Tengion Provides Business Update and Reports Third Quarter 2012 Financial Results
WINSTON-SALEM, N.C., Nov. 13, 2012 /PRNewswire/ — Tengion, Inc. (OTCQB: TNGN), a leader in regenerative medicine, today reported its financial results for the third quarter ended September 30, 2012 and provided a business update.
“We are focused on enrolling the remaining four patients in the Phase 1 trial of our Neo-Urinary Conduit, which we hope to complete by year-end, and we are working aggressively to file the IND for our Neo-Kidney Augment during the first half of 2013,” said John L. Miclot, President and Chief Executive Officer of Tengion. “We are dedicated to executing on our key program objectives and our successful $15 million private placement completed last month has provided us with sufficient funding to achieve these value creating milestones. We also recently received two Notices of Allowance from the USPTO for patent applications covering the novel technologies around the Neo-Urinary Conduit and Neo-Kidney Augment programs, which further solidify the breadth and strength of Tengion’s novel technology and the expanding intellectual property portfolio around it.”
Neo-Urinary Conduit Clinical Program Update
Tengion has implanted six patients in the ongoing Phase 1 clinical trial of its most advanced product candidate, the Neo-Urinary Conduit, for use in bladder cancer patients requiring a urinary diversion following bladder removal (cystectomy). The trial is an open-label, single-arm study, which is expected to enroll up to 10 patients.
In November 2012, Tengion announced that the United States Patent and Trademark Office (USPTO) issued a Notice of Allowance for U.S. Patent Application No. 12/612,606, titled “Cell-Scaffold Constructs.” The application includes compositional claims on the construct and cellular elements of the Neo-Urinary Conduit, as well as use claims covering this technology in additional clinical applications.
In October 2012, Tengion announced that two patients in the Phase 1 clinical trial of its Neo-Urinary Conduit died due to afflictions unrelated to the product candidate or the surgical procedure. The fourth patient enrolled in the trial died of metastatic bladder cancer and the sixth patient passed away from a cardiopulmonary arrest following a myocardial infarction. Until their deaths, both patients’ Neo-Urinary Conduits functioned well and they maintained normal renal function.
Following a positive meeting with the Data Safety Monitoring Board (DSMB) and the U.S. Food and Drug Administration (FDA), the Company is proceeding with concurrent enrollment of the remaining four patients in the Phase 1 clinical trial. Tengion is actively recruiting and remains focused on enrolling the remaining four patients in the trial by the end of 2012, however the timing of enrolling the seventh patient may result in completing enrollment of this trial in the first quarter of 2013.
There are four clinical trial sites actively recruiting patients for this clinical trial. These include the two original centers, the University of Chicago Medical Center and The Johns Hopkins Hospital in Baltimore, MD, as well as Baylor College of Medicine in Houston, TX and University of Michigan Comprehensive Cancer Center in Ann Arbor, MI. An additional two clinical trial sites are open for enrollment but are not yet actively recruiting patients.
Neo-Kidney Augment Preclinical Program Update
Tengion’s lead preclinical program, the Neo-Kidney Augment, is intended to prevent or delay the need for dialysis or kidney transplant by catalyzing the regeneration of functional kidney tissue in patients with advanced chronic kidney disease (CKD).
Tengion is currently conducting the good laboratory practice (GLP) animal study program required by the FDA to support an Investigational New Drug (IND) filing and initiation of a Phase 1 clinical trial in CKD patients. These GLP studies are consistent with the preclinical animal models already conducted by Tengion, which yielded positive data demonstrating slowing of kidney disease progression and improved survival. The Company is continuing to make progress on defining a plan, including milestones and source of funding, to conduct a clinical trial for the Neo-Kidney Augment in patients with CKD in Sweden.
In November 2012, Tengion announced that the USPTO issued a Notice of Allowance for U.S. Patent Application No. 12/617,721, titled “Isolated Renal Cells and Uses Thereof.” The application includes claims intended to protect important aspects of renal regeneration for the Neo-Kidney Augment.
