Dendreon Faces Internet-Fueled Shareholder Uprising, Led by a Little Guy in Kansas

Xconomy Seattle — 

Seattle-based Dendreon (NASDAQ: DNDN) has a passionate base of fans and detractors all over the web, but now it has a new and potentially volatile issue on its hands—an Internet-driven shareholder uprising that aims to shake up the company’s board of directors.

Battles for control of corporate boardrooms that hit the press are usually waged by powerful interests like billionaire Carl Icahn, or prominent activist Ralph Whitworth. But in this case, Brad Loncar, 32, has agitated for change with a Tweet and a posting today on a popular message board, InvestorVillage. Loncar, an individual Dendreon shareholder in Lenexa, KS, went public today with a 65-page, footnoted critique in which he details Dendreon’s managerial “missteps” of the past few years. After reaching out privately to Dendreon chairman Richard Brewer in February, and coming away unsatisfied with the company’s response to his concerns, Loncar went public with his call to add one or two new, independent directors to provide greater oversight on the existing eight-member board.

Within a few hours, hundreds of people had viewed the proposal, and dozens had written directly to the company to say they support it.

While Loncar said the company appears to be following of some of the suggestions, he wrote in a cover letter posted online today that, “it appears that management has otherwise chosen to ignore the proposal rather than work together constructively. That is why I have decided to reach out to other shareholders like you at this time. I am seeking your support in seeing that change is seriously pursued. Dendreon’s board might be able to ignore one shareholder, but hopefully they will more clearly see the importance of these issues if more of us stand together. Therefore, I respectfully ask that you contact Dendreon and let them know you support this proposal to add outside shareholders to the board.” [Editor’s Note: The bold emphasis is Loncar’s].

Dendreon, for those new to the story, faced intense skepticism throughout much of its history as it sought to develop the world’s first active immunotherapy against cancer, which works by stimulating the immune system to fight cancer cells as if they were viruses. The drug proved in a study of 512 men reported in April 2009 it could help prolong the lives of men with prostate cancer, with minimal side effects. The drug won FDA approval a year later.

Brad Loncar

While scientists and doctors (and more recently, Medicare) debated the merits of clinical trial data to support Dendreon, shareholder debates have raged for years about a number of controversial moves. In his critique, Loncar points to a number of reasons why he thinks greater board oversight of management is necessary:

—Dendreon paid a $16.5 million settlement to resolve a shareholder lawsuit, in which the company was accused of failing to properly disclose material information about its interactions with the FDA when it was seeking clearance of its drug, sipuleucel-T (Provenge), in 2007.

—The company has a history, Loncar asserts, of making forecasts to the investment community that have “often conflicted with reality or changed significantly over time.”

—Many company actions have been unfriendly to shareholders, Loncar says, citing the board’s authorization of dilutive rounds of financing, insider stock sales, and “generous gifts of stock and options to executives.”

—Dendreon management, Loncar says, “seems unprepared to effectively recognize and answer the public relations challenges facing the company that are outside the scientific realm.”

A Dendreon spokeswoman didn’t respond to my request for comment about Loncar’s complaints on Friday afternoon.

After reading Loncar’s cover letter and proposal, I followed up with him by phone to hear directly what he had to say, and find out more about him, and what motivated him to lead such a shareholder uprising.

Loncar isn’t a lawyer trained in the nuances of corporate governance, or someone skilled in waging the legal contests that big guys like Icahn know all about. He previously worked in administrative jobs in the past three Republican presidential campaigns for President. Loncar says he honed his interest in finance during a stint at Franklin Templeton Investments. Now he says he makes his living managing his family’s investment portfolio from his home.

Loncar says he has an emotional, not just financial, interest in what Dendreon does. His grandfather died of prostate cancer in 2006, he says. Loncar followed the company for almost 10 years, and has been a shareholder the past three years, he says. At one point, he owned “many thousands” of shares in Dendreon, but grew frustrated with management over time, and sold all of his shares but one.

