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Annual Meeting Notes

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By tktrimbath
June 11, 2009

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Dendreon Annual Meeting of Stockholders June 10,2009

As usual, I attended the meeting and have compiled this post from my notes. I hope you find them useful, but really I got the idea for personal purposes. It is very handy to look back and see what changes as a company progresses.

CAVEAT
I am human, not a biotech professional, not an finance professional, and can't take notes as quickly as they speak. Mistakes will be made. When you really have to know, ask me for clarification, other attendees for other points of view, and get the official words from the company, the FDA, and the SEC.

PRE-MEETING
Dendreon holds its meetings in a conference room in its headquarters. This year they outgrew it (~200 people?) and added a set of chairs in the break room where the organic goodies lived. Take your pick. Live action, but theater seating; or a big screen TV but lots of good, free food. A couple of friends and I sat in the back of the theater. I like being able to watch the off-podium reactions. Free T-shirts to those who attended. That and the food were the closest things to dividends.

The following is not chronological, because I don't want to describe the various introductions and director's accolades.

OFFICIAL MEETING
Everything passed with a quorum of 79%. That took less than ten minutes.

While in control of the podium, the COB took the time to comment on the recent good news, but to also emphasize that there is no finish line. He said that there is every reason to believe that the FDA will approve Provenge, but that there is considerable work required for the application, commercialization, and the strategic growth of the pipeline and the company.

BUSINESS PRESENTATION
Mitch Gold, CEO and President, gave the presentation; which, was purposely abbreviated because most of the audience had already seen the data and might appreciate having more time for the Question & Answer section. For the most part he was correct. Much of what he presented was familiar to long term shareholders. For more details, I suggest cruising the press releases and commentary.

For those familiar with the company, Eduardo, one of the first public Provenge success stories, passed away. Before the treatment his prognosis was for about 18 month survival. He lived for 8 more years. I am glad that he allowed us to follow his progress.

The CEO mentioned 200 employees (which is more than last year and probably much less than next year), and that the company raised $220 million.

He briefly described the pipeline. Beside Provenge, the chart described Neuvenge (breast, colorectal, ovarian?), CEA (breast, colon, lung), CA9? (kidney, colorectal, cervical), and TRPM8 (small molecule - prostate). His primary message was that Provenge is just the beginning, and its success validates Dendreon's proprietary dendritic cassette technology. The Antigen Delivery Cassette is effective and relatively simple, from the physician's point of view. It is infusion (transfusion?) based medicine and takes about 30-60 minutes to administer. This keeps it within the current exam room facility rather than other transfusions which take hours and require separate facilities.

Provenge's initial label will cover approximately 100,000 patients annually. He showed the 9901 and 9902B data. (I was surprised to see curves on the 9902B data eventually collapse, and I am sure someone on the board can explain that.)

He emphasized that this is the first immunotherapy treatment for any cancer. It changes the paradigm and validates the technology. They look to build a big oncology company and are focused on commercialization, not selling the company.

Their target customers are the 5,000 oncologists and 3,000 urologists, who will be dealing with about 120 sales staff.

The company has approximately $351,000,000 in assets, which is a comfortable position from which to commercialize Provenge and possibly restart the pipeline.

He described the company as a compelling investment opportunity. They have 100% of the rights (which they'll keep in the US but partner ex-US), and they have a validated platform which has strong physician interest.

With that, he turned it over to Q&A.

QUESTIONS & ANSWERS (paraphrased)
? Provenge is used post-chemo and castration. Approval for earlier cases requires more and longer studies, especially if survival is the measure.
? Immune response is persistent, and booster shots boost the response, but the impact on survival is unknown. (first treatment CD54 rises five-fold, second treatment CD54 rises ten-fold, third treatment CD54 rises ten-fold)
? The company is not being built for a buyout. There are few oncology companies that haven't sold away their rights. Dendreon will be one of the few to retain their rights.
? Executives sold stock for personal reasons like diversification.
? Pipeline re-ignition (and as one person said, do you want to ignite a pipeline?) is limited by capital but will be addressed this summer.
? Dendreon will not promote off-label use of Provenge. (Are they even allowed to promote off-label?)
? The FDA responds to data, not advocacy. The physicians have gone from 30% awareness prior to the panel meeting, to 50% post-panel, to 93% today.
? The cassette's intellectual property protections probably run out in 2020.
? Typically, a drug takes 10 years and $1 billion to reach approval. Provenge took longer, partly because the paradigm for the approval process is being re-defined for immunotherapy.
? (There was an excellent question on reimbursement, but I distracted myself with a side-conversation and missed the answer except to hear "Medicare".)
? The manufacturing facility is built to at least 25%. The remainder takes 12-14 months (which I believe has already begun). The 25% is sufficient to begin revenue operation.
? Lots of companies are talking about cooperative group studies, Provenge plus this, Provenge plus that, etc. There is lots of interest and it is all good for the company. (and hopefully the patients)
? Neuvenge may work against breast, ovarian, and colorectal cancers in a similar or better fashion than Provenge. The downside is that the patient population is more fragmented and there is much more competition.
? (I was confused by the question and the answer.)
? The company intends to remain independent. With the pipeline operating, the company will look different. The COB stood up, agreed, and emphasized the point.
? The FDA is driven by data, not politics.
? The summer analysts' meeting will provide more details.
? The FDA provided crystal clear instructions about how to clear their internal concerns and Dendreon's manufacturing issues.
? The stock divot is perplexing, but he focuses on long term issues and value.
? Dendreon's products are aimed at making cancer chronic instead of life-threatening. The word "cure" is a tougher term.

POST MEETING
The meeting adjourned and the attendees milled around more than last year. The chief scientist, the COB, and the CEO were all very accessible and surrounded. Ask the other attendees for additional insights.

MY SUMMARY & CONCLUSIONS
The company has done well. They've championed an innovative technology through tough and contentious technical, regulatory, and financial waters.

They keep to the story line of an independent company working for the patients and relying on the FDA to approve based on the data provided. The patient population for Provenge is men with late stage prostate cancer. They leave it to us to speculate about off-label use and whether the FDA is influenced by politics or if the financial markets are influenced by criminals. It is hard to know if they are maintaining a story line while fully aware of improprieties, or if they are very naive. The realities of their situation are such that they have no incentive to act otherwise. It is up for us to make up our minds.

Usually, management message posturing is fine by me because it rarely changes the long term picture, but I was dismayed by management's dismissal of the trading improprieties. Among their many duties is to protect the shareholder interests. The stock divot directly affected shareholder interests, yet they do nothing about it. This is a fundamental task and job description that they choose to ignore. That would get many people fired in other jobs. But, so it goes.

I am encouraged by the strategy of independent growth. I am encouraged by the progress. I am discouraged by the delay which has allowed other companies to catch up. I am discouraged by the delay in the pipeline and particularly in the delay in treating breast cancer. The company may still grow significantly, but I now suspect that it will take longer and may be less extensive. Despite that, it continues to have enormous potential.

I may be inspired by management to sell a bit to diversify and realize some gains.

I also want to thank all of the men who risked their lives by entering the trials. I appreciate their efforts as an investor, but also as a middle-aged man. Thank you.

DISCLAIMER
LTBH since 2002 and optimistic based on data but pessimistic based on politics. (Copied from last year's notes and still true.)