About Dendreon Corporation

Dendreon Corporation, founded in 1992, discovers and develops immunologically based therapeutic products for the treatment of cancer. The Company’s lead product, Provenge, is a therapeutic vaccine for the treatment of prostate cancer and is in Phase III clinical trials, the final stage of product development. Dendreon is conducting Phase II clinical trials for Mylovenge, its therapeutic vaccine for the treatment of multiple myeloma. The Company’s vaccine for the treatment of breast, ovarian and colon cancer, APC8024 is in Phase I clinical trials. The Company has additional therapeutic vaccines in preclinical development for the treatment of common malignancies, including lung, bladder and uterine cancers.  Together, these vaccines address the eight most common cancers in the Western hemisphere.

CEOCFOinterviews – What are some of your products and what stages are they in?

Mr. Simonetti – We have one product that is currently in 3 Phase III trials and that is Provenge.  Two of these Phase III trials are for hormone refractory prostate cancer.  We announced during men’s healthcare week, a Phase III trial in earlier stage prostate cancer for that product as well.  We also have Mylovenge, which is in late Phase II studies for multiple myeloma, and we recently announced the start of our third therapeutic vaccine cancer for our product APC8024 in breast and ovarian cancers.  Then we have 2 products in pre-clinical studies as well.  These vaccine candidates target multiple cancers, including lung, bladder, ovarian, breast and prostate cancers.

CEOCFOinterviews – Are you focusing strictly on cancer or do you see yourself expanding to other areas?

Mr. Simonetti – Our current focus is on oncology.  However, our technology does have applications outside of oncology.  Specifically, we believe that there is an opportunity to apply this technology to other areas like allergy, autoimmunity and infectious disease. 

CEOCFOinterviews – How exactly does this vaccine work?

Mr. Simonetti – These vaccines are not like our childhood vaccines that are prophylactic. These are therapeutic vaccines.  These vaccines are given once the disease is diagnosed.  In cancer settings, the immune system is compromised.  There are factors that tumors give off that inhibit certain compartments of the immune system.  There are also cancer cells that have done a good job of disguising themselves as normal cells.  The focus of our technology is to overcome these hurdles and the way we do that is through antigen engineering, a technology that we’ve evolved that rearranges these antigens at the DNA level so that they no longer look like normal antigens but still have the ability to illicit an immune response to the original antigen.  We combine these antigens with a specific cell in the immune system called the dendritic cell to elicit a T-cell response.  It’s believed that a T-cell response is the response that you want to get in order to create a specific immune response to these cancer or virally infected cells.  That is why we believe that this technology actually has application outside of oncology because T-cells respond not only to cancer cells but to virally infected cells.  Since these antigens are only found on cancer cells, not on normal cells, the immune system will not respond to normal cells. 

CEOCFOinterviews – How many treatments does a patient need in order to suppress the cancer from traveling?

Mr. Simonetti – A patient undergoes three vaccinations over a 4-week period.  The patient receives a vaccine at 0, 2,and 4 weeks and at that point the immune system has been induced to recognize the antigen and the natural biology of the immune system will perpetuate that response.  The patient only needs to go through 1 course of therapy. 

CEOCFOinterviews – What type of side affects are there?

Mr. Simonetti – There are very minimal side affects.  The types of side affects you see with these products are considerably different than you see with chemotherapy.  What you see in this setting is what you might expect with transfusion type medicine.  Patients may exhibit a slight fever or may get a slight reaction where the injection was.  These are all pretty mild side effects.

CEOCFOinterviews – When do you think the public will be more aware of this and know this product is out there for them?

Mr. Simonetti - We are currently in Phase III trials.  We began 2 of those trials last year and we’ll be done enrolling patients for 1 of those trials by the end of the summer.  We anticipate completing enrollment in the other trial by the end of the year.  We also anticipate that we will have some data available to share in the mid part of next year.  It’s our hope at that time that we will be able to use that data in the filing of a BLA application with the FDA. 

CEOCFOinterviews – Obviously you will have to partner up with some pharmaceutical company.  Do you have someone in mind or has someone taken an interest in this?

Mr. Simonetti – We have retained all the North American rights to our products. It’s our belief right now that a company of our size can in fact not only develop these products but market and sell these products with a very focused sales force.  We don’t have exact numbers but I think you can imagine a sales force in the 80-100-person range being able to cover these types of markets.  In the case of Provenge, which is for prostate cancer, you’re talking about a fairly focused group of urologists and oncologists that you would be targeting. It’s our intent to commercialize these products ourselves.  There are examples in the industry that shows it can be done.  

CEOCFOinterviews – Are you doing clinical trials in any other countries?

Mr. Simonetti – We do have a strategic partnership with the Pharmaceutical division of the Kirin Brewing Co., Ltd. and they have licensed our technology to develop these products in Asia.  They are currently conducting trials in Japan right now for both Provenge and Mylovenge.  We have had some discussions in Europe with some of the regulatory authorities and agencies there about these products and we anticipate that in the near future we would have some trials underway in Europe as well.

CEOCFOinterviews – Where is your revenue stream coming from now and do you have enough access to it going forward?

