##### Table of Contents



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




---



DENDREON CORPORATION
 INDEX
 PAGE NO.PART I. FINANCIAL INFORMATIONItem 1. Financial Statements
    
    
    3Balance Sheets as of September 30, 2009 (unaudited) and December 31, 2008
    
    
    3Statements of Operations for the Three Months and Nine Months Ended September 30, 2009
and 2008 (unaudited)
    
    
    4Statements of Cash Flows for the Nine Months Ended September 30, 2009 and 2008 (unaudited)
    
    
    5Notes to Consolidated Financial Statements
    
    
    6Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    18Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    28Item 4. Controls and Procedures
    
    
    28PART II. OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    29Item 6. Exhibits
    
    
    31SIGNATURES
    
    
    32EXHIBIT INDEX
    
    
    33EX-31.1EX-31.2EX-32
  2




---



##### Table of Contents



PART I. FINANCIAL INFORMATION
  ITEM 1.
    
    FINANCIAL STATEMENTS
 DENDREON CORPORATION
  BALANCE SHEETS
(In thousands, except share data)
 (consolidated)
 September 30,
    
    
    December 31,2009
    
    
    2008(Unaudited)ASSETSCurrent assets:Cash and cash equivalents
    
    $
    172,485
    
    
    $
    59,523Short-term investments
    
    
    71,059
    
    
    
    45,638Restricted cash
    
    
    4,882
    
    
    
    3,853Prepaid antigen costs
    
    
    18,975
    
    
    
    Prepaid expenses and other current assets
    
    
    3,762
    
    
    
    1,867Total current assets
    
    
    271,163
    
    
    
    110,881Property and equipment, net
    
    
    60,287
    
    
    
    28,150Long-term investments
    
    
    16,061
    
    
    
    3,386Long-term restricted cash
    
    
    4,462
    
    
    
    2,030Debt issuance costs and other assets
    
    
    2,631
    
    
    
    2,757Total assets
    
    $
    354,604
    
    
    $
    147,204LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable
    
    $
    6,889
    
    
    $
    237Accrued liabilities
    
    
    17,288
    
    
    
    6,004Accrued compensation
    
    
    5,153
    
    
    
    3,686Deferred revenue
    
    
    82
    
    
    
    82Warrant liability
    
    
    136,978
    
    
    
    14,190Current portion of capital lease obligation
    
    
    702
    
    
    
    Current portion of facility lease obligation
    
    
    473
    
    
    
    219Current portion of long-term debt
    
    
    146
    
    
    
    2,194Total current liabilities
    
    
    167,711
    
    
    
    26,612Deferred revenue, less current portion
    
    
    253
    
    
    
    314Capital lease obligations, less current portion
    
    
    894
    
    
    
    Facility lease obligations, less current portion
    
    
    14,274
    
    
    
    8,022Convertible senior subordinated notes
    
    
    52,535
    
    
    
    85,250Commitments and contingencies (Note 9)Stockholders equity:Preferred stock, $0.001 par value; 10,000,000 shares authorized, no shares issued or outstanding
    
    
    
    
    
    
    Common stock, $0.001 par value; 250,000,000 shares authorized and 113,553,433 issued and
outstanding; and 150,000,000 shares authorized and 95,577,664 shares issued and outstanding at
September 30, 2009 and December 31, 2008, respectively
    
    
    112
    
    
    
    95Additional paid-in capital
    
    
    869,715
    
    
    
    590,159Accumulated other comprehensive income
    
    
    55
    
    
    
    45Accumulated deficit
    
    
    (750,945
    )
    
    
    (563,293
    )Total stockholders equity
    
    $
    118,937
    
    
    $
    27,006Total liabilities and stockholders equity
    
    $
    354,604
    
    
    $
    147,204
  3




---



##### Table of Contents



DENDREON CORPORATION
  STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(consolidated)
(Unaudited)
 Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Revenue
    
    $
    25
    
    
    $
    26
    
    
    $
    80
    
    
    $
    83Operating expenses:Research and development
    
    
    16,494
    
    
    
    12,660
    
    
    
