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UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

for the fiscal year ended December 31, 2002

Commission File No. 000-30681

DENDREON CORPORATION

(Exact name of registrant as specified in its charter)

3005 FIRST AVENUE SEATTLE, WASHINGTON 98121

(206) 256-4545

(Address, including zip code, of Registrant’s principal executive offices and telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

NONE

Securities registered pursuant to Section 12(g) of the Act:

COMMON STOCK, $0.001 PAR VALUE

Indicate by check mark whether the Registrant (1) has filed all reports required 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.    Yes  þ    No  ¨

Indicate by a check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.    Yes  ¨    No  þ

Indicate by check mark whether the Registrant is an accelerated filer (as defined in Rule 12b-2 of the Act).    Yes  ¨    No  þ

The aggregate market value of the common stock held by non-affiliates of the Registrant based on the closing sale price of the Registrant’s common stock on June 28, 2002, as reported on the National Association of Securities Dealers Automated Market, was $30,621,791*.

As of March 3, 2003, the Registrant had outstanding 26,810,904 shares of common stock.

DOCUMENTS INCORPORATED BY REFERENCE

The Registrant’s definitive Proxy Statement, which will be filed on or before April 30, 2003 with the Securities and Exchange Commission in connection with the Registrant’s annual meeting of stockholders is incorporated by reference into Part III of this Report.

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INDEX

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SPECIAL NOTE ON FORWARD-LOOKING STATEMENTS

This Form 10-K contains forward-looking statements concerning matters that involve risk and uncertainties. The statements contained in this report that are not purely historical are forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and Section 27A of the Securities Act of 1933, as amended. These forward-looking statements concern matters that involve risks and uncertainties that could cause actual results to differ materially from those projected in the forward-looking statements. Words such as believe, expects, likely, may and plans are intended to identify forward-looking statements, although not all forward-looking statements contain these words.

Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Moreover, neither we nor any other person assumes responsibility for the accuracy and completeness of the forward-looking statements. We are under no duty to update any of the forward-looking statements after the date hereof to conform such statements to actual results or to changes in our expectations.

Readers are urged to carefully review and consider the various disclosures made by us in this Report which attempt to advise interested parties of the factors which affect our business, including without limitation the disclosures made under the caption “Factors That May Affect Results of Operations and Financial Condition” in Management’s Discussion and Analysis of Financial Condition and Results of Operations set forth herein.

Dendreon^®, the Dendreon logo, DACS^®, Provenge^®, Simplesep Enrichment System^®, Mylovenge^™, Myezenium^™, Neuvenge^™, Neuzenium^™, Provenge^™, Prozenium^™ and the Antigen Delivery Cassette^™ are our trademarks. All other trademarks appearing or incorporated by reference into this prospectus or any related prospectus supplement are the property of their owners.

AVAILABLE INFORMATION

Dendreon files annual, quarterly and current reports, proxy statements and other information with the SEC. You may read and copy any reports, statements and other information filed by Dendreon at the SEC’s Public Reference Room at 450 Fifth Street, N.W., Washington, D.C. 20549. Please call (800) SEC-0330 for further information on the Public Reference Room. The SEC maintains an Internet web site that contains reports, proxy and information statements and other information regarding issuers, including Dendreon, that file electronically with the SEC. The address for the SEC’s web site is http://www.sec.gov.

Dendreon makes available, free of charge, through its investor relations web site its annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports as soon as reasonably practicable after they are filed with the SEC. The address for Dendreon’s investor relations web site is http://investor.dendreon.com/edgar.cfm.

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PART I

ITEM 1.    BUSINESS

OVERVIEW

Dendreon Corporation is dedicated to the discovery and development of novel products for the treatment of diseases through its innovative manipulation of the immune system. Dendreon’s product pipeline is focused on cancer, and includes therapeutic vaccines, monoclonal antibodies and small molecule product candidates.

The product candidates most advanced in development are therapeutic vaccines designed to stimulate a patient’s immunity for the treatment of cancer. Provenge is a therapeutic vaccine for the treatment of prostate cancer and is in Phase III clinical trials, the final stage of human testing before seeking marketing approval. Mylovenge, our therapeutic vaccine for the treatment of multiple myeloma, is in Phase II clinical trials. APC8024, our therapeutic vaccine for the treatment of HER-2/neu over-expressing breast, ovarian and colon cancers, is in Phase I trials. We have additional therapeutic vaccines, monoclonal antibodies and small molecule product candidates in preclinical development for the treatment of cancer. We also intend, over time, to pursue the application of our technologies in the field of autoimmune diseases and in other fields.

