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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q/A

(Amendment No. 1)



|x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ---------------------------------------------------------------------------------------

FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2006

or



| ̈ | 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 AVENUE, SEATTLE, WASHINGTON                         |  | 98121                            
|(Address of registrants principal executive offices)          |  | (Zip Code)                       

(206) 256-4545

(Registrants telephone number, including area code)

N/A

(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)



---

Indicate by check mark whether the
registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and
(2) has been subject to such filing requirements for the past 90 days. þ Yes    No ̈

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer.
See definition of accelerated filer and large accelerated filer in Rule 12b-2 of the Exchange Act.

Large accelerated
filer ̈Accelerated filer x    Non-accelerated
filer ̈

Indicate by check
mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.): ̈Yes    No þ

The number of shares of the registrants common stock, $.001 par value, outstanding as of
August 4, 2006 was 71,864,684.



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Purpose of Amendment

This Amendment No. 1 to our Quarterly Report on Form 10Q (this Report) is being filed to amend our Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on
August 8, 2006 for the quarterly period ended June 30, 2006 (the Original Report), to reflect the restatement of our previously issued financial statements as of and for the three- and six-month periods ended June 30,
2006, and the notes related thereto, as described below. The restated financial statements are included in Item 1 Financial Statements.

The restatement is to change our accounting for the prepayment made to Diosynth RTP, Inc. in April 2006, under our December 2005 supply agreement, which was originally recorded as prepaid manufacturing costs on the
basis that no services had been performed by Diosynth and no product had been delivered. Since the date of the Original Report, we have determined that this payment should have been accounted for under Statement of Financial Accounting Standards
No. 2, Accounting for Research and Development Costs as research and development expense due to the uncertain future economic benefit of this payment as determined in accordance with The Financial Accounting Standards Board Concepts
Statement No. 6. We have therefore reflected in this Report the $6.3 million payment to Diosynth as research and development expense instead of as a prepaid manufacturing cost for the three and six months ended June 30, 2006.

In addition, Item 2, Managements Discussion and Analysis of Financial Condition and Results of Operations, has been revised to
reflect the different accounting treatment for this payment to Diosynth and previous footnote to the financial statements Note 4 Prepaid Manufacturing Costs has been deleted.

Further discussion of this supply agreement is provided in the accompanying financial statements at Note 9. Commitments  Supply
Agreement.

Other than the changes for the effects of the revision, no other information in this Report has been updated to reflect
any subsequent information or events since the date of the Original Report.



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DENDREON CORPORATION

INDEX



|                                                                                                       |  |         
|------------------------------------------------------------------------------------------------------ |  | --------
|                                                                                                       |  | PAGE NO.
|PART I. FINANCIAL INFORMATION                                                                          |  | 4       
|                                                                                                       | 
|Item 1. Financial Statements                                                                           |  | 4       
|                                                                                                       | 
|Consolidated Balance Sheets as of June 30, 2006 and December 31, 2005                                  |  | 4       
|                                                                                                       | 
|Consolidated Statements of Operations for the Three Months and Six Months Ended June 30, 2006 and 2005 |  | 5       
|                                                                                                       | 
|Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2006 and 2005                  |  | 6       
|                                                                                                       | 
|Notes to Consolidated Financial Statements                                                             |  | 7       
|                                                                                                       | 
|Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations          |  | 15      
|                                                                                                       | 
|PART II. OTHER INFORMATION                                                                             |  | 22      
|                                                                                                       | 
|Item 6. Exhibits                                                                                       |  | 22      
|                                                                                                       | 
|SIGNATURES                                                                                             |  | 23      
|                                                                                                       | 
|EXHIBIT INDEX                                                                                          |  |         



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PART I. FINANCIAL INFORMATION



|ITEM 1. | FINANCIAL STATEMENTS
|------- | --------------------

DENDREON CORPORATION

CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)



|                                                                                                                                                                            |  |               |          |   |                   |   |          |  
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------- | -------- | - | ----------------- | - | -------- | -
|                                                                                                                                                                            |  | Restated      |          |   |                   |  
|                                                                                                                                                                            |  | June 30, 2006 |          |   | December 31, 2005 |  
|                                                                                                                                                                            |  | (unaudited)   |          |   | (Note 1)          |  
|ASSETS                                                                                                                                                                      |  |               |          |   |                   |   |          |  
|Current assets:                                                                                                                                                             |  |               |          |   |                   |   |          |  
|Cash and cash equivalents                                                                                                                                                   |  | $             | 27,794   |   |                   | $ | 81,949   |  
|Short-term investments                                                                                                                                                      |  |               | 65,603   |   |                   |   | 52,273   |  
|Accounts receivable                                                                                                                                                         |  |               | 5,833    |   |                   |   | 5,636    |  
|Restricted cash                                                                                                                                                             |  |               | 3,303    |   |                   |   | 1,974    |  
|Prepaid and other current assets                                                                                                                                            |  |               | 3,014    |   |                   |   | 2,255    |  
|                                                                                                                                                                            |  |               |          |   |                   |   |          |  
|Total current assets                                                                                                                                                        |  |               | 105,547  |   |                   |   | 144,087  |  
|Property and equipment, net                                                                                                                                                 |  |               | 29,027   |   |                   |   | 22,296   |  
|Long-term investments                                                                                                                                                       |  |               | 12,205   |   |                   |   | 32,187   |  
|Long-term restricted cash                                                                                                                                                   |  |               | 6,985    |   |                   |   | 8,314    |  
|Deposits                                                                                                                                                                    |  |               | 586      |   |                   |   | 669      |  
|                                                                                                                                                                            |  |               |          |   |                   |   |          |  
|Total assets                                                                                                                                                                |  | $             | 154,350  |   |                   | $ | 207,553  |  
|                                                                                                                                                                            |  |               |          |   |                   |   |          |  
|LIABILITIES AND STOCKHOLDERS EQUITY                                                                                                                                        |  |               |          |   |                   |   |          |  
|Current liabilities:                                                                                                                                                        |  |               |          |   |                   |   |          |  
|Accounts payable                                                                                                                                                            |  | $             | 541      |   |                   | $ | 428      |  
|Accrued liabilities                                                                                                                                                         |  |               | 9,484    |   |                   |   | 13,619   |  
|Accrued compensation                                                                                                                                                        |  |               | 2,714    |   |                   |   | 4,234    |  
|Deferred revenue                                                                                                                                                            |  |               | 132      |   |                   |   | 82       |  
|Current portion of capital lease obligations                                                                                                                                |  |               | 1,498    |   |                   |   | 1,955    |  
|Current portion of long-term debt and lease obligation                                                                                                                      |  |               | 3,051    |   |                   |   | 2,237    |  
|                                                                                                                                                                            |  |               |          |   |                   |   |          |  
|Total current liabilities                                                                                                                                                   |  |               | 17,420   |   |                   |   | 22,555   |  
|Deferred revenue, less current portion                                                                                                                                      |  |               | 519      |   |                   |   | 560      |  
|Capital lease obligations, less current portion                                                                                                                             |  |               | 1,341    |   |                   |   | 1,904    |  
|Long-term debt, less current portion                                                                                                                                        |  |               | 4,910    |   |                   |   | 5,283    |  
|Facility lease obligation, less current portion                                                                                                                             |  |               | 8,481    |   |                   |   | 8,542    |  
|Commitments and contingencies                                                                                                                                               |  |               |          |   |                   |   |          |  
|Stockholders equity:                                                                                                                                                       |  |               |          |   |                   |   |          |  
|Preferred stock, $0.001 par value; 10,000,000 shares authorized, no shares issued or outstanding                                                                            |  |               |         |   |                   |   |         |  
|Common stock, $0.001 par value; 150,000,000 shares authorized, 71,314,814 and 71,115,910 shares issued and outstanding at June 30, 2006
and December 31, 2005, respectively |  |               | 71       |   |                   |   | 71       |  
|Additional paid-in capital                                                                                                                                                  |  |               | 472,148  |   |                   |   | 469,845  |  
|Deferred stock-based compensation                                                                                                                                           |  |               |         |   |                   |   | (120     | )
|Accumulated other comprehensive loss                                                                                                                                        |  |               | (385     | ) |                   |   | (344     | )
|Accumulated deficit                                                                                                                                                         |  |               | (350,155 | ) |                   |   | (300,743 | )
|                                                                                                                                                                            |  |               |          |   |                   |   |          |  
|Total stockholders equity                                                                                                                                                  |  |               | 121,679  |   |                   |   | 168,709  |  
|                                                                                                                                                                            |  |               |          |   |                   |   |          |  
|Total liabilities and stockholders equity                                                                                                                                  |  | $             | 154,350  |   |                   | $ | 207,553  |  

See accompanying notes



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DENDREON CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts)

