Bankruptcy

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The real bottom line is that if no bondholders choose to convert, DNDN will have to pay everyone in cash. In order for there to be any chance whatsoever of anyone converting, their bonds, the price of DNDN stock at some point before January 2016 will have to be up over 500% from where it is now.
 






Bond is trading at about 70 cents on the dollar for a yield to maturity over 13%. That is pretty much junk status. Knowing what I know about this company, I would not buy that bond for 40 cents on the dollar if I had to hold on to it.

In 1.5 years there aren't too many bonds that go from yielding 2.875% to over 13%. I bet that meeting yesterday with JP Morgan was about the notes. They underwrote the notes and probably sold a great deal of them to their own clients.

If JPM is thinking like me that there is a good chance those bondholders won't get all their principle back without a takeover, maybe JPM is pressuring them to sell the company for whatever they can get. Someone might pay 1.2 billion or 1.3 billion for the science and the responsibility for the debt and legal costs not covered under insurance which could be significant.
 






Yeah Rynotheknife you lowlife short piece of turd. Now you are trying to scare Dendreon employees with your lies. A 13% yield would indicate a risk of default on the bond of at most 3%.

"Fitch Ratings says the default rate on U.S. high-yield bonds is tracking much lower, between 1% and 1.5% for the year. Even if a stalled global economy triggers an increase in default rates, they will only edge up to about 3% over the next year, said Collins."

http://money.cnn.com/2011/10/21/markets/bondcenter/high_yield_bonds/index.htm

Keep your lies to Investor Village where people with financial backgrounds can call you out on your lies:

http://www.investorvillage.com/smbd.asp?mb=971&mn=438159&pt=msg&mid=11741248
 


















Sure.

In January 2011 these bonds were offered to buyers at par meaning for every $1000 of the bond they bought they had to pay $1000 and the bonds would be paying them at 2.875% interest. These bonds would mature in 5 years from that date so they were 5 year bonds paying 2.875% a year.

Now if one of those bondholders wanted to sell his bonds for every $1000 of his bond, the market is only paying about $700. That is the market price approximately. If the bondholder has a million dollars worth of the bond he would have to sell it for 700k if he wanted to get rid of it. Now considering where treasuries are today, 2.875% is not such a bad rate for a 4 year bond if the buyer is assured of getting all his principle back in 2016. If someone bought 1 million worth of the bond for 700k and they did end up getting all their principle back in 2016 that means they would be earning the 2.875% interest every year on the 1 million face value of the bond PLUS they would be making 300k at maturity. They invested 700k and would get 1 million at maturity plus that 2.875% a year. So, if they bought that bond today for the market price which is about 700k and made that 2.875% interest yearly plus 300k at maturity, the whole investment will have paid them approximately 13% instead of the 2.875% that just the bond pays.

The buyer is being paid for his risk that he will not get all his principle back and any difference in the prevailing interest rate at the time of his purchase. I think that 2.875% is not a bad rate for a 4 year corporate bond so pretty much all of that difference between 2.875% and 13% is the risk of not receiving all the principle at maturity. That is what is known as junk bonds. They are known as junk because of the high yields and high risk they carry.
 






"I think that 2.875% is not a bad rate for a 4 year corporate bond so pretty much all of that difference between 2.875% and 13% is the risk of not receiving all the principle at maturity. That is what is known as junk bonds. They are known as junk because of the high yields and high risk they carry."


The yield of 2.875% was so low because of the conversion feature of the bond that allowed the bond holder to participate in the upside of the stock. General Electric's or Mobil's bond yields are higher than that. Fact is the default risk (ie not paying principal when due in 2016) on Dendreon's bonds is fairly low. ie about 3%.

This article discusses default risk and yields on high yield debt:

http://www.cumber.com/commentary.aspx?file=050312.asp

"Within the high-yield universe there are several different ratings classes: BB, B, and CCC. For the most part, BB-rated bonds yield about 5.5% today (457 basis points over 5-year Treasuries), B-rated bonds yield 6-7% (613 basis points over 5-year Treasuries), and CCC+ rated bonds yield significantly higher, depending on the issuer (1100 basis points over 5-year Treasuries, or about 12%). While this is a helpful guide, it must be remembered that each bond must be analyzed individually from a credit perspective.

Current yields and spreads are discounting a 5% default rate, but the actual default rate in 2012 is unlikely to be that high. Most likely, no more than 3.5% of high-yield issuers will default. Therefore, investors are being overcompensated for the risks they are taking by investing in this asset class."


Given its yield Dendreon's debt would likely carry a CCC+ rating (see above article). This rating and yield is the same as Harrah's/Caesar's Entertainment, the casino company.
 












