SOURCE: Targeted Genetics

March 25, 2008 07:30 ET

Targeted Genetics Reports Fourth Quarter and Year-End 2007 Financial Results

Conference Call Today at 10:30 a.m. ET

SEATTLE, WA--(Marketwire - March 25, 2008) - Targeted Genetics Corporation (NASDAQ: TGEN) today announced its financial results for the fourth quarter and year ended December 31, 2007. The Company will hold a conference call with analysts and investors to discuss its financial and business results at 10:30 a.m. ET today.

For the fourth quarter of 2007, the Company reported a net loss of $5.1 million, or $0.26 per common share, compared to net income of $808,000, or $0.08 per common share for the fourth quarter of 2006. For the year ended December 31, 2007, the Company reported a net loss of $16.1 million, or $0.98 per common share, compared to a net loss of $34.0 million, or $3.47 per common share for the year ended December 31, 2006. Per share results for 2007 reflect the issuance of 2.2 million shares in January 2007 and 6.7 million shares in June 2007.

Revenue for the fourth quarter of 2007 was $3.2 million, compared to $4.0 million for the same quarter in the prior year and was $10.3 million for the year ended December 31, 2007 compared to $9.9 million for the year ended December 31, 2006. Revenue for both the fourth quarter and the full year consists primarily of research and development revenue earned under the Company's NIAID-funded subcontract to develop adeno-associated viral (AAV)-based HIV/AIDS vaccines. Fiscal year 2007 revenue results also include revenue generated by the Company's heart failure collaboration with Celladon Corporation and licensing revenue primarily from a milestone payment. Revenue in 2006 consisted primarily of development revenue earned under the Company's heart failure collaboration, HIV/AIDS vaccine collaboration activity and $1.8 million in licensing revenue in the fourth quarter from a license fee received from Amsterdam Molecular Therapeutics for a non-exclusive license to certain of our AAV1 patent rights.

Research and development expenses for the fourth quarter of 2007 increased to $4.9 million from $4.0 million in the fourth quarter of 2006 and increased to $17.7 million for the year ended December 31, 2007 from $14.5 million for the prior year. Increases for both periods were due to higher development and vaccine candidate manufacturing costs associated with the Company's NIAID-funded HIV/AIDS vaccine subcontract, higher clinical costs to support more subjects in the Company's Phase I/II clinical study of tgAAC94 to treat inflammatory arthritis and increased research and development activities and costs to support the Company's heart failure collaboration with Celladon, which entered Phase I clinical trials in the second quarter of 2007.

General and administrative expenses for the fourth quarter of 2007 were $2.2 million compared to $1.6 million for the fourth quarter of 2006 and were $7.0 million and $6.4 million for the year ended December 31, 2007 and 2006, respectively. The increases for both periods over the prior year results were primarily related to higher compensation costs, patent prosecution and issuance activities and non-cash stock-based compensation expense.

The Company's cash balance was $16.4 million at December 31, 2007, as compared to $6.2 million at December 31, 2006. This increase is primarily due to net proceeds of $26.0 million resulting from two private equity financings completed in 2007.

"2007 has been a challenging, yet rewarding year. We are very pleased with the advancement of our clinical development programs in arthritis, heart failure and HIV/AIDS vaccines, and intend to move our lead candidate, tgAAC94 for inflammatory arthritis, into Phase II clinical studies later this year," said H. Stewart Parker, president and chief executive officer of Targeted Genetics. "During 2008, we will continue to leverage our emerging RNAi platform, data momentum and strong AAV manufacturing patent position to drive the business forward."

Highlights for 2007

In 2007, we made progress in our development collaborations and our product development programs and expanded and leveraged our patent portfolio. More specifically:

--  In February 2007, the Company reported results from the complete Phase
    I clinical trial of the investigational HIV/AIDS vaccine candidate
    partnered with IAVI. The results of this study indicated a favorable safety
    and tolerability profile consistent with the results observed in clinical
    trials for this product candidate to date, and provided the rationale for
    the ongoing Phase II study to evaluate the vaccine at higher doses and at
    different dosing intervals. The results of these studies support further
    evaluation of HIV/AIDS vaccines which will be done in conjunction with our
    NIAID-funded vaccine program.
    