(unaudited)



|                                                                   |  |                            |         |   |                          |   |         |              |  |   |         |   |  |   |         |  
|------------------------------------------------------------------ |  | -------------------------- | ------- | - | ------------------------ | - | ------- | ------------ |  | - | ------- | - |  | - | ------- | -
|                                                                   |  | Three Months EndedJune 30, |         |   | Six Months EndedJune 30, |  
|                                                                   |  | Restated2006               |         |   | 2005                     |   |         | Restated2006 |  |   | 2005    |  
|Revenue                                                            |  | $                          | 78      |   |                          | $ | 58      |              |  | $ | 103     |   |  | $ | 115     |  
|Operating expenses:                                                |  |                            |         |   |                          |   |         |              |  |   |         |   |  |   |         |  
|Research and development                                           |  |                            | 20,842  |   |                          |   | 13,501  |              |  |   | 41,242  |   |  |   | 29,390  |  
|General and administrative                                         |  |                            | 5,495   |   |                          |   | 5,247   |              |  |   | 10,659  |   |  |   | 10,019  |  
|                                                                   |  |                            |         |   |                          |   |         |              |  |   |         |   |  |   |         |  
|Total operating expenses                                           |  |                            | 26,337  |   |                          |   | 18,748  |              |  |   | 51,901  |   |  |   | 39,409  |  
|                                                                   |  |                            |         |   |                          |   |         |              |  |   |         |   |  |   |         |  
|Loss from operations                                               |  |                            | (26,259 | ) |                          |   | (18,690 | )            |  |   | (51,798 | ) |  |   | (39,294 | )
|Interest income                                                    |  |                            | 1,591   |   |                          |   | 1,302   |              |  |   | 3,287   |   |  |   | 2,479   |  
|Interest expense                                                   |  |                            | (388    | ) |                          |   | (132    | )            |  |   | (901    | ) |  |   | (206    | )
|                                                                   |  |                            |         |   |                          |   |         |              |  |   |         |   |  |   |         |  
|Net loss                                                           |  | $                          | (25,056 | ) |                          | $ | (17,520 | )            |  | $ | (49,412 | ) |  | $ | (37,021 | )
|                                                                   |  |                            |         |   |                          |   |         |              |  |   |         |   |  |   |         |  
|Basic and diluted net loss per share                               |  | $                          | (0.35   | ) |                          | $ | (0.30   | )            |  | $ | (0.69   | ) |  | $ | (0.63   | )
|                                                                   |  |                            |         |   |                          |   |         |              |  |   |         |   |  |   |         |  
|Shares used in computation of basic and diluted net loss per share |  |                            | 71,212  |   |                          |   | 59,226  |              |  |   | 71,192  |   |  |   | 59,182  |  
|                                                                   |  |                            |         |   |                          |   |         |              |  |   |         |   |  |   |         |  

See accompanying notes



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DENDREON CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(unaudited)



|                                                                            |  |                          |          |   |      |   |          |  
|--------------------------------------------------------------------------- |  | ------------------------ | -------- | - | ---- | - | -------- | -
|                                                                            |  | Six Months EndedJune 30, |         
|                                                                            |  | Restated2006             |          |   | 2005 |  
|Operating Activities:                                                       |  |                          |          |   |      |   |          |  
|Net loss                                                                    |  | $                        | (49,412  | ) |      | $ | (37,021  | )
|Adjustments to reconcile net loss to net cash used in operating activities: |  |                          |          |   |      |   |          |  
|Depreciation and amortization expense                                       |  |                          | 1,870    |   |      |   | 1,532    |  
|Non-cash stock-based compensation expense                                   |  |                          | 1,841    |   |      |   | 467      |  
|Non-cash stock-based consulting expense                                     |  |                          | 11       |   |      |   | 118      |  
|Gain on sale of fixed asset                                                 |  |                          | (15      | ) |      |   |         |  
|Impairment of fixed assets                                                  |  |                          | 419      |   |      |   |         |  
|Changes in operating assets and liabilities:                                |  |                          |          |   |      |   |          |  
|Accounts receivable                                                         |  |                          | (197     | ) |      |   | (422     | )
|Other current assets                                                        |  |                          | (759     | ) |      |   | 364      |  
|Deposits                                                                    |  |                          | 83       |   |      |   |         |  
|Deferred revenue                                                            |  |                          | 9        |   |      |   | (47      | )
|Accounts payable                                                            |  |                          | 113      |   |      |   | 148      |  
|Accrued liabilities and compensation                                        |  |                          | (5,655   | ) |      |   | (3,471   | )
|                                                                            |  |                          |          |   |      |   |          |  
|Net cash used in operating activities                                       |  |                          | (51,692  | ) |      |   | (38,332  | )
|                                                                            |  |                          |          |   |      |   |          |  
|Investing Activities:                                                       |  |                          |          |   |      |   |          |  
|Purchases of investments                                                    |  |                          | (247,222 | ) |      |   | (217,762 | )
|Maturities of investments                                                   |  |                          | 253,833  |   |      |   | 206,825  |  
|Purchases of property and equipment                                         |  |                          | (9,005   | ) |      |   | (2,337   | )
|                                                                            |  |                          |          |   |      |   |          |  
|Net cash used in investing activities                                       |  |                          | (2,394   | ) |      |   | (13,274  | )
|                                                                            |  |                          |          |   |      |   |          |  
|Financing Activities:                                                       |  |                          |          |   |      |   |          |  
|Proceeds from equipment financing arrangement, net of debt financing costs  |  |                          | 1,661    |   |      |   |         |  
|Payments on capital lease obligations                                       |  |                          | (1,020   | ) |      |   | (619     | )
|Payments on long-term debt                                                  |  |                          | (1,227   | ) |      |   |         |  
|Payments on facility lease obligation                                       |  |                          | (54      | ) |      |   |         |  
|Proceeds from exercise of stock options and warrants                        |  |                          | 163      |   |      |   | 175      |  
|Issuance of common stock under the Employee Stock Purchase Plan             |  |                          | 408      |   |      |   | 1,099    |  
|                                                                            |  |                          |          |   |      |   |          |  
|Net cash (used in) provided by financing activities                         |  |                          | (69      | ) |      |   | 655      |  
|                                                                            |  |                          |          |   |      |   |          |  
|Net decrease in cash and cash equivalents                                   |  |                          | (54,155  | ) |      |   | (50,951  | )
|Cash and cash equivalents at beginning of period                            |  |                          | 81,949   |   |      |   | 54,501   |  
|                                                                            |  |                          |          |   |      |   |          |  
|Cash and cash equivalents at end of period                                  |  | $                        | 27,794   |   |      | $ | 3,550    |  
|                                                                            |  |                          |          |   |      |   |          |  

See accompanying notes



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DENDREON CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



|1. | BUSINESS, PRINCIPLES OF CONSOLIDATION AND BASIS OF PRESENTATION
|-- | ---------------------------------------------------------------

Business

Dendreon Corporation (unless the context suggests otherwise, Dendreon, the Company,
we, us, or our), a Delaware corporation originally formed in 1992 as Activated Cell Therapy, Inc., is a biotechnology company whose mission is to target cancer and transform lives through the discovery,
development and commercialization of novel therapeutics to fight cancer. Our goal is to develop innovative cancer treatments that significantly improve cancer treatment options for patients. Our product portfolio includes active immunotherapy,
monoclonal antibody and small molecule product candidates to treat a wide range of cancers. Our most advanced product candidate is Provenge®(sipuleucel-T), an active immunotherapy that has completed two Phase 3 trials for the treatment of asymptomatic, metastatic,
androgen-independent prostate cancer. Prostate cancer is the most common non-skin cancer among men in the United States, with over one million men currently diagnosed with the disease, and the second leading cause of cancer deaths in men in the
United States. Based upon the significant survival benefit seen in our completed studies for Provenge, we intend to submit in 2006 a Biologics License Application (BLA) to the Food and Drug Administration (FDA) for Provenge
on a rolling basis which permits the FDA to review sections of the BLA in advance of receiving the complete submission. We own worldwide commercialization rights for Provenge.

Restatement of Financial Statements

As discussed further in Note 9, on December 22, 2005,
we entered into a supply agreement with Diosynth, RTP, Inc. covering the commercial production of the antigen used in connection with the manufacture of Provenge. In April 2006, we paid $6.3 million to Diosynth as a prepayment of the commercial
production costs, and originally recorded this amount as prepaid manufacturing costs on our balance sheet as of June 30, 2006, as the commercial production will commence in January 2007 and product releases are expected to begin in June 2007.
Upon further analysis, we have determined the payment is more appropriately accounted for under Statement of Financial Accounting Standards No. 2, Accounting for Research and Development Costs, (SFAS 2) as research and
development expense, instead of prepaid manufacturing costs due to the uncertain future economic benefit of this payment as determined in accordance with The Financial Accounting Standards Board Concepts Statement No. 6. Therefore, we are restating
our previously issued financial statements as of and for the three and six months ended June 30, 2006.

The aggregate effect of the
revision was to increase previously reported net loss for the three months and six months ended June 30, 2006 by $6.3 million, and to increase previously reported basic and diluted net loss per share by $0.09 and $0.08, respectively. The impact
on our balance sheet was to decrease current assets and increase accumulated deficit by $6.3 million. The revision had no effect on net cash flows from operating, investing or financing activities as previously reported.

Principles of Consolidation

The consolidated
financial statements include the accounts of Dendreon and its wholly-owned subsidiary, Dendreon San Diego, LLC. All material intercompany transactions and balances have been eliminated in consolidation.

Basis of Presentation

The accompanying unaudited
financial statements reflect, in the opinion of management, all adjustments (consisting of only normal recurring adjustments) necessary for a fair presentation of our financial position, results of operations and cash flows for each period presented
in accordance with U.S. generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, information and note disclosures normally included in financial
statements prepared in accordance with U.S. generally accepted accounting principles have



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been condensed or omitted from the accompanying statements. These interim financial statements should be read in conjunction with the audited financial
statements and related notes thereto, which are included in our Annual Report on Form 10-K for the year ended December 31, 2005 (the 2005 Form 10-K). The accompanying financial information as of December 31, 2005 has been
derived from audited financial statements. Operating results for the three- and six- month periods ended June 30, 2006 are not necessarily indicative of future results that may be expected for the year ending December 31, 2006 or any other
future period.