    41,613
    
    
    
    39,331General and administrative
    
    
    9,301
    
    
    
    4,625
    
    
    
    22,126
    
    
    
    15,720Total operating expenses
    
    
    25,795
    
    
    
    17,285
    
    
    
    63,739
    
    
    
    55,051Loss from operations
    
    
    (25,770
    )
    
    
    (17,259
    )
    
    
    (63,659
    )
    
    
    (54,968
    )Other income (expense):Interest income
    
    
    196
    
    
    
    819
    
    
    
    725
    
    
    
    2,907Interest expense
    
    
    (606
    )
    
    
    (1,218
    )
    
    
    (1,930
    )
    
    
    (3,995
    )Loss from valuation of warrant liability
    
    
    (19,371
    )
    
    
    (9,119
    )
    
    
    (122,788
    )
    
    
    (6,751
    )Net loss
    
    $
    (45,551
    )
    
    $
    (26,777
    )
    
    $
    (187,652
    )
    
    $
    (62,807
    )Basic and diluted net loss per share
    
    $
    (0.40
    )
    
    $
    (0.29
    )
    
    $
    (1.79
    )
    
    $
    (0.71
    )Shares used in computation of basic and diluted net loss per share
    
    
    113,447
    
    
    
    91,723
    
    
    
    105,096
    
    
    
    88,762
  4




---



##### Table of Contents



DENDREON CORPORATION
  STATEMENTS OF CASH FLOWS
(In thousands)(consolidated)(Unaudited)
 Nine Months EndedSeptember 30,2009
    
    
    2008Operating Activities:Net loss
    
    $
    (187,652
    )
    
    $
    (62,807
    )Adjustments to reconcile net loss to net cash used in operating activities:Depreciation and amortization expense
    
    
    3,267
    
    
    
    4,325Non-cash stock-based compensation expense
    
    
    10,413
    
    
    
    4,314Loss from valuation of warrant liability
    
    
    122,788
    
    
    
    6,751Gain on sale of fixed assets
    
    
    
    
    
    
    (5
    )Changes in operating assets and liabilities:Prepaid antigen costs
    
    
    (18,975
    )
    
    
    Amortization of securities discount and premium
    
    
    (48
    )
    
    
    29Restricted cash related to operating lease
    
    
    (1,700
    )
    
    
    1,258Prepaid expenses and other assets
    
    
    (1,540
    )
    
    
    829Accounts payable
    
    
    6,652
    
    
    
    (945
    )Deferred revenue
    
    
    (61
    )
    
    
    (62
    )Accrued liabilities and compensation
    
    
    12,751
    
    
    
    (5,041
    )Net cash used in operating activities
    
    
    (54,105
    )
    
    
    (51,354
    )Investing Activities:Maturities of investments
    
    
    (115,048
    )
    
    
    41,704Purchases of investments
    
    
    77,010
    
    
    
    (42,001
    )Restricted cash and deposit related to facility expansions
    
    
    (2,843
    )
    
    
    Purchases of property and equipment
    
    
    (26,946
    )
    
    
    (4,594
    )Net cash used in investing activities
    
    
    (67,827
    )
    
    
    (4,891
    )Financing Activities:Proceeds from common stock offering, net of financing costs
    
    
    220,810
    
    
    
    45,991Proceeds from release of security deposit associated with debt
    
    
    853
    
    
    
    700Payments on capital lease obligations
    
    
    (197
    )
    
    
    (653
    )Payments on long-term debt
    
    
    (2,048
    )
    
    
    (4,208
    )Payments on facility lease obligations
    
    
    (159
    )
    
    
    (124
    )Net proceeds from exercise of stock options and other
    
    
    14,963
    
    
    
    212Issuance of common stock under the Employee Stock Purchase Plan
    
    
    672
    
    
    
    445Net cash provided by financing activities
    
    
    234,894
    
    
    
    42,363Net increase (decrease) in cash and cash equivalents
    
    
    112,962
    
    
    
    (13,882
    )Cash and cash equivalents at beginning of year
    
    
    59,523
    
    
    