--  In May 2007, the first patient was dosed in the Phase I clinical trial
    of MYDICAR™, heart failure product candidate under development through
    the Company's collaboration with Celladon.
    
--  In May 2007, the University College London's Institute of
    Ophthalmology and Moorefield's Eye Hospital initiated a Phase I/II clinical
    trial to test the use of an AAV vector to deliver RPE65 to treat a form of
    childhood blindness. The Company manufactured the vector (AAV-RPE65) used
    in this trial, which is funded by the UK Department of Health.
    
--  In June 2007, the Company reported additional data from its ongoing
    Phase I/II clinical trial of its tgAAC94 inflammatory arthritis product
    candidate that demonstrated safety and a trend in a higher percentage of
    subjects with a two-point reduction, on a three point severity scale, in
    swelling in treated joints compared to placebo. Enrollment and initial
    dosing in this trial was completed in May 2007. In July 2007, this trial
    was placed on clinical hold when a patient participating in the clinical
    trial experienced a serious adverse event, or SAE, and subsequently died.
    In September 2007, the National Institutes of Health Recombinant DNA
    Advisory Committee held a public hearing which reviewed the SAE. Evidence
    presented at the hearing suggested that the subject died of an invasive
    fungal infection.
    
--  In November 2007, the U.S. Food and Drug Administration, or FDA,
    removed the hold on the Company's Phase I/II clinical trial of its tgAAC94
    inflammatory arthritis product candidate after an in depth review of all
    product and clinical data. Also in November 2007, the Company reported
    additional data indicating that a higher percentage of subjects who
    received the drug candidate showed improvement in function and pain
    compared to results from the placebo injected group. These data also
    indicated that tgAAC94 is well-tolerated at the highest dose tested in the
    trial.
    
--  In September 2007, the Company received a milestone payment from
    Amsterdam Molecular Therapeutics, or AMT, upon initiation of a clinical
    trial for AMT-011, an AAV1-based therapy for lipoprotein lipase (LPL) Type
    1 deficiency, a genetic disorder caused by the reduced or absent activity
    of an enzyme called lipoprotein lipase, which results in accumulation of
    lipids in the blood.
    
--  Additional patents the Company had applied for have issued,
    strengthening our AAV vector patent portfolio and expanding the coverage of
    potential applications of AAV-based gene delivery.
    

Conference Call and Webcast Information

The Company will host a conference call reviewing financial results and its product development portfolio, including an update on the tgAAC94 inflammatory arthritis program and other clinical and business developments, today beginning at 10:30 a.m. Eastern Time / 7:30 a.m. Pacific Time. You may access the live webcast via the "Events" section found on the homepage of the Company's website at www.targetedgenetics.com or via telephone at 800.240.4186 (domestic) or 303.262.2139 (international).

Replay Access

Webcast replay will be available for 90 days at www.targetedgenetics.com; telephone replay will be available following today's call at approximately 12:30 p.m. ET through 11:59 p.m. ET, Wednesday, June 25, 2008, by calling 800.405.2236 (domestic) or 303.590.3000 (international); passcode 11110469#.

About Targeted Genetics

Targeted Genetics Corporation is a biotechnology company committed to the development of innovative targeted molecular therapies for the prevention and treatment of acquired and inherited diseases with significant unmet medical need. Targeted Genetics' proprietary Adeno-Associated Virus (AAV) technology platform allows it to deliver genes that encode proteins to increase gene function or RNAi to decrease or silence gene function. Targeted Genetics' product development efforts target inflammatory arthritis, AIDS prophylaxis, congestive heart failure and Huntington's disease. To learn more about Targeted Genetics, visit Targeted Genetics' website at www.targetedgenetics.com.

