceeds
     Convertible Notes
  25




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ITEM
3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
     
 ITEM 4. CONTROLS AND PROCEDURES
     26




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PART II. OTHER INFORMATION
 
 ITEM 1. LEGAL PROCEEDINGS
 McGuire v.
Dendreon Corporation, et al. McGuire, et al. v. Dendreon Corporation, et al
 Mountanos v. Dendreon Corporation, et al. McGuire v. Dendreon Corporation, et al McGuire v.
Dendreon
 Loh v. Gold,
et al. McGuire v. Dendreon
 Loh v. Gold
 27




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ITEM 1A. RISK FACTORS
 The risks described below may not be the only ones relating to our company. The risk factors
described below include any material changes to and supersede the description of the risk factors
associated with our business previously disclosed in Item 1A of
our 2008 Form 10-K. Additional risks
that we currently believe are immaterial may also impair our business operations. Our business,
financial condition, and future prospects and the trading price of our common stock could be harmed
as a result of any of these risks. Investors should also refer to the other information contained
or incorporated by reference in this Quarterly Report on Form 10-Q and our 2008 Form 10-K,
including our consolidated financial statements and related notes, and our other filings from time
to time with the Securities and Exchange Commission.
 Risks Relating to our Product Development and Commercialization Pursuits
 Our near-term prospects are highly dependent on Provenge, our lead product candidate. If we fail
to obtain FDA approval for Provenge or fail to successfully commercialize Provenge, our business
would be harmed and our stock price would likely decline.
   Provenge and our other product candidates are based on novel technologies, which may raise new
regulatory issues that could delay or make FDA approval more difficult.
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If testing of a particular product candidate does not yield successful results, then we will be
unable to commercialize that product.
  
    
    safety and efficacy results from human clinical trials may show the product candidate to
be less effective or safe than desired or earlier results may not be replicated in later
clinical trials;
 
    
    the results of preclinical studies may be inconclusive or they may not be indicative of
results that will be obtained in human clinical trials;
 
    
    after reviewing relevant information, including preclinical testing or human clinical
trial results, we may abandon or substantially restructure programs that we might previously
have believed to be promising;
 
    
    we or the FDA or similar regulatory authorities in other countries may suspend or
terminate clinical trials if the participating patients are being exposed to unacceptable
health risks or for other reasons; and
 
    
    the effects of our product candidates may not be the desired effects or may include
undesirable side effects or other characteristics that interrupt, delay or cause us or the
FDA to halt clinical trials or cause the FDA or foreign regulatory authorities to deny
approval of the product candidate for any or all target indications.
   The FDA or its Advisory Committee may determine our clinical trials data regarding safety or
efficacy are insufficient for regulatory approval.
  29




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We must significantly expand our operations to commercialize Provenge, and we may encounter
unexpected costs or difficulties.
    We may take longer to complete our clinical trials than we project, or we may not be able to
complete them at all.
    30




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If we encounter difficulties enrolling patients in our clinical trials, our trials could be
delayed or otherwise adversely affected.
   
    
    design of the trial protocol;
 
    
    the size of the patient population;
 
    
    eligibility criteria for the study in question;
 
    
    perceived risks and benefits of the product candidate under study;
 
    
    availability of competing therapies and clinical trials;
 
    
    efforts to facilitate timely enrollment in clinical trials;
 
    
    patient referral practices of physicians;
 
    
    the ability to monitor patients adequately during and after treatment; and
 
    
    proximity and availability of clinical trial sites for prospective patients.
  Risks Relating to our Financial Position and Operations
 We have a history of operating losses. We expect to continue to incur losses for the near future,
and we may never become profitable.
  We are likely to require additional funding, and our future access to capital is uncertain.
  
    
    the costs of developing the manufacturing, marketing and other supporting resources and
systems to support FDA licensure of
Provenge;
 
    
    our timetable and costs for the development of marketing, manufacturing, information
technology and other necessary infrastructure and preparatory activities related to the
commercialization of Provenge;
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
    
    the rate of progress and cost of our research and development and clinical trial
activities;
 
    
    the introduction into the marketplace of competing products and other adverse market
developments; and
 
    
    whether we enter into a collaboration for the commercialization of Provenge.
  Difficulties we may encounter managing our growth may divert resources and limit our ability to
successfully expand our operations.
  Our indebtedness could adversely affect our financial condition.
  