On February 25, 2003, we announced that we had entered into a definitive agreement for the acquisition of Corvas International, Inc. Corvas is a biopharmaceutical company focused on the discovery and development of novel drugs for the treatment of cardiovascular disease and cancer. Corvas’ core expertise is in vascular biology and protease modulation.

Corvas’ potential product most advanced in development is rNAPc2, a recombinant protein that is an anticoagulant in Phase II clinical trials for acute coronary syndromes. Corvas also has potential small molecule and monoclonal antibody product candidates for cancer in preclinical development. Additional information regarding the Corvas acquisition can be found in Part II, Item 7: Management’s Discussion and Analysis of Financial Condition and Results of Operations.

CURRENT CANCER THERAPIES

Cancer is characterized by abnormal cells that proliferate uncontrollably and metastasize, or spread, throughout the body, producing deposits of tumor cells, called metastases. These proliferating cells form masses called tumors. As the tumors grow, they cause tissue and organ failure and ultimately death.

To be effective, therapy must eliminate or control the growth of the cancer both at its site of origin and at sites of metastases. Metastatic disease is often responsible for the relapse and ultimate death of patients with cancer. Current treatments for cancer include surgery, radiation, hormone therapy and chemotherapy. Surgery and radiation therapy treat cancer at its origin, but are limited because certain tissues cannot be removed surgically and/or do not tolerate radiation. Moreover, cancers frequently spread prior to detection, and surgery and radiation cannot control all metastases. Chemotherapy and hormone therapy are frequently used to treat tumor metastases. However, these therapies can cause severe side effects, including damage to normal tissue. Additionally, chemotherapy and hormone therapy may shrink tumors, but rarely eliminate them completely.

Treatments known as immunotherapy stimulate the body’s natural mechanism for fighting disease and may overcome many of the limitations of current cancer therapies. Immunotherapy may be particularly useful for the treatment of residual disease.

The Immune System

Antigens.    The immune system, the body’s natural defense against disease, is composed of a variety of specialized cells. These cells recognize specific chemical structures, called antigens, that are found on disease-

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causing agents, including tumors. Antigens trigger an immune response, which results in the eventual removal of antigen from the body.

Cells of the Immune System.    A specialized class of immune system cells, called antigen-presenting cells, start the immune response. The most potent antigen-presenting cells are known as dendritic cells, which take up antigen from their surroundings and process the antigen into fragments that are recognized by specific classes of immune cells, called lymphocytes. During this antigen processing, dendritic cells mature, enabling them to present the processed antigen to lymphocytes. There are two main categories of lymphocytes: B-lymphocytes, or B-cells, and T-lymphocytes, or T-cells. Each category of lymphocytes has a different role in the immune response. T-cells combat disease by killing antigen bearing cells directly. In this way, T-cells eliminate cancers and virally infected tissue. T-cell immunity is also known as cell-mediated immunity and commonly is thought to be a key defense against tumors and cells chronically infected by viruses. In contrast, activation of B-cells leads to the production of specific antibodies. The antibodies are secreted by B-cells and bind to antigen found on pathogens or tumor cells resulting in their destruction.

Tumor Antigens.    The immune system recognizes and generates a strong response to hundreds of thousands of different antigens introduced from the environment. Tumors, however, frequently display antigens that are also found on normal cells. Thus, the immune system may not distinguish between tumors and normal cells and, therefore, may be unable to mount a strong anti-cancer response. Tumors may also actively prevent antigen-presenting cells from becoming mature, thereby preventing full activation of the immune system. Thus, we believe one key to directing the immune system to fight cancers is to modify, or engineer, tumor antigens so that they are recognized by the immune system and to manipulate antigen-presenting cells to stimulate a vigorous cell-mediated immunity.

Monoclonal Antibodies.    Naturally-occurring antibodies are proteins that are an essential component of the human immune system. They are produced in response to the presence of foreign antigens in the body and are extremely specific. Each antibody binds to and attacks one particular type of antigen expressed on a cell, interfering with that cell’s activity or causing cell death. Monoclonal antibodies are manufactured antibodies that share characteristics of naturally occurring antibodies. They may be created to recognize a specific antigen present on tumor cells, but not on healthy cells, and to bind to that antigen and cause the death of the tumor cell. Because each monoclonal antibody targets only cells expressing a specific antigen, healthy cells may be unaffected, and many of the harsh side effects of conventional cancer therapies avoided. Monoclonal antibodies may be used alone or coupled with drugs or radioisotopes in combination therapies that attack cancer cells in several ways.

