11/4/99 PR Newswire 07:14:00
PR Newswire
Copyright (c) 1999, PR Newswire
Thursday, November 4, 1999
Targeted Genetics Reports Third Quarter 1999 Financial Results
SEATTLE, Nov. 4 /PRNewswire/ -- Targeted Genetics Corporation (Nasdaq: TGEN)
today reported financial results for the third quarter of 1999. The results,
which include a $12 million non-cash loss associated with the establishment of
Emerald Gene Systems, Ltd., a joint venture formed with Elan Corporation plc,
were in line with company expectations. Emerald Gene Systems presents
opportunities to apply Targeted Genetics' gene delivery systems technologies to
new products and strengthens Targeted Genetics' near-term cash position.
For the quarter ended September 30, 1999, Targeted Genetics reported a net
loss applicable to common stock of $15.4 million, or $0.46 per share, compared
with a net loss of $3.4 million, or $0.12 per share, for the third quarter of
1998. For the first nine months of 1999, the company reported a net loss
applicable to common stock of $23.9 million, or $0.76 per share, compared to a
net loss of $10.3 million, or $0.40 per share, in the same period of 1998. The
company's results for both the third quarter and the first nine months of 1999
included $12.0 million for the loss of its' 80.1% owned subsidiary, Emerald
Gene Systems. The joint venture was established in July 1999 with the goal of
leveraging Elan's expertise in drug delivery and Targeted Genetics' innovative
gene delivery technologies to develop new products.
"The establishment of Emerald Gene Systems, our joint venture with Elan,
continued the momentum in our corporate partnering efforts," said H. Stewart
Parker, president and chief executive officer of Targeted Genetics. "Building
on our partnership with Medeva and our licensing agreement with Alkermes, we
continue to make progress in establishing strategic alliances that support and
enhance our existing core competencies while strengthening our financial and
intellectual property positions. Elan had a number of companies from which to
select a partner for their gene therapy initiatives and we are proud that
Targeted Genetics was chosen as their exclusive partner in this area. We
believe that the combination of Elan's expertise in drug delivery technologies
and our vector development capabilities will produce the next generation of
gene delivery systems."
Results for the first nine months of 1999 also included a $3.2 million non-
cash charge related to the issuance of stock and warrants to Alkermes, Inc. in
exchange for an exclusive sub-license to an important patent for the
manufacture of Adeno-Associated Viral (AAV) vectors. The broad patent and
related pending patent applications cover the use of cell lines for the
manufacture of AAV vectors, which are the key to making AAV-based products in a
commercially viable, cost-effective manner. During the past several years,
Targeted Genetics has developed a large-scale production method for AAV vectors
that is both efficient and cost effective.
Revenue results for the third quarter and first nine months of 1999 were $1.4
million and $4.0 million, respectively, derived from the company's
collaboration with Medeva PLC to develop its cystic fibrosis gene therapy
product candidate. The company began the Medeva collaboration in the fourth
quarter of 1998. Revenue reported for the third quarter and the first nine
months of 1998 was $116,000 and $438,000, respectively. Prior year revenue
consisted primarily of earnings from supply arrangements in the third quarter
and earnings from grants in the nine nine-month period.
"Patient accrual in our Phase I program in cystic fibrosis and Phase II trial
in head and neck cancer is progressing on schedule," said Barrie J. Carter,
Ph.D., executive vice president and director of research and development. "We
anticipate initiating a Phase I study of tgDCC-E1A, our cancer product, in
combination with chemotherapy, in patients with ovarian cancer by the end of
the year. Financially we are positioned to continue our promising research and
clinical development programs into 2001 and will continue to seek strategic
relationships and opportunities from which we will derive additional revenue."
Operating expenses for the third quarter of 1999 were $4.6 million compared
to $3.6 million in the third quarter of 1998. Operating expenses in the first
nine months of 1999 were $15.9 million compared to $10.8 million for the first
nine months of 1998. Increased operating expenses for the third quarter and
first nine months of 1999 reflected increased activity related to the Medeva
cystic fibrosis collaboration and costs associated with formation of the
Emerald Gene Systems joint venture with Elan. Expenses for the nine first nine
months of period in 1999 increased as a result of the second quarter 1999 non-
cash charge of $3.2 million taken by the company during the second quarter of
1999 for the exclusive AAV technology sub-license. Losses from operations for
the third quarter and first nine months of 1999 (excluding the second quarter
non-cash sub-license charge) were down compared to the same periods in 1998.
