DEF 14A 1 v55393def14a.htm DEF 14A def14a
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant þ
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Check the appropriate box:
o     Preliminary Proxy Statement
o     Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
þ     Definitive Proxy Statement
o     Definitive Additional Materials
o     Soliciting Material Pursuant to Rule 14a-12
DENDREON CORPORATION
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
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o     Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
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DENDREON CORPORATION
3005 First Avenue
Seattle, Washington 98121
 
 
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
JUNE 2, 2010
 
 
 
The Annual Meeting of Stockholders (the “Annual Meeting”) of Dendreon Corporation, a Delaware corporation (the “Company”), will be held on Wednesday, June 2, 2010, at 9:00 a.m., Pacific time, at the Grand Hyatt San Francisco, 345 Stockton Street, San Francisco, California 94108, for the following purposes:
 
(1) To elect three directors to hold office until the 2013 Annual Meeting of Stockholders;
 
(2) To ratify the selection of Ernst & Young LLP as the Company’s independent registered public accounting firm for the current year; and
 
(3) To transact such other business as may properly come before the Annual Meeting or any adjournments or postponements thereof.
 
The Board of Directors has fixed the close of business on April 16, 2010 as the record date for the determination of stockholders entitled to notice of and to vote at the Annual Meeting and at any adjournments or postponements thereof.
 
All stockholders are cordially invited to attend the Annual Meeting in person. However, to assure your representation at the Annual Meeting, please vote as soon as possible using one of the following methods: (1) by using the Internet as instructed on the proxy card; (2) by telephone by calling the toll-free number as instructed on the proxy card; or (3) by mail by completing, signing, dating and returning the proxy card in accordance with its instructions. If you vote in advance of the Annual Meeting using the Internet, telephone or proxy card, you may still vote in person if you attend the Annual Meeting. Please note, however, that if your shares are held of record by a broker, bank or other nominee and you wish to vote at the Annual Meeting, you must obtain from the record holder a proxy issued in your name.
 
By Order of the Board of Directors,
 
-s- Richard F. Hamm, Jr.
 
Richard F. Hamm, Jr.
Senior Vice President,
Corporate Development, General
Counsel and Secretary
 
April 23, 2010


 

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DENDREON CORPORATION
3005 First Avenue
Seattle, Washington 98121
 
 
JUNE 2, 2010
 
INFORMATION CONCERNING SOLICITATION AND VOTING
 
General
 
Your proxy is solicited on behalf of the Board of Directors of Dendreon Corporation, a Delaware corporation (“Dendreon”, the “Company”, “we”, “us”, or “our”), for use at the Annual Meeting of Stockholders (the “Annual Meeting”), to be held on June 2, 2010, at 9:00 a.m., Pacific time, and at any adjournments or postponements thereof, for the purposes set forth herein and in the accompanying Notice of Annual Meeting. The Annual Meeting will be held at the Grand Hyatt San Francisco, 345 Stockton Street, San Francisco, California 94108.
 
Internet Availability of Proxy Materials
 
Our proxy materials related to the 2010 Annual Meeting of Stockholders are available on the Internet. The rules governing Internet availability of proxy materials allow companies to provide access to proxy materials in one of two ways. We have elected to utilize the “full set delivery” option for all registered holders and beneficial holders of 5,000 shares or more of our common stock. These holders will be mailed paper copies of all of our proxy materials, including a proxy card on or about April 23, 2010. Beneficial holders of less than 5,000 shares will be mailed a Notice of Internet Availability of Proxy Materials on or about April 23, 2010 from an agent on behalf of the holder’s bank, broker or other nominee, as applicable, including instructions on how to access the proxy materials and requests for voting instructions. This proxy statement and our Annual Report on Form 10-K for the fiscal year ended December 31, 2009 will be available on or about April 23, 2010 at http://bnymellon.mobular.net/bnymellon/dndn for stockholders of record who hold shares in their own name and for beneficial stockholders who hold their shares in a brokerage account or through a nominee holder. Our Annual Report on Form 10-K for the fiscal year ended December 31, 2009 includes financial statements and a financial statement schedule, but excludes exhibits, as filed with the Securities and Exchange Commission (the “SEC”). Our Annual Report, and the exhibits thereto, as well as our other filings with the SEC may be accessed, free of charge, at http://www.sec.gov, as soon as practicable after filing.
 
Voting Rights and Outstanding Shares
 
Only holders of record our Common Stock, par value $0.001 per share (“Common Stock”), at the close of business on April 16, 2010 (the “Record Date”) will be eligible to vote at the Annual Meeting. As of the Record Date, there were 134,245,072 shares of Common Stock outstanding. Each stockholder will be entitled to one vote for each share owned. Stockholders have no right to cumulative voting as to any matter to be voted on at the meeting. A list of stockholders of record will be open to the examination of any stockholder for any purpose germane to the meeting at Dendreon Corporation, 3005 First Avenue, Seattle, Washington 98121, for a period of ten days prior to the Annual Meeting.
 
Votes Required
 
A plurality of the votes duly cast at the Annual Meeting is required for the election of director nominees. The three director nominees receiving the highest number of votes cast by the holders of our Common Stock entitled to vote at the Annual Meeting will be elected.
 
The ratification of the appointment of Ernst & Young LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2010 requires the affirmative vote of a majority of votes cast by the holders of our Common Stock entitled to vote at the Annual Meeting.


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Solicitation
 
We will bear the cost of the solicitation of proxies for the Annual Meeting, including preparation of this proxy statement, the proxy card and any additional information furnished to stockholders, including any mailing charges. We will, upon request, furnish hard copies of the solicitation materials to record holders of our Common Stock as well as forward materials to beneficial holders upon instruction by banks, brokerage houses, fiduciaries and custodians who are record holders of our Common Stock. We may, on request, reimburse persons representing beneficial owners of our Common Stock for their costs of forwarding solicitation materials to beneficial owners. Proxies may be solicited by telephone, facsimile or personal solicitation. No additional compensation will be paid to our directors, officers or other employees for such services.
 
Quorum, Abstention and Broker Non-Votes
 
At the Annual Meeting, inspectors of election shall determine the presence of a quorum and shall tabulate the results of the vote of the stockholders. The holders of a majority of the total number of outstanding shares of Common Stock entitled to vote must be present in person or by proxy to constitute a quorum for any business to be transacted at the Annual Meeting. Properly executed proxies marked “abstain” and “broker non-votes” will be considered “present” for purposes of determining whether a quorum is present at the Annual Meeting. “Broker non-votes” occur when certain nominees holding shares for beneficial owners do not vote those shares on a particular proposal because the nominees do not have discretionary authority to do so and have not received voting instructions with respect to the proposal from the beneficial owners. For purposes of calculating votes in the election of directors, broker non-votes and abstentions will not be counted as votes and will not affect the results of the vote. Brokers have discretionary authority to vote on the ratification of our independent registered public accounting firm. If a broker submits a “non-vote” on this proposal, it will have the same effect as a vote against the ratification of our independent registered public accounting firm.
 
The shares represented by all valid proxies received will be voted in the manner specified on the proxies. Where specific instructions are not indicated on a valid proxy, the shares represented by such proxies received will be voted: “For” the election of the director nominees named in this proxy statement, and “For” the ratification of the selection of Ernst & Young LLP as our independent registered public accounting firm for the current year and in accordance with the best judgment of the persons named in the proxy for any other matter that properly comes before the Annual Meeting.
 
Methods of Voting; Changing Votes
 
Stockholders may vote shares of our Common Stock using any of the following means:
 
Voting by Proxy Cards.  A registered stockholder may vote shares until voting is completed at the Annual Meeting by returning a duly completed and executed proxy card to Dendreon Corporation, 3005 First Avenue, Seattle, Washington 98121, Attention: Corporate Secretary. All proxy cards received by us that have been properly signed and have not been revoked will be voted in accordance with the instructions contained in the proxy cards. If a signed proxy card is received which does not specify a vote or an abstention, the shares represented by that proxy card will be voted “For” the director nominees to our Board of Directors listed on the proxy card and “For” the ratification of the appointment of Ernst & Young LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2010.
 
Voting by Telephone or Internet.  A registered stockholder may vote shares until 11:59 p.m. Pacific Time on June 1, 2009 by calling the toll-free number indicated on the proxy card and following the recorded instructions or by accessing the website indicated on the proxy card and following the instructions provided. When a stockholder votes by telephone or Internet, his, her or its vote is recorded immediately.
 
Voting by Attending the Annual Meeting.  A stockholder may vote shares in person at the Annual Meeting. A stockholder planning to attend the Annual Meeting should bring proof of identification. Prior notice by contacting Investor Relations at (206) 829-1500 or IR@Dendreon.com is appreciated. If a stockholder attends the Annual Meeting, he, she or it may also submit his, her or its vote in person, and any previous votes that were submitted by the stockholder, whether by Internet, telephone or mail, will be superseded by the vote that such stockholder casts at the Annual Meeting. Further, if the shares are held of record by a broker, bank or other nominee and a stockholder wishes to vote at the Annual Meeting, he, she or it must obtain a proxy


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issued in his, her or its name from the record holder in accordance with the materials and instructions for voting provided by his, her or its broker, bank or other nominee.
 
Voting by “Street Name” Stockholders.  If stockholders hold shares in “street name,” which means shares are held in the name of a broker, bank or other nominee, then those stockholders may vote in accordance with the materials and instructions for voting the shares provided by their broker, bank or other nominee. If “street name” stockholders wish to vote shares at the Annual Meeting, then they must obtain proxies from their broker, bank or other nominee in order to vote their shares at the Annual Meeting in accordance with the materials and instructions for voting provided by his, her or its broker, bank or other nominee. If a “street name” stockholder does not vote by proxy or otherwise give voting instructions to their broker, bank or other nominee, such shares will not be voted by the broker, bank or other nominee for the election of directors at the Annual Meeting.
 
Changing Votes.  A stockholder may change his, her or its vote at any time before it is voted at the Annual Meeting by (1) delivering a proxy revocation or another duly executed proxy bearing a later date to Dendreon Corporation, 3005 First Avenue, Seattle, Washington 98121, Attention: Corporate Secretary; (2) voting again by telephone or Internet in the manner described above; or (3) attending the Annual Meeting and voting in person. Attendance at the Annual Meeting will not revoke a proxy unless the stockholder actually votes in person at the meeting. “Street name” stockholders who want to revoke or change their votes after returning voting instructions to their broker, bank or other nominee may do so in accordance with the materials and instructions provided by their broker, bank or other nominee or by contacting such broker, bank or other nominee to effect the revocation or change of vote.
 
Counting of Votes
 
Representatives of BNY Mellon Shareowner Services LLC, the transfer agent and registrar for our Common Stock, will count the votes and act as the independent inspector of the election at the Annual Meeting.
 
Stockholder Proposals
 
Each stockholder’s notice must contain certain prescribed information required by our Amended and Restated Bylaws as to each matter the stockholder proposes to bring before the annual meeting, as well as a representation whether the stockholder intends to deliver a proxy statement and/or form of proxy to holders of at least the percentage of our outstanding capital stock required to approve the nomination or proposal and/or otherwise to solicit proxies from stockholders in support of the nomination or proposal. The full text of the provisions of our Bylaws dealing with stockholder nominations and proposals is available on the SEC’s website, free of charge, at http://www.sec.gov. In addition, a copy of the full text of our Bylaws may be obtained from our Corporate Secretary upon written request.
 
Under the SEC’s rules, stockholders who wish to submit proposals for inclusion in the proxy statement of our Board of Directors for the 2011 Annual Meeting of Stockholders must submit such proposals so that they are received by us at 3005 First Avenue, Seattle, Washington 98121, on or before December 24, 2010. Stockholders who do not wish to use the mechanism provided by the rules of the SEC in proposing a matter for action at the next annual meeting must notify us in writing of the proposal and the information required by the provisions of our Amended and Restated Bylaws dealing with advance notice of stockholder proposals and director nominations. Pursuant to the advance notice provision of our Bylaws, the notice must be submitted in writing to us not less than 90 days nor more than 120 days before the first anniversary of the previous year’s annual meeting. Accordingly, any stockholder proposal for next year’s meeting submitted to us on or between February 2, 2011 and March 4, 2011 will be considered filed on a timely basis.
 
PROPOSAL 1
 
ELECTION OF DIRECTORS
 
Our Board of Directors is currently composed of nine members. There are three directors in the class whose term of office expires at the close of the Annual Meeting in 2010: Gerardo Canet, Bogdan Dziurzynski, and Douglas G. Watson. Each of the nominees for election to this class is currently a director of our Company who was previously elected by the stockholders and has been nominated for re-election upon recommendation of our


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Corporate Governance Committee and our Board of Directors. If elected at the Annual Meeting, Mr. Canet, Dr. Dziurzynski, and Mr. Watson would serve until the 2013 Annual Meeting and until his successor is elected and has been duly qualified, or until such director’s earlier death, resignation or removal.
 
Directors are elected by a plurality of the votes cast, present in person or represented by proxy and entitled to vote at the Annual Meeting. Proxies will be voted, unless authority is withheld, for the election of the three nominees named below. In the event that any nominee should become unavailable for election as a result of an unexpected occurrence, such shares will be voted for the election of such substitute nominee as the Board of Directors may propose. Each person nominated for election has agreed to serve if elected, and management has no reason to believe that any nominee will be unable to serve.
 
Set forth below is biographical information for each person nominated for election at the Annual Meeting for a term expiring at the 2013 Annual Meeting and each person whose term of office as a director will continue after the Annual Meeting.
 
Nominees for Election for a Three-Year Term Expiring at the 2013 Annual Meeting
 
Gerardo Canet, age 64, has served as one of our directors since December 1996. Mr. Canet is Chairman of the Board of Directors of IntegraMed America, Inc., and from 1994 to 2005, served as its Chief Executive Officer. IntegraMed provides services to patients and medical practices that specialize in the diagnosis and treatment of infertility. Mr. Canet’s extensive experience in senior management and board service in the healthcare services industry gives him the appropriate and desired qualifications to serve as a member of our Board. Mr. Canet received a B.A. in Economics from Tufts University and an M.B.A. from Suffolk University.
 
Bogdan Dziurzynski, D.P.A., age 61, has served as one of our directors since May 2001. Since 2001, Dr. Dziurzynski has been a consultant in strategic regulatory management to the biotechnology industry and serves on the Board of Directors of Allostera Pharma Inc. and the Biologics Consulting Group, Inc. Dr. Dziurzynski is a fellow and past chairman of the board of the Regulatory Affairs Professional Society. He also serves as an advisory board member of Integrated Biotherapeutics, Inc. From 1994 to 2001, Dr. Dziurzynski was the Senior Vice President of Regulatory Affairs and Quality Assurance for MedImmune, Inc., a biotechnology company. From 1988 to 1994, Dr. Dziurzynski was Vice President of Regulatory Affairs and Quality Assurance for Immunex Corporation, a biotechnology company. Dr. Dziurzynski’s background and experience in biotechnology regulatory matters including the drug and device products approval process, product lifecycle management, product development and manufacturing, and all aspects of commercial product marketing, as well as his extensive period of board service and management roles within the industry give him the appropriate and pertinent qualifications to serve as a member of our Board. Dr. Dziurzynski has a B.A. in Psychology from Rutgers University, an M.B.A. from Seattle University and a Doctorate in Public Administration from the University of Southern California.
 