Tengion expects to submit an IND filing for the Neo-Kidney Augment to the FDA during the first half of 2013 and anticipates that its Phase 1 trial will provide initial human proof-of-concept data in 2014.
In October 2012, Tengion announced the closing of its private placement of $15.0 million aggregate principal amount of Senior Secured Convertible Notes. In addition, the Company granted the initial purchasers an option to purchase up to an additional $20 million aggregate principal amount of the Notes. Tengion intends to use the net proceeds of this transaction primarily to fund research and development activities for its two lead programs, the Neo-Urinary Conduit and the Neo-Kidney Augment. The $15.0 million principal amount included the exchange of the $1.0 million of debt issued in the Company’s bridge financing announced in September 2012.
Third Quarter 2012 Financial Results
For the nine months ended September 30, 2012, the Company reported an adjusted net loss of $13.1 million, or $5.52 per basic and diluted common share, compared to an adjusted net loss of $18.2 million, or $8.70 per basic and diluted common share, for the same period in 2011. The decreased adjusted net loss for the 2012 period was primarily due to a reduction in compensation and related expenses of $3.1 million and a decrease in depreciation expense of $2.4 million.
The decreased compensation-related expenses during the 2012 period, of which $1.6 million were attributable to research and development personnel and $1.5 million were attributable to general and administrative personnel, were primarily due to lower headcount resulting from the Company’s November 2011 restructuring. The decreased depreciation expense during the 2012 period resulted from both a change during the second quarter of 2011 in the estimated useful life of leasehold improvements at the Company’s leased facility in Winston-Salem, North Carolina and an impairment during the fourth quarter of 2011 of the carrying value of the Company’s leased facility in East Norriton, Pennsylvania.
For the third quarter ended September 30, 2012, the Company reported an adjusted net loss of $4.2 million, or $1.72 per basic and diluted common share, compared with an adjusted net loss of $5.1 million, or $2.17 per basic common share, for the same period in 2011. The decreased adjusted net loss for the 2012 period was primarily due to a reduction in compensation and related expenses of $0.5 million and a decrease in depreciation expense of $0.6 million. Those reductions in expense were offset in part by an increase of $0.3 million in interest expense related to the bridge financing announced in September 2012.
As of September 30, 2012, the Company held $1.4 million in cash and cash equivalents, which did not include proceeds from the Company’s $15.0 million financing in October 2012.
Conference Call and Webcast
John L. Miclot, President and Chief Executive Officer, Dr. Tim Bertram, Chief Scientific Officer and President of Research and Development, and A. Brian Davis, Chief Financial Officer and Vice President of Finance, will host a conference call today, November 13, 2012, at 8:30 a.m. EST to provide a business update and discuss the Company’s third quarter 2012 financial results.
To participate in the call, please dial 866-800-8651 (domestic) or 617-614-2704 (international) five minutes prior to the start time and referencing access code 64284960. The conference call can be accessed from the Investors section of the Company’s website at www.tengion.com or directly at http://www.media-server.com/m/p/6pr35s84. The webcast will also be archived on the website.
About the Neo-Urinary Conduit(TM)
The Neo-Urinary Conduit(TM) is a combination of a patient’s own cells and bioabsorbable scaffold that is intended to catalyze regeneration of a native-like urinary tissue conduit, passively transporting urine from the ureters through a stoma, or hole in the abdomen, into a standard ostomy bag. Standard of care for patients requiring a non-continent urinary diversion uses bowel tissue to construct a conduit for urine to exit from the body. There are over 20,000 urinary diversions performed annually in the United States and Europe. These patients are at risk for complications associated with the use of bowel tissue, as well as for those associated with the surgery to harvest the bowel tissue. The Neo-Urinary Conduit is the only product candidate currently in development that aims to avoid the use of bowel tissue. The Neo-Urinary Conduit is being evaluated in an ongoing Phase 1 clinical trial in bladder cancer patients requiring a urinary diversion following bladder removal (cystectomy). The trial is designed to assess the safety and preliminary efficacy of the Neo-Urinary Conduit in up to 10 patients, as well as to translate the surgical procedure successfully used in preclinical animal models into clinical trials with human patients. Six patients have been implanted with the Neo-Urinary Conduit to date and the Company is focused on enrolling the remaining patients in the trial by the end of 2012, of enrolling the seventh patient may result in completing enrollment of this trial in the first quarter of 2013.