    
    increase our vulnerability to general adverse economic and industry conditions;
 
    
    limit our ability to raise additional funds by borrowing or engaging in equity sales in
order to fund future working capital, capital expenditures, research and development and
other general corporate requirements;
 
    
    require us to dedicate a substantial portion of our cash to service payments on our debt;
or
 
    
    limit our flexibility to react to changes in our business and the industry in which we
operate or to pursue certain strategic opportunities that may present themselves.
 Our stockholders may be diluted by the conversion of our outstanding convertible notes.
  32




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We may elect to issue additional shares of our common stock or other securities that may be
convertible into our common stock, which could result in further dilution to our existing
stockholders.
   Risks Related to Regulation of our Industry
 The industry within which we operate and our business is subject to extensive regulation, which is
costly, time consuming and may subject us to unanticipated delays.
   Commercialization of our product candidates in the United States requires FDA approval, which may
not be granted, and foreign commercialization requires similar approvals.
  
    
    a product candidate may not demonstrate sufficient safety or efficacy in treatment;
 
    
    the FDA may determine that certain aspects of the clinical testing, manufacture, or quality
control are not in compliance with the regulations;
 
    
    the FDA may interpret data from preclinical testing and clinical trials in different ways
than we interpret the data or may require additional and/or different categories of data
than what we obtained in our clinical trials;
 33




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
    
    the FDA may require additional information about the efficacy, safety, purity, stability,
identity or functionality of a product candidate;
 
    
    the FDA may not approve our manufacturing processes or facilities or the processes or
facilities of our contract manufacturers; and
 
    
    the FDA may change its approval policies or adopt new regulations that impact our
business.
  Failure to comply with foreign regulatory requirements governing human clinical trials and
marketing approval for product candidates could prevent us from selling our products in foreign
markets, which may adversely affect our operating results and financial condition.
  Even if approved, Provenge and any other product we may commercialize and market may be subject to
promotional limitations.
  The availability and amount of reimbursement for our product candidates and the manner in which
government and private payers may reimburse for our potential products is uncertain.
   34




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35




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The pharmaceutical industry is subject to significant regulation and oversight in the United
States.
     Multi-jurisdictional regulations, including those establishing our ability to price products, may
negatively affect our sales and profit margins.
   Risks Relating to Manufacturing and Marketing Activities
 We have limited commercial or other large-scale manufacturing experience.
   36




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We need to rapidly expand our manufacturing facilities to meet anticipated demand for Provenge in
the event of licensure by the FDA.
  We and our contract manufacturers are subject to significant regulation with respect to
manufacturing of our products.
  We may initially be unable to successfully manufacture Provenge, if approved for marketing, in
quantities sufficient to fulfill patient demand.
  37




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We may in the future experience difficulties and delays in the manufacturing of our products, which
may harm our business and future prospects.
  
    
    construction delays related to the construction of planned and future facilities or the
expansion of these facilities;
    
    failure of us or any of our vendors or suppliers to comply with cGMP and other applicable
regulations and quality assurance guidelines; and
    
    changes in facility sites and limits to manufacturing capacity due to regulatory
requirements, or physical limitations that could impact continuous supply.
  We use hazardous materials in our business and must comply with environmental laws and regulations,
which can be expensive.
  Risks from Competitive Factors
 Our competitors may develop and market products that are less expensive, more effective, safer or
reach the market sooner, which may diminish or eliminate the commercial success of any products we
may commercialize.
  ®
  38




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Our products may not be accepted in the marketplace; therefore, we may not be able to generate
significant revenue, if any.
  Failure to retain key personnel could impede our ability to develop our products and to obtain new
collaborations or other sources of funding.
   Risks Relating to Collaboration Arrangements and Reliance on Third Parties
 If we fail to enter into any needed collaboration agreements for our product candidates, we may be
unable to commercialize them effectively or at all.
   
    
    the collaborator may not apply the expected financial resources or required expertise in
developing the physical resources and systems necessary to successfully commercialize
Provenge;
 
    
    the collaborator may not invest in the development of a sales and marketing force and the
related infrastructure at levels that ensure that sales of Provenge reach their full
potential;
 39




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##### Table of Contents




    
    disputes may arise between us and a collaborator that delay the commercialization of
Provenge or adversely affect its sales or profitability; or
 
    
    the collaborator may independently develop, or develop with third parties, products that
could compete with Provenge.
  Reliance on third party relationships and outsourcing arrangements could adversely affect our
business.
  We must rely at present on relationships with third-party contract manufacturers for components
used in our products, which will limit our ability to control the availability of, and
manufacturing costs for, our product candidates in the near-term.
   We rely on single source vendors for some key components for our active immunotherapy product
candidates, which could impair our ability to manufacture and supply our products.
  40