Douglas G. Watson, age 65, has served as one of our directors since February 2000. Mr. Watson is Chief Executive Officer of Pittencrieff Glen Associates, a consulting firm that he founded in July 1999. From January 1997 to May 1999, Mr. Watson served as President and Chief Executive Officer of Novartis Corporation, the U.S. subsidiary of Novartis AG. From April 1996 to December 1996, Mr. Watson served as President and Chief Executive Officer of Ciba-Geigy Corporation, which merged into Novartis Corporation in December 1996. Mr. Watson’s career spanned 33 years with Novartis, having joined Geigy (UK) Ltd. in 1966. Mr. Watson also currently serves as chairman of OraSure Technologies, Inc., a medical diagnostics company, chairman of Javelin Pharmaceuticals, Inc., a pharmaceutical company, and as a director of Genta Incorporated, a biopharmaceutical company, and BioMimetic Therapeutics, Inc., a pharmaceutical company. Mr. Watson previously served on the Board of Directors of Engelhard Corporation, a surface and materials science company, from 1991 to 2006, BioElectronics Inc., a pulsed electromagnetic field therapy company, from 2002 to 2006, and InforMedix Inc., a medical compliance monitors company, from 2002 to 2006. Mr. Watson’s long-time and diverse experience in executive roles in the pharmaceutical industry, and board service in the biopharmaceuticals industry, together with his accounting background and financial expertise, give him the appropriate and valuable qualifications to serve as a member of our Board. Mr. Watson received an M.A. in Pure Mathematics from Churchill College, Cambridge University and holds an ACMA qualification as an Associate of the Chartered Institute of Management Accountants.


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THE BOARD OF DIRECTORS RECOMMENDS
A VOTE FOR THE ELECTION OF EACH NAMED NOMINEE.
 
Directors Continuing in Office until the 2011 Annual Meeting
 
Richard B. Brewer, age 59, has served as our Chairman of the Board of Directors since June 2004 and has served as one of our directors since February 2004. He is the founding partner of Crest Asset Management, a management advisory and investment firm, a position he has held since January 2003. Since 2009, Mr. Brewer has served as the Chairman of the Board of Directors of Arca Biopharma, Inc., a biopharmaceutical company focused on genetically-targeted therapies for heart failure, and served as its President and CEO from 2006 to 2009. From September 1998 until February 2004, Mr. Brewer served as Chief Executive Officer and President of Scios Inc., a biopharmaceutical company. From 1996 until 1998, Mr. Brewer served as the Chief Operating Officer at Heartport, a cardiovascular device company. From 1984 until 1995, Mr. Brewer was employed by Genentech, Inc., a biotechnology company, and served as its Senior Vice President of Sales and Marketing, and Senior Vice President of Genentech Europe and Canada. Mr. Brewer’s extensive biotechnology industry experience, both as an outside advisor and in various operating and management roles, including as the chief executive officer of two biotechnology companies, as well as his background and experience in investment management and corporate finance both in the U.S. and the EU, give him the appropriate qualifications to serve as a member and chairman of our Board. Mr. Brewer serves as a director of SRI International, an independent, non-profit research group. He is an advisory board member at the Kellogg Graduate School of Management Center for Biotechnology at Northwestern University. Mr. Brewer holds a B.S. from Virginia Polytechnic Institute and an M.B.A. from Northwestern University.
 
Mitchell H. Gold, M.D., age 43, 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 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 and on the governing board of the Biotechnology Industry Organization. Dr. Gold’s marketing and management experience in the healthcare industry, medical background and long-term senior management with the company give him the appropriate and valued qualifications to serve as a member of our Board. Dr. Gold received a B.S. from the University of Wisconsin-Madison and an M.D. from Rush Medical College.
 
Pedro Granadillo, age 62, has served as one of our directors since October 2009. Mr. Granadillo, now retired, was most recently senior vice president of global manufacturing and human resources at Eli Lilly & Company. Mr. Granadillo worked at Eli Lilly & Company for over thirty years from 1970 to 2004, serving in roles such as vice president of human resources, vice president of pharmaceutical manufacturing, executive director, production operations and director of manufacturing strategy development. As the company’s top executive for both manufacturing and human resources, Mr. Granadillo was responsible for the overall management of an extensive network of pharmaceutical manufacturing facilities and for policies affecting the company’s global workforce of more than 43,000 employees. He currently serves on the Board of Directors of Haemonetics Corporation, a blood processing company, Nile Therapeutics, Inc., a biopharmaceutical company, and Tigris Pharmaceuticals, Inc, a biopharmaceutical company, and previously served on the Board of Directors of Noven Pharmaceuticals, Inc., a pharmaceutical company, from 2004 to 2009, and First Indiana Bank, a banking company, from 2002 to 2007. Mr. Grandillo’s lengthy management experience at a leading pharmaceutical manufacturer, and broad pharmaceutical and biotechnology industry board service give him the appropriate qualifications to serve as a member of our Board. Mr. Granadillo has extensive experience in multiple areas, including corporate management, human resources, manufacturing and quality including designing and operating complex global manufacturing networks, senior leadership development and succession planning, executive compensation, organizational transformation and portfolio management. Mr. Granadillo received a B.S. in industrial engineering from Purdue University.


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Directors Continuing in Office until the 2012 Annual Meeting
 
Susan B. Bayh, age 50, has served as one of our directors since our acquisition of Corvas International, Inc. (“Corvas”), a biotechnology company, in July 2003. Prior to that, she had served as a director of Corvas since June 2000. From 1994 to 2004, she was a Distinguished Visiting Professor at the College of Business Administration at Butler University in Indianapolis, Indiana. From 1994 to 2001, she was a Commissioner for the International Commission between the United States and Canada, overseeing compliance with environmental and water level treaties for the United States-Canada border. From 1989 to 1994, Ms. Bayh served as an attorney in the Pharmaceutical Division of Eli Lilly and Company, a pharmaceutical company. She currently serves on the Boards of Directors of Wellpoint, Inc., a health benefits company, Dyax Corp., a biotechnology company, Curis, Inc., a therapeutic drug development company, and Emmis Communications, a diversified media company, and previously served on the Board of Directors of MDRNA, Inc. (formerly Nastech Pharmaceutical Company Inc.), a biotechnology company, from 2006 to 2009. Ms. Bayh’s service on multiple healthcare, pharmaceutical and biotechnology company boards, as well as her academic, international and regulatory experience, give her the skills and appropriate qualifications to serve as a member of our Board. Ms. Bayh received a B.S. from the University of California, Berkeley and her J.D. from the University of Southern California Law School.
 
Ian T. Clark, age 49, has served as one of our directors since October 2009. Mr. Clark is currently the chief executive officer and head of North American commercial operations at Genentech, a wholly-owned member of the Roche Group. Prior to January 2010, he was head of global product strategy and chief marketing officer at Roche, Pharma Division since March 2009. Mr. Clark previously was executive vice president of commercial operations since 2006, senior vice president of commercial operations since 2005, and senior vice president of oncology commercial operations for Genentech’s BioOncology business unit since 2003, which focused on global commercialization of the company’s diverse oncology pipeline, including Avastin®, Rituxan® and Herceptin®. Prior to his time at Genentech, Mr. Clark was president of Novartis Canada from 2001 to 2003 and chief operating officer of Novartis United Kingdom from 1999 to 2001, and also served on the Board of Directors of Vernalis, a pharmaceutical company, from 2007 to 2009. Mr. Clark’s senior management experience with a leading biotechnology company and extensive background in the commercialization of drug and treatment therapies give him desired and appropriate qualifications to serve as a member of our Board. Mr. Clark received a B.S. in biological sciences from Southampton University in the United Kingdom.
 
David L. Urdal, Ph.D., age 60, has served as Chief Scientific Officer and director since joining the Company in July 1995. He served as vice chairman of the Company’s Board of Directors from 1995 to June 2004, as executive vice president from January 1999 through December 2000, as the Company’s president from January 2001 to December 2003, and as senior vice president since June 2004. 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’s biotechnology and pharmaceutical industry board and senior management experience, including his long-term senior management role with the company, together with his scientific expertise and background give him the valuable and appropriate qualifications to serve as a member of our Board. Dr. Urdal received a B.S. in zoology, a M.S. in Public Health and a Ph.D. in Biochemical Oncology from the University of Washington.
 
BOARD OF DIRECTORS
 
Director Independence
 
Our Corporate Governance Committee and our Board of Directors have determined that all seven of our current and continuing non-employee directors are independent under the rules of the SEC and the listing standards of The NASDAQ Stock Market, Inc. (“NASDAQ”). Those continuing independent directors are Ms. Bayh, Mr. Brewer, Mr. Canet, Mr. Clark, Dr. Dziurzynski, Mr. Granadillo, and Mr. Watson. Dr. Gold and Dr. Urdal are not independent based on their service as our Chief Executive Officer and President, and our Senior Vice President and Chief Scientific Officer, respectively. In making its independence determinations, the Corporate Governance Committee each year reviews any transactions and relationships between the director, or any member of his or her immediate family, and the Company, and is based on information provided by the director, Company records and


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publicly available information during the year. Specifically, the Corporate Governance Committee will consider the following types of relationships and transactions: (1) principal employment of and other public company directorships held by each non-employee director; (2) contracts or arrangements that are ongoing or which existed during any of the past three fiscal years between our Company and any entity for which the non-employee director, or his or her immediate family member, is an executive officer or greater-than-10% stockholder; and (3) contracts or arrangements that are ongoing or which existed during any of the past three fiscal years between our Company and any other public company for which the non-employee director serves as a director. During 2009, there were no material relationships or transactions in these categories reviewed by the Corporate Governance Committee, nor were there any other similar relationships or transactions the Corporate Governance Committee considered.
 
Classification of Directors; Board Vacancies
 
Our Amended and Restated Certificate of Incorporation and Amended and Restated Bylaws provide for the division of our Board of Directors into three classes, each class consisting, as nearly as possible, of one-third of the total number of directors, with each class having a three-year term. Vacancies on the Board of Directors may be filled only by persons elected by a majority of the remaining directors. A director elected by the Board of Directors to fill a vacancy (including a vacancy created by an increase in the number of directors) shall serve for the remainder of the full term of the class of directors in which the vacancy occurred and until such director’s successor is elected and qualified.
 
Board of Directors Meetings
 
In 2009, the Board of Directors held fifteen meetings. We encourage but do not require the directors to attend the Annual Meeting. We schedule a regular meeting of the Board of Directors immediately following the Annual Meeting. All of our directors attended the 2009 Annual Meeting of Stockholders, with the exception of Mr. Canet. All directors attended 75% or more of the aggregate of the meetings of the Board and the committees on which he or she served, with the exception of Dr. Ingle, who retired from the Board of Directors at the 2009 Annual Meeting of Stockholders, and Mr. Clark, who was newly appointed in October 2009 and had previously existing schedule conflicts.
 
Committees of the Board of Directors
 
The Board of Directors has three standing committees: an Audit Committee, a Compensation Committee and a Corporate Governance Committee, each of which has a written charter that is available on our investor relations website at http://investor.dendreon.com/governance.cfm. The authority and responsibilities of each of these committees meet NASDAQ listing standards and SEC guidelines, as applicable.
 
Audit Committee
 
The primary responsibility of the Audit Committee is to oversee our financial reporting process on behalf of the Board of Directors. Among other things, the Audit Committee is responsible for overseeing our accounting and financial reporting processes and audits of our financial statements, reviewing and discussing with our independent auditors critical accounting policies and practices for our Company, engaging in discussions with management and the independent auditors to assess risk for the Company and management thereof, and reviewing with management and the independent auditors the effectiveness of our internal controls and disclosure controls and procedures. The Audit Committee is directly responsible for the appointment, compensation, retention and oversight of the work of our independent auditors, including the resolution of disagreements, if any, between management and the auditors regarding financial reporting. In addition, the Audit Committee is responsible for reviewing and approving any related party transaction that is required to be disclosed pursuant to Item 404 of Regulation S-K promulgated under the Exchange Act.
 
During 2009 the Audit Committee was composed of Mr. Watson (Chair), Dr. Dziurzynski until December 18, 2009, Dr. Ingle until June 10, 2009, Mr. Canet since June 10, 2009, and Mr. Granadillo since December 18, 2009, each of whom the Board of Directors determined was independent under SEC rules and NASDAQ listing standards. The Audit Committee met seven times during 2009. The Board of Directors determined based on relevant business experience that each of Messrs. Watson, Canet and Granadillo, and Drs. Dziurzynski and Ingle, is an “audit committee financial expert,” as that term is defined in Item 407(d)(5) of Regulation S-K.


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Compensation Committee
 
The Compensation Committee develops compensation policies and implements compensation programs, makes recommendations annually concerning salaries and incentive compensation, awards stock options and restricted stock to officers and employees under our stock incentive plans and otherwise determines compensation levels and performs such other functions regarding compensation as the Board of Directors may delegate in accordance with the Compensation Committee Charter, which is available on our investor relations website. Compensation for our named executive officers each year is usually determined prior to the first quarter of the relevant year. When determining annual compensation levels and targets, the Compensation Committee reviews and approves individual and corporate goals and objectives for the current year, evaluates individual performance in light of the goals and objectives established for the prior year, considers competitive market data and establishes compensation based on these factors or in the case of our named executive officers, makes recommendations to our Board of Directors, who then act as a whole to set compensation based on these factors. The values of each component of total direct compensation (base salary, target annual cash incentive and equity awards) for the current year, as well as total annual compensation for the prior year are all considered collectively by our Compensation Committee as part of this process.
 
Our Compensation Committee has the authority to engage the services of outside advisors, experts and others to assist our Compensation Committee in determining the compensation of our executive officers. Our Compensation Committee may, from time to time, delegate certain authority to authorized persons internally, including our human resources department, to carry out certain administrative duties. The Compensation Committee holds executive sessions (with no members of management present) at the majority of its meetings.
 
The Compensation Committee is currently composed of Mr. Canet (Chair), Ms. Bayh, and Dr. Dziurzynski, as well as Mr. Granadillo since December 18, 2009, each of whom is independent under NASDAQ listing standards. The Compensation Committee met four times during 2009. No member of our Compensation Committee has been an officer or employee of our Company at any time. None of our executive officers during 2009 served as a director or as a member of the compensation committee of another entity that has an executive officer who served as a director of the Company or on our Compensation Committee during 2009.
 