Net Loss Per Share

Basic and diluted net loss per share of common stock are presented in conformity with Statement of Financial Accounting Standards (SFAS) No. 128, Earnings Per Share (SFAS 128). Basic net loss per
share is calculated by dividing net loss by the weighted average number of unrestricted common shares outstanding. Because we report a net loss, diluted net loss per share is the same as basic net loss per share. We have excluded all outstanding
stock options, warrants and unvested restricted stock from the calculation of diluted net loss per common share because all such securities are antidilutive. Shares excluded from the computation of net loss per share were 6,016,323 and 5,520,327 for
the three and six months ended June 30, 2006 and 2005, respectively.



|2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
|-- | ------------------------------------------

Research and
Development Expenses

Pursuant to Statement of Financial Accounting Standards No. 2, Accounting for Research and Development Costs
(SFAS 2), our research and development costs are expensed as incurred or at the date of payment of non-refundable upfront license fees and prepayments and milestones, whichever occurs first.

Accounting for Stock-Based Compensation

The Company
maintains two stock equity incentive plans under which it may grant non-qualified stock options, incentive stock options, restricted stock, restricted stock units or stock appreciation rights to employees, non-employee directors and consultants. The
Company also has an employee stock purchase plan (ESPP).

Prior to the January 1, 2006 adoption of the Financial
Accounting Standards Board (FASB) Statement No. 123(R), Share-Based Payment (SFAS 123R), we accounted for stock-based compensation using the intrinsic value method prescribed in Accounting Principles Board
(APB) Opinion No. 25, Accounting for Stock Issued to Employees, and related interpretations. Accordingly, when the stock option grant price equaled the market price on the date of grant, and any purchase discounts under
the ESPP were within statutory limits, no compensation expense was recognized by the Company for stock-based compensation. As permitted by SFAS No. 123, Accounting for Stock-Based Compensation (SFAS 123), stock-based
compensation is based on the fair value of options granted and was included as a pro forma disclosure in the notes to the consolidated financial statements.

Effective January 1, 2006, the Company adopted the fair value recognition provisions of SFAS 123R, using the modified-prospective transition method. Under this transition method, stock-based compensation expense
was recognized in the consolidated financial statements for granted, modified, or settled stock options and restricted stock awards and for expense related to the ESPP, because the purchase discounts available under the ESPP exceeded the amount
allowed under SFAS 123R for non-compensatory treatment. Compensation expense recognized included the estimated expense for stock options granted on and subsequent to January 1, 2006, based on the grant date fair value estimated in accordance
with the provisions of SFAS 123R, and the estimated expense for options granted prior to, but not vested as of January 1, 2006, based on the grant date fair value estimated in accordance with the original provisions of SFAS 123, except that the
carryover amount is adjusted for the estimated forfeiture rate. Results for prior periods have not been restated, as provided for under the modified-prospective transition method.

Total stock-based employee compensation expense recognized in the consolidated statement of operations for the three and six months ended June 30,
2006 was $1.1 million and $1.9 million,



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respectively, and consisted of stock option and restricted stock award expenses of $953,000 and $1.7 million, respectively, and ESPP expense of $93,000 and
$181,000, respectively. Of the $1.1 million and $1.9 million of stock compensation expense, $546,000 and $1.0 million, respectively, were included in research and development expense and $500,000 and $839,000, respectively, were included in general
and administrative expense. Total stock-based employee compensation expense recognized in the consolidated statement of operations for the three and six months ended June 30, 2006 increased our net loss per share by $0.01 and $0.03,
respectively. As we use a full valuation allowance with respect to deferred taxes, the adoption of SFAS123R had no impact on deferred taxes.

During the preparation of the notes to the consolidated financial statements for the year ended December 31, 2005, we determined that the calculation of our pro forma net loss reported under SFAS 123 for the three and six months ended
June 30, 2005, as previously reported, was understated primarily as a result of our inadvertent exclusion of the fair value of (and, therefore, the amortization expense related to) the rights granted pursuant to our ESPP. Accordingly, pro forma
net loss reported under SFAS 123 for the three and six months ended June 30, 2005, presented in the tables below, has been revised. These revisions had no effect on our previously reported consolidated results of operations or financial
condition.

The following table shows the effect on net loss and net loss per share had compensation cost been recognized based upon the
estimated fair value on the grant date of stock options, and shares under the ESPP, in accordance with SFAS 123, as amended by SFAS No. 148 Accounting for Stock-Based Compensation  Transition and Disclosure (in thousands,
except per share amounts):



|                                                                             |  |                                 |         |   |                               |   |         |  
|---------------------------------------------------------------------------- |  | ------------------------------- | ------- | - | ----------------------------- | - | ------- | -
|                                                                             |  | Three monthsended June 30, 2005 |         |   | Six monthsended June 30, 2005 |  
|Net loss                                                                     |  | $                               | (17,520 | ) |                               | $ | (37,021 | )
|Add: stock based employee compensation expense included in reported net loss |  |                                 | 110     |   |                               |   | 467     |  
|Deduct: pro forma stock-based employee compensation expense                  |  |                                 | (11,705 | ) |                               |   | (13,893 | )
|                                                                             |  |                                 |         |   |                               |   |         |  
|Pro forma net loss                                                           |  | $                               | (29,115 | ) |                               | $ | (50,447 | )
|                                                                             |  |                                 |         |   |                               |   |         |  
|Net loss per share as reported                                               |  | $                               | (0.30   | ) |                               | $ | (0.63   | )
|                                                                             |  |                                 |         |   |                               |   |         |  
|Pro forma net loss per share                                                 |  | $                               | (0.49   | ) |                               | $ | (0.85   | )
|                                                                             |  |                                 |         |   |                               |   |         |  

In June 2005, we accelerated the vesting of 2.5 million shares of unvested and
out-of-the-money stock options outstanding under our 2000 Equity Incentive Plan (the 2000 Plan) and our 2002 Broad Based Equity Incentive Plan (the 2002 Plan) that had a per share exercise price of $5.25 or higher
in order to reduce the negative impact on our results from operations when SFAS 123R became effective. As a result of the accelerated vesting, pro forma stock-based employee compensation expense for the three and six months ended June 30, 2005
reflects an additional $6.0 million.

Disclosures for the period ended June 30, 2006 are not presented because the amounts are
recognized in the consolidated financial statements.

The fair value for stock awards was estimated at the date of grant using the
Black-Scholes-Merton (BSM) option valuation model with the following weighted average assumptions for the three months ended June 30, 2006 and 2005:



|                                        |  |                        |      |   |                         |   |      |              |  |   |                       |   |  |   |      |  
|--------------------------------------- |  | ---------------------- | ---- | - | ----------------------- | - | ---- | ------------ |  | - | --------------------- | - |  | - | ---- | -
|                                        |  | Employee Stock Options |      |   | ESPP                    |  
|                                        |  | June 30,2006           |      |   | June 30,2005(Pro forma) |   |      | June 30,2006 |  |   | June, 2005(Pro forma) |  
|Expected term (in years)                |  |                        | 5.0  |   |                         |   | 5.0  |              |  |   | 0.5                   |   |  |   | 0.4  |  
|Expected stock price volatility         |  |                        | 81   | % |                         |   | 94   | %            |  |   | 80                    | % |  |   | 65   | %
|Risk-free interest rate                 |  |                        | 4.6  | % |                         |   | 3.9  | %            |  |   | 4.7                   | % |  |   | 3.3  | %
|Expected dividend yield                 |  |                        | 0.0  | % |                         |   | 0.0  | %            |  |   | 0.0                   | % |  |   | 0.0  | %
|Estimated forfeiture rate               |  |                        | 13.9 | % |                         |   |     |              |  |   |                      |   |  |   |     |  
|Estimated fair value per option granted |  | $                      | 2.84 |   |                         | $ | 3.65 |              |  | $ | 1.94                  |   |  | $ | 2.17 |  



9



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The fair value for stock awards was estimated at the date of grant using the BSM option valuation model
with the following weighted average assumptions for the six months ended June 30, 2006 and 2005:



|                                        |  |                        |      |   |                         |   |      |              |  |   |                       |   |  |   |      |  
|--------------------------------------- |  | ---------------------- | ---- | - | ----------------------- | - | ---- | ------------ |  | - | --------------------- | - |  | - | ---- | -
|                                        |  | Employee Stock Options |      |   | ESPP                    |  
|                                        |  | June 30,2006           |      |   | June 30,2005(Pro forma) |   |      | June 30,2006 |  |   | June, 2005(Pro forma) |  
|Expected term (in years)                |  |                        | 4.9  |   |                         |   | 5.0  |              |  |   | 0.5                   |   |  |   | 0.4  |  
|Expected stock price volatility         |  |                        | 81   | % |                         |   | 95   | %            |  |   | 80                    | % |  |   | 65   | %
|Risk-free interest rate                 |  |                        | 4.6  | % |                         |   | 3.9  | %            |  |   | 4.7                   | % |  |   | 3.3  | %
|Expected dividend yield                 |  |                        | 0.0  | % |                         |   | 0.0  | %            |  |   | 0.0                   | % |  |   | 0.0  | %
|Estimated forfeiture rate               |  |                        | 13.9 | % |                         |   |     |              |  |   |                      |   |  |   |     |  
|Estimated fair value per option granted |  | $                      | 3.46 |   |                         | $ | 5.00 |              |  | $ | 1.94                  |   |  | $ | 2.17 |  

The expected term 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. For 2006, expected stock price volatility is based on the historical volatility of the
Companys stock. The risk-free interest rate is based on the implied yield available on U.S. Treasury zero-coupon issues with an equivalent remaining term. The Company has not paid dividends in the past and does not plan to pay any dividends in
the near future.