“If I had faith in the management of the company, trust me, I’d own many thousands of shares now as I have in the past,” Loncar says. “I became disillusioned about six months ago. Rather than walk away, I wanted to try to fix this.”

Loncar tried to bring up his concerns in what he calls a “pretty amicable” letter to Dendreon chairman Richard Brewer on February 22. He was concerned that the board may not be fully aware of all the missteps of management that he has perceived from following the company closely. “If I had received a call a week later, and they said thank you, I probably would have been happy and it would have ended,” Loncar says.

But three weeks went by after that letter was sent, and Loncar heard nothing. So Loncar wrote another letter, dated March 14th, in which he said he was “surprised and disappointed” to have been blown off. Loncar told Brewer, the Dendreon chairman, that he was a “big supporter” of the company, but that ignoring his proposals meant that he had “no choice but to reach out to other shareholders.”

“That definitely lit a fire,” Loncar says.

Within two hours of sending that letter, Dendreon’s corporate secretary who manages communications with the board, Rick Hamm, told Loncar that Brewer had said that his letters could be distributed to the entire board. So Loncar decided to wait a while longer to see if he got any response.

“I figured I’d let a week pass by. I gave it more than that, and still didn’t hear anything. It became pretty clear they were ignoring the proposal,” Loncar says.

So Loncar did what he promised—he reached out to other shareholders. He found public lists of the top 12 mutual funds and hedge funds with holdings in Dendreon, printed up hard copies of his detailed critique, packaged them in binders, and sent them via FedEx to all of those top investment houses.

Then he waited.

“Surprisingly, I got a couple calls back,” Loncar says. “I talked on the phone to people I never dreamed I’d talk to. They were investors I look up to and idolize. A few of them said they agreed with almost everything I wrote.” When pressed for specifics, he wouldn’t name these investors, but did say he spoke to representatives of three of the top 12 major holders in Dendreon. None of them said they were willing to go public in their support for Loncar’s proposal.

The feedback he got was something like this, Loncar says: “We don’t know who you are, you’re a small investor, we’re a little uneasy supporting you.”

Nonetheless, the comments from the big guys were “a morale booster, and vindication that I was on the right track.”

That morale booster is what led to the open letter to shareholders, which Loncar posted on Twitter and Almost immediately, he started getting attaboy comments posted publicly, and sent to his e-mail privately.

Loncar says he had a lawyer friend review his critique just to make sure there was nothing illegal about it, but he says he’s got no real legal strategic help in getting what he’s asking for. He isn’t trying to oust any incumbent members of the board or replace them with directors of his liking, as the big guys like Icahn tend to do. As a little guy, Loncar says, making a list of demands like that would be unrealistic, and would essentially get his proposal tossed in the garbage immediately.

Instead, Loncar says he’ll be happy if Dendreon expands its board by one, maybe two members. The new representative(s) should be looking out for the ranks of small shareholders who want the company to succeed, Loncar says. While Dendreon’s board is currently composed of people with “impressive credentials” in healthcare and biotech, he thinks it could benefit from a more general business perspective. It’s been done before, as Loncar says, at the American Cancer Society, which seeks to strike a balance with directors from the medical field, as well as other parts of business and society at large.

It will be fascinating to see if this turns out to be something that grows into a real shareholder movement, as Loncar says he hopes it will, or nothing more than an Internet squall. Companies are often hostile to any attempt to rattle their boardrooms, and the law makes it very tough even for guys as rich, tough, and experienced as Carl Icahn to have an impact. Can a true little guy in the middle of America actually affect change at a prominent biotech company?

Loncar insists that he’s sincere, and wants to make Dendreon succeed. He certainly has shown he knows how to use the tools of the Internet to get his message across, and to get the attention of the powers that be at Dendreon. I’m very curious to see how this turns out.

Loncar, naturally, was feeling pretty optimistic about his chances after getting all the support he did from his fellow shareholders today.

