Analyst Conference Summary

Conference date: February 27, 2012 @ 6:00 AM Pacific Time
for quarter ending: December 31, 2011 (fourth quarter, Q4)

Forward-looking statements

Overview: As expected, Provenge revenue continues to grow sequentially and margins are improving. Revenue from a one-time royalty sale resulted in positive net income, but will return to a loss in Q1 2012.

Basic data (GAAP):

Revenue was $202.1 million, up 214% sequentially from $64.3 million and up by a factor of 8 from $25.0 million year-earlier.

Net income was $38.1 million, up sequentially from negative $147.1 million and up from negative $91.8 million year-earlier.

EPS (earnings per share) were $0.26, up sequentially from negative $1.00 and up from negative $0.64 year-earlier.

Guidance:

Ongoing modest quarter over quarter revenue growth.

Highlights:

Provenge revenue was $77.0 million, up from $61 million in Q3, and up from $25.0 million year-earlier. Royalty revenue was $125.2 million, essentially a one-time benefit for sale of Victrelis rights.

John H. Johnson is the new President and CEO. Believes $2 to $3 million in revenue was accelerated from Q1 into Q4 by end-of-year decisions by physicians and patients. January had fewer patients than expected. So Q1 is now expected to have low-single digit sequential growth. 80 new sites added in December and January.

End of quarter site count was 840, of which over 590 had infused Provenge at least once, with an additional 25 sites having their first Provenge patient scheduled. Average reimbursement time is now less than 30 days. Medicare and Medicaid policy no covers the costs associated with infusion as well.

The EMA (European Medicines Agency) validated the marketing authorization application for Provenge in January. Europe approval process is underway with a decision due approximately mid 2013.

Atlantic facility approved by FDA during quarter. All manufacturing costs are now flowing through cost of goods sold.

Manufacturing of Provenge is becoming more efficient and cost effective as volume production has ramped. Automation of data is also reducing costs. Hopes to reduce cost of goods sold from about 70% today to about 50% of revenue in 2014.

SG&A expenses are expected to be gradually reduced as the year progresses, but there will be some non-cash expenses in Q1. R&D expenses for 2012 are expected around $200.

$617.7 million cash at and of quarter. Used $75 million, excluding revenue from Vitrella royalty, which is a substantial improvement on prior quarters.

At $500 million annual revenue believes will be break-even on a cash flow basis.

Data announced showing that eliminating the crossover effect from Dendreon IMPACT trial, survival benefit was 7.8 months.

Newer data shows Provenge appears to be active during earlier stages of prostate cancer when the immune system may be more robust.

Began a new clinical study sequencing Provenge with abiraterone.

Planning for extending the clinical pipeline based on ACH technology.

Cost of product revenue was $57.0 million. Research and development expense was $17.7 million. Selling, general and administrative expense was $76.1 million. Leaving income from operations of $51.3 million. Interest expense was $13.3 million, other income $0.2 million.

Q&A:

Gross margins goals? Would like to beat the 50% at $500 million, then long term 20 to 30% range, but will stick with that guidance and confident can hit it.

Q1 sales trends? Order book for January was soft, but accelerated so far in quarter. Added 80 sites so far. Growth driven by new account acquisition. Trying to focus on larger new accounts.

New sites, rate of patients? Typically they average about 1/2 patient per month. 1 patient, then after treatment and reimbursement, another patient after 2 months. Our message is around increased screening, patient idenfication, and reimbursement.

Number of patients per site, on average? Believes we can do better penetrating existing accounts. There is some eating of patients from older sites by newer sites. One city population 400,000 had a site with a good run rate, had a strong site, saw fewer patients, investigated because now had 6 sites in the city.

Do sites have balance sheets so that they could front-run financing of Provenge? We do provide 3rd party financing, so the cash flow is not the issue. The issue is contingent liability because of worries about not being reimbursed. After they get reimbursed they become more comfortable.

Because there were no good treatment options for these patients, urologists did not identify them. Now there is incentive to screen for qualified patients.

Q4 seasonality and Q1 guidance? In Q4 you saw overall Dendreon did a better job getting patients through the system efficiently, and good doctor scheduling to get patients through before the holidays. In Q4 2010 we had only 12 work stations and closed down entirely the last 2 weeks, so this year is the first full quarter. Q1 with adjustments would be a low double digit increase in revenues.

Could you shut down a facility this year? That would be the least attractive option. If we did that we would have to be confident we could produce enough Provenge to service our customers in the remaining facilities. Improving cost of goods sold is our main method of improving margins.

No time frame at this point to hit break even, but we are doing well and are confident we will hit our targets.

McKesson was not a problem for physician financing, except that the sites were already set up with other GPOs for financing, so we facilitated that.

A lot of the patients that need to be identified are in a urology setting, so we are targetting that.

Urology has been fastest growing segment, but now is 20% of business versus 80% oncology. Academic is now 30%, community centers 70%.

Have you had any cases where pre-authorized patients did not get reimbursed? We don't know of such a case. There are a couple of cases that are going through an appeal process.

Medicare vs. commercial payers? 80% of patients are Medicare eligible.

Our sales force is around 100 reps, we think 130 would be the maximum, plus 25 to 30 on MSL side.

Site numbers? We expect 1000 acounts to do 80% of all the patients, some accounts have multiple sites.

Future capital expenses for improvements in automation? It is a nominal level of capital.

Sales force incentives are for treatments of patients, not bringing on new accounts.

Europe SG&A expense? Very little, just some rollout support. We have no headcount in Europe yet. We do have the contract manufacturer for the approval process, but that is included in R&D numbers.

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