Here’s a transcription of the CC last week. Missing are some revenue numbers that I deemed irrelevant. I used up my family alpha on this so while I’d like to get back to providing links and updating my research blog that ain’t happenin’ this week. My biggest a-ha from doing this is that Joel Sendek is an idiot. The whole thing seems even fishier when looked upon closely.

There is one place where I took dramatic license and transcribed a fantasy question by Miller, who is the only one who doesn’t have a boss to answer to and could have asked it.

Dendreon Earnings Call, Thursday, May 10:

Gold: I would like to begin by thanking all of the patients and clinical investigators who have participated in our clinical trials over the past decade. I would also like to thank our investors who believe in our vision and mission to transform the way cancer is being treated. Prostate cancer is the 2nd leading cause of cancer death in American men. It remains a serious unmet medical need with few effective treatment options, particularly when it comes to improving survival, which is what matters most to patients and their families. As you know we received a Complete Response Letter, or Approvable Letter, from the FDA regarding our Biological License Agreement for Provenge. This decision is very disappointing I know for all of us, and it comes as quite a surprise particularly considering the positive Advisory Committee meeting that we had at the end of March as well as our long history of collaborative discussions with the FDA. While we are disappointed with the decision. Despite this setback we are resolute to bring Provenge to prostate cancer victims and their families who could potentially benefit from this novel, life saving treatment. As stated in yesterday’s announcement, the FDA has requested additional CMC information which we believe can resolved in a timely manner and is not rate limiting factor. In addition, the FDA has requested additional clinical data to support the efficacy claim contained in the BLA. They have not specified exactly what form the additional data we might provide, and this is why we are seeking clarification from the FDA. Let me remind you that the ongoing IMPACT study is a double-blind, placebo controlled, randomized Phase III clinical trial being conducted under a special protocol assessment or SPA measuring overall survival in men with metastatic hormone refractory prostate cancer. For those of you who may not be familiar an SPA, it is a binding written agreement that provides for sponsors to receive official FDA evaluation on pivotal trials that would form the basis of final approval. Our SPA specifically recognizes that the IMPACT study will serve as a registration study based on positive results from either an interim analysis or final analysis. We anticipate completing an interim analysis next year with the final analysis available in 2010. So while this decision is disappointment, we think we are well positioned for the IMPACT study to provide the FDA with additional data necessary to complete the approval process.

Our commitment to provide men with Provenge is unwavering. After hearing the stories at the Advisory Committee meeting, our dedication to providing Provenge to prostate cancer victims is stronger than ever. As we continue to navigate through the regulatory process with the FDA we intend to keep you informed of any major developments.

Shiffman: (irrelevant earnings results) 88.5 million left. We believe the current balance is adequate to take us through the interim analysis in 2008. Cost of antigen was 6.3 mill. Will share operational plan in a CC in the near future.

Charles Duncan, JMP: Hi guys. I wanted to ask you, Mitch, about the history of collaborative discussion you’ve had with the FDA. How did that kinda change in the few weeks since the AC?

Gold: I think what was most surprising to us after the panel meeting…I wouldn’t say that our discussion with the FDA has changed, I think what was most surprising is after the panel meeting was the limited amount if any discussions we had with the FDA. There was very little interaction between the company and the Agency between the Panel Meeting and when we received the CR letter.

CD: And then moving on to some of the efficacy data, have you had any conversations with them? What do you anticipate having to provide them…is it survival data or do you think the interim would be sufficient?

Gold: We have had some preliminary discussions with the FDA since the CR letter. Let me just reiterate that we know that current ongoing study, the IMPACT study, is a binding agreement, looking at survival. There’s an interim analysis there and a final analysis. Based on some preliminary discussions that we’ve had with the FDA there may be some alternative pathways outside of the 9902b IMPACT SPA, and those are things that we’re going to discuss with the FDA. What we know is that we do have an SPA for 9902b looking at survival on both an interim and final analysis basis and we’ll get the interim basis next year.

CD: Sticking with the 9902b, at the interim what is the statistical hurdle that you kinda need to clear to be able to show a meaningful result?

Gold: What we said Charles is that on the final analysis is planned at 360 death events—it’s a 500 patient target enrollment study—the study is more than 90% powered. The interim analysis that is planned is very well powered but we’re not going to get into the specifics on the interim.

