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Targeted Genetics Retains Interest in RNAi Despite Severe Cash Crunch

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Despite a severe cash crunch, Targeted Genetics remains committed to its lead expressed RNAi program in Huntington’s disease and could still advance a drug candidate into the clinic sometime in 2009, the company’s newly appointed President and CEO Susan Robinson told RNAi News this week.
 
But with its current cash position only expected to carry the company into the first quarter of next year, any advances in the Huntington’s disease or other RNAi programs will be subject to Targeted Genetics’ ability to obtain additional funding, she cautioned.
 
“The promise for RNAi is very high … [and] we believe that one of the most promising areas in which [adeno-associated viruses] may be used … for the delivery of genetic constructs is in the field of RNAi.” Robinson said. Since the Huntington’s disease effort is the company’s most advanced in RNAi, “we are interested in continuing that program … [because] it is a candidate that we have on a clinical-trial path and … [since] it is a proof of concept for using AAV to deliver RNAi.”
 
Although officials from Targeted Genetics had indicated earlier this year that the Huntington’s disease program, which the company acquired in April from its former partner Merck (see RNAi News, 4/10/2008), would move into the clinic by the end of 2008, Robinson said that this timeline could now extend into the first half of 2010.
 
Still, “I would say that [2009] is a possibility,” she noted. Importantly, she also said that the company could likely move a Huntington’s disease drug into phase I testing without a partner given the expertise of its collaborators at the University of Iowa.
 
‘Very Short Cash Horizon’
 
Yet exactly how Targeted Genetics would fund this program, in addition to its other non-RNAi efforts, remains unclear.
 
Last week, during a third-quarter financials conference call, Targeted Genetics CFO David Poston said that the company’s cash position will enable it to fund operations only into the first quarter of 2009.
 
“This very short cash horizon has us intensely focused on carefully managing our current cash funds and on extending our cash horizon,” he added.
 

“I think with the financial markets the way they are … we’ll be focusing very specifically on the programs at hand in our pipeline, one of which is an RNAi product. Future work will probably be driven off of the success we have with [those] product candidates and [the acquisition of] additional resources.”

In line with Robinson’s statements this week, Targeted Genetics’ former President and CEO Stewart Parker said during the call that the company continues to “plan for additional product initiatives, particularly opportunities to exploit our leading intellectual-property position in expressed RNAi,” but stressed that those opportunities hinge on the availability of resources.
 
She added that the company is exploring a variety of ways to raise additional financing including mergers or acquisitions, licensing or selling products or technologies, forming product-development collaborations, selling stock, or placing debt.
 
Parker, along with Targeted Genetics former CSO Barrie Carter, resigned from the company the day after the conference call. Robinson declined to comment on the circumstances surrounding their departure.
 
Robinson confirmed, however, that the broad evaluation of fundraising opportunities continues despite Parker’s resignation, noting that “we’re going to explore all of the potential ways we can think of to extend our cash horizon,” but indicated that selling non-core assets is a likely possibility.
 
“All of the [company’s] pieces of value … are things we’re looking at,” she said. We’re “trying to determine the things we keep … and those things that are nice to have but could be monetized to help us with the future.”
 
Aside from delays in the Huntington’s disease program, Targeted Genetics’ plans to add new candidates to its RNAi pipeline may falter due to its money problems.
 
In May, Carter had said that Targeted Genetics expected to “define one or more other targets” for new expressed RNAi initiatives before the end of 2008 (see RNAi News, 5/8/2008). And while Robinson said this week that the process of identifying targets is ongoing, she said that the question has become, “‘What kind of effort can we put into doing more than identification?’
 
“I think with the financial markets the way they are … we’ll be focusing very specifically on the programs at hand in our pipeline, one of which is an RNAi product,” she added. “Future work will probably be driven off of the success we have with [those] product candidates and [the acquisition of] additional resources.”
 
Q3 Financials
 
For the third quarter, Targeted Genetics’ net loss dipped slightly to $2.7 million, or $0.13 per share, from a year-ago loss of $3 million, or $0.15 per share.
 
Revenues in the period fell to $1.7 million from $2.4 million the year before, reflecting a decrease in research and development and manufacturing activities under a non-RNAi HIV/AIDS vaccine project funded by the National Institute of Allergy and Infectious Diseases.
 
Research and development spending in the third quarter decreased to $3.2 million from $3.9 million in the same quarter last year, while general and administrative expenses dropped $500,000 to $1.2 million.
 
As of Sept. 30, Targeted Genetics had $9.2 million in cash. The company said it expects to burn $11.5 million to $12.5 million this year, and as a result expects to have enough cash to carry it into the first quarter of 2009. 

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