Dendreon Corp. (DNDN, Financial) filed Quarterly Report for the period ended 2010-03-31.
Dendreon Corp. has a market cap of $5.89 billion; its shares were traded at around $43.91 with and P/S ratio of 58318.1. DNDN is in the portfolios of Steven Cohen of SAC Capital Advisors, PRIMECAP Management, Jim Simons of Renaissance Technologies LLC, Jeremy Grantham of GMO LLC.
On August 18, 2005, we entered into an agreement to lease approximately 158,000 square feet of commercial manufacturing space in Morris Plains, New Jersey (the New Jersey Facility). 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. The initial phase (Phase I) of the build-out of the New Jersey Facility was completed in July 2006. In February 2007, we started to manufacture Provenge for clinical use in the New Jersey Facility. 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. Phase II of the facility build-out was completed in January 2010. 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. The deposit was later reduced to $1.9 million. The $1.9 million security deposit was recorded as long-term investment on our consolidated balance sheet as of March 31, 2010.
In May 2009, we placed an order for $39.5 million with Diosynth under our agreement dated December 22, 2005, as amended, which covers the commercial production of the recombinant antigen used in connection with Provenge. We expect to receive shipment of the order commencing in 2010. As of March 31, 2010, our remaining obligation related to this commitment is to pay Diosynth $19.2 million upon the delivery of antigen. In May 2010, we placed an order with Diosynth for shipment of antigen to commence delivery in mid 2011. The commitment for this order is approximately $40.0 million of which approximately $10.0 million will be prepaid to Diosynth in the second quarter of 2010. Our agreement with Diosynth, as amended, has an initial term through December 31, 2013, and unless terminated, will renew automatically thereafter for additional 5-year terms. The agreement may be terminated upon written notice by us or Diosynth at least 24 months before the end of the initial term or a renewal term or by either party in the event of an uncured material breach or default by the other party.
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 and include a net exercise feature. 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 BSM Value, as defined in the Warrants. 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 March 31, 2010 and December 31, 2009 was approximately $201.0 million and $133.0 million, respectively. As a result of this increase, we recorded $68.1 million in non-operating loss for the three months ended March 31, 2010.
In June and July 2007, an aggregate of $85.3 million of the Notes were sold in a private placement to qualified institutional buyers. Proceeds from the offering, after deducting placement fees and our estimated expenses, were approximately $82.3 million. The Notes were issued at face principal amount and pay interest semi-annually in arrears on June 15 and December 15 of each year. Record dates for payment of interest on the Notes are each June 1st and December 1st. In certain circumstances, additional amounts may become due on the Notes as additional interest. We can elect that the sole remedy for an event of default for our failure to comply with the reporting obligations provisions of the indenture under which the Notes were issued (the Indenture), for the first 180 days after the occurrence of such event of default would be for the holders of the Notes to receive additional interest on the Notes at an annual rate equal to 1% of the outstanding principal amount of the Notes. We recorded interest expense, including the amortization of debt issuance costs related to the Notes, of $314,000 and $1.1 million for the three months ended March 31, 2010 and 2009, respectively.
As of March 31, 2010 and December 31, 2009, we had short-term investments of $234.8 million and $167.1 million, respectively, and long-term investments of $18.5 million and $29.4 million, respectively. Our short-term and long-term investments are subject to interest rate risk and will decline in value if market interest rates increase. The estimated fair value of our short-term and long-term investments at March 31, 2010, assuming a 100 basis point increase in market interest rates, would decrease by approximately $1.2 million, which would not materially impact our results of operations, cash flows or financial position. While changes in interest rates may affect the fair value of our investment portfolio, any gains or losses will not be recognized in our statement of operations until the investment is sold or if the reduction in fair value was determined to be an other than temporary impairment.