CD: OK, you mentioned that IMPACT could be A registration trial, or THE registration trial…is that dependent on the magnitude of the fact (?) or…

Gold: IMPACT was designed with data from 9901 in hand, and IMPACT was designed under an SPA with the FDA that positive data from that study, either on an interim analysis or a final analysis or with survival as the primary endpoint, would be sufficient.

CD: In relation to a couple of the compounding variable, the things that people have been concerned about with some of the previous work, Gleason score and location of bony mets with the soft mets can you help us understand how you are managing that with 9902b?

Gold: There are two ways that I can see that you can stratify it using prognosticating factors…one is at randomizing and the other is through a statistical analysis. There are a couple things we do with randomization in that we do stratify patients in terms of Gleason scores in terms of which arm they go into in terms of balances if you’re a Gleason 4+3 or 3+4 so we deal with that kind of stratification at the time of randomization. The other way we deal with it is through the Cox Multivariate Regression analysis, that we use as an analytical tool on the 9902B clinical study.

CD: And that’s been agreed to by the FDA or fully vetted by them?

Gold: That is correct. Quick question for Greg. The burn rate analysis. Are you assuming any headcount reductions or do you think you’re going to continue to burn that at the current levels?

GS: At this time we’re taking appropriate short term actions to preserve cash. The specifics in terms of burn we would expect our burn to decrease over time. We believe we have adequate cash to get us through the interim. We’re not sharing specifics because we believe that its very important that we have a chance to formulate the final plan, talk to employees before we get information out to the investment community but we will certainly be sharing that with you in the near future.

CD: And you’re very likely not counting on any corporate partnering?

Gold: We don’t comment on corporate partnering, Charles, other than any discussion that we have ongoing discussions but we’re not going to comment beyond that.

CD: I’ll jump back in the queue…thanks.

Mark Monane, Needham: Could you go over the timeline for the next set of meetings with the FDA? Do you make a request and there’s 45 days or is there a more formal process?

Gold: There is a relatively formal process. What I can say Mark so far is that we’ve had a couple of preliminary discussions with the FDA since we’ve received the letter and I think the FDA wants to work closely with the company to try to bring Provenge forward as rapidly as possible. Beyond that I really can’t give you anything about the timing of those meetings. It’s going to be a high priority, formal meeting with the agency.

MM: Does the company have the option to appeal the approvable letter at this point and how would one go about doing that?

Gold: I believe the company has that option…that is currently not an option that we are considering going down right now.

MM: Maybe Greg can talk about the IMPACT trial. When you look at the costs…patients only get three infusions…zero weeks, then 2 weeks later, then 4 weeks later, yet there are costs accrued…is there any way to minimize these costs. How do you characterize these costs? There’s no more drug being given but the patients are obviously being followed. I guess there still is drug being given to those who progress…are they still going to be given the option to get Provenge?

GS: There is the option on the crossover. When you look a the clinical trial, and you look at enrollment, one month after enrollment an awful lot of the expense do decrease substantially in that you have given this reinfusion to the patients. You have the crossover potential if everyone participated in that…its sort of a choice…as you know, we’ve had over 420 patients enrolled in this study so we’ve incurred an awful lot of the charges. There are ongoing costs. We still have all of the costs with amending the BLA, the statistical follow ups with the patients and so forth, so that is part of the ongoing cost burn. We will give a lot better information and details of sort of how we see those costs preceding over time at a conference call in the near future.

MM: I know you just joined the firm so you have your own CFO philosophy that may or may not be independent of Mitch’s, but the bottom line is how much money do you like to have in the back in terms of time so you can sleep well at night?

GS: As we have always said…we believe we have cash to get through the interim…it would drive our cash balances down to essentially a very low level and that’s not a place you’d look to take the company, and I think as we’ve discussed very publicly since I’ve joined, should this occur we would have an additional financing before we’d be able to resubmit to the FDA.

MM: That’s very helpful…thanks for the added information.

William Ho, BOA: Hey guys…sorry about the outcome. I guess a couple questions. First, on the purchase of the antigen, how long will that antigen last? Will it last until the interim analysis or further?

David Urdal: The antigen does have a shelf life but it’s a shelf life that’s measured in years and we’re confident that it is an inventory that will last us through the launch of the product.

WH: What can you do to reduce the burn? That’s the biggest concern right now that I have.

