10-K

UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, DC 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, 2008

Commission File Number 000-30681

DENDREON CORPORATION
(Exact name of registrant as specified in its charter)

DELAWARE (State or other jurisdiction of incorporation or organization)	22-3203193 (I.R.S. Employer Identification No.)
3005 FIRST AVENUE, SEATTLE, WASHINGTON (Address of principal executive offices)	98121 (Zip Code)

(206) 256-4545

(Registrant’s telephone number, including area code)

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

Title of Each Class	Name of Each Exchange on Which Registered
Common Stock, $.01 Par Value Per Share	The NASDAQ Stock Market LLC

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

None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.  Yes o     No þ

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act.  Yes o     No þ

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.  Yes þ     No o

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.  þ

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o Accelerated filer þ Non-accelerated filer o Smaller reporting company o

(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes o     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 30, 2008, as reported by the NASDAQ Stock Market, was $401,037,151.

As of March 5, 2009, the registrant had outstanding 98,201,864 shares of common stock.

DOCUMENTS INCORPORATED BY REFERENCE

Sections of the registrant’s definitive Proxy Statement, which will be filed on or before April 30, 2009 with the Securities and Exchange Commission in connection with the registrant’s 2009 annual meeting of stockholders, are incorporated by reference into Part III of this Report, as noted therein.

TABLE OF CONTENTS

PART I
	ITEM 1. BUSINESS
	ITEM 1A. RISK FACTORS
	ITEM 1B. UNRESOLVED STAFF COMMENTS
	ITEM 2. PROPERTIES
	ITEM 3. LEGAL PROCEEDINGS
	ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
	ITEM 4A. EXECUTIVE OFFICERS OF THE REGISTRANT
PART II
	ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
	ITEM 6. SELECTED FINANCIAL DATA
	ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
	ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
	ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
	ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
	ITEM 9A. CONTROLS AND PROCEDURES
Report of Independent Registered Public Accounting Firm
	ITEM 9B. OTHER INFORMATION
PART III
	ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
	ITEM 11. EXECUTIVE COMPENSATION
	ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
	ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE
	ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
PART IV
	ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
SIGNATURES
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Report of Independent Registered Public Accounting Firm
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED STATEMENTS OF OPERATIONS
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
CONSOLIDATED STATEMENTS OF CASH FLOWS
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
EX-10.6
EX-10.15
EX-12
EX-23.1
EX-31.1
EX-31.2
EX-32

PART I

ITEM 1.   BUSINESS

OVERVIEW

Dendreon Corporation (“Dendreon”, the “Company”, “we”, “us”, or “our”), a Delaware corporation originally formed in 1992 as Activated Cell Therapy, Inc., is a biotechnology company focused on the discovery, development and commercialization of novel therapeutics that may significantly improve cancer treatment options for patients. Our product portfolio includes active cellular immunotherapy, monoclonal antibody and small molecule product candidates to treat a wide range of cancers. Our most advanced product candidate is Provenge^® (sipuleucel-T), an active cellular immunotherapy that has completed two Phase 3 trials for the treatment of asymptomatic, metastatic, androgen-independent prostate cancer. Prostate cancer is the most common non-skin cancer among men in the United States, with over one million men currently diagnosed with the disease, and the second leading cause of cancer deaths in men in the United States. On November 9, 2006, we completed our submission of our Biologics License Application (our “BLA”) to the U.S. Food and Drug Administration (“FDA”) for Provenge based upon the survival benefit seen in our completed D9901 and D9902A studies for Provenge. The FDA’s Cellular, Tissue and Gene Therapies Advisory Committee (the “Advisory Committee”) review of our BLA for the use of Provenge in the treatment of patients with asymptomatic, metastatic, androgen-independent prostate cancer was held on March 29, 2007. The Advisory Committee was unanimous (17 yes, 0 no) in its opinion that the submitted data established that Provenge is reasonably safe for the intended population and the majority (13 yes, 4 no) believed that the submitted data provided substantial evidence of the efficacy of Provenge in the intended population. On May 8, 2007, we received a Complete Response Letter from the FDA regarding our BLA. In its letter, the FDA requested additional clinical data in support of the efficacy claim contained in our BLA, as well as additional information with respect to the chemistry, manufacturing and controls (“CMC”) section of the BLA. In a meeting with the FDA on May 29, 2007, we received confirmation that the FDA will accept either a positive interim or final analysis of survival from our ongoing Phase 3 D9902B IMPACT (IMmunotherapy for Prostate AdenoCarcinoma Treatment) study to support licensure of Provenge. The primary endpoint of the IMPACT study is overall survival (an event-driven analysis), and time to objective disease progression is a secondary endpoint. In October 2007, we completed our target enrollment of over 500 patients in the IMPACT study. On October 6, 2008, we announced the receipt of interim results from our IMPACT study. The independent data monitoring committee (the “IDMC”) reported to us a 20 percent reduction in the risk of death in the Provenge arm of the study relative to placebo. The IDMC observed no safety concerns and recommended that the study continue to its final analysis, which is anticipated by the end of April 2009. If the study demonstrates approximately a 22 percent reduction in the risk of death, based on 304 events, we would expect the study to meet its primary endpoint of overall survival. In such event, we believe these data would be sufficient to address the FDA’s request for additional clinical information to support the proposed efficacy claim and we would amend our BLA. We own worldwide commercialization rights for Provenge.

2

Product Candidates Overview

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

Product Candidate	Target Indication(s)	Status
Product Candidates in Clinical Trials
Active Cellular Immunotherapy:
Provenge (sipuleucel-T)	Androgen-independent prostate cancer:
	Phase 3 D9901, D9902A	complete, BLA filed 2006
	Phase 3 D9902B (IMPACT)	ongoing; interim survival October 2008
	Phase 2 P07-2	ongoing
	Androgen-dependent prostate cancer:
	Phase 3 P-11	ongoing ; primary analysis 2007
	Phase 2 P-16	complete
	Phase 2 D9905	complete
	Phase 2 P07-1 (neoadjuvant)	ongoing
Neuvengetm (lapuleucel-T)	Breast cancer:
	Phase 1 2000-1	complete
	Breast, ovarian and colon cancer:
	Phase 1 2000-2	complete
Small Molecule Agonist to Trp Ion Channel:
D3263	Multiple cancers: Phase 1 T08-1	IND cleared

Product Candidates in Research and Development

Immunotherapy Targets

CEA	Breast, lung and colon cancer	Preclinical
CA-9 (MN)	Kidney, colon and cervical cancer	Preclinical
Monoclonal Antibody
Anti-Serine Protease	Multiple cancers	Preclinical
Anti-HLA-DR	Hematologic Malignancies	Preclinical

Cancer Immunotherapies

Cancer is characterized by abnormal cells that proliferate 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, cancer therapies must eliminate or control the growth of the cancer. Current therapies, such as surgery, radiation, hormone treatments and chemotherapy, may not have the desired therapeutic effect and may result in significant side effects. Active immunotherapies stimulate the immune system, the body’s natural mechanism for fighting disease, and may overcome some of the limitations of current standard of care cancer therapies.

3

The Immune System

The immune system is composed of a variety of specialized cells. These cells recognize specific chemical structures called antigens. Foreign antigens trigger an immune response that results in the eventual removal of disease-causing agents from the body.

The immune system recognizes and generates a strong response to hundreds of thousands of different foreign antigens. Tumors, however, frequently display antigens that are also found on normal cells. The immune system may not distinguish between tumors and normal cells and may be unable to mount a strong anti-cancer response. Tumors may also prevent the immune system from fully activating. 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 immune system cells to stimulate a vigorous response.

An immune response is started by a specialized class of immune system cells called antigen-presenting cells. Antigen-presenting cells take up antigen from their surroundings and process the antigen into fragments that are recognized by specific classes of immune cells called lymphocytes. One category of lymphocytes, T-lymphocytes (“T-cells”), combat disease by killing antigen-bearing cells directly. In this way, T-cells may eliminate cancers and virally infected tissue. T-cell immunity is also known as cell-mediated immunity and is commonly thought to be a key defense against tumors and cells chronically infected by viruses. Our active immunotherapies are designed to stimulate a T-cell response to cancer cells.

A second category of lymphocytes, B-lymphocytes (“B-cells”), produce specific antibodies when activated. 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.

Our Active Immunotherapy Approach

We combine our experience in antigen identification, antigen engineering and antigen-presenting cell processing to produce active immunotherapy products, which are designed to stimulate a robust T-cell immune response. We believe that our proprietary technology is applicable to many antigens of interest and therefore may be developed to target a variety of solid tumor and blood-borne malignancies.

Our approach to active immunotherapy is to:

•  identify or in-license antigens on cancer cells that are suitable targets for cancer therapy;

•  create proprietary, genetically engineered antigens that will be optimally processed by antigen-presenting cells; and

•  isolate antigen-presenting cells using proprietary methods and combine antigen-presenting cells and engineered antigens in vitro.

Antigen Identification.  Our internal antigen discovery programs begin by identifying novel antigens expressed in specific tissues or in malignant cells. We consider the antigens that we find localized in diseased tissue as candidates for antigen engineering. Our lead product candidate, Provenge, targets the prostate cancer antigen, prostatic acid phosphatase (“PAP”) which is found in approximately 95 percent of all prostate cancers. The antigen target for Neuvenge, our active immunotherapy for breast, ovarian and other solid tumors, is HER2/neu. Through licenses, we have also acquired the opportunity to work with the tumor antigens designated carcinoembryonic antigen and carbonic anhydrase 9. We discovered the tumor antigen TRPM8 and we are presently utilizing this protein for drug development.

Antigen Engineering.  We engineer antigens to produce proprietary active immunotherapies. 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 proprietary Antigen Delivery Cassette^tm.

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

4

provides a common key to unlock the potential of these cells to process antigen. The antigen-presenting cells process antigen along pathways that stimulate cell-mediated immunity. 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 can be built.

Active Immunotherapy Production and Delivery.  Our manufacturing process incorporates two elements: the Antigen Delivery Cassette and antigen-presenting cells. To obtain antigen-presenting cells, we first arrange to have white blood cells removed from a patient’s blood through a standard blood collection process called leukapheresis. Antigen-presenting cells are then collected using our proprietary cell separation technology. The antigen-presenting cells are then incubated with the required concentration of Antigen Delivery Cassette under controlled conditions. After approximately 40 hours, the antigen-presenting cells are ready to be used. We subject each dose to quality control testing, including identity, purity, potency, sterility and other safety testing. Our process requires less than three days from white blood cell collection to the administration of the active immunotherapy product candidate.

Provenge (sipuleucel-T)

Our most advanced product candidate is Provenge (sipuleucel-T), an active cellular immunotherapy that has completed two Phase 3 trials for the treatment of asymptomatic, metastatic, androgen-independent (also known as hormone refractory or castration resistant) prostate cancer. Prostate cancer is the most common non-skin cancer among men in the United States, with over one million men currently diagnosed with the disease, and the second leading cause of cancer deaths in men in the United States. On November 9, 2006, we completed the submission of our BLA to the FDA for Provenge based upon the survival benefit seen in our completed D9901 and D9902A studies for Provenge. On January 12, 2007, the FDA accepted our BLA filing and assigned Priority Review status for Provenge. The FDA’s Advisory Committee review of our BLA for the use of Provenge in the treatment of patients with asymptomatic, metastatic, androgen-independent prostate cancer was held on March 29, 2007. The Advisory Committee was unanimous (17 yes, 0 no) in its opinion that the submitted data established that Provenge is reasonably safe for the intended population and the majority (13 yes, 4 no) believed that the submitted data provided substantial evidence of the efficacy of Provenge in the intended population. On May 8, 2007, we received a Complete Response Letter from the FDA regarding our BLA. In its letter, the FDA requested additional clinical data in support of the efficacy claim contained in the BLA, as well as additional information with respect to the chemistry, manufacturing and controls section of the BLA. In a meeting with the FDA on May 29, 2007, we received confirmation that the FDA will accept either a positive interim or final analysis of survival from our ongoing Phase 3 D9902B IMPACT study to support licensure of Provenge. The primary endpoint of the IMPACT study is overall survival (an event-driven analysis), and time to objective disease progression is a secondary endpoint. In October 2007, we completed enrollment of over 500 patients in the IMPACT study. On October 6, 2008, we announced the receipt of interim results from our IMPACT study. The IDMC reported to us a 20 percent reduction in the risk of death in the Provenge arm of the study relative to placebo. The IDMC observed no safety concerns and recommended that the study continue to its final analysis, which is anticipated by the end of April 2009. If the study demonstrates approximately a 22 percent reduction in the risk of death, based on 304 events, we would expect the study to meet its primary endpoint of overall survival. In such event, we believe these data would be sufficient to address the FDA’s request for additional clinical information to support the proposed efficacy claim and we would amend our BLA.

5

The following table summarizes the survival results of the completed Provenge Phase 3 studies in men with asymptomatic, metastatic, androgen-independent prostate cancer:

			Studies 1 and 2
	Study 1 (D9901)	Study 2 (D9902A)	Integrated
	N = 127	N = 98	N = 225
Median Survival in months:
Provenge	25.9	19.0	23.2
Placebo	21.4	15.7	18.9
Median Survival Benefit: % (months)	21% (4.5)	21% (3.3)	23% (4.3)
Hazard Ratio	1.7	1.3	1.5
p-value (log rank)	P=0.010	p=0.331	p=0.011
Hazard Ratio	2.1	1.9	1.8
p-value (Cox regression)	P=0.002	p=0.023	p=0.0006
36-Month Survival: % (patients)
Provenge	34%(28)	32%(21)	33%(49)
Placebo	11%(5)	21%(7)	15% (12)

In both of our D9901 and D9902A studies, Provenge was generally well tolerated. In controlled clinical trials, the most common adverse reactions associated with Provenge were chills, fever, headache, fatigue, shortness of breath, vomiting and tremor. These events were primarily grade 1 and 2, with a short duration of 1 to 2 days around the time of infusion. Less than 2 percent of patients were not able to receive a full course of Provenge (3 infusions) due to treatment-related adverse reactions.

Market for Provenge

The American Cancer Society estimated that in 2008 approximately 186,320 new cases of prostate cancer would be diagnosed in the United States, and approximately 28,668 men were expected to die of prostate cancer. Our Provenge clinical studies submitted in support of our BLA have primarily targeted asymptomatic and minimally symptomatic, metastatic, androgen-independent, prostate cancer. Androgen-independent prostate cancer is an advanced stage of prostate cancer in which the tumor growth is no longer regulated by androgens, or male hormones.

Early-stage prostate cancer treatment generally involves surgery, radiation therapy or a combination of the two. Once the cancer becomes metastatic, or spreads outside the prostate gland, hormone ablation therapy is often used to try to control the cancer by limiting the supply of hormones that the cancer needs to grow. While most prostate cancer patients initially respond to hormone ablation therapy, the vast majority relapse after 18 to 24 months, becoming refractory to hormone treatment, or androgen-independent. For these androgen-independent patients, subsequent treatment involves a limited number of options, including chemotherapy and radiation therapy, which may not have the desired therapeutic effect and may result in significant adverse side effects.

To be effective, cancer therapies must eliminate or control the growth of the cancer. Taxotere^® (docetaxel) is a chemotherapy drug and it is the only FDA-approved drug that has been proven to prolong survival of androgen-independent prostate cancer patients. However, chemotherapy drugs are generally administered over the course of a number of months and may have significant side effects, including hair loss, fatigue, vomiting, and gastrointestinal effects.

We believe that Provenge addresses a significant unmet medical need for patients with metastatic, androgen-independent prostate cancer by prolonging survival while avoiding the toxicities associated with existing therapies. Provenge is administered over a four-week period consisting of three infusion treatments given on an outpatient basis each lasting about 30 to 60 minutes. The survival benefit in combination with the well tolerated treatment provides a highly favorable benefit-to-risk profile.

6

Provenge Clinical Trials in Advanced Stage Prostate Cancer

Clinical Trial — D9901.  In June 2001, we completed enrollment in our first Phase 3 clinical trial of Provenge, D9901, which was a randomized double-blind placebo-controlled study in 127 men with asymptomatic, metastatic, androgen-independent (hormone refractory) prostate cancer. The trial was designed to measure a delay in time to disease progression. Time to the onset of disease related pain was a secondary endpoint that was to be evaluated in concert with the results from a second, identical companion trial, D9902. After disease progression, placebo patients were given the option to receive salvage therapy of Provenge on a separate open label study. The protocols for both trials required patients to be followed for survival for three years after enrollment.

In 2002, an analysis of the primary endpoint in trial D9901 demonstrated a 31 percent reduction in the risk of disease progression for patients who received Provenge compared to patients who received placebo. At 6 months following randomization, 31.9 percent of patients receiving Provenge were progression free compared to 13.3 percent of patients in the placebo arm. This analysis closely approached but did not achieve statistical significance. We completed the planned three year follow-up for survival on the D9901 patients and disclosed in February 2005 that a significant survival advantage was seen in those patients who had been randomized to the Provenge arm compared to those who had been randomized to receive placebo. According to the final three year intent-to-treat analysis, patients who received Provenge had a median survival of 25.9 months compared to 21.4 months for patients in the placebo arm, a 4.5 month or 21 percent improvement (p-value = 0.01, hazard ratio = 1.7). This hazard ratio implies that patients who received placebo have a relative risk of dying that is 70 percent higher than that of patients who received Provenge. In addition, 34 percent of patients who received Provenge were alive at 36 months compared to 11 percent of patients who received placebo. These results were published in the July 2006 issue of the Journal of Clinical Oncology. A Cox multivariate regression analysis was used to test the validity of the survival benefit seen in this study. The results showed that treatment with Provenge remained a strong independent predictor of survival after adjusting for prognostic factors; patients who received placebo had a relative risk of dying more than twice as high as that of patients who received Provenge (p-value = 0.002, adjusted hazard ratio= 2.1). Recent additional analyses have demonstrated an improvement in prostate cancer specific survival for Provenge treated patients (p-value = 0.002; hazard ratio = 2.0). In addition, there is no evidence to suggest an imbalance in the use or delay in the timing of chemotherapy in the placebo arm relative to the Provenge arm. We have also demonstrated a correlation between overall survival and cumulative final product CD54 upregulation, a measure of antigen presenting cell activation which serves as the potency assay for Provenge. The survival benefit observed in the D9901 study was the primary basis of our BLA filing with the FDA.

Clinical Trial — D9902A.  D9902, our companion study to D9901, was stopped in 2002 after 98 of 120 patients were enrolled when the analysis of the completed D9901 trial showed that no statistically significant benefit in time to disease progression had been observed in the overall group, but that a benefit was seen in the subgroup of patients with Gleason scores of seven and less. We amended the D9902 protocol to bifurcate the study into our completed randomized D9902A Phase 3 trial consisting of the original 98 patients and our ongoing D9902B Phase 3 study, which was initially restricted to patients with Gleason scores of 7 or less, under a special protocol assessment (“SPA”).

In October 2005, we disclosed final results from D9902A. Trial D9902A also did not meet its primary endpoint of showing a statistically significant delay in time to disease progression. In the D9902A study, the three-year final survival analysis in the intent-to-treat population of the double-blind, placebo-controlled study of treatment with Provenge in 98 men with asymptomatic, metastatic, androgen-independent prostate cancer showed those patients who received Provenge had a median survival of 19.0 months compared to 15.7 months for patients in the placebo arm, a 3.3 month or 21 percent improvement (p-value = 0.331, hazard ratio = 1.3). A Cox multivariate regression analysis of overall survival, which adjusts for the same prognostic factors known to influence survival utilized in D9901, met the criteria for statistical significance (p-value = 0.023; adjusted hazard ratio = 1.9). The hazard ratio observed in this analysis was similar to that seen in our D9901 trial. In addition, at the three-year final follow up, 32 percent of patients who received Provenge were alive compared to only 21 percent of the patients who received placebo, a 52 percent improvement in the survival rate.

An integrated analysis of the survival data from these two companion Phase 3 clinical studies, D9901 and D9902A, showed a significant survival benefit in the overall intent-to-treat population of 225 patients. In this

7

analysis, those patients who received Provenge had a median survival of 23.2 months compared to 18.9 months for patients in the placebo arm (p-value = 0.011; hazard ratio = 1.5). A Cox multivariate regression analysis of the integrated data for overall survival also met the criteria for statistical significance (p-value = 0.0006; adjusted hazard ratio = 1.8). In addition, at the three-year final follow up, 33 percent of patients who received Provenge were alive compared to only 15 percent of the patients who received placebo. In both studies, Provenge was generally well tolerated. In controlled clinical trials, the most common adverse reactions associated with Provenge were chills, fever, headache, fatigue, shortness of breath, vomiting and tremor. These events were primarily grade 1 and 2, with a short duration of 1 to 2 days around the time of infusion. Less than 2 percent of patients were not able to receive a full course of Provenge (3 infusions) due to treatment-related adverse reactions.

Clinical Trial — D9902B.  In August 2002, we divided our D9902 trial into D9902A discussed above and D9902B, our ongoing supportive Phase 3 study, now known as the IMPACT (IMmunotherapy for Prostate AdenoCarcinoma Treatment) study. The IMPACT study was initiated in June 2003 under an SPA for the treatment of men with metastatic, androgen-independent prostate cancer whose tumors had been classified as Gleason score 7 or less. The SPA provides a written agreement with the FDA concerning the trial design and outlines definitive clinical objectives and data analyses. Based upon results of the two completed Phase 3 studies, D9901 and D9902A, we met with the FDA and amended the D9902B SPA to open the trial to men regardless of Gleason score and to elevate survival to the primary endpoint. The primary endpoint of the study is overall survival (an event-driven analysis), and time to objective disease progression is a secondary endpoint. On May 29, 2007, the FDA confirmed that it will accept either a positive interim or positive final analysis of overall survival from the IMPACT study to amend the BLA and support licensure for Provenge. In October 2007, we completed enrollment of over 500 patients in the IMPACT study. On October 6, 2008, we announced the receipt of interim results from our IMPACT study. The IDMC reported to us a 20 percent reduction in the risk of death in the Provenge arm of the study relative to placebo. The IDMC observed no safety concerns and recommended that the study continue to its final analysis, which is anticipated by the end of April 2009. If the study demonstrates approximately a 22 percent reduction in the risk of death, based on 304 events, we would expect the study to meet its primary endpoint of overall survival. In such event, we believe these data would be sufficient to address the FDA’s request for additional clinical information to support the proposed efficacy claim and we would amend our BLA.

Clinical Trial — P07-1.  In August 2008, we initiated a Phase 2 trial of Provenge in men with localized prostate cancer who are scheduled to undergo a radical prostatectomy. The trial called NeoACT (NEOadjuvant Active Cellular immunoTherapy), or P07-1, is anticipated to enroll approximately 40 patients. The study will assess safety of an immune response induced by sipuleucel-T in men with localized prostate cancer.

Clinical Trial — P07-2.  In August 2008, we initiated a Phase 2 trial of Provenge called PROACT (PROstate Active Cellular Therapy) or P07-2. The multicenter trial is enrolling approximately 120 patients with metastatic, androgen independent prostate cancer. All patients will receive active treatment but will be randomized into one of three cohorts that will receive Provenge manufactured with different concentrations of the immunizing antigen. Patients will receive three infusions of Provenge, each approximately two weeks apart. We are conducting the trial to explore the effect of antigen concentration on CD54 upregulation, a measure of product potency, as well as on immune response. Overall survival data will also be collected.

Other Provenge Clinical Trials in Early-Stage Prostate Cancer

Clinical Trial — P-11.  In November 2006, we disclosed preliminary results from our ongoing PROTECT (PROvenge Treatment and Early Cancer Treatment) (“P-11”), Phase 3 clinical trial in patients with androgen-dependent (hormone sensitive) prostate cancer. The study was designed to explore the biologic activity of Provenge in patients with recurrent prostate cancer prior to the development of metastatic disease. Among the preliminary findings, an analysis of prostate-specific antigen doubling time (“PSADT”) calculated from 90 days following randomization to biochemical failure or the initiation of systemic therapy demonstrated a 35 percent prolongation in PSADT for patients who received Provenge compared to placebo (p = 0.046). PSADT is currently considered to be one of the best predictors of clinical outcome in patients with PSA recurrence following primary therapy. These data were presented at the American Society of Clinical Oncology meeting in June of 2007. Per protocol, patients will continue to be followed for the clinical endpoints of distant failure and overall survival. The data from the patients in

8

this study supplemented our overall safety database for Provenge as part of our BLA submission for men with advanced androgen-independent prostate cancer.

Clinical Trial — P-16.  In 2005, an open label Phase 2 clinical trial, P-16, was completed, testing Provenge together with bevacizumab (Avastin^®) to treat patients with androgen-dependent prostate cancer. The trial was conducted at the University of California San Francisco and was sponsored by the National Cancer Institute. In February 2005 at the Multidisciplinary Prostate Cancer Symposium, we announced that the combination of Provenge and bevacizumab increased PSADT, in patients with prostate cancer that had relapsed after prior surgical and radiation therapy. The median pre-treatment PSADT for the 21 evaluable patients was 6.7 months and the median on-treatment PSADT was 12.7 months, an approximate 90 percent increase in PSADT (p = 0.004). In July 2006, results from this study were published in the American Cancer Society’s journal, Cancer. The research showed the combination immunotherapy significantly increased the PSADT in patients with prostate cancer that had relapsed after prior surgical and radiation therapy.

Clinical Trial — D9905.  In 2005, we completed a Phase 2 clinical trial, D9905, evaluating men with biochemical recurrence after prostatectomy. The median pre-treatment PSADT, for the 19 evaluable patients in D9905 was 5.2 months and the median on-treatment PSADT was 7.9 months, approximately a 52 percent increase in PSADT.

Product Candidates in Research and Development

Active Immunotherapies and Immunotherapy Targets

Neuvenge (lapuleucel-T).  Neuvenge is our investigational active immunotherapy for the treatment of patients with breast, ovarian and other solid tumors expressing HER2/neu. Results from a Phase 1 study of Neuvenge showed that treatment with Neuvenge stimulated significant immune responses in patients with advanced, metastatic HER2/neu positive breast cancer, which were shown to be enhanced following booster infusions. Twenty-two percent of patients had evidence of anti-cancer activity. This included one patient who experienced a partial response lasting approximately 6 months and three patients who had stable disease for over a year (74.9-94.0 weeks) without the addition of any other cancer therapy other than the continuation of bisphosphonates. Two additional patients had stable disease for up to 20 weeks. The study concluded that Neuvenge was feasible, well-tolerated and showed primary evidence of anti-cancer activity. These results were published in the August 20, 2007 issue of the Journal of Clinical Oncology. We are evaluating future development plans for Neuvenge.

Carcinoembryonic Antigen (“CEA”).  CEA was found to be present on 70 percent of lung cancers, virtually all cases of colon cancers and approximately 65 percent of breast cancers. We licensed CEA from Bayer Corporation, Business Group Diagnostics.

Carbonic Anhydrase 9 Antigen (“CA-9”).  CA-9 was found to be present on approximately 75 percent of cervical and colon cancers and 95 percent of renal cancers. We licensed the CA-9 antigen from Bayer Corporation, Business Group Diagnostics. In May 2006, preclinical data were presented at the American Association of Immunology Conference demonstrating that active immunotherapy using our proprietary Antigen Delivery Cassette technology with CA-9 significantly prolonged survival in animal models.

Monoclonal Antibodies

We have therapeutic monoclonal antibodies directed to a serine protease for the treatment of cancer in preclinical development. Proteases are proteins that act as molecular scissors to cleave other proteins to activate or inactivate them, and are responsible for regulating normal cellular function. Maintaining normal health requires that the activity of proteases be tightly controlled. Excessive or deficient protease activity underlies many serious diseases in humans, including cancer.

The growth and progression of human tumors involve different proteases at multiple stages during these processes. Serine proteases are thought to be important for tumor cell growth directly and through the modulation of growth factors required for tumor growth. In addition, serine proteases have been shown to indirectly support tumor

9

cell growth through their effects on the network of blood vessels that is essential for tumor survival, a process known as angiogenesis.

We also have in preclinical development, monoclonal antibodies directed to HLA-DR that induce apoptosis or programmed cell death, in HLA-DR expressing cancer cells such as the hematologic cancers like leukemia and lymphoma.

Small Molecules

TRPM8.  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. The protein encoded by the gene first designated trp-p8, is an ion channel. It was identified through our internal antigen discovery program. As progress has been made in the discovery of other ion channel members of the trp (Transient Receptor Potential) family, trp-p8 has come to be more commonly referred to as TRPM8. A patent on the gene encoding this ion channel was issued to us in 2001. In normal human tissues, it is expressed predominantly in the prostate and is over-expressed in hyperplastic prostate. A study found it to be present in 100 percent of prostate cancers and approximately 71 percent of breast cancers, 93 percent of colon cancers and 80 percent of lung cancers. Ion channels like TRPM8 may be an attractive target for manipulation by small molecule drug therapy. Small molecule agonists have been synthesized that activate the TRPM8 ion channel and induced cell death (apoptosis). The small molecule agonists are orally bioavailable and in December 2009 an Investigational New Drug application (“IND”) was filed with the FDA for clinical evaluation of the product candidate D3263 in subjects with advanced cancer.

Manufacturing and Commercial Infrastructure

Final manufacture of Provenge for our clinical trials is currently conducted at a pilot manufacturing facility we operate in Seattle, Washington, and at our manufacturing facility in Morris Plains, New Jersey.

We manufacture the Antigen Delivery Cassettes for our preclinical studies and clinical trials as recombinant proteins using production methods in compliance with current Good Manufacturing Practices (“cGMP”). Preclinical and clinical studies require relatively small amounts of our Antigen Delivery Cassette. To produce commercial quantities of the Antigen Delivery Cassette for Provenge, we have developed manufacturing processes to permit the production of much larger quantities of that protein. To scale-up to commercial levels of production of the Antigen Delivery Cassette used in Provenge, we contracted with Diosynth RTP, Inc. (“Diosynth”) in March 2001. Pursuant to the agreement, Diosynth completed conformance runs for the manufacturing process for the antigen in July 2006. On December 22, 2005, we entered into a long-term supply agreement with Diosynth covering the production of the antigen to be used in connection with Provenge. Our first order to Diosynth for commercial scale quantities of the antigen commenced production in January 2007 and we received final delivery of this order of commercial scale antigen in July 2008.

To support our commercialization efforts, including the potential commercialization of Provenge, we have invested in manufacturing facilities and related operations. The initial build-out of our 158,242 square foot commercial manufacturing facility in Morris Plains, New Jersey (the “Facility”) was completed in July 2006. The lease term of the Facility is seven years, and we have the option to extend the lease for two ten-year periods and one five-year period, upon the same terms and conditions except for rent, which adjusts to market rate.

The cell separation devices and related media that isolate the cells for our active immunotherapy product candidates from a patient’s blood and other bodily fluids are manufactured by third party contractors in compliance with cGMP. We plan to use third party contractors to produce commercial quantities of these devices and media for Provenge, assuming Provenge is approved for sale.

The manufacture of our active cellular immunotherapy candidates, such as a dose of Provenge, begins with a standard cell collection process called leukapheresis. The resulting cells are then transported to a manufacturing facility, processed and returned to a health care provider for infusion into the patient. We rely upon blood banks, hospitals and other health care providers to perform leukapheresis for our clinical trials. We have agreements with

10

Puget Sound Blood Center and New York Blood Center to act as providers of commercial leukapheresis services. We are actively pursuing commercial arrangements with other vendors in order to have an established network of commercial leukapheresis suppliers in place prior to commercial launch of Provenge.