Corporate Governance Committee
 
The Corporate Governance Committee considers and makes recommendations regarding corporate governance requirements and principles, periodically reviews the performance and operations of the standing committees of the Board of Directors and evaluates and recommends individuals for membership on the Company’s Board of Directors and committees. The Corporate Governance Committee Charter is available on our investor relations website.
 
Potential nominees for director are referred to the Corporate Governance Committee for consideration and evaluation. If the Committee identifies a need to replace a current member of the Board of Directors, to fill a vacancy in or to expand the size of the Board of Directors, the Corporate Governance Committee will consider those individuals recommended as candidates for Board membership, including those recommended by stockholders, and hold meetings to evaluate biographical information and background material relating to candidates, and interview any selected candidates.
 
According to its adopted policy, the Corporate Governance Committee may use multiple sources for identifying director candidates, including its own contacts and referrals from other directors, members of management, our advisors and executive search firms. The Corporate Governance Committee will consider director candidates recommended by stockholders and will evaluate those candidates in the same manner as candidates recommended by other sources if stockholders submitting recommendations follow the procedures established by the Corporate Governance Committee. We did not implement any changes to our process for stockholder recommendations of director nominees during 2009.
 
In making recommendations for director nominees for an annual meeting of stockholders, the Corporate Governance Committee will consider any written recommendations of director candidates by stockholders received by our Corporate Secretary not later than the close of business on the 90th day nor earlier than the 120th day prior to the first anniversary of the previous year’s annual meeting of stockholders. Recommendations must include the candidate’s name and contact information and a statement of the candidate’s background and qualifications, as well


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as the name and contact information of the stockholder or stockholders making the recommendation, and such other information as may be required under our Amended and Restated Bylaws. Recommendations must be mailed to Dendreon Corporation, 3005 First Avenue, Seattle, Washington 98121, Attention: Corporate Secretary, faxed to our Corporate Secretary at (206) 219-7211 or e-mailed to secretary@dendreon.com. No stockholder recommendations for director nominees were received for consideration at the Annual Meeting.
 
Although the Board of Directors does not have a formal diversity policy, for director candidates, the Corporate Governance Committee will consider such factors as it deems appropriate to assist in developing a Board of Directors and committees that are diverse in nature and comprised of experienced and seasoned advisors. These factors focus on experience and achievement in business, finance, biotechnology, health sciences or other areas relevant to our activities; reputation, ethical character and maturity of judgment; diversity of viewpoints, backgrounds and experiences; absence of conflicts of interest that might impede the proper performance of the responsibilities of a director; independence under SEC rules and the listing standards of NASDAQ; service on other boards of directors; sufficient time to devote to Board of Directors matters; and the ability to work effectively with other members of our Board of Directors.
 
During 2009, the Corporate Governance Committee was composed of Ms. Bayh (Chair until December 18, 2009), Mr. Brewer, Dr. Ingle until June 10, 2009, Dr. Dziurzynski since June 10, 2009 (Chair since December 18, 2009), and Mr. Clark since December 18, 2009. Each Committee member is independent under NASDAQ listing standards. The Corporate Governance Committee met four times during 2009.
 
Board Leadership Structure and Role in Risk Oversight
 
The Board of Directors has determined that having an independent director serve as our Chairman of the Board is in the best interest of the Company’s stockholders at this time. The Board of Directors does not however have a formal policy regarding the separation of the roles of Chief Executive Officer and Chairman of the Board as the Board of Directors believes it is in the best interests of the Company to make the determination regarding how to fulfill these functions based on the position and direction of the Company and the membership of the Board of Directors at the pertinent time. At present, the Board of Directors believes this separation of the chief executive and chairman facilitates the role of the independent Directors in the oversight of the Company and active participation of the independent Directors in setting agendas and establishing Board priorities and procedures. Further, this structure permits the Chief Executive Officer to focus on the management of the Company’s day-to-day operations.
 
It is management’s responsibility to manage risk and bring to the Board of Directors’ attention the most material risks to the Company. The Board of Directors has oversight responsibility of the processes established to report and monitor systems for material risks applicable to the Company and oversees the appropriate allocation of responsibility for risk oversight among the committees of the Board of Directors. The Audit Committee regularly reviews enterprise-wide risk management, which focuses primarily on financial and accounting, legal and compliance, and IT systems risks, and other risk management functions. The Compensation Committee assists the Board in fulfilling its oversight responsibilities with respect to the management of risks arising from the Company’s compensation policies and programs. The Compensation Committee also reviews compensation and benefits plans affecting employees as well as those applicable to executive officers. The full Board of Directors considers strategic risks and opportunities and regularly receives reports from the committees regarding risk oversight in their areas of responsibility.
 
STOCKHOLDER COMMUNICATIONS WITH THE BOARD OF DIRECTORS
 
We have established a procedure for stockholders to communicate with the Board of Directors or a particular Board committee. Communications should be in writing, addressed to: Dendreon Corporation, 3005 First Avenue, Seattle, Washington 98121, and marked to the attention of the Board of Directors or any of its individual committees. Copies of all communications so addressed will be promptly forwarded to the chair of the committee involved, or in the case of communications addressed to the Board of Directors as a whole, to the Corporate Governance Committee.


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DIRECTOR COMPENSATION
 
We compensate only our non-employee directors for serving on our Board of Directors. Our Board of Directors has adopted guidelines for the compensation of our non-employee directors, which were revised in December 2009 to be applicable on a prospective basis. During 2009, each non-employee director received an annual retainer of $40,000 that is paid ratably at the end of each quarter. In addition, the Chairman of the Board received an additional $75,000 retainer per year, and the chairs of each of our Audit, Compensation and Corporate Governance Committees received an additional $15,000, $10,000 and $6,000, respectively, retainer per year. These amounts are also paid ratably at the end of each quarter. For 2009, the total aggregate cash compensation earned by our non-employee directors was $345,600. These guidelines were updated for 2010, such that the annual retainer paid to each board member will be $45,000, and the chairs of our Audit, Compensation and Corporate Governance Committees will receive an additional retainer of $20,000, $15,000 and $10,000, respectively. We also introduced annual committee membership retainers of $12,000, $7,500, and $5,000 for the members of the Audit Committee, Compensation Committee, and Corporate Governance Committee who are not committee chairs, respectively. Further, we continue to reimburse each of our directors for expenses incurred in connection with attending Board of Directors’ meetings and for their service as directors in accordance with Company policy.
 
In December 2008 our non-employee directors approved the grant of 12,500 shares to each director serving at the end of 2008, which vested upon grant in January 2009. In December 2009, our non-employee directors approved the grant to each director of 7,500 stock options, which vested upon grant on December 8, 2009, and an award of 3,750 shares of restricted stock, which vested upon grant on January 21, 2010. Under the 2000 Equity Incentive Plan and the 2009 Equity Incentive Plan, we determine the value of the grant to our non-employee directors of an option to purchase one share of Common Stock and grants of restricted stock awards using the Black-Scholes-Merton valuation methodology and assumptions described in our financial statements to estimate the value of compensatory stock options and awards. All options granted to our non-employee directors are granted with an exercise price equal to the closing price of our Common Stock on the NASDAQ Global Market on the grant date.
 
Our policy is to grant our new non-employee directors an initial equity grant award determined in the discretion of the Board of Directors in an amount not to exceed two times the amount of the then-current annual grant. Accordingly, in October 2009, each of Mr. Clark and Mr. Granadillo were granted 4,994 shares of restricted stock that vested immediately upon grant.
 
The table below sets forth, for each non-employee director, the amount of cash compensation paid by us and the value of stock awards received from us for his or her service during 2009:
 
2009 Director Compensation Table
 
                                 
            Stock
   
    Fees Earned
  Stock Awards
  Options(2)
  Total
Name(1)
  or Paid in Cash   ($)   ($)   ($)
 
Susan B. Bayh
  $ 46,000 (3)   $ 107,100 (4)   $ 137,600     $ 290,700  
Richard B. Brewer
    115,000 (5)     107,100 (4)     137,600       359,700  
Gerardo Canet
    50,000 (6)     107,100 (4)     137,600       294,700  
Ian T. Clark
    10,000       242,100 (7)     137,600       389,700  
Bogdan Dziurzynski, D.P.A
    40,000       107,100 (4)     137,600       284,700  
Pedro Granadillo
    10,000       242,100 (7)     137,600       389,700  
M. Blake Ingle, Ph. D. 
    20,000       (9)           20,000  
Douglas G. Watson
    55,000 (8)     107,100 (4)     137,600       299,700  
 
 
(1) Our non-employee directors had vested option awards outstanding as of December 31, 2009 for the following number of shares: Mr. Brewer, 7,500; Ms. Bayh, 109,221; Mr. Canet, 7,500; Mr. Clark, 7,500; Dr. Dziurzynski, 99,171; Mr. Granadillo, 7,500; and Mr. Watson, 36,171.
 
(2) These options were granted on December 8, 2009 and fully vested on the grant date. The compensation cost represents the aggregate fair value on the grant date, as determined in accordance with the Financial Accounting Standards Board’s Accounting Standards Codification (ASC) 718. For more information, see Note 9 of the


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Notes to Consolidated Financial Statements in our Annual Report on Form 10-K for the fiscal year ended December 31, 2009.
 
(3) Amounts shown include retainer and Corporate Governance Committee chair fee earned during 2009.
 
(4) Includes shares granted on January 21, 2010 for 2009 services. These shares fully vested on the grant date. The compensation cost represents the aggregate fair value on the grant date as determined in accordance with the Financial Accounting Standards Board’s Accounting Standards Codification (ASC) 718. For more information see Note 9 of the Notes to Consolidated Financial Statements in our Annual Report on Form 10-K for the fiscal year ended December 31, 2009
 
(5) Amounts shown include retainer and Chairman of the Board fee earned during 2009.
 
(6) Amounts shown include retainer and Compensation Committee chair fee earned during 2009.
 
(7) Includes shares granted in October 2009 for joining the Board of Directors and January 2010 for 2009 services. Mr. Clark and Mr. Granadillo joined the Board of Directors in October 2009.
 
(8) Amounts shown include retainer and Audit Committee chair fee earned during 2009.
 
(9) Mr. Ingle retired as a Board member in June 2009 and accordingly did not receive a stock award for 2009 services.
 
Under the corporate governance principles adopted by our Board of Directors in 2005, our non-employee directors are encouraged to own stock in our Company in an amount equal to one times the annual general Board of Directors’ retainer. This ownership target is intended to be achieved within twenty-four months after a director joins our Board of Directors, and stock acquired to satisfy the target is expected to be a long-term investment. As of December 31, 2009, each of our non-employee directors met their applicable ownership guidelines.


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COMPENSATION DISCUSSION AND ANALYSIS
 
Objectives of our Executive Compensation Program
 
Our Company’s mission is to discover, develop and commercialize novel therapeutics that may significantly improve cancer treatment options for patients. To achieve this mission, we seek to attract and retain the most talented executive officers and other employees, reward them for helping achieve our business objectives and motivate them to enhance long-term stockholder value by achieving our product commercialization and development goals, and other corporate goals. As a result, the goals of our executive compensation program are to align senior executive compensation with the achievement of our Company’s business objectives and corporate performance. Each year, we expect that if we achieve our corporate objectives, our executive compensation program will reward our named executive officers for the multiple responsibilities that they have met in helping us succeed in reaching our goals. We also expect that compensation for our named executive officers will be less in years in which we do not achieve all of our corporate objectives. We also set individual goals for our executive officers, the achievement or partial achievement of which will also factor into our annual compensation review and bonus awards.
 
Role of Our Compensation Committee
 
Our Company’s compensation policies and practices are developed by the Compensation Committee of our Board of Directors and implemented by our Board of Directors upon the recommendation of the Compensation Committee. The Compensation Committee’s responsibility is to review and consider annually the performance of our management in achieving both corporate and individual goals and objectives and to ensure that our Company’s compensation policies and practices are competitive and effective to motivate management. The authority and responsibilities of the Compensation Committee are laid out in its charter and include:
 
  •  taking any and all actions that have been delegated by our Board of Directors with respect to determining the compensation level of officers and employees of our Company;
 
  •  proposing the adoption, amendment and termination of equity incentive plans, stock purchase plans, and tax-qualified profit sharing plans, and other similar programs, which we refer to as our compensation plans;
 
  •  granting awards under and participation in our compensation plans to eligible participants; and
 
  •  reviewing, advising and approving such other compensation matters as our Board of Directors may wish.
 
Our Compensation Committee met four times in 2009. In addition, the Compensation Committee held discussions with management, approved compensation plan awards, adopted and implemented our 2009 Equity Incentive Plan (the “2009 Equity Plan”), reviewed and structured our corporate objectives, which are also approved by the full Board, determined individual performance against previously established goals and reviewed the elements and structure of our total compensation packages for 2009. In addition, in June 2009, the Compensation Committee retained Radford Surveys and Consulting (“Radford”) to conduct a new review of our compensation programs and recommend changes to align our executive pay practices to maintain a competitive market position, taking into consideration significant corporate developments in the first half of 2009 and the anticipated business and operational growth for a biotechnology company with commercial products. The Company also retained Radford during 2009 to provide an analysis of its equity grant practices for non-executive employees of the Company, an engagement of services that was pre-approved by the Compensation Committee.
 
Role of our Compensation Consultant and Benchmarking Practices in 2009
 
In August 2008, our Compensation Committee first retained Radford to conduct a comprehensive competitive review and analysis of our executive and equity compensation programs with the specific goal of helping position the Company for the potential commercialization of our products. As part of its review, Radford reviewed our compensation philosophy of targeting executive base pay at the 50th percentile, with target variable cash incentives and long term targeted at a range between the 60th and 75th percentile, of the determined peer group. At the time 2009 compensation decisions were made for our named executive officers, however, our Company was constrained by lack of capacity under its existing equity plans and therefore, a decision was made to use exclusively restricted stock for equity awards rather than the Company’s traditional mix of stock options and restricted stock. Radford also reviewed and made recommendations regarding our peer group, and in November 2008 presented its findings to the


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Compensation Committee regarding its competitive assessment of the base salary, target total cash compensation, long-term incentives and total direct compensation that we pay our executive officers. In addition, Radford reviewed our existing executive employment agreements, which contain change-in-control severance benefits. In conducting its analysis, Radford reviewed the compensation payable to our named executive officers, and also certain other vice president-level positions. The November 2008 Radford survey reflected a finding that the equity component of the Company’s compensation program was significantly lower than the specified peer group, consisting of biotechnology companies pre-commercial product launch or at an early stage of commercialization and a market capitalization range of approximately $275 million to $1.7 billion, approximately 33% to 300% to that of our Company at that time. This peer group was chosen as a blend of companies reflecting our Company’s stage of development at that time and taking into consideration possible outcomes of the Company’s ongoing Phase III trial for Provenge® (sipuleucel-T), which results were announced in April 2009. The November 2008 Radford survey peer group consisted of:
 
  •  Acorda Therapeutics, Inc.
 