“It no longer takes a Carl Icahn to bring about change in companies. That’s what I’m doing now.”

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15 responses to “Dendreon Faces Internet-Fueled Shareholder Uprising, Led by a Little Guy in Kansas”

  1. Luke…

    I would be willing to bet if Dendreon were to have, on their board, someone who represents the little guy…that be me, then Dendreon would not only be the first company to bring an immunotherapy for cancer to market, but they would also be the first company in this country to have someone who represents me…the individual investor. I like that.

    For the most part, I feel Dendreon has done a great job. I have few if any complaints. They are going to be a success story in biotech. Dendreon maybe even on their way to becoming the next Amgen. A representative for the little guy on their board, might make them even better.

    Luke…Great article…!


  2. tbs_theman says:


    I hope when researching this article you reviewed Brad’s trading records and verified that he was, in fact, a long term DNDN holder. And, I hope, that you verified all the hedge fund / institutional investors in DNDN.

    I am curious – how does Brad Loncar manage to speak at CMS? Other investors tried, they were turned away. How does Brad Loncar, a guy holding 1 share of stock, pique your interest?

    I have been holding DNDN stock since 2007. Brad does not represent my opinion in any way, shape or form.

  3. Jake Smith says:

    Luke: its a public company. If you dont like it, sell your stock. Put your money somewhere else that you like. Why complain so bitterly. Why write a 65 page manifesto? Luke, if you are such a genious about biotech, and in particular, how to run a biotech company, then start one. Lenexa Kansas would be proud to have a company like Dendreon. Why not take your energy and do something to help the world rather than just complain bitterly?

  4. TBS—I don’t know how Brad managed to speak at the CMS hearing in November.

    I think the story is interesting for a couple reasons. The biggest is that he’s showing it’s now at least conceivable for a small shareholder to mount a grassroots campaign to reform corporate governance in a publicly-traded company. I have no idea whether he will succeed. But he clearly got the attention of a lot of shareholders online yesterday.

    I understand that what Brad is saying is controversial, that many will disagree. That’s absolutely within your right, and you’re welcome to wage battle in the marketplace of ideas online. Just because I wrote about Brad’s effort doesn’t mean I personally agree with everything he alleges. But I think it’s great that a small shareholder’s voice can now be heard, just like Carl Icahn or somebody else who’s rich and powerful.

  5. tbs_theman says:


    Shareholders have been trying these things for years. National publications have never given them a moments notice. Yet two days after DNDN gets a positive CMS draft, this story breaks about a “passionate shareholder who sold all his shares”.

    Tell me, Luke, did you interview the hedge funds / institutional investors who contacted Brad that were interested? Did they want to see this type of corporate governance with their other investments? Had they ever been contacted and responded to other 1 share investors?

    My experience in dealing with mutual fund managers is that they never respond. Individual companies are 1000 times more responsive than institutional investors unless I have $250,000 to invest.

    And, what are the odds that the ONE investor who got to speak, also got fed up and sold all his “thousands” of shares but one.

  6. arnold orlander says:

    I hold thousands of shares and have been on this board years. I don’t post frequently but the active old time and current members recognize my id.

    As for me would not like to be represented by someone who holds one share of stock over Gold.
    He fought the hard war and I know his bio. He may not have done everything perfectly but our company is owned 100% by us, recognized by FDA
    and don’t need to tell other shareholders the story of political machinations that had to be fought.

    Between my family and friends we hold a significant amount of shares that would vote against anyone who until today, holding one share of stock with out a bio would get our vote.


  7. ocyan says:

    Luke – Not sure if this article of yours was an April 1st joke but Mr. Loncar’s document was definitely a joke.

    The Dendreon management team headed by Dr. Gold has done a remarkable job of steering Provenge through difficult scientific and regulatory hurdles so that it is now available to patients. That was done in an environment where funding was short and virtually all investment houses continuously casted doubts on the efficacy of Provenge, hence making any effort to raise funding nearly impossible.