The patient cells derived from the leukapheresis process are transported to our manufacturing facility where final manufacturing of Provenge occurs before it is then transported to a health care provider for infusion into the patient. For our clinical trials, we use commercial carriers to fulfill these transportation needs and it is anticipated that such carriers will be sufficient to fulfill our commercial transportation needs.

Our transportation network, manufacturing facilities, leukapheresis providers, and physician infusion centers will be linked with an information technology scheduling solution, that allows for timely, efficient and cost effective production and timely delivery of Provenge on a commercial basis, assuming Provenge is approved for sale. We have completed the design and are finalizing the development of the information technology scheduling system required for the commercial launch of Provenge.

Supplies and Raw Materials

We currently depend on single source vendors for some of the components for our active immunotherapy candidates. We have entered into a long-term contract with Diosynth for production of the antigen used in the preparation of Provenge, which relationship is not readily replaceable. Should the FDA approve Provenge as a marketable product, any production shortfall that impairs the supply of the antigen would have a material adverse effect on our business, financial condition and results of operations. If we were unable to obtain sufficient quantity of the antigen, it is uncertain whether alternative sources could be developed.

On December 22, 2005, we entered into a supply agreement with Diosynth RTP, Inc. covering the commercial production of the antigen used in connection with Provenge. 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.

Research and Development

We devote significant resources to research and development programs directed at discovering new products such as Provenge. On December 31, 2008, we employed 132 individuals in research and development functions. Our costs associated with research and development expenses were $50.1 million in 2008, $76.5 million in 2007 and $74.1 million in 2006.

Intellectual Property

We protect our technology through United States and foreign patent filings, trademarks and trade secrets that we own or license. We own or license issued patents or patent applications that are directed to the media and devices by which cells can be isolated and manipulated, our Antigen Delivery Cassette technology, our antigen-presenting cell processing technology, immunostimulatory compositions, methods of making the immunostimulatory compositions, methods for treating specific diseases using the immunostimulatory compositions, our monoclonal antibody and small molecule product candidates, and methods for treating certain diseases using the product candidates. We have filed foreign counterparts to these issued patents and patent applications in a number of countries.

We also own or license issued patents or patent applications that are directed to potential small molecule pharmaceutical compounds that are modulators of ion channel and protease activity, to methods of making the compounds and to methods for treating specific diseases using the compounds. For many of these issued patents or applications, we have filed foreign counterparts in various countries.

We intend to continue using our scientific experience to pursue and patent new developments to enhance our position in the cancer field. Patents, if issued, may be challenged, invalidated, declared unenforceable or circumvented. Thus, any patent that we own or license from third parties may not provide adequate protection

11

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, or who could develop, similar or competing technologies, or who could design around our patents. From time to time, we have received invitations to license third party patents.

We also rely on trade secrets and know-how that we seek to protect, in part, by using 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 agreements from companies that receive our confidential data. For employees, consultants and contractors, we require agreements providing that all inventions conceived while rendering services to us shall be assigned to us as our exclusive property.

Competition

The biotechnology and biopharmaceutical industries are characterized by rapidly advancing technologies, intense competition and a strong emphasis on proprietary products. Pharmaceutical and biotechnology companies, academic institutions and other research organizations are actively engaged in the discovery, research and development of products designed to address prostate cancer and other indications. There are products currently under development by other companies and organizations that could compete with Provenge or other products that we are developing. Products such as chemotherapeutics, androgen metabolism or androgen receptor antagonists, endothelin A receptor antagonists, antisense compounds, angiogenesis inhibitors and gene therapies for cancer are also under development by a number of companies and could potentially compete with Provenge and our other product candidates. A chemotherapeutic, Taxotere^® (docetaxel) Injection Concentrate, was approved by the FDA in 2004 for the therapeutic treatment of metastatic, androgen-independent prostate cancer. In addition, many universities and private and public research institutes may in the future become active in cancer research, which may be in direct competition with us.

Our competitors include major pharmaceutical companies. These companies have significantly greater financial resources and expertise in research and development, manufacturing, preclinical testing, conducting clinical trials, obtaining regulatory approvals and marketing. In addition, smaller competitors may collaborate with these large established companies to obtain access to their resources.

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

•  our ability to meet all necessary regulatory requirements for Provenge to receive FDA approval and to advance our other product candidates through clinical trials and through the FDA approval process;

•  the perception by physicians and other members of the health care community of the safety, efficacy and benefits of Provenge or our other products compared to those of competing products or therapies;

•  our ability to manufacture Provenge and other products we may develop on a commercial scale;

•  the effectiveness of our sales and marketing efforts;

•  the willingness of physicians to adopt a new treatment regimen represented by our antigen-presenting cell technology;

•  our ability to accurately forecast and meet demand for Provenge and our product candidates if regulatory approvals are achieved;

•  our ability to secure reimbursement for Provenge and our other product candidates,

•  the price of Provenge and that of other products we may develop and commercialize relative to competing products;

•  our ability to recruit, train, retain, manage and motivate our employees;

12

•  our ability to develop a commercial scale infrastructure either on our own or with a collaborator, which would include expansion of existing facilities, including our manufacturing facilities, development of a distribution network and other operational and financial systems necessary to support our increased scale; and

•  our ability to rapidly expand the existing information technology infrastructure and configure existing operational, manufacturing and financial systems (on our own or with third party collaborators) necessary to support our increased scale, which would include existing or additional facilities and or partners.

Competition among products approved for sale will be based upon, among other things, efficacy, reliability, product safety, price and patent position. Our competitiveness will also depend on our ability to advance our product candidates, license additional technology, maintain a proprietary position in our technologies and products, obtain required government and other 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.

General

Governmental authorities in the United States and other countries extensively regulate the preclinical and clinical testing, manufacturing, labeling, storage, record-keeping, advertising, promotion, export, marketing and distribution, among other things, of biologic products. In the United States, the FDA subjects pharmaceutical and biologic products to rigorous review under the Federal Food, Drug, and Cosmetic Act, the Public Health Service Act and other federal statutes and regulations.

FDA Approval Process

To obtain approval of our product candidates from the FDA, we must, among other requirements, submit data supporting safety and efficacy as well as detailed information on the manufacture and composition of the product candidate. In most cases, this entails extensive laboratory tests and preclinical and clinical trials. The collection of these data, as well as the preparation of applications for review by the FDA are costly in time and effort, and may require significant capital investment. We may encounter significant difficulties or costs in our efforts to obtain FDA approvals that could delay or preclude us from marketing any products we may develop. The FDA also may require post-marketing testing to monitor the safety and efficacy of approved products or place conditions on any approvals that could restrict the commercial applications of these products. Regulatory authorities may withdraw product approvals if we fail to comply with regulatory standards or if we encounter problems at any time following initial marketing.

The first stage of the FDA approval process for a new biologic or drug involves the conducting of preclinical studies and the submission of the results of these studies to the FDA. This, together with proposed clinical protocol(s), manufacturing information, analytical data and other information, is submitted in an IND, and must become effective before human clinical trials may commence. Preclinical studies involve laboratory evaluation of product characteristics and animal studies to assess the efficacy and safety of the product. The FDA regulates preclinical studies under a series of regulations called the “Good Laboratory Practices” regulations. Violation of these regulations, in some cases, may cause the FDA to invalidate the studies and require the company to replicate those studies.

After the IND becomes effective, a company may commence human clinical trials. A company typically conducts human clinical trials in three sequential phases, but the phases may overlap. Phase 1 trials consist of testing of the product in a small number of patients or healthy volunteers, primarily for safety at one or more doses. Phase 1 trials in cancer are often conducted with patients who are not healthy and who have end-stage or metastatic cancer. Phase 2 trials, in addition to safety, evaluate the efficacy of the product in a patient population somewhat larger than Phase 1 trials. Phase 3 trials typically involve additional testing for safety and clinical efficacy in an expanded population at geographically dispersed test sites. A company must submit to the FDA a clinical plan, or “protocol,” which must also be approved by the Institutional Review Boards at the institutions participating in the trials, prior to commencement of each clinical trial. The FDA may order the temporary or permanent discontinuation of a clinical trial at any time.

13

To obtain marketing authorization, a company must submit to the FDA the results of the preclinical and clinical testing, together with, and among other things, detailed information on the manufacture and composition of the product, in the form of a new drug application or, in the case of a biologic, like Provenge, a biologics license application. Under federal law, the submission of most initial marketing applications is subject to a substantial application user fee, currently $1,247,200, and the manufacturer and sponsor under an approved new drug application are also subject to annual product and establishment user fees, currently $71,520 per product and $425,600 per establishment. These fees are typically increased annually.

Under goals established in connection with the Prescription Drug User Fee Act IV, the FDA has committed to reviewing standard marketing applications in 10 months and priority applications in six months. The FDA reviews an application and, when and if it decides that adequate data are available to show that the new compound is both safe and effective for a particular indication and that other applicable requirements have been met, approves the drug or biologic for marketing. The amount of time taken for this approval process is a function of a number of variables, including whether the product has received priority review, the quality of the submission and studies presented, the potential contribution that the compound will make in improving the treatment of the disease in question, and the workload at the FDA.

The FDA may, during its review of a marketing application, ask for additional test data and/or the conducting of additional clinical trials. If the FDA determines that a biologics license application does not contain sufficient data to support approval, the FDA will issue a complete response letter outlining the application’s deficiencies. A second review clock of six or two months duration begins when the applicant responds to the complete response letter with an amendment that addresses all issues raised in the complete response letter. If the FDA does ultimately approve the product, it may require post-marketing testing to monitor the safety and effectiveness of the product. In addition, the FDA may in some circumstances impose restrictions on the use of the product, which may be difficult and expensive to administer and may require prior approval of promotional materials.

Prior to regulatory approval, the FDA may elect to obtain advice from outside experts regarding scientific issues and/or marketing applications under FDA review. These outside experts are convened through FDA’s Advisory Committee process. An Advisory Committee will report to the FDA and make recommendations. Views of the Advisory Committee may differ from those of the FDA.

We will also be subject to a variety of regulations governing clinical trials and sales of our products outside the United States. Whether or not FDA approval has been obtained, approval of a product by the comparable regulatory authorities of foreign countries and regions must be obtained prior to the commencement of marketing the product in those countries. The approval process varies from one regulatory authority to another and the time may be longer or shorter than that required for FDA approval. In the European Union, Canada and Australia, regulatory requirements and approval processes are similar, in principle, to those in the United States.

Fast Track Designation/Priority Review

Congress enacted the Food and Drug Administration Modernization Act of 1997 (the “Modernization Act”) in part to ensure the availability of safe and effective drugs, biologics and medical devices by expediting the development and review for certain new products. The Modernization Act establishes a statutory program for the review of Fast Track products, including biologics. A Fast Track product is defined as a new drug or biologic intended for the treatment of a serious or life-threatening condition that demonstrates the potential to address unmet medical needs for this condition. Under the Fast Track program, the sponsor of a new drug or biologic may request that the FDA designate the drug or biologic as a Fast Track product at any time during the development of the product, prior to a new drug application submission.

The Modernization Act provides that the FDA can base approval of a marketing application for a Fast Track product on an effect on a surrogate endpoint, or on another endpoint that is reasonably likely to predict clinical benefit. The FDA may condition approval of an application for a Fast Track product on a commitment to do post-approval studies to validate the surrogate endpoint or confirm the effect on the clinical endpoint and require prior review of all promotional materials. In addition, the FDA may withdraw approval of a Fast Track product in an expedited manner on a number of grounds, including the sponsor’s failure to conduct any required post-approval study in a timely manner.

14

Ongoing Regulatory Requirements

Before approving a marketing application, the FDA will inspect the facilities at which the product is manufactured (including both those of the sponsor and any third-party component manufacturers) and will not approve the product unless the manufacturing facilities are in compliance with FDA’s cGMP, which are regulations that govern the manufacture, storage and distribution of a product. Manufacturers of biologics also must comply with FDA’s general biological product standards. Following approval, the FDA periodically inspects drug and biologic manufacturing facilities to ensure continued compliance with cGMP regulations. We must ensure that any third-party manufacturers continue to expend time, money and effort in the areas of production, quality control, record keeping and reporting to ensure full compliance with those requirements. Failure to comply with these requirements subjects the manufacturer to possible legal or regulatory action, such as suspension of manufacturing or recall or seizure of product. Adverse experiences with the product must be reported to the FDA and could result in the imposition of marketing restrictions through labeling changes or market removal. Product approvals may be withdrawn if compliance with regulatory requirements is not maintained or if problems concerning safety or efficacy of the product occur following approval.

The pharmacovigilence, labeling, advertising, promotion, marketing and distribution of a prescription drug or biologic product also must be in compliance with FDA requirements, which include, among others, standards and regulations for off-label promotion, industry sponsored scientific and educational activities, promotional activities involving the internet, and direct-to-consumer advertising. The FDA has very broad enforcement authority, and failure to abide by these regulations can result in penalties, including the issuance of a warning letter directing the company to correct deviations from regulatory standards and enforcement actions that can include seizures, injunctions and criminal prosecution.

Anti-Kickback, False Claims Laws & The Prescription Drug Marketing Act

In addition to FDA restrictions on marketing of pharmaceutical products, several other types of state and federal laws have been applied to restrict certain marketing practices in the pharmaceutical industry in recent years. These laws include anti-kickback statutes and false claims statutes. The federal healthcare program anti-kickback statute prohibits, among other things, knowingly and willfully offering, paying, soliciting or receiving remuneration to induce or in return for purchasing, leasing, ordering or arranging for the purchase, lease or order of any healthcare item or service reimbursable under Medicare, Medicaid or other federally financed healthcare programs. This statute has been interpreted to apply to arrangements between pharmaceutical manufacturers on the one hand and prescribers, purchasers and formulary managers on the other. Violations of the anti-kickback statute are punishable by imprisonment, criminal fines, civil monetary penalties and exclusion from participation in federal healthcare programs. Although there are a number of statutory exemptions and regulatory safe harbors protecting certain common activities from prosecution or other regulatory sanctions, the exemptions and safe harbors are drawn narrowly, and practices that involve remuneration intended to induce prescribing, purchases or recommendations may be subject to scrutiny if they do not qualify for an exemption or safe harbor.

Federal false claims laws prohibit any person from knowingly presenting, or causing to be presented, a false claim for payment to the federal government, or knowingly making, or causing to be made, a false statement to have a false claim paid. Recently, several pharmaceutical and other healthcare companies have been prosecuted under these laws for allegedly inflating drug prices they report to pricing services, which in turn were used by the government to set Medicare and Medicaid reimbursement rates, and for allegedly providing free product to customers with the expectation that the customers would bill federal programs for the product. In addition, certain marketing practices, including off-label promotion, may also violate false claims laws. The majority of states also have statutes or regulations similar to the federal anti-kickback law and false claims laws, which apply to items and services, reimbursed under Medicaid and other state programs, or, in several states, apply regardless of the payor.

Price Controls

In many of the markets where we may do business in the future, the prices of pharmaceutical products are subject to direct price controls (by law) and to drug reimbursement programs with varying price control mechanisms. In the United States, the Medicare program is administered by the Centers for Medicare & Medicaid

15

Services (“CMS”), an agency within the U.S. Department of Health and Human Services. Coverage and reimbursement for products and services under Medicare are determined pursuant to regulations promulgated by CMS and pursuant to CMS’s subregulatory coverage and reimbursement determinations. It is difficult to predict how CMS may apply those regulations and subregulatory determinations to newly approved products, especially novel products such as ours, and those regulations and interpretive determinations are subject to change. Moreover, the methodology under which CMS makes coverage and reimbursement determinations is subject to change, particularly because of budgetary pressures facing the Medicare program. For example, the Modernization Act provides for a change in reimbursement methodology that reduces the Medicare reimbursement rates for many drugs, including oncology therapeutics. Medicare regulations and interpretive determinations also may determine who may be reimbursed for certain services.

In the European Union, governments influence the price of pharmaceutical products through their pricing and reimbursement rules and control of national health care systems that fund a large part of the cost of such products to consumers. The approach taken varies from member state to member state. Some jurisdictions operate positive and/or negative list systems under which products may only be marketed once a reimbursement price has been agreed. Other member states allow companies to fix their own prices for medicines, but monitor and control company profits. The downward pressure on health care costs in general, particularly prescription drugs, has become very intense. As a result, increasingly high barriers are being erected to the entry of new products, as exemplified by the role of the National Institute for Health and Clinical Excellence in the United Kingdom, which evaluates the data supporting new medicines and passes reimbursement recommendations to the government. In addition, in some countries cross-border imports from low-priced markets (parallel imports) exert commercial pressure on pricing within a country.

Environmental and Safety Laws

We are subject to a variety of federal, state and local regulations relating to the use, handling, storage and disposal of hazardous materials, including chemicals and radioactive and biological materials. Our operations produce such hazardous waste products. Although we believe that our safety procedures for handling and disposing of these materials complies with the standards prescribed by state and federal regulations, the risk of accidental contamination or injury from these materials cannot be eliminated. We generally contract with third parties for the disposal of such substances, and store our low level radioactive waste at our facilities until the materials are no longer considered radioactive. We are also subject to various laws and regulations governing laboratory practices and the experimental use of animals.

We are also subject to regulation by the Occupational Safety and Health Administration (“OSHA”), and the Environmental Protection Agency (the “EPA”), and to regulation under the Toxic Substances Control Act, the Resource Conservation and Recovery Act and other regulatory statutes, and may in the future be subject to other federal, state or local regulations. OSHA and/or the EPA may promulgate regulations that may affect our research and development programs.

EMPLOYEES

As of March 2, 2009, we had 198 employees. None of our employees is subject to a collective bargaining agreement or represented by a union, and we believe that our relations with our employees are good.

TRADEMARKS AND TRADENAMES

Dendreon^®, the Dendreon logo, Dendreon Targeting Cancer, Transforming Lives^tm, Provenge^®, Neuvenge^tm and the Antigen Delivery Cassette^tm are our trademarks. All other trademarks that may appear or be incorporated by reference into this annual report are the property of their respective owners.

AVAILABLE INFORMATION

We make available, free of charge, through our investor relations website our 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, or furnished to, the Securities and Exchange Commission (the “SEC”). You

16

may also read and copy any materials we file with the SEC at the SEC’s Public Reference Room located at 100 F Street NE, Washington DC 20549. Information on the operation of the Public Reference Room may be obtained by calling the SEC at 1-800-SEC-0330. The address for our web site is http://www.dendreon.com and the address for the investor relations page of our web site is http://investor.dendreon.com/edgar.cfm. The information contained on our web site is not a part of this report.

ITEM 1A.   RISK FACTORS

Risks Relating to our Clinical and Commercialization Pursuits

Our near-term prospects are highly dependent on Provenge, our lead product candidate. If we fail to obtain final FDA approval for Provenge or fail to successfully commercialize Provenge, our business would be harmed and our stock price would likely decline.

Our most advanced product candidate is Provenge, an active cellular immunotherapy for advanced prostate cancer. FDA approval of Provenge depends on, among other things, our manufacturing protocol and controls, composition of the product and the FDA finding the data from our completed Phase 3 clinical trials sufficient to support approval. On November 9, 2006, we completed our submission of a BLA for Provenge based primarily on the demonstration of a survival benefit over placebo in patients with asymptomatic, metastatic androgen-independent prostate cancer in a Phase 3 study, D9901, as well as supportive evidence of survival from another Phase 3 study, D9902A. The BLA was accepted by the FDA on January 12, 2007 and granted priority review. On May 8, 2007, we received a Complete Response Letter from the FDA regarding our BLA. In its letter, the FDA requested additional clinical data in support of the efficacy claim contained in the BLA, as well as additional information with respect to the CMC section of the BLA. In a meeting with the FDA on May 29, 2007, we received confirmation that the FDA will accept either a positive interim or final analysis of survival from our ongoing Phase 3 D9902B IMPACT (IMmunotherapy for Prostate AdenoCarcinoma Treatment) study to support licensure of Provenge. On March 12, 2008, the FDA agreed to an amended Special Protocol Assessment for the Phase 3 IMPACT clinical trial of Provenge and reconfirmed that they would accept a positive interim or final analysis from the IMPACT trial to support licensure of Provenge. On October 6, 2008, we announced the receipt of interim results from our IMPACT study. The IDMC reported to us a 20 percent reduction in the risk of death in the Provenge arm of the study relative to placebo. The IDMC observed no safety concerns and recommended that the study continue to its final analysis, which is anticipated by the end of April 2009.

The final results of our IMPACT study may not meet the FDA requirements for licensure, and the FDA may otherwise determine that our manufacturing staff, methods, facilities or raw materials are insufficient to warrant licensure. Furthermore, even if we receive FDA approval, we might not be successful in commercializing Provenge. If any of these things occur, our business would be materially harmed and the price of our common stock would likely decline.

Provenge and our other product candidates are based on novel technologies, which may raise new regulatory issues that could delay or make FDA approval more difficult.

The process of obtaining required FDA and other regulatory approvals, including foreign approvals, is expensive, often takes many years and can vary substantially based upon the type, complexity and novelty of the products involved. Provenge and our other investigational active cellular immunotherapies are novel; therefore, regulatory agencies may lack experience with them, which may lengthen the regulatory review process, increase our development costs and delay or prevent commercialization of Provenge and our other active immunotherapy products under development.

To date, the FDA has approved for commercial sale in the United States an active immunotherapy designed to stimulate an immune response against human pappiloma virus to prevent cervical cancer, but there has been no active immunotherapy approved for treating pre-existing cancer. Consequently, there is no precedent for the successful commercialization of products based on our technologies in this area.

17

If testing of a particular product candidate does not yield successful results, then we will be unable to commercialize that product.

Our product candidates in clinical trials must meet rigorous testing standards. We must demonstrate the safety and efficacy of our potential products through extensive preclinical and clinical testing. Clinical trials are subject to continuing oversight by governmental regulatory authorities and institutional review boards and must meet the requirements of these authorities in the United States, including those for informed consent and good clinical practices. We may not be able to comply with these requirements, which could disqualify completed or ongoing clinical trials. We may experience numerous unforeseen events during, or as a result of, the testing process that could delay or prevent commercialization of Provenge or our other product candidates, including the following:

•  safety and efficacy results from human clinical trials may show the product candidate to be less effective or safe than desired or those results may not be replicated in later clinical trials;

•  the results of preclinical studies may be inconclusive or they may not be indicative of results that will be obtained in human clinical trials;

•  after reviewing relevant information, including preclinical testing or human clinical trial results, we may abandon or substantially restructure projects that we might previously have believed to be promising;

•  we or the FDA may suspend or terminate clinical trials if the participating patients are being exposed to unacceptable health risks or for other reasons; and

•  the effects of our product candidates may not be the desired effects or may include undesirable side effects or other characteristics that interrupt, delay or cause us or the FDA to halt clinical trials or cause the FDA or foreign regulatory authorities to deny approval of the product candidate for any or all target indications.

Data from our completed clinical trials and from our completed Phase 3 D9902B IMPACT study currently being analyzed may not be sufficient for approval by the FDA for Provenge. The ongoing clinical trials of Provenge or our other product candidates may not be completed as or when planned, and the FDA may not approve any of our product candidates for commercial sale. If we fail to demonstrate the safety or efficacy of a product candidate to the satisfaction of the FDA, this will delay or prevent regulatory approval of that product candidate. Therefore, any delay in obtaining, or inability to obtain, FDA approval of any of our product candidates could materially harm our business and cause our stock price to decline.

The FDA or its Advisory Committee may determine our clinical trials data regarding safety or efficacy are insufficient for regulatory approval.

We discuss with and obtain guidance from regulatory authorities on certain aspects of our clinical development activities. These discussions are not binding obligations on the part of regulatory authorities. Under certain circumstances, regulatory authorities may revise or retract previous guidance during the course of our clinical activities or after the completion of our clinical trials. The FDA may also disqualify a clinical trial in whole or in part from consideration in support of approval of a potential product for commercial sale or otherwise deny approval of that product. Even if we obtain successful clinical safety and efficacy data, we may be required to conduct additional, expensive trials to obtain regulatory approval. Prior to regulatory approval, the FDA may elect to obtain advice from outside experts regarding scientific issues and/or marketing applications under FDA review. These outside experts are convened through the FDA’s Advisory Committee process. An Advisory Committee will report to the FDA and make recommendations. Views of the Advisory Committee may differ from those of the FDA. Provenge was reviewed by the FDA’s Cellular, Tissue and Gene Therapies Advisory Committee on March 29, 2007. The Advisory Committee was unanimous (17 yes, 0 no) in its opinion that the submitted data established that Provenge is reasonably safe for the intended population and the majority (13 yes, 4 no) believed that the submitted data provided substantial evidence of the efficacy of Provenge in the intended population. On May 8, 2007, we received a Complete Response Letter from the FDA regarding our BLA. On March 12, 2008, the FDA agreed to an amended Special Protocol Assessment for the Phase 3 IMPACT clinical trial of Provenge and reconfirmed that they would accept a positive interim or final analysis from the IMPACT trial to amend the BLA for licensure of Provenge. On October 6, 2008, we announced the receipt of interim results from our IMPACT study. The IDMC reported to us a 20 percent reduction in the risk of death in the Provenge arm of the study relative to placebo. The

18

IDMC observed no safety concerns and recommended that the study continue to its final analysis, which is anticipated by the end of April 2009. If the study demonstrates approximately a 22 percent reduction in the risk of death, based on 304 events, we would expect the study to meet its primary endpoint of overall survival. In such event, we believe these data would be sufficient to address the FDA’s request for additional clinical information to support the proposed efficacy claim and we would amend our BLA.

If we amend our BLA to submit additional data from the IMPACT trial, the FDA may determine to again convene an Advisory Committee to review the amended application. We may not obtain approval of our BLA for Provenge from the FDA because an Advisory Committee advises against it or because the FDA’s view of our BLA differs from that of an Advisory Committee. Therefore, any delay in obtaining, or inability to obtain, FDA approval of Provenge could materially harm our business and cause our stock price to decline.

We must expand our operations to commercialize Provenge, and we may encounter unexpected costs or difficulties.

We will need to expand and effectively manage our operations and facilities and develop the necessary infrastructure to commercialize Provenge and pursue development of our other product candidates. We will need to further invest in our manufacturing facilities and information technology systems, develop a distribution network and hire additional personnel related to these functions. In 2006, we completed the initial phased build-out of our Morris Plains, New Jersey facility that provides manufacturing capabilities and related supporting facilities, as well as clean rooms. During 2007, we began production of Provenge at this facility for clinical use. We would need to add manufacturing, quality control, quality assurance, marketing and sales personnel, and personnel in all other areas of our operations to support commercialization, which may strain our existing managerial, operational, financial and other resources.

We have no experience in commercial-scale manufacturing, the management of large-scale information technology systems, or the management of a large-scale distribution network. We also have no experience in sales, marketing or distribution of products in commercial quantities. If we begin to build our sales capability in anticipation of the approval and commercial launch of Provenge, we may be unable to successfully recruit an adequate number of qualified sales representatives or to retain a third party to provide sales, marketing or distribution resources.

If we fail to manage our growth effectively, recruit required personnel or expand our operations within our planned time and budget, our product development and commercialization efforts for Provenge or our other product candidates could be curtailed or delayed.

We may take longer to complete our clinical trials than we project, or we may not be able to complete them at all.

A number of factors, including unexpected delays in the initiation of clinical sites, slower than projected enrollment, competition with ongoing clinical trials and scheduling conflicts with participating clinicians, regulatory requirements, limits on manufacturing capacity and failure of a product candidate to meet required standards for administration to humans may cause significant delays in the completion of our clinical trials. In addition, it may take longer than we project to achieve study endpoints and complete data analysis for a trial. Even if our product candidates proceed successfully through clinical trials and receive regulatory approval, there is no guarantee that an approved product can be manufactured in commercial quantities at reasonable cost or that such a product will be successfully marketed.

We rely on academic institutions, physician practices and clinical research organizations to conduct, supervise or monitor some or all aspects of clinical trials involving our product candidates. We have less control over the timing and other aspects of these clinical trials than if we conducted the monitoring and supervision entirely on our own. Third parties may not perform their responsibilities for our clinical trials on our anticipated schedule or consistent with a clinical trial protocol or applicable regulations. We also rely on clinical research organizations to perform much of our data management and analysis. They may not provide these services as required or in a timely manner.

19

If we fail to complete or experience delays in our ongoing clinical trial for Provenge, our ability to conduct our business as currently planned could materially suffer. Our development costs will increase if we are required to complete additional or larger clinical trials for Provenge prior to FDA approval or with respect to other product candidates. If the delays or costs are significant, our financial results and our ability to commercialize Provenge or our other product candidates will be adversely affected.

If we encounter difficulties enrolling patients in our clinical trials, our trials could be delayed or otherwise adversely affected.

Clinical trials for our product candidates may require that we identify and enroll a large number of patients with the disease under investigation. We may not be able to enroll a sufficient number of patients, or those with required or desired characteristics to achieve diversity in a study, to complete our clinical trials in a timely manner. We have in the past experienced some difficulty in enrollment in our clinical trials due to the criteria specified for eligibility for these trials, and we may encounter these difficulties in our ongoing clinical trials for Provenge or our other product candidates.

Patient enrollment is affected by factors including:

•  design of the trial protocol;

•  the size of the patient population;

•  eligibility criteria for the study in question;

•  perceived risks and benefits of the product candidate under study;

•  availability of competing therapies and clinical trials;

•  efforts to facilitate timely enrollment in clinical trials;

•  patient referral practices of physicians;

•  the ability to monitor patients adequately during and after treatment; and

•  proximity and availability of clinical trial sites for prospective patients.

If we have difficulty enrolling a sufficient number or diversity of patients to conduct our clinical trials as planned, we may need to delay or terminate ongoing or planned clinical trials, either of which would have a negative effect on our business.

Risks Relating to our Financial Position and Need for Additional Financing

We have a history of operating losses. We expect to continue to incur losses for the near future, and we may never become profitable.

At December 31, 2008, we had an accumulated deficit of $563.3 million. We do not have any products that generate revenue from commercial product sales. Operating losses have resulted principally from costs incurred in pursuing our research and development programs, clinical trials, manufacturing, and general and administrative expenses in support of operations. We do not expect to achieve commercial product sales until and unless the FDA approves Provenge for commercial sale. We expect to incur additional operating losses over the next few years, and these losses may increase significantly as we continue preclinical research and clinical trials, apply for regulatory approvals, expand our operations and develop the manufacturing and marketing infrastructure to support commercialization of Provenge and our other potential product candidates. These losses have caused and losses will continue to cause our stockholders’ equity and working capital to decrease.

We may not be successful in commercializing any of our product candidates, and our operations may not be profitable even if any of our product candidates are commercialized.

20

We are likely to require additional funding, and our future access to capital is uncertain.

It is expensive to develop and commercialize cancer immunotherapy, monoclonal antibody and small molecule product candidates. We plan to continue to simultaneously conduct clinical trials and preclinical research for a number of product candidates. Our product development efforts may not lead to commercial products, either because our product candidates fail to be found safe or effective in clinical trials or because we lack the necessary financial or other resources or relationships to pursue our programs through commercialization. Even if commercialized, a product may not achieve revenues that exceed the costs of producing and selling it. Our capital and future cash flow may not be sufficient to support the expenses of our operations and we may need to raise additional capital depending on a number of factors, including the following:

•  the costs of developing the manufacturing, marketing and other supporting resources and systems to support FDA approval of Provenge;

•  our timetable and costs for the development of marketing, manufacturing, information technology and other necessary infrastructure and preparatory activities related to the commercialization of Provenge;

•  the rate of progress and cost of our research and development and clinical trial activities;

•  the introduction of competing products and other adverse market developments; and

•  whether we enter into a collaboration for the commercialization of Provenge.