  •  Affymax, Inc.
 
  •  Arena Pharmaceuticals, Inc.
 
  •  Cadence Pharmaceuticals, Inc.
 
  •  CV Therapeutics, Inc.
 
  •  Exelixis, Inc.
 
  •  GTx, Inc.
 
  •  Idenix Pharmaceuticals, Inc.
 
  •  InterMune, Inc.
 
  •  Momenta Pharmaceuticals, Inc.
 
  •  Orexigen Therapeutics, Inc.
 
  •  Osiris Therapeutics, Inc.
 
  •  Pain Therapeutics, Inc.
 
  •  POZEN, Inc.
 
  •  Progenics Pharmaceuticals, Inc.
 
  •  Rigel Pharmaceuticals, Inc.
 
  •  Savient Pharmaceuticals, Inc.
 
  •  Seattle Genetics, Inc.
 
  •  Theravance, Inc.
 
  •  XenoPort, Inc.
 
  •  ZymoGenetics, Inc.
 
Overall, the November 2008 Radford survey found that the cash component for our Company, including base salary and target bonus, fell between the 50th and 60th percentile of the determined peer group, with individual exceptions, which met the Company’s compensation philosophy of targeting market competitive cash compensation for our named executive officers. The equity component, however, was historically closer to the 25th percentile, and therefore was not within the Company’s philosophy. This finding was a factor in the Compensation Committee’s recommendations regarding 2008 year-end equity awards.
 
In April 2009, we announced that the results from our pivotal Phase 3 IMPACT study for Provenge had met its primary endpoint of overall survival and exhibited a safety profile consistent with prior studies. Accordingly, the focus of our Company became preparing for potential commercial launch for Provenge during 2010. The second half of 2009 was a period of rapid and significant change for our Company. In light of these factors, Radford conducted a new survey of our compensation programs, and provided the summary of results to the Compensation Committee in November 2009. The November 2009 specified peer group included commercialized organizations


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with a market capitalization range between approximately $847 million and $6.2 billion, approximately 25% to 200% to that of our Company at that time. While our Company’s market capitalization at that time was over the 75th percentile of the November 2009 approved peer group, Radford nonetheless recommended, and our Compensation Committee agreed, that the selected peer group was appropriate given our Company was still growing into its market capitalization which underwent a significant increase during 2009. The November 2009 Radford survey peer group consisted of:
 
  •  Acorda Therapeutics, Inc.
 
  •  Alexion Pharmaceuticals, Inc.
 
  •  AMAG Pharmaceuticals, Inc.
 
  •  Amylin Pharmaceuticals, Inc.
 
  •  Auxilium Pharmaceuticals, Inc.
 
  •  BioMarin Pharmaceutical Inc.
 
  •  Cephalon, Inc.
 
  •  Cubist Pharmaceuticals, Inc.
 
  •  Illumina, Inc.
 
  •  Isis Pharmaceuticals, Inc.
 
  •  Medarex, Inc.
 
  •  Myriad Genetics, Inc.
 
  •  Onyx Pharmaceutials, Inc.
 
  •  OSI Pharmaceuticals, Inc.
 
  •  Regeneron Pharmaceuticals, Inc.
 
  •  Seattle Genetics, Inc.
 
  •  Sepracor Inc.
 
  •  United Therapeutics Incorporated
 
  •  Vertex Pharmaceuticals.
 
Overall, the November 2009 Radford survey found that due to the change in peer groups compared to 2008, the base salary component for the Company fell at the 50th percentile of the determined peer group, while the target cash bonus fell between the 25th and 50th percentiles. However, most executive base salaries were within 10% of the market 50th percentile, with individual exceptions. Since the Company no longer faced share constraint concerns due to its adoption of its 2009 Equity Incentive Plan, Radford recommended re-introducing stock options at the end of 2009 in addition to restricted stock awards, to balance retention through restricted stock and shareholder alignment through stock options. Radford provided a range of grant levels between the 60th and 75th percentile levels, balancing annual equity grant values and grant levels as a percent of shares outstanding. These suggestions were factored into the Compensation Committee’s recommendations regarding 2009 year-end equity awards, which are discussed below. In addition to the Radford survey results and recommendations, the Compensation Committee also considers individual responsibilities of named executive officers at our Company, anticipated growth in our company’s business and operations, and historical achievements.
 
Our Compensation Committee historically reviews a tally sheet setting forth all components of total compensation paid and payable to our named executive officers, including base compensation, annual cash incentives, long-term incentives consisting of equity awards, accumulated realized and unrealized stock option and restricted stock awards, and potential change of control and severance benefits. This tally sheet is helpful because it highlights the effect of compensation decisions made over time on each named executive officer’s total annual compensation, which historical information our Compensation Committee was able to review on the same page for comparative purposes. In this way, the tally sheet helps our Compensation Committee see the equity stake that each of our named executive officers holds in the Company, which is then used to review and evaluate potential equity


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awards in the current fiscal year. Our Compensation Committee continued the practice of reviewing a tally sheet for 2009 compensation decisions.
 
Role of our Management Team
 
We encourage appropriate involvement by our senior management team in determining our compensation practices. In general, our senior management team supports our Compensation Committee with its tasks of developing and implementing our executive compensation programs. Our management team, primarily through our human resources department, annually reviews Radford survey data for comparable biotechnology companies and determines management’s recommendations for overall annual salary increases across the entire Company and compensation levels for each of our executive officers, taking into consideration factors such as individual contributions and industry and competitive considerations. Performance goals are personally tailored for each of our named executive officers. Our Chief Executive Officer has historically conducted all performance evaluations for our senior vice presidents, which performance reviews factor into decisions with respect to annual cash incentive awards described below. We anticipate this practice will continue for our named executive officers. Our Chief Executive Officer and our Senior Vice President of Corporate Development and General Counsel regularly attend Compensation Committee meetings, and our Chief Executive Officer presents his recommendations and performance evaluation results to the Compensation Committee generally at the Compensation Committee’s November meeting.
 
Executive Compensation Programs Design Considerations
 
As mentioned above, the objective of our executive compensation programs is to attract, motivate and retain highly qualified employees, including senior executive officers, to help us achieve our business objectives. The principal components of our executive compensation program are base salary, annual cash incentives and long-term equity incentives. Our Compensation Committee determines the amounts to recommend to the Board of Directors for each compensation element for each named executive officer as a result of management recommendations, any relevant consultant recommendations and benchmarking reviews, as well as based on its review of past corporate performance and goals for future corporate performance. Historically, given our lack of profitability to date and expectation of continued heavy investment in driving business growth, and in order to provide a performance incentive, we have heavily-weighted total compensation in favor of equity incentive awards as compared to cash compensation. We expect to continue this practice as we continue our goal of building a sustainable business with commercialized products and revenue.
 
We have designed the elements of our executive compensation program, and our decisions regarding the amount paid for each element, to work together to meet our overall compensation objectives. Decisions regarding each element of compensation are considered when our Compensation Committee reviews the total compensation arrangement for each named executive officer and our executive officers as a group. In terms of the overall design of our executive compensation program, we generally emphasize incentive compensation components that are flexible and take into consideration our overall strategic advancement during the relevant calendar year with respect to designated corporate goals and, when applicable, individual contributions. As a result of our benchmarking activities described above, each component of our executive compensation program has been chosen to appropriately motivate and reward our executives for a company at our stage of development within the highly competitive biotechnology industry and geographic region of our operations.
 
Our long-term incentive program, in particular, is designed so that a significant portion of each named executive officer’s total direct compensation is delivered in the form of equity (which for 2009 consisted of both stock options and restricted stock awards), rather than cash, to create incentives for long-term performance and to promote alignment with stockholder interests over the relevant periods. In this way, our named executive officers will receive substantially increased compensation if our stockholders experience increased value, instead of simply receiving median salary compensation adjustments year-after-year, regardless of Company performance. Based on the recommendation of management, our named executive officers received an increase in base salary and cash bonus for 2009, as well as long-term equity awards, as discussed below. In addition, for 2010, the Compensation Committee determined to increase the target bonus percentage for each named executive officer. The Compensation Committee approved a slight increase to the 2010 target bonus for each named executive officer (40% to 45%) other than our Chief Executive Officer, with an increase from 60% to 100% in the 2010 target bonus for our Chief


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Executive Officer to continue to emphasize performance goals as our Company grows. We believe options remain a desirable incentive tool for both executive officers and employees generally, and have re-introduced the grant of stock options as a standard component of our compensation program following adoption of our 2009 Equity Incentive Plan in June 2009. We have also continued to award restricted stock awards for existing employees as an award with inherent value to incentivize employees given the volatility and increasing value of our stock.
 
We also encourage important individual contributions to our Company’s success and attempt to appropriately spur extraordinary efforts and achievement by rewarding our named executive officers for attaining our Company’s objectives. Under the incentive components of our executive compensation program, we focus on achievement of significant Company objectives, which are discussed in further detail below.
 
Impact of Company and Individual Performance on Executive Compensation
 
Achieving our corporate objectives is essential for the success of our business, and we place significant focus on pay for performance. The still pre-commercialization stage of our Company means that individual performance is critical in our achievement of our corporate objectives. We seek to encourage and reward both individual performance and the achievement of our corporate objectives through our incentive compensation components.
 
Annual cash incentive target opportunities are established each year as a percentage of base salary for each named executive officer. As discussed further below, payouts for the annual cash incentive opportunities are made based on two distinct evaluations: corporate objectives and individual performance. In this way, the annual cash incentive award is earned based on whether our Company achieves its pre-established strategic objectives as well as on an assessment of each named executive officer’s annual individual performance. Individual performance is evaluated based on the named executive officer’s individual contributions toward the achievement of our corporate objectives, which evaluation measures performance regarding factors including leadership, staff development, modeling Company values, fiscal responsibility, technical capabilities, teamwork, effective communication, quality and excellence, and corporate stewardship. For 2009, factors considered by the Compensation Committee included leadership, staff development and teamwork, as well as each named executive officer’s achievements against individually pre-determined goals for the year. In reviewing these factors, the Compensation Committee considered each named executive officer’s ability to lead his group or department, follow-through on commitments, contributions to teamwork, and ability to coach and mentor employees.
 
Our named executive officers earn the Company performance portion of their annual cash incentive awards based on pre-established corporate objectives, and the individual performance portion of each annual cash incentive award is also based on pre-established targets or objectives. These objectives are subject to change over the course of the year as deemed appropriate by the Compensation Committee and our Board of Directors. The individual performance portion is subject to a discretionary, hindsight evaluation as to whether the officer is entitled to an increased or decreased reward for his or her efforts. Our Chief Executive Officer has historically conducted all performance evaluations for our senior vice presidents, which practice we expect to continue for our named executive officers. Our Chairman of the Board of Directors conducts the performance evaluation for our Chief Executive Officer.
 
The Compensation Committee does consider internal pay equity factors when setting individual performance goals and annual cash incentive target percentages and equity awards, and accordingly our senior vice presidents are frequently aligned in pay practices.
 
Analysis of 2009 Executive Compensation Components
 
As discussed above, we review and compare our total compensation and each compensation element through benchmarking processes to ensure the competitiveness of both our executive compensation program as a whole and the total compensation packages for our named executive officers. The principal components for the compensation of each of our named executive officers are:
 
  •  base salary, which is reviewed on an annual basis;
 
  •  annual cash incentive, which is determined each year based on the achievement of Company objectives and individual performance; and
 
  •  long-term equity incentives (in 2007, we included performance acceleration events applicable to certain of these awards which continued to be relevant as we made progress in achieving corporate goals in 2009).


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Base Salary.  Base salary serves as the foundation of our executive compensation program. We pay base salary to attract and retain executives and to remain comparable with our peer companies. We establish the other key components of each named executive officer’s compensation package, including long-term equity incentives and termination payments, with reference to his or her base salary.
 
We establish base salaries for our named executive officers when they join our Company or upon promotion. Our Compensation Committee and Board of Directors annually review each named executive officer’s base salary. When reviewing base salaries, the Compensation Committee and Board of Directors consider corporate performance and executive performance reviews for the prior year, levels of responsibility, prior experience, breadth of knowledge and competitive pay practices. Annual increases in base salary are also generally tied to annual cost of living increases and market-driven annual salary increases across the entire Company or within our industry, as recommended by management based on its review of Radford survey data.
 
In setting 2009 base salaries, the Compensation Committee considered the Radford survey data, and determined to recommend moderate increases in the base salary of our executive officers to maintain a market competitive position. For more information about our base salaries for 2007, 2008 and 2009, see “Executive Compensation — 2009 Summary Compensation Table” below.
 
Mr. Hans Bishop, our Executive Vice President and Chief Operating Officer, did not join us until January 2010, and accordingly he was not a named executive officer for 2009.
 
Annual Cash Incentives.  As discussed above, we pay annual cash incentives to encourage and reward our named executive officers for both the achievement of our corporate objectives and individual performance. Actual payouts for our annual cash incentive awards for each named executive officer are based on a combination of achievement of specified Company and personal objectives established at the beginning of the year and individual performance (evaluated as discussed above), which is evaluated at the end of the year.
 
Annual cash incentive opportunities for our named executive officers for 2009 were established by our Compensation Committee in December 2008 as percentages of base salary. Our named executive officers’ 2009 target cash incentive awards, expressed as a percentage of base salary, were: Dr. Gold, 60%; Mr. Schiffman, 40%; Dr. Frohlich, 40%; Mr. Hamm, 40%; and Dr. Urdal, 40%. For 2010 compensation, these amounts were increased as follows: Dr. Gold, 100%; Mr. Schiffman, 45%; Dr. Frohlich, 45%; Mr. Hamm, 45%; and Dr. Urdal, 45%. For 2009, the corporate portion of our annual cash incentive opportunity was established at 80% for Dr. Gold and 75% for each of Messrs. Hamm and Schiffman and Drs. Frohlich and Urdal.
 
