2.2.0.7 false Summary of Significant Accounting Policies 0202 - Disclosure - Summary of Significant Accounting Policies true false false false 1 USD false false USD Standard http://www.xbrl.org/2003/iso4217 USD iso4217 0 USDEPS Divide http://www.xbrl.org/2003/iso4217 USD iso4217 http://www.xbrl.org/2003/instance shares xbrli 0 Shares Standard http://www.xbrl.org/2003/instance shares xbrli 0 $ 2 Summary of Significant Accounting Policies [Abstract] 0 dndn_SummaryOfSignificantAccountingPoliciesAbstract dndn false na duration Summary of Significant Accounting Policies. false false false false false true false false false false false false 1 false false false false 0 0 false false false xbrli:stringItemType string Summary of Significant Accounting Policies. false 3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 1 us-gaap_SignificantAccountingPoliciesTextBlock us-gaap true na duration No definition available. false false false false false false false false false false false verboselabel false 1 false false false false 0 0   <div style="font-family: 'Times New Roman',Times,serif"> <div align="left" style="font-size: 10pt; margin-top: 12pt"><b>2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES</b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt"><i>Revenue Recognition</i> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     We recognize revenue primarily from the sale of PROVENGE and collaborative research agreements. Revenue from the sale of PROVENGE is recorded net of product returns and estimated healthcare provider contractual chargebacks. Revenues from sales of PROVENGE are recognized upon our confirmed product delivery to and issuance of the product release form to the physician site. As we executed a drop shipment agreement with a credit worthy third party wholesaler (“wholesaler”) to sell PROVENGE, the wholesaler assumes all bad debt risk from the physician, and no allowance for bad debt is recorded. Due to the 18 hour shelf life of our product, actual returns are credited against sales in the month they are incurred. Healthcare provider contractual chargebacks are the result of contractual commitments by us to provide products to healthcare providers at specified prices or discounts such as pursuant to mandatory federal programs. Chargebacks occur when a contracted healthcare provider purchases our products through the wholesaler at fixed contract prices that are lower than the list prices we charge the wholesaler. The wholesaler, in turn, charges us back for the difference between the price initially paid by the wholesaler and the contract price paid to the wholesaler by the healthcare providers. These chargebacks will be recognized in the same period that the related revenue is recognized, resulting in a reduction in product sales revenue and are recorded as other accrued liabilities. For the six months ended June 30, 2010 we did not have any chargebacks. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     We recognize collaborative research revenue from up-front payments, milestone payments, and personnel-supported research funding. The payments received under these research collaboration agreements are generally contractually not refundable even if the research effort is not successful. Performance under our collaborative agreements is measured by scientific progress, as mutually agreed upon by us and our collaborators. </div> <div align="left" style="font-size: 10pt; margin-top: 12pt"><i>Inventory</i> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     Inventories are determined at the lower of cost or market value with cost determined under the specific identification method. Inventories consist of raw materials, work in process and finished goods. We began capitalizing raw material inventory in mid April 2009 in preparation for our PROVENGE product launch when the product was considered to have a high probability of regulatory approval and the related costs were expected to be recoverable through the commercialization of the product. Such costs incurred prior to mid April 2009 had been recorded as research and development expense in our statement of operations. As a result, inventory balances for the next few quarters will reflect a lower average per unit cost. </div> <div align="left" style="font-size: 10pt; margin-top: 12pt"><i>Prepaid Antigen Costs</i> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     The Company utilizes third party suppliers to manufacture and package the recombinant antigen used in the manufacture of PROVENGE. The Company takes title to this material when accepted from the third party supplier and stores it as raw material inventory for manufacturing and eventual sale. As of June 30, 2010, there was $29.6 million of capitalized costs associated with the purchase of the antigen used in the manufacture of PROVENGE, which Diosynth RTP, Inc. (“Diosynth”) is obligated to manufacture and is expected to begin to deliver in 2010. </div> <div align="left" style="font-size: 10pt; margin-top: 12pt"><i>Research and Development Expenses</i> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     Research and development expenses include, but are not limited to, payroll and personnel expenses, lab expenses, clinical trial and related clinical manufacturing costs, facilities and related overhead costs. </div> <div align="left" style="font-size: 10pt; margin-top: 12pt"><i>Accounting for Stock-Based Compensation</i> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     Stock-based compensation cost is estimated at the grant date based on the award’s fair value and is recognized on the accelerated method as expense over the requisite service period. Compensation cost for all stock-based awards is measured at fair value as of the grant date. The fair value of our stock options is calculated using the Black Scholes Merton (“BSM”) option pricing model. The BSM model requires various highly judgmental assumptions including volatility, forfeiture rates and expected option life. If any of the assumptions used in the BSM model change significantly, stock-based compensation expense for new awards may differ materially in the future from that recorded in the current period. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     We grant restricted stock awards that generally vest over a four year period, however, in 2006 and 2007 we granted restricted stock awards with certain performance conditions to all employees. We are required to estimate the probability of achieving each acceleration provision. The restricted stock awards granted in 2006 and 2007 with remaining performance conditions all vested upon marketing approval for PROVENGE by the FDA on April 29, 2010 (the “Approval Date”). </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     At June 30, 2010 and December 31, 2009, we had equity-based employee incentive plans, which are described more fully in Note 9 in the 2009 Form 10-K, and in the Definitive Proxy Statement for our 2010 Annual Meeting of Stockholders. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     Stock compensation expense was as follows: </div> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="76%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="6">Six months ended</td> <td> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px solid #000000">June 30,</td> <td> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td nowrap="nowrap" align="left" style="border-bottom: 1px solid #000000"><b>(in millions)</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2010</b></td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2009</b></td> <td> </td> </tr>   <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Cost of revenue </div></td> <td> </td> <td align="left">$</td> <td align="right">0.2</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">—</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Research and development </div></td> <td> </td> <td> </td> <td align="right">5.1</td> <td> </td> <td> </td> <td> </td> <td align="right">3.3</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Selling, general and administrative </div></td> <td> </td> <td> </td> <td align="right">11.2</td> <td> </td> <td> </td> <td> </td> <td align="right">3.2</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td align="left">$</td> <td align="right">16.5</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">6.5</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> </tr>  </table> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     In each of the six months ended June 30, 2010 and 2009, the tax deductions related to stock compensation expense were not reported as a financing cash flow, versus an operating cash flow, because of the availability of net operating losses. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     The fair value for stock awards was estimated at the date of grant using the BSM option valuation model with the following weighted average assumptions for awards granted during the three and six months ended June 30, 2010 and 2009: </div> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="52%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="7"><b>Employee Stock Options</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="7"><b>Employee Stock Purchase Plan</b></td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="7"><b>For the Three Months ended</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="7"><b>For the Three Months ended</b></td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="7" style="border-bottom: 1px solid #000000"><b>June 30,</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="7" style="border-bottom: 1px solid #000000"><b>June 30,</b></td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>2010</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>2009</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>2010</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>2009</b></td> </tr>   <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Weighted average estimated fair value </div></td> <td> </td> <td align="right">$</td> <td align="right">25.91</td> <td> </td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(A</td> <td nowrap="nowrap">)</td> <td> </td> <td align="right">$</td> <td align="right">18.16</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">3.37</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px"><b>Weighted Average Assumptions:</b> </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:30px; text-indent:-15px">Dividend yield (B) </div></td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">0.0</td> <td nowrap="nowrap">%</td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(A</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">0.0</td> <td nowrap="nowrap">%</td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">0.0</td> <td nowrap="nowrap">%</td> </tr> <tr valign="bottom"> <td> <div style="margin-left:30px; text-indent:-15px">Expected volatility (C) </div></td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">79.1</td> <td nowrap="nowrap">%</td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(A</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">124.0</td> <td nowrap="nowrap">%</td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">157.5</td> <td nowrap="nowrap">%</td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:30px; text-indent:-15px">Risk-free interest rate (D) </div></td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">1.4</td> <td nowrap="nowrap">%</td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(A</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">.33</td> <td nowrap="nowrap">%</td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">0.63</td> <td nowrap="nowrap">%</td> </tr> <tr valign="bottom"> <td> <div style="margin-left:30px; text-indent:-15px">Expected term (E) </div></td> <td> </td> <td colspan="2" nowrap="nowrap" align="right">3.9 years</td> <td> </td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(A</td> <td nowrap="nowrap">)</td> <td> </td> <td colspan="2" nowrap="nowrap" align="right">.8 years</td> <td> </td> <td> </td> <td colspan="2" nowrap="nowrap" align="right">1.3 years</td> <td> </td> </tr>  </table> </div> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="52%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="7"><b>Employee Stock Options</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="7"><b>Employee Stock Purchase Plan</b></td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="7"><b>For the Six Months ended</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="7"><b>For the Six Months ended</b></td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="7" style="border-bottom: 1px solid #000000"><b>June 30,</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="7" style="border-bottom: 1px solid #000000"><b>June 30,</b></td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>2010</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>2009</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>2010</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>2009</b></td> </tr>   <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Weighted average estimated fair value </div></td> <td> </td> <td align="right">$</td> <td align="right">21.62</td> <td> </td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(A</td> <td nowrap="nowrap">)</td> <td> </td> <td align="right">$</td> <td align="right">18.16</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">3.37</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px"><b>Weighted Average Assumptions:</b> </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:30px; text-indent:-15px">Dividend yield (B) </div></td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">0.0</td> <td nowrap="nowrap">%</td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(A</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">0.0</td> <td nowrap="nowrap">%</td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">0.0</td> <td nowrap="nowrap">%</td> </tr> <tr valign="bottom"> <td> <div style="margin-left:30px; text-indent:-15px">Expected volatility (C) </div></td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">79.2</td> <td nowrap="nowrap">%</td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(A</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">124.0</td> <td nowrap="nowrap">%</td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">157.5</td> <td nowrap="nowrap">%</td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:30px; text-indent:-15px">Risk-free interest rate (D) </div></td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">1.8</td> <td nowrap="nowrap">%</td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(A</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">.33</td> <td nowrap="nowrap">%</td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">0.63</td> <td nowrap="nowrap">%</td> </tr> <tr valign="bottom"> <td> <div style="margin-left:30px; text-indent:-15px">Expected term (E) </div></td> <td> </td> <td colspan="2" nowrap="nowrap" align="right">4.2 years</td> <td> </td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(A</td> <td nowrap="nowrap">)</td> <td> </td> <td colspan="2" nowrap="nowrap" align="right">.8 years</td> <td> </td> <td> </td> <td colspan="2" nowrap="nowrap" align="right">1.3 years</td> <td> </td> </tr>  </table> </div> <div align="left"> <div style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">  </div> </div> <table width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; text-align: left"> <tr> <td width="3%"></td> <td width="1%"></td> <td width="96"></td> </tr> <tr valign="top"> <td nowrap="nowrap" align="left">(A)</td> <td> </td> <td>During the three and six months ended June 30, 2009 we did not grant stock options; therefore the weighted average estimated fair value and the weighted average assumptions were not applicable during this period.</td> </tr> <tr style="font-size: 3pt"> <td> </td> </tr> <tr valign="top"> <td nowrap="nowrap" align="left">(B)</td> <td> </td> <td>We have not paid dividends in the past and do not plan to pay dividends in the near future.</td> </tr> <tr style="font-size: 3pt"> <td> </td> </tr> <tr valign="top"> <td nowrap="nowrap" align="left">(C)</td> <td> </td> <td>The expected stock price volatility is based on the weighted average of the historical volatilities of our stock and the volatilities of certain peer companies.</td> </tr> <tr style="font-size: 3pt"> <td> </td> </tr> <tr valign="top"> <td nowrap="nowrap" align="left">(D)</td> <td> </td> <td>The risk-free interest rate is based on the implied yield available on U.S. Treasury zero-coupon issues with a term equal to the expected life of the award on the date of grant.</td> </tr> </table>   </div>  <div style="font-family: 'Times New Roman',Times,serif"> <table width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; text-align: left"> <tr> <td width="3%"></td> <td width="1%"></td> <td width="96"></td> </tr> <tr valign="top"> <td nowrap="nowrap" align="left">(E)</td> <td> </td> <td>The expected term of the options represents the estimated period of time until exercise and is based on historical experience of similar awards, giving consideration to the contractual terms, vesting schedules and expectations of future employee behavior. The expected term of awards under the employee stock purchase plan represents the weighted average purchase periods of each offering.