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Dendreon Stockholder's Meeting Notes
Board: Dendreon Corporation

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By tktrimbath
June 7, 2007

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Dendreon Annual Stockholder's Meeting 06/06/07


CAVEAT I am an amateur investor and not a biotech professional. I am also human. Mistakes will be made. That's why it is best to ask questions, check with others and remember that the official words reside with Investor Relations and the SEC. Also, Dendreon's situation is so incredible that I can't cover a lot of the recent background here. That would literally take an entire book and I ain't writing that in an afternoon. The DNDN, biotechnology, and New Paradigm Investing boards cover most of it.

PRE-MMEETING
The meeting was held in the company's auditorium just like the last couple of years, but they've finally had to expand to accommodate the extra shareholders. So some folks had to sit in the break room and watch the meeting on a projection screen. I got there early to get my favorite seat in the main room, so I don't know how many were in the overflow. The total was probably about 200, but I am guessing.

The mix was different this year. Many of the new attendees were new shareholders. I think there were fewer suits too.

The other benefit was a goodie bag. Previous years have been a notepad, pen and maybe a coffee mug laid out in piles on a table. This year there was a stack of those fancy bags that have cloth cords so they act as mini-backpacks. Inside each was a notepad, pen, and a Dendreon hat. Hmm, it was a black hat. (Are they making a statement here? Just joking.)

INTRODUCTIONS
The Chairman of the Board was out of the country on family matters, so he sent in a video. He expressed his surprise by using words like unbelievable, uneasy, roller coaster, etc. The issue is back in Dendreon's hands and he was impressed with all of the work that the Dendreon employees have done.

FORMAL MEETING
87.8% of the shares were represented at the meeting and everything passed.

BUSINESS PRESENTATION
The CEO took over and used a show of hands to point out that many people there were first-timers to the company's meeting. That gave him the opportunity to point out that over a billion shares have been traded since the panel meeting. He described the company's recent events as incredibly interesting. IN a very natural way he described the company as "your" company, a distinction that most corporate types miss.

The summary of Provenge is that it looks to be a safe and effective means of treating prostate cancer that is in demand because of its negligible side effects and improvement to a patient's quality of life. The FDA action has sparked a consolidation of the prostate cancer support groups who want to see Provenge approved.

In practice, the treatment involves three doses within a month. Each dose takes 30-40 hours to produce and is customized for each patient because it uses that patient's cells. The current drugs have severe enough side effects that patient frequently refuse to continue the treatment, and that for those that do take Taxotere and such, there is very little improvement in survivability.

The 9901 trial showed a 4.5 month median survival improvement which contrasts the 2.5 month Taxotere experience, but that is only the mean survival. Some patients have lived years longer as a result of Provenge. The 9901 trial was actually measuring time-to-disease-progression and showed a 31% improvement, but missed the statistical probability of .05 by .052. Because of that .002 Provenge was not submitted for approval years ago.

Here is where it might be important to check with the real detail types. As I understand it, the 9901 data and the 9902A data were used as the basis for the BLA (basically the application for approval) back in late 2006. It was that data that the advisory panel voted as safe (17-0) and probably effective (13-4). No one, except some of the people within the FDA (and their compatriots?), expected Provenge to not be approved. The next surprise was that the FDA's letter was unclear and ambiguous. A formal fallow-up meeting produced clearer instructions and is agreed to in writing. In general, the company is driving to providing interim data from the 9902B trial as the next most critical step in the process.

The 9902B, also known as IMPACT, is a trial designed to focus on survivability instead of time-to-disease-progression. The treatment takes longer than expected to kick in, which made it more difficult for the earlier trials to succeed - though they still came very close. The 9902B trial is going on at 70 sites, has over 400 patients signed up and should complete the enrollment of 500 by the end of this year. The timing of the interim data is then driven by a certain number of death events. And yes, as best as I understand it, the FDA needs to see a certain number of men die before Dendreon can resubmit the data. I have to skip to the next paragraph before I dwell on that insanity.

The market for Provenge is large and because prostate cancer is treated by both oncologists (5000) and urologists (3000) it will take about 125 sales and marketing people to sell Provenge.

If Provenge gets approved, Dendreon can restart its pipeline: Neuvenge for breast and ovarian cancer, and also treatments for colorectal cancer and renal cancer. There is also a TrpP8 (spelling please) study that I forget the details about.

FINANCIALS
The CFO has only been with the company for 5 months. (What a time to join DNDN.)

As of the end of March they had $88M in cash and $130M in assets.

They will spend about $95M in 2007, of which most costs are payments to third parties. About $18M of that is for antigen products that have long shelf lives that could be used in subsequent years. The 18% layoff also helps the cash flow, though it hurts the personnel. The delay allows for a slowed and cheaper ramp-up.

If nothing else was to happen, FY08 would see a cash burn of $55M so with the recent refinancing (Which was done at about $10.28/share) the company has two years of cash. That should be enough to get the company through the interim data from 9902B.