These percentages were originally chosen when we adopted our management incentive plan in 2005 based on each named executive officer’s expected ability to impact corporate performance, and the Compensation Committee re-evaluates these percentages annually and concluded in 2009 that they remained an appropriate allocation for each named executive officer. Each year, our Compensation Committee retains the discretion to adjust target annual cash incentive awards to take into account changes in corporate circumstances and individual opportunities and performance throughout the year. In 2009 the Compensation Committee did not make any such adjustments from the initial targets established for the year. Our Company’s primary mission for 2009 was to continue to advance Provenge toward commercialization, which remains dependent on the U.S. Food and Drug Administration, or FDA, response to our amended biologics license application. To achieve this mission and overall corporate growth, we established the following specific and event-driven corporate objectives for 2009:
 
  •  Goal 1:  continued focus on achieving FDA approval of our biologics license application (BLA) for Provenge by filing an amended BLA based on positive data, assembling data and completing final primary analysis of our IMPACT study by mid-year, completing our 9902B clinical study report, and increasing capacity at New Jersey by completing the first phase of build-out by 50% and further preparing for anticipated preapproval inspection in early 2010 (a weighting of 40%);
 
  •  Goal 2:  retain or raise sufficient cash to end 2009 with sufficient capital to cover approximately twelve months of operating costs and expenditures (a weighting of 25%);
 
  •  Goal 3:  continue advancing Trp-p8 by achieving FDA approval for our IND, initiating patient enrollment, and completing dosing of our second/third dose cohort; and (a weighting of 20%)
 
  •  Goal 4:  execute at least one in-licensing, out-licensing, or M&A deal (a weighting of 15%).


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We use generally non-financial objectives such as these because advancing our primary product to market, and ensuring that we have enough capital to do so, are the primary ways in which we believe we will achieve near-term Company success and secure value for our stockholders. For 2009, we achieved or exceeded each of these goals with the exception of goal 4, and our Compensation Committee recommended a 117.5% payout of the corporate portion of the annual cash incentive target opportunities for Dr. Gold and Messrs. Hamm and Schiffman, and Drs. Frohlich and Urdal (based on a 117.5% achievement of the above goals: 150% achievement of goals 1 and 2 due to the substantial achievement ahead of schedule and beyond the original targets, with events including the submission of our amended BLA in October, which was accepted by the FDA as a complete amendment, substantial completion of the next phase of the build-out for the New Jersey facility prior to year end, and completion of two equity offerings during 2009 raising a total of approximately $630 million in net proceeds to us, 100% achievement of goal 3, and 0% achievement of goal 4) , which recommendation our Board of Directors approved. Our corporate goals for 2010 will again consist mostly of operating, strategic and financial goals with the primary focus on preparing for and achieving a successful commercial launch of Provenge, as well as clinical development of product candidates.
 
The balance of each named executive officer’s annual cash incentive payout was then determined based on individual performance, which was determined by our Compensation Committee through its evaluation of each officer’s performance review and measurement of the material factors as described above under “— Impact of Company and Individual Performance on Executive Compensation.” After reviewing each named executive officer’s 2009 performance evaluation, our Compensation Committee determined that the 20% individual performance component of Dr. Gold’s annual cash incentive opportunity would payout at 100%, resulting in Dr. Gold achieving 117.5% of his total annual cash incentive opportunity and a payout of approximately 70.5% (target was 60%) of his base salary. The Compensation Committee also determined that the 25% individual performance component of each of Drs. Frohlich and Urdal’s, and each of Messrs. Hamm and Schiffman’s, annual cash incentive opportunities would payout at 100%. Total cash bonuses for each executive officer are capped at an amount equal to corporate goal performance, and will be consistent with the corporate goal performance in the event an executive officer achieves 100% of his or her personal goals. Our management incentive plan provides that the total bonus pool available to all employees is capped by our achievement of the Company’s corporate goals. For more information about our annual cash incentive awards and payouts for 2009, see “Executive Compensation — Summary Compensation Table” and “Executive Compensation — 2009 Grants of Plan-Based Awards Table” below.
 
Long-Term Equity Incentives.  We provide long-term equity incentive opportunities to our named executive officers to align senior executive compensation with our stockholders’ ownership interests, and to motivate our named executive officers to work to achieve specific operating goals that will generate stockholder value. By generating additional stockholder value, our named executive officers will also create equity rewards for themselves that bring their total compensation to competitive levels.
 
Our long-term incentive program for our named executive officers consists of stock options and restricted stock grants pursuant to our 2000 Equity Incentive Plan, 2009 Equity Incentive Plan and our 2002 Broad-Based Equity Incentive Plan, as amended. We refer to these three plans together as our stock plans. Our long-term incentive program also consists of the opportunity to purchase Common Stock through our 2000 Employee Stock Purchase Plan, in which our named executive officers participate on the same basis as all Company employees.
 
Our Compensation Committee has historically granted a mix of stock options and restricted stock as equity awards for both incentive and retention purposes under our stock plans. Stock options and restricted stock granted to our named executive officers under the stock plans generally vest over a four-year period, which time-based vesting encourages our executives to remain employed by us. We also believe in the inherent performance nature of options, as the value of the stock option to the executive will increase based on goal achievement that causes market appreciation of our Common Stock. We also believe that performance-based restricted stock grants allow us to target specific performance targets and reward named executive officers if those targets are met. Finally, we believe that time-based restricted stock grants serve as a strong retention vehicle at this critical juncture in our Company’s history. Through stock option and restricted stock grants, executives and employees receive significant equity as an incentive to assist us in building long-term stockholder value.


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We generally make incentive equity awards during December and January each year, and occasionally make additional awards during the year for retention purposes. Additionally, in the event that an executive officer or a designated key employee is hired during the year, a grant is generally made at the time of his or her commencement of employment. When making equity awards for 2009, our Compensation Committee agreed on an award measured in dollars for each named executive officer, and this award value is converted to equity, consisting of stock options and restricted stock, using the Black-Scholes-Merton method and the equity awards are then granted to the executive. Our Compensation Committee considers the number of outstanding options, both vested and unvested, and also prior restricted stock awards, both vested and unvested, held by our named executive officers when awarding new grants, which consideration may cause the Compensation Committee to increase or decrease the size of an additional grant.
 
For performance in 2009, the Compensation Committee approved stock options and restricted stock awards in December 2009, which were granted in December 2009 and January 2010, respectively, as long term equity incentives. The number of shares subject to each award to the named executive officers was determined after considering the November 2009 Radford report regarding the competitiveness of our equity compensation practices, and, specifically, considering the recommendation that our Company’s equity awards be within the target percentile when compared to our specified peer group. In December 2009, our Board of Directors approved the Compensation Committee’s recommendation to make the following time-based equity grants to our named executive officers:
 
  •  to Dr. Gold, 56,250 shares of restricted stock and 112,500 stock options;
 
  •  to Dr. Frohlich, 22,500 shares of restricted stock and 45,000 stock options;
 
  •  to each of Messrs. Hamm and Schiffman, 18,750 shares of restricted stock and 37,500 stock options; and
 
  •  to Dr. Urdal, 16,250 shares of restricted stock and 32,500 stock options.
 
The shares of restricted stock awarded to each of our named executive officers were granted on January 21, 2010, which was the third Thursday in January, pursuant to Company policy, and vest over a four-year period beginning on the grant date with 25% of the award vesting on the first anniversary of the grant date, and the remaining shares then vesting quarterly over the next three years. The stock options awarded to each of our named executive officers were granted on December 8, 2009, have a term of ten years and vest over a four-year period beginning on the grant date with 25% of the award vesting on the first anniversary of the grant date, and the remaining shares then vesting monthly over the next three years. The Compensation Committee has historically awarded annual grants subject to time-vesting requirements only.
 
Perquisites and Other Elements of Compensation.  We generally do not provide significant perquisites to our named executive officers. In 2009, we paid for executive disability insurance premiums for Drs. Gold, Frohlich and Urdal, and Messrs. Hamm and Schiffman. We additionally paid for the cost of certain health and non-health executive club memberships held by our named executive officers, which memberships may frequently involve business entertainment by our named executive officers on our behalf. Our $4,000 matching 401(k) plan contribution was available to all our employees.
 
Employment Agreements
 
We have employment agreements with each of our named executive officers, which we refer to as our executive employment agreements. In April 2010, as part of our ongoing evaluation of our compensation agreements, we approved an amended form of executive employment agreement. The amended employment agreements generally made certain clarifying changes to definitions and otherwise updated the agreements, but did not provide for increased monetary or severance benefits. Each of our named executive officers is employed on an at-will basis without a specified term. Each of our executive employment agreements contains restrictive covenants that will apply following the executive’s termination of employment as follows:
 
  •  our Chief Executive Officer is subject to a one-year non-competition covenant;
 
  •  each of our executive vice president and senior vice presidents is subject to a nine-month non-competition covenant; and
 
  •  each of our senior executives is subject to a one-year post-termination non-solicitation covenant.


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For more information about our executive employment agreements, see “Executive Compensation — Summary of Executive Employment Agreements and Compensatory Terms” below.
 
Post-Termination Compensation and Benefits
 
The executive employment agreements also provide for certain post-termination payments and benefits as follows:
 
  •  Severance generally
 
Upon termination without cause or resignation for good reason, our executive vice president and senior vice presidents will receive a lump-sum payment equal to 75% of their base salary and 75% of the target annual cash incentive award identified for the relevant year, and our chief executive officer will receive a lump-sum payment equal to 100% of his base salary for the relevant year and 100% of the target annual cash incentive award identified for the relevant year. In addition, each executive will receive full acceleration of all stock options and restricted stock awards held by him or her, will be entitled to payment for continued health benefits coverage by us for up to 18 months, and will receive up to $10,000 for outplacement services.
 
Upon termination for cause or voluntary termination by an executive, we will not pay any additional benefits other than for accrued and unpaid salary and vacation.
 
  •  Severance payable within 12 months following a change of control
 
In the event of termination without cause or for good reason, our senior vice presidents will receive a lump-sum payment equal to 150% of their base salary and 100% of the target annual cash incentive award identified for the relevant year, and our executive vice president and chief executive officer will receive a lump-sum payment equal to 200% of his base salary and 100% of the target annual cash incentive award identified for the relevant year. In addition, each executive will receive full acceleration of all stock options and restricted stock awards held by him or her, will be entitled to payment for continued health benefits coverage by us for up to 18 months, and will receive up to $10,000 for outplacement services.
 
  •  Severance payable in the event of other terminations (death or disability)
 
Upon death, a named executive officer’s beneficiary will continue to receive the executive’s annual base salary up to the earlier of six months or the commencement of death benefits, and the stock options and restricted stock awards held by the executive will be subject to full acceleration.
 
Upon disability, a named executive officer will receive a cash lump sum in an amount equal to half of the executive’s base salary, and the executive will receive full acceleration of all stock options and restricted stock awards held by him or her.
 
  •  No tax gross up benefits
 
None of our executive employment agreements includes a gross-up for excise taxes that would be payable by an executive on benefits in excess of the amount permitted under Section 280G of the Internal Revenue Code of 1986. The executive employment agreements provide that we will either pay the entire severance amount to the named executive officer, who will then be subject to and responsible for the excise tax, or we will reduce the severance to be paid to an amount low enough to avoid the tax to the executive, whichever alternative is the better result for the executive.
 
For more information about our new executive employment agreements, see “Executive Compensation — Summary of Executive Employment Agreements and Compensatory Terms” below. In reviewing and evaluating the compensation and benefits payable under these arrangements as effective during 2009 and as updated in April 2010, the members of our Compensation Committee relied on their knowledge of similar post-termination arrangements for other companies with which the members were affiliated or familiar. For more information about our post-termination compensation and benefits, see “Executive Compensation — Potential Payments Upon Termination” below.
 
Stock Ownership and Retention Guidelines
 
We have not adopted stock ownership or equity retention guidelines for our named executive officers. To date, our compensation programs have been heavily weighted toward long-term equity incentives, and each of our named


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executive officers has a sizable equity interest in the Company, which equity interest consists of both stock options exercisable for shares of Common Stock and also restricted Common Stock. Accordingly, the Compensation Committee has not determined that ownership or equity retention guidelines are necessary at this time. We may consider adopting equity ownership guidelines in the future if we determine it is appropriate and in the best interests of our Company and our stockholders.
 
Tax and Regulatory Considerations
 
Section 162(m) of the Internal Revenue Code limits us to a deduction for federal income tax purposes of no more than $1 million of compensation paid to certain executive officers in a taxable year. Compensation above $1 million may be deducted if it is performance-based compensation within the meaning of the Internal Revenue Code. Our Compensation Committee’s policy with respect to Section 162(m) is to try and preserve the deductibility of compensation payable to our named executive officers, although deductibility is only one among a number of factors considered in determining appropriate levels or means of compensation for these officers.
 
Our Compensation Committee has determined that stock options granted under the 2000 Equity Incentive Plan, 2009 Equity Plan and the 2002 Equity Plan with an exercise price at least equal to the closing price of our Common Stock on the NASDAQ Global Market on the grant date will be treated as performance-based compensation upon approval by the Compensation Committee.
 
Section 409A of the Internal Revenue Code requires that “nonqualified deferred compensation” be deferred and paid under plans or arrangements that satisfy the requirements of that statute with respect to the timing of deferral elections, timing of payments and certain other matters. Failure to satisfy these requirements can expose employees to accelerated income tax liabilities and penalty taxes and interest on their vested compensation under such plans. Accordingly, as a general matter, it is our intention to design and administer our compensation and benefits plans and arrangements for all of our employees, including our named executive officers, so that they are either exempt from, or satisfy the requirements of, Section 409A.
 
COMPENSATION COMMITTEE REPORT
 
The Compensation Committee reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K and contained within this proxy statement with management and, based on such review and discussions, recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this proxy statement and incorporated into the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2009.
 
From the members of the Compensation Committee of the Board of Directors,
 
Gerardo Canet (Chair)
Susan B. Bayh
Bogdan Dziurzynski, D.P.A.
Pedro Granadillo


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EXECUTIVE COMPENSATION
 
Summary Compensation Table
 
The table below summarizes the total compensation earned during 2007, 2008 and 2009 by our principal executive officer, principal financial officer and our three other most highly-paid executive officers. We refer to these officers collectively as our named executive officers. The named executive officers were determined by us as of December 31, 2009.
 
                                                         
                Stock
    Option
    Non-Equity
    All Other
       
Name and
        Salary
    Awards
    Awards
    Incentive Plan
    Compensation
    Total
 
Principal Position
  Year     ($)     ($)(1)     ($)(1)     Compensation(2)     ($)(3)     ($)  
 
Mitchell H. Gold, M.D., 
    2009     $ 550,000     $ 806,750     $ 2,045,695     $ 387,750     $ 17,218     $ 3,807,413  
President and Chief
    2008       500,000       595,420             212,500       13,536       1,321,456  
Executive Officer
    2007       500,000       991,500       637,203       232,500       11,796       2,372,999  
Gregory T. Schiffman,
    2009       374,400       391,850       681,897       175,968       7,032       1,631,147  
Senior Vice President
    2008       360,000       208,097             122,400       5,032       695,529  
and Chief Financial Officer
    2007       360,000       249,075       222,700       144,000       93,271       1,069,046  
Mark W. Frohlich, M.D.,
    2009       336,000       391,850       818,278       157,920       6,513       1,710,561  
Senior Vice President
    2008       300,000       138,727             96,000       4,436       539,163  
Clinical Affairs and Chief Medical Officer
    2007       271,700       198,300       148,465       100,000       4,436       722,901  
Richard F. Hamm, Jr.,
    2009       342,342       391,850       681,897       160,901       8,478       1,585,468  
Senior Vice President,
    2008       329,175       208,097             111,920       7,330       656,522  
Corporate Development,
    2007       329,175       297,450       222,700       131,671       7,231       988,227  
General Counsel and Secretary
                                                       
David L. Urdal, Ph.D., 
    2009       407,550       391,850       590,978       191,549       7,684       1,589,611  
Senior Vice President
    2008       391,875       208,097             125,400       5,684       731,056  
and Chief Scientific Officer
    2007       391,875       297,450       222,700       156,750       5,684       1,074,459  
 
 
 
(1) The compensation cost represents the aggregate fair value on the grant date, as determined in accordance with the Financial Accounting Standards Board’s Accounting Standards Codification (ASC) 718. For more information, see Note 9 of the Notes to Consolidated Financial Statements in our Annual Report on Form 10-K for the fiscal year ended December 31, 2009.
 