The BSM option valuation model was developed for use in estimating the fair value of traded options, which have no
vesting restrictions and are fully transferable. In addition, option valuation models require the input of highly subjective assumptions, particularly for the expected term and expected stock price volatility. The Companys employee stock
options have characteristics significantly different from those of traded options, and changes in the subjective input assumptions can materially affect the fair value estimate. Because Company stock options do not trade on a secondary exchange,
employees do not derive a benefit from holding stock options unless there is an increase, above the grant price, in the market price of the Companys common stock. Such an increase in stock price would benefit all stockholders commensurately.
See Note 7 for additional details.



|3. | RECENT ACCOUNTING PRONOUNCEMENTS
|-- | --------------------------------

In
November 2005, the FASB issued Staff Position No. FAS 123(R)-3, Transition Election Related to Accounting for the Tax Effects of Share-Based Payment Awards (FSP 123R-3). We elected to adopt the alternative
transition method provided in FSP 123R-3 for calculating the tax effects of stock-based compensation under SFAS 123R. The alternative transition method includes simplified methods to establish the beginning balance of the additional paid-in-capital
pool (APIC pool) related to the tax effects of stock-based compensation, and for determining the subsequent impact on the APIC pool and consolidated statements of cash flows of the tax effects of stock-based compensation awards that are
outstanding upon adoption of SFAS 123R. We have determined this will have no impact on our APIC pool.

In June 2006, the FASB issued
Interpretation No. 48, Accounting for Uncertainty in Income Taxes, (FIN 48), which clarifies the accounting for uncertainty in income taxes recognized in the financial statements in accordance with FASB Statement
No. 109, Accounting for Income Taxes, FIN 48 provides guidance on the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. FIN 48 also provides guidance on nonrecognition,
classification, interest and penalties, accounting in interim periods, disclosures, and transition. FIN 48 is effective for fiscal years beginning after December 15, 2006. We are currently evaluating the impact of this standard on our
Consolidated Financial Statements.



|4. | PROPERTY AND EQUIPMENT
|-- | ----------------------

Property and equipment
consisted of the followings:



|                                               |  |              |         |   |                  |   |         |  
|---------------------------------------------- |  | ------------ | ------- | - | ---------------- | - | ------- | -
|(in thousands)                                 |  | June 30,2006 |         |   | December 31,2005 |  
|Furniture and office equipment                 |  | $            | 1,256   |   |                  | $ | 1,232   |  
|Laboratory and manufacturing equipment         |  |              | 9,352   |   |                  |   | 9,226   |  
|Computer equipment                             |  |              | 5,746   |   |                  |   | 2,822   |  
|Leasehold improvements                         |  |              | 4,413   |   |                  |   | 4,374   |  
|Construction in progress                       |  |              | 22,217  |   |                  |   | 16,771  |  
|                                               |  |              |         |   |                  |   |         |  
|                                               |  |              | 42,984  |   |                  |   | 34,425  |  
|Less accumulated depreciation and amortization |  |              | (13,957 | ) |                  |   | (12,129 | )
|                                               |  |              |         |   |                  |   |         |  
|                                               |  | $            | 29,027  |   |                  | $ | 22,296  |  
|                                               |  |              |         |   |                  |   |         |  



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In January 2006, we incurred a $419,000 impairment charge due to abandoned design costs for our New
Jersey facility. Included in construction in progress at June 30, 2006 is $8.7 million, which is the capitalized amount of our leased New Jersey facility, $9.4 million in tenant improvements, $3.1 million in software and $1.0 million in
equipment.



|5. | ACCRUED LIABILITIES
|-- | -------------------

Accrued liabilities consisted
of the followings:



|                          |  |              |       |                  |   |       
|------------------------- |  | ------------ | ----- | ---------------- | - | ------
|(in thousands)            |  | June 30,2006 |       | December 31,2005
|Clinical trial costs      |  | $            | 2,920 |                  | $ | 3,103 
|Construction in progress  |  |              | 2,049 |                  |   | 2,681 
|Antigen manufacturing     |  |              | 1,279 |                  |   | 4,055 
|Deferred rent             |  |              | 778   |                  |   | 895   
|Other accrued liabilities |  |              | 2,458 |                  |   | 2,885 
|                          |  |              |       |                  |   |       
|                          |  | $            | 9,484 |                  | $ | 13,619
|                          |  |              |       |                  |   |       



|6. | RESTRUCTURING
|-- | -------------

In January 2006, we announced the
realignment of our resources to focus on achieving regulatory approvals for Provenge as expeditiously as possible and to reduce operating costs. The majority of our resources have now been deployed to complete our BLA for Provenge during 2006 and
prepare for the commercialization of Provenge, assuming approval. As a result of the realignment, we reduced our workforce by 16%, or 37 employees, primarily in early-stage research and development and in general and administrative functions. We
incurred a total of $1.3 million restructuring charges for employee severance and outplacement costs and non-cash compensation of $60,000 due to the accelerated vesting of options and restricted stock awards of certain employees. Of the total $1.4
million restructuring charges, $1.0 million was included in research and development expenses and $350,000 was included in general and administrative expenses.



|                                     |  |                                    |       |                            |   |      |                           |  |   |             |   |                     |   |    |  |   |    
|------------------------------------ |  | ---------------------------------- | ----- | -------------------------- | - | ---- | ------------------------- |  | - | ----------- | - | ------------------- | - | -- |  | - | ---
|Restructuring Charges (in thousands) |  | Incurred InSix MonthsEnded 6/30/06 |       | Paid In First Quarter 2006 |   |      | Paid InSecondQuarter 2006 |  |   | Adjustments |   | BalanceAs of6/30/06
|Severance and outplacement costs     |  | $                                  | 1,314 |                            | $ | (894 | )                         |  | $ | (299        | ) |                     | $ | 34 |  | $ | 155
|Stock compensation expense           |  |                                    | 60    |                            |   | (60  | )                         |  |   |            |   |                     |   |   |  |   |   
|                                     |  |                                    |       |                            |   |      |                           |  |   |             |   |                     |   |    |  |   |    
|Total                                |  | $                                  | 1,374 |                            | $ | (954 | )                         |  | $ | (299        | ) |                     | $ | 34 |  | $ | 155



|7. | STOCK-BASED COMPENSATION
|-- | ------------------------

The Employee Stock Purchase Plan

Upon the completion of our initial public offering, we implemented the ESPP, which was approved by the Board of Directors on
March 1, 2000 and approved by stockholders on May 1, 2000. A total of 1,485,000 shares of common stock were originally reserved for issuance under the ESPP. Each year, the number of shares reserved for issuance under the ESPP automatically
increases by the lesser of (i) 1% of the total number of fully diluted shares of our common stock then outstanding including convertible securities, (ii) 400,000 shares, or (iii) a number determined by our Board of Directors. On
January 1, 2006, the number of shares reserved for future issuance under the ESPP was automatically increased by an additional 400,000 shares.



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The ESPP permits eligible employees to purchase common stock at a discount, but only through payroll
deductions during defined offering periods. The price at which common stock is purchased under the ESPP is equal to 85% of the lower of the fair market value of the common stock at the commencement date of each offering period or the relevant
purchase date.

For the six months ended June 30, 2006 and June 30, 2005, 99,233 and 212,563 shares, respectively, were issued
under the ESPP at an average price of $4.11 and $5.17, respectively. Since inception of the plan, 1,951,704 shares have been purchased, leaving 1,584,709 shares available for future issuance.

Stock Option Plans

In 2000, our Board of Directors
and stockholders approved the 2000 Plan, which amended and restated our 1996 Equity Incentive Plan. A total of 4,400,000 shares of common stock were originally authorized and reserved for issuance under the 2000 Plan, an increase of 550,000 shares
over that previously authorized under the 1996 Plan. In 2003, our Board of Directors and stockholders approved amendments to the 2000 Plan: (i) to increase the number of shares of common stock authorized for issuance under the 2000 Plan by an
additional 2,000,000 shares; (ii) to increase the number of shares of common stock annually reserved for issuance under the 2000 Plan, effective as of January 1, 2004, from 550,000 to 750,000 shares; and (iii) to permit us to assume
existing options, stock bonuses and restricted stock awards that were granted or issued by another corporation and assumed by us in connection with a merger, consolidation or other corporate reorganization in which we are a party. Each year, the
number of shares reserved for issuance under the 2000 Plan is automatically increased by the lesser of (i) 5% of the total number of shares of our common stock then outstanding, (ii) 750,000 shares, or (iii) a number to be determined
by our Board of Directors. On January 1, 2006, the number of shares reserved for issuance under the 2000 Plan was automatically increased by 750,000 shares, to an aggregate of 10,300,000 shares.

The options granted under the 2000 Plan may be either incentive stock options or nonqualified stock options. Options granted under the 2000 Plan expire
no later than 10 years from the date of grant. The option price must be at least 100% of the fair value on the date of grant for incentive stock options, and no less than 85% of the fair value for nonqualified stock options. The options generally
become exercisable in increments over a period of four years from the date of grant, with the first increment vesting after one year. Options may be granted with different vesting terms from time to time.

