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Table of Contents
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
 
 
FORM 10-Q
 
Mark One
 
x
 
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2002
 
or
 
¨
 
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM                      TO                     
 
 
Commission File Number: 000-30681
 
DENDREON CORPORATION
(Exact name of registrant as specified in its charter)
 
DELAWARE
  
22-3203193
(State or other jurisdiction of incorporation or organization)
  
(IRS Employer Identification No.)
 
3005 FIRST AVENUE, SEATTLE, WASHINGTON 98121
(Address of principal executive offices, including zip code)
 
(206) 256-4545
(Registrant’s telephone number, including area code)
 
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    x  Yes    ¨  No
 
The number of shares of the registrant’s common stock, $.001 par value, outstanding as of October 31, 2002 was 26,368,964.
 

Table of Contents
DENDREON CORPORATION
 
INDEX
 
             
PAGE NO.
PART I.    FINANCIAL INFORMATION
     
        Item 1.    Financial Statements
     
   
a)
      
2
   
b)
      
3
   
c)
      
4
   
d)
      
5
  
6
  
16
  
17
PART II.    OTHER INFORMATION
     
  
17
  
18
  
19
  
20
  
22

Table of Contents
PART 1—FINANCIAL INFORMATION
 
ITEM 1.    FINANCIAL STATEMENTS
 
DENDREON CORPORATION
 
CONDENSED BALANCE SHEETS
(in thousands, except share and per share amounts)
 
    
September 30, 2002
     
December 31, 2001
  
    
(unaudited)
         
ASSETS
                  
Current assets:
                  
Cash and cash equivalents
   
$
20,144
 
   
$
13,912
 
Short-term investments
   
 
34,452
 
   
 
56,969
 
Accounts receivable
   
 
2,337
 
   
 
1,955
 
Other current assets
   
 
3,398
 
   
 
3,253
 
    
  
Total current assets
   
 
60,331
 
   
 
76,089
 
Property and equipment, net
   
 
3,705
 
   
 
3,858
 
Long-term investments
   
 
6,209
 
   
 
10,361
 
Deposits and other assets
   
 
887
 
   
 
774
 
    
  
Total assets
   
$
71,132
 
   
$
91,082
 
    
  
LIABILITIES AND STOCKHOLDERS’ EQUITY
                  
Current liabilities:
                  
Accounts payable
   
$
642
 
   
$
932
 
Accrued liabilities
   
 
5,917
 
   
 
4,524
 
Accrued compensation
   
 
1,277
 
   
 
1,975
 
Deferred revenue
   
 
6,574
 
   
 
7,572
 
Current portion of long-term debt
   
 
—  
 
   
 
281
 
Current portion of capital lease obligations
   
 
1,286
 
   
 
1,120
 
    
  
Total current liabilities
   
 
15,696
 
   
 
16,404
 
Deferred revenue, less current portion
   
 
4,769
 
   
 
7,454
 
Capital lease obligations, less current portion
   
 
1,347
 
   
 
2,013
 
Stockholders’ equity:
                  
Common stock, $0.001 par value; 80,000,000 shares authorized, 26,363,764 and 24,919,696 shares issued and outstanding at September 30, 2002 and December 31, 2001, respectively
   
 
26
 
   
 
25
 
Additional paid-in capital
   
 
159,176
 
   
 
156,481
 
Deferred stock-based compensation
   
 
(418
)
   
 
(987
)
Accumulated other comprehensive income
   
 
159
 
   
 
486
 
Accumulated deficit
   
 
(109,623
)
   
 
(90,794
)
    
  
Total stockholders’ equity
   
 
49,320
 
   
 
65,211
 
    
  
Total liabilities and stockholders’ equity
   
$
71,132
 
   
$
91,082
 
    
  

2

Table of Contents
DENDREON CORPORATION
 
CONDENSED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
 
    
Three Months
Ended
September 30,
     
Nine Months
Ended
September 30,
  
    
2002
     
2001
     
2002
     
2001
  
Total revenue
   
$
4,992
 
   
$
3,789
 
   
$
11,134
 
   
$
9,977
 
Operating expenses:
                                    
