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Targeted Genetics Sells AAV, Manufacturing Tech to Genzyme for $7M

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Just days after it was poised to run out of cash, Targeted Genetics last week announced that it has sold its manufacturing and adeno-associated viral vector technologies, among other assets, to Genzyme for up to $7 million.

The transaction, which will enable the company to continue operations through 2010, will transfer Targeted Genetics’ patents, manufacturing-related equipment, and licenses to use certain technology and materials necessary for manufacturing AAV vectors to Genzyme, according to the company.

In exchange, Targeted Genetics will receive $3.5 million upfront and the additional $3.5 million in installments based upon the completion of specified transfer-plan deliverables. The company said it also stands to receive fees should Genzyme sublicense any Targeted Genetics intellectual property within a specified timeframe, as well as royalties on products using the AAV technology.

Although it remains unclear what these operations will consist of now that Targeted Genetics has sold off assets that supported a good portion of its core business activities, it appears that the company is attempting to re-cast itself as leaner drug developer focused on a handful of programs, which may include its RNAi-based effort in Huntington’s disease.

As part of the divestiture, Targeted Genetics has acquired a license to its former AAV manufacturing and vector technology for use in certain product-development programs, including the Huntington’s disease program, in exchange for royalties. In a statement, President and CEO Susan Robinson noted that the company intends to “explore opportunities to maximize the value of our business and assets, including our therapeutic programs.”

The Huntington’s disease program originated in the lab of University of Iowa researcher Beverly Davidson and gathered steam in 2004 when Sirna Therapeutics began a collaboration with Davidson in 2004 to develop an expressed RNAi-based therapy for the condition. About a year later, Sirna announced that it had partnered with Targeted Genetics on the effort (see RNAi News, 1/14/2005).

The alliance fell apart last year, however, when Sirna’s new parent company, Merck, handed the rights to the program to Targeted Genetics after deciding it was outside its areas of interest (see RNAi News, 4/10/2009).

Still, Targeted Genetics was bullish on the program, and company officials had at one time speculated that the Huntington’s disease program could advance into human testing before the end of 2009. But financial dire straits led the company to reevaluate this timeline and in March, Robinson told RNAi News that the program was being put on hold until Targeted Genetics could secure enough funding to stay in business (see RNAi News, 3/12/2009).

By the end of the second quarter, it appeared that Targeted Genetics was unlikely to do so, and, in a filing with the US Securities and Exchange Commission at the time, the firm noted that the “scope and extent of the recent disruptions in the capital markets could continue to make it difficult or impossible for us to raise additional capital in public or private capital markets until conditions stabilize, and conditions may not sufficiently stabilize in the very short amount of time we have left before we reach the end of our financial resources and are forced to go out of business.”

As part of an effort to trim costs, the company said in August that it was “evaluating whether to continue its involvement” in the Huntington’s disease program going forward and may terminate its license from the University of Iowa to the relevant technology.

Despite Targeted Genetics’ license to use its now-sold technology in the Huntington’s disease program, whether the company intends to do so is currently unknown. Company officials did not return multiple requests for comment.

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