OUR THERAPEUTIC CANCER VACCINE APPROACH

We combine our experience in antigen identification, antigen engineering and antigen-presenting cell processing to produce therapeutic cancer vaccines. Our ability to both manipulate antigen-presenting cells and engineer antigens allows us to develop vaccines that are designed to generate a cell-mediated immune response. We have vaccines in development for many common cancers. Our approach to therapeutic cancer vaccines is to:

Antigen Identification

Our objective is to identify antigens associated with as broad a population of cancers as possible. We obtain antigens from several sources: our internal discovery programs, public databases of genetic information and

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licenses from third parties. Our internal antigen discovery programs begin by identifying novel antigens expressed in specific tissues or in malignant cells. We then evaluate the expression of these antigens in normal versus diseased tissue. We consider the antigens that we find localized in diseased tissue as candidates for antigen engineering. Likewise, we also consider antigens from external sources that meet these criteria. Our lead product candidate, Provenge, targets the prostate cancer antigen, prostatic acid phosphatase, or PAP. The antigen target for APC8024, our therapeutic vaccine in Phase I clinical trials for breast, ovarian and colon cancer, is HER-2/neu. In 2001, we were issued a patent on a gene designated trp-p8. The protein expressed by this gene is found on multiple cancers. We have also acquired through licenses, the opportunity to work with the tumor antigens designated carcinoembryonic antigen, or CEA, carbonic anhydrase IX, or MN, and telomerase.

Antigen Engineering

We engineer antigens to produce proprietary therapeutic vaccines for multiple cancers. Our antigen engineering is designed to trigger and maximize cell-mediated immunity by augmenting the uptake and processing of the target antigen by antigen-presenting cells. We can affect the quality and quantity of the immune response that is generated by adding, deleting or modifying selected sequences of the antigen gene, together with inserting the modified antigen into our Antigen Delivery Cassette.

Our Antigen Delivery Cassette is a protein that enhances antigen binding and entry into antigen-presenting cells. The Antigen Delivery Cassette targets each engineered antigen to a receptor on antigen-presenting cells and provides a common key to unlock the potential of these cells to process antigen.

The antigen-presenting cell binding region is common to all of our Antigen Delivery Cassettes and has the capability to recognize the antigen-presenting cell and bind the cassette to the antigen-presenting cell surface. Binding stimulates the antigen-presenting cell to engulf the cassette. The antigen-presenting cells process antigen along pathways that stimulate cell-mediated immunity. The antigen region of the Antigen Delivery Cassette thus gains access to processing by the antigen-presenting cell that would otherwise be denied to non-engineered antigen. We believe this process results in a potent cell-mediated immune response. Our Antigen Delivery Cassette technology also provides us with a foundation on which new proprietary antigens are built.

ANTIGEN-PRESENTING CELL PROCESSING AND VACCINE PRODUCTION

Our vaccine manufacturing process incorporates two elements: the Antigen Delivery Cassette and antigen-presenting cells. To obtain antigen-presenting cells, we first remove white blood cells from a patient’s blood through a standard blood collection process called leukapheresis. Antigen-presenting cells are then separated from other white blood cells using our proprietary cell separation technology. We perform our process outside of the body, away from the immunosuppressive environment of tumor cells. We believe that this allows the antigen-presenting cells to become fully mature and activated, leading to a more robust immune response.

The antigen-presenting cells are incubated with the required concentration of Antigen Delivery Cassette under controlled conditions. After about 40 hours, the antigen-presenting cells are ready to be used as a vaccine. We subject each vaccine to quality control testing, including identity, purity, potency, and safety testing, including sterility. Our process requires less than three days from white blood cell collection to vaccine administration.

VACCINE DELIVERY

A vaccine dose is delivered as an intravenous infusion lasting about 30 minutes given as an outpatient procedure. Our clinical trials indicate that maximum stimulation requires three infusions given at two-week intervals. Patients in our trials typically complete a course of therapy in one month.

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PRECLINICAL PRODUCT CANDIDATES

We have therapeutic monoclonal antibodies for the treatment of cancer and autoimmune diseases in preclinical development. DN1924, our monoclonal antibody against HLA-DR positive malignancies, is in preclinical development for the treatment of leukemias and lymphomas such as Non-Hodgkin’s lymphoma, Hodgkin’s lymphoma, and B-cell leukemia. In preclinical studies to date, DN1924 has been shown to induce cell death in cancer cells expressing HLA-DR, but has no effect on normal cells and does not suppress immune response. Our monoclonal antibody, DN1921, is in preclinical development for the treatment of autoimmune diseases, including rheumatoid arthritis. In collaboration with Genentech, Inc., we are working to develop a monoclonal antibody to trp-p8, a gene discovered in our internal discovery program, that is a potential treatment for soft tissue malignancies such as prostate, breast and colon cancer. The functional characteristics of trp-p8 also make it a candidate for small molecule therapies.