    Throughout all that, the Dendreon team never wavered in their faith that Provenge works and will bring in a revolution in how cancers will be treated. That was why they took back the Provenge partnership with Kirin for the Asian market and resisted all attempts to get the company to partner the treatment both in the US and in Europe. The result is that Dendreon and its shareholders now hold exclusive world-wide rights to a blockbuster treatment that will generate billions of dollars a year in revenue in just a couple of years.

    I read Mr. Loncar’s document. Many of his comments reflected sentiments of certain so-called investors who may not be pleased with the downturn of the stock price until recently and blamed that on just about anything that they could imagine. The fact of the matter is that the stock price is a function of revenue or expectation of it. Because of the lack of funding mentioned above, Dendreon could not perform the usual roll-out of a new FDA-approved product. The company is still building out its manufacturing facilities. As such, revenue is still constrained. On top of that, the Medicare’s inquest into whether to pay for Provenge cause uncertainty in the mind of investors as to the stability of the revenue stream. It should not have been a surprise that the stock price was depressed.

    Again, the Dendreon management team has performed perfectly through these obstacles. They have gotten the FDA approval for the entire NJ facility, effectively quadrupling manufacturing capacity. They have gotten Medicare to agree to pay for Provenge on-label while leaving the question of off-label payment to local contractors hinged upon new clinical trial data (likely in the form of the Phase 3 trial P11 or PROTECT). They have completed construction of two new manufacturing facilities in CA and GA and expect FDA approval later this year. Lastly, they have started work in Europe to get Provenge approved and marketed, likely in 2013.

    In light of the above, and the fact that the stock price has advanced more than ten-folds since its low in 2009, it is a joke for anyone to claim that this Dendreon management team has not performed for its shareholders. Please give me a break!

  8. tbs_theman says:


    You’ve been fed a story. I hope you will follow up with the IV shareholders who were contacted by this charlatan. He contacted them for initial support – playing on only the fact that Gold sells many of his options, then went behind their backs and went public with you.

    He has history at Franklin Templeton Investments. SAC Capital has a relationship with them. SAC was a big short and now a big long on DNDN.

    Very disappointed in this lack of proper journalism.

  9. Tony F says:


    You’ve been had and bad.

    Over nearly 6 years as a Dendreon shareholder and a poster replying to some of your Seattle newspaper and Xconomy articles on DNDN, the 3 predominate journalists who instantly come to mind as being fair, honest and objective reporters of FACTS rather than injecting personal bias or even, as some have suggested of other reporters, being paid to write slanted (and usually negative) articles about various companies (See the history of the Patrick Burn’s Overstock lawsuit that continues successfully in the California courts) are Luke Timmerman, Ed Silverman of Pharmalot and Mike Huckman, formerly of CNBC.

    Whether DNDN news has been good or bad, you 3 have reported honestly, factually and without bias.

    I also do not recall you writing a 3 page article in such detail previously about any other Dendreon happening.

    Unfortunately, imo, your article in this case certainly went into great detail about a 1-share shareholder who, so far, has failed for find a following for his so-called “shareholder revolt”.

    I believe you state he sold all but 1 of his “thousands” of DNDN 6 months ago where the share price at the beginning of October was in the $40 range.

    This gentleman is reported to be handling his family’s investment funds. Did you ask if he’d lost money in his trading of DNDN? When did he purchase–in the $50 after FDA approval last year or was he savvy enough to have bought in the single digits as many of we long-time shareholders have? What price did he sell at? Did he make money or lose money for his family? (Guess where I’m putting my money?)

    I didn’t see you stating you’d contacted any Dendreon shareholders–of whom you should have posts and emails–seeking their comments to provide your usual fair and balanced reporting in your story.

    While you referenced posts at Investor’s Village message board on the topic, I didn’t see you reporting contact with any of the IV members who are pro or con this sole shareholder’s proposition.