We may not be able to obtain additional financing on favorable terms or at all. If we are unable to raise additional funds, we may have to delay, reduce or eliminate some of our clinical trials and our development programs and infrastructure build out. If we raise additional funds by issuing equity or equity-linked securities, further dilution to our existing stockholders will result. In addition, the expectation of future dilution as a result of our offering of securities convertible into equity securities may cause our stock price to decline.

Our substantial indebtedness could adversely affect our financial condition.

In June and July 2007, we sold an aggregate of $85.25 million in convertible senior subordinated notes (the “Notes”), which bear interest annually at the rate of 4.75 percent. Our substantial indebtedness and annual debt service requirements may adversely impact our business, operations and financial condition in the future. For example, it could:

•  increase our vulnerability to general adverse economic and industry conditions;

•  limit our ability to raise additional funds to fund future working capital, capital expenditures, research and development and other general corporate requirements;

•  require us to dedicate a substantial portion of our cash to service payments on our debt;

•  limit our flexibility to react to changes in our business and the industry in which we operate or to pursue certain strategic opportunities that may present themselves;

•  limit our ability to borrow additional funds; or

•  increase our difficulty in obtaining equity financing.

Our stockholders may be diluted by the conversion of our outstanding convertible notes.

The holders of the Notes may choose at any time to convert their Notes into common stock prior to maturity in June 2014. The Notes are convertible into our common stock, initially at the conversion price of $10.28 per share, equal to a conversion rate of approximately 97.2644 shares per $1,000 principal amount of the Notes. The number of shares of common stock issuable upon conversion of the Notes, and therefore the dilution of existing common stockholders, could increase under certain circumstances described in the indenture under which the Notes were issued. Conversion of our Notes would result in issuance of additional shares of common stock, diluting existing common stockholders.

21

We may elect to issue additional shares of our common stock or other securities that may be convertible into our common stock, which could result in further dilution to our existing stockholders.

The Notes may be exchanged for shares of our common stock upon certain conditions. In addition, we may sell from time to time up to approximately $301 million in a combination of common stock, preferred stock, warrants to purchase securities and debt securities under existing shelf registration statements. On October 11, 2007, we entered into an equity line of credit arrangement with Azimuth Opportunity Ltd. (“Azimuth”). We entered into a Common Stock Purchase Agreement with Azimuth (the “Purchase Agreement”), which we amended in October 2008 and February 2009. As amended, the Purchase Agreement provides that, upon the terms and subject to the conditions set forth therein, Azimuth is committed to purchase up to $130,000,000 of our common stock over the approximately 36-month term of the Purchase Agreement. On October 10, 2008, we issued 3,610,760 shares of our common stock to Azimuth and received net proceeds of approximately $19.8 million pursuant to the Purchase Agreement in the first draw down under our equity line of credit arrangement.

Future sales of our common stock will depend primarily on the market price of our common stock, the terms we may receive upon the sale of debt or convertible securities, the interest in our company by institutional investors and our cash needs. In addition, we may register additional securities with the SEC for sale in the future. Each of our issuances of common stock or securities convertible into common stock to investors under a registration statement or otherwise will proportionately decrease our existing stockholders’ percentage ownership of our total outstanding equity interests and may reduce our stock price.

Risks Related to Regulation of our Industry

The industry within which we operate and our business is subject to extensive regulation, which is costly, time consuming and may subject us to unanticipated delays.

Our business, including preclinical studies, clinical trials and manufacturing, is subject to extensive regulation by the FDA and comparable authorities outside the United States. Preclinical studies involve laboratory evaluation of product characteristics and animal studies to assess the efficacy and safety of a potential product. The FDA regulates preclinical studies under a series of regulations called the Good Laboratory Practices. If we violate these regulations, the FDA, in some cases, may not accept the studies and require that we replicate those studies.

An IND must become effective before human clinical trials may commence. The IND application is automatically effective 30 days after receipt by the FDA unless, before that time, the FDA raises concerns or questions about the product’s safety profile or the design of the trials as described in the application. In the latter case, any outstanding concerns must be resolved with the FDA before clinical trials can proceed. Thus, the submission of an IND may not result in FDA authorization to commence clinical trials in any given case. After authorization is received, the FDA retains the authority to place the IND, and clinical trials under that IND, on clinical hold. If we are unable to commence clinical trials or clinical trials are delayed indefinitely, we would be unable to develop our product candidates and our business would be materially harmed.

Commercialization of our product candidates in the United States requires FDA approval, which may not be granted, and foreign commercialization requires similar approvals.

The FDA can delay, limit or withhold approval of a product candidate for many reasons, including the following:

•  a product candidate may not demonstrate sufficient safety in human trials or efficacy in treatment;

•  the FDA may interpret data from preclinical testing and clinical trials in different ways than we interpret the data or may require additional and/or different categories of data than what we obtained in our clinical trials;

•  the FDA may require additional information about the efficacy, safety, purity, stability, identity or functionality of a product candidate;

•  the FDA may not approve our manufacturing processes or facilities or the processes or facilities of our contract manufacturers; and

22

•  the FDA may change its approval policies or adopt new regulations.

The FDA also may approve a product for fewer indications than are requested or may condition approval on the performance of post-approval clinical studies. Even if we receive FDA and other regulatory approvals, our products may later exhibit adverse effects that limit or prevent their widespread use or that force us to withdraw those products from the market. Any product and its manufacturer will continue to be subject to strict regulations after approval, including but not limited to, labeling, packaging, adverse event reporting, storage, advertising, promotion and record-keeping requirements. Any problems with an approved product or any violation of regulations could result in restrictions on the product, including its withdrawal from the market, which could materially harm our business. The process of obtaining approvals in foreign countries is subject to delay and failure for many of the same reasons.

Failure to comply with foreign regulatory requirements governing human clinical trials and marketing approval for product candidates could prevent us from selling our products in foreign markets, which may adversely affect our operating results and financial condition.

The requirements governing the conduct of clinical trials, product licensing, pricing and reimbursement outside the United States vary greatly from country to country. The time required to obtain approvals outside the United States may differ from that required to obtain FDA approval. We may not obtain foreign regulatory approvals on a timely basis, if at all. Approval by the FDA does not ensure approval by regulatory authorities in other countries, and approval by one foreign regulatory authority does not ensure approval by regulatory authorities in other countries or by the FDA and foreign regulatory authorities could require additional testing. Failure to comply with these regulatory requirements or obtain required approvals could impair our ability to develop foreign markets for our products and may have a material adverse effect on our results of operations and financial condition.

Even if approved, Provenge and any other product we may commercialize and market may be later withdrawn from the market or subject to promotional limitations.

We may not be able to obtain the labeling claims necessary or desirable for the promotion of our products. We may also be required to undertake post-marketing clinical trials. If the results of such post-marketing studies are not satisfactory, the FDA may withdraw marketing authorization or may condition continued marketing on commitments from us that may be expensive and/or time consuming to fulfill. In addition, if we or others identify adverse side effects after any of our products are on the market, or if manufacturing problems occur, regulatory approval may be withdrawn and reformulation of our products, additional clinical trials, changes in labeling of our products and additional marketing applications may be required.

The availability and amount of reimbursement for our product candidates and the manner in which government and private payers may reimburse for our potential products is uncertain.

In many of the markets where we may do business in the future, the prices of pharmaceutical products are subject to direct price controls (by law) and to drug reimbursement programs with varying price control mechanisms.

We expect that many of the patients who seek treatment with Provenge or any other of our products that are approved for marketing will be eligible for Medicare benefits. Other patients may be covered by private health plans or uninsured. The Medicare program is administered by the Centers for Medicare & Medicaid Services (“CMS”), an agency within the U.S. Department of Health and Human Services. Coverage and reimbursement for products and services under Medicare are determined pursuant to regulations promulgated by CMS and pursuant to CMS’s subregulatory coverage and reimbursement determinations. It is difficult to predict how CMS may apply those regulations and subregulatory determinations to newly approved products, especially novel products such as ours, and those regulations and interpretive determinations are subject to change.

Moreover, the methodology under which CMS makes coverage and reimbursement determinations is subject to change, particularly because of budgetary pressures facing the Medicare program. For example, the Medicare Prescription Drug, Improvement, and Modernization Act (the “Medicare Modernization Act”), enacted in December 2003, provides for a change in reimbursement methodology that reduces the Medicare reimbursement

23

rates for many drugs, including oncology therapeutics, which may adversely affect reimbursement for Provenge, if it is approved for sale, or our other product candidates. If we are unable to obtain or retain adequate levels of reimbursement from Medicare or from private health plans, our ability to sell Provenge and our other potential products will be adversely affected. Medicare regulations and interpretive determinations also may determine who may be reimbursed for certain services. This may adversely affect our ability to market or sell Provenge or our other potential products, if approved.

Federal, state and foreign governments continue to propose legislation designed to contain or reduce health care costs. Legislation and regulations affecting the pricing of products like our potential products may change further or be adopted before Provenge or any of our potential products are approved for marketing. It is difficult to predict which, if any, of these proposals will be enacted, and, if so, when. Cost control initiatives by governments or third party payers could decrease the price that we receive for any one or all of our potential products or increase patient coinsurance to a level that makes Provenge and our other products under development unaffordable.

In addition, government and private health plans persistently challenge the price and cost-effectiveness of therapeutic products. Accordingly, these third parties may ultimately not consider Provenge or any or all of our products under development to be cost-effective, which could result in products not being covered under their health plans or covered only at a lower price. Any of these initiatives or developments could prevent us from successfully marketing and selling any of our potential products. We are unable to predict what impact the Medicare Modernization Act or other future regulation or third party payer initiatives, if any, relating to reimbursement for Provenge or any of our other potential products will have on sales of Provenge or those other product candidates, if any of them are approved for sale.

In the European Union, governments influence the price of pharmaceutical products through their pricing and reimbursement rules and control of national health care systems that fund a large part of the cost of such products to consumers. The approach taken varies from member state to member state. Some jurisdictions operate positive and/or negative list systems under which products may only be marketed once a reimbursement price has been agreed. Other member states allow companies to fix their own prices for medicines, but monitor and control company profits. The downward pressure on health care costs in general, particularly prescription drugs, has become very intense. As a result, increasingly high barriers are being erected to the entry of new products, as exemplified by the role of the National Institute for Health and Clinical Excellence in the United Kingdom which evaluates the data supporting new medicines and passes reimbursement recommendations to the government. In addition, in some countries cross-border imports from low-priced markets (parallel imports) exert commercial pressure on pricing within a country. All of these factors could adversely impact our ability to successfully commercialize product candidates in these jurisdictions.

The pharmaceutical industry is subject to significant regulation and oversight in the United States.

In addition to FDA restrictions on marketing of pharmaceutical products, several other types of state and federal laws have been applied to restrict certain marketing practices in the pharmaceutical and medical device industries in recent years. These laws include antikickback statutes and false claims statutes.

The federal health care program antikickback statute prohibits, among other things, knowingly and willfully offering, paying, soliciting, or receiving remuneration to induce or in return for purchasing, leasing, ordering, or arranging for the purchase, lease, or order of any health care item or service reimbursable under Medicare, Medicaid, or other federally financed healthcare programs. This statute has been interpreted to apply to arrangements between pharmaceutical manufacturers on one hand and prescribers, purchasers, and formulary managers on the other. Although there are a number of statutory exemptions and regulatory safe harbors protecting certain common activities from prosecution, the exemptions and safe harbors are drawn narrowly, and practices that involve remuneration intended to induce prescribing, purchases, or recommendations may be subject to scrutiny if they do not qualify for an exemption or safe harbor. Our practices may not in all cases meet all of the criteria for safe harbor protection from antikickback liability.

Federal false claims laws prohibit any person from knowingly presenting, or causing to be presented, a false claim for payment to the federal government, or knowingly making, or causing to be made, a false statement to get a false claim paid. Recently, several pharmaceutical and other health care companies have been prosecuted under

24

these laws for allegedly providing free product to customers with the expectation that the customers would bill federal programs for the product. Other companies have been prosecuted for causing false claims to be submitted because of the company’s marketing of the product for unapproved, and thus non-reimbursable, uses. The majority of states also have statutes or regulations similar to the federal antikickback law and false claims laws, which apply to items and services reimbursed under Medicaid and other state programs, or, in several states, apply regardless of the payor. Sanctions under these federal and state laws may include civil monetary penalties, exclusion of a manufacturer’s products from reimbursement under government programs, criminal fines and imprisonment.

Because of the breadth of these laws and the narrowness of the safe harbors, it is possible that some of our business activities could be subject to challenge under one or more of these laws, which could have a material adverse effect on our business, financial condition and results of operations.

Multi-jurisdictional regulations, including those establishing our ability to price products, may negatively affect our sales and profit margins.

We expect to face pricing pressure globally from managed care organizations, institutions and government agencies and programs that could negatively affect the sales and profit margins for Provenge or any other of our products that are approved for marketing. For example, in the United States, the Medicare Modernization Act contains a prescription drug benefit for individuals who are eligible for Medicare. The prescription drug benefit became effective on January 1, 2006 and has resulted in increased use of generics and increased purchasing power of those negotiating on behalf of Medicare recipients, which in turn may result in increased pricing pressure on our products.

In addition to legislation concerning price controls, other trends could adversely affect our sales and profit margins. These trends include legislative or regulatory action relating to health care reform initiatives, drug importation legislation and involuntary approval of medicines for over-the-counter use. These trends also include non-governmental initiatives and practices such as consolidation among customers, managed care practices and health care costs containment.

Risks Relating to Manufacturing Activities

We have limited commercial or other large-scale manufacturing experience.

To be successful, our product candidates must be capable of being manufactured in sufficient quantities, in compliance with regulatory requirements and at an acceptable cost. We have limited commercial or other large-scale manufacturing experience. We currently rely on third parties for certain aspects of the commercial and clinical trial manufacture of Provenge and its components and our other product candidates. In 2006, we completed the initial phase of the build out for our Morris Plains, New Jersey facility, which includes commercial manufacturing space, including clean rooms. During 2007, we began production of Provenge at our facility for clinical use. In order to commercialize Provenge, if approved for marketing, we will need to hire and train a significant number of employees and comply with applicable regulations for our facilities, which are extensive. A limited number of contract manufacturers are capable of manufacturing the components of Provenge or the final manufacture of Provenge. If we encounter delays or difficulties with manufacturers and cannot manufacture the contracted components or product candidate ourselves, we may not be able to conduct clinical trials as planned or to meet demand for Provenge, if it is approved, any of which could materially harm our business. Expansion of our production capabilities or facilities might also require reexamination of our manufacturing processes.

In addition to increased production efforts, we may make manufacturing changes to the components or to the manufacturing process for Provenge. These changes could result in delays in the development or regulatory approval of Provenge or in reduction or interruption of commercial sales, in the event Provenge is approved, any of which could materially harm our business. We will be required to demonstrate product comparability for each manufacturing site. The FDA may require additional testing beyond what we propose.

We intend to rely on results of preclinical studies and clinical trials performed using the form of the product candidate produced using the prior formulation or production method or at the prior scale. Depending upon the type and degree of differences between manufacturing processes or component substitutions for a product candidate, we

25

may be required to conduct additional studies or clinical trials to demonstrate that the new method or methods or substitute component or product candidate is sufficiently similar to the previously produced material.

We and our contract manufacturers are subject to significant regulation with respect to manufacturing of our products.

All of those involved in the preparation of a therapeutic drug for clinical trials or commercial sale, including our existing contract manufacturer for the Antigen Delivery Cassette used in Provenge, and clinical trial investigators, are subject to extensive regulation by the FDA. Components of a finished therapeutic product approved for commercial sale or used in late-stage clinical trials must be manufactured in accordance with cGMP, a series of complex regulations. These regulations govern manufacturing processes and procedures and the implementation and operation of quality systems to control and assure the quality of investigational products and products approved for sale. Our facilities and quality systems and the facilities and quality systems of some or all of our third party contractors must pass a pre-approval inspection for compliance with the applicable regulations as a condition of FDA approval of Provenge or any of our other potential products. In addition, the FDA may, at any time, audit or inspect a manufacturing facility involved with the preparation of Provenge or our other potential products or the associated quality systems for compliance with the regulations applicable to the activities being conducted. The FDA also may, at any time following approval of a product for sale, audit our manufacturing facilities or those of our third party contractors. If any such inspection or audit identifies a failure to comply with applicable regulations or if a violation of our product specifications or applicable regulation occurs independent of such an inspection or audit, we or the FDA may require remedial measures that may be costly and/or time consuming for us or a third party to implement and that may include the temporary or permanent suspension of a clinical trial or commercial sales or the temporary or permanent closure of a facility. Any such remedial measures imposed upon us or third parties with whom we contract could materially harm our business.

We must rely at present on relationships with third-party contract manufacturers, which will limit our ability to control the availability of, and manufacturing costs for, our product candidates in the near-term.

We will rely upon contract manufacturers for components of Provenge for commercial sale, if it is approved for sale. Problems with any of our or our contract manufacturers’ facilities or processes could result in failure to produce or a delay in production of adequate supplies of antigen, components or finished Provenge. This could delay or reduce commercial sales and materially harm our business. Any prolonged interruption in the operations of our or our contract manufacturers’ facilities could result in cancellation of shipments, loss of components in the process of being manufactured or a shortfall in availability of a product. A number of factors could cause interruptions, including the inability of a supplier to provide raw materials, equipment malfunctions or failures, damage to a facility due to natural disasters, changes in FDA regulatory requirements or standards that require modifications to our manufacturing processes, action by the FDA or by us that results in the halting or slowdown of production of components or finished product due to regulatory issues, a contract manufacturer going out of business or failing to produce product as contractually required or other similar factors. Because manufacturing processes are highly complex and are subject to a lengthy FDA approval process, alternative qualified production capacity may not be available on a timely basis or at all. Difficulties or delays in our contract manufacturers’ manufacturing and supply of components could delay our clinical trials, increase our costs, damage our reputation and, for Provenge, if it is approved for sale, cause us to lose revenue or market share if we are unable to timely meet market demands.

Further, if our contract manufacturers are not in compliance with regulatory requirements at any stage, including post-marketing approval, we may be fined, forced to remove a product from the market and/or experience other adverse consequences, including delays, which could materially harm our business.

We rely on single source vendors for some key components for our active immunotherapy candidates, which could impair our supply of such product.

We currently depend on single source vendors for some of the components for our active immunotherapy candidates. We have entered into a long-term contract with Diosynth for production of the antigen used in the

26

preparation of Provenge, which relationship is not readily replaceable. Should the FDA approve Provenge as a marketable product, any production shortfall that impairs the supply of the antigen would have a material adverse effect on our business, financial condition and results of operations. If we were unable to obtain sufficient quantity of the antigen, it is uncertain whether alternative sources could be developed.

We use hazardous materials in our business and must comply with environmental laws and regulations, which can be expensive.

Our operations produce hazardous waste products, including chemicals and radioactive and biological materials. We are subject to a variety of federal, state and local regulations relating to the use, handling, storage and disposal of these materials. Although we believe that our safety procedures for handling and disposing of these materials complies with the standards prescribed by state and federal regulations, the risk of accidental contamination or injury from these materials cannot be eliminated. We generally contract with third parties for the disposal of such substances and store our low level radioactive waste at our facilities until the materials are no longer considered radioactive. We may be required to incur further costs to comply with current or future environmental and safety regulations. In addition, in the event of accidental contamination or injury from these materials, we could be held liable for any damages that result and any such liability could exceed our resources.

Risks from Competitive Factors

Our competitors may develop and market products that are less expensive, more effective, safer or reach the market sooner, which may diminish or eliminate the commercial success of any products we may commercialize.

Competition in the cancer therapeutics field is intense and is accentuated by the rapid pace of advancements in product development. We anticipate that we will face increased competition in the future as new companies enter our markets. Some competitors are pursuing a product development strategy competitive with ours. Certain of these competitive products may be in a more advanced stage of product development and clinical trials. In addition, we compete with other clinical-stage companies and institutions for clinical trial participants, which could reduce our ability to recruit participants for our clinical trials. Delay in recruiting clinical trial participants could adversely affect our ability to bring a product to market prior to our competitors. Further, research and discoveries by others may result in breakthroughs that render Provenge or our other potential products obsolete even before they begin to generate any revenue.

There are products currently under development by other companies and organizations that could compete with Provenge or other products that we are developing. Products such as chemotherapeutics, androgen metabolism or androgen receptor antagonists, endothelin A receptor antagonists, antisense compounds, angiogenesis inhibitors and gene therapies for cancer are also under development by a number of companies and could potentially compete with Provenge and our other product candidates. A chemotherapeutic, Taxotere^® (docetaxel) Injection Concentrate, was approved by the FDA in 2004 for the therapeutic treatment of metastatic, androgen-independent prostate cancer. In addition, many universities and private and public research institutes may become active in cancer research, which may be in direct competition with us.

Some of our competitors in the cancer therapeutics field have substantially greater research and development capabilities and manufacturing, marketing, financial and managerial resources than we do. In addition, our competitors may obtain patent protection or FDA approval and commercialize products more rapidly than we do, which may impact future sales of our products. If we are permitted by the FDA to commence commercial sales of products, we will also be competing with respect to marketing capabilities and manufacturing efficiency, areas in which we have limited or no experience. We expect that competition among products approved for sale will be based, among other things, on product efficacy, price, safety, reliability, availability, patent protection, and sales, marketing and distribution capabilities. Our profitability and financial position will suffer if our products receive regulatory approval, but cannot compete effectively in the marketplace.

27

Our products may not be accepted in the marketplace; therefore, we may not be able to generate significant revenue, if any.

Even if Provenge or any of our other potential products is approved and sold, physicians and the medical community may not ultimately use it or may use it only in applications more restricted than we expect. Our products, if successfully developed, will compete with a number of traditional products and immunotherapies manufactured and marketed by major pharmaceutical and other biotechnology companies. Our products will also compete with new products currently under development by such companies and others. Physicians will only prescribe a product if they determine, based on experience, clinical data, side effect profiles and other factors, that it is beneficial and preferable to other products currently in use. Many other factors influence the adoption of new products, including marketing and distribution restrictions, course of treatment, adverse publicity, product pricing, the views of thought leaders in the medical community, and reimbursement by government and private third party payers.

Failure to retain key personnel could impede our ability to develop our products and to obtain new collaborations or other sources of funding.

We depend, to a significant extent, on the efforts of our key employees, including senior management and senior scientific, clinical, regulatory and other personnel. The development of new therapeutic products requires expertise from a number of different disciplines, some of which are not widely available.

We depend upon our scientific staff to discover new product candidates and to develop and conduct preclinical studies of those new potential products. Our clinical and regulatory staff is responsible for the design and execution of clinical trials in accordance with FDA requirements and for the advancement of our product candidates toward FDA approval and submission of data supporting approval. The quality and reputation of our scientific, clinical and regulatory staff, especially the senior staff, and their success in performing their responsibilities, may directly influence the success of our product development programs. In addition, our Chief Executive Officer and other executive officers are involved in a broad range of critical activities, including providing strategic and operational guidance. The loss of these individuals, or our inability to retain or recruit other key management and scientific, clinical, regulatory and other personnel, may delay or prevent us from achieving our business objectives. We face intense competition for personnel from other companies, universities, public and private research institutions, government entities and other organizations.

Risks Relating to Collaboration Arrangements

If we fail to enter into any needed collaboration agreements for our product candidates, we may be unable to commercialize them effectively or at all.

To successfully commercialize Provenge, we will need substantial financial resources and we will need to develop or access expertise and physical resources and systems, including expanding our manufacturing facilities, a distribution network, an information technology platform and sales and marketing and other resources that we currently do not have or may be in the process of developing. We may elect to develop some or all of these physical resources and systems and expertise ourselves or we may seek to collaborate with another biotechnology or pharmaceutical company that can provide some or all of such physical resources and systems as well as financial resources and expertise. Such collaborations are complex and any potential discussions may not result in a definitive agreement for many reasons. For example, whether we reach a definitive agreement for a collaboration will depend, among other things, upon our assessment of the collaborator’s resources and expertise, the terms and conditions of the proposed collaboration, and the proposed collaborator’s evaluation of a number of factors. Those factors may include the design or results of our Provenge clinical trials, the potential market for Provenge, the costs and complexities of manufacturing and delivering Provenge to patients, the potential of competing products, the existence of uncertainty with respect to our ownership of technology, which can exist if there is a challenge to such ownership without regard to the merits of the challenge and industry and market conditions generally. If we were to determine that a collaboration for Provenge is necessary and were unable to enter into such a collaboration on acceptable terms, we might elect to delay or scale back the commercialization of Provenge in order to preserve our

28

financial resources or to allow us adequate time to develop the required physical resources and systems and expertise ourselves.

If we enter into a collaboration agreement we consider acceptable, the collaboration may not proceed as quickly, smoothly or successfully as we plan. The risks in a collaboration agreement for Provenge include the following:

•  the collaborator may not apply the expected financial resources or required expertise in developing the physical resources and systems necessary to successfully commercialize Provenge;

•  the collaborator may not invest in the development of a sales and marketing force and the related infrastructure at levels that ensure that sales of Provenge reach their full potential;

•  disputes may arise between us and a collaborator that delay the commercialization of Provenge or adversely affect its sales or profitability; or

•  the collaborator may independently develop, or develop with third parties, products that could compete with Provenge.

With respect to a collaboration for Provenge or any of our other product candidates, we are dependent on the success of our collaborators in performing their respective responsibilities and the continued cooperation of our collaborators. Our collaborators may not cooperate with us to perform their obligations under our agreements with them. We cannot control the amount and timing of our collaborators’ resources that will be devoted to activities related to our collaborative agreements with them. Our collaborators may choose to pursue existing or alternative technologies in preference to those being developed in collaboration with us. Disputes may arise between us and our collaborators that delay the development and commercialization of our product candidates. In addition, a collaborator for Provenge may have the right to terminate the collaboration at its discretion. Any termination may require us to seek a new collaborator, which we may not be able to do on a timely basis, if at all, or require us to delay or scale back the commercialization efforts. The occurrence of any of these events could adversely affect the commercialization of Provenge and materially harm our business and stock price by delaying the date on which sales of the product may begin, if it is approved by the FDA, by slowing the pace of growth of such sales, by reducing the profitability of the product or by adversely affecting the reputation of the product in the market.

Risks in Protecting our Intellectual Property

If we are unable to protect our proprietary rights or to defend against infringement claims, we may not be able to compete effectively or operate profitably.

We invent and develop technologies that are the basis for or incorporated in our potential products. We protect our technology through United States and foreign patent filings, trademarks and trade secrets. We have issued patents, and applications for United States and foreign patents in various stages of prosecution. We expect that we will continue to file and prosecute patent applications and that our success depends in part on our ability to establish and defend our proprietary rights in the technologies that are the subject of issued patents and patent applications.

The fact that we have filed a patent application or that a patent has issued, however, does not ensure that we will have meaningful protection from competition with regard to the underlying technology or product. Patents, if issued, may be challenged, invalidated, declared unenforceable or circumvented. In addition, our pending patent applications as well as those we may file in the future may not result in issued patents. Patents may not provide us with adequate proprietary protection or advantages against competitors with, or who could develop, similar or competing technologies or who could design around our patents.

We also rely on trade secrets and know-how that we seek to protect, in part, through 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 agreements from companies that receive our confidential data. For employees, consultants and contractors, we require confidentiality agreements providing

29

that all inventions conceived while rendering services to us shall be assigned to us as our exclusive property. It is possible, however, 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 know-how will otherwise become known to or be independently developed by competitors.

We are also subject to the risk of claims, whether meritorious or not, that our immunotherapy candidates infringe or misappropriate third party intellectual property rights. If we are found to infringe or misappropriate third party intellectual property, we could be required to seek a license or discontinue our products or cease using certain technologies or delay commercialization of the affected product or products, and we could be required to pay substantial damages, which could materially harm our business.

We may be subject to litigation with respect to the ownership and use of intellectual property that will be costly to defend or pursue and uncertain in its outcome.

Our business may bring us into conflict with our licensees, licensors or others with whom we have contractual or other business relationships, or with our competitors or others whose interests differ from ours. If we are unable to resolve those conflicts on terms that are satisfactory to all parties, we may become involved in litigation brought by or against us. That litigation is likely to be expensive and may require a significant amount of management’s time and attention, at the expense of other aspects of our business.

Litigation relating to the ownership and use of intellectual property is expensive, and our position as a relatively small company in an industry dominated by very large companies may cause us to be at a disadvantage in defending our intellectual property rights and in defending against claims that our immunotherapy candidates infringe or misappropriate third party intellectual property rights. Even if we are able to defend our position, the cost of doing so may adversely affect our profitability. We have not yet experienced patent litigation. This may reflect, however, the fact that we have not yet commercialized any products. We may in the future be subject to such litigation and may not be able to protect our intellectual property at a reasonable cost if such litigation is initiated. The outcome of litigation is always uncertain, and in some cases could include judgments against us that require us to pay damages, enjoin us from certain activities or otherwise affect our legal or contractual rights, which could have a significant adverse effect on our business.

We are exposed to potential product liability claims, and insurance against these claims may not be available to us at a reasonable rate in the future.

Our business exposes us to potential product liability risks that are inherent in the testing, manufacturing, marketing and sale of therapeutic products. We have clinical trial insurance coverage, and we intend to obtain commercial product liability insurance coverage in the future. However, this insurance coverage may not be adequate to cover claims against us or available to us at an acceptable cost, if at all. Regardless of their merit or eventual outcome, product liability claims may result in decreased demand for a product, injury to our reputation, withdrawal of clinical trial volunteers and loss of revenues. Thus, whether or not we are insured, a product liability claim or product recall may result in losses that could be material.

Risks Relating to an Investment in Our Common Stock

We are currently subject to certain pending litigation and a stockholder demand and may be subject to similar claims in the future.

Four proposed securities class action suits have been filed in The United States District Court for the Western District of Washington, which the Court has consolidated and which name our company, and our Chief Executive Officer and one of our executive officers s and purport to state claims for securities law violations stemming from our disclosures related to Provenge and the FDA’s actions regarding our pending BLA for Provenge. A derivative suit has also been filed in the State of Washington against all of the members of our Board of Directors, and us as a nominal defendant, alleging breaches of fiduciary duties and failure to control the alleged wrongful actions of the Company. In addition, we have received letters from counsel to two of our stockholders demanding our board of directors investigate certain allegations of wrongful disclosure and insider trading stemming from our disclosures regarding our correspondence with the FDA during the first half of 2007 pertaining to our BLA filed with the FDA

30

for Provenge. It is possible that additional suits will be filed, or allegations received from stockholders, with respect to these same matters and also naming our company and/or our executive officers and directors. We cannot predict the outcome of any of these suits. Monitoring and defending against legal actions, whether or not meritorious, and considering stockholder demands is time-consuming for our management and detracts from our ability to fully focus our internal resources on our business activities. In addition, legal fees and costs incurred in connection with such activities are costly. We are not currently able to estimate the possible cost to us from these matters, as these suits are currently at an early stage and we cannot be certain how long it may take to resolve these matters or the possible amount of any damages that we may be required to pay. We have not established any reserves for any potential liability relating to the suits or other claims related to the same matters. It is possible that we could, in the future, incur judgments or enter into settlements of claims for monetary damages. A decision adverse to our interests on these actions or resulting from these matters could result in the payment of substantial damages and could have a material adverse effect on our cash flow, results of operations and financial position.