Gold: We’re going to align the workforce with the operational plan going forward and that’s something that Greg mentioned that we’re looking at right now. The costs are going to go down obviously because we’re not going since we’re not going to be gearing up for commercialization as we were in 2006 and up until now in 2007, so as Greg said we’ll give an update to the investment community on what the burn looks like going forward but based on our current assessment now we have enough cash to get us through the interim analysis.

GS: As Mitch has indicated, we’ve had an awful lot of activity towards ramping up for commercialization and a lot of that involving third parties outside of the company and now we have more time to get that commercial infrastructure in place and that will immediately reduce a lot of the expenses which is cash leaving the company that were taking place right now.

Joel Sendek, Lazard: Couple questions on the IMPACT study. I know you can’t much more detail, but as far as the difference that you’re looking for, is it fair to think at the delta (?) might be in line with what Taxotere showed, about a 15% increase in survival

The way that you power these studies, Joel, is not off a median number but more off a overall treatment effect or Hazard Ratio, and the way that we made our powering assumptions for the ongoing IMPACT study was to look at the integrated analysis, which was presented in the advisory meeting so you can pull it right from there, we looked at the interim analysis and used the lower end of the Cox interval to power the study.

JS: OK, when you look at the interim, one of the key things about Provenge is the late effect which is also potentially the explanation for the why you saw the survival benefit. Doesn’t that argue that the likelihood of success on the interim is vanishingly (?) small?

Gold: Au contraire. (!) As you remember this is a study that started in 2003…this is a death event rate, so its not like progression, where the drug may not be active as the progression events are occurring. These are men that enrolled in the study in 2003, we know that the drug takes effect between 8 and 13 weeks, and then we’re able to follow them out.

JS: So if that’s the case you have a good shot. Is there any alpha spend on the interim?

Gold: Yes there will be an alpha spend on the interim and we’re not going to disclose what that is. It’s a interim that we think is a meaningful interim, it’s well powered and something that we think is important to the organization (sounding like Torre here).

JS: My final question (see below)…these patients, based on the Taxotere data and your own data tend to live about two years and you started the trial in 2003 and you almost have 400 patients now, why won’t the final data be available before 2010…it seems to me that, just doing the math…

Gold: There’s a little gap in your understanding Joel. (nice euphemism!) They began enrolling in 2003 and continue to enroll now, we have just over 420 patients enrolled and as each patient enrolls historically each patient has about 18 to 20 months, from the time they enroll on average, 18 to 20 months until they reach a death event. (please just say they die!) So the patients that enrolled in 2003, we know that from our 9901 data that at 3 years that we had about 30% of patients on drug that were still alive…at three years

JS: So you need all the patients, so its not like you can reach a median…

Gold: Right…it’s an event driven analysis

JS: My final question, in regard to the SPA on the IMPACT study, does that preclude the potential for the FDA to require a second study to support a registration?

Gold: Based on the discussions, the way the SPA is written, written when we already had the 9901 data, so that study was designed and the SPA was agreed to that that study by itself, at either the interim or final analysis, would be sufficient for our registration pathway.

JS: Thanks a lot Mitch.

Greg Suvanneveh, UBS: I have a question on the manufacturing. (Shades of Nov, 2005…Maged has a sell with no approval in sight and asks a manufacturing question). You said on these issues you could get a response back to the FDA relatively quickly and I was wondering if you have granularity (!?) on if it’s more a concern on the potency assay or is it more about control about maintaining sample consistency since it is an autologous therapy.

Urdal: It was none of those that you mentioned. Just as a reminder, when you go through license application review, there is part of the review that deals with Chemistry, Manufacturing and Control division of the FDA, inspecting your facility, and we hosted a FDA facility inspection on the week of Feb 12, and out of the inspection got several observations that were made that we’re already addressing, quite effectively, so one of the items mentioned in the letter was just a reminder that we needed to complete a response to the 483 (?) items…they were all observations that we think we have well in hand, not ones that will delay the approval process from a manufacturing point of view. From discussions we’ve had with the agency we don’t see the manufacturing issues would hold up approval…it’s the clinical data that they need more…

GS: Can you give us a sense of the number of observations or the kind of observations that have been noted?

Gold: Those are proprietary to the company, Greg, and as David noted these are things that we can easily be addressed…these aren’t big issues but we wanted it to be noted that they were included in the letter.