The 2002 Plan provides for the award of options, stock bonuses, and rights to acquire restricted stock. The stock options granted under the 2002 Plan are
nonqualified options and expire no later than 10 years from the date of the grant. The exercise price for each option must not be less than 85% of the fair market value of the common stock on the date of the grant. Employees, officers, members of
our Board of Directors and consultants are eligible to receive awards under the 2002 Plan. No more than 49% of the number of shares underlying options granted under the Plan may be awarded to directors and senior officers of Dendreon. A total of
1,500,000 shares of common stock were authorized and reserved for issuance under the 2002 Plan. The Compensation Committee of the Board of Directors determines the terms of each option, including the number of shares, the option price, the term of
the option, the vesting period, and the purchase price.

A summary of restricted stock award activity under the 2000 Plan is as follows:



|                         |  |                        |   |  |                                      
|------------------------ |  | ---------------------- | - |  | -------------------------------------
|                         |  | OutstandingStockAwards |   |  | Weighted AverageGrant Date Fair Value
|Balance, January 1, 2006 |  | 20,143                 |   |  | 4.58                                 
|Units granted            |  | 572,181                |   |  | 4.51                                 
|Units vested             |  | (23,229                | ) |  | 4.39                                 
|Units forfeited          |  | (23,125                | ) |  | 5.39                                 
|                         |  |                        |   |  |                                      
|Balance, June 30, 2006   |  | 545,970                |   |  | 4.49                                 
|                         |  |                        |   |  |                                      

Restricted stock awards granted during 2006 had a weighted average fair value of $4.51 per share
and generally vest over a four year period. On June 7, 2006, 377,050 shares of restricted stock were granted to all non-executive employees. These awards are subject to our normal vesting period with a provision for acceleration, which states
that vesting for 40% of shares accelerate upon acceptance of our BLA by the



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FDA and the balance upon the approval of Provenge for commercialization by the FDA. In accordance with FAS 123R, we have considered the probability of
achieving each acceleration provision and will record compensation expense based upon our assessment of accomplishing each provision.

The
fair value of each stock option granted is estimated on the date of grant using the BSM option valuation model. The assumptions used to calculate the fair value of options granted are evaluated and revised, as necessary, to reflect market conditions
and the Companys experience. Options granted are valued using the multiple option valuation approach, and the resulting expense is recognized using the graded, or accelerated, attribution method, consistent with the multiple option valuation
approach. Compensation expense is recognized only for options and awards expected to vest, with forfeitures estimated at the date of grant based on the Companys historical experience and future expectations. Prior to the adoption of SFAS 123R,
the effect of forfeitures on the pro forma expense amounts was recognized as the forfeitures occurred.

A summary of the Companys
stock option activity during the six months ended June 30, 2006 is presented in the following table:



|                             |  |                         |   |  |                                         |      |                                          |      |                          |   |        
|---------------------------- |  | ----------------------- | - |  | --------------------------------------- | ---- | ---------------------------------------- | ---- | ------------------------ | - | -------
|                             |  | SharesSubject toOptions |   |  | Weighted-AverageExercise Price perShare |      | Weighted-AverageRemainingContractualLife |      | Aggregate IntrinsicValue
|Outstanding, January 1, 2006 |  | 5,823,025               |   |  | $                                       | 8.37 |                                          |      |                          |   |        
|Granted                      |  | 909,593                 |   |  |                                         | 5.20 |                                          |      |                          |   |        
|Exercised                    |  | (76,767                 | ) |  |                                         | 2.13 |                                          |      |                          |   |        
|Forfeited                    |  | (1,205,186              | ) |  |                                         | 8.48 |                                          |      |                          |   |        
|                             |  |                         |   |  |                                         |      |                                          |      |                          |   |        
|Outstanding, June 30, 2006   |  | 5,450,665               |   |  | $                                       | 7.90 |                                          | 7.45 |                          | $ | 657,743
|                             |  |                         |   |  |                                         |      |                                          |      |                          |   |        
|Exercisable, June 30, 2006   |  | 4,252,928               |   |  | $                                       | 8.62 |                                          | 6.92 |                          | $ | 633,914

The aggregate intrinsic value in the table above is before applicable income taxes, based on the
Companys closing stock price of $4.84 as of the last business day of the period ended June 30, 2006, which would have been received by the optionees had all options been exercised on that date. As of June 30, 2006, total unrecognized
stock-based compensation expense related to nonvested stock options was approximately $5.1 million, which is expected to be recognized over a weighted-average period of approximately 1.7 years. During the six months ended June 30, 2006, the
total intrinsic value of stock options exercised was $236,000. During the six months ended June 30, 2006, the total fair value of options vested was $67,000.

The Company issues new shares of common stock upon exercise of stock options.



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Additional information regarding options outstanding as of June 30, 2006 is as follows:



|                         |  |                     |  |                                                  |  |                               |       |        |           |                               |   |      
|------------------------ |  | ------------------- |  | ------------------------------------------------ |  | ----------------------------- | ----- | ------ | --------- | ----------------------------- | - | -----
|                         |  | Options Outstanding |  | Options Exercisable                             
|Range of Exercise Prices |  | Shares              |  | Weighted-AverageRemainingContractualLife (Years) |  | Weighted-AverageExercisePrice |       | Shares |           | Weighted-AverageExercisePrice
|$ 0.75  $ 5.45          |  | 1,309,283           |  | 7.12                                             |  | $                             | 4.34  |        | 795,977   |                               | $ | 3.98 
|5.50     6.38           |  | 1,101,892           |  | 8.28                                             |  |                               | 5.72  |        | 453,961   |                               |   | 5.90 
|6.47     8.85           |  | 1,143,854           |  | 7.79                                             |  |                               | 7.54  |        | 1,114,854 |                               |   | 7.57 
|8.95   12.12            |  | 1,192,988           |  | 7.84                                             |  |                               | 10.22 |        | 1,185,488 |                               |   | 10.22
|12.14   36.74           |  | 702,648             |  | 5.53                                             |  |                               | 14.62 |        | 702,648   |                               |   | 14.62
|                         |  |                     |  |                                                  |  |                               |       |        |           |                               |   |      
|                         |  | 5,450,665           |  | 7.45                                             |  | $                             | 7.90  |        | 4,252,928 |                               | $ | 8.62 
|                         |  |                     |  |                                                  |  |                               |       |        |           |                               |   |      

As of June 30, 2006, equity based awards (including stock option and stock awards) available
for future issuances are as follows:



|                           |  |                         |  
|-------------------------- |  | ----------------------- | -
|                           |  | StockAvailablefor Grant |  
|Balance, January 1, 2006   |  | 1,178,703               |  
|Additional shares reserved |  | 750,000                 |  
|Granted                    |  | (1,481,774              | )
|Forfeited                  |  | 1,228,311               |  
|                           |  |                         |  
|Balance, June 30, 2006     |  | 1,675,240               |  



|8. | COMPREHENSIVE LOSS
|-- | ------------------

We reported comprehensive loss
in accordance with SFAS No. 130, Reporting Comprehensive Income, which establishes standards for reporting and displaying comprehensive income (loss) and its components in financial statements. Comprehensive loss includes charges
and credits to stockholders equity that are not the result of transactions with stockholders. Our comprehensive loss consisted of net loss plus changes in unrealized gain or loss on investments as follows:



|                                         |  |                             |         |   |                          |   |         |          |  |   |         |   |  |   |         |  
|---------------------------------------- |  | --------------------------- | ------- | - | ------------------------ | - | ------- | -------- |  | - | ------- | - |  | - | ------- | -
|                                         |  | Three months ended June 30, |         |   | Six months endedJune 30, |  
|                                         |  | Restated                    |         |   |                          |   |         | Restated |  |   |         |  
|(in thousands)                           |  | 2006                        |         |   | 2005                     |   |         | 2006     |  |   | 2005    |  
|Net loss                                 |  | $                           | (25,056 | ) |                          | $ | (17,520 | )        |  | $ | (49,412 | ) |  | $ | (37,021 | )
|Net unrealized gain (loss) on securities |  |                             | (23     | ) |                          |   | 183     |          |  |   | (41     | ) |  |   | 210     |  
|                                         |  |                             |         |   |                          |   |         |          |  |   |         |   |  |   |         |  
|Comprehensive loss                       |  | $                           | (25,079 | ) |                          | $ | (17,337 | )        |  | $ | (49,453 | ) |  | $ | (36,811 | )



|9. | COMMITMENTS SUPPLY AGREEMENT
|-- | -----------------------------

On
December 22, 2005, we entered into a supply agreement with Diosynth, RTP, Inc. covering the commercial production of the antigen used in connection with the manufacture of Provenge®. Our first binding order to Diosynth for commercial scale quantities of the antigen was
placed on the same day to commence production in January 2007. This order is noncancelable and obligates us to pay Diosynth a total of $25.1 million over the production period, which is expected to extend through November 2007. In April 2006, we
paid $6.3 million to Diosynth as a prepayment of the commercial production and recorded this amount as research and development expense for the three and six months ended June 30, 2006. Under this agreement, we are required to submit additional
prepayments of $1.0 million and $7.3 million in October 2006 and January 2007, respectively. The remaining payments due to Diosynth will coincide with actual deliveries of product. We will evaluate the status of regulatory approval for the
commercial sale of



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Provenge and record these remaining payments as inventory if regulatory approval has been received, or as research and development expense if regulatory
approval has not been received.



|ITEM 2. | MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|------- | -------------------------------------------------------------------------------------

This quarterly report contains forward-looking statements concerning matters that involve risks and uncertainties. The statements contained in this report
that are not purely historical are forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the Exchange Act), and Section 27A of the Securities Act of 1933, as amended.
These forward-looking statements concern matters that involve risks and uncertainties that could cause actual results to differ materially from those projected in the forward-looking statements. Words such as believes,
expects, likely, may and plans are intended to identify forward-looking statements, although not all forward-looking statements contain these words.

Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of
activity, performance or achievements. Moreover, neither we nor any other person assumes responsibility for the accuracy and completeness of the forward-looking statements. We are under no duty to update any of the forward-looking statements after
the date hereof to conform such statements to actual results or to changes in our expectations.

The following discussion should be read in
conjunction with the consolidated financial statements and the notes thereto included in Item 1 of the Original Report, and also as provided in this Report. In addition, readers are urged to carefully review and consider the various disclosures
made by us regarding the factors that affect our business, including without limitation the disclosures made under the caption, Risk Factors set forth in our 2005 Form 10-K, and the audited financial statements and the notes thereto and
disclosures made under the caption, Managements Discussion and Analysis of Financial Condition and Results of Operations included in our 2005 Form 10-K.

OVERVIEW

We are a biotechnology company focused on the discovery, development and commercialization
of novel therapeutics that harness the immune system to fight cancer. Our portfolio includes active immunotherapy, monoclonal antibody and small molecule product candidates to treat a wide range of cancers. The product candidates most advanced in
development are active immunotherapies designed to stimulate a patients immune system for the treatment of cancer. Our most advanced product candidate is Provenge® (sipuleucel-T), an active cellular immunotherapy for the treatment of prostate cancer.

We have incurred significant losses since our inception. As of June 30, 2006, our accumulated deficit was $350.2 million. We have incurred net
losses as a result of research and development expenses, clinical trial expenses, contract manufacturing expenses and general and administrative expenses in support of our operations and marketing expenses. We anticipate incurring net losses over
the next several years as we continue our clinical trials, apply for regulatory approvals, develop our technology, expand our operations and develop the infrastructure to support the commercialization of Provenge and other product candidates we may
develop.

We anticipate that we will not generate revenue from the sale of our potential commercial therapeutic products until the FDA
approves Provenge for commercial sale. Without revenue generated from commercial sales, we anticipate that we will continue to fund our ongoing research, development and general operations from our available cash resources, future equity or debt
offerings and with license fees and milestone payments received from our collaborators. The timing and level of funding from our existing or future collaborations will fluctuate based upon the success of our research programs, our ability to meet
milestones and receipt of approvals from government regulators. We expect research and development expenses to increase in the future as a result of increased clinical trial costs, contract manufacturing costs and costs associated with operating our
New Jersey manufacturing facility. In January 2006, we announced the realignment of our resources to focus on achieving regulatory approval for Provenge as expeditiously as possible and to reduce operating costs. The majority of our resources have
now been deployed to complete



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the BLA for Provenge during 2006 and to prepare for the commercialization of Provenge. We anticipate net cash utilized for operating and capital expenditures
for 2006 to be approximately $100 million. In addition, clinical trial costs may grow at a faster rate compared to research and other preclinical expenses as we continue our ongoing clinical trials.

Provenge (sipuleucel-T)

In September 2005, we
announced plans to submit a BLA to the FDA to obtain regulatory approval for the commercialization of Provenge. This decision followed a pre-BLA meeting in which we reviewed safety and efficacy data with the FDA from our two completed Phase 3
clinical trials, D9901 and D9902A. In these discussions the FDA agreed that the survival benefit observed in the D9901 study in conjunction with the supportive data obtained from study D9902A and the absence of significant toxicity in both studies
is sufficient to serve as the clinical basis of a BLA submission for Provenge. Specifically, our first Phase 3 clinical trial of Provenge, D9901, was a randomized double-blind placebo-controlled study in 127 men with asymptomatic, metastatic,
androgen-independent prostate cancer. The trial was designed to measure a delay in time to disease progression. Time to the onset of disease related pain was a secondary endpoint that was to be evaluated in concert with the results from a second,
identical companion trial, D9902. The protocols for both trials required patients to be followed for survival for three years after enrollment.

While trial D9901 approached, but did not meet, its primary endpoint of showing a significant delay in time to disease progression in the overall patient population in the study (p-value = 0.052, hazard ratio = 1.4) , we completed
the planned three year follow-up for survival on the D9901 patients and disclosed in February 2005 that a significant survival advantage was seen in those patients who had been randomized to the Provenge arm compared to those who had been randomized
to receive placebo. According to the final three year intent-to-treat analysis, patients who received Provenge had a median survival of 25.9 months compared to 21.4 months for patients in the placebo arm, a 4.5 month or 21 percent improvement
(p-value = 0.01, hazard ratio = 1.7). This hazard ratio implies that patients who received placebo have a relative risk of dying that is 70 percent higher than that of patients who received Provenge. In addition, 34 percent of patients who
received Provenge were alive at 36 months compared to 11 percent of patients who received placebo. A Cox multivariate regression analysis was used to test the validity of the survival benefit seen in this study. The results showed that treatment
with Provenge remained a strong independent predictor of survival after adjusting for prognostic factors. These results were published in the July 2006 issue of the Journal of Clinical Oncology.

In October 2005, we disclosed results from the second randomized Phase 3 trial, D9902A. Trial D9902A also did not meet its primary endpoint of showing a
significant delay in time to disease progression. In the D9902A study, the three-year final survival analysis in the intent-to-treat population of the double-blind, placebo-controlled study of Provenge in 98 men with asymptomatic, metastatic,
androgen-independent prostate cancer showed those patients who received Provenge had a median survival of 19.0 months compared to 15.7 months for patients in the placebo arm, a 3.3 month or 21 percent improvement (p-value = 0.331, hazard ratio
= 1.3). A Cox multivariate regression analysis of overall survival, which adjusts for the same prognostic factors known to influence survival utilized in D9901, met the criteria for statistical significance (p-value = 0.023; adjusted
hazard ratio = 1.9). The hazard ratio observed in this analysis was similar to that seen in our D9901 trial. In addition, at the three-year final follow up, 32 percent of patients who received Provenge were alive compared to only 21 percent of
the patients who received placebo, a 52 percent improvement in the survival rate.

An integrated analysis of the survival data from these
two companion Phase 3 clinical studies, D9901 and D9902A, showed a significant survival benefit in the overall intent-to-treat population of 225 patients. In this analysis, those patients who received Provenge had a median survival of 23.2 months
compared to 18.9 months for patients in the placebo arm (p-value = 0.011; hazard ratio = 1.5). A Cox multivariate regression analysis of the integrated data for overall survival also met the criteria for statistical significance (p-value
= 0.0006; adjusted hazard ratio = 1.8). In addition, at the three-year final follow up, 33 percent of patients who received Provenge were alive compared to only 15 percent of the patients who received placebo. In both studies, Provenge was
generally well tolerated. In controlled clinical trials, the most common adverse reactions associated with Provenge were chills, headache, fatigue, shortness of breath, vomiting and tremor. These events were primarily grade 1 and 2, with a short
duration of 1 to 2 days around the time of infusion. Less than 2% of patients were not able to receive a full course of Provenge (3 infusions) due to treatment-related adverse reactions.



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Summary of PROVENGE Studies



|                                    |  |                         |  |                         |  |                                   
|----------------------------------- |  | ----------------------- |  | ----------------------- |  | ----------------------------------
|                                    |  | Study 1 (D9901) N = 127 |  | Study 2 (D9902A) N = 98 |  | Studies 1 and 2 Integrated N =
225
|Median Survival in months:          |  |                         |  |                         |  |                                   
|Provenge                            |  | 25.9                    |  | 19.0                    |  | 23.2                              
|Placebo                             |  | 21.4                    |  | 15.7                    |  | 18.9                              
|                                    |  |                         |  |                         |  |                                   
|Median Survival Benefit: % (months) |  | 21% (4.5)               |  | 21% (3.3)               |  | 23% (4.3)                         
|                                    |  |                         |  |                         |  |                                   
|Hazard Ratio                        |  | 1.7                     |  | 1.3                     |  | 1.5                               
|p-value (log rank)                  |  | p=0.010                 |  | p=0.331                 |  | p=0.011                           
|                                    |  |                         |  |                         |  |                                   
|Hazard Ratio                        |  | 2.1                     |  | 1.9                     |  | 1.8                               
|p-value (Cox regression, adj.)      |  | p=0.002                 |  | p=0.023                 |  | p=0.0006                          
|                                    |  |                         |  |                         |  |                                   
|36-Month Survival: % (patients)     |  |                         |  |                         |  |                                   
|Provenge                            |  | 34%(28)                 |  | 32%(21)                 |  | 33%(49)                           
|Placebo                             |  | 11%(5)                  |  | 21%(7)                  |  | 15%(12)                           

Provenge has Fast Track designation from the FDA for the treatment of asymptomatic patients with
metastatic, androgen-independent prostate cancer. We anticipate submitting a BLA for Provenge to the FDA in 2006 on a rolling basis, which permits the FDA to review sections of the BLA in advance of receiving the complete submission. We own
commercialization rights for Provenge worldwide.

The initial build-out of our commercial manufacturing facility in Hanover, New Jersey was
completed in July 2006. In the first quarter of 2006, we entered into amendments to our construction agreements with AES Clean Technology and The Henderson Corporation to reflect a phased approach to the build-out of the facility. The original
design for the facility provided for the installation of clean rooms on a modular basis. Our decision to use a phased approach to the construction improvements to the facility was based on our desire to have a commercially viable facility completed
as quickly as feasible, on a financially prudent basis.

