Dendreon Corp. (DNDN, Financial) filed Quarterly Report for the period ended 2009-06-30.
Dendreon Corporation discovers and develops immunologically based therapeutic products for the treatment of cancer. Through the use of antigen engineering and proprietary cell separation technologies Dendreon develops therapeutic vaccines that induce cell-mediated immunity the body\'s key defense against cancer. In addition to its products for cancer Dendreon also intends to pursue the application of its technologies in the fields of autoimmune diseases allergies and infectious diseases. Dendreon Corp. has a market cap of $2.72 billion; its shares were traded at around $23.81 with and P/S ratio of 24478.4. Dendreon Corp. had an annual average earning growth of 15.3% over the past 5 years.
Interest income decreased to $196,000 for the three months ended June 30, 2009, from $951,000 for the three months ended June 30, 2008. Interest income decreased to $529,000 for the six months ended June 30, 2009, from $2.1 million for the six months ended June 30, 2008. The decreases in the three and six months ended June 30, 2009 compared to 2008 was primarily due to lower average interest rates.
Interest expense decreased to $213,000 for the three months ended June 30, 2009, compared to $1.2 million for the three months ended June 30, 2008. Interest expense decreased to $1.3 million for the six months ended June 30, 2009, compared to $2.8 million for the six months ended June 30, 2008. The decreases in the three and six months ended June 30, 2009 compared to 2008 was primarily due to a decreased outstanding debt balance associated with the conversion in April of $11.5 million in principal amount of the 4.75% Convertible Senior Subordinated Notes due 2014 (the Notes) to equity, and the May 2009 exchange of $21.2 million in principal amount of the Notes for equity, decreased interest expense related to debt and capital lease obligations and capitalized interest expense related to the construction of the New Jersey Facility and our product scheduling system in 2009.
In December 2005, we entered into the first two of a series of anticipated Promissory Notes (the GE Notes), with General Electric Capital Corporation (GE Capital), for the purchase of equipment and associated build-out costs for the New Jersey Facility. The GE Notes, which evidence one loan with an original principal amount of $7.0 million bearing interest at 7.55 percent per year that was paid in full at December 31, 2008, and the remaining loans with original principal amounts totaling $9.6 million and an average interest rate of 10.1 percent, are to be repaid in 36 consecutive monthly installments of principal and interest. The GE Notes are secured by a Master Security Agreement (the Security Agreement), and two Security Deposit Pledge Agreements (the Pledge Agreements). Pursuant to the Pledge Agreements, we deposited an aggregate of $7.0 million as a security deposit for the repayment of the GE Notes, which will be released upon the repayment of the GE Notes or upon receipt of FDA approval for the commercialization of Provenge. The balance of such security deposit as of June 30, 2009 was $3.0 million. The security deposit is recorded on our balance sheet in short-term restricted cash. There is a material adverse change clause in the Security Agreement which may accelerate the maturity of the GE Notes upon the occurrence of certain events. We do not believe a material adverse change in our financial condition has occurred. The balance due on the GE Notes as of June 30, 2009 was approximately $643,000.
On August 18, 2005, we entered into an agreement to lease 158,242 square feet of commercial manufacturing space in Morris Plains, New Jersey. The lease term is seven years, and we have the option to extend the lease for two ten-year periods and one five-year period, with the same terms and conditions except for rent, which adjusts upon renewal to market rate. We have pursued a plan to outfit the New Jersey Facility in phases to meet the anticipated clinical and commercial manufacturing needs for Provenge and our other immunotherapy product candidates in development. The Phase I of the build-out of the New Jersey Facility was completed in July 2006. In June 2009 we entered into a construction agreement for the build-out of Phases II and III of the New Jersey Facility, described below. In February 2007, we started to manufacture Provenge for clinical use in the New Jersey Facility. The lease required us to provide the landlord with a letter of credit in the initial amount of $3.1 million as a security deposit. We provided Wells Fargo, the bank that issued the letter of credit on our behalf, a security deposit of $3.1 million to guarantee the letter of credit. During 2008, the letter of credit was reduced to $1.9 million and the collateral amount required by Wells Fargo was reduced commensurately, resulting in a release of restricted cash of $1.2 million. The $1.9 million letter of credit was recorded as long-term restricted cash on our balance sheet as of June 30, 2009.
In April 2008, we received net proceeds of $46.0 million from our issuance of the Shares and the Warrants to the Investor. The Investor purchased the Shares and Warrants for a negotiated price of $5.92 per share of common stock purchased. The Warrants are exercisable at any time prior to April 8, 2015, with an exercise price of $20.00 per share of common stock. The Warrants contain a fundamental change provision, as defined in the Warrants, which may in certain circumstances allow the Warrants to be redeemed for cash in an amount equal to the Black Scholes Value, as defined in the Warrants. Accordingly, pursuant to SFAS No. 133, and EITF No. 00-19), the Warrants are recorded as a liability and then marked to market each period through earnings in other income (expense). The fair value of the Warrants at June 30, 2009 and December 31, 2008 was approximately $117.6 million and $14.2 million, respectively, based on Level 3 Inputs, as defined under SFAS 157 (see Note 4 to our Financial Statements). As a result of this increase, we recorded $105.8 million and $103.4 million in non-operating income for the three and six months ended June 30, 2009, respectively.
Read the The complete ReportDNDN is in the portfolios of PRIMECAP Management.