Anonymous said:
The yield of 2.875% was so low because of the conversion feature of the bond that allowed the bond holder to participate in the upside of the stock. General Electric's or Mobil's bond yields are higher than that. Fact is the default risk (ie not paying principal when due in 2016) on Dendreon's bonds is fairly low. ie about 3%.
Good conversation. I am the person you responded to.

I disagree that the yield was inordinately low at the time and I definitely disagree that the conversion option drastically reduced its yield. If you look at the table in the prospectus, the stock would have had to have really good performance for any really worthwhile value to come from the option. The option definitely reuced the yield to some extent but i doubt it was that much.

IMO any reason for a somewhat low yield was due to misrepresentations and omissions by the management team at the time which resuled in a falsely inflated stock price at the time of this offering. IMO, bondholders bought these bonds under false pretenses of false and misleading statements and omissions.

The $530 million that bondholders spent on this offering is now worth about $160 million less one and a half years later.

The reason IMO that these bonds are not yielding 25% or 30% is due to the fact that if DNDN teeters close to bankruptcy the company will always have an inherent value of more than the bond offering, so someone would buy it and assume the liabilities of that debt offering.
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" if DNDN teeters close to bankruptcy the company will always have an inherent value of more than the bond offering, so someone would buy it and assume the liabilities of that debt offering."

Nice switch. This thread started out with the BS that Dendreon is heading for bankruptcy, --- to the assets of the company are worth more than the debt so the company would be acquired.

A $350 million a year current sales run rate, just months after receiving an electronic Q-code for medicare filing and a year since the plants were approved (the real launch date) is worth something to big pharma. They could acquire the company and run it more effeciently and turn a profit. There is real value here.

"inordinately" or "drastically" is your spin, I never used those words. The fact is the rate was low because of the conversion feature. The rest is your negative spin.
 






Wow, civil friendly conversation can't even last 2 posts.

The fact is that the reason for the low yield is that bondholders thought they were buying the bonds of a very strong company that was very quickly going to have revenues between 350M and 400M the year of the offering. In actuality, they were buying bonds of a company with a market capitalization of about 4 billion dollars due to crimes of the management team.

One and a half years later due to the management team having to come clean about their crimes by pulling phony guidance, the bonds are now junk bonds because this company's future and the bondholders future IMO is in the hands of big pharma and whether big pharma is nice enough to keep DNDN from bankruptcy. IMO BP can let them go through bankruptcy if they wish but then there would be less control of who would ultimately get the science.
 






Anonymous;4380218"inordinately" or "drastically" is your spin said:
I then said that the option definitely reduced the yield. If you didn't mean drastically or inordinately then why would you even say it? Of course the option reduces the yield. Business 101. There are bonds that start out as junk bonds that have an option. It might reduce the yield from 25% to 24%. All options to the bondholder reduce the yield. In this case the low rate of 2.875% was not due to the option but due to the fact that the strength of the company was misrepresented by the management of the company.

If the bond without the option would have been 3.5% that would still have been a low rate due to the perceived strength of the company that was only there because of the crimes of management.
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"If you didn't mean drastically or inordinately then why would you even say it?"

I never used those words - you did. Dendreon has a completely new senior management team in place. Dendreon will do well in the long run. The company is at a $360 million annual run rate in just its first year of launch. Good science will win out in the end.
 






Anonymous said:
"If you didn't mean drastically or inordinately then why would you even say it?"

I never used those words - you did. Dendreon has a completely new senior management team in place. Dendreon will do well in the long run. The company is at a $360 million annual run rate in just its first year of launch. Good science will win out in the end.
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Somehow the quote got screwed up. My bad or CF's bad. I used those words.

This conversation was about the bonds and I brought up management's crimes in context of the bonds and why the yield was low. Like shareholders, bondholders were mislead and IMO that is what yesterdays private conference call with JP Morgan's clients was about. JP Morgan underwrote this offering and in 1.5 years the option is worthless IMO and the bonds are worth 70 cents on the dollar. Probably many of their clients had questions.

I have never said anything about the science. If the science is good I agree it will win out. It will never win out while DNDN owns the science and it won't be long until DNDN can no longer own the science IMO.
 






I listened to the conference call. The dial-in was (888) 889-1309 and the password was "biotech". The call was about the future business prospects of the company. Johnson, Schiffman, and Frohlich were on the call from Dendreon. I left the call more convinced than ever that with time Dendreon will do well and the new sr. mgt. will get it done.

The call was part of a series of one-on-one calls JP Morgan has scheduled with biotech companies over the next few months, so your "theory" that this related to Dendreon's bondholders is complete nonsense. That is OK you got all weekend to dream up your next bogus "theory" that some disaster is just around the corner.
 