Market volatility may affect our stock price, and the value of an investment in our common stock may be subject to sudden decreases.

The trading price for our common stock has been, and we expect it to continue to be, volatile. The price at which our common stock trades depends on a number of factors, including the following, many of which are beyond our control:

•  timing and the final outcome of FDA review of our BLA for Provenge;

•  the progression and tenor of our discussions with the FDA regarding our BLA for Provenge;

•  the recommendations of the FDA’s Advisory Committee for Provenge;

•  preclinical and clinical trial results and other product development activities;

•  our historical and anticipated operating results, including fluctuations in our financial and operating results;

•  changes in government regulations affecting product approvals, reimbursement or other aspects of our or our competitors’ businesses;

•  announcements of technological innovations or new commercial products by us or our competitors;

•  developments concerning our key personnel and intellectual property rights;

•  announcements regarding significant collaborations or strategic alliances;

•  publicity regarding actual or potential performance of products under development by us or our competitors;

•  market perception of the prospects for biotechnology companies as an industry sector; and

•  general market and economic conditions.

In addition, during periods of extreme stock market price volatility, share prices of many biotechnology companies have often fluctuated in a manner not necessarily related to their individual operating performance. Accordingly, our common stock may be subject to greater price volatility than the stock market as a whole.

Anti-takeover provisions in our charter documents and under Delaware law and our stockholders’ rights plan could make an acquisition of us, which may be beneficial to our stockholders, more difficult.

Provisions of our certificate of incorporation and bylaws will make it more difficult for a third party to acquire us on terms not approved by our board of directors and may have the effect of deterring hostile takeover attempts. Our certificate of incorporation authorizes our board of directors to issue up to 10,000,000 shares of preferred stock, of which 1,000,000 shares have been designated as “Series A Junior Participating Preferred Stock,” and to fix the price, rights, preferences, privileges and restrictions, including voting rights, of those shares without any further vote or action by the stockholders. The rights of the holders of our common stock will be subject to, and may be junior to the rights of the holders of any preferred stock that may be issued in the future. The issuance of preferred

31

stock could reduce the voting power of the holders of our common stock and the likelihood that common stockholders will receive payments upon liquidation.

In addition, our certificate of incorporation divides our board of directors into three classes having staggered terms. This may delay any attempt to replace our board of directors. We have also implemented a stockholders’ rights plan, also called a poison pill, which would substantially reduce or eliminate the expected economic benefit to an acquirer from acquiring us in a manner or on terms not approved by our board of directors. These and other impediments to a third party acquisition or change of control could limit the price investors are willing to pay in the future for shares of our common stock. Our board of directors has approved employment agreements with our executive officers that include change of control provisions that provide severance benefits in the event that their employment terminates involuntarily without cause or for good reason within twelve months after a change of control of us. These agreements could affect the consummation of and the terms of a third party acquisition.

We are also subject to provisions of Delaware law that could have the effect of delaying, deferring or preventing a change in control of our company. One of these provisions prevents us from engaging in a business combination with any interested stockholder for a period of three years from the date the person becomes an interested stockholder, unless specified conditions are satisfied.

ITEM 1B.   UNRESOLVED STAFF COMMENTS

None.

ITEM 2.   PROPERTIES

Our principal research, development and administrative facilities are located in Seattle, Washington and consist of approximately 95,000 square feet under two leases. The first lease approximates 71,000 square feet and expires in December 2011 and may be extended at our option for one consecutive five-year period. The second lease for the remaining 24,000 square feet, as amended, also expires in December 2011. We lease approximately 2,400 square feet of office space in Morrisville, North Carolina under a lease expiring in May 2009. We lease approximately 158,000 square feet of commercial manufacturing space in Morris Plains, New Jersey under a lease expiring in October 2012. This lease may be extended at our option for two ten-year periods and one five-year period. We believe that our existing properties are in good condition and suitable for the conduct of our business.

ITEM 3.   LEGAL PROCEEDINGS

Four proposed securities class action suits were filed in the United States District Court for the Western District of Washington. Three of these suits named Dendreon and our chief executive officer as defendants and alleged a proposed class period of March 30, 2007 through May 8, 2007. One suit named Dendreon, four of our executive officers, and two members of our Board of Directors and alleged a proposed class period of March 1, 2007 through May 8, 2007. All four proposed class action suits purported to state claims for securities law violations stemming from our disclosures related to Provenge and the FDA’s actions regarding our pending BLA for Provenge. The complaints sought compensatory damages, attorney’s fees and expenses. On October 4, 2007, the Court consolidated these actions under the caption McGuire v. Dendreon Corporation, et al., and designated a lead plaintiff. Plaintiffs designated the complaint filed June 6, 2007 in McGuire, et al. v. Dendreon Corporation, et al., as the operative complaint. On December 21, 2007, the Company and individual defendants jointly filed a motion to dismiss the complaint. Plaintiffs filed an opposition thereto. The Court held a hearing on the motion to dismiss on March 27, 2008. By order dated April 18, 2008, the Court granted the motion to dismiss the complaint, holding that plaintiffs failed to plead a claim against the Company or the individual defendants, and allowing plaintiffs thirty days to file an amended complaint. Plaintiffs filed an amended complaint on June 2, 2008, naming Dendreon, our chief executive officer, and a senior vice president as defendants. Defendants filed a motion to dismiss the amended complaint on July 2, 2008, and plaintiffs filed their opposition to the motion to dismiss on July 31, 2008. Defendants’ reply brief was filed August 20, 2008, and oral argument was held on November 25, 2008. By order dated December 5, 2008, the Court granted the motion to dismiss the allegations against our chief executive officer based on allegedly false or misleading statements and his sale of Dendreon stock, and denied the remainder of the motion. The Court allowed plaintiffs thirty days to file an amended complaint to reassert their allegations against our chief executive officer, and plaintiffs filed a second

32

amended complaint on January 5, 2009. Defendants filed a motion to dismiss the second amended complaint on January 29, 2009, and plaintiffs filed their opposition to the motion to dismiss on February 13, 2009. Oral argument has not been requested. No trial date has been set and discovery has not commenced.

On July 31, 2007, a stockholder derivative action was filed in the Superior Court for King County, Washington, allegedly on behalf of and for the benefit of the Company, against all of the members of our Board of Directors, alleging, among other claims, breach of fiduciary duty, gross mismanagement, waste of corporate assets, and unjust enrichment. The case is captioned Loh v. Gold, et al. The complaint is derivative in nature and does not seek monetary damages from the Company. However, the Company may be required, throughout the pendency of the action, to advance payment of legal fees and costs incurred by the defendants. On November 6, 2007, the Company and the individual defendant directors each filed a motion to dismiss the complaint. Rather than file an opposition to the motions to dismiss, the plaintiff opted to file an amended complaint on December 5, 2007. On January 29, 2008, the Company and the individual defendant directors each filed a motion to dismiss the amended complaint. The plaintiff filed a consolidated opposition to both motions to dismiss, and the Company and the individual defendants have filed replies to plaintiff’s opposition. By Order dated February 18, 2009 the Court granted a stipulated motion from all parties requesting that oral argument be postponed until after the resolution of the motion to dismiss the second amended complaint in the federal class action, McGuire v. Dendreon Corporation.

On or around July 2, 2007 and July 26, 2007, Dendreon’s Board of Directors received letters from counsel for two Dendreon stockholders claiming damage to the Company from alleged wrongful disclosure and insider trading and demanding that the Board investigate and take legal action against certain Dendreon officers and directors. The wrongful disclosure allegations relate to the Company’s BLA filed with the FDA for Provenge. These potential claims are not against the Company. A committee of the Company’s Board of Directors which has responsibility to consider an appropriate response to the letters has advised counsel for the two stockholders that it will consider an appropriate response after it is determined whether the Court in Loh v. Gold will require that the plaintiff stockholder in that action must make a demand on the Board before proceeding with the derivative lawsuit.

Management currently believes that resolving these matters, individually or in aggregate, will not have a material adverse effect on our financial position, our results of operations, or our cash flows. However, these matters are subject to inherent uncertainties and the actual cost, as well as the distraction from the conduct of our business, will depend upon many unknown factors and management’s view of these may change in the future. Thus, these matters could result in a material adverse effect on our business, financial condition and results of operations.

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

No matters were submitted for a vote of security holders during the quarter ended December 31, 2008.

ITEM 4A.   EXECUTIVE OFFICERS OF THE REGISTRANT

Our executive officers and their ages as of March 1, 2009 were as follows:

Name	Age		Position
Mitchell H. Gold, M.D.		41	President and Chief Executive Officer
Mark W. Frohlich, M.D.		47	Senior Vice President for Clinical Affairs and Chief Medical Officer
Richard F. Hamm, Jr.		49	Senior Vice President, Corporate Development, General Counsel and Secretary
Gregory T. Schiffman		51	Senior Vice President, Chief Financial Officer and Treasurer
David L. Urdal, Ph.D.		59	Senior Vice President and Chief Scientific Officer

Mitchell H. Gold, M.D. has served as our Chief Executive Officer since January 1, 2003, and as a director since May 2002. Dr. Gold also served as our Vice President of Business Development from June 2001 to May 2002, and as our Chief Business Officer from May 2002 through December 2002. From April 2000 to May 2001, Dr. Gold served as Vice President of Business Development and Vice President of Sales and Marketing for Data Critical Corporation, a company engaged in wireless transmission of critical healthcare data, now a division of GE

33

Medical. From 1995 to April 2000, Dr. Gold was the President and Chief Executive Officer, and a co-founder of Elixis Corporation, a medical information systems company. From 1993 to 1998, Dr. Gold was a resident physician in the Department of Urology at the University of Washington. Dr. Gold currently serves on the boards of the University of Washington/Fred Hutchinson Cancer Research Center Prostate Cancer Institute and the Washington Biotechnology and BioMedical Association. Dr. Gold received a B.S. from the University of Wisconsin-Madison and an M.D. from Rush Medical College.

Mark W. Frohlich, M.D. became our Senior Vice President for Clinical Affairs and Chief Medical Officer on January 1, 2008. Dr. Frohlich served as our Vice President of Clinical Affairs from April 2006 and from August 2005 served as our Senior Medical Director. Prior to joining Dendreon, Dr. Frohlich was Vice President and Medical Director at Xcyte Therapies, Inc., a biotechnology company, from October 2001 to July 2005. From 1998 to 2001, Dr. Frohlich was a member of the faculty of the University of California at San Francisco where he served as an assistant professor in the Division of Hematology/Oncology. Dr. Frohlich received a B.S. in electrical engineering and economics from Yale University and an M.D. from Harvard Medical School.

Richard F. Hamm, Jr. has served as our Senior Vice President, Corporate Development since December 2005, in addition to his positions as our Senior Vice President, General Counsel and Secretary, in which capacities he has served us since November 2004. Mr. Hamm also served as our principal financial officer from January to December 2006. From April 2002 to November 2004, Mr. Hamm was the Vice President and Deputy General Counsel of Medtronic, Inc., a leading medical technology company. Prior to Medtronic, Mr. Hamm was the Vice President — Corporate Development and Planning at Carlson Companies, Inc., a global travel, hospitality and marketing services company. For more than five years prior thereto, he was Senior Vice President — Legal and Business Development and Vice President and General Counsel at Tropicana Products, Inc., a manufacturer of fruit juices. Mr. Hamm is a director of EMCOR Group, Inc., an electrical and mechanical construction and facilities services company, and Axsys Technologies, Inc., a manufacturer of precision optical components and systems for aerospace, defense and other high technology markets. Mr. Hamm received a B.S. in Business Administration from Arizona State University, a J.D. from Harvard Law School and an M.B.A. from the Wharton School at the University of Pennsylvania.

Gregory T. Schiffman joined us in December 2006 as Senior Vice President, Chief Financial Officer and Treasurer. Prior to that time, Mr. Schiffman was the Executive Vice President and Chief Financial Officer of Affymetrix, Inc., a manufacturer of genetic analysis products. He served as Affymetrix’s Vice President of Finance from March 2001 and was appointed Vice President and Chief Financial Officer in August 2001. At Affymetrix, Mr. Schiffman was promoted to Senior Vice President in October 2002 and to Executive Vice President in February 2005. Prior to joining Affymetrix, Mr. Schiffman was Vice President, Controller of Applied Biosystems, Inc. from October 1998. From 1987 through 1998, Mr. Schiffman held various managerial and financial positions at Hewlett Packard Company. Mr. Schiffman serves as a director of Entelos, a biopharmaceutical company and Vnus Technologies, Inc., a medical device company. Mr. Schiffman received a B.S. from De Paul University and an M.B.A. from the Kellogg School at Northwestern University.

David L. Urdal, Ph.D.  has served as our Senior Vice President and Chief Scientific Officer since June 2004. In January 2006, Dr. Urdal assumed oversight of manufacturing operations for the Company. Prior to June 2004, he served as Vice Chairman of the Company’s Board of Directors and Chief Scientific Officer since joining the Company in July 1995. He served as the Company’s President from January 2001 to December 2003, and he served as the Company’s Executive Vice President from January 1999 through December 2000. From 1982 until July 1995, Dr. Urdal held various positions with Immunex Corporation, a biotechnology company, including President of Immunex Manufacturing Corporation, Vice President and Director of Development, and head of the departments of biochemistry and membrane biochemistry. Dr. Urdal serves as a director of VLST, a biotechnology company and ORE Pharmaceuticals, Inc., a pharmaceutical drug repositioning and development company. Dr. Urdal received a B.S. and M.S. in Public Health and a Ph.D. in Biochemical Oncology from the University of Washington.

34

PART II

ITEM 5.   MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Our common stock trades on the Nasdaq Global Market under the symbol “DNDN.” The following table sets forth, for the periods indicated, the high and low reported intraday sale prices of our common stock as reported on the Nasdaq Global Market:

	High		Low
Year ended December 31, 2008
First quarter	$	7.00	$	4.15
Second quarter		5.90		4.37
Third quarter		6.70		4.27
Fourth quarter		10.00		4.05
Year ended December 31, 2007
First quarter	$	18.05	$	3.57
Second quarter		25.25		4.95
Third quarter		8.56		6.80
Fourth quarter		8.50		4.56

Holders.  As of March 5, 2009, there were 384 holders of record of our common stock. We also have numerous beneficial owners of our common stock that are not included as holders of record.

Dividends.  We have never declared or paid cash dividends on our capital stock. We currently intend to retain any future earnings to fund the development and growth of our business and do not currently anticipate paying any cash dividends in the foreseeable future. Future dividends, if any, will be determined by our board of directors and will depend upon our financial condition, results of operations, capital requirements and other factors.

35

Performance Comparison Graph

The following graph shows the total stockholder return of an investment of $100 in cash in our common stock or in each of the following indices on December 31, 2003: (i) the Nasdaq Composite Index and (ii) the Nasdaq Biotechnology Index. All values assume reinvestment of the full amount of all dividends and are calculated as of December 31, 2008.

COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
Among Dendreon Corporation, The NASDAQ Composite Index
And The NASDAQ Biotechnology Index

* $100 invested on 12/31/03 in stock & index-including reinvestment of dividends. Fiscal year ending December 31.

36

ITEM 6.   SELECTED FINANCIAL DATA

You should read the selected financial data set forth below in conjunction with the information in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our audited financial statements and the related notes thereto appearing elsewhere in this annual report.

	Year Ended December 31,
	2008			2007			2006			2005			2004
	(In thousands, except per share amounts)
Consolidated Statement of Operations Data:
Revenue	$	111		$	743		$	273		$	210		$	5,035
Operating expenses		70,589			102,362			97,629			86,673			85,427
Loss from operations		(70,478	)		(101,619	)		(97,356	)		(86,463	)		(80,392	)
Interest income (expense)		(1,537	)		2,355			5,714			4,916			3,590
Gain from valuation of warrant liability		371			—			—			—			—
Loss before taxes		(71,644	)		(99,264	)		(91,642	)		(81,547	)		(76,802	)
Foreign income tax benefit (expense)(1)		—			—			—			—			1,562
Net loss	$	(71,644	)	$	(99,264	)	$	(91,642	)	$	(81,547	)	$	(75,240	)
Basic and diluted net loss per share	$	(0.79	)	$	(1.20	)	$	(1.27	)	$	(1.36	)	$	(1.32	)
Shares used in computation of basic and diluted net loss per share		90,357			82,531			72,366			59,912			57,103

	As of December 31,
	2008		2007		2006		2005		2004
Consolidated Balance Sheet Data:
Cash, cash equivalents, short- and long-term investments	$	108,547	$	120,575	$	121,283	$	166,409	$	195,730
Working capital		84,269		81,656		89,557		121,532		170,735
Total assets		147,204		161,662		163,643		207,553		217,353
Long-term obligations, less current portion		93,272		95,647		17,027		15,729		2,429
Total stockholders’ equity		27,006		40,377		125,717		168,709		198,565

(1) During the year ended December 31, 2004, we reversed our foreign tax liability and recognized a tax benefit of $1.6 million based on a new tax treaty, which eliminated withholding taxes on our revenue from our prior collaboration with Kirin Brewing Co., Ltd.

ITEM 7.   MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

OVERVIEW

We are a biotechnology company focused on the discovery, development and commercialization of novel therapeutics that harness the immune system to fight cancer. Our portfolio includes active immunotherapy, monoclonal antibody and small molecule product candidates to treat a wide range of cancers. Our most advanced product candidate is Provenge (sipuleucel-T), an active cellular immunotherapy for prostate cancer.

We have incurred significant losses since our inception. As of December 31, 2008, our accumulated deficit was $563.3 million. We have incurred net losses as a result of research and development expenses, clinical trial expenses, contract manufacturing expenses and general and administrative expenses in support of our operations and research efforts. We anticipate incurring net losses over at least the next several years as we continue our clinical trials, apply for regulatory approvals, develop our technology, expand our operations and develop the infrastructure

37

to support the commercialization of Provenge and other product candidates we may develop. The majority of our resources continue to be used in support of Provenge. We own worldwide commercialization rights for Provenge.

We will not generate revenue from the sale of our potential commercial therapeutic products in the U.S. until Provenge or another product candidate we may develop is approved by the U.S. Food and Drug Administration (the “FDA”). Without revenue generated from commercial sales, we anticipate that we will continue to fund our ongoing research, development and general operations from our available cash resources and future offerings of equity, debt or other securities.

In September 2005, we announced plans to submit our biologics license application (our “BLA”) to the FDA for approval to market Provenge. This decision followed a pre-BLA meeting in which we reviewed safety and efficacy data with the FDA from our two completed Phase 3 clinical trials for Provenge, D9901 and D9902A. In these discussions the FDA agreed that the survival benefit observed in the D9901 study in conjunction with the supportive data obtained from study D9902A and the absence of significant toxicity in both studies was sufficient to serve as the clinical basis of our BLA submission for Provenge. Provenge was granted Fast Track designation from the FDA for the treatment of asymptomatic, metastatic, androgen-independent (also known as hormone refractory) prostate cancer patients, which enabled us to submit our BLA on a rolling basis.

On August 24, 2006, we submitted the clinical and non-clinical sections of our BLA and on November 9, 2006, we submitted the chemistry, manufacturing and controls (“CMC”) section, completing our submission of our BLA to the FDA for Provenge. On January 12, 2007, the FDA accepted our BLA filing and assigned Priority Review status for Provenge.

The FDA’s Cellular, Tissue and Gene Therapies Advisory Committee (the “Advisory Committee”) review of our BLA for the use of Provenge in the treatment of patients with asymptomatic, metastatic, androgen-independent prostate cancer was held on March 29, 2007. The Advisory Committee was unanimous (17 yes, 0 no) in its opinion that the submitted data established that Provenge is reasonably safe for the intended population and the majority (13 yes, 4 no) believed that the submitted data provided substantial evidence of the efficacy of Provenge in the intended population.

On May 8, 2007, we received a Complete Response Letter from the FDA regarding our BLA. In its letter, the FDA requested additional clinical data in support of the efficacy claim contained in the BLA, as well as additional information with respect to the CMC section of the BLA. In a meeting with the FDA on May 29, 2007, we received confirmation that the FDA will accept a positive interim or final analysis of survival from our ongoing Phase 3 D9902B IMPACT (IMmunotherapy for Prostate AdenoCarcinoma Treatment) study to support licensure of Provenge. These analyses are event driven, rather than time specific.

On October 6, 2008, we announced the receipt of interim results from our IMPACT study. The independent data monitoring committee (the “IDMC”) reported to us a 20 percent reduction in the risk of death in the Provenge arm of the study relative to placebo. The IDMC observed no safety concerns and recommended that the study continue to its final analysis, which is anticipated by the end of April 2009. If the study demonstrates approximately a 22 percent reduction in the risk of death, based on 304 events, we would expect the study to meet its primary endpoint of overall survival. In such event, we believe these data would be sufficient to address the FDA’s request for additional clinical information to support the proposed efficacy claim and we would amend our BLA.

We would also expect to increase our investments in commercial infrastructure in preparation for the possible approval of Provenge. The level of increased investment would depend on our ability to access additional financing, either through the capital markets, borrowings or through partnership opportunities with Provenge. The IMPACT study may not meet the prespecified statistical criteria, but still provide additional supportive evidence of efficacy to support amending our BLA. The decision to amend the BLA will be based on several factors, including the totality of the data from our three phase 3 studies and whether such data demonstrate a favorable benefit to risk profile for patients with asymptomatic, metastatic, androgen-independent prostate cancer. If the IMPACT study fails to provide sufficient positive evidence of survival to allow us to amend on BLA we expect to focus our efforts on the TRPM8 clinical program and explore potential business development opportunities.

Other potential product candidates we have under development include Neuvenge^tm, our investigational active cellular immunotherapy for the treatment of patients with breast, ovarian and other solid tumors expressing HER2/

38

neu. We are also developing an orally-available small molecule targeting TRPM8 that could be applicable to multiple types of cancer as well as benign prostatic hyperplasia. In December 2008 we filed an investigational new drug application (“IND”) to investigate this small molecule in advanced cancer patients. The IND was cleared by the FDA in January 2009.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

We make judgmental decisions and estimates with underlying assumptions when applying accounting principles to prepare our consolidated financial statements. Certain critical accounting policies requiring significant judgments, estimates, and assumptions are detailed below. We consider an accounting estimate to be critical if (1) it requires assumptions to be made that are uncertain at the time the estimate is made and (2) changes to the estimate or different estimates, that could have reasonably been used, would have materially changed our consolidated financial statements. The development and selection of these critical accounting policies have been reviewed with the Audit Committee of our Board of Directors.

We believe the current assumptions and other considerations used to estimate amounts reflected in our consolidated financial statements are appropriate. However, should our actual experience differ from these assumptions and other considerations used in estimating these amounts, the impact of these differences could have a material impact on our consolidated financial statements.

Revenue Recognition

Substantially all of the revenue we receive is collaborative research revenue and license revenue. We recognize collaborative research revenues from up-front payments, milestone payments, and personnel-supported research funding. We also recognize license revenue from intellectual property and technology agreements. The payments received under these research collaboration agreements are generally contractually not refundable even if the research effort is not successful. Performance under our collaborative agreements is measured by scientific progress, as mutually agreed upon by us and our collaborators.

Our revenue arrangements with multiple elements are divided into separate units of accounting if certain criteria are met, including whether the delivered element has stand-alone value to the customer and whether there is objective and reliable evidence of the fair value of the undelivered items. The consideration we receive is allocated among the separate units based on their respective fair values, and the applicable revenue recognition criteria are applied to each of the separate units.

License Fees:  License fees from our research collaborations include payments for technology transfer and access rights. Non-refundable, up-front payments received in connection with collaborative research and development agreements are deferred and recognized on a straight-line basis over the period during which we have continuing obligations, generally the research term. When the research term is not specified in the agreement and instead the agreement specifies the completion or attainment of a particular development goal, an estimate is made of the time required to achieve that goal considering experience with similar projects, level of effort and the development stage of the project. The basis of the revenue recognition is reviewed and adjusted based on the status of the project against the estimated timeline as additional information becomes available. Non-refundable license fees where we have completed all future obligations are recognized as revenue in the period when persuasive evidence of an agreement exists, delivery has occurred, collectability is reasonably assured and the price is fixed and determinable.

Royalty Income:  Royalties from licensees are based on reported sales of licensed products, and revenues are calculated based on contract terms when reported sales are reliably measurable and collectability is reasonably assured.

Research and Development Expenses

We account for research and development costs in accordance with Statement of Financial Accounting Standards (“SFAS”) No. 2, “Accounting for Research and Development Costs,” and Emerging Issues Task Force (“EITF”) Issue No. 07-3, “Accounting for Advance Payments for Goods or Services to Be Used in Future Research

39

and Development Activities” (“EITF 07-3”). For research and development activities in progress at January 1, 2008, costs are expensed as incurred including nonrefundable prepayments for research and development services. On January 1, 2008, we adopted EITF 07-3 and changed our accounting policy. For new contracts entered into as of or subsequent to January 1, 2008, nonrefundable prepayments for research and development services are deferred and recognized as the services are rendered. Research and development expenses include, but are not limited to, payroll and personnel expenses, lab expenses, clinical trial and related clinical manufacturing costs, facilities and related overhead costs.

Accounting for Stock-Based Compensation

We account for stock-based compensation in accordance with Financial Accounting Standards Board (“FASB”) SFAS No. 123R, “Share-Based Payment” (“SFAS 123R”). Under the provisions of SFAS 123R, stock-based compensation cost is estimated at the grant date based on the award’s fair value as calculated by the Black-Scholes-Merton (“BSM”) option-pricing model and is recognized as expense over the requisite service period. The BSM model requires various highly judgmental assumptions including volatility, forfeiture rates and expected option life. If any of the assumptions used in the BSM model change significantly, stock-based compensation expense may differ materially in the future from that recorded in the current period.

We grant restricted stock awards that generally vest over a four year period, however, in 2006 and 2007, we granted restricted stock awards with certain performance conditions to all employees. In accordance with SFAS 123R, management is required to estimate the probability of achieving each acceleration provision. Compensation expense is recorded based upon our assessment of accomplishing each provision.

We recognize compensation expense for our stock-based payment awards on the accelerated method over the requisite service period of the entire award, unless the awards are subject to other conditions, in which case we recognize compensation expense over the requisite service period of each separate vesting tranche. We determine the grant date fair value of our stock option awards and Employee Stock Purchase Plan under SFAS 123R using the BSM option pricing model.

For additional information about stock-based compensation, see Note 10 to the Consolidated Financial Statements.

Recent Accounting Pronouncements

On January 1, 2008, we adopted EITF Issue 07-3 and changed our accounting policy. For new contracts entered into as of or subsequent to January 1, 2008, nonrefundable prepayments for research and development services are deferred and recognized as the services are rendered.

In February 2008, the FASB issued FASB Staff Position No. FAS 157-2, “Effective Date of FASB Statement No. 157” (“FSP 157-2”), to partially defer SFAS No. 157, “Fair Value Measurements” (“SFAS 157”). In accordance with the provisions of FSP 157-2, we have elected to defer implementation of SFAS 157 as it relates to our non-financial assets and non-financial liabilities that are recognized and disclosed at fair value in the financial statements on a nonrecurring basis until January 1, 2009. We believe that the impact of these items will not be material to our consolidated financial statements. Assets and liabilities typically recorded at fair value on a non-recurring basis include:

•  Long-lived assets measured at fair value due to an impairment assessment under SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets;” and

•  Asset retirement obligations initially measured under SFAS No. 143, “Accounting for Asset Retirement Obligations.”

On October 10, 2008, the FASB issued FASB Staff Position No. 157-3, “Fair Value Measurements” (“FSP 157-3”), which clarifies the application of SFAS 157 in an inactive market and provides an example to demonstrate how the fair value of a financial asset is determined when the market for that financial asset is inactive. FSP 157-3 was effective upon issuance, including prior periods for which financial statements had not been issued.

40

The adoption of this standard as of December 31, 2008 did not have a material impact on our results of operations, cash flows or financial positions.

New Accounting Standards Not Yet Adopted

In December 2007, the FASB ratified the final consensuses in EITF Issue No. 07-1, “Accounting for Collaborative Arrangements” (“EITF 07-1”), which requires a certain presentation of transactions with third parties and of payments between parties to a collaborative arrangement in our statement of operations, along with disclosure about the nature and purpose of the arrangement. EITF 07-1 is effective beginning January 1, 2009. We have evaluated the impact of adopting EITF 07-1 on our consolidated financial statements and do not expect any impact on our results of operations, cash flows or financial position.

RESULTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 2008, 2007 AND 2006

Revenue

Revenue was $111,000 in 2008, $743,000 in 2007 and $273,000 in 2006. The decrease in 2008 compared to 2007 was primarily due to decreased revenue related to the sale of certain intellectual property in 2007. Our revenue in 2008 also includes recognition of deferred revenue related to one license agreement. The increase in 2007 compared to 2006 was primarily due to revenue related to an intellectual property option purchase agreement entered into in 2006 with Wilex AG (“Wilex”) and exercised in 2007 for payment to us of $500,000, as further described below. Our revenue in 2007 and 2006 also includes recognition of deferred revenue related to two license agreements.

On February 22, 2006, we entered into an option purchase agreement with Wilex for our intellectual property in small molecule inhibitors of urokinase plasminogen activator (u-PA). On March 7, 2007, Wilex exercised its option pursuant to the terms and conditions of the option agreement in exchange for payment to us of $500,000. The sale of this technology is a perpetual exclusive arrangement where we have assigned our entire right, title and interest in the intellectual property to Wilex. Furthermore, upon exercising its option, Wilex is obligated to make additional milestone payments to us upon the occurrence of future events, which includes initiation of the first clinical Phase II and Phase III studies resulting from a product developed from the intellectual property and upon the first sale of this product after an approval from the FDA. These milestone payments are capped at $1.6 million.

Research and Development Expenses

Research and development expenses were $50.1 million in 2008, $76.5 million in 2007 and $74.1 million in 2006. The 2008 decrease compared with 2007 was primarily due to decreased Phase 3 clinical activities as a result of the completion of patient enrollment in the IMPACT trial in late 2007, the completion and utilization of our Morris Plains, New Jersey manufacturing facility (the “Facility”) and resultant reduction of outside clinical manufacturing, the purchase of commercial antigen in 2007, the reduction in the costs for pre-commercialization efforts of Provenge and the decrease in headcount and related severance costs associated with the 2007 reduction in force. The 2007 increase compared with 2006 was primarily due to the purchase of commercial antigen in 2007 and increased costs associated with our Facility, offset by decreased Phase 3 clinical activities as a result of the completion of patient enrollment in the IMPACT trial in late 2007.

Financial data from our research and development-related activities is compiled and managed by us as follows:

1) Clinical programs; and

2) Discovery research.