As another integral part of our effort to prepare for the commercialization of
Provenge, we are engaged with Diosynth in the production of the antigen used in the preparation of Provenge. Manufacture of conformance lots was completed in July 2006. On December 22, 2005, we entered into a long-term supply agreement with
Diosynth covering the production of the antigen used in the preparation of Provenge. Our first binding order to Diosynth for commercial scale quantities of the antigen under this agreement was placed on the same day to commence production in January
2007. This order is noncancelable and obligates us to pay Diosynth $25.1 million, of which $18.8 million remains to be paid over the next 15 months.

Other Provenge Clinical Trials

We are currently conducting another Phase 3 clinical trial of Provenge, D9902B. Based on the
results of the two completed Phase 3 studies, D9901 and D9902A, we met with the FDA and have amended the D9902B Special Protocol Assessment agreement to open the trial to men regardless of Gleason score and to elevate survival to the primary
endpoint. Approximately 500 men will be enrolled and men with asymptomatic or minimally symptomatic disease are eligible for the study. We expect to complete enrollment in the D9902B study, now known as the IMPACT (IMmunotherapy for Prostate
AdenoCarcinoma Treatment) study, during 2007. In June 2005, we disclosed that enrollment has been completed in a Phase 3 double-blind placebo controlled trial called PROTECT (PROvenge Trial of Early Prostate Cancer Treatment) (P-11) in
androgen-dependent prostate cancer.

In July 2006, the results from a National Cancer Institute-sponsored Phase 2 study of Provenge in
combination with Avastin were published in the journal Cancer. The research showed the combination immunotherapy significantly increased the prostate-specific antigen doubling-time in patients with prostate cancer that had relapsed after
prior surgical and radiation therapy.



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Neuvenge (lapuleucel-T)

Neuvenge is our investigational active cellular immunotherapy for the treatment of patients with breast, ovarian and other solid tumors expressing HER2/neu. In December 2004, we announced results from two Phase 1
studies of Neuvenge indicating that Neuvenge stimulated an immune response and may provide clinical benefit in patients with advanced, metastatic HER2/neu positive breast cancer. We are evaluating future development plans for Neuvenge.

Preclinical Research and Development Programs

In
addition to other active immunotherapies in preclinical research and development, we have monoclonal antibody and small molecule product candidates in preclinical research and development programs. These also include product candidates being
developed with our collaborators. In May 2006, preclinical data were presented demonstrating that active immunotherapy using our proprietary Antigen Delivery Cassette technology with the antigen carbonic anhydrase IX (CA9) significantly prolonged
survival in renal cell carcinoma animal models.

Our collaboration with Genentech, Inc. targets the development of product candidates
directed against trp-p8, an ion channel found in prostate cancer cells. We and Genentech are currently engaged in discovering, evaluating and developing small molecule and monoclonal antibody therapeutics that modify trp-p8 function. We have
discovered selective trp-p8 small molecule agonists that induce cell death and inhibit the growth of trp-p8 positive tumors in animals. Genentechs option to participate in the small molecule program has expired. Consequently, we own worldwide
rights to the small molecule program. Genentech continues to be primarily responsible for the monoclonal antibody products program and has certain rights with respect to other products in our agreement with them.

Our collaboration with Amgen Fremont Inc., the survivor of the acquisition of Abgenix, Inc. by Amgen, Inc., is focused on the discovery, development and
commercialization of fully-human monoclonal antibody candidates against a membrane-bound serine protease. Under the terms of the collaboration, Amgen Fremont will use its human antibody technologies to generate and select antibodies against this
serine protease. Both Dendreon and Amgen Fremont have the right to co-develop and commercialize, or, if co-development is not elected, to solely develop and commercialize, any antibody product candidates discovered during the collaboration.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

As discussed in Item 7, Managements Discussion and Analysis of Financial Condition and Results of Operations of our 2005 Form 10-K, we consider our policies on revenue recognition and research and development expenses
to be the most critical in understanding the judgments that are involved in preparing our consolidated financial statements. With the adoption of SFAS 123R at the beginning of the Companys first fiscal quarter of 2006, we added
Stock-Based Compensation as a critical accounting policy.

Research and Development Expenses

Pursuant to Statement of Financial Accounting Standards No. 2, Accounting for Research and Development Costs (SFAS 2), our research and
development costs are expensed as incurred or at the date of payment of non-refundable upfront license fees and prepayments and milestones, whichever occurs first.

Stock-Based Compensation

Effective January 1, 2006, the Company adopted the fair value recognition provisions of SFAS 123R, using the modified-prospective transition method. Under this transition method, stock-based compensation expense was recognized in the
consolidated financial statements for granted, modified, or settled stock options and restricted stock awards and for expense related to the ESPP, because the purchase discounts available under the ESPP exceeded the amount allowed under SFAS 123R
for non-compensatory treatment. We use the BSM option-pricing model, which requires the input of highly subjective assumptions. These assumptions include estimating the length of time employees will retain their vested stock options before
exercising them (the expected term), the estimated volatility of our common stock



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price over the expected term and the number of options that will ultimately not complete their vesting requirements (forfeitures). Changes in
these subjective assumptions can materially affect the estimate of fair value of stock-based compensation and consequently, the related amount recognized as an expense on the consolidated statements of operations. As required under accounting rules,
we review our valuation assumptions at each grant date and, as a result, we are likely to change our valuation assumptions used to value employee stock-based awards granted in future periods.

On June 7, 2006, we granted 377,050 shares of restricted stock to all non-executive employees. These awards are subject to our normal vesting period
with a provision for acceleration, which states that vesting for 40% of shares accelerate upon acceptance of our BLA by the FDA and the balance upon the approval of Provenge for commercialization by the FDA. In accordance with FAS 123R, we have
considered the probability of achieving each acceleration provision and will record compensation expense based upon our assessment of accomplishing each provision.

Total stock-based employee compensation expense recognized in the consolidated statement of operations for the three and six months ended June 30, 2006 was $1.1 million and $1.9 million, respectively, and
consisted of stock option and restricted stock award expenses of $953,000 and $1.7 million, respectively, and ESPP expense of $93,000 and $181,000, respectively. Of the $1.1 million and $1.9 million of stock compensation expense, $546,000 and $1.0
million, respectively, were included in research and development expense and $500,000 and $839,000, respectively, were included in general and administrative expense. Total stock-based employee compensation expense recognized in the consolidated
statement of operations for the three and six months ended June 30, 2006 increased our net loss per share by $0.01 and $0.03, respectively. As we use a full valuation allowance with respect to deferred taxes, the adoption of SFAS 123R had no
impact on deferred taxes.

There was no stock-based compensation expense related to employee stock options and employee stock purchases
recognized under SFAS 123R during the three and six months ended June 30, 2005; however, $467,000 of employee stock-based compensation was recognized during the six months ended June 30, 2005 under the former accounting guidance.

RESULTS OF OPERATIONS FOR THE THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 2006 AND 2005

Revenue

Revenue increased to $78,000 for the three
months ended June 30, 2006, compared to $58,000 for the three months ended June 30, 2005. Revenue decreased to $103,000 for the six months ended June 30, 2006, compared to $115,000 for the six months ended June 30, 2005. The
three month increase was primarily due to revenue related to an intellectual property option purchase agreement. Our revenue in 2006 also includes recognition of deferred revenue related to a license agreement.

Research and Development Expenses

Research and
development expenses increased to $20.8 million for the three months ended June 30, 2006, from $13.5 million for the three months ended June 30, 2005. Research and development expenses increased to $41.2 million for the six months ended
June 30, 2006 from $29.4 for the six months ended June 30, 2005. The three month increase was primarily due to a prepayment of contract manufacturing costs of $6.3 million paid to Diosynth, increased clinical development costs of $1.0
million and non-cash stock based compensation expense of $546,000, partially offset by decreased lab expenses of $313,000 due to decreased headcount. The six month increase was primarily due to increased contract manufacturing costs of $9.2 million,
clinical development costs of $1.5 million, severance costs related to our January 2006 restructuring of $1.0 million, non-cash stock based compensation of $674,000 offset by decreased outside research services. Furthermore, an impairment charge of
$419,000 was recorded during the six months ended June 30, 2006 due to amended construction agreements related to our manufacturing facility.



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Financial data from our research and development-related activities is compiled and managed by us as
clinical programs and discovery research. Our research and development expenses for the three and six months ended June 30, 2006 and 2005 were as follows (in millions):



|                                       |  |                             |      |                           |   |               |  |      |      |  |   |     
|-------------------------------------- |  | --------------------------- | ---- | ------------------------- | - | ------------- |  | ---- | ---- |  | - | ----
|                                       |  | Three months ended June 30, |      | Six months ended June 30,
|                                       |  | Restated 2006               |      | 2005                      |   | Restated 2006 |  | 2005
|Clinical programs:                     |  |                             |      |                           |   |               |  |      |      |  |   |     
|Cancer                                 |  | $                           | 10.1 |                           | $ | 4.3           |  | $    | 14.2 |  | $ | 9.8 
|Indirect costs                         |  |                             | 9.7  |                           |   | 7.4           |  |      | 24.5 |  |   | 16.0
|                                       |  |                             |      |                           |   |               |  |      |      |  |   |     
|Total clinical programs                |  |                             | 19.8 |                           |   | 11.7          |  |      | 38.7 |  |   | 25.8
|Discovery research                     |  |                             | 1.0  |                           |   | 1.8           |  |      | 2.5  |  |   | 3.6 
|                                       |  |                             |      |                           |   |               |  |      |      |  |   |     
|Total research and development expense |  | $                           | 20.8 |                           | $ | 13.5          |  | $    | 41.2 |  | $ | 29.4
|                                       |  |                             |      |                           |   |               |  |      |      |  |   |     

Direct research and development costs associated with our clinical programs include clinical trial
site costs, clinical manufacturing costs, costs incurred for consultants and other outside services, such as data management and statistical analysis support, and materials and supplies used in support of the clinical programs. Indirect costs of our
clinical program include wages, payroll taxes and other employee-related expenses including rent, restructuring, stock based compensation, utilities and other facilities-related maintenance. The costs in each category may change in the future and
new categories may be added. Costs attributable to our discovery research programs represent our efforts to develop and expand our product pipeline.