    75,721Cash and cash equivalents at end of period
    
    $
    172,485
    
    
    $
    61,839Supplemental Disclosure of Cash Flow Information:Capital expenditures financed through capital leases
    
    $
    1,793
    
    
    $
    Capital expenditures financed through facility leases
    
    $
    6,665
    
    
    $
    
  5




---



##### Table of Contents



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




---



##### Table of Contents



Net Loss Per Share
  Subsequent Events
  2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 Prepaid Antigen Costs
  Research and Development Expenses
  Accounting for Stock-Based Compensation
    7




---



##### Table of Contents



Employee Stock Options
    
    Employee Stock Purchase PlanFor the Three Months ended
    
    For the Three Months endedSeptember  30,
    
    September  30,2009
    
    2008
    
    2009
    
    2008Weighted average estimated fair value (A)
    
    $
    17.23
    
    
    
    N/A
    
    
    $
    21.23
    
    
    $
    1.22Weighted Average AssumptionsDividend yield (A,B)
    
    
    0.0
    %
    
    
    N/A
    
    
    
    0.0
    %
    
    
    0.0
    %Expected volatility (A,C)
    
    
    93.5
    %
    
    
    N/A
    
    
    
    137.0
    %
    
    
    50.0
    %Risk-free interest rate (A,D)
    
    
    1.5
    %
    
    
    N/A
    
    
    
    0.4
    %
    
    
    1.6
    %Expected life (A,E)
    
    4.4 years
    
    
    
    N/A
    
    
    1 years
    
    
    0.5 yearsEmployee Stock Options
    
    Employee Stock Purchase PlanFor the Nine Months Ended
    
    For the Nine Months EndedSeptember 30,
    
    September 30,2009
    
    2008
    
    2009
    
    2008Weighted average estimated fair value
    
    $
    17.23
    
    
    $
    4.34
    
    
    $
    10.71
    
    
    $
    1.25Weighted Average AssumptionsDividend yield (A,B)
    
    
    0.0
    %
    
    
    0.0
    %
    
    
    0.0
    %
    
    
    0.0
    %Expected volatility (A,C)
    
    
    93.5
    %
    
    
    91
    %
    
    
    137.0
    %
    
    
    49.0
    %Risk-free interest rate (A,D)
    
    
    1.5
    %
    
    
    2.5
    %
    
    
    0.6
    %
    
    
    2.0
    %Expected life (A,E)
    
    4.4 years
    
    
    4.5 years
    
    
    1.3 years
    
    
    0.5 years
 
 (A)
    
    During the three months ended September 30, 2008 we did not grant stock options; therefore
the above-described assumptions and the weighted average estimated fair value were not
applicable during this period.(B)
    
    We have not paid dividends in the past and do not plan to pay dividends in the near future.(C)
    
    The expected stock price volatility is based on the weighted average of the historical
volatilities of our stock and certain peer companies.(D)
    
    The risk-free interest rate is based on the implied yield available on U.S. Treasury
zero-coupon issues with a term equal to the expected life of the award on the date of grant.(E)
    
    The expected life of the options represents the estimated period of time until exercise and
is based on historical experience of similar awards, giving consideration to the contractual
terms, vesting schedules and expectations of future employee behavior. The expected life of
awards under the employee stock purchase plan represents the purchase period under the plan. 8




---



##### Table of Contents



Shares
    
    Weighted-Average
    
    Weighted-AverageSubject to
    
    Exercise Price per
    
    Remaining
    
    Aggregate IntrinsicOptions
    
    Share
    
    Contractual Life
    
    ValueOutstanding, January 1, 2009
    
    
    4,877,268
    
    
    $
    6.99Granted
    
    
    236,500
    
    
    
    25.45Exercised
    
    
    (2,184,492
    )
    
    
    7.21Forfeited
    
    
    (199,747
    )
    
    
    7.60Outstanding, September 30, 2009
    
    
    2,729,529
    
    
    $
    8.38
    
    
    
    6.56
    
    
    $
    53,531,641Exercisable, September 30, 2009
    
    
    1,800,307
    
    
    $
    7.32
    
    
    
