Targeted Genetics Corporation Announces the Sale of Manufacturing Assets to Genzyme Corporation
SEATTLE, WA -- (Marketwire) -- 09/09/09 -- Targeted Genetics Corporation (NASDAQ: TGEN) today announced the sale to Genzyme Corporation of certain assets, including manufacturing technologies and other adeno-associated viral (AAV) vector technology, for up to $7 million in cash. The purchased assets consist primarily of patents, know-how and manufacturing-related equipment. Genzyme also received a license to use certain technology and materials necessary for manufacturing AAV vectors.
As part of the transaction, Targeted Genetics has agreed to work with Genzyme to transfer the acquired technology and assist Genzyme in its implementation of the technology. Genzyme has agreed to pay $3.5 million within five days of the closing and an additional $3.5 million in installments payable upon successful completion of specified transfer plan deliverables. Targeted Genetics expects the transition plan to be completed by the end of 2009. In addition, Targeted Genetics will receive revenue from Genzyme in the event that Genzyme sublicenses the acquired intellectual property within specified time periods, and will receive royalties in the event of commercial sales of products containing AAV vectors covered by the acquired intellectual property.
As part of the transaction, Genzyme has licensed back to Targeted Genetics the AAV manufacturing and vector technology sold to Genzyme for Targeted Genetics' use in specified product programs, including the development and sale of products in Targeted Genetics' current AAV gene therapeutic programs for the treatment of a type of blindness called Leber's Congenital Amaurosis, inflammatory arthritis and a neurodegenerative disease called Huntington's Disease. Genzyme will receive royalties from Targeted Genetics in the event of any commercial sales of certain products utilizing the intellectual property licensed back to Targeted Genetics.
"We believe that the AAV vector manufacturing expertise developed by Targeted Genetics is in the hands of a company well-positioned to move it forward," said B.G. Susan Robinson, President and Chief Executive Officer of Targeted Genetics Corporation. "Genzyme has demonstrated a commitment to advancing gene therapeutics and has AAV programs in its development pipeline. We have evaluated multiple opportunities to build shareholder value around these assets, and believe this transaction holds the most promise."
"Genzyme has a substantial commitment to advancing gene therapy as a solution to many complex diseases," said David Meeker, Executive Vice President for Genzyme's Therapeutics, Biosurgery and Transplant businesses. "The acquisition of the intellectual property from Targeted Genetics will add depth to our program and overall gene therapy capabilities."
Based on Targeted Genetics' current projections, including cash to be received upon successful execution of the transfer elements of the transaction, the Company estimates it has cash resources to continue operations through 2010.
"We've been operating for a number of months in overdrive, exploring multiple avenues to extend our cash horizon," said Ms. Robinson. "Unfortunately, but necessarily, we have reduced our workforce by 80% since November 2008, to approximately 15 core employees. We also renegotiated our facility leases and greatly reduced our rent and other liabilities, and at the same time, generated significant new revenue in 2009 through renegotiating our collaboration with Celladon Corporation. The combination of these efforts extended our cash horizon enough to allow us to engage in a number of strategic discussions, including the maturation of and close of this transaction with Genzyme."
Ms. Robinson continued, "This shift out of crisis mode was made possible only with the unwavering commitment and determination of our employees, collaboration of our partners, cooperation of our landlords, and efforts of past employees. With these resources in hand, we will continue to explore opportunities to maximize the value of our business and assets, including our therapeutic programs, our license agreements with Celladon and Amsterdam Molecular Therapeutics that could generate future revenue streams, and our other proprietary and licensed intellectual property."
Wedbush Pacgrow Lifesciences provided financial advisory and investment banking services to Targeted Genetics to assist the company in the identification and evaluation of strategic alternatives.
About Targeted Genetics Corporation
Targeted Genetics Corporation is a biotechnology company committed to the development and commercialization of innovative therapies for the prevention and treatment of diseases with significant unmet medical need. To learn more about Targeted Genetics, visit its website at www.targetedgenetics.com.
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995:
This release contains forward-looking statements, including statements regarding the transaction with Genzyme Corporation, the transfer of technology under the agreement with Genzyme, future revenue that the Company could receive in connection with the transaction, the Company's liquidity, financial resources and cash horizon, the Company's ongoing operations and business plans, and potential future revenue streams. These statements involve current expectations, forecasts of future events and other statements that are not historical facts. Inaccurate assumptions and known and unknown risks and uncertainties can affect the accuracy of forward-looking statements and cause actual results to differ materially from those expected or implied by the forward-looking statements. Factors that could affect actual future events or results include, but are not limited to, the risk that the Company will not be successful in transferring technology to Genzyme as required for the Company to receive the remainder of the purchase price for the transaction, the risk that the Company will not be able to raise additional capital or secure other financial resources through additional strategic transactions, product collaborations or otherwise, the risk that the Company's current financial resources and future financial resources (if any) will be insufficient to enable the Company to make meaningful progress in the development of its product candidates or, in the future, to fund continuing operations, the risk that the Company will not receive anticipated future revenue streams, the risk that the Company will run out of cash earlier than expected, the risk that the Company will be unable to maintain its listing on the Nasdaq Capital Market and that an over-the-counter market will not trade the Company's shares if the Nasdaq Capital Market delists the Company, in either case impairing the Company's ability to raise capital through the sale of equity, the risk that the Company will be unable to successfully develop its product candidates and the risk factors described in the section entitled "Risk Factors" in Part I, Item 1A of the Company's quarterly report on Form 10-Q for the quarter ended June 30, 2009, filed with the Securities and Exchange Commission. You should not rely unduly on these forward-looking statements, which apply only as of the date of this release. The Company undertakes no duty to publicly announce or report revisions to these statements as new information becomes available that may change the Company's expectations.
Investor and Media Contact:
Stacie D. Byars
On behalf of Targeted Genetics Corporation