Mr. Simonetti – In a small company such as ours and especially such a capital intense company as ours, we are very keenly aware that cash is king.  We did an IPO and a secondary offering last year and at the end of the first quarter this year had approximately $95 million in the bank.  We’ve been burning on a net basis about $2 million a month.  As I mentioned we have the strategic relationship with Kirin, and we also have a strategic relationship with the Pharmaceutical Research Institute of the Johnson & Johnson family of companies. Between these 2 strategic partnerships, we anticipate they will cover about 35% of our cash burn associated with our R&D expenditures this year.  They support some ongoing research associated with those relationships in our organization now.  These collaborations, together with our cash generated from equity offerings, has us feeling comfortable that we have sufficient cash to bring these products to market at this time.   

CEOCFOinterviews - Back in April when you did your first quarter results, in R&D alone it increased 49%.  Can you expand on that?

Mr. Simonetti – That’s a reflection of the significant increase in effort around the clinical trials.  As you know moving a product from the research phase into the clinical development phase is a very expensive decision especially in the Phase III process and so with the initiation of those trials and bringing on board our other products into the trial process our expenditures did run around that number.

CEOCFOinterviews – Do you see this following the same path until it is marketed or do you feel the largest sum is behind you?

Mr. Simonetti – This is part of a portfolio management discussion that we evaluate each product on a series of criteria and base decisions on how we are going to move these products forward on a resource basis as well.  So you have to link all these things together.  As Provenge winds down in its trials towards the end of this year, other products will be moving upwards in trials in terms of that. Therefore, we certainly aren’t going to see expenditures going down in the very near future.  Obviously, we can’t continue to increase expenditures at the rate you described on an ongoing basis.  We have 2 other products that are in the clinic as well and are continuing to move forward and as you move them further and further into the clinic, the expenditure level will increase. 

CEOCFOinterviews – How much advertising expenditures are you willing to spend to get these products out there?

Mr. Simonetti – First of all, until the products are approved we can’t be promoting our products.  At this point, we are doing no promotions of the products.  We have done patient enrollment efforts, but we certainly are not promoting the products in any way at this point.  As we move forward and receive approval from the FDA for the marketing and selling of this product then in fact we would evolve a marketing strategy that would promote these products at that time.

CEOCFOinterviews – What would you say to a potential investor?

Mr. Simonetti – There’s a couple of key things that an investor should look at and if you do that than I think that you would see that we are a company you would want to invest in. One key thing is the technology.  You have to take a hard look and understand the technology that you are investing in.  Another factor is intellectual property, which is always a very important part of the decision making process.  In the case of Dendreon, we have 88 patents that we either own or have licensed.  We have over 200 applications in place for other patents. We’ve really built a solid intellectual portfolio to support the ongoing efforts of the organization.  I think another thing you should look at is the management team.  In the case of Dendreon, I think that you would be very impressed.  Our chairman and CEO, Chris Henney, is an over 20-year veteran in the biotech industry and was a co-founder of Immunex Corp.   In 1989, together with a couple of other people, he was co-founder of Icos Corp.  He took the helm here at Dendreon back in 1995.  Our president and chief scientific officer, Dave Urdal, is another 20 year veteran having spent the first 14 years at Immunex Corp. as their first head of Biochemistry and then ultimately as the president of their manufacturing division the last 5 years before joining Dendreon in 1995. Myself, I’ve been in the industry 20 years as well.  Originally, as a bench scientist and then moved over to finance at Genentech back in the late 80’s.  Then joined Amgen in 1991 in various finance operation roles ultimately as the V.P. of Finance and Operations of their Colorado division.  Then I joined Dendreon in Jan.1999.  At the senior level we have 3 people who have been with successful companies and successful products and have seen what works and doesn’t work in those companies and in the industry as a whole over that period of time.  There are a lot of lessons learned through experience.  So I think those are the key criteria, the technology, the intellectual property, the management team and ultimately the cash. 

CEOCFOinterviews – When you joined the company in 1999, what was the biggest challenge you were faced with?

Mr. Simonetti – In January of 1999 the company was in the process of moving its headquarters from the San Francisco Bay area to Seattle, Washington.  We were faced with a multiplicity of issues at the time; mostly centered on financing the organization.  We were in the process at an operational level of moving the entire company and relocating families and scientists.  At the same time we were obviously trying to do a round of private financing to support the next phase of growth in the company.  There was a lot of activity going on at that time and I do reflect back on it often because it was a lot of fun and it is still a lot of fun.  It was an exciting time to say the least. 

CEOCFOinterviews – Do you have any problems getting the scientists and qualified personnel?

Mr. Simonetti – Since moving to Seattle, we’ve been very fortunate to grow the organization at a pace that makes sense with what we are trying to accomplish.  The pool of talent here locally in Seattle is quite good.  The other aspect about Seattle, we’re not only able to recruit locally but we can recruit nationally and internationally as opposed to being a small company in the Bay area where the cost of living was really prohibitive for a small company to move people into the area.  It takes a little longer to recruit scientists than it does general administrative people but I think that because of the things I mentioned earlier about why someone would invest in a company, those are the same reasons we are able to attract strong talent to this organization.  That’s part of why we were able to grow the organization quite successfully over the last 2 years.