Dendreon Corporation discovers and develops immunologically based therapeutic products for the treatment of cancer. Through the use of antigen engineering and proprietary cell separation technologies Dendreon develops therapeutic vaccines that induce cell-mediated immunity the body\'s key defense against cancer. In addition to its products for cancer Dendreon also intends to pursue the application of its technologies in the fields of autoimmune diseases allergies and infectious diseases. Dendreon Corp. has a market cap of $2.72 billion; its shares were traded at around $23.81 with and P/S ratio of 24478.4. Dendreon Corp. had an annual average earning growth of 15.3% over the past 5 years.
Highlight of Business Operations:
General and administrative expenses increased to $7.6 million for the three months ended June 30, 2009, compared to $5.4 million for the three months ended June 30, 2008. General and administrative expenses increased to $12.8 million for the six months ended June 30, 2009, compared to $11.1 million for the six months ended June 30, 2008. General and administrative expenses were primarily comprised of salaries and wages, consulting fees, marketing fees and administrative costs to support our operations. The increases in the three and six months ended June 30, 2009 compared to 2008 was primarily attributable to increased salaries in the three months ended June 30, 2009, and wages associated with stock compensation.Interest income decreased to $196,000 for the three months ended June 30, 2009, from $951,000 for the three months ended June 30, 2008. Interest income decreased to $529,000 for the six months ended June 30, 2009, from $2.1 million for the six months ended June 30, 2008. The decreases in the three and six months ended June 30, 2009 compared to 2008 was primarily due to lower average interest rates.
Interest expense decreased to $213,000 for the three months ended June 30, 2009, compared to $1.2 million for the three months ended June 30, 2008. Interest expense decreased to $1.3 million for the six months ended June 30, 2009, compared to $2.8 million for the six months ended June 30, 2008. The decreases in the three and six months ended June 30, 2009 compared to 2008 was primarily due to a decreased outstanding debt balance associated with the conversion in April of $11.5 million in principal amount of the 4.75% Convertible Senior Subordinated Notes due 2014 (the Notes) to equity, and the May 2009 exchange of $21.2 million in principal amount of the Notes for equity, decreased interest expense related to debt and capital lease obligations and capitalized interest expense related to the construction of the New Jersey Facility and our product scheduling system in 2009.
In December 2005, we entered into the first two of a series of anticipated Promissory Notes (the GE Notes), with General Electric Capital Corporation (GE Capital), for the purchase of equipment and associated build-out costs for the New Jersey Facility. The GE Notes, which evidence one loan with an original principal amount of $7.0 million bearing interest at 7.55 percent per year that was paid in full at December 31, 2008, and the remaining loans with original principal amounts totaling $9.6 million and an average interest rate of 10.1 percent, are to be repaid in 36 consecutive monthly installments of principal and interest. The GE Notes are secured by a Master Security Agreement (the Security Agreement), and two Security Deposit Pledge Agreements (the Pledge Agreements). Pursuant to the Pledge Agreements, we deposited an aggregate of $7.0 million as a security deposit for the repayment of the GE Notes, which will be released upon the repayment of the GE Notes or upon receipt of FDA approval for the commercialization of Provenge. The balance of such security deposit as of June 30, 2009 was $3.0 million. The security deposit is recorded on our balance sheet in short-term restricted cash. There is a material adverse change clause in the Security Agreement which may accelerate the maturity of the GE Notes upon the occurrence of certain events. We do not believe a material adverse change in our financial condition has occurred. The balance due on the GE Notes as of June 30, 2009 was approximately $643,000.
On August 18, 2005, we entered into an agreement to lease 158,242 square feet of commercial manufacturing space in Morris Plains, New Jersey. The lease term is seven years, and we have the option to extend the lease for two ten-year periods and one five-year period, with the same terms and conditions except for rent, which adjusts upon renewal to market rate. We have pursued a plan to outfit the New Jersey Facility in phases to meet the anticipated clinical and commercial manufacturing needs for Provenge and our other immunotherapy product candidates in development. The Phase I of the build-out of the New Jersey Facility was completed in July 2006. In June 2009 we entered into a construction agreement for the build-out of Phases II and III of the New Jersey Facility, described below. In February 2007, we started to manufacture Provenge for clinical use in the New Jersey Facility. The lease required us to provide the landlord with a letter of credit in the initial amount of $3.1 million as a security deposit. We provided Wells Fargo, the bank that issued the letter of credit on our behalf, a security deposit of $3.1 million to guarantee the letter of credit. During 2008, the letter of credit was reduced to $1.9 million and the collateral amount required by Wells Fargo was reduced commensurately, resulting in a release of restricted cash of $1.2 million. The $1.9 million letter of credit was recorded as long-term restricted cash on our balance sheet as of June 30, 2009.
In April 2008, we received net proceeds of $46.0 million from our issuance of the Shares and the Warrants to the Investor. The Investor purchased the Shares and Warrants for a negotiated price of $5.92 per share of common stock purchased. The Warrants are exercisable at any time prior to April 8, 2015, with an exercise price of $20.00 per share of common stock. The Warrants contain a fundamental change provision, as defined in the Warrants, which may in certain circumstances allow the Warrants to be redeemed for cash in an amount equal to the Black Scholes Value, as defined in the Warrants. Accordingly, pursuant to SFAS No. 133, and EITF No. 00-19), the Warrants are recorded as a liability and then marked to market each period through earnings in other income (expense). The fair value of the Warrants at June 30, 2009 and December 31, 2008 was approximately $117.6 million and $14.2 million, respectively, based on Level 3 Inputs, as defined under SFAS 157 (see Note 4 to our Financial Statements). As a result of this increase, we recorded $105.8 million and $103.4 million in non-operating income for the three and six months ended June 30, 2009, respectively.
Read the The complete ReportDNDN is in the portfolios of PRIMECAP Management.
