Analyst Conference Summary

Biotechnology

Conference date: May 8, 2014 @ 6:00 AM Pacific Time
for quarter ending: March 31, 2013 (first quarter, Q4)

Forward-looking statements

Overview: Revenue up slightly y/y. Net loss, improved, but is still unsustainable.

Basic data (GAAP):

Revenue was $68.8 million, down 8% sequentially from $74.8 million and up 2% from $67.6 million in the year-earlier quarter.

Net income was negative $36.4 million, up sequentially from negative $88.7 million, and also down from negative $72.0 million year-earlier.

EPS (earnings per share) were negative $0.24 , up sequentially from negative $0.58 and also up from negative $0.48 year-earlier.

Guidance:

Expects Q2 2014 revenue to be seasonally, sequentially up from Q1. Cash burn near $30 million.

Highlights:

Believes has made real progress in the last year. First year since competition for Provenge was introduced, that saw revenue grow. Achieved this with reduced expenses. Sequential decrease in revenue was due to seasonality.

Believes data supports increased clinical use of Provenge. Phase II sequencing study of Provenge and Xtandi is near completing enrollment. Completed enrollment in high-risk urothelial cancer Phase II study.

Enrollments increased sequentially since the quarter ended.

Taking a cost-effective approach to introducing Provenge in Europe. Will begin with fewer than 10 centers, all in England and Germany, with intent to treat first patient in Q4. European guidelines support Provenge, including using it prior to competing therapies within the label. Once automation is approved would expand further in Europe.

Believes can reach cost of goods sold in the 30s percentage range when automation is complete, given revenue assumptions.

Focus is becoming cash-flow break-even as soon as possible.

Community oncology led growth, up y/y but down sequentially. 40% community, 34% community urology, 26% hospitals.

Seeing increased competition. So Dendreon is focusing on the 93 larger accounts, which represented 80% of business. Believes held revenue share. Continues to educate about the benefits of immunotherapy.

Non-GAAP numbers were net income negative $23 million, up sequentially from negative $25 million. EPS negative $0.15, up sequentially from negative $0.17.

Cash and equivalents balance ended at $169.7 million. $30 million burn in quarter. Debt is $593 million in convertible notes.

Exploring options for addressing the convertible debt.

Total operating expenses were $91.9 million. Consisted of $36.6 million cost of goods sold; $14.0 million research and development; $39.4 million selling, general, and administrative; and a $1.8 million restructuring charge. Income from operations negative $23.1 million. Interest expense $13.4 million.

$2 million non-cash stock based compensation credit.

Exploring leasing out part of the Seal Beach facility.

Q&A:

Price effect on y/y revenue growth? We did take a price increase last year, it was only a $1 million lift from price on a y/y basis, it will be in our 10-Q.

Pre-chemo competition from Xtandi? We believe Provenge is complementary to both Xtandi and Zytiga. Competition from hormonal therapy is not new, is in oncology segment.

Debt due next month? We are addressing the overall debt issue. No specific comment on the 2014 or 2016 debt.

DTC campaign? Running ads through end of May. Whether to extend is a data-driven decision. So far DTC has met our expectations. We have learned a lot through this.

Europe? Initial plan is for less than 10 centers in Q4. We had physicians at the European Urology meeting ask us to be allowed to set up centers.

April trends? We saw enrollments sequentially up in Q1 and that continued in April. We believe our business has stabilized, with some help from price. We believe Q2 will improve over Q2 2013 similar to the Q1 improvement.

Immunotherapy campaign? Pleased with results. Patients are being treated earlier. We see the results in the urology and hospital segments.

We see seasonality in Q1 due to slowed enrollments in the holidays in the prior quarter.

We added 49 new sites in the quarter.

We don't have the reach of our two big competitors, so we are concentrating on our larger accounts.

To reach 30s for COGS we will need more than automation. We need to reduce our materials handling costs, and with other efficiencies.

Patients who received Zytiga. previously? Less than 5%.

Pricing strategy in Europe, reimbursements? We have been working with committees across Europe, discussions are going well. Our label in Europe breaks out response by quartile for PSA. They are looking at where pricing and utilization makes sense on a societal basis.

KOLs tell us the use of these products sequentially should increase over time. Xtandi coming into the pre-chemo market should mainly affect Zytiga, though we could lose some patients here and there.

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