GS: Follow up question if I may. I want to see if there are links to the safety signal that had been noted at the advisory panel meeting and I was wondering if there’s been any kind of discussion that the safety is any kind of a concern or is it really all about providing efficacy data?

Gold: It is really all about providing additional efficacy data.

Liisa Bako, Next Generation: What triggers the interim analysis of the IMPACT study?

Gold: Sure, it’s an advanced dacorate? Lisa…based upon a certain number of death events. I don’t know if you were on the call earlier…I know given the call volumes that some were having trouble getting onto the call. The final analysis of the IMPACT study is 360 death events, and its powered at over 90 percent to achieve its outcome there and the interim analysis is based on a number of death events less than that but it is also well powered.

LB: But you’re not going to disclose the actual number?

Gold: Correct. Or the alpha spend there.

LB: OK. Can you expand on the crossover design? And how that might confound the results?

Gold: It’s identical in design to the 9901 and 9902a studies, meaning that once patients progress, they can crossover and receive a salvage version of the product. We know that the salvage version of the product isn’t as potent as the primary version of Provenge and we’re basically able to model out the effect of salvage on our estimates, so one of the things that we did when designed IMPACT was to take into account the impact of crossover and power the study to deal with that. Salvage is not fresh Provenge it’s a frozen version of the product, it is slightly less potent than the primary fresh version.

LB: OK, just one more follow up. Can you remind us of your commitment to Diosynth for the remainder of 2007.

GS: Our commitment to Diosynth through the rest of the year would be 12.5 million years.

David Miller, BSR: I’m trying to figure out the ramp in the trial as in most trials is backloaded. And if I am remembering the numbers correctly there was somewhere between 150-200 patients in Jan. 06, and according to the briefing docs there was about 300 in Nov. 06, and now we have about 420 today, am I about right on those numbers?

Gold: I don’t have those numbers in front of me. Where are getting those, David?

DM: Conversations from conference calls and presentations the company has made at various investor events.

Gold: I can’t confirm those because I don’t have those in front of me but what I can say, and what I’ve said before which is that early in the trial enrollment is slower and now its ramped up pretty substantially.

DM: When you amended the trial to more patients in the more patient population did you account for differential expected from symptomatic and asymptomatic in terms of your statistical assumptions?

Gold: What we’ve doen is that we’ve looked at the IMPACT study on a blinded basis and compared the predicted survival on the IMPACT study from what we’ve seen in 9901 and 9902a and the demographics of the patient populations are very very similar. What we’re seeing from a demographic perspective and a survival perspective is very much in line with the IMPACT study from what we saw in the first Phase III trials and is reassuring us.

DM: When did you take that look?

Gold: It’s a blinded look just on a demographic basis and you plug it in

DM: When did you do that?

Gold: I don’t have the exact date

DM: Like?

Gold: Recently.

DM; It was recently? OK. Do you have activities or presentations planned for AUA or ASCO?

Gold: That’s not publically available, but yes we presentations planned for both of those events.

DM: When you’re going through the process of going through figuring out what exactly they mean by efficacy data, if there is something perhaps outside of efficacy survival data that might satisfy that, how are going about letting us know about that

Gold: In the form of either a press release or a conference call

DM; I just want to confirm and be clear and really sure about this…there was nothing in the CMC issues about characterization of potency…just the kind of…grab this manual and this procedure and get this paperwork straight kind of stuff?

Urdal: Yes…all which we can readily address.

DM: In the CR Letter, is there any reference to needing more data on mechanism of action or any sorts of things just added efficacy.

Gold: No. It’s all focused on additional clinical efficacy.

DM: Is there any thought amongst you about trying to amend the trial to allocate a little bit more alpha to the interim analysis?

Gold: Yeah, we can’t really talk about that at all…we have a planned interim analysis that’s built in the SPA…

DM: I was just talking about any discussions that are planned to allocate more data to that (interim) to make it less likely that it will fail.

Gold: Yes I think we believe the interim is a meaningful analysis to the company, to the FDA, and to the patients and certainly want the alpha that we apportioned is appropriate to that end…

DM: Right, but do you plan on make any changes to what’s already in the SPA?

Gold: I can’t comment on that

DM: Thanks for answering my questions, I appreciate it.

