Targeted Genetics Realigns Product Development Priorities and Implements Cost Reduction Measures
Company Focuses on Clinical Development Path for LCA, HD and ALS; Cuts Costs by Personnel Reductions and Salary Deferrals and Reductions
SEATTLE, WA -- (Marketwire) -- 12/02/08 -- Targeted Genetics Corporation (NASDAQ: TGEN)today announced that it has realigned its product development priorities tofocus on its ocular and neurological product candidates and its first useof expressed RNAi. The Company believes these candidates present thegreatest opportunity for creating value in the near term with thecapabilities and resources currently available to the Company and itscollaborators and with the financial resources it believes are available intoday's challenging capital markets. In conjunction with this pipelineprioritization, the Company has reduced its payroll costs by 25% andreduced other costs by 15% when compared to 2008.
"We believe this prioritization of our product pipeline and the resultingchanges to our cost structure positions us to advance our promisingcandidates while we explore ways to monetize other valuable assets thatthe Company has built over the years," said B.G. Susan Robinson, presidentand chief executive officer of the Company.
The Company plans to focus its efforts around its clinical stage AAV-RPE65product candidate for treatment of severe retinal dystrophies most commonlydiagnosed as Leber's Congenital Amaurosis (LCA), its preclinicalHuntington's Disease (HD) product candidate and a third product candidateto treat Amyotrophic Lateral Sclerosis (ALS), also in preclinicaldevelopment.
Targeted Genetics' LCA program was initiated in 2005 when the Companyentered into a collaboration agreement to develop, manufacture andcommercialize AAV-RPE65 with the University College London and Moorfield'sHospital. Targeted Genetics manufactured AAV-RPE65 vector for the ongoingPhase I/II clinical trial initiated in May 2007. In April 2008, ProfessorRobin Ali, University College London and Moorfield's Hospital, reportedpromising early results at the Association for Research in Vision andOphthalmology (ARVO) conference, which findings were published in the May2008 issue of the New England Journal of Medicine. Based on the successseen in this trial with one of the patients and the possible short time tomarket for a potential drug of this type, the Company plans to pursuecommercialization of the AAV-RPE65 product candidate and be in position asearly as 2010 to file regulatory documents seeking marketing approval forthe candidate. If the LCA program is successful, the Company intends toleverage work on the AAV-RPE65 product and pursue treatment of additionalocular diseases.
Targeted Genetics' HD program, conducted in collaboration with BeverlyDavidson, Ph.D., the Roy J. Carver Professor of Medicine and Vice Chair ofBasic Research in the Department of Internal Medicine at the University ofIowa, is the Company's prototype program to utilize the potential of AAV asa delivery mechanism for expressed RNAi, a potent gene silencingtechnology. The Company views its expressed RNAi program for HD as both apromising initial product opportunity to address neurological disorders anda proof-of-concept for delivering expressed interfering RNA constructsutilizing an AAV vector.
Targeted Genetics is conducting its ALS program with John F. Engelhardt,Ph.D., Director of the Center for Gene Therapy and Professor, Department ofAnatomy and Cell Biology at the University of Iowa. The program is fullyfunded for 2009 as a result of a $2.4 million grant from the United StatesDepartment of Defense. Targeted Genetics plans to develop a small-moleculeproduct candidate based on observations by Dr. Engelhardt which show thatover-activation of NADPH (nicotinamide adenine dinucleotide phosphate)oxidase is associated with pathogenesis of ALS. The work expected to beperformed under the grant includes formulation development and preclinicaltesting. Although not within the Company's general focus on gene therapy,the Company believes the ability to leverage a long-standing collaborationand a two-year NADPH sponsored research agreement with Dr. Engelhardt andits experience with bringing therapeutics to trial presents a compellingopportunity to expand the Company's platform. If preclinical resultsgenerated in 2009 are promising, the Company expects to initiate clinicaltrials of an ALS drug candidate as early as 2010.