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Risks in Protecting our Intellectual Property
 If we are unable to protect our proprietary rights or to defend against infringement claims, we
may not be able to compete effectively or operate profitably.
     We may be subject to litigation with respect to the ownership and use of intellectual property
that will be costly to defend or pursue and uncertain in its outcome.
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We are exposed to potential product liability claims, and insurance against these claims may not
be available to us at a reasonable rate in the future.
  Risks Relating to an Investment in Our Common Stock
 We are currently subject to certain pending litigation and a stockholder demand and may be subject
to similar claims in the future.
  Market volatility may affect our stock price, and the value of an investment in our common stock
may be subject to sudden decreases.
  
    
    timing and the final outcome of FDA review of our BLA for Provenge;
 
    
    the progression and tenor of our discussions with the FDA regarding our BLA for Provenge;
 
    
    preclinical and clinical trial results and other product development activities;
 
    
    our historical and anticipated operating results, including fluctuations in our financial
and operating results;
 
    
    changes in government regulations affecting product approvals, reimbursement or other
aspects of our or our competitors businesses;
 
    
    announcements of technological innovations or new commercial products by us or our
competitors;
 
    
    developments concerning our key personnel and intellectual property rights;
 
    
    announcements regarding significant collaborations or strategic alliances;
 
    
    publicity regarding actual or potential performance of products under development by us
or our competitors;
 
    
    market perception of the prospects for biotechnology companies as an industry sector; and
 
    
    general market and economic conditions.
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Anti-takeover provisions in our charter documents and under Delaware law and our stockholders
rights plan could make an acquisition of us, which may be beneficial to our stockholders, more
difficult.
    
 ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
  
 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  1.
    
    To elect two directors to hold office for a 3-year term and until their successors are duly
elected and qualified, each Director received the votes for and withheld as set opposite
his or her respective name:
 Nominee
    
    For
    
    WithheldSusan B. Bayh
    
    
    75,499,009
    
    
    
    3,578,712David L. Urdal, Ph.D.
    
    
    77,368,187
    
    
    
    1,709,534
 Gerardo Canet, Bogdan Dziurzynski, D.P.A. and Douglas G. Watson will continue as Directors until
the 2010 Annual Meeting and Richard B. Brewer and Mitchell H. Gold, M.D. will continue as
Directors until the 2011 Annual Meeting.
 43




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2.
    
    To approve the new Dendreon Corporation 2009 Equity Incentive Plan:
 VotesFor
    
    
    26,964,279Against
    
    
    3,148,865Abstain
    
    
    298,265
 3.
    
    To approve an amendment to our Amended and Restated Certificate of Incorporation to increase the
number of authorized shares of the Companys common stock from 150,000,000 shares to 250,000,000
shares:
 VotesFor
    
    
    65,709,782Against
    
    
    12,777,502Abstain
    
    
    590,437
 4.
    
    To ratify the selection of Ernst & Young LLP as the Companys independent registered public
accounting firm for the current fiscal year.
 VotesFor
    
    
    65,709,782Against
    
    
    12,777,502Abstain
    
    
    590,437
 There were no other matters voted upon at the Annual Meeting.
 
 ITEM 6. EXHIBITS
 ExhibitNumber
    
    Description10.1
    
    Industrial Real Estate Lease between Majestic Realty Co. as Landlord and Dendreon Corporation as Tenant.10.2
    
    Industrial Real Estate Lease between Knickerbocker Properties, Inc. XLVI, as Landlord and Dendreon
Corporation as Tenant.31.1
    
    Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.31.2
    
    Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.32
    
    Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C § 1350 as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 44




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SIGNATURES
   DENDREON CORPORATIONBy:
    /s/ MITCHELL H. GOLD, M.D.Mitchell H. Gold, M.D.President and Chief Executive OfficerBy:
    /s/ GREGORY T. SCHIFFMANGregory T. SchiffmanSenior Vice President,
Chief Financial Officer and Treasurer
(Principal Financial Officer)By:
    /s/ GREGORY R. COXGregory R. Cox(Principal Accounting Officer) 45




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EXHIBIT INDEX
 ExhibitNumber
    
    Description10.1
    
    Industrial Real Estate Lease between Majestic Realty Co. as Landlord and Dendreon Corporation as Tenant.10.2
    
    Industrial Real Estate Lease between Knickerbocker Properties, Inc. XLVI, as Landlord and Dendreon
Corporation as Tenant.31.1
    
    Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.31.2
    
    Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.32
    
    Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C § 1350 as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 46