41

Our research and development expenses for the years ended December 31, 2008, 2007 and 2006 were as follows (in millions):

	2008		2007		2006
Clinical programs:
Direct costs	$	9.0	$	30.1	$	27.2
Indirect costs		37.7		43.3		42.3
Total clinical programs		46.7		73.4		69.5
Discovery research		3.4		3.1		4.6
Total research and development expense	$	50.1	$	76.5	$	74.1

Direct research and development costs associated with our clinical programs include clinical trial site costs, clinical manufacturing costs, costs incurred for consultants and other outside services, such as data management and statistical analysis support, and materials and supplies used in support of the clinical programs. Indirect costs of our clinical program include wages, payroll taxes and other employee-related expenses, rent, restructuring charges, stock-based compensation, utilities and other facilities-related maintenance. The costs in each category may change in the future and new categories may be added. Costs attributable to our discovery research programs represent our efforts to develop and expand our product pipeline.

While we believe our clinical programs are promising, we do not know whether any commercially viable products will result from our research and development efforts. Due to the unpredictable nature of scientific research and product development, we cannot reasonably estimate:

•  the timeframe over which our projects are likely to be completed;

•  whether they will be completed;

•  if they are completed, whether they will provide therapeutic benefit or be approved for commercialization by the necessary regulatory agencies; or

•  whether, if approved, they will be scalable to meet commercial demand.

General and Administrative Expenses

General and administrative expenses were $20.5 million in 2008, $25.8 million in 2007 and $23.5 million in 2006. General and administrative expenses were primarily comprised of salaries and wages, consulting fees, marketing fees and administrative costs to support our operations. The decrease in 2008 compared with 2007 was primarily attributable to decreased outside services and marketing costs related to pre-commercialization efforts for Provenge, decreased headcount and severance costs associated with the 2007 reduction in force and decreased legal fees associated with our current legal proceedings. The increase in 2007 compared with 2006 was primarily attributable to increased legal fees associated with our current legal proceedings, increased non-cash stock compensation and increased administrative costs offset by decreased consulting costs associated with the validation of our enterprise resource planning system in 2006.

Interest Income

Interest income was $3.6 million in 2008, $6.5 million in 2007 and $6.1 million in 2006. The decrease in 2008 compared to 2007 was primarily due to lower average interest rates and lower average cash and investment balances. The increase in 2007 compared to 2006 was primarily due to higher average interest rates and a higher average cash balance due to the proceeds from the issue in June and July 2007 of an aggregate of $85.25 million in 4.75% Convertible Senior Subordinated Notes (the “Notes”).

Interest Expense

Interest expense was $5.2 million in 2008, $4.1 million in 2007 and $336,000 in 2006. The increase in 2008 was primarily due to an increase in the average debt balance in 2008, including the principal amount of the Notes as

42

compared to 2007, offset by capitalized interest expense related to the construction of the Facility and our product scheduling system and by decreased interest expense related to debt and capital lease obligations. The increase in 2007 was primarily due to an increase in the average debt balance in 2007, including the principal amount of the Notes, as compared to 2006, and the 2006 capitalization of interest costs related to the construction of the Facility.

Warrant Liability

Non-operating income associated with the decrease in warrant liability was $371,000 for the year ended December 31, 2008. This represents the decrease in the initial fair value of $14.6 million of the warrants from the date of issuance, April 2008. Under SFAS 157, the warrants were determined to be Level 3 liability, as such the fair value was calculated using the Black-Scholes-Merton option-pricing model and is remeasured at each reporting period. Potential future increases in our stock price will result in losses being recognized in our consolidated statement of operations in future periods. Conversely, potential future declines in our stock price will result in gains being recognized in our consolidated statement of operations in future periods. Neither of these potential gains or losses will have any impact on our cash balance, liquidity or cash flows from operations.

Income Taxes

As of December 31, 2008, we had federal and state net operating loss carryforwards (“NOLs”) of approximately $529 million and $76 million, respectively. We also had federal and state research and development credit carryforwards (“R&D Credits”) of approximately $15 million and $1.7 million, respectively. The NOLs and R&D Credits expire at various dates, beginning in 2009 through 2028, if not utilized. Utilization of the NOLs and R&D Credits may be subject to annual limitations due to the ownership change limitations provided by the Internal Revenue Code of 1986. The annual limitations may result in the expiration of NOLs and R&D Credits before utilization.

Stock-Based Compensation Expense

Total stock-based employee compensation expense recognized in the consolidated statement of operations in 2008, 2007 and 2006 was $5.9 million, $6.1 million and $5.3 million, respectively, of which $2.9 million, $2.8 million and $2.6 million, respectively, were included in research and development expense and $3.0 million, $3.3 million and $2.7 million, respectively, were included in general and administrative expense. Total stock-based employee compensation expense recognized in the consolidated statement of operations in 2008, 2007 and 2006 increased our net loss per share by $0.06, $0.07 and $0.07, respectively. As we use a full valuation allowance with respect to deferred taxes, the adoption of SFAS 123R had no impact on deferred taxes.

LIQUIDITY AND CAPITAL RESOURCES

Cash Uses and Proceeds

As of December 31, 2008, we had approximately $108.5 million in cash, cash equivalents and short-term and long-term investments. To date, we have financed our operations primarily through proceeds from the sale of equity and debt securities, including the Notes, cash receipts from collaborative agreements, and interest income earned.

Net cash used in operating activities for the years ended December 31, 2008, 2007 and 2006 was $66.1 million, $82.6 million and $80.8 million, respectively. Expenditures in all periods were a result of research and development expenses, clinical trial costs, contract manufacturing costs and general and administrative expenses in support of our operations. In 2006, these expenditures were partially offset by cash received from our corporate collaborators, including license fees from Kirin Brewing Co., Ltd. of $6.0 million.

Since our inception, investing activities, other than purchases and maturities of short-term and long-term investments, consist primarily of purchases of property and equipment. At December 31, 2008, our aggregate investment in equipment and leasehold improvements was $45.2 million.

As of December 31, 2008, we anticipate that our cash on hand, including our cash equivalents and short-term and long-term investments, will be sufficient to enable us to meet our anticipated expenditures for at least the next 12 months; provided, however, that if we receive positive survival results from the final analysis for the IMPACT

43

trial and therefore commence activities in anticipation of the approval of Provenge for commercialization, we will need to raise additional funds for, among other things:

•  the development of marketing, manufacturing, information technology and other infrastructure and activities related to the commercialization of Provenge,

•  working capital needs,

•  expanding the our manufacturing capabilities,

•  increased personnel needs, and

•  continuing our internal research and development programs.

Additional financing may not be available on favorable terms or at all. If we are unable to raise additional funds through sales of common stock or debt securities, borrowings, partnership opportunities for Provenge, or otherwise, should we need them, we may be required to delay our commercialization efforts for Provenge.

Leases and Credit Facility

On March 9, 2009, we entered into the second amendment to our office lease agreement with Selig Holdings Company, LLC. The amendment extends the term on our headquarters to December 31, 2011. On August 22, 2007, we entered into the third amendment to our lease agreement with ARE — 3005 First Avenue, LLC. The amendment extends the lease on our principal research, development and administrative facilities in Seattle, Washington that consist of approximately 71,000 square feet to December 31, 2011, with option to extend the term for an additional five years. The annual base rent for the extended lease term is approximately $2.7 million, which is to be increased annually between three to six percent, approximating the Seattle area consumer price index.

On August 18, 2005, we entered into an agreement to lease 158,242 square feet of commercial manufacturing space in Morris Plains, New Jersey. The lease term is seven years, and we have the option to extend the lease for two ten-year periods and one five- year period, with the same terms and conditions except for rent, which adjusts upon renewal to market rate. We intend to outfit the Facility in phases to meet the anticipated clinical and commercial manufacturing needs for Provenge and our other immunotherapy product candidates in development. The initial phase of the build-out of the Facility was completed in July 2006. In February 2007, we started to manufacture Provenge for clinical use in the Facility. The lease required us to provide the landlord with a letter of credit in the 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, which was recorded as long-term restricted cash on our consolidated balance sheet upon issuance. During 2008, the letter of credit was reduced to $1.9 million and the collateral amount required by Wells Fargo was reduced commensurately, resulting in a release of restricted cash of $1.2 million. The $1.9 million letter of credit was recorded as long-term restricted cash on our consolidated balance sheet as of December 31, 2008.

In December 2005, we entered into the first two of a series of anticipated Promissory Notes (the “GE Notes”), with General Electric Capital Corporation (“GE Capital”), for the purchase of equipment and associated build-out costs for the Facility. The GE Notes, which evidence one loan with an original principal amount of $7.0 million bearing interest at 7.55 percent per year that was paid in full at December 31, 2008, and the remaining loans with original principal amounts totaling $9.6 million and an average interest rate of 10.1 percent, are to be repaid in 36 consecutive monthly installments of principal and interest. The GE Notes are secured by a Master Security Agreement (the “Security Agreement”), and two Security Deposit Pledge Agreements (the “Pledge Agreements”). Pursuant to the Pledge Agreements, we deposited an aggregate of $7.0 million as a security deposit for the repayment of the GE Notes, which will be released upon the repayment of the GE Notes or upon receipt of FDA approval for the commercialization of Provenge. The balance of such security deposit as of December 31, 2008 was $3.9 million. The security deposit is recorded on our consolidated balance sheet in short-term restricted cash. There is a material adverse change clause in the Security Agreement which may accelerate the maturity of the GE Notes upon the occurrence of certain events. We do not believe a material adverse change in our financial condition has occurred. The balance due on the GE Notes as of December 31, 2008 was approximately $2.1 million.

44

Financings from the Sale of Securities and Issuance of Convertible Notes

Equity Offering Proceeds

We have received net proceeds of $107.9 million from the sale of equity securities through a public offering, registered direct offerings and our equity line arrangement since January 1, 2006.

In November 2006, we sold 9.9 million shares of common stock at a price of $4.55 per share for gross proceeds of $45.0 million, or $42.2 million, net of underwriting fees, commissions and other offering costs.

In April 2008, we received net proceeds of $46.0 million from our issuance of 8.0 million shares of our common stock, and warrants to purchase up to 8.0 million shares of common stock and warrants to an single investor. The investor purchased the shares and warrants for a negotiated price of $5.92 per share of common stock purchased. The warrants are exercisable at any time prior to April 8, 2015, with an exercise price of $20.00 per share of common stock. The warrants contain a “fundamental change” provision, as defined in the warrants, which may in certain circumstances allow the warrants to be redeemed for cash in an amount equal to the Black Scholes Value, as defined in the warrants. Accordingly, pursuant to SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities,” (“SFAS 133”), as amended, and EITF No. 00-19, “Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in, a Company’s Own Stock,” (“EITF 00-19”), the warrants are recorded as a liability and then marked to market each period through earnings in other income (expense). The fair value of the warrants at issuance, April 3, 2008, and December 31, 2008 was approximately $14.6 million and $14.2 million, respectively, based on “Level 3” Inputs, as defined under SFAS 157 (see Note 4 to our Consolidated Financial Statements). As a result of this decrease, we recorded $371,000 in non-operating income for the year ended December 31, 2008.

On October 11, 2007, we entered into an equity line of credit arrangement with Azimuth Opportunity Ltd. (“Azimuth”). We entered into a Common Stock Purchase Agreement with Azimuth (the “Purchase Agreement”), which provides that, upon the terms and subject to the conditions set forth therein, Azimuth is committed to purchase up to $130,000,000 of our common stock over the approximately 18-month term of the Purchase Agreement. From time to time, and at our sole discretion, we may present Azimuth with draw down notices to purchase our common stock over 10 consecutive trading days or such other period mutually agreed upon by us and Azimuth. Each draw down is subject to limitations based on the price of our common stock, with a minimum price of $4.00 per share before Azimuth is committed to purchase any shares, and a limit of 2.5% of our market capitalization at the time of such draw down, provided, however, Azimuth will not be required to purchase more than $55,000,000 of our common stock in any single draw down. We are able to present Azimuth with up to 24 draw down notices during the term of the Purchase Agreement, with a minimum of five trading days required between each draw down period. Pursuant to a single draw down notice, on October 10, 2008, we issued 3,610,760 shares of our common stock to Azimuth and received net proceeds of approximately $19.8 million. On February 9, 2009, we entered into an amendment to the Purchase Agreement to extend the term of the equity line arrangement to 36 months.

As of December 31, 2008, we had up to approximately $301 million of common stock, preferred stock, warrants and debt securities, in the aggregate, available to be sold under two effective registration statements.

Convertible Notes

On June 11, 2007, we sold $75.0 million of the Notes to Merrill Lynch, Pierce, Fenner & Smith Incorporated (the “Initial Purchaser”) for sale in a private placement to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933. Proceeds from the offering, after deducting the fees to the Initial Purchaser and our estimated expenses were approximately $72.5 million. We granted the Initial Purchaser a 30-day option to purchase up to an additional $25.0 million in principal amount of the Notes. The Initial Purchaser elected to exercise this right and purchased $10.25 million of additional Notes in July 2007, from which we received approximately $9.8 million in proceeds after deducting the Initial Purchaser’s fee and our estimated expenses. The Notes were issued at the face principal amount thereof and pay interest semi-annually in arrears on June 15 and December 15 of each year, beginning on December 15, 2007. 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 or

45

liquidated damages. 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. In addition, holders of the Notes may be entitled to liquidated damages in the event of a “registration default” as described in the registration rights agreement pursuant to which we registered the Notes, at an annual rate equal to 0.25% of the principal amount of the Notes up to the 90th day following a registration default, and 0.50% of the principal amount of the Notes after the 91st day following such registration default. Liquidated damages, if any, would cease to accrue on the second anniversary of issuance of the Notes. The registration statement pertaining to the Notes was declared effective by the SEC on September 7, 2007. We recorded interest expense, including the amortization of debt issuance costs related to the Notes, of $4.5 million and $2.5 million for the years ended December 31, 2008 and 2007, respectively.

The Notes are convertible into our common stock, initially at the conversion price of $10.28 per share, equal to a conversion rate of approximately 97.2644 shares per $1,000 principal amount of the Notes, subject to adjustment. There may be an increase in the conversion rate of the Notes under certain circumstances described in the Indenture; however, the number of shares of common stock issued will not exceed 114.2857 per $1,000 principal amount of the Notes. A holder that converts Notes in connection with a “fundamental change,” as defined in the Indenture may in some circumstances be entitled to an increased conversion rate (i.e., a lower per share conversion price) as a make whole premium. If a fundamental change occurs, holders of the Notes may require us to repurchase all or a portion of their Notes for cash at a repurchase price equal to 100% of the principal amount of the Notes to be repurchased, plus any accrued and unpaid interest and other amounts due thereon. The Indenture contains customary covenants.

We identified the embedded derivatives associated with the Notes and are accounting for these embedded derivative instruments pursuant to SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities,” as amended, and related guidance. These embedded derivatives meet certain criteria and are not required to be accounted for separately from the Notes.

The fair value of the Notes at December 31, 2008 was approximately $46.8 million based on the last trading price in December 2008.

Contractual Commitments

The following are contractual commitments at December 31, 2008 associated with supply agreements, debt and lease obligations, including interest and unconditional purchase obligations (in thousands):

	Total		1 Year		2-3 Years		4-5 Years		Thereafter
Contractual Commitments:
Convertible senior subordinated notes (including interest)(a)	$	107,353	$	4,049	$	8,099	$	8,099	$	87,106
Facility lease obligation (including interest)(b)		13,710		841		1,778		1,886		9,205
Debt obligations (including interest)(b)		2,282		2,282		—		—		—
Operating leases(c)		12,615		3,618		6,432		436		2,129
Unconditional purchase obligations		167		167		—		—		—
	$	136,127	$	10,957	$	16,309	$	10,421	$	98,440

(a)	See Note 8 to our Consolidated Financial Statements for additional information related to the Notes.
(b)	See Note 7 to our Consolidated Financial Statements for additional information. Our facility lease obligation commitment reflects the initial 7 year term of the Lease and a 10 year renewal period.
(c)	See Note 13 to our Consolidated Financial Statements for additional information related to contractual commitments.

46

OFF-BALANCE SHEET ARRANGEMENTS

We do not have any off-balance sheet arrangements.

FORWARD-LOOKING STATEMENTS

Some of the statements contained in this annual report are forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and are subject to the safe harbor created by the Private Securities Litigation Reform Act of 1995. We have based these forward-looking statements largely on our expectations and projections about future events and financial trends affecting the financial condition and/or operating results of our business. Forward-looking statements involve risks and uncertainties, particularly those risks and uncertainties inherent in the process of discovering, developing and commercializing drugs that are safe and effective for use as human therapeutics. There are important factors that could cause actual results to be substantially different from the results expressed or implied by these forward-looking statements, including, among other things:

•  the final analysis of overall survival data from our IMPACT Study;

•  the FDA’s review of our BLA for Provenge, if amended;

•  whether we have adequate financial resources and access to capital to fund commercialization of Provenge and that of other potential product candidates we may develop;

•  our ability to successfully obtain regulatory approvals and commercialize our products that are under development and develop the infrastructure necessary to support commercialization if regulatory approvals are received;

•  our ability to complete and achieve positive results in ongoing and new clinical trials;

•  our ability to successfully manufacture Provenge and other product candidates in necessary quantities with required quality;

•  our dependence on single-source vendors for some of the components used in our product candidates, including the Antigen Delivery Cassette for Provenge;

•  the extent to which the costs of any products that we are able to commercialize will be reimbursable by third-party payors;

•  the extent to which any products that we are able to commercialize will be accepted by the market;

•  our dependence on our intellectual property and ability to protect our proprietary rights and operate our business without infringing on the rights of others;

•  the effect that any intellectual property litigation, securities litigation, or product liability claims may have on our business and operating and financial performance;

•  our expectations and estimates concerning our future operating and financial performance;

•  the impact of competition and regulatory requirements and technological change on our business;

•  our ability to recruit and retain key personnel;

•  our ability to enter into future collaboration agreements;

•  anticipated trends in our business and the biotechnology industry generally; and

•  other factors described under Item 1A, “Risk Factors”.

In addition, in this annual report the words “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “intend,” “plan,” “expect,” “potential,” or “opportunity,” the negative of these words or similar expressions, as they relate to us, our business, future financial or operating performance or our management, are intended to identify forward-looking statements. We do not intend to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Past financial or operating performance is not necessarily a

47

reliable indicator of future performance and you should not use our historical performance to anticipate results or future period trends.

ITEM 7A.   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Our investment portfolio is maintained in accordance with our investment policy, which specifies credit quality standards, limits our credit exposure to any single issuer and defines allowable investments. Auction rate or asset-backed securities without a guarantee by the U.S. government are not permitted to be purchased. The fair value of our cash equivalents and marketable securities is subject to change as a result of changes in market interest rates and investment risk related to the issuers’ credit worthiness.

As of December 31, 2008 and 2007, we had short-term investments of $45.6 million and $27.1 million, respectively and long-term investments of $3.4 million and $17.7 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 December 31, 2008, assuming a 100 basis point increase in market interest rates, would decrease by $64,000, which would not materially impact our operations. 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.

We proactively monitor and manage our portfolio. If necessary we believe we are able to liquidate our investments within the next year without significant loss. We currently believe these securities are not significantly impaired, primarily due to the government and major corporate guarantees of the underlying securities; however, it could take until the final maturity of the underlying notes to realize our investments’ recorded values. Based on our expected operating cash flows, and our other sources of cash, we do not anticipate the potential lack of liquidity on these investments will affect our ability to execute our current business plan.

We limit our exposure to adjustable interest rates on our debt financings by capping the interest rate at a fixed amount.

ITEM 8.   FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Our financial statements, together with related notes, are listed in Item 15(a) and included herein beginning on page F-1.

ITEM 9.   CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

ITEM 9A.   CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

We carried out an evaluation required by the Exchange Act, under the supervision and with the participation of our principal executive officer and principal financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rule 13a-15(e) of the Exchange Act, as of December 31, 2008. Based on this evaluation, our principal executive officer and principal financial officer concluded that, as of December 31, 2008, our disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission and to provide reasonable assurance that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosures.

48

Management’s Report on Internal Control over Financial Reporting

Management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rule 13a-15(f) of the Exchange Act. Management has assessed the effectiveness of our internal control over financial reporting as of December 31, 2008 based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. As a result of this assessment, management concluded that, as of December 31, 2008, our internal control over financial reporting was effective in providing reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Ernst & Young has independently assessed the effectiveness of our internal control over financial reporting and its report is included below.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting during the quarter ended December 31, 2008 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Limitations on Controls

Management does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent or detect all error and fraud. Any control system, no matter how well designed and operated, is based upon certain assumptions and can provide only reasonable, not absolute, assurance that its objectives will be met. Further, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, within the Company have been detected.

The effectiveness of our internal control over financial reporting as of December 31, 2008, was audited by our independent registered public accounting firm, Ernst & Young LLP, as stated in its report, which is included below.

49

Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders

Dendreon Corporation

We have audited Dendreon Corporation’s internal control over financial reporting as of December 31, 2008, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (the COSO criteria). Dendreon Corporation’s management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting. Our responsibility is to express an opinion on the effectiveness of the company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company, (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company, and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, Dendreon Corporation maintained, in all material respects, effective internal control over financial reporting as of December 31, 2008, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of Dendreon Corporation as of December 31, 2008 and 2007 and the related consolidated statements of operations, stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2008, and our report dated March 11, 2009 expressed an unqualified opinion.

/s/  Ernst & Young LLP

Seattle, Washington

March 11, 2009

50

ITEM 9B.   OTHER INFORMATION

None.

PART III

ITEM 10.   DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

The information required by this item concerning our directors and nominees is incorporated by reference to our definitive Proxy Statement for our 2009 Annual Meeting of Stockholders (the “2009 Proxy Statement”) under the caption “Election of Directors.” Information on our nominating committee process, and on our audit committee members including our audit committee financial expert(s) is incorporated by reference to the headings “Governance Committee” and “Audit Committee” in our 2009 Proxy statement. Information regarding Section 16(a) beneficial ownership reporting compliance is incorporated by reference to the material under the heading “Security Ownership of Certain Beneficial Owners and Management” in our 2009 Proxy Statement. Information relating to our executive officers is contained in Part I, Item 4A of this annual report.

Our Board of Directors has adopted a Code of Business Conduct applicable to our directors and all of our officers and employees. The Code of Business Conduct is available, free of charge, through the investor relations section of our website at http://investor.dendreon.com/governance.cfm. We intend to disclose any amendment to, or waiver from, the Code of Business Conduct by posting such amendment or waiver, as applicable, on our website.

ITEM 11.   EXECUTIVE COMPENSATION

The information required by this item is incorporated by reference to the 2009 Proxy Statement under the captions “Executive Compensation” and “Director Compensation.”

ITEM 12.   SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

Information regarding security ownership is incorporated by reference to the 2009 Proxy Statement under the caption “Security Ownership of Certain Beneficial Owners and Management.”

Securities Authorized for Issuance Under Equity Compensation Plans.  We maintain the 2000 Equity Incentive Plan (the “2000 Plan”), the 2002 Broad Based Equity Incentive Plan (the “2002 Plan”) and the Employee Stock Purchase Plan (the “ESPP”), pursuant to which we may grant equity awards to eligible persons. We have issued warrants as compensation to consultants and contractors for goods and services provided to us. The following table provides information as of December 31, 2008, regarding the 2000 Plan, the 2002 Plan and the ESPP and certain other compensatory arrangements pursuant to which we have issued, or agreed to issue, options or warrants to purchase shares of common stock:

							(c)
							Number of Securities
	(a)			(b)			Remaining Available
	Number of Securities			Weighted-Average			for Future Issuance
	to be Issued Upon			Exercise Price of			Under Equity
	Exercise of			Outstanding			Compensation Plans
	Outstanding Options,			Options, Warrants			(Excluding Securities
Plan Category	Warrants and Rights			and Rights			Reflected in Column (a))
Equity compensation plans approved by stockholders(1)		3,854,709	(3)	$	7.12	(3)		2,266,783	(4)
Equity compensation plans not approved by stockholders(2)		1,022,559		$	6.52			206,737
Total		4,877,268		$	6.99			2,473,520

(1)	These plans are the 2000 Plan and the ESPP.
(2)	This plan is the 2002 Plan. See Note 10 to our Consolidated Financial Statements for a description of the material terms of the 2002 Plan.

51

(3)	Includes information relating solely to options to purchase common stock under the 2000 Plan.
(4)	Of these shares, 1,770,223 remained available for purchase under the ESPP as of December 31, 2008.

ITEM 13.   CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE

The information required by this item is incorporated by reference to the 2009 Proxy Statement under the captions “Management and Certain Security Holders of Dendreon — Certain Transactions” and “Director Independence.”

ITEM 14.   PRINCIPAL ACCOUNTANT FEES AND SERVICES

The information required by this item is incorporated by reference to the 2009 Proxy Statement under the caption “Information Regarding Our Independent Registered Public Accounting Firm.”

PART IV

ITEM 15.   EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) The following documents are filed as part of this report:

(1) Financial Statements and Report of Independent Auditors.

The financial statements required by this item are submitted in a separate section beginning on page F-1 of this annual report.

	Page
Index to Consolidated Financial Statements		F-1
Report of Independent Registered Public Accounting Firm		F-2
Consolidated Balance Sheets		F-3
Consolidated Statements of Operations		F-4
Consolidated Statements of Stockholders’ Equity		F-5
Consolidated Statements of Cash Flows		F-6
Notes to Consolidated Financial Statements		F-7

(2) Financial Statement Schedules.

None required.

(3) Exhibits.

Exhibit
Number			Description
	3	.1	Amended and Restated Certificate of Incorporation.(1)
	3	.2	Certificate of Amendment to Amended and Restated Certificate of Incorporation.(2)
	3	.3	Amended and Restated Bylaws.(3)
	4	.1	Specimen Common Stock certificate.(4)
	4	.2	Certificate of Designation of Series A Junior Participating Preferred Stock.(5)
	4	.3	Rights Agreement between the registrant and Mellon Investor Services LLC, as Rights Agent, dated September 18, 2002.(6)
	4	.4	Form of Right Certificate.(7)
	4	.5	Indenture, dated as of June 11, 2007, between Dendreon Corporation and The Bank of New York Trust Company, N.A.(8)
	10	.1	Form of Amended Executive Employment Agreement with named executive officers.(9)*
	10	.2	Indemnity Agreement between the registrant and each of its directors and certain of its officers.(10)

52

Exhibit
Number			Description
	10	.3	Amended and Restated 2000 Broad Based Equity Incentive Plan.(11)*
	10	.4	Amended and Restated 2002 Broad Based Equity Incentive Plan.(12)*
	10	.5	2000 Employee Stock Purchase Plan.(13)*
	10	.6	2009 Offering under the 2000 Employee Stock Purchase Plan.*
	10	.7	Form of Stock Option Agreement under 2000 Equity Incentive Plan.(14)*
	10	.8	Form of Stock Option Agreement under 2002 Broad Based Equity Incentive Plan.(15)*
	10	.9	Form of Restricted Stock Award Agreement.(16)*
	10	.10	Dendreon Corporation Incentive Plan.(17)*
	10	.11†	Supply Agreement, dated as of December 22, 2005, by and between Dendreon Corporation and Diosynth RTP.(18)
	10	.12†	Settlement Agreement and Amendment to the Supply Agreement, dated as of October 24, 2008, by and between Dendreon Corporation and Diosynth RTP, Inc.(19)
	10	.13	Lease Agreement between First Industrial, L.P. and Dendreon Corporation, dated August 17, 2005.(20)
	10	.14	Office Lease between Selig Real Estate Holdings Fourteen and Dendreon Corporation, dated September 2, 2005.(21)
	10	.15	Second Amendment to Office Lease Agreement between Selig Real Estate Holdings Fourteen and Dendreon Corporation, dated March 9, 2009
	10	.16	Lease Agreement, dated July 31, 1998, between the Registrant and ARE-3005 First Avenue, LLC.(22)
	10	.17	Third Amendment to Lease Agreement, dated August 22, 2007 between Dendreon Corporation and ARE-3005 First Avenue, LLC.(23)
	10	.18	Form of Promissory Note of Dendreon Corporation to General Electric Capital Corporation.(24)
	10	.19	Master Security Agreement between General Electric Capital Corporation and Dendreon Corporation dated December 30, 2005.(25)
	10	.20	Security Deposit Pledge Agreement among General Electric Capital Corporation, Dendreon Corporation and Webster Bank, N.A., dated December 30, 2005.(26)
	10	.21	Security Deposit Pledge Agreement between General Electric Capital Corporation and Dendreon Corporation dated December 30, 2005.(27)
	10	.22	Commitment Letter, dated January 31, 2006, between Dendreon Corporation and General Electric Capital Corporation.(28)
	10	.23	Common Stock Purchase Agreement, dated October 11, 2007, between Dendreon Corporation and Azimuth Opportunity, Inc.(29)
	10	.24	Amendment No. 1 to Common Stock Purchase Agreement, dated October 10, 2008.(30)
	10	.25	Amendment No. 2 to Common Stock Purchase Agreement, dated February 9, 2009.(31)
	12		Computation of Ratio of Earnings to Fixed Charges.
	23	.1	Consent of Independent Registered Public Accounting Firm.
	24	.1	Power of Attorney (contained on signature page).
	31	.1	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
	31	.2	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
	32		Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C § 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

(1)	Incorporated by reference to Exhibit 3.1 filed with the registrant’s Form 10-Q for the quarter ended March 31, 2002.
(2)	Incorporated by reference to Exhibit 3.1 filed with the registrant’s Form 8-K, filed with the SEC on June 13, 2005.
(3)	Incorporated by reference to Exhibit 3.2 filed with the registrant’s Form 10-Q for the quarter ended June 30, 2004.

53

(4)	Incorporated by reference to Exhibit 4.1 filed with the registrant’s Registration Statement on Form S-1/A, File No. 333-31920.
(5)	Incorporated by reference to Exhibit 4.1 filed with the registrant’s Registration Form 8-K, filed with the SEC on September 25, 2002.
(6)	Incorporated by reference to Exhibit 99.2 filed with the registrant’s Registration Form 8-K, filed with the SEC on September 25, 2002.
(7)	Incorporated by reference to Exhibit 99.3 filed with the registrant’s Form 8-K, filed with the SEC on September 25, 2002.
(8)	Incorporated by reference to Exhibit 10.1 filed with the registrant’s Registration Form 8-K, filed with the SEC on June 12, 2007.
(9)	Incorporated by reference to Exhibit 99.1 filed with the registrant’s Form 8-K, filed with the SEC on January 4, 2007.
(10)	Incorporated by reference to Exhibit 10.1 filed with the registrant’s Registration Statement on Form S-1, File No. 333-47706.
(11)	Incorporated by reference to Exhibit 10.3 filed with the registrant’s Form 10-K, for the fiscal year ended December 31, 2006.
(12)	Incorporated by reference to Exhibit 10.4 filed with the registrant’s Form 10-K, for the fiscal year ended December 31, 2006.
(13)	Incorporated by reference to Exhibit 10.3 filed with the registrant’s Registration Statement on Form S-1, File No. 333-47706.
(14)	Incorporated by reference to Exhibit 10.33 filed with the registrant’s Form 8-K, filed with the SEC on June 13, 2005.
(15)	Incorporated by reference to Exhibit 10.34 filed with the registrant’s Form 8-K, filed with the SEC on June 13, 2005.
(16)	Incorporated by reference to Exhibit 10.46 filed with the registrant’s Form 8-K, filed with the SEC on January 24, 2006.
(17)	Incorporated by reference to Exhibit 10.31 filed with the registrant’s Form 8-K, filed with the SEC on June 13, 2005.
(18)	Incorporated by reference to Exhibit 10.41 filed with the registrant’s Form 8-K, filed with the SEC December 28, 2005.
(19)	Incorporated by reference to Exhibit 10.1 filed with the registrant’s Form 10-Q for the quarter ended September 30, 2008.
(20)	Incorporated by reference to Exhibit 10.36 filed with the registrant’s Form 8-K, filed with the SEC on August 18, 2005, File No. 000-30681.
(21)	Incorporated by reference to Exhibit 10.37 filed with the registrant’s Form 10-Q for the quarter ended September 30, 2005.
(22)	Incorporated by reference to Exhibit 10.11 filed with the registrant’s Registration Statement on Form S-1, File No. 333-31920.
(23)	Incorporated by reference to Exhibit 10.1 filed with the registrant’s Form 8-K, filed with the SEC on August 23, 2007.
(24)	Incorporated by reference to Exhibit 10.42 filed with the registrant’s Form 8-K, filed with the SEC on January 5, 2006.
(25)	Incorporated by reference to Exhibit 10.43 filed with the registrant’s Form 8-K, filed with the SEC on January 5, 2006.
(26)	Incorporated by reference to Exhibit 10.44 filed with the registrant’s Form 8-K, filed with the SEC on January 5, 2006.