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995:

This release contains forward-looking statements regarding the Company's liquidity and financial resources, its ability to fund ongoing and future operations, its business strategy and product development, including statements regarding the data collected in the tgAAC94 program, the cause of the serious adverse event and the impact, if any, on the timing, continuance or results of this trial, establishment or determination of efficacy endpoints from the data collected in the trial, the timely and complete accrual of patients in the trial and our ability to commercialize tgAAC94, the strength of our patent portfolio, and other statements about the Company's plans, objectives, intentions and expectations. 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. Factors that could affect actual future events or results include, but are not limited to, payments anticipated by the Company under product development collaborations and contracts, the Company's actual expenses, the Company's ability to raise capital when needed, the timing, nature and results of the Company's clinical trials, potential development of alternative technologies or more effective products by competitors, the Company's ability to obtain and maintain regulatory or institutional approvals, the Company's ability to maintain its listing on the NASDAQ Capital Market and the Company's ability to obtain, maintain and protect its intellectual property, as well as other risk factors described in "Item 1A. Risk Factors" in the Company's most recent annual report on Form 10-K for the year ended December 31, 2006 filed with the SEC. The Company anticipates updating the risk factors in its annual report on Form 10-K for the year ended December 31, 2007, to be filed with the SEC. 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.

                      TARGETED GENETICS CORPORATION
             (in thousands, except per share information)

                                   Quarter ended      Year-to-date ended
                                    December 31,          December 31,
                                --------------------  --------------------
Statement of Operations
 Information:                     2007       2006       2007       2006
                                ---------  ---------  ---------  ---------
                               (unaudited)           (unaudited)

Revenue:
  Collaborative agreements      $   3,120  $   2,258  $   9,732  $   8,114
  Licensing revenue                   100      1,750        600      1,750
                                ---------  ---------  ---------  ---------
    Total revenue                   3,220      4,008     10,332      9,864

Operating expenses:
  Research & development            4,869      3,999     17,709     14,482
  General & administrative          2,208      1,646      7,029      6,382
  Restructure charges               1,339        188      2,148      2,006
  Goodwill impairment charge            -          -          -     23,723
                                ---------  ---------  ---------  ---------
    Total expenses                  8,416      5,833     26,886     46,593
                                ---------  ---------  ---------  ---------
Loss from operations               (5,196)    (1,825)   (16,554)   (36,729)

Investment income                     123         99        428        567
Interest expense                        -        (49)        (1)      (411)
Gain on debt restructure                -      2,583          -      2,583
                                ---------  ---------  ---------  ---------
Net income (loss)               $  (5,073) $     808  $ (16,127) $ (33,990)
                                =========  =========  =========  =========

Net income (loss) per common
 share                          $   (0.26) $    0.08  $   (0.98) $   (3.47)
                                =========  =========  =========  =========

Shares used in computation of
 net income (loss) per
 common share                      19,814     10,502     16,504      9,788
                                =========  =========  =========  =========




                      TARGETED GENETICS CORPORATION
                             (in thousands)

                                                  December 31, December 31,
Balance Sheet Information:                            2007         2006
                                                  ------------ ------------
                                                  (unaudited)

Cash and cash equivalents                         $     16,442 $      6,206
Other current assets                                     2,854        2,029
Property and equipment, net                              1,052        1,100
Other assets                                             8,126        8,132
                                                  ------------ ------------
  Total assets                                    $     28,474 $     17,467
                                                  ============ ============

Current liabilities                               $      4,657 $      5,188
Long-term obligations and other liabilities              7,577        6,912
Shareholders' equity                                    16,240        5,367
                                                  ------------ ------------
  Total liabilities and shareholders' equity      $     28,474 $     17,467
                                                  ============ ============

Contact Information

  • Investor and Media Contact:
    Stacie D. Byars
    WeissComm Partners for
    Targeted Genetics
    415.946.1072
    Email Contact