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Targeted Genetics' Cash Dwindles as Company Fails to Secure Needed Funding

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Officials from Targeted Genetics announced last week that it has not been able to raise much-needed capital, raising questions about the firm's ability to advance its priority drug-development programs.

"We maintain great belief in the promise of our adeno-associated viral … platform technology and our current product-development programs," Targeted Genetics President and CEO Susan Robinson said during a conference call held last week to discuss the company's fourth-quarter financial results.

"However, we have a short cash horizon, and access to the capital we need to move these programs forward has become increasingly difficult given the current volatile financial environment," she added.

During the call, Targeted Genetics CFO David Poston reiterated the company's expectation that it will be able to fund its planned operations "only through the first half of 2009."

Robinson said that the company remains "wholly focused on completing one or more strategic transactions to raise capital and to support longer-term value creation," but noted that if it is not successful in doing so "in the near term," Targeted Genetics will move forward with a previously announced plan to shutter its manufacturing operations and focus solely on its therapeutics-development efforts.

Last month, Targeted Genetics announced that it was considering stopping its manufacturing work after it satisfies its contractual obligations to partner Celladon related to a non-RNAi collaboration (see RNAi News, 3/12/2009).

Such a move, Robinson said this week, "would include reducing our manufacturing headcount from approximately 35 full-time equivalent staff to five or fewer manufacturing-related staff and include "other infrastructure cost reductions."

It was not immediately clear how the closure would affect Targeted Genetics' financial position.

Robinson said during the call that the company remains committed to its three key drug-development programs, including an expressed RNAi program in Huntington's disease that had previously been partnered with Sirna Therapeutics (see RNAi News, 4/16/2008), but cautioned that it may not have the to ability to advance them.

"Our ability to move our programs forward, as well as develop exciting new product opportunities for AAV to deliver RNA therapeutics, requires significant additional capital," she said. "We are working diligently to avoid a scenario where we are forced or decide to suspend our operations and are actively engaged in a variety of discussions with the goal of obtaining a more favorable outcome for Targeted Genetics and … our shareholders."

The Quarter

For the three-month period ended Dec. 31, Targeted Genetics' net loss surged to $10.8 million, or $0.54 per share, from $5.1 million, or $0.26 per share, in the same period a year earlier.

Revenues in the fourth quarter slipped to $2.2 million from $3.2 million the year before, while research and development spending dropped to $3.9 million from $4.9 million.

General and administrative costs, meanwhile, fell sharply to just under $1 million from $2.2 million in the fourth quarter of 2007, reflecting the effects of a cost-reduction plan that included lower executive compensation.

As of Dec. 31, Targeted Genetics had a cash balance of $5.2 million.

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