Struggling Tengion threatens bankruptcy as it scrambles for cash

After burning through a disappointing $30 million IPO haul from 2010, the regenerative medicine biotech Tengion is signaling that it's scraping the bottom of the bank account and may have to file for bankruptcy protection if it can't raise fresh funds soon.

At the end of June, Winston-Salem, NC-based Tengion ($TNGN) had $3.7 million in reserves, enough to get through to the end of this month. "Tengion is actively exploring opportunities to continue its business operations as currently conducted and fund deficits in operating cash flows," the biotech reported in its second quarter report. "If Tengion is unable to raise additional capital, it will need to suspend its business operations and will likely need to seek protection under U.S. bankruptcy laws."

To be sure, Tengion hasn't given up on its regenerative work, which uses a bioabsorbable scaffold seeded with a patient's cells to create new tissue. Investigators at the University of Chicago Medical Center and at the Johns Hopkins Hospital have inserted Tengion's neo-urinary conduit in 5 patients in a Phase I study. More implants are being prepared. And a neo-kidney augment designed to delay or prevent dialysis in advanced chronic kidney disease patients in being prepped for an IND and initial human studies.

Tengion, though, has been a victim of investors' abiding distaste for high-risk public offerings in the wake of the 2008 financial crisis. Early-stage development efforts like Tengion's have proved to be among the worst performers on Wall Street. Its IPO was rolled out in 2010, but only after the company took a big discount on its initial projected price range. The biotech restructured last fall, slashing 30 jobs in an effort to cut the burn rate.

Tengion's shares were trading at $2.45 this morning, down 18%.

- here's the release on the Q2 results

Special Report: Tengion ($TNGN) - 10 Biotech IPOs of 2010

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