</td> </tr> </table> <div align="left" style="font-size: 10pt; margin-top: 6pt">The following table summarizes our stock option activity during the six months ended June 30, 2010: </div> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="52%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"><b>Shares</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"><b>Weighted-Average</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"><b>Weighted-Average</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"><b>Subject to</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"><b>Exercise Price per</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"><b>Remaining</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"><b>Aggregate Intrinsic</b></td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>Options</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>Share</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>Contractual Life</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>Value</b></td> </tr>   <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Outstanding, January 1, 2010 </div></td> <td> </td> <td> </td> <td align="right">3,274,615</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">11.73</td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Granted </div></td> <td> </td> <td> </td> <td align="right">448,250</td> <td> </td> <td> </td> <td> </td> <td align="right">36.89</td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Exercised </div></td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(1,295,514</td> <td nowrap="nowrap">)</td> <td> </td> <td> </td> <td align="right">7.64</td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Forfeited </div></td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(22,150</td> <td nowrap="nowrap">)</td> <td> </td> <td> </td> <td align="right">24.50</td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td> </td> <td align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Outstanding, June 30, 2010 </div></td> <td> </td> <td> </td> <td align="right">2,405,201</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">18.50</td> <td> </td> <td> </td> <td> </td> <td align="right">7.80</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">36,116,888</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td> </td> <td align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Exercisable, June 30, 2010 </div></td> <td> </td> <td> </td> <td align="right">818,994</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">7.66</td> <td> </td> <td> </td> <td> </td> <td align="right">5.64</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">20,281,679</td> <td> </td> </tr>  </table> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     As of June 30, 2010 we had approximately $14.8 million of unrecognized compensation expense related to our unvested stock options. We expect to recognize this compensation expense over a weighted average period of approximately 1.4 years. </div> <div align="left" style="font-size: 10pt; margin-top: 12pt"><i>Restricted Stock Awards</i> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     Restricted stock awards generally vest over a four-year period; however, in 2006 we granted restricted stock awards with performance conditions to executive employees and restricted stock awards with time-vesting and performance conditions to non-executive employees. On January 12, 2007, vesting for 40 percent of these shares accelerated upon acceptance of our Biologics License Application by the FDA. The balance vested for non-executive employees upon the earlier of the dates that the requisite service periods were rendered or the approval of PROVENGE for commercialization by the FDA on the Approval Date. On June 20, 2007, we granted restricted stock awards with performance conditions to executive employees and restricted stock awards with time-vesting and performance conditions to non-executive employees. Awards granted to executive employees vested 100% upon the Approval Date. Awards granted to non-executive employees vested 50% in June 2008 and the balance vested upon the Approval Date. Each of these awards required the relevant executive or non-executive employee to be employed by us on the date of achievement of the performance condition in order for the shares to vest. Compensation expense was recorded based upon management’s estimate of the completion of the performance conditions. The remaining performance conditions related to these restricted stock awards were considered completed upon the Approval Date; all expense related to these performance-based stock awards has accordingly been recorded. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     The following table summarizes our restricted stock award activity during the six months ended June 30, 2010 and 2009: </div> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="52%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px solid #000000"><b>2010</b></td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px solid #000000"><b>2009</b></td> <td> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>Weighted</b></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>Weighted</b></td> <td> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>Average</b></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>Average</b></td> <td> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>Grant</b></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>Grant</b></td> <td> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>Stock</b></td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>Date</b></td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>Stock</b></td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>Date</b></td> <td> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Awards</b></td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Fair Value</b></td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Awards</b></td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Fair Value</b></td> <td> </td> </tr>   <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Outstanding at beginning of period </div></td> <td> </td> <td> </td> <td align="right">2,360,138</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">7.71</td> <td> </td> <td> </td> <td> </td> <td align="right">1,462,936</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">6.13</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Granted </div></td> <td> </td> <td> </td> <td align="right">930,019</td> <td> </td> <td> </td> <td> </td> <td align="right">33.28</td> <td> </td> <td> </td> <td> </td> <td align="right">1,247,247</td> <td> </td> <td> </td> <td> </td> <td align="right">4.72</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Vested </div></td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(1,093,748</td> <td nowrap="nowrap">)</td> <td> </td> <td> </td> <td align="right">6.52</td> <td> </td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(293,529</td> <td nowrap="nowrap">)</td> <td> </td> <td> </td> <td align="right">5.52</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Forfeited or expired </div></td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(65,249</td> <td nowrap="nowrap">)</td> <td> </td> <td> </td> <td align="right">13.48</td> <td> </td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(87,319</td> <td nowrap="nowrap">)</td> <td> </td> <td> </td> <td align="right">5.69</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Outstanding at end of period </div></td> <td> </td> <td> </td> <td align="right">2,131,160</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">19.30</td> <td> </td> <td> </td> <td> </td> <td align="right">2,329,335</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">5.47</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> </tr>  </table> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     As of June 30, 2010 we had approximately $26 million in total unrecognized compensation expense related to our restricted stock awards that is to be recognized over a weighted average period of approximately 1.5 years. </div> <div align="left" style="font-size: 10pt; margin-top: 12pt"><i>Fair Value</i> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     We currently measure and report at fair value our cash equivalents and investment securities. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability, an exit price, in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     Assets and liabilities typically recorded at fair value on a non-recurring basis include long-lived assets measured at fair value due to an impairment assessment under ASC 360-10, “Property, Plant and Equipment,” and asset retirement obligations initially measured under ASC 410-20, “Asset Retirement and Environmental Obligations.” </div> <div align="left" style="font-size: 10pt; margin-top: 12pt"><i>Warrant Liability</i> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     On April 3, 2008, we issued 8.0 million shares (the “Shares”) of our common stock, and warrants to purchase up to 8.0 million shares of common stock (the “Warrants”) to an institutional investor (the “Investor”). The Investor purchased the Shares and Warrants for a negotiated price of $5.92 per share of common stock purchased. The Warrants were exercisable at any time prior to October 8, 2015, with an original exercise price of $20.00 per share of common stock and included a net exercise feature. On May 18, 2010 (the “exercise date”), we entered into an amendment (the “Amendment”) to the warrant agreement. Pursuant to the terms of the Amendment, the exercise price of the Warrants was amended from $20.00 to $8.92 per share, and the Investor concurrently exercised the warrant for 8,000,000 shares of common stock, resulting in aggregate cash proceeds to the Company of $71.4 million. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     The Warrants were recorded at fair value at issuance and continued to be adjusted to fair value until the exercise date. Any change in value between reporting periods was recorded as other income (expense). The Warrants continued to be reported as a liability until they were exercised, at which time the Warrants were adjusted to fair value and reclassified from liabilities to stockholders’ equity. The fair value of the Warrants was estimated using the BSM option-pricing model. The fair value of the Warrants on the exercise date was $275.5 million of which $74.5 million and $105.8 million was recognized during the three and six months ended June 30, 2010, respectively, and of which $142.6 million and $103.4 million was recognized during the three and six months ended June 30, 2009, respectively, in loss from valuation of warrant liability. </div> </div>  <!-- Begin Block Tagged Note false false false us-types:textBlockItemType textblock This element may be used to describe all significant accounting policies of the reporting entity. Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher AICPA -Name Accounting Principles Board Opinion (APB) -Number 22 -Paragraph 8 false 1 2 false UnKnown UnKnown UnKnown false true