General and Administrative Expenses

General and administrative expenses increased to $5.5 million for the three months
ended June 30, 2006, compared to $5.2 million for the three months ended June 30, 2005. General and administrative expenses increased to $10.7 million for the six months ended June 30, 2006, compared to $10.0 million for the six
months ended June 30, 2005. General and administrative expenses were primarily comprised of salaries and wages, consulting fees, marketing fees and administrative costs to support our operations. The three and six month increases were primarily
attributable to non-cash stock compensation of $500,000 and $710,000, respectively.

Interest Income

Interest income increased to $1.6 million for the three months ended June 30, 2006 from $1.3 million for the three months ended June 30, 2005.
Interest income increased to $3.3 million for the six months ended June 30, 2006 from $2.5 million for the six months ended June 30, 2005. The three and six month increases in 2006 were primarily due to higher average interest rates,
partially offset by a decrease in interest income earned on short-term receivables and declining cash and investment balances. We expect interest income to decrease in the future due to a declining cash balance.

Interest Expense

Interest expense increased to
$388,000 for the three months ended June 30, 2006 from $132,000 for the three months ended June 30, 2005. Interest expense increased to $901,000 for the six months ended June 30, 2006, compared to $206,000 for the six months ended
June 30, 2005. The increase was primarily due to an increase in the average capital and facility lease balances in 2006 compared to 2005.

LIQUIDITY AND CAPITAL RESOURCES

As of June 30, 2006, we had approximately $105.6 million in cash, cash
equivalents and short- and long-term investments. We have financed our operations primarily through proceeds from the sale of equity securities, cash receipts from collaborative agreements, interest income earned and debt instruments. We have
received net proceeds of $231.1 million from the sale of our equity securities since January 1, 2003, of which $48.3 million was received in our December 2005 common stock offering.

On April 4, 2006 we entered into an amendment to our construction agreement with The Henderson Corporation dated, November 4, 2005. Pursuant to
the agreement, Henderson performed construction related services and arranged for, supervised and subcontracted for the construction of our facility in



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Hanover, New Jersey. The agreement, as amended, allowed us to use a phased approach to building out the facility and decreased the amount we will pay
Henderson by $11.8 million to a price not to exceed $3.2 million. The amount of remaining payments due under this agreement as of June 30, 2006 was approximately $1.6 million.

On February 16, 2006, we entered into an amendment to our construction agreement with AES Clean Technology, Inc., dated November 4, 2005. Under
the terms of the agreement, AES designed and constructed clean rooms, production modules, related corridors and ancillary systems in our facility in Hanover, New Jersey. The agreement, as amended, allowed us to use a phased approach to building out
the facility and decreased the amount we will pay AES by $4.8 million to a guaranteed maximum price of $2.3 million. The amount of remaining payments due under this agreement as of June 30, 2006 was approximately $291,000.

The initial build-out of our commercial manufacturing facility in Hanover, New Jersey was completed in July 2006.

On October 29, 2004, we entered into a second amendment to our Bioprocessing Services Agreement originally dated March 16, 2001 with Diosynth
RTP, Inc. Pursuant to the second amendment, Diosynth has completed conformance runs for the manufacturing process for the antigen used in Provenge. The contract had an unpaid balance of $1.4 million as of June 30, 2006.

On December 22, 2005, we entered into a supply agreement with Diosynth covering the commercial production of the antigen used in connection with
Provenge. Our first binding order to Diosynth for commercial scale quantities of the antigen was placed on the same day to commence production in January 2007. This order is noncancelable and our remaining current obligation is to pay Diosynth $18.8
million over the next 15 months.

In December 2005, we entered into the first two of a series of anticipated Promissory Notes (the
Notes), with General Electric Capital Corporation (GE Capital), for the purchase of equipment and associated build-out costs for our Hanover, New Jersey manufacturing facility. The Notes, one with a principal amount of $7.0
million bearing interest at 7.55% per year and one with a principal amount of $593,954 bearing interest at 10.2%, are to be repaid in 36 consecutive monthly installments of principal and interest. The Notes are secured by a Master Security
Agreement (the Security Agreement), and two Security Deposit Pledge Agreements (the Pledge Agreements). Pursuant to the Pledge Agreements, we deposited an aggregate of $7.0 million as a security deposit for the repayment of
the $7.0 million, which finances the soft costs (such as leasehold improvements and designs), and will be released pro rata upon the repayment of the loan or upon receipt of FDA approval of Provenge. There is a material adverse change
clause in the Security Agreement which may accelerate the maturity of the Notes upon the occurrence of certain events. We do not believe a material adverse change in our financial condition has occurred. The $7.0 million security deposit is recorded
on our consolidated balance sheet in restricted cash and long-term restricted cash. On January 31, 2006, we entered into a commitment letter with GE Capital wherein GE Capital has committed to make a series of loans to us up to an aggregate
original principal amount of $13 million. We have drawn $2.3 million of the loan as of June 30, 2006.

As of December 31, 2005,
we had financed $4.2 million of leasehold improvements, laboratory, computer and office equipment under several leases with GE Life Sciences and Technology Financings. In 2005, we entered into a $1.8 capital lease with Oracle Corporation to finance
our Enterprise Resource Planning system. The amount of remaining lease payments due under these leases as of June 30, 2006 was approximately $2.8 million.

On August 18, 2005, we entered into an agreement to lease 158,242 square feet of commercial manufacturing space in Hanover, New Jersey. The lease term is seven years and we have the option to extend the lease for
two ten-year periods and one five-year period, with the same terms and conditions except for rent, which adjusts to market rate. We completed the initial build-out of this facility to meet the anticipated clinical and commercial manufacturing needs
for Provenge. Property and equipment on our consolidated balance sheet as of June 30, 2006 includes $9.4 million of construction in progress related to the build-out and construction of the New Jersey facility. The lease required us to provide
the landlord with a letter of credit in the amount of $3.1 million as a security deposit, which is recorded within long-term restricted cash on our consolidated balance sheet as of June 30, 2006. In addition to the letter of credit, the



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restricted cash balance includes a collateral amount of $164,000, which is required by Wells Fargo, the bank that issued the letter of credit on our behalf.

On August 12, 2005, we filed a shelf registration statement with the SEC to sell up to $150 million of our common stock from time to
time. The SEC declared this registration statement effective in October 2005. In December 2005, we sold 11.5 million shares of common stock at a price of $4.50 per share for gross proceeds of $51.8 million, or $48.3 million net of underwriting
discounts, commissions and other offering costs. As of June 30, 2006, $98.2 million of common stock is available to be sold under this registration statement.

Net cash used in operating activities for the six months ended June 30, 2006 was $51.7 million, compared to $38.3 million for the six months ended June 30, 2005. Expenditures in all periods were a result of
research and development expenses, clinical trial costs, contract manufacturing costs and general and administrative expenses in support of our operations and marketing expenses. We expect cash used in operations to increase in the future as a
result of increased contract manufacturing and clinical trial activity, costs associated with operating our New Jersey manufacturing facility and the ongoing development of a commercial infrastructure to support the commercialization of Provenge.

Since our inception, investing activities, other than purchases and maturities of short-term and long-term investments, consist primarily
of purchases of property and equipment. At June 30, 2006, our aggregate net investment in equipment and leasehold improvements was $34.3 million.

As of June 30, 2006, we anticipate that our cash on hand, including our cash equivalents, short-term and long-term investments and cash generated from our collaboration arrangements, will be sufficient to enable
us to meet our anticipated expenditures for at least the next 12 months, including, among other things:



| |  |  | supporting our submission of a BLA for Provenge;
| | - |  | ------------------------------------------------



| |  |  | manufacturing scale-up and infrastructure development related to the planned commercialization of Provenge;
| | - |  | -----------------------------------------------------------------------------------------------------------



| |  |  | supporting additional clinical trials of Provenge; and
| | - |  | ------------------------------------------------------



| |  |  | continuing internal research and development.
| | - |  | ---------------------------------------------

However,
we may need additional financing prior to that time. Additional financing may not be available on favorable terms or at all. If we are unable to raise additional funds through sales of our common stock under our shelf registration statement, sales
of other forms of equity or debt securities, whether registered or privately placed, or through other financing means, should we need them, we may be required to delay, reduce or eliminate some of our development programs and some of our clinical
trials and this could adversely impact our intent to submit a BLA for Provenge during 2006.

PART II. OTHER INFORMATION



|ITEM 6. | EXHIBITS
|------- | --------



|              |  |                                                                                                                                                                           
|------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|ExhibitNumber |  | Description                                                                                                                                                               
|              | 
|31.1          |  | Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                                                       
|              | 
|31.2          |  | Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                                                   
|              | 
|32            |  | Certification of Chief Executive Officer and Principal Financial Officer pursuant to 18 U.S.C § 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.



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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to
be signed on its behalf by the undersigned thereunto duly authorized.

Date: October 10, 2006



DENDREON CORPORATIONBy:

/s/ Richard F. Hamm, Jr.Richard F. Hamm, Jr.Senior Vice President, CorporateDevelopment,General Counsel and Secretary(Authorized Officer and PrincipalFinancial Officer)




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