Anonymous said:
I listened to the conference call. The dial-in was (888) 889-1309 and the password was "biotech". The call was about the future business prospects of the company. Johnson, Schiffman, and Frohlich were on the call from Dendreon. I left the call more convinced than ever that with time Dendreon will do well and the new sr. mgt. will get it done.

The call was part of a series of one-on-one calls JP Morgan has scheduled with biotech companies over the next few months, so your "theory" that this related to Dendreon's bondholders is complete nonsense. That is OK you got all weekend to dream up your next bogus "theory" that some disaster is just around the corner.
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It is truly disturbing that you continue to lie on a bulletin board that is hardly read. You act as if this bulletin board will have any effect on the success or failure of DNDN. The only thing that will determine success or failure is the truth. The real truth. Not some lies you make up on a bulletin board. I think you have Obsessive-Compulsive Disorder because after you lie and deceive you seem to have a mental obligation have to keep making the same statement that DNDN has a bright future.

I know you did not have access to this conference call. I will refrain from name calling because more than anything I feel sorry for you, especially if you have OCD as I think you do. That is not something to be taken lightly. Here is an Op-Ed from X-conomy from today written by Brad Loncar. And no, you are not a JP Morgan private client. Those are successful people. You lie on Cafe Pharma. Enjoy!!

http://www.xconomy.com/seattle/2012/05/24/good-for-some-good-for-all/

"The recent Facebook IPO has brought to the front pages an issue that many ordinary investors have been asking themselves for a long time: “Is the system fair?” In Facebook’s case, legitimate questions have arisen about why Morgan Stanley, Goldman Sachs, and J.P. Morgan, Facebook’s lead underwriters, all reduced their internal revenue estimates for that company prior to its IPO while investors outside of these three banks were told nothing about it. As Henry Blodget explains here, these circumstances raise serious questions about the practice on Wall Street of selective disclosure and the fairness of the overall system. In other words, were these banks (and subsequently their clients) told something that other investors were not?

This question, and an experience that happened to me this week, bring to mind another long-held practice on Wall Street that I think is equally questionable and seriously outdated. It’s the practice of banks holding private calls with company management teams for a select group of investors. Here is what happened:

This week, a website called theflyonthewall published an alert that Dendreon CEO John Johnson would be participating in a conference call hosted by J.P. Morgan as part of their “CEO/CFO Conference Call Series.” While I follow the company very closely, this was the first I had heard of this. I wasn’t even sure at that point if it was just a rumor or not. Subsequently, I learned that J.P. Morgan also previously distributed a schedule of such calls, presumably to their private clients.

Now before I go any further, let me make a few important disclosures. 1) I have been extremely critical of Dendreon’s management team and their disclosure practices in the past, so much so that I publicly lobbied for the ouster of its prior CEO and Chairman. 2) In this case, I do not mean to pick on Dendreon or its new CEO specifically because this is a practice that is rampant in the industry. Dendreon is just one of many companies who participate in these calls. In fact, I think Mr. Johnson is very honorable, ethical, and a breath of fresh air at Dendreon. I believe the company has a bright future with him at the helm. I only bring up this case for illustrative purposes because it specifically happened to me this week, and in light of the recent Facebook news. 3) J.P. Morgan is a great bank and they have a world-class biotech team. This is an industry problem, not a J.P. Morgan one.

After seeing this investor alert, I emailed Dendreon’s investor relations team, asked them if it was indeed true that the CEO would be holding an investor call and, if so, may I please have the dial-in number. Like many investors, I was interested in hearing what kind of updates or advice Mr. Johnson had to report. Dendreon Investor Relations replied with the following message, “Hi Brad, this is true, however the call is for clients of JPM and I’m not at liberty to provide the call info.” It does not get any more straightforward than that. Dendreon’s CEO had an hour of his time to give to investors, but apparently only investors who are clients of a specific institution. J.P. Morgan, by the way, has been either the lead or joint underwriter of multiple debt and equity offerings for Dendreon in the recent past.

Now let’s set Dendreon aside, because again, this is a practice that many, if not most companies participate in. As an individual investor, I believe these types of selective and private calls need to be opened up to all comers because otherwise they are blatantly unfair. In truth, it is impossible to know in advance if material information will arise during a call. It is one thing to hold a private call with an outside expert who has a relationship with the bank, but it is something entirely different to hold one directly with a company’s management team.

In fact, I believe it is so unfair that in my opinion even the banks themselves recognize this. For example, if you are ever awarded the “privilege” of being invited to one of these calls, you will notice the sleight of hand the banks sometimes use to cover their legal tracks. In the case of this J.P. Morgan event, during an opening legal remark they ask you to voluntarily jump off the call if you are not an “analyst.” However, clearly the call is for clients too because 1) Dendreon directly acknowledged that in their email to me and 2) the first thing the J.P. Morgan operator asks you upon calling in is, “Who is your J.P. Morgan salesperson?” They also forward you directly into the call after you have told them you are an investor. Why not just block “non-analysts” right from the start if it is so important?