    5.62
    
    
    $
    37,215,330
  Restricted Stock Awards
   2009
    
    
    2008Weighted
    
    
    
    
    
    
    WeightedAverage
    
    
    
    
    
    
    AverageGrant
    
    
    
    
    
    
    GrantStock
    
    
    Date
    
    
    Stock
    
    
    DateAwards
    
    
    Fair Value
    
    
    Awards
    
    
    Fair ValueOutstanding at beginning of period
    
    
    1,462,936
    
    
    $
    6.13
    
    
    
    1,449,687
    
    
    $
    5.96Granted
    
    
    1,405,115
    
    
    
    7.01
    
    
    
    545,838
    
    
    
    6.35Vested
    
    
    (426,308
    )
    
    
    5.55
    
    
    
    (343,974
    )
    
    
    5.78Forfeited or expired
    
    
    (114,938
    )
    
    
    5.74
    
    
    
    (135,820
    )
    
    
    6.30Outstanding at end of period
    
    
    2,326,805
    
    
    $
    6.79
    
    
    
    1,515,731
    
    
    $
    6.10
  Fair Value
  9




---



##### Table of Contents




    
    Long-lived assets measured at fair value due to an impairment assessment under ASC 360-10,
Property, Plant and Equipment; and
 
    
    Asset retirement obligations initially measured under ASC 410-20, Asset Retirement and
Environmental Obligations.
     Warrant Liability
   3. RECENT ACCOUNTING PRONOUNCEMENTS
 
 10




---



##### Table of Contents



4. FAIR VALUE MEASUREMENTS
     11




---



##### Table of Contents



Quoted Prices in
    
    
    SignificantActive Markets
    
    
    Other
    
    
    SignificantAmortized
    
    
    Unrealized gain
    
    
    
    
    
    
    for Identical
    
    
    Observable
    
    
    Unobservablecost as of
    
    
    (loss) as of
    
    
    Balance as of
    
    
    Assets
    
    
    Inputs
    
    
    InputsDescription
    
    Sept. 30, 2009
    
    
    Sept. 30, 2009
    
    
    Sept. 30, 2009
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)Assets:Money Market
    
    $
    88,550
    
    
    $
    
    
    
    $
    88,550
    
    
    $
    88,550
    
    
    $
    
    
    
    $
    Commercial paper
    
    
    56,748
    
    
    
    
    
    
    
    56,748
    
    
    
    
    
    
    
    56,748
    
    
    
    Corporate debt securities
    
    
    23,111
    
    
    
    11
    
    
    
    23,122
    
    
    
    
    
    
    
    23,122
    
    
    
    Government-sponsored
enterprises
    
    
    56,921
    
    
    
    5
    
    
    
    56,926
    
    
    
    
    
    
    
    56,926
    
    
    
    U.S. Treasury Note
    
    
    30,204
    
    
    
    39
    
    
    
    30,243
    
    
    
    
    
    
    
    30,243
    
    
    
    Total financial assets
    
    $
    255,534
    
    
    $
    55
    
    
    $
    255,589
    
    
    $
    88,550
    
    
    $
    167,039
    
    
    $
    Liabilities:Warrants
    
    
    
    
    
    
    
    
    
    $
    136,978
    
    
    $
    
    
    
    $
    
    
    
    $
    136,978Total financial liabilities
    
    
    
    
    
    
    
    
    
    $
    136,978
    
    
    $
    
    
    
    $
    
    
    
    $
    136,978
   Three Months
    
    
    Nine Months
    
    
    YearEnded
    
    
    Ended
    
    
    EndedDescription
    
    Sept. 30, 2009
    
    
    Sept. 30, 2009
    
    
    December 31, 2008Beginning balance
    
    $
    117,607
    
    
    $
    14,190
    
    
    $
    Purchases, issuances, and settlements
    
    
    
    
    
    
    
    
    
    
    14,561Total loss (gain) included in net loss (1)
    
    
    19,371
    
    
    
    122,788
    
    
    