(2) Amounts shown reflect the named executive officers’ annual cash incentive payouts for 2009 performance, as further discussed above under “Compensation Discussion and Analysis.” These amounts were recommended by the Compensation Committee and approved by our Board of Directors at its December 8, 2009 meeting and were paid in January 2010.


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(3) Amounts shown include:
 
                                                 
        401(k)
  Insurance
  Executive
       
        Employer Match
  Premiums
  Memberships
  Miscellaneous
  Total
Name
  Year   ($)   ($)(i)   ($)(ii)   ($)(iii)   ($)
 
M. Gold, M.D. 
    2009     $ 4,000     $ 1,021     $ 7,379     $ 4,818     $ 17,218  
      2008       2,000       1,607       8,897       1,032       13,536  
      2007       2,000       1,607       8,189             11,796  
G. Schiffman
    2009       4,000       1,927             1,105       7,032  
      2008       2,000       3,032                   5,032  
      2007       2,000       2,526             88,745       93,271  
M. Frohlich, M.D. 
    2009       4,000       1,597             916       6,513  
      2008       2,000       2,436                   4,436  
      2007       2,000       2,436                   4,436  
R. Hamm
    2009       4,000       1,679       1,167       1,632       8,478  
      2008       2,000       2,561       2,769             7,330  
      2007       2,000       2,561       2,670             7,231  
D. Urdal, Ph.D. 
    2009       4,000       2,341             1,343       7,684  
      2008       2,000       3,684                   5,684  
      2007       2,000       3,684                   5,684  
 
 
(i) Consists of executive disability insurance premiums.
 
(ii) Consists of health and non-health club memberships.
 
(iii) For Mr. Schiffman, consists of 2007 relocation assistance and other incidental benefits.
 
2009 Grants of Plan-Based Awards Table(1)
 
                                                         
            Estimated
  All Other
  All Other
       
            Future
  Stock
  Option
       
            Payouts
  Awards:
  Awards:
  Exercise
  Grant Date
            Under
  Number
  Number of
  or Base
  Fair Value
        Date of
  Equity
  of Shares
  Securities
  Price of
  of Stock
        Board
  Incentive
  of Stock
  Underlying
  Option
  and Options
    Grant
  Action
  Awards
  or Units
  Options
  Awards
  Awards
Name
  Date   (2)   (#)   (#)   (#)   ($/Sh)   ($)
 
Mitchell H. Gold, M.D. 
    12/08/09 (3)     12/08/09                   112,500     $ 26.64     $ 2,045,695  
      1/21/10 (4)     12/08/09             56,250                   1,606,500  
Gregory T. Schiffman
    12/08/09 (3)     12/08/09                   37,500     $ 26.64       681,897  
      1/21/10 (4)     12/08/09             18,750                   535,500  
Mark W. Frohlich, M.D. 
    12/08/09 (3)     12/08/09                   45,000     $ 26.64       818,278  
      1/21/10 (4)     12/08/09             22,500                   642,600  
Richard F. Hamm, Jr. 
    12/08/09 (3)     12/08/09                   37,500     $ 26.64       681,897  
      1/21/10 (4)     12/08/09             18,750                   535,500  
David L. Urdal, Ph.D. 
    12/08/09 (3)     12/08/09                   32,500     $ 26.64       590,978  
      1/21/10 (4)     12/08/09             16,250                   464,100  
 
 
(1) All awards listed were granted under our 2009 Equity Incentive Plan.
 
(2) For most equity awards, our Compensation Committee recommends a grant, pursuant to the terms of the applicable compensation plan, to be approved and granted by our Board of Directors as of the close of the market on the date of action by the Board of Directors. However, for annual grants of restricted stock to our named executive officers, the Compensation Committee has established a practice of setting the third Thursday of January as the actual grant date for these awards, which are recommended at the last meeting of the Compensation Committee during the applicable year, and approved by the Board of Directors, before the relevant year-end.
 
(3) These time-based stock option grants vest as to 25% of the total number of shares on December 8, 2010 and thereafter at a rate of 1/36th monthly thereafter.


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(4) These awards were technically granted during fiscal 2010; however, they were made as part of our 2009 compensation related grants approved in December 2009. These time-based shares of restricted stock vest as to 25% of the total number of shares on January 21, 2011 and thereafter at a rate of 6.25% of the total number of remaining shares in equal quarterly installments.
 
Treatment of stock options and restricted stock awards upon an executive’s termination of employment under various scenarios are summarized under “Executive Compensation — Potential Payments Upon Termination” below.
 
Summary of Executive Employment Agreements and Compensatory Terms
 
In January 2007, we entered into an executive employment agreement with each of Drs. Gold and Urdal and Messrs. Hamm and Schiffman in connection with the termination of our Executive Change in Control Severance Plan and prior employment agreements with no material changes to either the plan or the form of the employment agreements. On December 7, 2007, we entered into an executive employment agreement with Dr. Frohlich. The executive employment agreements provided for annual base salaries for calendar year 2009 as follows: Dr. Gold, $550,000; Dr. Frohlich, $336,000; Mr. Hamm, $342,342; Mr. Schiffman, $374,400; and Dr. Urdal, $407,550. Under these agreements effective during 2009, if performance targets set in advance by the Board of Directors were met, each executive was eligible under his employment agreement for an annual cash incentive award, as determined by the Board, of up to 60% of base salary for Dr. Gold, and up to 40% of base salary for Drs. Frohlich and Urdal and Messrs. Hamm and Schiffman. For 2010 compensation, these target amounts were increased as follows: Dr. Gold, 100%; Mr. Schiffman, 45%; Dr. Frohlich, 45%; Mr. Hamm, 45%; and Dr. Urdal, 45%. In April 2010, as part of our ongoing evaluation of our compensation agreements, we entered into an amended form of executive employment agreement with each of our named executive officers. The amended employment agreements generally made certain clarifying changes to definitions and otherwise updated the agreements, but did not provide for increased monetary or severance benefits.
 
Our executive employment agreements have no specified term, and the employment relationship may be terminated by the executive officers or by us at any time. If we terminate the named executive officer’s employment without cause, or if the named executive officer resigns for good reason, the named executive officer will be entitled to severance payments as detailed under the section heading “Executive Compensation — Potential Payments Upon Termination.” As defined in the form of executive employment agreement approved in April 2010, a named executive officer is entitled to “good reason” resignation upon the occurrence of the following:
 
  •  the alteration of the named executive officer’s duties, responsibilities or title resulting in a significant diminution of position, duties, responsibilities or status with our Company or certain changes in the executive’s direct report, or the reduction of the named executive officer’s base salary, unless the base salaries of all other employees of our Company at the same level or above are proportionately reduced and the reduction does not exceed 10% of the employee’s base salary;
 
  •  the permanent transfer or assignment to any location that is more than fifty (50) miles from the location of the named executive officer’s current principal office of employment; or
 
  •  the Company materially breaches its obligations under the employment agreement.
 
As defined in each executive employment agreement approved April 2010, during the 12-month period following a change in control, in lieu of the above, a named executive officer is entitled to “good reason” resignation upon the occurrence of the following:
 
  •  a material adverse change in the named executive officer’s duties, responsibilities or title as in effect at any time within one year prior to the change in control or any time thereafter, or the assignment to the named executive officer of any duties or responsibilities which are inconsistent with such named executive officer’s duties, responsibilities or title as in effect at any time within one year prior to the date of the change in control or thereafter;
 
  •  a material reduction in annual salary or target annual bonus opportunity as in effect at any time within one year prior to the change in control or any time thereafter;
 
  •  the permanent transfer or assignment to any location that is more than fifty (50) miles from the location of the named executive officer’s current principal office of employment prior to the change in control;


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  •  the Company’s failure to provide the named executive officer with compensation and benefits, in the aggregate, at least equal to those provided for under a material employee benefit plan in which the named executive officer was participating at any time within one year prior to the change in control or thereafter;
 
  •  the Company materially breaches its obligations under the executive employment agreement, terminates the executive for “cause” which does not comply with the terms of the executive employment agreement; or a successor does not agree to assume and perform the executive employment agreement.
 
Each executive employment agreement requires the named executive officer not to compete with us after termination of employment for a period of one year for Dr. Gold, and nine months for our other named executive officers, and provides for a one-year post-termination non-solicitation obligation for each of the named executive officers.
 
Outstanding Equity Awards at 2009 Fiscal Year-End Table
 
The table below summarizes the named executive officers’ equity awards that were unvested or unexercised, as applicable, as of December 31, 2009.
 
                                                                 
    Option Awards     Stock Awards  
                                        Equity
    Equity
 
                                        Incentive Plan
    Incentive Plan
 
                                        Awards:
    Awards:
 
                                  Market
    Number of
    Market or
 
    Number of
    Number of
                Number of
    Value of
    Unearned
    Payout Value of
 
    Securities
    Securities
                Shares or
    Shares or
    Shares, Units
    Unearned
 
    Underlying
    Underlying
                Units of
    Units of
    or Other
    Shares, Units or
 
    Unexercised
    Unexercised
    Option
          Stock That
    Stock
    Rights That
    Other Rights
 
    Options
    Options
    Exercise
    Option
    Have Not
    That Have
    Have Not
    That Have Not
 
    (#)
    (#)
    Price
    Expiration
    Vested
    Not Vested
    Vested
    Vested
 
Name
  Exercisable     Unexercisable     ($)(1)     Date     (#)     ($)     (#)     ($)  
 
Mitchell H. Gold, M.D. 
    36,535           $ 9.25       5/10/2011                          
      150,000             9.77       12/8/2014                          
      18,750             5.45       12/13/2015                          
      12,500       18,750 (2)     4.41       12/06/2016                          
      31,060       93,180 (3)     4.90       12/05/2017                          
            112,500 (4)     26.64       12/08/2019                          
                              3,516 (5)   $ 92,400              
                                        $ 67,500 (6)   $ 1,773,900  
                              11,719 (7)     307,975              
                                          112,500 (8)     2,956,500  
                              52,414 (9)     1,377,440              
                              175,000 (10)     4,599,000              
Gregory T. Schiffman
    32,566       32,566 (3)     4.90       12/05/2017                          
            37,500 (4)     26.64       12/08/2019                          
                              50,000 (11)     1,314,000              
                                          33,750 (8)     886,950  
                              18,318 (9)     481,397              
                              85,000 (10)     2,233,800              
Mark W. Frohlich, M.D. 
    23,333             5.88       08/01/2015                          
      3,578       108 (12)     5.50       01/19/2016                          
      5,353       1,250 (13)     4.52       03/16/2016                          
      2,500       3,750 (2)     4.41       12/06/2016                          
      12,229       21,710 (3)     4.90       12/05/2017                          
            45,000 (4)     26.64       12/08/2019                          
                              625 (14)     16,425              
                                          13,500 (6)     354,780  
                                          22,500 (8)     591,300  
                              2,344 (7)     61,600              
                              12,211 (9)     320,905              
                              85,000 (10)     2,233,800              


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    Option Awards     Stock Awards  
                                        Equity
    Equity
 
                                        Incentive Plan
    Incentive Plan
 
                                        Awards:
    Awards:
 
                                  Market
    Number of
    Market or
 
    Number of
    Number of
                Number of
    Value of
    Unearned
    Payout Value of
 
    Securities
    Securities
                Shares or
    Shares or
    Shares, Units
    Unearned
 
    Underlying
    Underlying
                Units of
    Units of
    or Other
    Shares, Units or
 
    Unexercised
    Unexercised
    Option
          Stock That
    Stock
    Rights That
    Other Rights
 
    Options
    Options
    Exercise
    Option
    Have Not
    That Have
    Have Not
    That Have Not
 
    (#)
    (#)
    Price
    Expiration
    Vested
    Not Vested
    Vested
    Vested
 
Name
  Exercisable     Unexercisable     ($)(1)     Date     (#)     ($)     (#)     ($)  
 
Richard F. Hamm, Jr. 
    100,000             12.12       11/8/2014                          
      15,000             9.77       12/8/2014                          
      33,750             5.45       12/13/2015                          
      48,293       3,220 (15)     4.37       03/24/2016                          
      16,875       5,625 (2)     4.41       12/06/2016                          
      32,566       32,566 (3)     4.90       12/05/2017                          
            37,500 (4)     26.64       12/08/2019                          
                              1,055 (5)     27,725              
                              1,610 (16)     42,311              
                                          20,250 (6)     532,170  
                              3,515 (7)     92,374              
                                          33,750 (8)     886,950  
                              18,318 (9)     481,397              
                              85,000 (10)     2,233,800              
David L. Urdal, Ph.D. 
    12,588             14.06       12/14/2010                          
      20,856             4.95       02/27/2012                          
      14,080             5.74       01/01/2013                          
      4,382             9.77       12/08/2014                          
      30,000             5.45       12/13/2015                          
      16,875       5,625 (2)     4.41       12/06/2016                          
      20,193       32,566 (3)     4.90       12/05/2017                          
            32,500 (4)     26.64       12/08/2019                          
                              937 (5)     24,624              
                                          20,250 (6)     532,170  
                              3,515 (7)     92,374              
                                          33,750 (8)     886,950  
                              18,318 (9)     481,397              
                              85,000 (10)     2,233,800              
 
 
(1) Effective December 6, 2006, the exercise price of option grants was changed to be the closing price on the NASDAQ Global Market on the date of grant. Previously, the fair market value determination under the plans used the closing sales price as of the last market trading day prior to the date of grant.
 
(2) Service-based stock options granted December 6, 2006 vest at a rate of 25% on the first year anniversary and 1/36th monthly thereafter, assuming continued employment.
 
(3) Service-based stock options granted December 5, 2007 vest at a rate of 25% on the first year anniversary and 1/36th monthly thereafter, assuming continued employment.
 