BUSINESS SUMMARY
The CEO summarized by pointing out that Dendreon still has first-mover advantage, plans to retain 100% of US rights, plans to negotiate non-US rights, and can expand the Provenge treatment within and beyond the existing trial populations.

QUESTIONS & ANSWERS (paraphrased to make my life simpler)
> Q: Would Dendreon be interested in meeting with various wealthy and influential representatives from outside the US for the purpose of establishing a clinic somewhere outside the US? Dubai was presented as one example.
A: The company is committed to bringing Provenge to market and the US is prime. Their decision to go it alone was a good one and outside possibilities are to be evaluated.
> On the political side, Washington senators Cantwell and Murray are being kept up to date, but the company expects science to prevail and will not use the refinancing to pursue political solutions.
> Restarting the pipeline won't happen until they can discuss it; especially, now that they have a better understanding of how to design an immunotherapy trial. The recent financing will fund the discussion.
> Q: Are there other options other than waiting for the Interim data? The company is focusing on the interim data. The timing is driven by reaching a certain number of "death events".
> Q: Why should the company trust the FDA this time? Things have been written down before and the company has been surprised. A: There is more evidence now.
> (I missed one or two. Sorry about that.)
> Early data sets the bar higher because statistics favor larger data sets and that takes a while.
> The manufacturing issues are minor and will be handled before the interim data come in.
> The question change at the advisory meeting was from non-standard wording to standard wording, which was why the vote improved after the change.
> Provenge is one of the first, if not the first, immunotherapy approach to a medical condition. Most FDA regulations address drugs, but Provenge is a treatment. The distinction is apparent to the medical community but is not reflected in the FDA regulations. That disconnect is part of the problem with approval and with designing a proper trial.
> The company has met informally and formally with the FDA since the CR letter at the highest levels and has received clarification in writing.
> An appeal could actually slow down approval because some activities would have to be shutdown. It also creates an adversarial relationship with the FDA.
> After a certain number of "death events" the approval process clock restarts. The FDA could take up to 6 months to respond, but they could take less too.
> CD54 potency release correlates with survivability which suggests that booster shots would increase efficacy.
> If the interim data is not sufficient for approval then the company will have to wait until 9902B is completed, probably sometime in 2010.

SUMMARY
Dendreon is a company with a viable technology which is first represented by Provenge, a treatment for prostate cancer. A trial from a few years ago almost met the statistical goal, but because it missed by .002, the company has had to embark on additional clinical trials. The company thought it had a good relationship with the FDA, so under mutual agreement, the company submitted Provenge for approval based on the available data. An FDA advisory panel voted Provenge to be safe (17-0) and to have a reasonable probability of being effective (13-4). Rather than approval, the FDA produced a CR letter that asked for more data but was vague and ambiguous. Subsequent communications have resulted in another agreement with the FDA and that data should be available in less than a year. If data is available soon, and Provenge is approved in a timely fashion, Dendreon is in first-mover position to market Provenge and study extending it and its technology within prostate cancer treatments and beyond into treatments for breast, ovarian, colorectal, and renal cancers. In the meantime the company has two years of cash and a groundswell of support.

CONCLUSION
Wow. I never would've guessed this scenario while sitting at last year's meeting.
The company's public position of focusing on the interim data is probably the least adversarial face they can proceed with. The consensus of the crowd was that the issue is primarily political within the FDA. The best hope for Provenge is that political pressure from Congress and cancer support groups will provide the FDA with an excuse to accept the interim data as sufficient, if for no other reason than because of the limited side effects. Ulterior motives, money influences, pride issues may all exist, but they are moot in the time frame of getting Provenge approved. Conflicts of interest and SEC reforms are important but will not happen quickly enough to affect Provenge's approval process. Congressional pressure, and voters influencing congressmen are more expedient avenues.

Sadly, rather than working at saving lives, the process requires a certain number (>100) of men to die before the treatment can be approved. This delay also affects the company's treatments for breast, ovarian, colorectal and renal cancers. Oops, gotta get off of that soap box.

I like the company's prospects but their future is being determined by politics and pride, not science and financing. I can't tell if their posture is well-thought out and noble, or naive and noble. I will continue to hold but can not recommend any action because the forces at play are hidden and tangled. It is however a fascinating view of the medical, regulatory, financial, and political realms. I hope for the best, but unfortunately, hope is not an investment strategy. Hope is a gamble.

DISCLAIMER
LTBH since late 2002. Not a professional investor. Not a biotech professional. In a family with a recent history of prostate cancer. And am a middle-aged man who hopes this is resolved. And much of this information was also covered at a shareholder event held the night before by David Miller, who runs a biotech newsletter, and by Investor Village. Individual shareholders are still the best source of information and I thank you all for your insights and your tolerance of any gaps that I didn't fill.


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