The Company is also evaluating alternatives for the future clinicaldevelopment of its inflammatory arthritis product candidate, tgAAC94. TheCompany continues to see value in the inflammatory arthritis program. Itbelieves, however, that the most prudent and efficient way to advance thisprogram will be through collaboration with a corporate partner that has theresources to take the product into phase II development and, if successful,onto commercialization. In the near term, the Company plans to continueits collaborations with the National Institutes of Health and Children'sHospital of Philadelphia to support the initiation of clinical trials byits collaborators of an HIV-vaccine product candidate.
In addition, the Company plans to maintain its manufacturing collaborationwith Celladon Corporation in support of their clinical study in congestiveheart failure. Finally, the Company plans to continue to exploreopportunities to monetize its other assets, including ways to capitalize onits industry pioneering work and strength as a leader in the development ofcommercially scalable AAV manufacturing processes.
The Company's cost cutting measures included a reduction of seven employeesand salary deferrals or reductions to half-time status for the seven mostsenior Company executives. These changes, along with the previouslyannounced resignations of the Company's former chief executive officer andchief scientific officer, collectively reduce the Company's current cashoutflow for employee compensation by approximately 25%. As a result ofthese staffing changes, the Company currently employs 56 full-timeequivalent employees.
As reported in the Company's Form 10Q filed November 5, 2008, the Companyonly has cash and short term investments to support its ongoing activitiesinto the first quarter of 2009. As a result, the Company is aggressivelypursuing access to additional capital from a wide variety of potentialsources, including strategic transactions, licensing or selling technology,additional product development collaborations, sales of stock or placementof debt, additional revenue from expanding or augmenting currentcollaborations and initiatives to capitalize on the Company's intellectualproperty, manufacturing capabilities and product development expertise.
About Targeted Genetics Corporation
Targeted Genetics Corporation is a biotechnology company committed to thedevelopment of innovative therapies for the prevention and treatment ofdiseases with significant unmet medical need. A key area of focus forTargeted Genetics is applying its proprietary Adeno-Associated Virus (AAV)technology platform to deliver genetic constructs to increase gene functionor silence gene function. Targeted Genetics' lead product developmentefforts target ocular and neurological indications, two therapeutic areaswhere AAV delivery may have competitive advantages over other therapeuticmodalities. To learn more about Targeted Genetics, visit its website atwww.targetedgenetics.com.
Safe Harbor Statement under the Private Securities Litigation Reform Act of1995:
This release contains forward-looking statements regarding the Company'sliquidity and financial resources, its ability to fund ongoing and futureoperations and its business strategy and product development, includingstatements regarding the Company's ability to raise capital or secure otherfinancial resources in the near term, the extent of the Company's cashhorizon, the timing, nature and results of the Company's research anddevelopment programs and the potential impact of the results of suchprograms on the Company's operations, the Company's ability to monetizeassets and other statements about the Company's plans, objectives,intentions and expectations. These statements involve current expectations,forecasts of future events and other statements that are not historicalfacts. Inaccurate assumptions and known and unknown risks and uncertaintiescan affect the accuracy of forward-looking statements and cause actualresults to differ materially from those expected or implied by theforward-looking statements. Factors that could affect actual future eventsor results include, but are not limited to, the risk that the Company willrun out of cash earlier than expected, the risk that the Company will notbe able to raise capital or secure other financial resources in the nearterm, the risk that the Company's research and development programs are notsuccessful or are delayed or terminated, the risk that payments anticipatedby the Company under product development collaborations, contracts and itsgrant are not earned or received when expected or at all, the risk that theCompany will not be able to monetize its assets as expected or at all andthe risk that the Company will not be able to maintain its listing on theNASDAQ Capital Market as well as other risk factors described in "Item 1A.Risk Factors" in the Company's most recent quarterly report on Form 10-Qfor the period ended September 30, 2008 filed with the SEC. You should notrely unduly on these forward-looking statements, which apply only as of thedate of this release. The Company undertakes no duty to publicly announceor report revisions to these statements as new information becomesavailable that may change the Company's expectations.