Analyst Conference Summary


Conference date: November 3, 2010 @ 1:30 PM Pacific Time
for quarter ending: September 30, 2010 (third quarter, q3)

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Forward-looking statements

Overview: First full quarter of Provenge sales; capacity constrained.

Basic data (GAAP):

Revenue was $20.2 million, up sequentially from $2.8 million, and up from no revenue in the year-earlier quarter.

Net income was negative $79.3 million, up sequentially from negative $142.6 million, but down from negative $45.5 million year-earlier.

EPS (earnings per share) were negative $0.56, up sequentially from negative $1.04, but down from negative $0.40 year-earlier.


Full year 2010 revenue expected between $46 and $47 million. Full 2011 revenue expected at $350 to $400 million if new manufacturing facilities are approved by the FDA in the standard time frame. But about one-half of total revenue in 2011 will come in Q4.


By month, Provenge revenue was $5.2 million in July, $7.2 million in August, and $7.8 million in September. October revenue, which is in Q4, was about $9.5 million. Current maximum capacity is about $10 million per month. Q4 may not be at full run rate due to holidays.

Most sites now have long waiting lists. New infuser sites are being brought online in anticipation of increased capacity next year.

Reimbursement has not been an actual issue so far. NCA has had no impact on patient access to Provenge. Only J7 region has failed to give coverage.

Working on global commercialization of Provenge.

Operating expense included a $13.3 million charge for a litigation settlement.

Cash and equivalents dropped to $392.7 million. $460 million of cash expected to be used in full 2010, with about half that being capital expense.

Provenge revenue should ramp in 2011after expansion of New Jersey facility is licensed, possibly in March, and the new Georgia and California facilities are brought on line.

Cost of revenue was $12.4 million, leaving gross profit of $7.8 million. Operating expenses of $87.7 million included $13.5 million for research and development and $74.1 million for selling, general, and administrative. Net interest income was $0.2 million. There was an income tax benefit of $0.4 million.

Now has over 1000 employees.

Gross margins should improve during 2011, except in periods when new capacity is brought online.

$33 million of the $74 million SG&A expense is startup costs for the new facilities.


How does the ramp happen in 2011? 50 initial infuser sites had been in clinical trials. Identifying high volume sites to bring up next. No details by quarter.

Can we read the 2012 run rate as equal to Q4 2011? All of our facilities should be up and running by Q4, 2011, and we should be able to project that into 2012, which should be a very good year.

How does staging work in New Jersey? We expect all of NJ to be approved in one go. Staging in facility will correspond with activation of new infuser sites. Also planning to balance for future sharing with Georgia and California facilities.

Is there a demand issue implied by staging? We are not at all worried about demand.

Sales force is now beginning to service new accounts. We don't want to generate demand too far in advance, but will have new marketing and sales initiatives as we go through 2011.

The European market is about twice the size of the U.S.

We are offering extended payment terms to physicians and working with an intermediary to pay us with 45 days.

2000 patients in first year was to let physicians and patients know availability would be limited.

2011 capital expenses will be dependent on expansion into Europe, which has an uncertain timeline so far.

The manufacturing and supply chain is working exactly as expected.

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Copyright 2010 William P. Meyers