54

(27)	Incorporated by reference to Exhibit 10.45 filed with the registrant’s Form 8-K, filed with the SEC on January 5, 2006.
(28)	Incorporated by reference to Exhibit 10.47 filed with the registrant’s Form 8-K, filed with the SEC on February 3, 2006.
(29)	Incorporated by reference to Exhibit 10.1 filed with the registrant’s Form 8-K, filed with the SEC on October 12, 2007.
(30)	Incorporated by reference to Exhibit 10.2 filed with the registrant’s Form 8-K, filed with the SEC on October 10, 2008.
(31)	Incorporated by reference to Exhibit 10.3 filed with the registrant’s Form 8-K filed with the SEC on February 11, 2009.
†	Confidential treatment granted as to certain portions of this Exhibit.
*	Management compensatory plans and arrangements required to be filed as exhibits to this Report.

55

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized on this 12th day of March, 2009.

DENDREON CORPORATION

By:  /s/  Mitchell H. Gold, M.D.

Mitchell H. Gold, M.D.

President and Chief Executive Officer

By:  /s/  Gregory T. Schiffman

Gregory T. Schiffman

Senior Vice President, Chief Financial Officer

and Treasurer (Principal Financial Officer)

By:  /s/  Gregory R. Cox

Gregory R. Cox

(Principal Accounting Officer)

56

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that each individual whose signature appears below constitutes and appoints Mitchell H. Gold, M.D. and Richard F. Hamm, Jr., his or her true and lawful attorneys-in-fact each acting alone, with full power of substitution and re-substitution, for him or her and in his or her name, place and stead in any and all capacities to sign any or all amendments to this report on Form 10-K, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact, or their substitutes, each acting alone, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated:

Signature	Title	Date
/s/  Mitchell H. Gold Mitchell H. Gold, M.D.	President, Chief Executive Officer and Director (Principal Executive Officer)	March 12, 2009
/s/  Gregory T. Schiffman Gregory T. Schiffman	Senior Vice President, Chief Financial Officer and Treasurer (Principal Financial Officer)	March 12, 2009
/s/  Gregory R. Cox Gregory R. Cox	(Principal Accounting Officer)	March 12, 2009
Richard B. Brewer	Chairman of the Board of Directors
/s/  Susan B. Bayh Susan B. Bayh	Director	March 12, 2009
/s/  Gerardo Canet Gerardo Canet	Director	March 12, 2009
/s/  Bogdan Dziurzynski, D.P.A. Bogdan Dziurzynski, D.P.A.	Director	March 12, 2009
/s/  M. Blake Ingle, Ph.D. M. Blake Ingle, Ph.D.	Director	March 12, 2009
/s/  David L. Urdal, Ph.D. David L. Urdal, Ph.D.	Director	March 12, 2009
/s/  Douglas G. Watson Douglas G. Watson	Director	March 12, 2009

57

DENDREON CORPORATION

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

	Page
Report of Independent Registered Public Accounting Firm		F-2
Consolidated Balance Sheets		F-3
Consolidated Statements of Operations		F-4
Consolidated Statements of Stockholders’ Equity		F-5
Consolidated Statements of Cash Flows		F-6
Notes to Consolidated Financial Statements		F-7

F-1

Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders

Dendreon Corporation

We have audited the accompanying consolidated balance sheets of Dendreon Corporation as of December 31, 2008 and 2007, and the related consolidated statements of operations, stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2008. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Dendreon Corporation at December 31, 2008 and 2007, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 2008, in conformity with U.S. generally accepted accounting principles.

As discussed in Note 1 to the consolidated financial statements, in 2007 the Company changed its method of accounting for uncertainties in income taxes upon the adoption of Financial Accounting Standards Board Interpretation No. 48, “Accounting for Uncertainty in Income Taxes — An Interpretation of FASB Statement No. 109”, effective January 1, 2007.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the effectiveness of Dendreon Corporation’s internal control over financial reporting as of December 31, 2008, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated March 11, 2009 expressed an unqualified opinion thereon.

/s/  Ernst & Young LLP

Seattle, Washington

March 11, 2009

F-2

DENDREON CORPORATION

CONSOLIDATED BALANCE SHEETS

	December 31,
	2008			2007
	(In thousands, except share data)
ASSETS
Current assets:
Cash and cash equivalents	$	59,523		$	75,721
Short-term investments		45,638			27,115
Restricted cash		3,853			1,553
Prepaid expenses and other current assets		1,867			2,508
Total current assets		110,881			106,897
Property and equipment, net		28,150			27,454
Long-term investments		3,386			17,739
Long-term restricted cash		2,030			6,288
Debt issuance costs and other assets		2,757			3,284
	$	147,204		$	161,662
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	237		$	2,221
Accrued liabilities		6,004			11,545
Accrued compensation		3,686			4,598
Deferred revenue		82			82
Warrant liability		14,190			—
Current portion of capital lease obligations		—			780
Current portion of facility lease obligation		219			172
Current portion of long-term debt		2,194			5,843
Total current liabilities		26,612			25,241
Deferred revenue, less current portion		314			397
Capital lease obligations, less current portion		—			73
Long-term debt, less current portion		—			2,083
Facility lease obligation, less current portion		8,022			8,241
Convertible senior subordinated notes		85,250			85,250
Commitments and contingencies (Note 13)
Stockholders’ equity:
Preferred stock, $0.001 par value; 10,000,000 shares authorized, no shares issued or outstanding		—			—
Common stock, $0.001 par value; 150,000,000 shares authorized, 95,577,664 and 83,258,210 shares issued and outstanding at December 31, 2008 and 2007, respectively		95			83
Additional paid-in capital		590,159			531,891
Accumulated other comprehensive income		45			52
Accumulated deficit		(563,293	)		(491,649	)
Total stockholders’ equity	$	27,006		$	40,377
Total liabilities and stockholders’ equity	$	147,204		$	161,662

See accompanying notes.

F-3

DENDREON CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

	Year Ended December 31,
	2008			2007			2006
	(In thousands, except per share amounts)
Revenue	$	111		$	743		$	273
Operating expenses:
Research and development		50,086			76,523			74,088
General and administrative		20,503			25,839			23,541
Total operating expenses		70,589			102,362			97,629
Loss from operations		(70,478	)		(101,619	)		(97,356	)
Interest income		3,619			6,461			6,050
Interest expense		(5,156	)		(4,106	)		(336	)
Gain from valuation of warrant liability		371			—			—
Net loss	$	(71,644	)	$	(99,264	)	$	(91,642	)
Basic and diluted net loss per share	$	(0.79	)	$	(1.20	)	$	(1.27	)
Shares used in computation of basic and diluted net loss per share		90,357			82,531			72,366

See accompanying notes.

F-4

DENDREON CORPORATION

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

										Accumulated
					Additional		Deferred			Other						Total
	Common Stock				Paid-in		Stock-Based			Comprehensive			Accumulated			Stockholders’
	Shares		Amount		Capital		Compensation			Income (Loss)			Deficit			Equity
	(In thousands, except share amounts)
Balance, January 1, 2006		71,115,910	$	71	$	469,845	$	(120	)	$	(344	)	$	(300,743	)	$	168,709
Exercise of stock options for cash		90,392		—		218		—			—			—			218
Issuance of common stock under the Employee Stock Purchase Plan		201,720		—		771		—			—			—			771
Issuance of common stock for cash (net of issuance cost of $2,850)		9,890,110		10		42,140		—			—			—			42,150
Non-cash stock-based compensation expense		—		—		5,153		120			—			—			5,273
Issuance of restricted stock grants		25,506		—		—		—			—			—			—
Comprehensive loss Net loss		—		—		—		—			—			(91,642	)		(91,642	)
Net unrealized gain on securities available-for-sale		—		—		—		—			238			—			238
Comprehensive loss																	(91,404	)
Balance, December 31, 2006		81,323,638	$	81	$	518,127	$	0		$	(106	)	$	(392,385	)	$	125,717
Exercise of stock options for cash		1,033,441		1		6,566		—			—			—			6,567
Net exercise of stock warrants		68,101		—		—		—			—			—			—
Issuance of common stock under the Employee Stock Purchase Plan		307,268		1		1,082		—			—			—			1,083
Non-cash stock-based compensation expense		—		—		6,116		—			—			—			6,116
Issuance of restricted stock grants		525,762		—		—		—			—			—			—
Comprehensive loss Net loss		—		—		—		—			—			(99,264	)		(99,264	)
Net unrealized gain on securities available-for-sale		—		—		—		—			158			—			158
Comprehensive loss																	(99,106	)
Balance, December 31, 2007		83,258,210	$	83	$	531,891	$	0		$	52		$	(491,649	)	$	40,377
Exercise of stock options for cash		131,133		—		496		—			—			—			496
Issuance of common stock under the Employee Stock Purchase Plan		204,731		—		721		—			—			—			721
Issuance of common stock for cash (net of issuance cost of $2,550)		11,610,760		12		51,179		—			—			—			51,191
Non-cash stock-based compensation expense		—		—		5,872		—			—			—			5,872
Issuance of restricted stock grants		372,830		—		—		—			—			—			—
Comprehensive loss Net loss		—		—		—		—			—			(71,644	)		(71,644	)
Net unrealized loss on securities available-for-sale		—		—		—		—			(7	)		—			(7	)
Comprehensive loss																	(71,651	)
Balance, December 31, 2008		95,577,664	$	95	$	590,159	$	0		$	45		$	(563,293	)	$	27,006

See accompanying notes

F-5

DENDREON CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

	Year Ended December 31,
	2008			2007			2006
	(In thousands)
Operating Activities:
Net loss	$	(71,644	)	$	(99,264	)	$	(91,642	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization expense		5,716			6,241			3,855
Non-cash stock-based compensation expense		5,872			6,116			5,273
Gain on valuation of warrant liability		(371	)		—			—
(Gain) loss on sale of fixed assets		(5	)		42			(15	)
Impairment of fixed assets		418			—			419
Changes in operating assets and liabilities:
Amortization of securities discount and premium		56			(241	)		194
Accounts receivable		—			—			5,636
Prepaid expenses and other assets		1,168			(132	)		257
Restricted cash related to operating lease		1,258			—			—
Accounts payable		(1,984	)		718			1,075
Accrued liabilities and compensation		(6,453	)		4,043			(5,753	)
Deferred revenue		(83	)		(94	)		(69	)
Net cash used in operating activities		(66,052	)		(82,571	)		(80,770	)
Investing Activities:
Maturities of investments		51,287			53,447			61,261
Purchases of investments		(55,520	)		(37,583	)		(37,076	)
Purchases of property and equipment		(6,825	)		(3,207	)		(12,494	)
Net cash provided by (used in) investing activities		(11,058	)		12,657			11,691
Financing Activities:
Proceeds from sale of equity securities, net of issuance costs		51,191			—			42,150
Proceeds from issuance of warrants		14,561			—			—
Proceeds from release of security deposits associated with debt		700			1,322			1,125
Proceeds from issuance of convertible senior subordinated notes, net of debt financing costs		—			82,257			—
Proceeds from equipment financing arrangement, net of debt financing costs		—			—			9,025
Payments on long-term debt		(5,732	)		(5,295	)		(3,212	)
Payments on facility lease obligation		(172	)		(128	)		(112	)
Payments on capital lease obligations		( 853	)		(1,135	)		(1,871	)
Proceeds from exercise of stock options and other		496			6,567			218
Proceeds from issuance of common stock under the Employee Stock Purchase Plan		721			1,083			771
Net cash provided by financing activities		60,912			84,671			48,094
Net increase (decrease) in cash and cash equivalents		(16,198	)		14,757			(20,985	)
Cash and cash equivalents at beginning of year		75,721			60,964			81,949
Cash and cash equivalents at end of year	$	59,523		$	75,721		$	60,964
Supplemental Disclosure of Cash Flow Information:
Cash paid during the period for interest, net of amount capitalized	$	4,601		$	3,570		$	220

See accompanying notes.

F-6

DENDREON CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.   ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Organization

Dendreon Corporation (“Dendreon”, the “Company”, “we”, “us”, or “our”), a Delaware corporation, is a biotechnology company focused on the discovery, development and commercialization of novel therapeutics that may significantly improve cancer treatment options for patients. Our product portfolio includes active cellular immunotherapy, monoclonal antibody and small molecule product candidates to treat a wide range of cancers. Our most advanced product candidate is Provenge^® (sipuleucel-T), an active cellular immunotherapy that has completed two Phase 3 trials for the treatment of asymptomatic, metastatic, androgen-independent prostate cancer. Prostate cancer is the most common non-skin cancer among men in the United States, with over one million men currently diagnosed with the disease, and the second leading cause of cancer deaths in men in the United States. On November 9, 2006, we completed our submission of our Biologics License Application (our “BLA”) to the U.S. Food and Drug Administration (the “FDA”) for Provenge based upon the survival benefit seen in our completed D9901 and D9902A studies for Provenge. The FDA’s Cellular, Tissue and Gene Therapies Advisory Committee (the “Advisory Committee”) review of our BLA for the use of Provenge in the treatment of patients with asymptomatic, metastatic, androgen-independent prostate cancer was held on March 29, 2007. The Advisory Committee was unanimous (17 yes, 0 no) in its opinion that the submitted data established that Provenge is reasonably safe for the intended population and the majority (13 yes, 4 no) believed that the submitted data provided substantial evidence of the efficacy of Provenge in the intended population. On May 8, 2007, we received a Complete Response Letter from the FDA regarding our BLA. In its letter, the FDA requested additional clinical data in support of the efficacy claim contained in our BLA, as well as additional information with respect to the chemistry, manufacturing and controls (“CMC”) section of the BLA. In a meeting with the FDA on May 29, 2007, we received confirmation that the FDA will accept either positive interim or final analysis of survival from our ongoing Phase 3 D9902B IMPACT (IMmunotherapy for Prostate AdenoCarcinoma Treatment) study to support licensure of Provenge. The primary endpoint of the IMPACT study is overall survival (an event-driven analysis), and time to objective disease progression is a secondary endpoint. In October 2007, we completed our target enrollment of over 500 patients in the IMPACT study. On October 6, 2008, we announced the receipt of interim results from our IMPACT study. The independent data monitoring committee (the “IDMC”) reported to us a 20 percent reduction in the risk of death in the Provenge arm of the study relative to placebo. The IDMC observed no safety concerns and recommended that the study continue to its final analysis, which is anticipated by the end of April 2009. If the study demonstrates approximately a 22 percent reduction in the risk of death, based on 304 events, we would expect the study to meet its primary endpoint of overall survival. In such event, we believe these data would be sufficient to address the FDA’s request for additional clinical information to support the proposed efficacy claim and we would amend our BLA.

We own worldwide commercialization rights for Provenge.

Principles of Consolidation

The consolidated financial statements include the accounts of Dendreon and its wholly-owned subsidiary, Dendreon San Diego, LLC. All material intercompany transactions and balances have been eliminated in consolidation. Dendreon San Diego LLC was dissolved effective February 2, 2009.

Reclassifications

We have reclassified certain prior period balances to conform to the current period presentation. In our consolidated statements of cash flows for the year ended December 31, 2006, we made reclassifications to appropriately reflect the investing activities attributable to maturities and purchases in available for sale securities and amortization of securities discount and premium. These reclassifications resulted in a net decrease to cash used in operating activities of $194,000 and a net increase in cash provided by investing activities of $194,000 for the

F-7

DENDREON CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

year ended December 31, 2006. These reclassifications were for comparative purposes only and had no net effect on our balance sheet, statement of operations, stockholders’ equity or net cash flows.

Cash, Cash Equivalents, and Investments

We consider investments in highly liquid instruments purchased with an original maturity at purchase of 90 days or less to be cash equivalents. The amounts are recorded at cost, which approximates fair value. Our cash equivalents and short-term and long-term investments consist principally of commercial paper, money market securities, corporate bonds/notes and certificates of deposit.

We have classified our entire investment portfolio as available-for-sale. Available-for-sale securities are carried at fair value, with unrealized gains and losses reported as a separate component of stockholders’ equity and included in accumulated other comprehensive income (loss). The amortized cost of investments is adjusted for amortization of premiums and accretion of discounts to maturity. Such amortization and accretion are included in interest income. Interest earned on securities is included in interest income. Gains are recognized when realized in our consolidated statements of operations. Losses are recognized when realized and when we have determined that an other-than-temporary decline in fair value has occurred. We consider an investment with a maturity greater than twelve months as long-term and a maturity less than twelve months as short-term at the balance sheet date. The cost of securities sold is based on the specific identification method.

Property and Equipment

Property and equipment are stated at cost and are depreciated using the straight-line method over the estimated useful lives of the assets, which range from three to sixteen years. Included in fixed assets is the cost of internally developed software. We expense all costs related to internally developed software, other than those incurred during the application development stage. Costs incurred during the application development stage are capitalized and amortized over the estimated useful life of the software. Estimated useful lives of furniture and fixtures and laboratory and manufacturing equipment are seven years, office equipment is five years, buildings are sixteen years and computers and software is three years. Computers and equipment financed under capital leases are amortized over the shorter of the useful lives of the related assets or the lease term. Leasehold improvements are stated at cost and amortized using the straight-line method over the remaining life of the lease or ten years, whichever is shorter. Construction in progress is reclassified to the appropriate fixed asset classifications and depreciated accordingly when related assets are deemed ready for their intended use and placed in service. We capitalize interest on borrowings during the construction period of major capital projects. Capitalized interest is added to the cost of the underlying assets and is amortized over the useful lives of the related assets.

Debt Issuance Costs

Debt issuance costs of approximately $3.0 million related to our 4.75% Convertible Senior Subordinated Notes due 2014 (the “Notes”) issued in June and July of 2007 and are amortized over the life of the Notes. Amortization expense was approximately $428,000 and $231,000 for the years ended December 31, 2008 and 2007, respectively, and is reported as interest expense.

Concentrations of Risk

We are subject to concentration of risk from our investments and single-source vendors for some components necessary for our active cellular immunotherapy product candidates.

Our investment portfolio is maintained in accordance with our investment policy which specifies credit quality standards, limits our credit exposure to any single issuer and defines allowable investments. Auction rate or asset-backed securities without a guarantee by the U.S. government are not permitted to be purchased. The fair value of

F-8

DENDREON CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

our cash equivalents and marketable securities is subject to change as a result of changes in market interest rates and investment risk related to the issuers’ credit worthiness.

We proactively monitor and manage our portfolio. If necessary, we believe we are able to liquidate our investments without significant loss within the next year. We currently believe these securities are not significantly impaired, primarily due to the government and major corporate guarantees of the underlying securities; however, it could take until the final maturity of the underlying notes to realize our investments recorded values. Based on our expected operating cash flows, and our other sources of cash, we do not anticipate the potential lack of liquidity on these investments will affect our ability to execute our current business plan.

Our risk for single-source vendors is managed by maintaining a safety stock of components and a continued effort to establish additional suppliers.

Revenue Recognition

Substantially all of the revenue we receive is collaborative research revenue and license revenue. We recognize collaborative research revenues from up-front payments, milestone payments, and personnel-supported research funding. We also recognize license revenue from intellectual property and technology agreements. The payments received under these research collaboration agreements are generally contractually not refundable even if the research effort is not successful. Performance under our collaborative agreements is measured by scientific progress, as mutually agreed upon by us and our collaborators.

Our revenue arrangements with multiple elements are divided into separate units of accounting if certain criteria are met, including whether the delivered element has stand-alone value to the customer and whether there is objective and reliable evidence of the fair value of the undelivered items. The consideration we receive is allocated among the separate units based on their respective fair values, and the applicable revenue recognition criteria are applied to each of the separate units.

License Fees:  License fees from our research collaborations include payments for technology transfer and access rights. Non-refundable, up-front payments received in connection with collaborative research and development agreements are deferred and recognized on a straight-line basis over the period during which we have continuing obligations, generally the research term. When the research term is not specified in the agreement and instead the agreement specifies the completion or attainment of a particular development goal, an estimate is made of the time required to achieve that goal considering experience with similar projects, level of effort and the development stage of the project. The basis of the revenue recognition is reviewed and adjusted based on the status of the project against the estimated timeline as additional information becomes available. Non-refundable license fees where we have completed all future obligations are recognized as revenue in the period when persuasive evidence of an agreement exists, delivery has occurred, collectability is reasonably assured and the price is fixed and determinable.

Royalty Income:  Royalties from licensees are based on reported sales of licensed products and revenues are calculated based on contract terms when reported sales are reliably measurable and collectability is reasonably assured.

Research and Development Expenses

We account for research and development costs in accordance with Statement of Financial Accounting Standards (‘‘SFAS”) No. 2, “Accounting for Research and Development Costs,” and Emerging Issues Task Force (“EITF”) Issue No. 07-3, “Accounting for Advance Payments for Goods or Services to Be Used in Future Research and Development Activities” (“EITF 07-3”). For research and development activities in progress at January 1, 2008, costs are expensed as incurred including nonrefundable prepayments for research and development services. On January 1, 2008, we adopted EITF 07-3 and changed our accounting policy. For new contracts entered into as of or subsequent to January 1, 2008, nonrefundable prepayments for research and development services are deferred and

F-9

DENDREON CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

recognized as the services are rendered. Research and development expenses include, but are not limited to, payroll and personnel expenses, lab expenses, clinical trial and related clinical manufacturing costs, facilities and related overhead costs.

Impairment of Long-Lived Assets

SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets” (“SFAS 144”), requires losses from impairment of long-lived assets used in operations to be recorded when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the assets’ carrying amount. We periodically evaluate the carrying value of long-lived assets to be held and used when events and circumstances indicate that the carrying amount of an asset may not be recovered.

Accounting for Stock-Based Compensation

We account for stock-based compensation in accordance with Financial Accounting Standards Board (“FASB”) SFAS No. 123R, “Share-Based Payment” (“SFAS 123R”). Under the provisions of SFAS 123R, stock-based compensation cost is estimated at the grant date based on the award’s fair value as calculated by the Black-Scholes-Merton (“BSM”) option-pricing model and is recognized on the accelerated method as expense over the requisite service period. The BSM model requires various highly judgmental assumptions including volatility, forfeiture rates and expected option life. If any of the assumptions used in the BSM model change significantly, stock-based compensation expense may differ materially in the future from that recorded in the current period.

We grant restricted stock awards that generally vest over a four year period, however in 2006 and 2007, we granted restricted stock awards with certain performance conditions to all employees. In accordance with SFAS 123R, management is required to estimate the probability of achieving each acceleration provision. Compensation expense is recorded based upon our assessment of accomplishing each provision.

SFAS 123R also requires the benefit of tax deductions in excess of recognized stock compensation expense to be reported as a financing cash flow, rather than as an operating cash flow. In each of the years ended December 31, 2008, 2007 and 2006, the tax deductions related to stock compensation expense were not recognized because of the availability of net operating losses, and therefore no such financing cash flows were reported.

Use of Estimates

Our financial statements have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and judgments in certain circumstances that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. In preparing these financial statements, management has made its best estimates and judgments of certain amounts included in the financial statements, giving due consideration to materiality. On an ongoing basis, we evaluate our estimates, including those related to revenue recognition, investments, fair values of acquired assets, income taxes, financing activities, long-term service contracts, clinical trial accruals and other contingencies. Management bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. Actual results could differ from these estimates.

Net Loss Per Share

Basic and diluted net loss per share of common stock is presented in conformity with SFAS No. 128, “Earnings Per Share.” Basic net loss per share is calculated by dividing net loss by the weighted average number of common shares outstanding. Because we report a net loss, diluted net loss per share is the same as basic net loss per share. We have excluded all outstanding stock options, warrants and unvested restricted stock, as well as shares issuable in

F-10

DENDREON CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

connection with the conversion of the Notes and our Common Stock Purchase Agreement with Azimuth Opportunity Ltd. (the “Common Stock Purchase Agreement”), from the calculation of diluted net loss per common share because all such securities are antidilutive to the computation of net loss per share. Shares excluded from the computation of net loss per share were 35,625,600, 31,569,782 and 6,790,806 for the years ended December 31, 2008, 2007 and 2006, respectively.

Fair Value

Effective January 1, 2008, we adopted SFAS No. 157, “Fair Value Measurements” (“SFAS 157”), except as it applies to the nonfinancial assets and nonfinancial liabilities subject to FASB Staff Position No. FAS 157-2, “Effective Date of FASB Statement No. 157” (“FSP 157-2”). SFAS 157 defines fair value, establishes a framework for measuring fair value under U.S. GAAP and enhances disclosures about fair value measurements. Fair value is defined under SFAS 157 as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value under SFAS 157 must maximize the use of observable inputs and minimize the use of unobservable inputs.

Warrant Liability

On April 3, 2008, we issued 8.0 million shares (the “Shares”) of our common stock, and warrants to purchase up to 8.0 million shares of common stock (the “Warrants”) to an institutional investor (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.

We account for the Warrants as a liability under SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities,” as amended (“SFAS 133”), and EITF No. 00-19, “Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in, a Company’s Own Stock,” (“EITF No. 00-19”) which provide guidance for distinguishing between permanent equity, temporary equity and assets and liabilities. The Warrants have been recorded at their relative fair values at issuance and will continue to be recorded at fair value each subsequent balance sheet date. Any change in value between reporting periods will be recorded as other income (expense) each reporting date. The Warrants will continue to be reported as a liability until such time as they are exercised or are otherwise modified to remove the provisions that require this treatment, at which time the Warrants will be adjusted to fair value and reclassified from liabilities to stockholders’ equity. The fair value of the Warrants is estimated using the BSM option-pricing model. As of December 31, 2008, the fair value of the Warrants was determined to be $14.2 million; accordingly, we recorded approximately $371,000 in other income for the year ended December 31, 2008 related to the change in the fair value of the Warrants.

Income Taxes

We account for income taxes in accordance with the provision of SFAS No. 109, “Accounting for Income Taxes” (“SFAS 109”) and FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes — an interpretation of FASB Statement No. 109” (“FIN 48”), which requires recognition of deferred taxes to provide for temporary differences between financial reporting and tax basis of assets and liabilities. Deferred taxes are measured using enacted tax rates expected to be in effect in a year in which the basis difference is expected to reverse. We continue to record a valuation allowance for the full amount of deferred assets, which would otherwise be recorded for tax benefits relating to operating loss and tax credit carryforwards, as realization of such deferred tax assets cannot be determined to be more likely than not.

F-11

DENDREON CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Recent Accounting Pronouncements

On January 1, 2008, we adopted EITF 07-3 and changed our accounting policy. For new contracts entered into as of or subsequent to January 1, 2008, nonrefundable prepayments for research and development services are deferred and recognized as the services are rendered.

In February 2008, the FASB issued FSP 157-2 to partially defer SFAS 157. In accordance with the provisions of FSP 157-2, we have elected to defer implementation of SFAS 157 as it relates to our non-financial assets and non-financial liabilities that are recognized and disclosed at fair value in the financial statements on a nonrecurring basis until January 1, 2009. We believe that the impact of these items will not be material to our consolidated financial statements. Assets and liabilities typically recorded at fair value on a non-recurring basis include:

•  Long-lived assets measured at fair value due to an impairment assessment under SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets;” and

•  Asset retirement obligations initially measured under SFAS No. 143, “Accounting for Asset Retirement Obligations.”

On October 10, 2008, the FASB issued FASB Staff Position No. 157-3, “Fair Value Measurements” (“FSP 157-3”), which clarifies the application of SFAS No. 157 in an inactive market and provides an example to demonstrate how the fair value of a financial asset is determined when the market for that financial asset is inactive. FSP 157-3 was effective upon issuance, including prior periods for which financial statements had not been issued. The adoption of this standard as of December 31, 2008 did not have a material impact on our results of operations, cash flows or financial positions.

New Accounting Standards Not Yet Adopted

In December 2007, the FASB ratified the final consensuses in EITF Issue No. 07-1, “Accounting for Collaborative Arrangements” (“EITF 07-1”), which requires a certain presentation of transactions with third parties and of payments between parties to a collaborative arrangement in our statement of operations, along with disclosure about the nature and purpose of the arrangement. EITF 07-1 is effective beginning January 1, 2009. We have evaluated the impact of adopting EITF 07-1 on our consolidated financial statements and do not expect any impact on our results of operations, cash flows or financial position.

2.   SIGNIFICANT AGREEMENTS

In our accompanying statements of operations for the years ended December 31, 2008, 2007 and 2006, we have recognized revenue relating to our collaborative agreements in the aggregate of $82,000 per year. We incurred no collective research and development expenses incurred under these collaborative agreements for the years ended December 31, 2008 and 2007. We estimate that our collective research and development expenses under these collaborative agreements for the year ended December 31, 2006 was approximately $92,000.

Due to our ability to share resources and knowledge across multiple research platforms, our expense allocations to our collaborative agreements are based on estimated data of personnel time incurred across all our collaborations. As a result, the expenses allocated to the estimated expenses of our collaborative agreements may not reflect actual expenses incurred.

Wilex

On February 22, 2006, we entered into an option purchase agreement with Wilex AG (“Wilex”) for our intellectual property in small molecule inhibitors of urokinase plasminogen activator (u-PA). On March 7, 2007, Wilex exercised its option pursuant to the terms and conditions of the option agreement in exchange for payment to us of $500,000. The sale of this technology is a perpetual exclusive arrangement where we have assigned our entire right, title and interest in the intellectual property to Wilex. Furthermore, upon exercising its option, Wilex is

F-12

DENDREON CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

obligated to make additional milestone payments to us upon the occurrence of future events, which includes the initiation of the first clinical Phase II and Phase III studies resulting from a product developed from the intellectual property and upon the first sale of this product after an approval from the FDA. These milestone payments are capped at $1.6 million.

Kirin

In November 2003, we licensed to Kirin Brewery Co., Ltd. our worldwide patent rights relating to the use of certain HLA-DR antibodies being developed by Kirin for which Kirin agreed to pay us $20 million and released its rights to our active cellular immunotherapy product candidates, including provenge, in Asia and Pacific Rim countries. This agreement ended our previous collaboration with Kirin. The $20  million receivable was paid in four installments, of which $2 million was paid in December 2003 and the remaining $18 million was paid annually in three equal installments beginning in November 2004 and ending on November 30, 2006.