Small molecules are a diverse group of natural and synthetic substances that generally have a low molecular weight. They are either isolated from natural sources such as plants, fungi or microbes or they are synthesized by organic chemistry. Most conventional pharmaceuticals, such as aspirin, penicillin and chemotherapeutics, are small molecules. Small molecules have many different uses, modes of action, and side effect profiles because there are many different classes of small molecules. Ion channels, like trp-p8 that transport calcium through the cell membrane are one of many examples of molecular targets for manipulation by small molecules. Under our agreements with Genentech, we are primarily responsible for preclinical development of a small molecule targeting trp-p8.

PRODUCTS

The following table summarizes the target indications and status of our products and product candidates in development.

Our Products and Product Candidates in Development

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Status shown above is as of February 28, 2003.    Preclinical means that a potential product is undergoing study and evaluation, including study in cell and animal disease models in preparation for potential human clinical trials. We continue to undertake preclinical development work with respect to potential products that are in clinical trials.

Phase I-III clinical trials denote safety and efficacy tests in humans as follows:

Phase I: Evaluation of safety and dosing.

Phase II: Evaluation of safety and efficacy.

Phase III: Definitive evaluation of safety and efficacy.

PRODUCT CANDIDATES IN CLINICAL TRIALS

Provenge for Prostate Cancer

Prostate cancer is the most common solid tumor malignancy in men in the United States with over one million currently diagnosed with this disease. The American Cancer Society estimates that, in the United States, prostate cancer was diagnosed in approximately 189,000 men and that approximately 30,000 men died of the disease in 2002.

The antigen component of Provenge is derived from the gene encoding a marker for prostate cancer, prostatic acid phosphatase, which is found in approximately 95% of prostate cancers. We have subjected prostatic acid phosphatase to our antigen engineering process and created a proprietary Antigen Delivery Cassette.

We initiated two double-blind, placebo-controlled Phase III clinical trials, D9901 and D9902, designed to demonstrate that Provenge is safe and effective for treating androgen independent prostate cancer, or AIPC. “Androgen independent” means that tumor growth is no longer regulated by androgens, or male hormones, and that the disease has progressed to an advanced stage. Men with prostate cancer who are hormone resistant are considered androgen independent.

The results from our first Phase III trial of Provenge, D9901, were announced in August 2002. The results did not meet the primary endpoint of the study, a pre-specified delay in the time to objective disease progression versus placebo in the overall study population. However, the results demonstrated significant benefit from Provenge treatment for men with a Gleason score of 7 or less. For these patients, the probability of remaining progression free while on the study was over two times higher than for patients treated with placebo. In patients with a Gleason score of 7 or less, the placebo group had a median time to disease progression of 9.0 weeks,

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compared to 16.0 weeks in the Provenge-treated group, with a highly significant p-value of 0.002 and a treatment effect of 78%. In addition, the patients receiving Provenge, whose disease had not progressed six months after randomization, had a greater than eight-fold advantage in progression-free survival compared to patients who received placebo (34.7% of Provenge patients versus 4% of placebo patients). No apparent benefit was observed among patients with Gleason scores of 8 or higher. A Gleason score is the most commonly used prostate cancer scoring system and is considered one of the most important prognostic indicators for prostate cancer. High Gleason scores (8 or above) are indicative of aggressive cancers. In the androgen independent population, approximately 75% of the patients have a Gleason score of 7 or less.

In December 2002, we announced additional results from D9901 indicating that, in addition to delaying the time to progression of disease, Provenge treatment delayed the onset of disease-related pain in patients with a Gleason score of 7 or less. Delay in the onset of disease-related pain was the secondary endpoint of D9901, which enrolled only patients who did not have cancer-related pain at the time of entry into the study. In patients with a Gleason score of 7 or less, those receiving treatment with Provenge remained pain free significantly longer than those receiving placebo (p=0.019). For patients with a Gleason score of 7 or less treated with Provenge, the probability of remaining free of cancer-related pain while on the study was over two-and-one-half times higher than for patients treated with placebo. No apparent benefit in the pain endpoint was observed among patients with Gleason scores of 8 or higher.