Additionally, I would like to point out that other companies who have in the past participated in this same “CEO/CFO Conference Call Series” did see the value in full-disclosure and were motivated to put out a press release alerting everybody about it. For example, here is a link to a press release by Regeneron Pharmaceuticals. They were motivated to make sure that all of their investors could equally participate in their call. Bravo, Regeneron…this is the right thing to do. Unfortunately though, they are the exception, not the rule. In my opinion, other companies would be very wise to follow suit. Private meetings throughout the 1990s tech bubble led to so many material disclosures behind closed doors that it prompted the SEC to enact Regulation Fair Disclosure (FD) in 2000. The regulation is supposed to ensure all investors get material information at the same time.

The bottom line is that in this day and age, the practice of publicly-traded management teams holding private investor calls for only a select few should stop. All investors, no matter who they bank with or how much money they have, deserve as much of an equal footing in the market as possible…especially when it comes to information straight from a CEO’s mouth. This is not overly burdensome for the companies or the banks, and might actually even increase their business. All you would be doing is distributing the phone number of a call that is already happening in the first place, as Regeneron and others have done. A small investor’s money is just as good as the big guys, so they deserve to hear what is on a CEO’s mind as well.

Calls such as these are just one of the many reasons why so many individual investors feel that the system is unfair. Make no doubt, this is an important issue because it is this perceived unfairness that is keeping many people out of the market. At the end of the day, this hurts both trading volumes (which are at multi-year lows) and the veracity of our overall system. Let’s level the playing field. What is good for one set of investors should be good for all."
 






"I know you did not have access to this conference call."

You can continue with your mentally ill rants, but I most cetainly was on the call. You are just here trying to damage Dendreon so that you can make money off your short position. You cite Brad Loncar in your rant. Well Brad provided the call-in information on Twitter on May 23rd:

http://twitter.com/#!/bradloncar

"Brad Loncar‏@bradloncar

The dial-in for John Johnson’s 1:00 call with JP Morgan investors is (888) 889-1309. Thought I would provide to all, since $DNDN did not".

Brad had this to say about the outlook for Dendreon in the article you provided:

"In fact, I think Mr. Johnson is very honorable, ethical, and a breath of fresh air at Dendreon. I believe the company has a bright future with him at the helm."

I agree with Brad, Dendreon has a bright future.
 






Brad wrote the Op-Ed stating that he could not get on. You are citing information from Brad Loncar. That is how you provided the phone number and that is how you knew the name of the series of conference calls.

Brad did not have the password and Brad obviously did not have access to the call. That is what his Op-Ed was about. As you well know, knowing the phone number does not give you access and you clearly are NOT a JP Morgan client who has a JP Morgan broker. I am not short or long in Dendreon. I do not short stocks. I tell truth and opinion here. I don't need lies to aid me. If you told nothing but truth and opinion here and you are positive on the company and long the stock that wold be great. Where we differ is that you feel that you feel the need to tell lies to help the things that you are saying. If you are so sure of DNDN's success I would completely respect that if you did not feel that you have to add non truths to help your side of the story. I never understood people who lie on bulletin boards. It gets you no where and when someone catches on to your lies it completely invalidates your point of view. I feel sorry for you and your obsessive behavior.
 






I am an advocate for those who are victims of high level employees, board members and ex-employees of Dendreon. Atrocities happened at Dendreon.

My mother shot me several times in my head with a snub nose 38 when I was a kid. Since that time, my dog, Sam, has been telling me that Dendreon must fail. If Dendreon succeeds tens of thousands of men will have their life extended (some for years) with little in the way of side effects. With a new highly competent management now in place, Dendreon can not be allowed to succeed. Atrocities happened at Dendreon. Dendreon must fail. I have to stop typing now because my ears are bleeding again.
 






I am an advocate for those who are victims of high level employees, board members and ex-employees of Dendreon. Atrocities happened at Dendreon.

Brad Loncar stated in his article below:

"In fact, I think Mr. Johnson is very honorable, ethical, and a breath of fresh air at Dendreon. I believe the company has a bright future with him at the helm. "

Brad is the shareholder that sent the board a proposal to the board to replace Gold and Brewer. He succeeded in ridding the company of these 2 individuals. If Dendreon is allowed to succeed tens of thousands of men with terminal prostate cancer will live longer and healthier lives. This can not be allowed to happen. Dendreon must fail. Atrocities happened at Dendreon.
 






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