3.   INVESTMENTS

Securities available-for-sale at cost or amortized cost and fair market value by contractual maturity were as follows:

	Cost or		Fair
	Amortized		Market
	Cost		Value
	(In thousands)
December 31, 2008
Due in one year or less	$	45,576	$	45,638
Due after one year through two years		3,403		3,386
	$	48,979	$	49,024
December 31, 2007
Due in one year or less	$	27,100	$	27,115
Due after one year through two years		17,702		17,739
	$	44,802	$	44,854

Our gross realized gains or losses on sales of available-for-sale securities were not material for 2008, 2007 or 2006.

F-13

DENDREON CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Securities available-for-sale, short-term and long-term, consisted of the following:

	Cost or		Gross		Gross			Fair
	Amortized		Unrealized		Unrealized			Market
	Cost		Gains		Losses			Value
	(In thousands)
December 31, 2008
Corporate debt securities	$	22,360	$	54	$	(154	)	$	22,260
Government-sponsored enterprises		16,285		110		(25	)		16,370
U.S. Treasury Note		10,334		60		—			10,394
	$	48,979	$	224	$	(179	)	$	49,024
December 31, 2007
Corporate debt securities	$	35,664	$	59	$	(59	)	$	35,664
Government-sponsored enterprises		5,747		9		(10	)		5,746
U.S. Treasury Note		3,391		53		—			3,444
	$	44,802	$	121	$	(69	)	$	44,854

In accordance with EITF Issue No. 03-1 “The Meaning of Other Than Temporary Impairment”, the following table summarizes the fair value and gross unrealized losses related to available-for-sale securities, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, at December 31, 2008:

	Less Than 12 Months					12 Months or More					Total
			Gross					Gross					Gross
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
	Value		Losses			Value		Losses			Value		Losses
	(In thousands)
Corporate debt securities	$	12,756	$	(143	)	$	2,004	$	(11	)	$	14,760	$	(154	)
Government securities		4,629		(25	)		—		—			4,629		(25	)
Total	$	17,385	$	(168	)	$	2,004	$	(11	)	$	19,389	$	(179	)

Market values were determined for each individual security in the investment portfolio. The declines in value of these investments are primarily related to changes in interest rates and are considered to be temporary in nature. Because we have the ability and intent to hold these investments until a forecasted recovery of fair value, which may be the maturity or call date, we do not consider these investments to be other-than-temporarily impaired as of December 31, 2008.

4.   FAIR VALUE MEASUREMENTS

We implemented SFAS 157 for our financial assets and liabilities that are measured and reported at fair value at each reporting period. We currently measure and report at fair value warrant liability, cash equivalents and investment securities.. Fair value is defined under SFAS 157 as the exchange price that would be received for an asset or paid to transfer a liability, an exit price, in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value under SFAS 157 must maximize the use of observable inputs and minimize the use of unobservable inputs. SFAS 157 establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers are:

Level 1 — Observable inputs for identical assets or liabilities such as quoted prices in active markets,

F-14

DENDREON CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Level 2 — Inputs other than quoted prices in active markets that are either directly or indirectly observable, and

Level 3 — Unobservable inputs in which little or no market data exists, therefore developed using estimates and assumptions developed by us, which reflect those that a market participant would use.

The following table summarizes our financial assets and liabilities measured at fair value on a recurring basis in accordance with SFAS 157 as of December 31, 2008 (in thousands):

			Quoted Prices in				Significant
	Balance as of		Active Markets for		Significant Other		Unobservable
	December 31,		Identical Assets		Observable Inputs		Inputs
Description	2008		(Level 1)		(Level 2)		(Level 3)
Assets:
Money Market	$	5,800	$	5,800	$	—	$	—
Commercial paper		51,936		—		51,936		—
Corporate debt securities		22,260		—		22,260		—
Government-sponsored enterprises		16,370		—		16,370		—
U.S. Treasury Note		10,394		—		10,394		—
Total financial assets	$	106,760	$	5,800	$	100,960	$	—
Liabilities:
Warrants (Footnote 9 — Stockholders’ Equity)	$	14,190	$	—	$	—	$	14,190
Total financial liabilities	$	14,190	$	—	$	—	$	14,190

As of December 31, 2008, our cash equivalents, and short-term and long-term investments are recorded at fair value as determined through market, observable and corroborated sources.

The following table is a roll forward of the fair value of the Warrants, as to which fair value is determined by Level 3 inputs (in thousands):

	Year
	Ended
	December 31,
Description	2008
Beginning balance, January 1, 2008	$	—
Purchases, issuances, and settlements		14,561
Total gain included in net loss(1)		(371	)
Ending balance	$	14,190

(1) The gain for the year ended December 31, 2008 relates to the revaluation of the warrant liability from the date of issuance of the Warrants, April 3, 2008, through December 31, 2008. The gain is reflected in our consolidated statements of operations as a component of other income.

As further discussed in Note 8, the fair value of the Notes at December 31, 2008 was approximately $46.8 million, based on the last trading price in December. The fair value is determined based on quoted prices in active markets for similar instruments (a “Level 2” input).

The carrying amounts reflected in the consolidated balance sheets for cash, prepaids, other current assets, accounts payable, accrued expenses and other liabilities approximate fair value due to their short term nature. In

F-15

DENDREON CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

addition, our debt obligations approximate their fair value based on current interest rates which contain an element of default risk.

5.   PROPERTY AND EQUIPMENT

Property and equipment consisted of the following:

	December 31,
	2008			2007
	(In thousands)
Furniture and office equipment	$	1,188		$	1,263
Laboratory and manufacturing equipment		11,427			10,905
Computer equipment and software		10,134			9,794
Leasehold improvements		15,478			15,681
Buildings		1,730			1,730
Construction in progress		15,132			9,966
		55,089			49,339
Less accumulated depreciation and amortization		(26,939	)		(21,885	)
	$	28,150		$	27,454

Property and equipment included assets financed under debt and capital leases of $5.1 million at December 31, 2007. Accumulated amortization related to these assets was $4.6 million at December 31, 2007. As of December 31, 2008, the related debt and capital leases were no longer outstanding. In December 2008, we recorded a $418,000 impairment charge, due to abandoned design costs for our product scheduling system, a software scheduling solution, currently in development, that will link certain supply chain providers to allow for timely, efficient and cost effective production and distribution of Provenge. This impairment charge was recorded as research and development expense in our consolidated statements of operations for the year ended December 31, 2008.

We lease our commercial manufacturing facility in Morris Plains, New Jersey (the “Facility”) of approximately 158,000 square feet, pursuant to a Lease Agreement dated August, 11, 2005 (the “Lease”), between us and Dividend Capital Trust, LLC, which assumed the obligations of the lessor under the Lease in December 2005. Under the Lease, we committed to funding the construction and outfitting of the Facility. The Lease required us to provide the landlord with a letter of credit in the 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, which was recorded as long-term restricted cash on our consolidated balance sheet upon issuance. During 2008, the letter of credit was reduced to $1.9 million and the collateral amount required by Wells Fargo was reduced commensurately, resulting in a release of restricted cash of $1.2 million. The $1.9 million letter of credit was recorded as long-term restricted cash on our consolidated balance sheet as of December 31, 2008.

In accordance with EITF Issue No. 97-10, “The Effect of Lessee Involvement in Asset Construction” (“EITF 97-10”), as we are responsible for the construction costs, we are deemed to be the owner of the Facility for accounting purposes during the construction period. During the year ended December 31, 2005, upon taking possession of the Facility and beginning construction, we capitalized approximately $8.6 million in our construction in progress account to record the estimated fair value of the building with a related lease obligation of approximately $8.6 million, which was reflected in the accompanying balance sheet as Facility Lease Obligation. The related lease payments have been allocated to the building and the land based on their estimated relative fair values. The portion of the Lease related to land is treated as an operating lease and the balance of the lease payment is applied to the Facility Lease Obligation.

F-16

DENDREON CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Our initial Facility construction phase began in late 2005. We commenced production of Provenge at the Facility, for clinical use, in February 2007. Included in leasehold improvements at December 31, 2008 is $11.1 million of the amount capitalized for outfitting the Facility for clinical use. At December 31, 2008, the $15.1 million in construction in progress included $9.5 million related to the remaining portion of the capitalized amount of the Facility (including $931,000 in capitalized interest) and $5.6 million in software, mainly related to our product scheduling (including $253,000 in capitalized interest). At December 31, 2007, the $10.0 million in construction in progress included the remaining portion of the capitalized amount of the Facility of $7.8 million, $2.1 million of software and $598,000 in capitalized interest.

In addition, the Lease also has provisions requiring that we restore the building to its original condition upon lease termination. Accordingly, we have accrued the estimated costs of dismantlement and restoration as these obligations accumulate in accordance with SFAS No. 143, “Accounting for Asset Retirement Obligations.”

For a further description of the Lease, see Notes 7 and 13, which include the applicable future minimum payments under the Lease.

6.   ACCRUED LIABILITIES

Accrued liabilities consisted of the following:

	December 31,
	2008		2007
	(In thousands)
Clinical trial costs	$	1,700	$	1,949
Deferred rent		1,089		697
Accrued property and equipment		895		—
Accrued legal		286		640
Antigen manufacturing costs		—		5,987
Other accrued liabilities		2,034		2,272
	$	6,004	$	11,545

7.   FINANCING OBLIGATIONS AND DEBT

In August 2005, we leased the Facility and, in accordance with EITF 97-10, we are deemed the owner of the Facility during the construction period; therefore, we capitalized approximately $8.6 million, which represented the estimated fair value of the building, and recorded a lease obligation of approximately $8.6 million as the Facility Lease Obligation. Accordingly, the lease payments are allocated to the building and land based on their estimated relative fair values. The Facility Lease Obligation has an extended term of 17 years with an effective interest rate of 7.64 percent. The estimated lease term is based on the initial 7 year term of the Lease and a 10 year renewal. The future minimum payments of the Facility Lease Obligation, as presented below, reflect such 17 year period. The Lease may be renewed for up to an additional 15 years beyond the estimated 17 year term. See Notes 5 and 13 for a further description of the Lease.

In December 2005, we entered into an agreement with General Electric Capital Corporation (“GE Capital”), whereby we would enter into a series of anticipated Promissory Notes (the “GE Notes”), for the purchase of equipment and associated build-out costs for the Facility. As of December 31, 2008, these GE Notes, which evidence one loan with an original principal amount of $7.0 million bearing interest at 7.55 percent per year, which was paid in full at December 31, 2008, and the remaining loans with original principal amounts totaling $9.6 million and an average interest rate of 10.1 percent are being repaid in 36 consecutive monthly installments of principal and interest. The GE Notes are secured by a Master Security Agreement (the “Security Agreement”), and two Security Deposit Pledge Agreements (the “Pledge Agreements”). Pursuant to the Pledge Agreements, we deposited an

F-17

DENDREON CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

aggregate of $7.0 million as a security deposit for the repayment of the GE Notes, which will be released upon the repayment of the GE Notes or upon receipt of FDA approval of Provenge. The balance of such security deposit as of December 31, 2008 was $3.9 million. The security deposit is recorded on our consolidated balance sheet in short-term restricted cash. There is a material adverse change clause in the Security Agreement which may accelerate the maturity of the GE Notes upon the occurrence of certain events. We do not believe a material adverse change in our financial condition has occurred. The balance due on the GE Notes as of December 31, 2008 was approximately $2.1 million.

The future minimum payments due under financing obligations were as follows as of December 31, 2008:

				Facility
	Debt			Lease
	Obligations			Obligations
	(In thousands)
Year ending December 31:
2009	$	2,282		$	841
2010		—			873
2011		—			905
2012		—			934
2013		—			951
Thereafter		—			9,206
Total payments		2,282			13,710
Less amount representing interest		(88	)		(5,469	)
Present value of payments		2,194			8,241
Less current portion of obligations		(2,194	)		(219	)
Long-term portion of obligations	$	—		$	8,022

8.   CONVERTIBLE SENIOR SUBORDINATED NOTES

On June 11, 2007, we sold $75.0 million of the 4.75% Convertible Senior Subordinated Notes due 2014 to Merrill Lynch, Pierce, Fenner & Smith Incorporated (the “Initial Purchaser”) for sale in a private placement to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933. Proceeds from the offering, after deducting the fees to the Initial Purchaser and our estimated expenses, were approximately $72.5 million. We granted the Initial Purchaser a 30-day option to purchase up to an additional $25.0 million in principal amount of the Notes. The Initial Purchaser elected to exercise this right and purchased $10.25 million of additional Notes in July 2007, from which we received approximately $9.8 million in proceeds after deducting the Initial Purchaser’s fee and our estimated expenses. The Notes were issued at the face principal amount thereof and pay interest semi-annually in arrears on June 15 and December 15 of each year, beginning on December 15, 2007. 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 or liquidated damages. 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. In addition, holders of the Notes may be entitled to liquidated damages in the event of a “registration default” as described in the Registration Rights Agreement, at an annual rate equal to 0.25% of the principal amount of the Notes up to the 90th day following a registration default, and 0.50% of the principal amount of the Notes after the 91st day following such registration default. Liquidated damages, if any, would cease to accrue on the second anniversary of issuance of the Notes. The registration statement pertaining to the Notes was declared effective by the Securities and Exchange Commission (the “SEC”) on September 7, 2007.

F-18

DENDREON CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

We recorded interest expense, including the amortization of debt issuance costs related to the Notes, of $4.5 million and $2.5 million during the years ended December 31, 2008 and 2007, respectively.

The Notes are convertible into our common stock, initially at the conversion price of $10.28 per share, equal to a conversion rate of approximately 97.2644 shares per $1,000 principal amount of the Notes, subject to adjustment. There may be an increase in the conversion rate of the Notes under certain circumstances described in the Indenture; however, the number of shares of common stock issued will not exceed 114.2857 per $1,000 principal amount of the Notes. A holder that converts Notes in connection with a “fundamental change,” as defined in the Indenture, may in some circumstances be entitled to an increased conversion rate (i.e., a lower per share conversion price) as a make whole premium. If a fundamental change occurs, holders of the Notes may require us to repurchase all or a portion of their Notes for cash at a repurchase price equal to 100% of the principal amount of the Notes to be repurchased, plus any accrued and unpaid interest and other amounts due thereon. The Indenture contains customary covenants.

Pursuant to SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities,” as amended, and related guidance, we have identified the embedded derivatives associated with the Notes and are accounting for these embedded derivatives accordingly. These embedded derivatives meet certain criteria and are therefore not required to be accounted for separately from the Notes.

The fair value of the Notes at December 31, 2008 and 2007 was approximately $46.8 million and $69.6 million, respectively, based on the last trading prices in December 2008 and 2007, respectively. Such amounts are determined based on quoted prices in active markets for similar instruments (a “Level 2” input as defined under SFAS 157).

9.   STOCKHOLDERS’ EQUITY

Preferred Stock

We currently have 10,000,000 shares, $0.001 par value, of authorized preferred stock, of which 1,000,000 shares have been designated as Series A Junior Participating Preferred Stock. No preferred stock was issued or outstanding as of December 31, 2008.

Equity Sales

We have received net proceeds of $107.9 million from the sale of equity securities through a public offering, registered direct offerings and our equity line arrangement since January 1, 2006.

In November 2006, we sold 9.9 million shares of common stock at a price of $4.55 per share for gross proceeds of $45.0 million, or $42.2 million, net of underwriting fees, commissions and other offering costs.

On October 11, 2007, we entered into an equity line of credit arrangement with Azimuth Opportunity Ltd. (“Azimuth”). We entered into the Common Stock Purchase Agreement”) with Azimuth, which we amended in October 2008 and February 2009. As amended, the Common Stock Purchase Agreement provides that, upon the terms and subject to the conditions set forth therein, Azimuth is committed to purchase up to $130,000,000 of our common stock over the approximately 36-month term of the Common Stock Purchase Agreement. From time to time, and at our sole discretion, we may present Azimuth with draw down notices to purchase our common stock over 10 consecutive trading days or such other period mutually agreed upon by us and Azimuth. Each draw down is subject to limitations based on the price of our common stock and a limit of 2.5% of our market capitalization at the time of such draw down, provided, however, Azimuth will not be required to purchase more than $55,000,000 of our common stock in any single draw down. In addition, the number of shares of our common stock purchased by Azimuth under the Common Stock Purchase Agreement cannot equal or exceed 20% of our issued and outstanding shares of common stock as of the date of the Common Stock Purchase Agreement. We are able to present Azimuth with up to 24 draw down notices during the term of the Common Stock Purchase Agreement, with a minimum of five trading days required between each draw down period. On October 10, 2008, we sold 3,610,760 shares of our

F-19

DENDREON CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

common stock at a price of $5.80 per share to Azimuth for gross proceeds of approximately $21.0 million under the Common Stock Purchase Agreement. We received net proceeds of approximately $19.8 million from the sale of these shares.

In April 2008, we received net proceeds of $46.0 million from our issuance of the Shares, and the Warrants to the Investor. The Investor purchased the Shares and Warrants for a negotiated price of $5.92 per share of common stock purchased. The Warrants are exercisable at any time prior to April 8, 2015, with an exercise price of $20.00 per share of common stock.

The Warrants contain a “fundamental change” provision, as defined in the Warrants, which may in certain circumstances allow the warrants to be redeemed for cash in an amount equal to the Black Scholes Value, as defined in the Warrants. Accordingly, pursuant to SFAS 133 and EITF 00-19, the Warrants are recorded as a liability and then marked to market each period through earnings in other income (expense). The fair value of the Warrants at issuance, April 3, 2008, and December 31, 2008 was approximately $14.6 million and $14.2 million, respectively, based on “Level 3” Inputs, as defined under SFAS 157 (see Note 4). As a result of this decrease, we recorded approximately $371,000 in non-operating income for the year ended December 31, 2008.

As of December 31, 2008, we had up to approximately $301 million of common stock, preferred stock, warrants and debt securities, in the aggregate, available to be sold under two effective registration statements.

10.   STOCK-BASED COMPENSATION PLANS

We maintain two stock -based incentive plans under which we may grant non-qualified stock options, incentive stock options, restricted stock, restricted stock units or stock appreciation rights to employees, non-employee directors and consultants. We also have an Employee Stock Purchase Plan (the “ESPP”). Under these plans we issue new shares of common stock upon exercise of stock options and purchases under the ESPP.

On January 1, 2006, we adopted SFAS 123R, which requires the grant-date fair value of all stock-based payment awards that are expected to vest, including employee stock options, to be recognized as employee compensation expense over the requisite service period. We adopted SFAS 123R by applying the modified prospective transition method and, therefore, (1) did not restate any prior periods and (2) recognized compensation expense for all stock-based payment awards that were outstanding, but not yet vested, as of January 1, 2006, based upon the same estimated grant-date fair values and service periods used to prepare our SFAS 123R pro-forma disclosures, except that the carryover amount is adjusted for an estimated forfeiture rate. We recognize compensation expense for options granted to non-employees in accordance with the provisions of SFAS 123R and EITF consensus Issue 96-18. “Accounting for Equity Instruments that are Issued to Other Than Employees for Acquiring, or in Conjunction with Selling, Goods or Services.”

We recorded stock-based employee compensation expense in the consolidated statement of operations in 2008, 2007 and 2006 of $5.9 million, $6.1 million and $5.3 million, respectively. We recognize compensation expense for our stock-based payment awards on the accelerated method over the requisite service period of the entire award, unless the awards are subject to other conditions, in which case we recognize compensation expense over the requisite service period of each separate vesting tranche. We determine the grant-date fair value of our stock-based payment awards using the BSM option valuation model. Total stock-based employee compensation expense recognized in the consolidated statement of operations in 2008, 2007 and 2006 increased our net loss per share by $0.06, $0.07 and $0.07, respectively. As we use a full valuation allowance with respect to deferred taxes, the adoption of SFAS 123R had no impact on deferred taxes.

The Employee Stock Purchase Plan

Upon the completion of our initial public offering, we implemented the ESPP, which was approved by the Board of Directors on March 1, 2000 and approved by the stockholders on May 1, 2000. A total of 1,485,000 shares of common stock were originally reserved for issuance under the ESPP. Each year, the number of shares reserved for

F-20

DENDREON CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

issuance under the ESPP is automatically increased by the lesser of (i) 1 percent of the total number of fully diluted shares of our common stock then outstanding, including convertible securities, (ii) 400,000 shares, or (iii) a number determined by our Board of Directors. On January 1, 2009, the number of shares reserved for future issuance under the ESPP was automatically increased by an additional 400,000 shares, to an aggregate of 2,170,223 shares.

In 2008, 2007 and 2006, 204,731, 307,268 and 201,720 shares, respectively, were issued under the ESPP at an average price of $3.52, $3.52 and $3.82, respectively.

Stock Option Plans

In 2000, the Board of Directors and our stockholders approved the 2000 Equity Incentive Plan (the “2000 Plan”), A total of 4,400,000 shares of common stock were originally authorized and reserved for issuance under the 2000 Plan. In 2003, the Board of Directors and our stockholders approved amendments to the 2000 Plan: (i) to increase the number of shares of common stock authorized for issuance under the 2000 Plan by an additional 2,000,000 shares; (ii) to increase the number of shares of common stock annually reserved for issuance under the 2000 Plan, effective as of January 1, 2004, from 550,000 to 750,000 shares; and (iii) to permit us to assume existing options, stock bonuses and restricted stock awards that were granted or issued by another corporation and assumed by us in connection with a merger, consolidation or other corporate reorganization in which we are a party. Each year, the number of shares reserved for issuance under the 2000 Plan is automatically increased by the lesser of (i) 5 percent of the total number of shares of our common stock then outstanding, (ii) 750,000 shares, or (iii) a number to be determined by our Board of Directors. On January 1, 2009, the number of shares reserved for issuance under the 2000 Plan was automatically increased by 750,000 shares, to an aggregate of 12,550,000 shares.

The options granted under the 2000 Plan may be either incentive stock options or nonqualified stock options. Options granted under the 2000 Plan expire no later than 10 years from the date of grant. The option price must be at least 100 percent of the fair value on the date of grant for incentive stock options, and no less than 85 percent of the fair value for nonqualified stock options. The options generally become exercisable in increments over a period of four years from the date of grant, with the first increment vesting after one year. Options may be granted with different vesting terms from time to time.

The 2002 Broad Based Equity Incentive Plan (the “2002 Plan”) provides for the award of options, stock bonuses, and rights to acquire restricted stock. The stock options granted under the Plan are nonqualified options and expire no later than 10 years from the date of the grant. The exercise price for each option must not be less than 85 percent of the fair market value of the common stock on the date of the grant. Employees, officers, members of our Board of Directors and consultants are eligible to receive awards under the 2002 Plan. No more than 49 percent of the number of shares underlying options granted under the Plan may be awarded to directors and senior officers of Dendreon. A total of 1,500,000 shares of common stock were authorized and reserved for issuance under the 2002 Plan. The Compensation Committee of the Board of Directors will determine the terms of each option, including the number of shares, the option price, the term of the option, the vesting period, and the purchase price.

F-21

DENDREON CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Stock Options and Employee Stock Purchases

The fair value for stock awards was estimated at the date of grant using the BSM option valuation model with the following weighted average assumptions for the years ended December 31, 2008, 2007 and 2006:

	Employee Stock Options			Employee Stock Purchase Plan
	2008	2007	2006	2008	2007	2006
Weighted average estimated fair value	$4.34	$3.40	$3.16	$1.36	$2.03	$1.86
Weighted Average Assumptions
Dividend yield(A)	0.0%	0.0%	0.0%	0.0%	0.0%	0.0%
Expected volatility(B)	91%	87%	81%	58%	124%	46%
Risk-free interest rate(C)	2.46%	3.8%	4.6%	1.49%	4.3%	4.7%
Expected life(D)	4.5 years	4.8 years	4.6 years	0.5 years	0.5 years	0.5 years

(A)	We have not paid dividends in the past and do not plan to pay dividends in the near future.
(B)	The expected stock price volatility is based on the historical volatility of our stock.
(C)	The risk-free interest rate is based on the implied yield available on U.S. Treasury zero-coupon issues with a term equal to the expected life of the award on the date of grant.
(D)	The expected life of the options represents the estimated period of time until exercise and is based on historical experience of similar awards, giving consideration to the contractual terms, vesting schedules and expectations of future employee behavior. The expected life of awards under the employee stock purchase plan represents the purchase period under the plan.

The following table summarizes our stock option activity during the years ended December 31, 2008, 2007 and 2006:

	2008					2007					2006
				Weighted					Weighted					Weighted
	Shares			Average		Shares			Average		Shares			Average
	Under			Exercise		Under			Exercise		Under			Exercise
	Option			Price		Option			Price		Option			Price
Outstanding at January 1		5,223,439		$	7.10		5,664,958		$	7.48		5,823,025		$	8.37
Granted		376,564			6.39		1,176,562			4.94		1,550,793			4.88
Exercised		(131,133	)		4.37		(1,033,441	)		6.51		(90,392	)		2.41
Forfeited or expired		(591,602	)		8.14		(584,640	)		7.43		(1,618,468	)		8.48
Outstanding at December 31		4,877,268			6.99		5,223,439			7.10		5,664,958			7.48
Options exercisable at December 31		3,617,543			7.58		3,608,654			8.05		4,205,662			8.31
Options available for future grant		703,297					138,267					884,366

The total intrinsic value of options exercised during the years ended December 31, 2008, 2007, and 2006 was $229,000, $8.5 million and $250,000, respectively. The total fair value of the options vested during 2008 was $2.6 million.

F-22

DENDREON CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The following table summarizes our options outstanding and our options exercisable as of December 31, 2008:

	Options Outstanding						Options Exercisable
			Weighted-Average		Weighted-				Weighted-
	Number		Remaining		Average		Number		Average
	Outstanding As of		Contractual Life		Exercise		Exercisable as of		Exercise
Exercise Prices	December 31, 2008		(In Years)		Price		December 31, 2008		Price
$ 0.91 - $ 4.90		1,745,238		7.83	$	4.51		975,010	$	4.35
$ 4.95 - $ 5.99		1,012,437		5.44		5.47		856,339		5.46
$ 6.00 - $ 9.21		985,035		6.10		7.01		658,007		7.31
$ 9.25 - $14.25		981,921		4.46		11.33		981,921		11.33
$14.28 - $36.74		152,637		2.95		17.51		146,266		17.51
$ 0.91 - $36.74		4,877,268		6.15	$	6.99		3,617,543	$	7.58

The aggregate intrinsic value of options outstanding and exercisable as of December 31, 2008 was $397,000 and $342,000, respectively. The weighted-average remaining contractual term for options exercisable was 5.4 years as of December 31, 2008.

As of December 31, 2008, we had approximately $1.9 million of unrecognized compensation expense related to our unvested share options. We expect to recognize this compensation expense over a weighted average period of approximately one year.

Restricted Stock Awards

Restricted stock awards granted generally vest over a four-year period; however, in 2006 we granted restricted stock awards with performance conditions to executive employees and restricted stock awards with time-vesting and performance conditions to non-executive employees. On January 12, 2007, vesting for 40 percent of these shares accelerated upon acceptance of our BLA by the FDA. The balance will vest for non-executive employees upon the earlier of the dates that the requisite service periods are rendered or the approval of Provenge for commercialization by the FDA. The balance of the award for executive employees will vest upon the approval of Provenge for commercialization by the FDA. On June 20, 2007, we granted restricted stock awards with performance conditions to executive employees and restricted stock awards with time-vesting and performance conditions to non-executive employees. Awards granted to executive employees will vest 100% upon the approval of Provenge for commercialization by the FDA. Awards granted to non-executive employees vested 50% in June 2008 and the balance will vest upon the approval of Provenge for commercialization by the FDA. Each of these awards requires the relevant executive or non-executive employee to be employed by us on the date of achievement of the performance condition in order for the shares to vest. In accordance with SFAS 123R, we have considered the probability of achieving each acceleration provision, recorded compensation expense based upon our assessment of these performance contingencies and have unrecognized compensation costs of approximately $4.5 million relating to these performance conditions.

F-23

DENDREON CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The following table summarizes our restricted stock award activity during the years ended December 31, 2008, 2007, and 2006:

	2008					2007					2006
				Weighted					Weighted					Weighted
				Average					Average					Average
	Stock			Grant Date		Stock			Grant Date		Stock			Grant Date
	Awards			Fair Value		Awards			Fair Value		Awards			Fair Value
Outstanding at beginning of year		1,449,687		$	5.96		1,106,160		$	4.45		20,143		$	4.58
Granted		554,138			6.33		1,017,004			6.68		1,159,181			4.44
Vested		(386,759	)		5.68		(560,650	)		4.45		(25,995	)		2.44
Forfeited or expired		(154,130	)		7.06		(112,827	)		4.14		(47,169	)		5.00
Outstanding at end of year		1,462,936		$	6.13		1,449,687		$	5.96		1,106,160		$	4.45

As of December 31, 2008 we had approximately $6.2 million in total unrecognized compensation expense related to our restricted stock awards, which includes $1.7 million of compensation costs to be recognized over a weighted average period of approximately one year and $4.5 million that is subject to the achievement of certain performance conditions.

As of December 31, 2008, equity based awards (including stock option and stock awards) available for future issuances are as follows:

	Awards
	Available
	for Grant
Balance, January 1, 2006		1,178,703
Granted		(2,709,974	)
Forfeited or expired		1,665,637
Additional shares reserved		750,000
Balance, December 31, 2006		884,366
Granted		(2,193,566	)
Forfeited or expired		697,467
Additional shares reserved		750,000
Balance at December 31, 2007		138,267
Granted		(930,702	)
Forfeited or expired		745,732
Additional shares reserved		750,000
Balance at December 31, 2008		703,297

F-24

DENDREON CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Common Stock Reserved

As of December 31, 2008, shares of our common stock were reserved for issuance as follows:

Convertible senior subordinated notes	8,291,790
Warrants	8,000,000
Outstanding common stock options	4,877,268
Employee stock purchase plan	1,770,223
Common stock awards	1,462,936
Available for future grant under equity plans	703,297
	25,105,514

11.   INCOME TAXES

As of December 31, 2008, we had federal and state net operating loss carryforwards (“NOLs”) of approximately $529 million and $76 million, respectively. We also had federal and state research and development credit carryforwards (“R&D Credits”) of approximately $15.0 million and $1.7 million, respectively. The NOLs and R&D Credits will expire at various dates, beginning in 2009 through 2028, if not utilized.

At December 31, 2007, we adjusted our federal and state NOLs by $131 million and $67 million, respectively and our federal and state R&D Credits by $6.9 million and $3.8 million, respectively. These adjustments were associated with annual limitations due to ownership changes, as provided by Sections 382 and 383 of the Internal Revenue Code of 1986, as amended. Utilization of the remaining NOLs and R&D Credits may be subject to annual limitations due to the ownership change limitations provided by the Internal Revenue Code of 1986. The annual limitations may result in the expiration of NOLs and R&D Credits before utilization.

As a result of the adoption of FIN 48, we decreased our R&D Credits by approximately $700,000 as of December 31, 2007. We did not have any unrecognized tax benefits that would impact our effective tax rate and there was no material effect on our financial condition or results of operations as a result of implementing FIN 48. We do not expect any material changes over the next twelve months.

We are subject to U.S. federal and state income tax examinations for years after 2003 and 2002, respectively. However, carryforward attributes that were generated prior to 2002 may still be adjusted by a taxing authority upon examination if the attributes have been or will be used in a future period.

We recognize interest and penalties accrued on any unrecognized tax benefits as a component of income tax expense. During the year ended December 31, 2008, we did not have any accrued interest or penalties associated with any unrecognized tax benefits.