In light of the results from D9901, we met with the U.S. Food and Drug Administration, or FDA, to discuss our second Phase III clinical trial for Provenge, D9902. Based upon those discussions, the protocol for D9902 has been revised to enroll only androgen independent prostate cancer patients with a Gleason score of 7 or less whose cancer has spread but who otherwise are without symptoms. Our plan for D9902, as amended, is that it will serve as the pivotal trial for seeking marketing approval for Provenge. We are currently engaged in discussions with pharmaceutical companies regarding potential collaboration arrangements for the commercialization of Provenge.

We are also currently conducting a Phase III clinical trial (P-11) of Provenge to evaluate its safety and effectiveness in treating men with early stage, androgen dependent prostate cancer. Men with prostate cancer who are hormone sensitive are considered androgen dependent.

Mylovenge for B-cell Malignancies: Multiple Myeloma and Amyloidosis

In 2001, approximately 15,000 people were diagnosed with multiple myeloma, a cancer of the blood, and over 10,000 individuals died from this disease in the United States. It accounts for approximately 10% of cancers of the blood. Amyloidosis is a disease related to multiple myeloma, afflicting approximately 2,500 individuals in the United States annually, and amyloidosis is fatal in most cases. Mylovenge has received orphan drug designation from the FDA for the treatment of multiple myeloma. We are conducting Phase II clinical trials for Mylovenge, our therapeutic vaccine for the treatment of multiple myeloma and amyloidosis. We expect to complete these trials in the first half of 2003. At that time, we will be able to determine the future development of Mylovenge in light of the results of our Phase II trials, the prospects for potential products being developed by competitors, and other relevant factors.

APC8024 for Treatment of Breast, Ovarian and Colon Cancers

APC8024 is our vaccine against tumors that have increased levels of a protein called HER-2/neu. Increased levels of this protein are found in approximately 25% of metastatic breast, ovarian, and colon cancers. We have identified portions of the HER-2/neu molecule that stimulate a potent cell-mediated immune response in animal models when engineered into our Antigen Delivery Cassette.

We are conducting Phase I trials to evaluate APC8024 for the treatment of patients with tumors that over-express HER-2/neu. The trials examine different doses, schedules and formulations of APC8024 for safety and

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ability to stimulate immunity. Preliminary results from one of our Phase I studies for APC8024 were announced in December 2002. The initial results indicate that APC8024 appears to be generally well-tolerated, stimulates immunity, and is showing signs of clinical benefit in patients with HER-2 positive breast cancer that has spread. In this Phase I study, 16 women received treatment with APC8024. Of 11 patients evaluated, 5 patients had stable disease, and one patient had a partial response with a more than 50% reduction in tumor size. An immune response was detected in all of the patients evaluated. Side effects were minor, consisting primarily of fever and chills following vaccine infusion.

PRODUCT CANDIDATES IN RESEARCH AND DEVELOPMENT

Vaccine Targets

Trp-p8

The trp-p8 gene, and the protein encoded by this gene, is present on 100% of prostate cancers and approximately 71% of breast cancers, 93% of colorectal cancers and 80% of lung cancers. Trp-p8 is the first gene generated from our internal antigen discovery program. A patent on the gene encoding trp-p8 was issued to us in 2001. We plan to incorporate the trp-p8 antigen into our vaccine technology.

NY-ESO

NY-ESO is a protein that is present on many cancers, including melanoma, breast, prostate, lung, ovarian/uterine and bladder cancers. We licensed the NY-ESO antigen from the Ludwig Cancer Institute, where scientists performed a series of preclinical studies that demonstrated that NY-ESO is an appropriate immunotherapy target. We engineered the NY-ESO antigen into our Antigen Delivery Cassette.

Carcinoembryonic Antigen (CEA)

The carcinoembryonic antigen, or CEA, is present on 70% of lung cancers, virtually all cases of colon cancers and approximately 65% of breast cancers. We licensed the CEA antigen from Bayer Corporation, Business Group Diagnostics. We plan to incorporate the CEA antigen into our vaccine technology.

Carbonic Anhydrase IX Antigen (MN)

MN antigen is a protein also known as the carbonic anhydrase IX antigen. It is present on approximately 75% of cervical and colon cancers and 95% of renal cancers. We licensed the MN antigen from Bayer Corporation, Business Group Diagnostics. We plan to incorporate the MN antigen into our vaccine technology.

Telomerase

The human telomerase antigen, or hTERT, is present on approximately 80% of tumor samples. We licensed the hTERT antigen from Geron Corporation and plan to incorporate it into our vaccine technology.