Research and development
   
 
7,636
 
   
 
8,081
 
   
 
23,436
 
   
 
20,502
 
General and administrative
   
 
2,475
 
   
 
2,236
 
   
 
6,916
 
   
 
5,766
 
Marketing
   
 
146
 
   
 
285
 
   
 
625
 
   
 
1,249
 
    
  
  
  
Total operating expenses
   
 
10,257
 
   
 
10,602
 
   
 
30,977
 
   
 
27,517
 
    
  
  
  
Loss from operations
   
 
(5,265
)
   
 
(6,813
)
   
 
(19,843
)
   
 
(17,540
)
Interest income, net:
                                    
Interest income
   
 
361
 
   
 
1,151
 
   
 
1,476
 
   
 
3,895
 
Interest expense
   
 
(92
)
   
 
(132
)
   
 
(262
)
   
 
(412
)
    
  
  
  
Interest income, net:
   
 
269
 
   
 
1,019
 
   
 
1,214
 
   
 
3,483
 
Loss before income taxes
   
 
(4,996
)
   
 
(5,794
)
   
 
(18,629
)
   
 
(14,057
)
Foreign income tax expense
   
 
200
 
   
 
—  
 
   
 
200
 
   
 
—  
 
    
  
  
  
Net loss
   
$
(5,196
)
   
$
(5,794
)
   
$
(18,829
)
   
$
(14,057
)
    
  
  
  
Basic and diluted net loss per share
   
$
(0.20
)
   
$
(0.23
)
   
$
(0.74
)
   
$
(0.57
)
    
  
  
  
Shares used in computation of basic and diluted net loss per share
   
 
25,786
 
   
 
24,818
 
   
 
25,309
 
   
 
24,710
 
    
  
  
  

3

Table of Contents
DENDREON CORPORATION
 
CONDENSED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
 
    
Nine Months Ended September 30,
  
    
2002
     
2001
  
CASH FLOWS FROM OPERATING ACTIVITIES
                  
Net loss
   
$
(18,829
)
   
$
(14,057
)
Adjustments to reconcile net loss to net cash used in operating activities:
                  
Depreciation and amortization expense
   
 
1,298
 
   
 
948
 
Non-cash stock-based compensation expense
   
 
569
 
   
 
938
 
Non-cash consulting expense
   
 
52
 
   
 
60
 
Non-cash interest expense
   
 
9
 
   
 
84
 
Changes in current assets and liabilities
                  
Accounts receivable
   
 
(382
)
   
 
5,845
 
Other current assets
   
 
544
 
   
 
(334
)
Deposits and other assets
   
 
12
 
   
 
192
 
Deferred revenue
   
 
(3,683
)
   
 
2,483
 
Accounts payable
   
 
(290
)
   
 
190
 
Accrued liabilities and compensation
   
 
(270
)
   
 
387
 
    
  
Net cash used in operating activities
   
 
(20,970
)
   
 
(3,264
)
    
  
CASH FLOWS FROM INVESTING ACTIVITIES
                  
Purchases of investments
   
 
(23,879
)
   
 
(66,374
)
Maturities of investments
   
 
50,221
 
   
 
45,404
 
Proceeds from asset disposals
   
 
250
 
   
 
—  
 
Purchases of property and equipment
   
 
(1,180
)
   
 
(2,986
)
    
  
Net cash provided by (used in) investing activities
   
 
25,412
 
   
 
(23,956
)
    
  
CASH FLOWS FROM FINANCING ACTIVITIES
                  
Payments from equipment financing arrangement
   
 
386
 
   
 
960
 
Payments on long-term debt
   
 
(281
)
   
 
(1,154
)
Payments on capital lease obligations
   
 
(886
)
   
 
(464
)
Proceeds from sale of common stock
   
 
1,952
 
   
 
—  
 
Proceeds from employee stock purchase plan
   
 
183
 
   
 
661
 
Proceeds from exercise of stock options
   
 
436
 
   
 
320
 
    
  
Net cash provided by financing activities
   
 
1,790
 
   
 
323
 
    
  
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
   
 
6,232
 
   
 
(26,897