2.2.0.25falsefalse0202 - Disclosure - Summary of Significant Accounting Policiestruefalsefalse1falsefalseUSDfalsefalse1/1/2011 - 3/31/2011 USD ($) USD ($) / shares $Jan-01-2011_Mar-31-2011http://www.sec.gov/CIK0001107332duration2011-01-01T00:00:002011-03-31T00:00:00SharesStandardhttp://www.xbrl.org/2003/instancesharesxbrli0USDStandardhttp://www.xbrl.org/2003/iso4217USDiso42170USDEPSDividehttp://www.xbrl.org/2003/iso4217USDiso4217http://www.xbrl.org/2003/instancesharesxbrli0USDUSD$2true0dndn_SummaryOfSignificantAccountingPoliciesAbstractdndnfalsenadurationSummary of Significant Accounting Policies.falsefalsefalsefalsefalsefalsefalsefalsefalsefalse1falsefalsefalse00falsefalsefalsefalsefalseOtherxbrli:stringItemTypestringSummary of Significant Accounting Policies.falsefalseSummary of Significant Accounting Policies [Abstract]3false0us-gaap_SignificantAccountingPoliciesTextBlockus-gaaptruenadurationNo definition available.falsefalsefalsefalsefalsefalsefalsefalsefalsefalseverboselabel1falsefalsefalse00  <div align="left" 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. Revenue from sales of PROVENGE is 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 (the “Wholesaler”) to sell PROVENGE, the Wholesaler assumes all bad debt risk from the physician site or institution, and no allowance for bad debt is recorded. Due to the limited usable 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 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 price 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 are estimated and recorded in the period that the related revenue is recognized, resulting in a reduction in product sales revenue, and are recorded as other accrued liabilities. For the three months ended March 31, 2011, we recorded chargebacks of approximately $0.4 million. </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. We also recognize license revenue from intellectual property and technology agreements. The payments received under these research collaboration agreements are generally contractually not refundable even if the research effort is not successful. Performance under our collaborative agreements is measured by scientific progress, as mutually agreed upon by us and our collaborators. Such revenue was insignificant for the three months ended March 31, 2011 and 2010. </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 consisted of raw materials and finished goods at March 31, 2011, and raw materials at December 31, 2010, but we may also have work in process at any given time. 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. Costs incurred prior to mid-April 2009 have been recorded as research and development expense in our statement of operations. As a result, inventory balances and cost of revenue reflect a lower average per unit cost of materials. </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 a third party supplier 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. Upon successful manufacturing of the antigen, the prepaid costs of these materials are capitalized and transferred to inventory as antigen is received. As of March 31, 2011 and December 31, 2010, there were $24.3 million and $17.7 million, respectively, of prepaid costs associated with the purchase of the antigen used in the manufacture of PROVENGE, which Diosynth RTP, Inc. (“Diosynth”) is obligated to manufacture. </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">     Nonrefundable prepayments for research and development goods and services are deferred and recognized as the services are rendered. Research and development expenses include, but are not limited to, payroll and personnel expenses, lab expenses, clinical trial and related clinical manufacturing costs, facilities and related overhead costs. </div> <div align="left" style="font-size: 10pt; margin-top: 12pt"><i>Impairment of Long-Lived Assets</i> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     Losses from impairment of long-lived assets used in operations are recognized when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the assets’ carrying amount. We periodically evaluate the carrying value of long-lived assets to be held and used when events and circumstances indicate that the carrying amount of an asset may not be recovered. </div> <div align="left" style="font-size: 10pt; margin-top: 12pt"><i>Convertible Senior Notes due 2016</i> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     On January 14, 2011, we entered into an underwriting agreement with J.P. Morgan Securities LLC (the “Underwriter”) relating to the offer and sale of $540 million aggregate principal amount of our 2.875% Convertible Senior Notes due 2016 (the “2016 Notes”). Under the terms of the underwriting agreement, we granted the Underwriter an option, exercisable within 30 days of the date of the agreement, to purchase up to an additional $80 million aggregate principal amount of 2016 Notes to cover overallotments, which was exercised in full, resulting in a total offering of $620 million. Net proceeds to us, after deducting underwriting fees and other offering expenses were approximately $607.1 million. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     The 2016 Notes are convertible at the option of the holder, and we may choose to satisfy the conversion in cash, shares of our common stock, or a combination of cash and shares of our common stock, based on a conversion rate initially equal to 19.5160 shares of our common stock per $1,000 principal amount of the 2016 Notes, which is equivalent to an initial conversion price of approximately $51.24 per share. The 2016 Notes are accounted for in accordance with Accounting Standards Codification (“ASC”) 470-20, “Debt with Conversion and Other Options.” Under ASC 470-20, issuers of certain convertible debt instruments that have a net settlement feature and may be settled in cash upon conversion, including partial cash settlement, are required to separately account for the liability (debt) and equity (conversion option) components of the instrument. The carrying amount of the liability component of the 2016 Notes, as of the issuance date, was calculated by estimating the fair value of a similar liability issued at an 8.1% effective interest rate, which was determined by considering the rate of return investors would require in the Company’s debt structure. The amount of the equity component was calculated by deducting the fair value of the liability component from the principal amount of the 2016 Notes and resulted in a corresponding increase to debt discount. The debt discount is being amortized as interest expense through the earlier of the maturity date of the 2016 Notes or the date of conversion. Amortization of the debt discount for the three months ended March 31, 2011 resulted in non-cash interest expense of $4.3 million. </div> <div align="left" style="font-size: 10pt; margin-top: 12pt"><i>Debt Issuance Costs</i> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     We incurred debt issuance costs of approximately $12.9 million related to our 2016 Notes issued in January and February of 2011. In accordance with ASC 470-20, we allocated approximately $10.1 million of debt issuance costs to the liability component of the 2016 Notes, and are amortizing these costs to interest expense through the earlier of the maturity date of the 2016 Notes or the date of conversion. The remaining $2.8 million of debt issuance costs was allocated to the equity component of the 2016 Notes and recorded as an offset to additional paid-in capital upon issuance of the notes. Debt issuance costs of approximately $3.0 million related to our 4.75% Convertible Senior Subordinated Notes due 2014 (the “2014 Notes”) issued in June and July of 2007 are amortized over the life of the 2014 Notes. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     Amortization expense for the 2016 Notes and the 2014 Notes was approximately $0.5 million for the three months ended March 31, 2011, compared with amortization expense of $0.1 million related to the 2014 Notes for the three months ended March 31, 2010, and was reported as interest expense. </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 (the “Warrants”) to purchase up to 8.0 million shares of common stock 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 were adjusted to fair value at each reporting period until the Exercise Date. Any change in fair 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 Black-Scholes-Merton (“BSM”) option pricing model. The fair value of the Warrants on the Exercise Date was $275.5 million. During the three months ended March 31, 2010, a loss of approximately $68.1 million was recognized from valuation of the warrant liability. </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 measure and report at fair value our cash equivalents and investment securities. We also measured and reported at fair value our warrant liability, prior to exercise of the Warrants in the second quarter of 2010. 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>  <div style="font-family: 'Times New Roman',Times,serif"> <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 BSM 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 also grant restricted stock awards that generally vest and are expensed over a four year period. In December 2010 we granted restricted stock awards with certain performance conditions to certain executive officers. At each reporting date, we are required to evaluate whether achievement of the performance condition is probable. Compensation expense is recorded based upon our assessment of accomplishing each performance provision, over the appropriate service period. For the three months ended March 31, 2011, no expense was recognized related to these awards. </div> <div align="left" style="font-size: 10pt; margin-top: 12pt"><i>Net Loss Per Share</i> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     Basic net loss per share is calculated by dividing net loss by the weighted average number of common shares outstanding. Because we report a net loss, diluted net loss per share is the same as basic net loss per share. We have excluded all outstanding stock options, Warrants and unvested restricted stock, as well as shares issuable in connection with the conversion of the 2014 Notes and the 2016 Notes and our Common Stock Purchase Agreement with Azimuth Opportunity Ltd. (the “Common Stock Purchase Agreement”) that expired during October 2010, from the calculation of diluted net loss per common share because all such securities are anti-dilutive to the computation of net loss per share. As of March 31, 2011 and 2010, shares excluded from the computation of net loss per share were 20,499,413 and 32,210,671, respectively. </div> </div>  <!-- Begin Block Tagged NotefalsefalsefalsefalsefalseOtherus-types:textBlockItemTypestringThis 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 falsefalseSUMMARY OF SIGNIFICANT ACCOUNTING POLICIES12Summary of Significant Accounting PoliciesUnKnownUnKnownUnKnownUnKnownfalsetrue