Analyst Conference Summary



Conference date: March 3, 2014 @ 6:00 AM Pacific Time
for quarter ending: December 31, 2013 (fourth quarter, Q4)

I own this
Forward-looking statements

Overview: Revenue ramped sequentially, announced plans for Europe. But net loss got worse.

Basic data (GAAP):

Revenue was $74.8 million, up 10% sequentially from $68.0 million but down 13% from $85.5 million in the year-earlier quarter.

Net income was negative $88.7 million, down sequentially from negative $67.2 million, and also down from negative $38.7 million year-earlier.

EPS (earnings per share) were negative $0.58 , down sequentially from negative $0.44 and also down from negative $0.26 year-earlier.


Expects Q1 2014 revenue to be consistent with Q1 2013 [$67.6 million]; it is typically seasonally lower than Q4.


Growth in the sale of Provenge for mCRPC (metastatic castrate resistant prostate cancer) was led by community oncology, which grew 19% q/q. Community practices grew 2% sequentially, but represented 72% of total sales. Academic center revenue grew 5% sequentially. New commercial model and effectiveness is gaining traction. Revenue in the quarter was 40% oncology, 32% urology, 18% academic [?10% other?].

31 net new accounts were added in the quarter. 6 new large accounts were added, bringing the total number of large accounts to 100.

There was a $40.0 million charge in the quarter for loss on inventory impairment.

More personnel changes: Silvio Pacheco is the new Chief Customer Officer; Bill Jenkinson is the new Chief Marketing Officer.

Plan is to provide Provenge to patients in Europe through PharmaCell, a contract manufacturing organization. Germany and the U. K. will be first. There is a "favorable label in Europe" that should help get approvals for reimbursement. But still needs for the European authorities to approve the automation of the production of Provenge. There is pre-market demand for Provenge for advanced prostate cancer patients.

Dendreon continues to work with the FDA to gain approval of automation that will help drive production costs (COGS) lower and thus allow for profitability. Automation has already transitioned from prototypes to an alpha model to submit to the FDA.

Dendreon "presented data from ongoing immuno-oncology trials at ASCO-GU, which further elucidate the product potency and mechanism of PROVENGE, and surrounding investigational compound DN24-02."

Some costs should be reduced in Q1 2014. Expects 54% COGS in Q1.

2014 convertible debt issue remains a top priority.

Number of sales people in the field has declined 30% since its peak.

Non-GAAP numbers were net income negative $25 million, up sequentially from negative $43.9 million. EPS negative $0.17 , up sequentially from negative $0.29.

Cash and equivalents balance ended at $199.4 million, down $34 million sequentially from $233.3million. Debt is $588 million in convertible notes.

Provenge + Xtandi Phase II sequencing trial began enrollment in Q4. Sequencing trials, Phase 2, with Zytiga and ADT are fully enrolled; "data support that Zytiga and Provenge can be given concurrently." There are 19 novel investigator initiated trials underway or planned. Also looking for biomarkers. Emerging data indicates Provenge should be given before or with other therapies for minimally symptomatic mCRPC.

PREDICT study screening for castrate-resistant prostate cancer patients for metastasis is actively enrolling.

DN24-02 trial continues for HER2-neu expression cancers.

Total operating expenses were $150.1 million. Consisted of $38.5 million cost of goods sold; $40.0 loss on inventory impairment; $16.6 million research and development; $47.4 million selling, general, and administrative; and a $7.7 million restructuring charge. Income from operations negative $75.3 million. Interest expense $13.4 million.

$2 million non-cash stock-based compensation

Filing with insurance carrier for reimbursement of antigen inventory impairment charge.

DTC (direct to consumer) advertisement campaign continues to run.


Timeline for enrolling patients in Europe? We would see our first patient sometime early in Q4 due to need to finalize reimbursement and transition from clinical to commercial manufacturing.

Commercial partner? We are going to go it alone in Europe. We did not find a deal that was in our shareholders' interest. We will remain open to future partnerships. We believe we can go it alone with minimal commercial investment.

Could stabilization of sales continue if another competing product launches later this year? There was a lot of discussion at ASCO GU about the need to have multiple mechanisms of actions for the patients. The fact is none of the current therapies are a cure. Our message is to use immunotherapy earlier in the sequencing.

European awareness of Provenge, pricing? In our European label we have the quartile analysis described, which is significant. We believe the reimbursement authorities will position Provenge earlier. Our discussions on reimbursement have been extremely positive so far. There is some awareness with patients and physicians in Europe, particularly with the KOL community.

Automation color? We essentially now have the machinery that will be used once we get FDA approval. All that would change would be the software. It removes the problem of human error.

Direct to consumer (DTC)? We have achieved expectations to date. We are nearing the one-year mile mark. We will monitor our ROI and dial it up or down as appropriate. Some of the new accounts in Q4 resulted from DTC.

$40 million charge detail? This was antigen that had met our specs but was stored incorrectly at a third party supplier. We discovered it before manufacturing. We don't expect any more write-offs due to this particular reason.

Gross margin in Europe? It will be based on pricing and volume in specific countries, plus the contract with PharmaCell. Pricing is low in Europe, but automation should lower our costs.

Community urology segment? We were pleased with growth in this segment in Q4 and expect it to continue to grow. Urology seems to be bouncing back in Q1; patient flows are lumpy.

The $6 million write off in Q3 was the same antigen; we later decided we had to write off the full amount.

Is it possible to achieve profitability this year? We have taken strategic steps to move Provenge forward. We are working to become cash-flow positive as fast as we can. We have removed about 2/3 of our employees.

Zytiga Xtandi competitive landscape remained the same in Q4. We saw some impact in the pre-chemo setting by Xtandi in oncology. The greatest effect of competition in the smallest and low-volume accounts. We have seen no effect in our largest accounts.

Reimbursement in Europe? There are processes in Germany and Europe, no specific timeline, but about a 12 month review in Germany. Discounts may be in the 20% to 25% range, based on products similar to Provenge.

Capital structure and liquidity? We are working as effectively as possible to become cash flow break even. We are well advised on our debt issue.

Dendreon Main Page
Dendreon corporate investor page
OpenIcon Analyst Conference Summaries Main Page



More Analyst Conference Pages:


Disclaimer: Our analyst summaries may include both our condensations of statements made by company representatives and our own analysis. They are not covered by any warranty. We cannot guarantee anything said by company representatives is true. We try not to make errors, but it is possible. Before making or terminating an investment you should always verify any factual basis of your decision.

Copyright 2014 William P. Meyers