F-25

DENDREON CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of our deferred tax assets were as follows:

	December 31,
	2008			2007
	(In thousands)
Deferred tax assets:
Net operating loss carryforwards	$	186,754		$	164,344
Research credits		16,716			15,029
Stock-based compensation		2,322			1,775
Capitalized research and development		—			321
Other		5,648			3,814
Total deferred tax assets		211,440			185,283
Valuation allowance		(211,440	)		(185,283	)
Net deferred tax assets and liabilities	$	—		$	—

The net deferred tax asset has been fully offset by a valuation allowance. The valuation allowance increased by $26.0 million, decreased by $24.1 million and increased by $30.5 million during the years ended December 31, 2008, 2007 and 2006, respectively.

12.   NET LOSS PER SHARE

The computation of basic and diluted net loss per share is based on the weighted average number of shares of common stock outstanding during the year, and excludes all outstanding stock options, warrants and unvested restricted stock, as well as shares issuable in connection with the conversion of the Notes and the Common Stock Purchase Agreement, from the calculation of diluted net loss per share, as such securities are anti-dilutive for all periods presented. Shares excluded from the computations of diluted net loss per common share were 35,625,600, 31,569,782 and 6,790,806 for December 31, 2008, 2007 and 2006, respectively.

The following table presents the calculation of basic and diluted net loss per share:

	For the Year Ended December 31,
	2008			2007			2006
	(In thousands, except per share amounts)
Net loss	$	(71,644	)	$	(99,264	)	$	(91,642	)
Weighted average shares used in computation of basic and diluted net loss per share		90,357			82,531			72,366
Basic and diluted net loss per share	$	(0.79	)	$	(1.20	)	$	(1.27	)

13.   COMMITMENTS AND CONTINGENCIES

On December 22, 2005, we entered into a supply agreement with Diosynth RTP, Inc. (“Diosynth”) covering the commercial production of the antigen used in connection with Provenge. Production was commenced on our first binding order for commercial scale quantities of the antigen in January 2007 and the final delivery and payment therefore occurred in July 2008. We have no remaining obligation as of December 31, 2008. 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

F-26

DENDREON CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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.

The majority of our operating lease payments relate to our two leases in Seattle, Washington, which collectively cover our principal corporate offices in Seattle, and the Lease in Morris Plains, New Jersey. The two leases in Seattle began in 1998 and 2004 and expire in 2011; the Lease on the Facility began in 2005 and the initial term expires in 2012.

In August 2005, we leased the Facility and, in accordance with EITF 97-10, we are deemed the owner of the Facility during the construction period; therefore, we capitalized approximately $8.6 million, which represented the estimated fair value of the building, and recorded a lease obligation of approximately $8.6 million as the Facility Lease Obligation. Accordingly, the lease payments are allocated to the building and land based on their estimated relative fair values. The portion of the lease related to land is treated as an operating lease. The payment schedule below reflects the initial 7 year term of the Lease and a 10 year renewal period. See Notes 5 and 7 for a further description of the Lease.

Future minimum lease payments under noncancelable operating leases at December 31, 2008, were as follows:

	Operating
	Leases
	(In thousands)
Year ending December 31:
2009	$	3,618
2010		3,180
2011		3,252
2012		216
2013		220
Thereafter		2,129
Total minimum lease payments	$	12,615

Rent expense for the years ended December 31, 2008, 2007 and 2006 was $4.4 million, $4.7 million and $5.0 million, respectively, which is net of sublease rental income of zero, zero and $282,000, respectively.

Four proposed securities class action suits were filed in the United States District Court for the Western District of Washington. Three of these suits named Dendreon and our chief executive officer as defendants and alleged a proposed class period of March 30, 2007 through May 8, 2007. One suit named Dendreon, four of our executive officers, and two members of our Board of Directors and alleged a proposed class period of March 1, 2007 through May 8, 2007. All four proposed class action suits purported to state claims for securities law violations stemming from our disclosures related to Provenge and the FDA’s actions regarding our pending BLA for Provenge. The complaints sought compensatory damages, attorney’s fees and expenses. On October 4, 2007, the Court consolidated these actions under the caption McGuire v. Dendreon Corporation, et al., and designated a lead plaintiff. Plaintiffs designated the complaint filed June 6, 2007 in McGuire, et al. v. Dendreon Corporation, et al., as the operative complaint. On December 21, 2007, the Company and individual defendants jointly filed a motion to dismiss the complaint. Plaintiffs filed an opposition thereto. The Court held a hearing on the motion to dismiss on March 27, 2008. By order dated April 18, 2008, the Court granted the motion to dismiss the complaint, holding that plaintiffs failed to plead a claim against the Company or the individual defendants, and allowing plaintiffs thirty days to file an amended complaint. Plaintiffs filed an amended complaint on June 2, 2008, naming Dendreon, our chief executive officer, and a senior vice president as defendants. Defendants filed a motion to dismiss the amended complaint on July 2, 2008, and plaintiffs filed their opposition to the motion to dismiss on July 31, 2008. Defendants’ reply brief was filed August 20, 2008, and oral argument was held on November 25, 2008. By order dated December 5, 2008, the Court granted the motion to dismiss the allegations against our chief executive officer

F-27

DENDREON CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

based on allegedly false or misleading statements and his sale of Dendreon stock, and denied the remainder of the motion. The Court allowed plaintiffs thirty days to file an amended complaint to reassert their allegations against our chief executive officer, and plaintiffs filed a second amended complaint on January 5, 2009. Defendants filed a motion to dismiss the second amended complaint on January 29, 2009, and plaintiffs filed their opposition to the motion to dismiss on February 13, 2009. Oral argument has not been requested. No trial date has been set and discovery has not commenced.

On or around July 2, 2007 and July 26, 2007, Dendreon’s Board of Directors received letters from counsel for two Dendreon stockholders claiming damage to the Company from alleged wrongful disclosure and insider trading and demanding that the Board investigate and take legal action against certain Dendreon officers and directors. The wrongful disclosure allegations relate to the Company’s BLA filed with the FDA for Provenge. These potential claims are not against the Company. A committee of the Company’s Board of Directors which has responsibility to consider an appropriate response to the letters has advised counsel for the two stockholders that it will consider an appropriate response after it is determined whether the Court in Loh v. Gold will require that the plaintiff stockholder in that action must make a demand on the Board before proceeding with the derivative lawsuit.

On July 31, 2007, a stockholder derivative action was filed in the Superior Court for King County, Washington, allegedly on behalf of and for the benefit of the Company, against all of the members of our Board of Directors, alleging, among other claims, breach of fiduciary duty, gross mismanagement, waste of corporate assets, and unjust enrichment. The case is captioned Loh v. Gold, et al. The complaint is derivative in nature and does not seek monetary damages from the Company. However, the Company may be required, throughout the pendency of the action, to advance payment of legal fees and costs incurred by the defendants. On November 6, 2007, the Company and the individual defendant directors each filed a motion to dismiss the complaint. Rather than file an opposition to the motions to dismiss, the plaintiff opted to file an amended complaint on December 5, 2007. On January 29, 2008, the Company and the individual defendant directors each filed a motion to dismiss the amended complaint. The plaintiff filed a consolidated opposition to both motions to dismiss, and the Company and the individual defendants have filed replies to plaintiff’s opposition. By Order dated February 18, 2009 the Court granted a stipulated motion from all parties requesting that oral argument be postponed until after the resolution of the motion to dismiss the second amended complaint in the federal class action, McGuire v. Dendreon Corporation.

Management currently believes that resolving these matters, individually or in aggregate, will not have a material adverse effect on our financial position, our results of operations, or our cash flows. However, these matters are subject to inherent uncertainties and the actual cost, as well as the distraction from the conduct of our business, will depend upon many unknown factors and management’s view of these may change in the future. Thus, these matters could result in a material adverse effect on our business, financial condition and results of operations.

14.   EMPLOYEE BENEFIT PLAN

We have a 401(k) plan for our employees who meet eligibility requirements. Eligible employees may contribute up to 60 percent of their eligible compensation, subject to Internal Revenue Service limitations.

Our contributions to the plans are discretionary as determined by the Board of Directors. Effective January 1, 2001, we implemented a matching program to match employee contributions fifty cents for each dollar, up to a maximum of $2,000 per employee per year. Employer contributions in 2008, 2007 and 2006 were $311,000, $361,000 and $371,000, respectively. Effective January 1, 2009, the maximum match of employee contributions was increased to $4,000.

15.   RESTRUCTURING

On May 8, 2007, we received a Complete Response Letter from the FDA regarding our BLA. In its letter, the FDA requested additional clinical data in support of the efficacy claim contained in the BLA, as well as additional information with respect to the CMC section of the BLA. As a result, our Board of Directors, on May 16, 2007,

F-28

DENDREON CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

approved the reduction of personnel who were focused on the near term commercialization activities of Provenge. As a result of the realignment, we reduced our workforce by approximately 18%, or 40 positions. We incurred a total of $1.9 million in restructuring charges for employee severance, outplacement costs, contract termination costs and non-cash compensation due to the accelerated vesting of options and restricted stock awards of certain employees. Of the total $1.9 million in restructuring charges, approximately $1.5 million was included in research and development expenses and approximately $409,000 was included in general and administrative expenses. In September 2007, we incurred additional restructuring costs of approximately $442,000, $133,000 of which was recognized on the date the restructuring was communicated, and $309,000 of which was based on continuing service by employees and was recognized in the fourth quarter of 2007. Substantially all costs related to the September 2007 restructuring were recognized as research and development expenses.

									Balance								Balance
	Accrued in		Paid in						As of		Paid in						As of
Restructuring Charges	2007		2007			Adjustments			12/31//07		2008			Adjustments			12/31//08
	(In thousands)
Severance and outplacement costs	$	1,871	$	(1,508	)	$	(29	)	$	334	$	(295	)	$	(39	)	$	—
Contract termination costs		300		(300	)		—			—		—			—			—
Stock compensation expense		199		(199	)		—			—		—			—			—
Total	$	2,370	$	(2,007	)	$	(29	)	$	334	$	(295	)	$	(39	)	$	—

16.   SUBSEQUENT EVENTS

In February 2009, we amended the term of the Common Stock Purchase Agreement with Azimuth from 18 to 36 months (for a further description, see Note 9).

17.   QUARTERLY INFORMATION (UNAUDITED)

The following table summarizes the unaudited statement of operations for each quarter of 2008 and 2007:

	March 31			June 30			September 30			December 31
	(In thousands, except per share amounts)
2008
Revenue	$	31		$	26		$	26		$	28
Total operating expenses		19,153			18,613			17,285			15,538
Loss from operations		(19,122	)		(18,587	)		(17,259	)		(15,510	)
Net loss(a)		(19,516	)		(16,514	)		(26,777	)		(8,837	)
Basic and diluted net loss per share		(0.23	)		(0.18	)		(0.29	)		(0.09	)

	March 31			June 30			September 30			December 31
	(In thousands, except per share amounts)
2007
Revenue	$	80		$	523		$	112		$	28
Total operating expenses(b)		32,037			23,387			19,813			27,125
Loss from operations		(31,957	)		(22,864	)		(19,701	)		(27,097	)
Net loss		(30,858	)		(22,225	)		(19,230	)		(26,951	)
Basic and diluted net loss per share		(0.38	)		(0.27	)		(0.23	)		(0.32	)

(a)	Net loss during the quarters ended June 30, 2008 and September 30, 2008 includes loss from warrant valuation of $12.2 million and $9.1 million, respectively. Net loss during the quarter ended December 31, 2008 includes gain from warrant valuation of $7.1 million.
(b)	Total operating expenses during the quarter ended March 31, 2007 includes contract manufacturing costs of $8.1 million to support commercial level production runs of the antigen used in Provenge. Total operating expenses during the quarter ended December 31, 2007 includes an increase of $7.8 million in contract manufacturing costs from the prior quarter.

F-29

EX-10.6

Exhibit 10.6

DENDREON CORPORATION
AMENDED AND RESTATED
2000 EMPLOYEE STOCK PURCHASE PLAN
2009 OFFERING

Adopted By the Board of Directors
December 3, 2008

Section 1 Introduction

At a meeting on December 2, 2008, the Compensation Committee of the Board of Directors of Dendreon Corporation approved this Offering to Eligible Employees of Rights to purchase Company Shares pursuant to the Dendreon Corporation Amended and Restated 2000 Employee Stock Purchase Plan and recommended adoption of the Offering by the Board of Directors of Dendreon Corporation. The Board of Directors of Dendreon Corporation adopted this Offering at a meeting on December 3, 2008.

The terms of the Offering are set forth below. Each capitalized word used in this Offering is intended to have the same meaning as the term is defined in the Plan.

All Offerings are subject to the provisions of the Plan, including any Plan amendments and the Committee’s interpretations of the Plan provisions. If any term(s) of the Offering conflict with the provisions of the Plan or the Committee’s interpretations, the Plan provisions control.

Section 2 Eligible Employees

All Employees of the Company and its Affiliates who satisfy the following requirements are “Eligible Employees”:

     (a) An Employee must be employed (within the meaning of Code Section 3401(c)) by the Company or an Affiliate on the Offering Date;

     (b) The Employee’s customary employment is more than twenty (20) hours per week;

     (c) The Employee’s customary employment is more than five (5) months per calendar year; and

     (d) The Employee does not own stock (including Rights and unexercised stock options) possessing five percent (5%) or more of the total combined voting power or value of all classes of stock of the Company, as described in subparagraph 6(c) of the Plan.

Section 3 Offering and Offering Date

     (a) Offering Date

     (i) Effective for each Offering beginning on or after January 1, 2009, unless sooner terminated in accordance with Section 3(b), such Offerings will end on the day prior to the second anniversary after the Offering Date of the Offering, and a new

1

Offering will begin the next day, unless the Board discontinues future Offerings or amends an Offering pursuant to Section 8.

     (ii) The Offering Date of Rights granted under Section 5 to an Eligible Employee who was not an Eligible Employee on the Offering Date or to an Eligible Employee who was an Eligible Employee on the Offering Date but failed to enroll in the Plan on or before the Offering Date, is determined pursuant to Section 5.

     (b) Early Termination of Offering

          Notwithstanding Section 3(a), if the Fair Market Value of the Shares on the day after any Purchase Date during an Offering is less than the Fair Market Value on the Offering Date, then the Offering will terminate, and the day after the Purchase Date will be the Offering Date of a new Offering. The new Offering will end on the day prior to the second anniversary after the Offering Date. Notwithstanding the foregoing, if the Fair Market Value of the Shares on the day after any Purchase Date during an Offering is less than the Fair Market Value on the Offering Date for Special Enrollment Rights provided under Section 5 but not less than the Fair Market Value of the Shares on the Offering Date provided in Section 3(a)(i), then the Offering will not terminate.

Section 4 Participation

     (a) Enrollment

     An Eligible Employee may elect to begin participating in an Offering by submitting an authorization of payroll deductions. The election must specify deductions of a whole percentage, between one percent (1%) and fifteen percent (15%), of the Eligible Employee’s Earnings. Except as provided in Section 5, an Eligible Employee must submit his or her initial payroll withholding election no later than the Offering Date of the Offering. Payroll deductions will begin on the Offering Date or as soon as administratively practicable after the Offering Date.

     (b) Increasing, Reducing, Discontinuing and Resuming Payroll Deductions

     (i) Increasing Deduction Percentage

     After enrollment, an Eligible Employee may increase the percentage of his or her future Earnings that will be deducted to purchase Shares under an Offering. An election to increase the deduction percentage must specify a greater whole percentage, up to fifteen percent (15%), than the deduction percentage in effect before the election. An election to change the deduction percentage will be effective on the later of:

     (A) the next Offering Date or the day after the next Purchase Date, whichever is earlier, or

     (B) as soon as administratively practicable after the election is submitted.

     (ii) Reducing Deduction Percentage

     An Eligible Employee may elect to reduce the whole percentage (not below 1%) of his or her future Earnings that will be deducted to purchase Shares under an Offering. Only one election to reduce the deduction percentage will be effective each purchase period. An election to reduce the deduction percentage will be effective beginning as soon as administratively feasible after the election is submitted.

     (iii) Discontinuing Payroll Deductions

     (A) Election To Discontinue

     An Eligible Employee may elect to discontinue all future payroll deductions and elect either to withdraw his or her accumulated payroll deductions (reduced to the extent such deductions have been used to acquire Shares on prior Purchase Dates) or to purchase Shares on the next Purchase Date with the accumulated payroll deductions. Payroll deductions will cease as soon as administratively practicable after the election is submitted. If the Employee elects to withdraw his or her accumulated deductions, the accumulated payroll deductions (without any increase or decrease for interest, gains or losses) will be distributed to the Employee as soon as administratively practicable after the withdrawal election is submitted.

     (B) Resuming Payroll Deductions

     An Eligible Employee who discontinued payroll deductions during an Offering may resume payroll deductions by submitting an authorization of payroll deductions. The election must authorize deductions of a whole percentage, between one percent (1%) and fifteen percent (15%), of the Eligible Employee’s future Earnings. Payroll deductions will resume on the later of:

     (1) the day after the next Purchase Date after the election is submitted, or

     (2) as soon as administratively practicable after the election is submitted.

     (c) Election Procedures

     All elections must be in writing in the form required by the Committee and must be submitted to the Committee at the time and in the manner required by the Committee. Employee payments will be made only by payroll deduction in accordance with the Eligible Employee’s election; the Plan will not accept additional payments.

     (d) Automatic Renewal

     Elections are deemed to continue in effect throughout an Offering and during subsequent Offerings until changed by the Eligible Employee in accordance with Section 4(b).

     (e) Earnings

     “Earnings” means the total cash compensation paid to an Employee, including all salary, wages (including compensation elected to be deferred by the Employee under any plan maintained by the Company), overtime pay, commissions, bonuses, and other remuneration paid directly to the Employee, but excluding, the value or cost of employee benefits provided by the Company, education or tuition reimbursements, imputed income arising under any Company group insurance or benefit program, traveling expenses, business and moving expense reimbursements, income received in connection with stock options or stock grants, and contributions made by the Company under any employee benefit plan.

Section 5 Special Enrollment for New Hires and Late Enrollments

     An Eligible Employee who either (i) was not an Eligible Employee on an Offering Date or (ii) was an Eligible Employee on the Offering Date but who did not enroll in the Plan on or before the Offering Date, may elect to participate in the Offering that began on the Offering Date by submitting an authorization of payroll deductions in accordance with Section 4(a). Rights granted to Eligible Employees under this Section 5 (“Special Enrollment Rights”) have the same rights, privileges and terms as other Rights granted during the Offering, except that Special Enrollment Rights have a special Offering Date for purposes of determining the purchase price and commencement of payroll deductions. The Offering Date for new hire Rights granted under this Section 5 is the day after the next Purchase Date after the election is submitted.

Section 6 Purchase Dates and Purchase Price

     (a) Purchase Dates

     On each Purchase Date, each Participant’s accumulated payroll deductions (without any increase or decrease for interest, gains or losses) will be used to purchase whole Shares, up to the maximum number of Shares permitted by the Plan and Section 7 below. Effective for Offerings beginning on or after January 1, 2009, the Purchase Dates are each June 30 and December 31.

     (b) Purchase Price

     The purchase price of Shares is the lesser of (i) eighty-five percent (85%) of the Fair Market Value of the Shares on the Offering Date, or (ii) eighty-five percent (85%) of the Fair Market Value of the Shares on the Purchase Date.

Section 7 Purchase Limitations

     In no event will the following limitations be exceeded by any purchase under the Plan:

     (a) Purchase Date Share Limit

     On any Purchase Date during an Offering, an Employee may purchase in the aggregate no more than seven thousand (7,000) Shares.

     (b) $25,000 Calendar Year Limit

     (i) $25,000 Limit

     The value of Shares that an Eligible Employee may purchase during any calendar year generally cannot exceed twenty-five thousand dollars ($25,000). For purposes of the $25,000 limit in this Section 7(b), the value of Shares is the Fair Market Value determined on the Offering Date. The $25,000 limit may be increased during the second calendar year of an Offering by the excess of $25,000 over the value of Shares an Eligible Employee purchased in the Offering during the preceding calendar year. Any Shares purchased during the second calendar year of an Offering will be applied first to the unused portion of the $25,000 limit for the first calendar year of the Offering.

     (ii) Example

     Employee Smith first becomes a participant in the Plan on July 1, 2007 and receives a Special Enrollment Right for an Offering that begins on July 1, 2007 and ends on December 31, 2008. On July 1, 2007, the Fair Market Value of Shares is $10 per share. The maximum number of Shares that Employee Smith may purchase during 2007 is 2,500 Shares ($25,000 / $10 per share).

     On December 31, 2007, the first purchase date during Employee Smith’s purchased 1,500 Shares. The unused portion of Employee Smith’s $25,000 limit for 2007, or 1,000 Shares, is added to her $25,000 limit for 2008. On June 30, 2008, the next Purchase Date during the Offering, Employee Smith purchases 1,000 Shares. Employee Smith’s remaining $25,000 limit is 3,000 Shares (5,000 – 1,500 – 1,000 = 2,500). On December 31, 2008, Employee Smith purchases 1,500 Shares and 1,000 Shares remain unused from her 2008 limit for this Offering.

     January 1, 2009 is a new Offering Date, and a new Offering begins on January 1, 2009. The Fair Market Value of Shares on the new Offering Date is $25 per Share. The maximum number of Shares that Employee Smith may purchase during 2009 is 1,000 Shares (1,000 Shares x $25 = $25,000), because the 1,000 unused Shares from the first Offering do not carry forward to the second Offering.

     (c) Aggregate Limit

     The maximum aggregate number of Shares available to be purchased by all Eligible Employees during an Offering is the number of Shares remaining available under Section 4 of the Plan on the Offering Date. If the aggregate purchase of Shares under an Offering would exceed the maximum available under the Plan, the Board will make a pro rata allocation of the available Shares.

Section 8 Amendments

     (a) Prospective Amendments

     The Board may amend the terms of any Offering or discontinue future Offerings to the extent the Board deems necessary or advisable, as long as the amendment or discontinuance is

adopted before the Offering Date of the Offering to which it applies. An Offering cannot be amended after the Offering Date of the Offering.

     (b) Exception

     If the terms of an Offering (or the Rights granted pursuant to an Offering) would not meet the requirements of Code Section 423, the Board may modify the terms of an Offering to the extent necessary to bring the Offering into compliance with Code Section 423.

EX-10.15

Exhibit 10.15

SECOND AMENDMENT
TO
OFFICE LEASE AGREEMENT

     THIS SECOND AMENDMENT TO OFFICE LEASE (this “Amendment”) is made this 9th day of March, 2009, by and between SELIG HOLDINGS COMPANY, L.L.C., a Delaware limited liability company (“Lessor”) and DENDREON CORPORATION, a Delaware corporation (“Lessee”).

RECITALS:

     A. Lessor is the owner of that certain real property commonly known as 3101 Western Avenue in Seattle, Washington and legally described in Exhibit A (the “Property”).

     B. Lessor is the successor in interest to SELIG REAL ESTATE HOLDINGS XIV, L.L.C., a Washington limited liability company, the prior owner of the Property.

     C. Lessor and Lessee are parties to that certain Office Lease dated September 2, 2004 (the “2004 Lease”) for approximately: (i) 21,795 rentable square feet on the eighth floor of the Property; and (ii) 1,818 rentable square feet of the exercise facility on the upper parking level of the Property. The Lease was amended by that certain First Amendment to Office Lease dated March 8, 2005 (the “2005 Amendment”). The 2004 Lease and the 2005 Amendment are collectively referred to herein as the “Lease”.

     D. Under the terms of the Lease, Lessee’s current term expires on September 30, 2009 (the “Existing Expiration Date”). Lessee desires to extend the term of the Lease through December 31, 2011 (the “Amended Expiration Date”).

     E. Lessor and Lessee desire to amend the Lease in order to provide for the extension of the Lease term as described herein and to memorialize other changes they have agreed to by entering into this Amendment.

AGREEMENT:

     NOW, THEREFORE, in consideration of the above and the mutual promises contained in this Amendment, and other good and valuable consideration, the receipt and sufficiency of which are acknowledged, Lessor and Lessee agree as follows:

     1. Confirmation of Lease. Lessor and Lessee each agree and confirm that the Lease is in full force and effect and has not been previously modified and neither Lessor nor Lessee is aware of any failure of the other party to perform its obligations under the Lease that are accrued as of the date of this Amendment.

- 1 -

     2. Term. The term of the Lease is hereby extended for a period of twenty-seven (27) months beginning on the day after the Existing Expiration Date and ending on the Amended Expiration Date.

     3. Rent. During the period between the Existing Expiration Date and the Amended Expiration Date, Lessee covenants and agrees to pay to Lessor rent each month in advance on the first day of each calendar month. Except for Lessee’s share of increases in the costs of the Operating Services and the Real Estate Taxes (as described in the 2004 Lease), this lease is on a fully serviced basis and rent shall be computed at the annual base rental rate times the number of Rentable Square Feet as follows:

October 1, 2009 – September 30, 2010	$	30.50
October 1, 2010 – September 30, 2011	$	31.50
October 1, 2011 – December 31, 2011	$	32.50

     4. Lessee’s Security Deposit. Lessor shall continue to hold Lessee’s security deposit in conformance with the terms of the Lease.

     5. Agency/Commission. Lessor and Lessee recognize Jones Lang LaSalle (“JLL”) as the exclusive real estate agent representing Lessee in this transaction. Lessor shall pay JLL a market standard commission of $1.00 times the number of Rentable Square Feet leased each year by Lessee (the “Commission”). One-half of the Commission shall be due and payable at the time this Amendment is fully executed; the remaining one-half of the Commission shall be due and payable the first business day following the Existing Expiration Date.

     6. Offset Provision. If Lessor does not provide payment of any allowances, fees or commissions due under the Lease or the Amendment within thirty (30) days of such amount’s due date, Lessee shall have the right to offset rent due and receive interest on such offset funds at a rate of interest equal to the Prime Rate plus three percent (3%). The term “Prime Rate” means the prime rate reported in the Money Rates section of The Wall Street Journal.

     7. Cost of Parking. As stated within the Office Lease, Lessee has the right to utilize one (1) parking stall in the Property’s garage per each 1,000 square feet leased and one (1) parking stall outside of the Property per each 1,000 square feet leased. Currently, Lessee actually utilizes fifteen (15) unreserved stalls in the Property’s garage at a cost of $134.38 per stall per month. Lessee also utilizes nine (9) reserved stalls in the Property’s garage at a cost of $334.76. Further, Lessee utilizes two (2) unreserved stalls outside of the Property at a cost of $107.40. Effective October 1, 2009 Lessor shall charge Lessee the then current market rate for each stall rented. Thirty days prior to the October 1, 2009, Lessor shall notify Lessee as to the then current market rate for parking locations defined above. On October 1 and each anniversary thereafter the rate for such parking shall be adjusted to the lesser of market rate or an increase of five percent (5%) per year. Lessor shall not adjust the rate charged to Lessee for parking more than one (1) time during each calendar year.

- 2 -

     8. No Implied Modifications. Except as hereinabove set forth, all of the terms, covenants and conditions of the Lease shall continue in full force and effect.

     9. Entire Agreement. This Amendment constitutes the entire agreement of the parties hereto with respect to the matters described herein. None of the provisions in this Amendment may be modified or revised except by a subsequent amendment executed by the parties hereto.

     10. Execution in Counterparts. This Amendment may be executed in counterparts, both of which shall constitute but one and the same contract.

     IN WITNESS WHEREOF, the undersigned have executed this Amendment on the date and year first written above.

LESSOR:
SELIG HOLDINGS COMPANY, L.L.C, a Delaware limited liability company
By:	/s/ Peter Parker
	Martin Selig, a member and its manager
	as attorney in-fact
LESSEE:
DENDREON CORPORATION, a Delaware corporation
By:	/s/ Greg Schiffman
Name:	Greg Schiffman
Title:	CFO

- 3 -

EXHIBIT A

3101 WESTERN AVENUE — LEGAL DESCRIPTION

Lots 1, 2, 3 and the southwesterly half of Lot 4, Block 3 of William M. Bell’s 7^th addition to the City of Seattle, according to plat thereof, recorded in Volume 2 of Plats, page 82, records of King County, Washington, together with the northwesterly 66’ of block southerly of Bay Street siding westerly of Western Avenue and easterly of Elliott Avenue.

- 4 -

EX-12

Exhibit 12

Dendreon Corporation
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES

Ratio of Earnings to Fixed Charges (in thousands)	2008			2007			2006			2005			2004
Earnings
Loss before taxes		(71,644	)		(99,264	)		(91,642	)		(81,547	)		(76,802	)
Add: Fixed Charges		7,210			5,888			3,532			2,157			2,871
Less: Capitalized Interest		586			229			1,536			—			—
Total Earnings (as defined)		(65,020	)		(93,605	)		(89,646	)		(79,390	)		(73,931	)
Fixed Charges
Interest expense		4,685			3,828			252			346			255
Capitalized Interest		586			229			1,536			—			—
Amortization of debt issuance costs		471			278			84			5			—
Total Interest Expensed and Capitalized		5,742			4,335			1,872			351			255
One-third of rental expense, net of sublease income		1,468			1,553			1,660			1,806			2,616
Total Fixed Charges		7,210			5,888			3,532			2,157			2,871

EX-23.1

Exhibit 23.1

Consent of Independent Registered Public Accounting Firm

We consent to the incorporation by reference in the Registration Statements (Form S-3 Nos. 333-150062, 333-151573, 333-127521, 333-145311, and 333-141388) of Dendreon Corporation and in the related Prospectuses and to the incorporation by reference in the Registration Statements (Form S-8 Nos. 333-39634, 333-107551, 333-85032, and 333-143251) pertaining to the 2000 Equity Incentive Plan, as amended, the 2000 Employee Stock Purchase Plan, and the 2002 Broad Based Equity Incentive Plan of our reports dated March 11, 2008 with respect to the consolidated financial statements of Dendreon Corporation and the effectiveness of internal control over financial reporting of Dendreon Corporation included in the Annual Report (Form 10-K) for the year ended December 31, 2008.

/s/ ERNST & YOUNG LLP

Seattle, Washington
March 11, 2009

EX-31.1

Exhibit 31.1

PRINCIPAL EXECUTIVE OFFICER’S CERTIFICATIONS
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Mitchell H. Gold, M.D., certify that:

1. I have reviewed this annual report on Form 10-K of Dendreon Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s Board of Directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

/s/  Mitchell H. Gold, M.D.

Mitchell H. Gold, M.D.

President and Chief Executive Officer

Date: March 12, 2009

EX-31.2

Exhibit 31.2

PRINCIPAL FINANCIAL OFFICER’S CERTIFICATIONS
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Gregory T. Schiffman, certify that:

1. I have reviewed this annual report on Form 10-K of Dendreon Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s Board of Directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

/s/  Gregory T. Schiffman

Gregory T. Schiffman

Senior Vice President, Chief Financial Officer and Treasurer

Date: March 12, 2009

EX-32

Exhibit 32

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Dendreon Corporation (the “Company”) on Form 10-K for the fiscal year ended December 31, 2008, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), each of the undersigned officers of the Company certifies, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to such officer’s knowledge:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of the dates and for the periods expressed in the Report.

/s/  Mitchell H. Gold, M.D.

Name:           Mitchell H. Gold, M.D.
Title:     President and Chief Executive Officer

/s/  Gregory T. Schiffman

Name:            Gregory T. Schiffman.
Title:     Senior Vice President, Chief Financial
      Officer and Treasurer

Date: March 12, 2009