ADDITIONAL VACCINE PRODUCTS

We believe that our vaccine technologies have additional potential applications that, over time, we may pursue in the fields of autoimmune diseases, allergies and infectious diseases.

MONOCLONAL ANTIBODIES

Trp-p8

Trp-p8, the protein encoded by the trp-p8 gene, is a voltage gated calcium ion channel. It displays numerous characteristics that make it an attractive target for immunotherapy, as well as for small molecule drug therapy. In

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normal human tissues, trp-p8 is expressed predominantly in the prostate and is over-expressed in hyperplastic prostate. In cancerous tissues, trp-p8 is expressed in cancers of the prostate, colon, lung and breast. The unique molecular characteristics of trp-p8 make it an attractive candidate as a therapeutic target for monoclonal antibodies, cancer vaccines and small molecules. In 2002, we entered into a collaboration agreement with Genentech to discover and develop products targeting trp-p8.

DN1924 Antibody for Treatment of Cancer

DN1924 is our monoclonal antibody that targets a unique antigen called HLA-DR present on normal and malignant blood cells and causes the death of only malignant cells. The target for DN1924 is present on numerous blood-borne tumors, such as Hodgkin’s lymphoma, non-Hodgkin’s lymphoma, and B-cell leukemias. Current treatments for these cancers include chemotherapy, radiation, and high dose chemotherapy with stem cell transplantation, all of which are highly toxic. More recently, a monoclonal antibody, rituximab, has been approved for use in some of these patients. It is directed to a different antigen than the antigen to which DN1924 binds. Preclinical studies suggest that DN1924 can kill human cancer cells without apparent toxicity or immune suppressive side effects. Furthermore, these preclinical studies suggest that cancer cells may not develop resistance to this treatment over time.

DN1921 Antibody for Treatment of Autoimmune Disease

DN1921 is our monoclonal antibody that suppresses activities of the immune system. Autoimmune diseases, such as rheumatoid arthritis, systemic lupus erythematosus, multiple sclerosis, myasthenia gravis and pemphigus vulgaris, result from unwanted activities of the immune system. Current therapies include non-specific immune suppression by corticosteroids, methotrexate and other drugs. Although these treatments may reduce tissue damage in some patients, they are not curative.

DN1921 is specific for a well-known target for immunosuppression, HLA-DR. Previously, other companies have attempted to develop drugs that target HLA-DR. Although those drugs usually suppressed immune response, they failed in preclinical studies due to unacceptable toxicity. We have observed that suppression of immune response and toxicity are mediated by two separate parts of the antibody molecule. We are developing DN1921 to take advantage of this observation. DN1921 has shown encouraging immunosuppressive abilities in our preclinical studies without producing unacceptable levels of toxicity.

CELL SEPARATION PRODUCTS

We developed proprietary cell separation technology that can be tailored for specific cell types. This technology consists of two components: specially engineered separation and wash containers and solutions called buoyant density solutions. We prepare our buoyant density solutions to match the buoyant density of a particular cell type. By matching buoyant densities in this manner, we are able to control whether or not a specific cell type floats or sinks in the solution. This allows us to isolate the desired cells easily, rapidly and without the need for the biological reagents used in conventional cell separation techniques.

In 1996, we received a marketing authorization in the United States on a family of our solutions and separation devices. In 1999, we obtained pre-marketing approval, or a PMA, from the FDA for our DACS SC kit. We use our cell separation technology to isolate antigen-presenting cells for our cancer vaccines.

COLLABORATIONS

Kirin Brewery Co., Ltd.

Kirin Brewery Co., Ltd., or Kirin, is our collaborator for the development and marketing of our vaccines in Asia. We have granted Kirin an exclusive license to our proprietary antigen-presenting cell technology for the

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development and commercialization of our vaccine products in Japan and other countries in Asia and Oceania. We also granted Kirin an option to obtain an exclusive license to commercialize in these countries other therapeutic vaccines we develop with our antigen-presenting cell technology. In exchange, Kirin has granted us an option to obtain an exclusive license to commercialize in North America any products developed by Kirin under this agreement. In August 2001, we entered into a memorandum agreement with Kirin modifying our agreements with Kirin. These modifications, including terms relating to the manufacture and supply of the antigen used in Provenge and the provision by us of additional development and regulatory support, have been incorporated in amended and restated agreements, effective August 6, 2002.