(4) Service-based stock options granted December 8, 2009 vest at a rate of 25% on the first year anniversary and 1/36th monthly thereafter, assuming continued employment.
 
(5) Service-based restricted stock awards granted January 19, 2006 vest at a rate of 25% on the first year anniversary and 6.25% quarterly thereafter, assuming continued employment.
 
(6) Performance-based restricted stock awards granted December 6, 2006 were scheduled to vest 40% upon the acceptance by the FDA of our biologics license application for Provenge and the balance to vest upon the FDA’s approval of Provenge for commercial sale, assuming continued employment. We received notice from the FDA on January 12, 2007 that the biologics license application for Provenge was accepted and 40% of the award vested on that date.
 
(7) Service-based restricted stock awards granted January 18, 2007 vest at a rate of 25% on the first year anniversary and 6.25% quarterly thereafter, assuming continued employment.

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(8) Performance-based restricted stock awards granted June 20, 2007 are scheduled to vest 100% upon the FDA’s approval of Provenge for commercial sale, assuming continued employment.
 
(9) Service-based restricted stock awards granted January 17, 2008 vest at a rate of 25% on the first year anniversary and 6.25% quarterly thereafter, assuming continued employment.
 
(10) Service-based restricted stock awards granted January 15, 2009 vest at a rate of 25% on the first year anniversary and 6.25% quarterly thereafter, assuming continued employment.
 
(11) Mr. Schiffman’s new hire service-based restricted stock award granted December 18, 2006 vests 25% on the first year anniversary and 6.25% quarterly thereafter, assuming continued employment.
 
(12) Service-based stock options granted January 19, 2006 vest at a rate of 25% on the first year anniversary and 1/36th monthly thereafter, assuming continued employment.
 
(13) Service-based stock options granted March 16, 2006 vest at a rate of 25% on the first year anniversary and 1/36th monthly thereafter, assuming continued employment.
 
(14) Service-based restricted stock awards granted March 16, 2006 vest at a rate of 25% on the first year anniversary and 6.25% quarterly thereafter, assuming continued employment.
 
(15) Mr. Hamm’s stock options granted March 24, 2006 vest 25% on the first year anniversary and 1/36th monthly thereafter, or, if earlier, 100% on the FDA’s approval of Provenge for commercial sale, assuming continued employment.
 
(16) Mr. Hamm’s restricted stock award granted March 24, 2006 vests 25% on the first year anniversary and 6.25% quarterly thereafter, or, if earlier, 100% on the FDA’s approval of Provenge for commercial sale, assuming continued employment.
 
2009 Option Exercises and Stock Vested Table
 
The following table provides information regarding stock options exercised by, and restricted stock awards vested for, our named executive officers during 2009.
 
                                 
    Option Awards     Stock Awards  
    Number of Shares
    Value
    Number of
    Value
 
    Acquired on
    Realized on
    Shares Acquired
    Realized on
 
    Exercise
    Exercise
    on Vesting
    Vesting
 
Name
  (#)     ($)     (#)(1)     ($)(2)  
 
Mitchell H. Gold, M.D. 
    542,928     $ 9,986,133       64,203     $ 946,318  
Gregory T. Schiffman
                64,248       1,240,199  
Mark W. Frohlich, M.D. 
    26,628       536,395       13,874       204,916  
Richard F. Hamm, Jr. 
                27,718       441,606  
David L. Urdal, Ph.D. 
    325,467       4,382,012       20,811       300,427  
 
 
(1) This represents the vesting of restricted stock awards previously granted.
 
(2) Computed based on the closing market price of our Common Stock on the date of vesting multiplied by the number of shares vested.
 
Potential Payments Upon Termination or Change-in-Control
 
The amounts shown in the tables below assume that the noted triggering event occurred on December 31, 2009. Other relevant assumptions and explanations are provided in the footnotes following the tables. The amounts shown reflect only the additional payments or benefits that a named executive officer would have received upon the occurrence of the respective triggering events listed below; they do not include the value of payments or benefits that would have been earned, or any amounts associated with equity awards that would have vested absent the triggering event.


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Potential Payments on Termination (Without Cause or Following Change-in-Control)
As of Year Ended December 31, 2009(1)
 
                                                                 
    Termination Without Cause or
       
    Resignation for Good Reason(2)     Termination Following Change-in-Control(3)  
                Estimated
                      Estimated
       
          Estimated
    Value of
                Estimated
    Value of
       
          Value of
    Accelerated
                Value of
    Accelerated
       
          Continued
    Stock
                Continued
    Stock
       
          Health Care
    Options and
                Health Care
    Options and
       
          Benefits and
    Restricted
                Benefits and
    Restricted
       
    Cash
    Outplacement
    Stock
          Cash
    Outplacement
    Stock
       
    Payments
    Assistance
    Awards
    Total
    Payments
    Assistance
    Awards
    Total
 
Name of Executive Officer
  ($)(4)     ($)(5)     ($)(6)     ($)     ($)(7)     ($)(5)     ($)(6)     ($)  
 
Mitchell H. Gold, M.D. 
  $ 1,008,000     $ 43,500     $ 2,708,500     $ 3,760,000     $ 1,638,000     $ 43,500     $ 2,708,500     $ 4,390,000  
Gregory T. Schiffman
    436,800       31,900       973,500       1,442,200       790,400       31,900       973,500       1,795,800  
Mark W. Frohlich, M.D. 
    378,000       43,500       1,046,800       1,468,300       684,000       43,500       1,046,800       1,774,300  
Richard F. Hamm, Jr. 
    400,100       43,500       953,200       1,396,800       723,900       43,500       953,200       1,720,600  
David L. Urdal, Ph.D. 
    449,400       31,900       868,100       1,349,400       813,200       31,900       868,100       1,713,200  
 
 
(1) All references to base salary and annual target bonus refer to the amounts described above under “Summary of Executive Employment Agreements and Compensatory Terms” as in effect as of December 31, 2009. Effective in April 2010, we approved certain changes to the definitions contained in the form of executive employment agreement; however these changes did not impact payment amounts listed in the table.
 
(2) If we terminated the executive without cause, or the executive resigned for good reason as defined in his executive employment agreement, the executive would have been entitled to receive the compensation as shown in the table.
 
(3) If we terminated the executive’s employment without cause, or if the executive resigned for good reason as defined in his executive employment agreement, in either case within twelve months following a change of control, then the executive would have been entitled to receive in lieu of other termination compensation the amounts listed as shown in the table, plus any accrued but not yet paid salary, and the cash value of accrued vacation benefits.
 
(4) Cash payments to Dr. Gold consist of a lump sum severance payment in an amount equal to 100% of his then current base salary and 100% of the target annual bonus payable for the then calendar year. Cash payments to Drs. Frohlich and Urdal, and Messrs. Hamm and Schiffman consist of a lump sum severance payment in an amount equal to 75% of their then current base salary and 75% of the amount of the target annual bonus payable for the then calendar year.
 
(5) The estimated value of continued benefits and outplacement assistance provided to Drs. Gold, Frohlich and Urdal and Messrs. Hamm and Schiffman consists of up to $10,000 for outplacement services, and continuation of all health benefits in effect on the termination date for a period of up to 18 months.
 
(6) Estimated value of accelerated vesting of stock options and restricted stock awards held by Drs. Gold, Frohlich and Urdal and Messrs. Hamm and Schiffman represents the unamortized expense as calculated in accordance with the Financial Accounting Standards Board’s Accounting Standards Codification (ASC) 718.
 
(7) Cash payments to Dr. Gold consist of a lump sum severance payment in an amount equal to 200% of his then current base salary and 100% of the target annual bonus payable for the then calendar year. Cash payments to Drs. Frohlich and Urdal and Messrs. Hamm and Schiffman consist of a lump sum severance payment in an amount equal to 150% of his then current base salary and 100% of the amount of the target annual bonus payable for the current calendar year.


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Potential Payments on Disability or Death
As of Year Ended December 31, 2009
 
                                                         
    Disability(1)     Death(2)  
                Estimated
                Estimated
       
                Value of
                Value of
       
                Accelerated
                Accelerated
       
          Estimated
    Stock
                Stock
       
          Value of
    Options and
                Options and
       
          Continued
    Restricted
                Restricted
       
    Cash
    Benefits/
    Stock
          Cash
    Stock
       
    Payments
    Perquisites
    Awards
    Total
    Payments
    Awards
    Total
 
Name of Executive Officer
  ($)     ($)     ($)     ($)     ($)     ($)     ($)  
 
Mitchell H. Gold, M.D. 
  $ 283,800     $ 33,500     $ 2,708,500     $ 3,025,800     $ 315,000     $ 2,708,500     $ 3,023,500  
Gregory T. Schiffman
    176,800       21,900       973,500       1,172,200       208,000       973,500       1,181,500  
Mark W. Frohlich, M.D. 
    148,800       33,500       1,046,800       1,229,100       180,000       1,046,800       1,226,800  
Richard F. Hamm, Jr. 
    159,300       33,500       953,200       1,146,000       190,500       953,200       1,143,700  
David L. Urdal, Ph.D. 
    182,800       21,900       868,100       1,072,800       214,000       868,100       1,082,100  
 
 
(1) In the event the executive becomes physically or mentally disabled such that he is unable to perform his duties for a period of three consecutive months as determined by a medical professional, we may terminate the executive’s employment, unless otherwise prohibited by law. In the event of termination due to disability, we will continue the executive’s base salary (less any short term disability payments the executive receives from our Company) until the earlier of six months from the termination date or the commencement of long-term disability payments under any existing Company long-term disability policy, and we will fully accelerate vesting of any and all unvested stock options and restricted stock grants held by the executive. Under the amended form of executive employment agreement entered into in April 2010, the continuation of executive’s base salary in the event of termination due to disability has been replaced in order to comply with Section 409A of the Internal Revenue Code with a cash lump sum in an amount equal to half of the executive’s base salary.
 
(2) An executive’s employment will terminate automatically upon death. We will continue to pay the executive’s base salary to his stated beneficiary until the earlier of six months from the termination date or the commencement of death benefits under any existing group life insurance plan of our Company, and we will fully accelerate vesting of any and all unvested stock options and restricted stock grants held by the executive.
 
RELATED PARTY TRANSACTIONS
 
We have entered into indemnity agreements with our directors, executive officers and other members of senior management that provide, among other things, that we will indemnify such officer or director, under the circumstances and to the extent provided for therein, for expenses, damages, judgments, fines and settlements he or she may be required to pay in actions or proceedings in which he or she is or may be made a party by reason of his or her position as a director, officer or other agent of the Company, and otherwise to the full extent permitted under Delaware law and our Amended and Restated Bylaws.
 
As set forth in the Audit Committee Charter, unless submitted to another comparable independent body of the Board of Directors, as and to the extent required under applicable federal securities laws and related rules and regulations and/or NASDAQ listing standards, our Audit Committee is responsible for reviewing and approving, in advance, all related party transactions. Related parties include any of our directors or executive officers and their immediate family members as well as significant stockholders of the Company. To identify any related party transactions, each year, we submit and require our directors and officers to complete Director and Officer Questionnaires identifying any transactions with us in which the executive officer or director or their family members has an interest. We review related party transactions due to the potential for a conflict of interest. A conflict of interest occurs when an individual’s private interest interferes, or appears to interfere, with our interests. In addition, our Corporate Governance Committee determines, on an annual basis, which members of our Board of Directors meet the definition of an independent director as defined in NASDAQ’s Marketplace Rules. Our Corporate Governance Committee reviews and discusses any relationships with directors that would potentially interfere with his or her exercise of independent judgment in carrying out the responsibilities of a director. Finally,


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our Code of Business Conduct, also available on our investor relations website, establishes the corporate standards of behavior for all our employees, officers, and directors.
 
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
 
The following table sets forth certain information regarding the beneficial ownership of the Company’s Common Stock as of April 16, 2010, based on 134,245,072 shares outstanding as of that date, by (1) each person or group who is known to the Company to be the beneficial owner of more than 5% of the Company’s outstanding Common Stock, (2) each director of the Company, (3) each executive officer named in the Summary Compensation Table under “Executive Compensation”, and (4) all of the Company’s directors and executive officers as a group.
 
                                 
    Beneficial Ownership
    Shares
  Shares
  Total
  Percentage
    Beneficially
  Acquirable
  Beneficial
  Beneficially
Name and Address(1)
  Owned   Within 60 Days(2)   Ownership   Owned
 
FMR, LLC(3)
    19,629,024             19,629,024       14.62 %
237 Park Avenue, 9th Floor
                               
New York, NY 10017
                               
S.A.C. Capital Advisors(4)
    9,494,601       558,300       10,052,901       7.49 %
72 Cummings Point Rd,
                               
Stamford, CT 06902
                               
Capital Ventures International(5)
          8,000,000       8,000,000       5.96 %
One Capital Place
                               
P.O. Box 1787 GT
                               
Grand Cayman, Cayman Islands
                               
British West Indies
                               
BlackRock, Inc.(6)
    7,707,715             7,707,715       5.74 %
40 East 52nd St.
                               
New York, NY 10022
                               
Mitchell H. Gold, M.D. 
    107,639       281,516       389,155       *
Mark W. Frohlich, M.D. 
    76,430       46,360       122,790       *
Richard F. Hamm, Jr. 
    105,276       260,659       365,935       *
Gregory T. Schiffman
    105,240       40,708       145,948       *
David L. Urdal, Ph.D.(7)
    539,217       129,929       669,146       *
Susan B. Bayh
    17,250       109,221       126,471       *
Richard B. Brewer
    20,650       7,500       28,150       *
Gerardo Canet
    24,706       7,500       32,206       *
Ian T. Clark
    8,744       7,500       16,244       *
Bogdan Dziurzynski, D.P.A
    41,250       99,171       140,421       *
Pedro Granadillo
    8,744       7,500       16,244       *
Douglas G. Watson
    26,250       36,171       62,421       *
All executive officers and directors as a group (12 persons)
    1,081,396       1,033,735       2,115,131       1.6 %
 
 
Less than 1%.
 
(1) The information set forth in this table is based upon information supplied to the company by the company’s officers, directors and principal stockholders and Schedules 13D, 13F and 13G filed with the SEC. Except as otherwise indicated, and subject to applicable community property laws, the company believes that the persons named in the table have sole voting and investment power with respect to all shares of common stock beneficially owned by them.
 
(2) Reflects the number of shares that could be purchased by exercise of options vested at April 16, 2010 or within 60 days thereafter.


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(3) According to a Schedule 13G filed with the SEC on February 16, 2010, FMR, LLC held and had sole investment direction over 19,629,024 shares of our Common Stock. The interest of one person, Fidelity Growth Company Fund, a registered investment company, converted to 10,680,303 of such shares of our Common Stock, or 7.96%.
 
