Analyst Conference Summary


Conference date: February 25, 2013 @ 6:00 AM Pacific Time
for quarter ending: December 31, 2012 (fourth quarter, Q4)

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Forward-looking statements

Overview: Provenge revenue ramping, outlined 2013 initiatives.

Basic data (GAAP):

Revenue was $85.5 million, up 10% sequentially from $78 million, but down 58% from $202.1 million in the year-earlier quarter, which included a $125.2 million one-time payment.

Net income was negative $38.7 million, up sequentially from negative $154.9 million but down from positive$38.1 million year-earlier.

EPS (earnings per share) were negative $0.26, up sequentially from negative $1.04 but down from positive $0.26 year-earlier.


No specific guidance, but believes Provenge revenue will grow year over year and costs will be lowered. For Q1 saw negative seasonal January effect and from competition, so believes Q1 revenue will be sequentially down from Q4.


GAAP revenue included a $3.8 million favorable adjustment to the chargeback reserve. Excluding that, Provenge revenue was $81.6 million, up 5% sequentially and up 51% from year-earlier.

Provenge revenue increase was driven by a 25% increase in sales at community urology centers and 4% increase in community oncology. Academic use declined by 9% sequentially. Community accounts represented 71% of total sales. There were 61 net new accounts added in the quarter, bringing the total to 802.

Dendreon will begin a direct-to-consumer advertising campaign in Q2 which will run about $5 million per quarter. Working on reducing cost of goods sold (COGS) and restructuring, including of administrative costs. Expects lower costs to be fully realized in Q3. Expects cost of goods sold to be 50% of revenue by Q3.

Continuing sequencing studies. Initial data presented for Provenge and ADT. Zytiga (abiraterone) study completed enrollment.

Will also try to catch men at the beginning of the label window by monitoring those with castrate resistant prostate cancer.

Expects a European regulatory decision mid-year.

At ASCO-GU meeting Phase II data was presented for sequencing with Zytiga. Preliminary analysis of now fully enrolled trial suggested Provenge can be successfully manufactured concurrent with Zytiga and prednisone use. Retreatment trail indicates very long term immunological memory.

Cash and equivalents balance ended at $$429.8 million. Cash used in quarter was $15 million. Convertible senior note liability is $560 million.

Non-GAAP EBITDA loss $9.5 million of $0.06 per share.

Total operating expenses were $110.5 million, down from $150.9 million year-earlier. Consisted of $54.4 million cost of goods sold; $19.0 million research and development; $74.5 million selling, general, and administrative; and a benefit of $36.3 million restructuring. Income from operations $25.0 million. Interest expense $14.0 million.


More on seasonality? The main thing is the out of pocket costs that occur in a 30 day window. 2013 was similar to 2012 in that there is caution at some accounts late in the year leading to slowness in January. That softness is now behind us, as was the case last year.

Sequencing results? Keeping in mind they were preliminary results, physicians seemed encouraged.

We see all the therapies in some sort of sequence, with no one therapy getting the lions' share.

Do you need sales to accelerate to reach the 50% COGS later in the year? The assumption is $80 million per quarter to hit the COGS goal.

Sales vacancies mainly occurred at the end of the year in lower-revenue territories. We continue to strengthen the sales force, but the top of the force has been stable.

There is some evidence that long-term Zytiga use makes it difficult to use Provenge, which is why doctors are moving to using Provenge first, but then can use Zytiga quickly.

Direct to Consumer (DTC) campaign? We can still break even at $100 million in revenue per quarter. We can discontinue DTC if it does not have positive results. With DTC you should probably figure break even at $105 million.

COGS will see a drop in Q1, but not down to the 50% level. The Q1 drop is mainly due to the closing of the New Jersey facility.

Patient Assistance Programs? Dendreon will continue to fund patient assistance in 2013.

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Copyright 2013 William P. Meyers