We conduct collaborative research with Kirin. Under the terms of our agreements with Kirin, we are reimbursed by Kirin for research and development expenses pursuant to a mutually agreed plan. We also supply Kirin with devices. We and Kirin have also agreed to collaborate in the future clinical development and commercialization in the European Union of certain products jointly developed under our agreements and to share equally in any resulting profits.

Genentech, Inc.

In August 2002, we entered into an agreement with Genentech, Inc. to collaborate in the preclinical research, clinical development, and commercialization of monoclonal antibody and potentially other products derived from our trp-p8 gene platform. We will be jointly responsible with Genentech for conducting preclinical and clinical work. Genentech will fund a majority of these expenses for products that reach Phase III clinical trials. Genentech will also be responsible for all manufacturing of resulting products. The agreement provides for profit-sharing and commercialization in the United States. Genentech will be responsible for the commercialization of trp-p8 products in the rest of the world except Asia and Oceania, where we retain all development and commercialization rights.

J&J PRD

In October 2000, the Company entered into a Research Collaboration and License Agreement with J&J PRD. Under the agreement, we have received a study fee, milestone fee, and funding pursuant to an agreed research plan. We collaborated with J&J PRD under the agreement on the development of CTL8004, an immunotherapy product of J&J PRD, until July 2002 when we and J&J PRD agreed that J&J PRD would solely conduct any further work on CTL8004. We continued to work in collaboration with J&J PRD under the agreement on the development of APC8024, our therapeutic vaccine for the treatment of breast, ovarian and colon cancers until the agreement expired on December 31, 2002.

MANUFACTURING

We manufacture the Antigen Delivery Cassettes used to conduct preclinical and clinical trials. We manufacture our Antigen Delivery Cassettes as recombinant proteins using standard production methods in compliance with current good manufacturing practices, or cGMP.

In March 2001, we contracted with Diosynth RTP, Inc., or Diosynth, to assist us in the scale-up to commercial level production of the Antigen Delivery Cassette used in the preparation of Provenge. At the inception of the agreement, we anticipated that a substantial part of the work and corresponding expense for the scale-up program would be incurred in 2002. Pursuant to procedures established in the agreement, we requested certain modifications to the program, to which Diosynth agreed. Subsequently, we began discussions with Diosynth to revise the scope of work for scale up to commercial level production. These revisions are not yet finished.

We have the right to terminate the agreement with Diosynth without cause on forty-five days’ written notice to Diosynth. The agreement provides for a cancellation fee of 20% of the unpaid balance of the total estimated budget for the program at the time the notice is given, approximately $3.3 million as of December 31, 2002. The estimated budget will be revised as a consequence of revisions to the scope of work. In light of the results from our first Phase III trial of Provenge, D9901, and our planned protocol amendment for D9902, we have no present intention to exercise our right to cancel the agreement with Diosynth.

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We own and operate a cell-processing center in Seattle, Washington. In addition, we use third-party cell-processing centers operated by the Mayo Clinic in Rochester, Minnesota, the American Red Cross in Philadelphia, Pennsylvania, and Progenitor Cell Therapy, or PCT, in Hackensack, New Jersey and Mountain View, California. In August 2002, we agreed to sell the cell processing facility then owned by us in Mountain View, California to PCT. Under terms of the agreement, PCT pays a fee to us and assumed operational, lease and personnel obligations for the Mountain View facility. PCT will provide cell-processing services at the facility for us as requested.

We also manufacture cell separation devices that isolate cells from blood and other bodily fluids. We rely on subcontractors to manufacture these devices in compliance with cGMP.

INTELLECTUAL PROPERTY

We protect our technology through numerous United States and foreign patent filings, trademarks and trade secrets that we own or license. Our issued and allowed patents include patents that are directed to the solutions and devices by which cells can be isolated and manipulated, including claims that apply specifically to the isolation of dendritic cells, the development of monoclonal antibodies and claims on the use of these technologies for immunotherapies, for example, the treatment of diseases such as B-cell malignancies. We have also received claims on treatment methods covering a variety of immunostimulatory antigen compositions. We have patents issued covering various technologies in the United States, Europe and Asia/Oceania. These include our Antigen Delivery Cassette for use with a variety of tumor antigens and specifically, the prostate antigen containing cassette, for which we have independent patent protection.