In conjunction with the formation of Emerald, Elan made a $12 million
investment in Targeted Genetics convertible exchangeable preferred stock and a
$5 million investment in Targeted Genetics common stock at a significant
premium to market price. Targeted Genetics used the preferred stock proceeds
to fund its initial investment in Emerald. Elan has committed to invest $5
million in Targeted Genetics common stock at a premium to market in July 2000
and to provide up to $12 million to the company in the form of convertible debt
to assist with funding Emerald's research and development expenses. The
company also issued convertible exchangeable preferred stock in conjunction
with the Emerald collaboration. Accordingly, the company began reporting net
loss applicable to common stock in the third quarter of 1999. Targeted
Genetics' loss applicable to common stock refers to the company's net loss less
dividends on the preferred stock. In the 1998 comparative periods, when
Targeted Genetics did not have any preferred stock outstanding, the comparable
measure is the company's net loss.
Cash and short term investments totaled $8.6 million at September 30, 1999
compared to $12.0 million at the end of 1998. The company estimates that,
based on current revenue sources and planned rates of spending, existing cash
and short term investments, together with the funding expected to be provided
by collaborative partners, will be sufficient to meet operating and capital
requirements through 2000 and into the second quarter of 2001.
Targeted Genetics Corporation develops gene and cell therapy products for the
treatment of certain acquired and inherited diseases. The company has three
lead product development programs targeting cystic fibrosis, cancer, and
infectious diseases, as well as an extensive gene delivery and cellular therapy
technology platform.
NOTE: This release contains forward-looking statements relating to the
Company's products under development, technologies, joint venture arrangements
and future operating results that are subject to certain risks and
uncertainties that could cause actual results to differ materially from those
projected. The words "believes", "expects", "intends", "anticipates",
variations of such words, and similar expressions identify forward-looking
statements, but their absence does not mean that the statement is not forward-
looking. These statements are not guarantees of future performance and are
subject to certain risks, uncertainties and assumptions that are difficult to
predict. Factors that could affect the Company's actual results include the
need for additional capital, the early stage of product development,
uncertainties related to clinical trials, uncertainties inherent in scientific
collaborations, and uncertainties related to patent position. Reference is made
to the Company's latest Annual Report on Form 10-K filed with the SEC for a
more detailed description of such factors. Readers are cautioned not to place
an undue reliance on these forward-looking statements, which speak only as of
the date of this release. The Company undertakes no obligation to update
publicly any forward-looking statements to reflect new information, events or
circumstances after the date of this release or to reflect the occurrence of
unanticipated events.
TARGETED GENETICS CORPORATION
Selected Financial Information
STATEMENTS OF OPERATIONS Three months ended Nine months ended
(unaudited, in thousands September 30, September 30,
except per share data)
1999 1998 1999 1998
Revenue:
Collaborative agreements $1,365 $112 $3,988 $120
Other 0 14 0 318
Total revenue 1,365 126 3,988 438
Expense:
Research and development 3,636 2,899 10,297 8,734
Technology license fee 0 0 3,200 0
General and administrative 968 651 2,408 2,092
Total expense 4,604 3,550 15,905 10,826
Loss from operations (3,239) (3,424) (11,917) (10,388)
Equity in loss of joint venture (12,015) -- 12,015) --
Investment income 124 136 345 313
Interest (58) (65) (164 (209)
Net Loss (15,188) (3,353) (23,751) (10,284)
Accretion of dividend on
preferred stock (164) -- (164) --
Net loss applicable to common
stock $(15,352) $(3,353) $(23,915) $(10,284)
Net loss per share $(0.46) $(0.12) $(0.76) $(0.40)
Shares used in computation of
net loss per share 33,191 28,975 31,560 25,529
CONDENSED BALANCE SHEETS September 30, December 31,
(in thousands)
1999 1998
(unaudited)
Cash, cash equivalents and
securities held for sale $8,553 $11,957
Other current assets 1,468 490
Property, plant and equipment,
net 3,717 3,299
Other assets 442 458
Total assets $14,180 $16,204
Current liabilities $3,211 $3,322
Long-term obligations 1,133 900
Shareholders' equity
(33,999 common shares outstanding
at September 30, 1999) 9,836 11,982
Total liabilities and shareholders'
equity $14,180 $16,204
/CONTACT: David Schubert, Senior Director, Communications and Strategic
Relations of Targeted Genetics Corporation, 206-521-7809; or Investors,
Stephanie Seiler, Ph.D., 212-696-4455, ext. 212, or Media, Amy Flood, 415-677-
4455, ext. 211, both of Noonan-Russo Communications, for Targeted Genetics
Corporation/ 06:59 EST
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