About the Neo-Kidney Augment(TM)
The Neo-Kidney Augment(TM) is intended to prevent or delay the need for dialysis or kidney transplantation by catalyzing the regeneration of functional kidney tissue in patients with advanced chronic kidney disease (CKD). This increase in functional kidney mass could thereby delay or prevent the need for dialysis or kidney transplant in patients with end stage renal disease (ESRD). According to the United States Renal Data System, more than $27 billion in Medicare costs each year are attributable to patients with ESRD and ESRD is associated with an approximate 20% mortality rate per year, with the average life expectancy of a patient initiating dialysis of approximately four years. Tengion scientists have published and presented positive data on the effect of the Company’s Neo-Kidney Augment in four different preclinical models of CKD. Two of these preclinical models have been conducted for a sufficiently long period of time to demonstrate durability and an impact on survival. Tengion anticipates submitting an IND filing for the Neo-Kidney Augment to FDA during the first half of 2013. Tengion is also exploring moving forward using the Advanced Therapy Medicinal Products (ATMP) pathway, an established regulatory route in Europe for advanced cell-based therapies.
Tengion, a clinical-stage regenerative medicine company, is focused on developing its Organ Regeneration Platform(TM) to harness the intrinsic regenerative pathways of the body to regenerate a range of native-like organs and tissues with the goal of delaying or eliminating the need for chronic disease therapies, organ transplantation, and the administration of anti-rejection medications. An initial clinical trial is ongoing for the Company’s most advanced product candidate, the Neo-Urinary Conduit(TM), an autologous implant that is intended to catalyze regeneration of native-like urinary tissue for bladder cancer patients requiring a urinary diversion following bladder removal. The Company’s lead preclinical candidate is the Neo-Kidney Augment(TM), which is designed to prevent or delay dialysis kidney transplantation by increasing renal function in patients with advanced chronic kidney disease. Tengion has worldwide rights to its product candidates.
Certain statements set forth above may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including, but not limited to: (i) the Company’s estimates regarding expenses, future revenues, capital requirements, needs for additional financing and its ability to obtain such financing; (ii) the Company’s plans to develop and commercialize its product candidates; (iii) the Company’s ongoing and planned preclinical studies and clinical trials; (iv) the timing of and the Company’s ability to obtain and maintain marketing approvals for its product candidates; (v) the rate and degree of market acceptance and clinical utility of the Company’s products; (vi) the Company’s plans to leverage its Organ Regeneration Platform to discover and develop product candidates; (vii) the Company’s ability to identify and develop product candidates; (viii) the Company’s commercialization, marketing and manufacturing capabilities and strategy; and (ix) the Company’s intellectual property position. Although Tengion believes that these statements are based upon reasonable assumptions within the bounds of its knowledge of its business and operations, there are a number of factors that may cause actual results to differ from these statements. Tengion’s business is subject to significant risks and uncertainties and there can be no assurance that actual results will not differ materially from expectations. Factors which could cause actual results to differ materially from expectations include, among others: (i) the Company will need to raise additional funds through collaborative arrangements or the issuance of additional equity to execute the business plan beyond June 2013; (ii) patients enrolled in the Neo-Urinary Conduit clinical trial may experience adverse events, which could delay the clinical trial or cause the Company to terminate the development of its Neo-Urinary Conduit; (iii) the Company may have difficulty enrolling patients in its clinical trials, including the Phase 1 clinical trial for the Neo-Urinary Conduit; (iv) data from the Company’s ongoing preclinical studies, including the proposed GLP program for the Neo-Kidney Augment, may not continue to be supportive of advancing such preclinical product candidates; and (v) the Company may be unable to progress its product candidates that are undergoing preclinical testing, including the Neo Kidney Augment, into clinical trials and the Company may not be successful in designing such clinical trials in a manner that supports development of such product candidates. For additional factors which could cause actual results to differ from expectations, reference is made to the reports filed by the Company with the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended. The forward looking statements in this release are made only as of the date hereof and the Company disclaims any intention or responsibility for updating predictions or expectations in this release.