    Over the years, 2 counts–admittedly subject to error–show IV board members anonymously reporting how many shares they own to a publicly identified attorney and IV board member (who also publicly states his DNDN holdings exceed one-half million shares) show IV member reports we hold a 10% ownership in Dendreon.

    Where’s your reporting of contact with those regular, reliable, knowledgeable Investor’s Village members and their comments on this?

    All, imo, legitimate questions any reporter should ask and report to ascertain the reason(s) for this alleged 1 share shareholder’s position of a Dendreon “shareholder revolt”… which, as far as I can see from all available media is non-existent other than in the eyes of the gentleman and his “cause” for which you provided substantial reporting.

    This situation reminds me of the alleged contact by McGuire in 2007 after the FDA turned down in which he lost substantial funds offering his services as a “consultant”–for a fee in what appeared to me to be a means to recoup his substantial loss when the FDA turned down approval. That situation turned into the small 16 million dollar class-action settlement–peanuts and, as is often the case, a settlement is far cheaper than a protracted legal case, imo.

    Others have commented upon the unusual fact that he made a CMS presentation and other facets of this tempest-in-a-teapot; I’ll defer repeating what they’ve already said.

    But, let’s not forget the substantial and powerful forces who have been aligned against Dendreon for years–besides the shorting and naked shorting of DNDN shares– to include the convicted felon, Mike Milken and his Prostate Cancer Foundation which has never supported Dendreon; the outlandish and never substantiated claim of “death threats” by noted chemo-prescribing and chemo-researching physicians, Howard Scher of NYC’s Sloan Kettering and Maha Hussain of University of Michigan among others aligned against Dendreon and it’s first-in-class immunotherapy.

    You should remember, Scher certified to the FDA in Feb 2007–in order to obtain an FDA waiver and to sit on the FDA Advisory Committee reviewing Provenge in March 2007–that he had but 3 Conflict of Interests (COI). Internet research shows his had an exorbitant 17 COI at that time including competing cancer therapies Scher was involved with developing and which he failed to disclose to the FDA.

    I personally wrote both the HHS Office of Investigative Services detailing those 17 COI and the FDA Investigative office with the same letter; I received no response to my allegations.

    Yet, when an IV member and DNDN shareholder sent then FDA Commissioner Andy von Eschenbach roses on the first anniversary of the FDA denial, our government spent the time and money to send 2 FDA investigators instantly to the floral shop to force the owner of that business to disclose who’d sent the Commissioner flowers…..

    There are of course the other aspects of shareholder demonstrations after the FDA turned down in support of a new, never-before invented treatment for terminal prostate cancer victims offering greater survival benefits than chemo with a superb quality of life, dying at the rate of 30,000 per year, whose only available treatment was the toxic, deadly chemo Taxetore (which, by the way, kills 1 to 2% of the men taking the treatment and for which fully 50% refuse that treatment choosing to die sooner than suffer the ravages of that chemo).

    I myself wrote the BoD and Senior Executives on another topic over a month ago and received no reply which was acceptable to me.

    I want Dendreon and its Management to focus on executing their plan; the rest–including share price–will take care of itself and follow suit depending upon how well those people execute.

    Anyone can error; it’s a natural human foible. I certainly hope you’ll revisit this topic and provide “the rest of the story” as Paul Harvey used to say in his honest and fair daily story reporting.

    You have proven to be of such high caliber reporting over many years; frankly, I’m sorely disappointed you dropped the ball and/or were hood-winking into unfairly reporting this non-event, despite the outstanding accomplishments of Dendreon, its Board of Directors and its Senior Management.

    Thank you for many years of being telling Dendron’s story as it is; I hope you’ll do a follow up piece that is significantly more fair and balanced.

  10. Itsme says:

    So with the passage of time it seems clear that Loncar was right, and most of his detractors were wrong. Perhaps the smart people heeded the warnings.

  11. bloncariously bologna says:

    Hmmm. I wonder if Bad Loncar is enjoying this new CEO’s performance or is he writing another manifesto, but this one was going to be 100 pages long demanding change? Rofl