    (371
    )Ending balance
    
    $
    136,978
    
    
    $
    136,978
    
    
    $
    14,190
 
 (1)
    
    The loss for the three and nine months ended September 30, 2009 relates to the revaluation of
the warrant liability from December 31, 2008 through September 30, 2009. The loss is reflected
in our consolidated statements of operations as a component of other expense.   12




---



##### Table of Contents



5. INVESTMENTS
  Cost or
    
    
    FairAmortized
    
    
    MarketCost
    
    
    Value(In thousands)September 30, 2009Due in one year or less
    
    $
    71,051
    
    
    $
    71,059Due after one year through two years
    
    
    16,014
    
    
    
    16,061$
    87,065
    
    
    $
    87,120December 31, 2008Due in one year or less
    
    $
    45,576
    
    
    $
    45,638Due after one year through two years
    
    
    3,403
    
    
    
    3,386$
    48,979
    
    
    $
    49,024
   Cost or
    
    
    Gross
    
    
    Gross
    
    
    FairAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    MarketCost
    
    
    Gains
    
    
    Losses
    
    
    Value(In thousands)September 30, 2009Corporate debt securities
    
    $
    23,110
    
    
    $
    11
    
    
    $
    
    
    
    $
    23,121Government-sponsored enterprises
    
    
    36,921
    
    
    
    15
    
    
    
    (10
    )
    
    
    36,926U.S. Treasury Note
    
    
    27,034
    
    
    
    39
    
    
    
    
    
    
    
    27,073$
    87,065
    
    
    $
    65
    
    
    $
    (10
    )
    
    $
    87,120December 31, 2008Corporate debt securities
    
    $
    22,360
    
    
    $
    54
    
    
    $
    (154
    )
    
    $
    22,260Government-sponsored enterprises
    
    
    16,285
    
    
    
    110
    
    
    
    (25
    )
    
    
    16,370U.S. Treasury Note
    
    
    10,334
    
    
    
    60
    
    
    
    
    
    
    
    10,394$
    48,979
    
    
    $
    224
    
    
    $
    (179
    )
    
    $
    49,024
 13




---



##### Table of Contents



Less Than 12 Months
    
    
    12 Months or More
    
    
    TotalGross
    
    
    
    
    
    
    Gross
    
    
    
    
    
    
    GrossFair
    
    
    Unrealized
    
    
    Fair
    
    
    Unrealized
    
    
    Fair
    
    
    UnrealizedValue
    
    
    Losses
    
    
    Value
    
    
    Losses
    
    
    Value
    
    
    Losses(In thousands)September 30, 2009Governmentsponsored enterprises
    
    
    29,966
    
    
    
    (10
    )
    
    
    
    
    
    
    
    
    
    
    29,966
    
    
    
    (10
    )Total
    
    $
    29,966
    
    
    $
    (10
    )
    
    $
    
    
    
    $
    
    
    
    $
    29,966
    
    
    $
    (10
    )
 Less Than 12 Months
    
    
    12 Months or More
    
    
    TotalGross
    
    
    
    
    
    
    Gross
    
    
    
    
    
    
    GrossFair
    
    
    Unrealized
    
    
    Fair
    
    
    Unrealized
    
    
    Fair
    
    
    UnrealizedValue
    
    
    Losses
    
    
    Value
    
    
    Losses
    
    
    Value
    
    
    Losses(In thousands)December 31, 2008Corporate debt securities
    
    $
    12,756
    
    
    $
    (143
    )
    
    $
    2,004
    
    
    $
    (11
    )
    
    $
    14,760
    
    
    $
    (154
    )Government-sponsored enterprises
    
    
    4,629
    
    
    
    (25
    )
    
    
    
    
    
    
    
    
    
    
    4,629
    
    
    
    (25
    )Total
    
    $
    17,385
    
    
    $
    (168
    )
    
    $
    2,004
    
    
    $
    (11
    )
    
    $
    19,389
    
    
    $
    (179
    )
  6. PROPERTY AND EQUIPMENT
  September 30,
    
    
    December 31,(in thousands)
    