(A Development-Stage Company)
Statements of Operations
(in thousands, except per share data)
Period from July 10, 2003 (inception) through September 30, 2012 Three Months Ended Nine Months Ended September 30, September 30, ------------- ------------- 2011 2012 2011 2012 ---- ---- ---- Revenue $ - $ - $ - $ - $ - Operating expenses: Research and development $2,837 $2,438 $9,579 $7,921 $125,778 General and administrative 1,383 1,198 5,197 4,017 45,910 Depreciation 718 106 2,816 357 23,509 Impairment of property and equipment - - - - 7,371 Other expense 26 38 995 130 1,835 --- --- --- --- ----- Total operating expenses 4,964 3,780 18,587 12,425 204,403 ----- ----- ------ ------ ------- Loss from operations (4,964) (3,780) (18,587) (12,425) (204,403) Interest income 12 1 39 12 8,524 Interest expense (193) (469) (666) (794) (15,683) Change in fair value of warrant liability 4,185 (324) 14,123 367 16,865 ----- ---- ------ --- ------ Net loss $(960) $(4,572) $(5,091) $(12,840) $(194,697) ===== ======= ======= ======== ========= Basic and diluted net loss attributable to common stockholders per share $(0.41) $(1.87) $(2.43) $(5.41) ====== ====== ====== ====== Shares used in computing basic and diluted net loss attributable to common stockholders: Basic and diluted 2,354 2,450 2,094 2,371 ===== ===== ===== =====
(A Development-Stage Company)
BALANCE SHEET DATA
December 31, September 30, 2011 2012 ---- ---- Cash and cash equivalents $9,244 $1,374 Short-term investments 6,066 - Total assets 17,817 3,894 Warrant liability 2,511 2,144 Total debt (including current portion) 4,987 4,852 Total liabilities 12,802 11,286 Total stockholders' equity (deficit) 5,015 (7,392)
(A Development-Stage Company)
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(in thousands, except per share data)
In accordance with Regulation G of the Securities and Exchange Commission, the table set forth below reconciles certain financial measures used in this press release that were not calculated in accordance with generally accepted accounting principles, or GAAP, with the most directly comparable financial measure calculated in accordance with GAAP.
Three Months Ended September 30, Nine Months Ended September 30, ------------- 2011 2012 2011 2012 ---- ---- ---- ---- Net loss attributable to common stockholders - GAAP $(960) $(4,572) $(5,091) $(12,840) Change in fair value of warrant liability (4,185) 324 (14,123) (367) Other expense 26 38 995 130 --- --- --- --- Adjusted net loss $(5,119) $(4,210) $(18,219) $(13,077) ======= ======= ======== ======== Shares used in computing basic and diluted net loss Attributable to common stockholders: Basic 2,354 2,450 2,094 2,371 ===== ===== ===== ===== Diluted 2,354 2,450 2,094 2,371 ===== ===== ===== ===== Basic net loss per share- GAAP $(0.41) $(1.87) $(2.43) $(5.41) Adjustment per share (1.76) 0.15 (6.27) (0.11) ----- ---- ----- ----- Basic net loss per share-adjusted $(2.17) $(1.72) $(8.70) $(5.52) ====== ====== ====== ====== Diluted net loss per share- GAAP $(0.41) $(1.87) $(2.43) $(5.41) Adjustment per share (1.76) 0.15 (6.27) (0.11) ---- ----- ----- Diluted net loss per share-adjusted $(2.17) $(1.72) $(8.70) $(5.52) ====== ====== ====== ======
SOURCE Tengion, Inc.