Analyst Conference Summary


Conference date: August 8, 2013 @ 1:30 PM Pacific Time
for quarter ending: June 30, 2013 (second quarter, Q2)

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Forward-looking statements

Overview: Sequential improvement in Provenge sales, but nothing to get excited about, yet.

Basic data (GAAP):

Revenue was $73.3 million, up 8% sequentially from $67.6 million, but down 8% from $80.0 million in the year-earlier quarter.

Net income was negative $68.8 million, slightly improved sequentially from negative $72.0 million, and improved from negative $96.1 million year-earlier.

EPS (earnings per share) were negative $0.45, improved sequentially from negative $0.48 and from negative $0.65 year-earlier.


Does not expect to meet the prior goal off increased y/y Provenge sales in 2013 despite some progress being made in urology setting and with larger accounts. Not providing more detailed revenue guidance.


Revenue growth was led by large accounts, particularly urology practices, which were up 37% sequentially. Met low end of guidance.

Earlier in the quarter Dendreon received a positive opinion from the CHMP (Committee for Medicinal products for Human Use) recommending that Provenge receive marketing authorization from the EMA (European Medicines Agency). In discussion with potential partners for launch in Europe and eventually other national markets. Believes a final EMA decision will be received this year.

42 new physician accounts were added in the quarter. The direct-to-consumer (DTC) advertising campaign continued, and appeared to have positive results, but cost $5 million in the quarter. Dendreon aims to leverage compelling evidence of the benefits of immunotherapy, especially in combination with other therapies. By type, community clinics accounted for 71% of revenue. Oncology was 38%, urology 33%, academic centers 18% (types are not exclusive). Competition is most intense in the community oncology setting, where there was a revenue decline. But overall the competitive landscape remained unchanged.

Cash and equivalents balance ended at $280.6 million, down sequentially from $337.3 million. Debt is $573 million in convertible notes.

The Provenge and ADT (androgen deprivation therapy) sequencing study completed enrollment. Also completed enrollment of the Provenge + Zytiga sequencing study and both presented initial data at ASCO-GU. Provenge + Xtandi Phase II trial expected to begin enrollment in Q4. There are 19 novel investigator initiated trials underway or planned. Also looking for biomarkers.

DN24-02 immunotherapy for HER2/neu tumor antigen is advancing in the pipeline. Will be looking for opportunities to augment the pipeline. Study enrollment should complete in 2014.

Non-GAAP numbers were net income negative $51.1 million, EPS negative $0.34. Year-earlier had been negative $60.2 million and negative $0.41, respectively. Excluded $3.6 million in non-cash stock based compensation expense, but the normal run rate is expected near $7 million.

Total operating expenses were $128.5 million. Consisted of $43.8 million cost of goods sold; $18.2 million research and development; $66.8 million selling, general, and administrative; and a $0.3 million restructuring benefit. Income from operations negative $55.2 million. Interest expense $13.6 million.

Still trying to reduce COGS (cost of goods sales). Still thinks can become cash-flow positive, but maybe not at $100 million per quarter revenue. In particular looking to reduce cost of antigen and to increase automation. Reductions in COGS more likely to appear in Q4 than in Q3.

Greg Cox, currently VP of Finance, has been named interim CFO to replace Gregory Schiffman.


Plan to turn cash flow positive, timeframe for? It is extemely important to reduce costs, and not just COGS. We will discuss timing of actions at a later date.

Why did the previous guidance for 2013 revenues fail? We had the positives, particularly urology. We had challenges from smaller oncology accounts, in particular when patients had to travel for therapy, and with patients with a higher disease burden. We believe having immunotherapy up front in sequence, and are seeing evidence of PSA scores coming down, but were hit by the competition. DTC exceeded expectations. We track patients who call in from DTC. Each ad has an individual 800 number to call, which is tracked. But we are not satisfied with the results overall.

We looked at June, July and first week of August results, and decided we should tell investors we could not meet the previous guidance despite showing some improvement over Q1.

Any DTC metrics? Not revealing metrics for competitive reasons. Conversion ratio exceeded what we were expecting.

Europe? We will be going with a contract manufacturing organization. We have a launch plan and are in discussions with potential partners.

Europe affect on profitability? We would like to have Provenge available for all 27 nations in Europe. But may have to prioritize markets.

Strategic alternatives? Open to whatever is to the advantage of our shareholders, but focus is on execution of the current plan.

Sequencing strategy? Is already some annecdotal evidence of efficacy of combining therapy.

NOLs? Dendreon has over $1 billion in net outstanding losses [WPM: used to reduce tax payments] and that is updated in 10-K filings.

New accounts are growing mainly in community oncology and in urology. Interest in Provenge is being driven by a variety of factors. Our focus is on making new accounts into large ($1 million or more) accounts.

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Copyright 2013 William P. Meyers