We intend to continue using our scientific expertise to pursue and patent new developments with respect to uses, compositions and factors to enhance our position in the field of cancer. Patents, if issued, may be challenged, invalidated or circumvented. Thus, any patent that we own or license from third parties may not provide adequate protection against competitors. Our pending patent applications, those we may file in the future, or those we may license from third parties may not result in issued patents. Also, patents may not provide us with adequate proprietary protection or advantages against competitors with similar or competing technologies. For example, we are aware of others that have had patents issued to them in the antigen-presenting cell field relating to methods to isolate, culture or activate antigen-presenting cells and relating to the treatment with antigens of cancers such as prostate cancer. As a result of potential conflicts with the proprietary rights of others, we may in the future have to prove we are not infringing the patent rights of others or be required to obtain a license to the patent. We do not know whether such a license would be available on commercially reasonable terms, or at all.

We also rely on trade secrets and unpatentable know-how that we seek to protect, in part, by confidentiality agreements. Our policy is to require our officers, employees, consultants, contractors, manufacturers, outside scientific collaborators and sponsored researchers and other advisors to execute confidentiality agreements. These agreements provide that all confidential information developed or made known to the individual during the course of the individual’s relationship with us be kept confidential and not disclosed to third parties except in specific limited circumstances. We also require signed confidentiality or material transfer agreements from companies that are to receive our confidential data. In the case of employees, consultants and contractors, confidentiality agreements with them generally provide that all inventions conceived by the individual while rendering services to us shall be assigned to us as our exclusive property. However, it is possible that these parties may breach those agreements, and we may not have adequate remedies for any breach. It is also possible that our trade secrets or unpatentable know-how will otherwise become known or be independently developed by competitors.

COMPETITION

The biotechnology and biopharmaceutical industries are characterized by rapidly advancing technologies, intense competition and a strong emphasis on proprietary products. Many entities, including pharmaceutical and biotechnology companies, academic institutions and other research organizations are actively engaged in the discovery, research and development of products that could compete directly with our products under

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development. We understand that companies, including AVI Biopharma, Inc., Cell Genesys, Inc., and Therion Biologics Corporation, may be developing cancer vaccines for the United States market that could potentially compete with Provenge, if Provenge is successfully developed. These competitors may succeed in developing and marketing cancer vaccines that are more effective than or marketed before Provenge. Other products such as chemotherapeutics, antigen compounds, angiogenesis inhibitors and gene therapies are also under development and could potentially compete with Provenge or other products we may develop.

Many companies, including major pharmaceutical companies, are also developing therapies that may compete with our other potential products in the fields of cancer and autoimmune diseases. Many of the companies developing cancer vaccines and other treatments have significantly greater financial resources and expertise in research and development, manufacturing, preclinical testing, conducting clinical trials, obtaining regulatory approvals and marketing. Others have partnered with large established companies to obtain access to these resources. Smaller companies may also prove to be significant competitors, particularly through the establishment of collaborative arrangements with large, established companies.

Our ability to commercialize our potential products and compete effectively will depend, in large part, on:

Competition among products approved for sale will be based, among other things, upon efficacy, reliability, product safety, price and patent position. Our competitiveness will also depend on our ability to advance our technologies, license additional technology, maintain a proprietary position in our technologies and products, obtain required government and other public and private approvals on a timely basis, attract and retain key personnel and enter into corporate relationships that enable us and our collaborators to develop effective products that can be manufactured cost-effectively and marketed successfully.

EMPLOYEES

As of January 31, 2003, we had 117 employees. None of our employees is subject to a collective bargaining agreement, and we believe that our relations with our employees are good.

ITEM 2.    PROPERTIES

We lease approximately 70,650 square feet of laboratory, manufacturing and office space in Seattle, Washington under a lease expiring in December 2008. We sublease to a subtenant approximately 3,451 square feet of this leased space under a sub-lease that expires on March 15, 2004. We also lease approximately 5,256 square feet of office space in another Seattle, Washington location, under a lease expiring in 2008. Both leases may be extended at our option for two consecutive five-year periods. We lease approximately 25,000 square feet of laboratory, manufacturing and office space in Mountain View, California under a lease expiring June 2006.

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We sublease to a subtenant approximately 9,166 square feet of this leased space under a sublease agreement that expires on June 29, 2006. The Company has engaged a real estate broker to sublease the balance of the space. This lease may be extended at our option for one five year period.

ITEM 3.    LEGAL PROCEEDINGS

We are not a party to any material legal proceedings.

ITEM 4.    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.

PART II

ITEM 5.    MARKET FOR REGISTRANT’S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Our common stock is quoted on the Nasdaq National Market System under the symbol “DNDN.” Public trading of our common stock commenced on June 16, 2000. Prior to that time, there was no public market for our stock. The following table summarizes our common stock’s high and low sales prices for the periods indicated as reported by the Nasdaq National Market System.