Big shot of cash for Dendreon

In a bid to tread water pending the delayed regulatory approval of its first cancer-fighting drug, Seattle biotechnology company Dendreon said Wednesday it had raised $75 million from institutional investors.

The company said it may sell $25 million more in convertible debt by early July. The transaction closes Monday.

That "gives us two years worth of cash," Chief Financial Officer Gregory Schiffman told shareholders at the company's annual meeting Wednesday. "We've removed the financial overhang from the company."

The move follows the U.S. Food and Drug Administration's decision to hold off approving Dendreon's prostate-cancer drug therapy, Provenge, originally expected to be marketed this year.

Despite an FDA advisory board recommending approval, the agency requested additional clinical results proving the drug's effectiveness in stopping the spread of prostate cancer and extending patient lives.

That data won't be available until at least next year, forcing Dendreon to put its fast-moving commercialization plans on hold and to cut its work force by 18 percent.

Dendreon's fund-raising effort underscores how small biotech firms struggle to stay afloat even as they jump through the hoops of a strict regulatory examination that can take years.

The process can take its toll not only on shareholders seeking to profit from the $1 billion market in therapies for prostate cancer, but also on patients who pin their hopes for survival on a miracle breakthrough.

Emotions can ride high. Two doctors on the advisory panel who opposed approval of Dendreon's drug received e-mail threats, The New York Times reported earlier in the week.

Provenge belongs to a new class of bio-engineered drugs that spur the immune system to destroy malignant tumors.

Dendreon, like many biotech companies waiting to sell their first scientific breakthroughs, has no income from its products.

At the end of the first quarter, the company had $88.5 million in cash and investments.

With anticipated capital expenditures of $95 million for 2007, it was on track to end the year with only $25 million, said David Miller, president of Biotech Stock Research, a Seattle-based research firm.

"This just gives them some more wiggling room" until the interim clinical data is available, Miller said.

The choice of selling convertible notes instead of new shares was smart, because selling more stock at the current price would dilute existing shareholders' stake, Miller said.

Dendreon stock has had some wild swings in recent months. Shares skyrocketed when the FDA advisory panel recommended approval in late March, only to tank as the agency withheld its final blessing in May.

Shares rose again when regulators confirmed they would make a decision on interim data from a clinical study that may be available next year.

"It's been an incredibly interesting 2007 for the company," Chief Executive Mitchell Gold told a couple hundred shareholders at the meeting at Dendreon's downtown Seattle offices.

Some investors expressed frustration at the FDA's reluctance to approve Provenge, and the ensuing roller-coaster ride in share prices.

"I was a millionaire one day, and then we got shot down," said Arnie Mass, 71, a retired broker from Chicago who said he helped stage a demonstration in favor of Provenge's approval at a biotech conference there last weekend. "But I still hope."

Angel Gonzalez: 206-515-5644 or agonzalez@seattletimes.com