    2009
    
    
    2008Furniture and office equipment
    
    $
    1,466
    
    
    $
    1,188Laboratory and manufacturing equipment
    
    
    11,609
    
    
    
    11,427Computer equipment and software
    
    
    10,918
    
    
    
    10,134Leasehold improvements
    
    
    15,670
    
    
    
    15,478Buildings
    
    
    1,730
    
    
    
    1,730Construction in progress
    
    
    48,928
    
    
    
    15,13290,321
    
    
    
    55,089Less accumulated depreciation and amortization
    
    
    (30,034
    )
    
    
    (26,939
    )$
    60,287
    
    
    $
    28,150
  14




---



##### Table of Contents



7. ACCRUED LIABILITIES
  September 30,
    
    
    December 31,(in thousands)
    
    2009
    
    
    2008Clinical trial costs
    
    $
    1,503
    
    
    $
    1,700Deferred rent
    
    
    1,104
    
    
    
    1,089Accrued property and equipment
    
    
    9,722
    
    
    
    895Accrued legal costs
    
    
    512
    
    
    
    286Other accrued liabilities
    
    
    4,447
    
    
    
    2,034$
    17,288
    
    
    $
    6,004
 8. CONVERTIBLE SENIOR SUBORDINATED NOTES
      15




---



##### Table of Contents



9. COMMITMENTS AND CONTINGENCIES
     McGuire v.
Dendreon Corporation, et al. McGuire, et al. v. Dendreon Corporation, et al
 16




---



##### Table of Contents



Mountanos v. Dendreon Corporation, et al. Mountanos McGuire Mountanos McGuire v.
Dendreon
 Loh v. Gold,
et al. McGuire v. Dendreon
 Loh v. Gold
  10. EQUITY
 Equity Line of Credit
  17




---



##### Table of Contents



Other Equity Financing
   11. COMPREHENSIVE LOSS
  Three months ended
    
    
    Nine months endedSeptember 30,
    
    
    September 30,(in thousands)
    
    2009
    
    
    2008
    
    
    2009
    
    
    2008Net loss
    
    $
    (45,551
    )
    
    $
    (26,777
    )
    
    $
    (187,652
    )
    
    $
    (62,807
    )Net unrealized gain (loss) on securities
    
    
    (4
    )
    
    
    (423
    )
    
    
    10
    
    
    
    (391
    )Comprehensive loss
    
    $
    (45,555
    )
    
    $
    (27,200
    )
    
    $
    (187,642
    )
    
    $
    (63,198
    )
 
 ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
    18




---



##### Table of Contents



OVERVIEW
         19




---



##### Table of Contents



tm
 CRITICAL ACCOUNTING POLICIES AND ESTIMATES
    Prepaid Antigen Costs
  Fair Value
  
    
    Long-lived assets measured at fair value due to an impairment assessment under ASC 360-10,
Property, Plant and Equipment; and
 20




---



##### Table of Contents




    
    Asset retirement obligations initially measured under ASC 410-20, Asset Retirement and
Environmental Obligations.
     Warrant Liability
   Recent Accounting Pronouncements
 
  21




---



##### Table of Contents



RESULTS OF OPERATIONS FOR THE THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 2009 AND 2008
 Revenue
  Research and Development Expenses
   Three months ended
    
    
    Nine months endedSeptember 30,
    
    
    September 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Clinical programs:Direct costs
    
    $
    1.2
    
    
    $
    2.3
    
    
    $
    3.7
    
    
    $
    7.8Indirect costs
    
    
    14.8
    
    
    
    9.4
    
    
    
    36.5
    
    
    
    28.6Total clinical programs
    
    
    16.0
    
    
    
    11.7
    
    
    
    40.2
    
    
    
    36.4Discovery research
    
    
    0.5
    
    
    
    1.0
    
    
    
    1.4
    
    
    