Paul Latta, McAdams Wright: Good afternoon. I would like a little more info on the death event part of the interim analysis. When you look at the 9901 study and apply the same sort of death event protocol, would 9901 have passed the same type of interim

Gold: What I can say about that is that the number of death events that we’ll see on the interim analysis is more that the number of death events that we saw in both 9901 and 9902a combined.

PL: You would expect a curve separation time to exist using the death event protocol, in other words it will still take months for the curves to separate.

Gold: It’s different than progression, Paul, survival occurs on the order of 18 to 20 months and so we’ve taken that all into consideration.

PL: Can I get you to reiterate. Does the FDA decision change your thoughts at all on partnering in terms of ex US and US.

Gold: We’ve very committed to the Provenge development program, and we certainly have the ability to do it here in the US ourselves, that being said we’re open to discussions but we’re mostly interested in an ex-US partner and if there’s something ver appealing to us in the US we’d consider it.

Duncan: Thanks for taking my follow up question. Maybe you touched on this in your response to David Miller’s last question. I’m having trouble understanding how you would characterize the interim analysis as being well powered so can you help walk me through that.

Gold: Sure. The best way to walk you through that is to take you back to the data you already have in hand. The data you have in hand is an integrated analysis of 9901 and 9902a, which I believe is 160 death events for those two studies combined. We powered the interim and final analysis (of 9902b) off of those two studies combined, so we got a good idea of what the overall treatment effect is. The interim analysis for 9902b will have a similar or greater number of death events than the two studies combined.

Duncan: That’s helpful Mitch. I know you don’t want to give people a p value to debate, but it would be helpful to have an idea of what you’re targeting. Usually for interim analyses you’re looking at numbers that are very small…p value .001 or .005, that kind of thing at that level, which makes that improbable, but are you targeting something much greater than that? What range are you thinking?

Gold: We’ve already agreed on what that would be with the FDA but we’re not going to get into specifics, but its bigger than the numbers that you’re describing, but it’s a meaningful interim analysis.

Duncan: Great.

Suvanneveh: Was your shelf registration effective, and when will take advantage of that?

GS: It is effective, and it wouldn’t be appropriate to comment, we’re comfortable that we can get through the interim. As for the timing of when we’re going to raise cash, we don’t have any specific plans right now and it would be irresponsible to project that, but we will probably be active in the market before that interim is submitted.

Suvanneveh: You mentioned you have enough cash on hand to the interim analysis but your balances would get kind of low, so do you anticipate this would be an 07 event or probably an 08 event?

GS: I don’t think we want to speculate about when we will try to raise cash. There’s also a lot of opportunities or means of potentially bringing cash into the company and I think we’re sorting all that out. We will have a plan and the market will become aware of it at the appropriate time.

Suv: One last follow up…when you said “other potential opportunities” can you expand on what those might be?

GS: We can’t go into specifics but the reality is there are various means by which we can bring cash into the company. One is the capital markets and I think there are other options available and we’re going to explore all of them and see what makes the most sense.

William Ho: Thanks for taking my follow up question. Did you say that Provenge has a late survival effect and that you would see greater survival later in therapy?

Gold: I did not.

WH: OK.

Miller: Two follow up questions. Do you expect to restart any pipeline activity between now and the interim?

Gold: We’re looking at our operating plan and how it lines up with our balance sheet, so we want to operate most efficiently going forward, and as Greg said we’ll have a conference call in the future to tell you what that is.

DM: I’ll re-ask the question then. Second question is probably for Urdal. Is there an established survival difference between symptomatic and mildly symptomatic patients as they are being enrolled in the 02b study?

DU: No.

DM: OK, because I know you mentioned the Halabi nomogram they matched out and I know pain is not one of the criteria on the Halabi nomogram so I just wanted to see if perhaps sicker patients enrolled later in the study could be affecting the curves somewhat.

Gold: What we’re seeing is that the demographics of the patients are very similar to what we saw in 9901…that’s very reassuring.

DM: OK, just one last question. What do you think of an FDA that would encourage you to put all your resources into a BLA at the expense of other promising treatments, fast track the drug, accept the BLA, convene a panel of experts to advise on the drug, get a favorable vote from the panel, and then F you and prostate cancer patients over?

Gold: (nervous laughter..then silence)

Before we conclude this call I want to express our gratitude for our employees, shareholders, physicians and patients for your continued support and dedication to Dendreon’s mission to fundamentally change the way that advanced prostate cancer is being treated. Thank you.