(4) According to a Schedule 13G/A filed on March 10, 2010, S.A.C. Capital Advisors, L.P. and affiliates beneficially owned in the aggregate 10,052,901 shares of our Common Stock as follows: S.A.C. Capital Advisors, L.P. held shared voting and investment power over 7,369,801 shares of Common Stock; S.A.C. Capital Advisors, Inc. held shared voting and investment power over 7,369,801 of such shares of Common Stock; S.A.C. Capital Associates, LLC held shared voting and investment power over 7,366,501 of such shares of Common Stock; CR Intrinsic Investors, LLC held shared voting and investment power over 980,000 shares of Common Stock; Sigma Capital Management, LLC held shared voting and investment power over 1,703,100 shares of Common Stock; and Steven A. Cohen held shared voting and investment power over 10,052,901 of such shares of Common Stock. Mr. Cohen controls each of S.A.C. Capital Advisors, Inc., CR Intrinsic Investors, LLC and Sigma Capital Management, LLC. Includes 475,000 shares of Common Stock subject to call options held by SAC Capital Associates, LLC, 3,300 shares of Common Stock subject to call options held by SAC Select Fund, an entity for which S.A.C. Capital Advisors, L.P. serves as investment advisor, and 80,000 shares of Common Stock subject to call options held by CR Intrinsic Investments, an entity for which CR Intrinsic Investors, LLC serves as investment advisor.
 
(5) According to a Schedule 13G filed with the SEC on February 12, 2010, Capital Ventures International had shared voting and shared dispositive power together with its investment manager, Heights Capital Management, over 8,000,000 warrants to purchase shares of our Common Stock.
 
(6) According to a Schedule 13G filed with the SEC on January 29, 2010, BlackRock, Inc. held sole investment and voting power over 7,707,715 shares of our Common Stock.
 
(7) Includes 436,494 shares owned jointly with Dr. Urdal’s wife, Shirley G. Urdal.
 
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
 
Section 16(a) of the Exchange Act requires the Company’s directors and executive officers and persons who own more than 10% of the Company’s Common Stock to file with the SEC initial reports of ownership and reports of changes in ownership of the Common Stock. The Company’s directors and executive officers and greater than 10% stockholders are required by SEC regulation to furnish the Company with copies of all forms that each has filed pursuant to Section 16(a) of the Exchange Act.
 
To the Company’s knowledge, based solely on a review of the copies of such reports furnished to the Company during 2009, SEC filings and certain written representations that no other reports were required, during the fiscal year ended December 31, 2009, the Company’s officers, directors and greater than 10% stockholders complied with all applicable Section 16(a) filing requirements, except that one report filed on Dr. Frohlich’s behalf was filed four days late.


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PROPOSAL 2
 
RATIFICATION OF OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
The Audit Committee has selected Ernst & Young LLP (“Ernst & Young”) as our independent registered public accounting firm for the current year and the Board is asking stockholders to ratify that selection. Although current laws, rules, and regulations, as well as the Audit Committee Charter, require our independent registered public accounting firm to be engaged, retained, and supervised by the Audit Committee, the Board considers the selection of the independent registered public accounting firm to be an important matter of stockholder concern and is submitting the selection of Ernst & Young for ratification by stockholders as a matter of good corporate practice. If the stockholders do not ratify the selection of Ernst & Young as our independent registered public accounting firm, the Audit Committee will consider this vote in determining whether or not to continue the engagement of Ernst & Young.
 
Ernst & Young has audited our financial statements since 1994. Representatives of Ernst & Young are expected to be present at the Annual Meeting, will have an opportunity to make a statement if they so desire, and will be available to respond to appropriate questions.
 
The affirmative vote of holders of a majority of the shares of Common Stock represented at the meeting is required to ratify the selection of Ernst & Young as our independent registered public accounting firm for the current year.
 
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE RATIFICATION
OF THE SELECTION OF ERNST & YOUNG AS OUR
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM.
 
INFORMATION REGARDING OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
Audit Fees.  During the fiscal years ended December 31, 2008 and 2009, the aggregate fees billed by Ernst & Young for the audit of our financial statements for such fiscal years, the reviews of our interim financial statements, Sarbanes-Oxley Section 404 attestation services and assistance with registration statements were $814,500 and $831,200, respectively.
 
Audit-Related Fees.  During the fiscal years ended December 31, 2008 and 2009, Ernst & Young did not bill us for any audit-related services related to the performance of the audit or review beyond the fees disclosed under “Audit Fees” above.
 
Tax Fees.  During the fiscal years ended December 31, 2008 and 2009, the aggregate fees billed by Ernst & Young for preparing state and federal income tax returns were $30,000 and $25,000, respectively. During 2008 and 2009, Ernst & Young fees for other tax services were $32,000 and $158,000, respectively. The 2008 and 2009 fees for other tax services were primarily related to investigating the limitations on utilization of tax attributes imposed by Sections 382 and 383 of the Internal Revenue Code as they applied to the Company.
 
All Other Fees.  During the fiscal years ended December 31, 2008 and 2009, all other fees billed by Ernst & Young were $1,500 and $2,000, respectively. These fees were principally related to a subscription for an online financial reporting and accounting research tool.
 
The Audit Committee has determined that the rendering of these non-audit services by Ernst & Young is compatible with maintaining its independence.
 
Audit Committee Pre-Approval Policy.  All services to be performed by Ernst & Young for us must be pre-approved by the Audit Committee. Pre-approval is granted usually at regularly scheduled meetings of the Audit Committee. If unanticipated items arise between meetings of the Audit Committee, the Audit Committee has delegated authority to the Chairman of the Audit Committee to pre-approve services involving fees of up to $15,000, in which case the Chairman communicates such pre-approval to the full Audit Committee at its next meeting. All other services must be approved in advance by the full Audit Committee. During 2008 and 2009, all services billed by Ernst & Young were pre-approved by the Audit Committee in accordance with this policy.


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REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
 
The Audit Committee represents and assists the Board of Directors in its oversight of the integrity of Dendreon’s financial reporting, the independence, qualifications, and performance of Dendreon’s independent registered public accounting firm and Dendreon’s compliance with legal and regulatory requirements. During 2009 and up to the date of the Annual Meeting the Audit Committee consisted of Messrs. Watson (Chair) and Canet, as well as Drs. Ingle and Dziurzynski until June 10, 2009 and December 18, 2009, respectively, and Mr. Granadillo since December 18, 2009, each being an independent director as defined in NASDAQ’s listing standards and, in accordance with SEC and NASDAQ requirements, meets additional independence standards applicable to audit committee members. Each of Messrs. Watson, Canet, and Granadillo, and Dr. Ingle qualified as an “audit committee financial expert” within the meaning of that term as defined by the SEC pursuant to Item 407(d)(5) of Regulation S-K.
 
Management is responsible for our internal controls and the financial reporting process. The Audit Committee is directly responsible for the compensation, appointment and oversight of Dendreon’s independent registered public accounting firm. Our independent registered public accounting firm reports directly to the Audit Committee. The independent registered public accounting firm is responsible for performing an independent audit of our financial statements in accordance with standards of the Public Company Accounting Oversight Board (United States) and for issuing a report thereon. The Audit Committee’s responsibility is to monitor and oversee these processes. The Audit Committee also meets privately in separate executive sessions periodically with management and the independent registered public accounting firm.
 
In this context, the Audit Committee has met and held discussions with management and our independent registered public accounting firm. Management represented to the Audit Committee that our financial statements were prepared in accordance with accounting principles generally accepted in the United States. The Audit Committee has reviewed and discussed the financial statements with management and the independent registered public accounting firm. The Audit Committee discussed with the independent registered public accounting firm matters required to be discussed by Statement on Auditing Standards No. 61 (Communication with Audit Committees) and other professional standards.
 
Our independent registered public accounting firm also provided to the Audit Committee the written disclosures and letter required by the applicable requirements of the Public Company Accounting Oversight Board regarding the independent accountant’s communication with the Audit Committee concerning independence, and the Audit Committee discussed with the independent registered public accounting firm that firm’s independence.
 
Based on the Audit Committee’s review of our audited financial statements and its discussion with management and the independent registered public accounting firm and the Audit Committee’s review of the representations of management and the report of the independent registered public accounting firm to the Board of Directors and stockholders, the Audit Committee recommended that the Board of Directors include the audited financial statements in our Annual Report on Form 10-K for the year ended December 31, 2009, for filing with the SEC.
 
From the members of the Audit Committee of the Board of Directors,
 
Douglas B. Watson (Chair)
Gerardo Canet
Pedro Granadillo


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OTHER MATTERS
 
The Board of Directors knows of no other matters that will be presented for consideration at the Annual Meeting. If any other matters are properly brought before the meeting, it is the intention of the persons named in the accompanying proxy to vote on such matters in accordance with their best judgment.
 
Copies of our Annual Report on Form 10-K for the year ended December 31, 2009 are available without charge upon written request to: Investor Relations, Dendreon Corporation, 3005 First Avenue, Seattle, Washington 98121.
 
By Order of the Board of Directors,
 
-s- Richard F. Hamm, Jr.
 
Richard F. Hamm, Jr.
Secretary
 
April 23, 2010
 
YOUR VOTE IS IMPORTANT

IN ORDER TO ASSURE YOUR REPRESENTATION AT THE ANNUAL MEETING, YOU ARE
REQUESTED TO VOTE, BY PROXY VIA TELEPHONE, INTERNET OR MAIL IN ACCORDANCE
WITH THE VOTING INSTRUCTIONS ON YOUR PROXY CARD. IF YOU VOTE BY MAIL, YOU
SHOULD MARK, SIGN AND DATE THE PROXY CARD AS PROMPTLY AS POSSIBLE IN
ACCORDANCE WITH THE INSTRUCTIONS ON THE PROXY CARD.


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YOUR VOTE IS IMPORTANT. PLEASE VOTE TODAY. We encourage you to take advantage of Internet or telephone voting. Both are available 24 hours a day, 7 days a week. Internet and telephone voting is available through 11:59 PM Eastern Time the day prior to the annual meeting day. INTERNET http://www.proxyvoting.com/dndn DENDREON CORPORATION Use the Internet to vote your proxy. Have your proxy card in hand when you access the web site. OR TELEPHONE 1-866-540-5760 Use any touch-tone telephone to vote your proxy. Have your proxy card in hand when you call. If you vote your proxy by Internet or by telephone, you do NOT need to mail back your proxy card. To vote by mail, mark, sign and date your proxy card and return it in the enclosed postage-paid envelope. Your Internet or telephone vote authorizes the named proxies to vote your shares in the same manner as if you marked, signed and returned your proxy card. 73205 FOLD AND DETACH HERE YOUR VOTE IS IMPORTANT. PLEASE MARK, DATE AND SIGN THIS PROXY AND RETURN IT IN THE ENCLOSED ENVELOPE. Please mark your votes as indicated in this example X DENDREON CORPORATION PLEASE MARK VOTES IN THE BOXES BELOW USING DARK INK ONLY. The Board of Directors recommends a vote FOR WITHHOLD *EXCEPTIONS The Board of Directors recommends a vote “FOR” the nominees for directors below. ALL FOR ALL “FOR” the proposal below. FOR AGAINST ABSTAIN 1. Election of Directors 2. Approval of the ratification of the selection of Ernst & Nominees: Young LLP as the Company’s independent registered public accounting firm for the current year. 01 Gerardo Canet 02 Bogdan Dziurzynski 03 Douglas G. Watson In their discretion, the proxies named herein are also authorized to take any action upon any other business that may properly come before the Annual Meeting, or any reconvened (INSTRUCTIONS: To withhold authority to vote for any individual nominee, mark the meeting following any adjournment or postponement of the Annual Meeting. “Exceptions” box above and write that nominee’s name in the space provided below.) All stockholders are cordially invited to attend the Annual Meeting in person. If you indicated *Exceptions that you will attend by marking the box below, please also contact investor relations at (206) 829-1500 or ir@Dendreon.com. Will Attend Meeting YES Mark Here for Address Change or Comments SEE REVERSE Signature Signature Date NOTE: Please sign as name appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, trustee or guardian, please give full title as such.

 


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You can now access your Dendreon Corporation account online. Access your Dendreon Corporation account online via Investor ServiceDirect®(ISD). BNY Mellon Shareowner Services, the transfer agent for Dendreon Corporation, now makes it easy and convenient to get current information on your shareholder account. View account status View payment history for dividends View certificate history Make address changes View book-entry information Obtain a duplicate 1099 tax form Visit us on the web at http://www.bnymellon.com/shareowner/isd For Technical Assistance Call 1-877-978-7778 between 9am-7pm Monday-Friday Eastern Time Investor ServiceDirect ® Available 24 hours per day, 7 days per week TOLL FREE NUMBER: 1-800-370-1163 Choose MLinkSMfor fast, easy and secure 24/7 online access to your future proxy materials, investment plan statements, tax documents and more. Simply log on to Investor ServiceDirect®at www.bnymellon.com/shareowner/isd where step-by-step instructions will prompt you through enrollment. Important notice regarding the Internet availability of proxy materials for the Annual Meeting of Stockholders. The Proxy Statement and the 2009 Annual Report to Stockholders are available at: http://bnymellon.mobular.net/bnymellon/dndn FOLD AND DETACH HERE PROXY            DENDREON CORPORATION PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY FOR THE ANNUAL MEETING OF STOCKHOLDERS ON JUNE 2, 2010. The undersigned hereby constitutes and appoints Mitchell H. Gold, M.D. and Richard F. Hamm, Jr., and each of them, his or her true and lawful agents and proxies with full power of substitution in each, to represent the undersigned at the Annual Meeting of Stockholders of Dendreon Corporation to be held at the Grand Hyatt San Francisco, 345 Stockton St., San Francisco, California 94108 on Wednesday, June 2, 2010 at 9:00 a.m., local time, and at any adjournments or postponements thereof, as follows and i n accordance with their judgment upon any other matters coming before said meeting. YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES BY MARKING THE APPROPRIATE BOXES ON THE REVERSE SIDE. SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED OR, IF DIRECTIONS ARE NOT INDICATED, WILL BE VOTED FOR THE ELECTION OF EACH NOMINEE AND FOR APPROVAL OF THE RATIFICATION OF THE SELECTION OF ERNST & YOUNG LLP AS THE COMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM AND ANY OTHER BUSINESS THAT MAY PROPERLY COME BEFORE THE ANNUAL MEETING IN ACCORDANCE WITH THE BOARD OF DIRECTORS’ RECO MMENDATIONS. THE PROXIES CANNOT VOTE YOUR SHARES UNLESS YOU SIGN, DATE AND RETURN THIS CARD. Address Change/Comments (Mark the corresponding box on the reverse side) BNY MELLON SHAREOWNER SERVICES P.O. BOX 3550 SOUTH HACKENSACK, NJ 07606-9250 (Continued and to be marked, dated and signed, on the other side) 73205