    2.9Total research and development expense
    
    $
    16.5
    
    
    $
    12.7
    
    
    $
    41.6
    
    
    $
    39.3
  22




---



##### Table of Contents




    
    the timeframe over which our programs are likely to be completed;
    
    whether they will be completed;
    
    if they are completed, whether they will provide therapeutic benefit or be approved for
commercialization by the necessary regulatory agencies;
    
    to what extent a product may generate commercial demand and be viewed favorably by
physicians; or
    
    whether, if approved, the manufacture of these products will be scalable to meet
commercial demand.
 General and Administrative Expenses
  Interest Income
  Interest Expense
  Warrant Liability
  23




---



##### Table of Contents



LIQUIDITY AND CAPITAL RESOURCES
 Cash Uses and Proceeds
     
    
    expanding our manufacturing capabilities, including the build-out of our  facilities
in Atlanta, Georgia and Orange County, California,
    
    the development of marketing, manufacturing, information technology and other
infrastructure and activities related to the commercialization of Provenge,
    
    working capital needs,
    
    increased personnel needs, and
    
    continuing and expanding our internal research and development programs.
  Credit Financings
  24




---



##### Table of Contents



Office Leases
   Manufacturing Facilities Leases
  
    
    leases for two new manufacturing facilities to be constructed or built-out in Atlanta,
Georgia and Orange County, California that will total approximately 340,000 square feet of
manufacturing space; and
    
    a construction agreement for the completion of Phases II and III of our New Jersey
Facility.
     25




---



##### Table of Contents



Production and Supply Expenses
  Financings from the Sale of Securities and Issuance of Convertible Notes
 Equity Offering Proceeds
    26




---



##### Table of Contents



Convertible Notes
     27




---



##### Table of Contents



Contractual Commitments
  Total
    
    
    1 Year
    
    
    2-3 Years
    
    
    4-5 Years
    
    
    ThereafterDiosynth
    
    $
    20,535
    
    
    $
    7,771
    
    
    $
    12,764
    
    
    $
    
    
    
    $
    Convertible senior subordinated notes (including interest)
    
    
    65,012
    
    
    
    2,495
    
    
    
    4,991
    
    
    
    57,526
    
    
    
    Facility lease obligation (including interest)
    
    
    20,588
    
    
    
    865
    
    
    
    2,663
    
    
    
    2,797
    
    
    
    14,263Debt obligations (including interest)
    
    
    103
    
    
    
    103
    
    
    
    
    
    
    
    
    
    
    
    Operating leases
    
    
    34,553
    
    
    
    5,082
    
    
    
    9,419
    
    
    
    3,531
    
    
    
    16,521Unconditional purchase obligations
    
    
    590
    
    
    
    590
    
    
    
    
    
    
    
    
    
    
    
    $
    141,381
    
    
    $
    16,906
    
    
    $
    29,837
    
    
    $
    63,854
    
    
    $
    30,784
 
 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
     
 ITEM 4. CONTROLS AND PROCEDURES
     28




---



##### Table of Contents



PART II. OTHER INFORMATION
 
 ITEM 1. LEGAL PROCEEDINGS
 McGuire v.
Dendreon Corporation, et al. McGuire, et al. v. Dendreon Corporation, et al
 Mountanos v. Dendreon Corporation, et al. Mountanos McGuire Mountanos McGuire v.
Dendreon
 Loh v. Gold,
et al. McGuire v. Dendreon
  29




---



##### Table of Contents



Loh v. Gold
  30




---



##### Table of Contents



ITEM 6. EXHIBITS
 ExhibitNumber
    
    Description31.1
    
    Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.31.2
    
    Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.32
    
    Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C § 1350
as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 31




---



##### Table of Contents



SIGNATURES
   DENDREON CORPORATIONBy:
    
    /s/ MITCHELL H. GOLD, M.D.

Mitchell H. Gold, M.D.President and Chief Executive OfficerBy:
    
    /s/ GREGORY T. SCHIFFMANGregory T. SchiffmanSenior Vice President,Chief Financial Officer and Treasurer(Principal Financial Officer)By:
    
    /s/ GREGORY R. COXGregory R. Cox(Principal Accounting Officer)
 32




---



##### Table of Contents



EXHIBIT INDEX
 ExhibitNumber
    
    Description31.1
    
    Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.31.2
    
    Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.32
    
    Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C § 1350
as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 33