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Dendreon Corp. has a market cap of $5.89 billion; its shares were traded at around $43.91 with and P/S ratio of 58318.1. DNDN is in the portfolios of Steven Cohen of SAC Capital Advisors, PRIMECAP Management, Jim Simons of Renaissance Technologies LLC, Jeremy Grantham of GMO LLC.
Highlight of Business Operations:
Net cash (used in) provided by investing activities for the three months ended March 31, 2010 and 2009, was ($95.0) million and $15.1 million, respectively. Expenditures related to investing activities for the three months ended March 31, 2010, consisted primarily of purchases of investments of $128.1 million and purchases of property and equipment, primarily related to facilities related expenditures, of $37.9 million, offset by maturities and sales of investments of $71.0 million.On August 18, 2005, we entered into an agreement to lease approximately 158,000 square feet of commercial manufacturing space in Morris Plains, New Jersey (the New Jersey Facility). 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. The initial phase (Phase I) of the build-out of the New Jersey Facility was completed in July 2006. In February 2007, we started to manufacture Provenge for clinical use in the New Jersey Facility. 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. Phase II of the facility build-out was completed in January 2010. 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. The deposit was later reduced to $1.9 million. The $1.9 million security deposit was recorded as long-term investment on our consolidated balance sheet as of March 31, 2010.
In May 2009, we placed an order for $39.5 million with Diosynth under our agreement dated December 22, 2005, as amended, which covers the commercial production of the recombinant antigen used in connection with Provenge. We expect to receive shipment of the order commencing in 2010. As of March 31, 2010, our remaining obligation related to this commitment is to pay Diosynth $19.2 million upon the delivery of antigen. In May 2010, we placed an order with Diosynth for shipment of antigen to commence delivery in mid 2011. The commitment for this order is approximately $40.0 million of which approximately $10.0 million will be prepaid to Diosynth in the second quarter of 2010. Our agreement with Diosynth, as amended, has an initial term through December 31, 2013, and unless terminated, will renew automatically thereafter for additional 5-year terms. The agreement may be terminated upon written notice by us or Diosynth at least 24 months before the end of the initial term or a renewal term or by either party in the event of an uncured material breach or default by the other party.
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 and include a net exercise feature. 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 BSM Value, as defined in the Warrants. 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 March 31, 2010 and December 31, 2009 was approximately $201.0 million and $133.0 million, respectively. As a result of this increase, we recorded $68.1 million in non-operating loss for the three months ended March 31, 2010.
In June and July 2007, an aggregate of $85.3 million of the Notes were sold in a private placement to qualified institutional buyers. Proceeds from the offering, after deducting placement fees and our estimated expenses, were approximately $82.3 million. The Notes were issued at face principal amount and pay interest semi-annually in arrears on June 15 and December 15 of each year. Record dates for payment of interest on the Notes are each June 1st and December 1st. In certain circumstances, additional amounts may become due on the Notes as additional interest. We can elect that the sole remedy for an event of default for our failure to comply with the reporting obligations provisions of the indenture under which the Notes were issued (the Indenture), for the first 180 days after the occurrence of such event of default would be for the holders of the Notes to receive additional interest on the Notes at an annual rate equal to 1% of the outstanding principal amount of the Notes. We recorded interest expense, including the amortization of debt issuance costs related to the Notes, of $314,000 and $1.1 million for the three months ended March 31, 2010 and 2009, respectively.
As of March 31, 2010 and December 31, 2009, we had short-term investments of $234.8 million and $167.1 million, respectively, and long-term investments of $18.5 million and $29.4 million, respectively. Our short-term and long-term investments are subject to interest rate risk and will decline in value if market interest rates increase. The estimated fair value of our short-term and long-term investments at March 31, 2010, assuming a 100 basis point increase in market interest rates, would decrease by approximately $1.2 million, which would not materially impact our results of operations, cash flows or financial position. While changes in interest rates may affect the fair value of our investment portfolio, any gains or losses will not be recognized in our statement of operations until the investment is sold or if the reduction in fair value was determined to be an other than temporary impairment.
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