Annual meeting notes
The short version
They think they have good enough science. Got money?
The long version
Here are my notes from the stockholder's meeting. As usual I'll point out up front that I am an amateur and have a background in engineering, not in biotech so what you get is my best guess of what happened. When in doubt, you can ask me, but you might want to talk to someone else for a different point of view or to Investor Relations for the official story.
Preliminaries
This was the fourth year I've attended TGEN's meeting. Except for a room change it was about as well attended as the earlier ones. The crowd was probably a bit bigger. The audience was about equally divided between suits, employees, and folks who looked like investors. People were not wearing name tags so part of this is guesswork based on how spiffy they looked and how hard they worked the crowd. As usual there was plenty of free pastries, fruits, and stuff to drink like coffee, tea, and juice. For most startups that is the closest an individual investor can get to a dividend.
As a nice touch some of the directors and officers introduced themselves around. Todd Simpson, CFO et al., said hello and he was nice enough to answer my questions for quite a few minutes. There were no revelations to pass along but sometimes there are lessons to be learned by hearing the stuff in press releases reiterated by a human. He was confident, personable and didn't seem to be judging who to talk to based on their percentage ownership. Maybe someone with finer questioning skills would have uncovered more significant insights. I thought he had a nice suit.
Official Meeting
CEO/President H. Stewart Parker called the meeting to order and within 5 minutes ran through all of the official business. Everything passed to no surprise.
Company Overview
The CEO continued with a series of presentations. She led off with an overall statement that emphasized that the company is working on technologies that have never been done before: gene based therapeutics delivered like classical pharmaceutical products. They are diverse enough to technically be able to work with gene replacement, protein replacement, vaccines, and something called functional validation that I think involves simplifying the FDA approval process. They are the first to get AAV (one of their delivery techniques) into clinical development and it appears to be a safe and key platform to work from. She felt that the product portfolio is the best in the sector. I don't know how that matches up with other competing sectors; is that limited to other gene therapies or does that comment include all advanced biotechs?
Scientific Progress 2002
For 2002, science was the good news. She talked about the bad news, finances, later.
Cystic Fibrosis
She emphasized the phase 2 results that showed good lung function at 30 days and a safety characteristic that allowed the minimum patient age to be lowered from 18 down to 12. The earlier CF can be treated the better. The 60 day and 90 day results didn't look as good but tended to do better than the placebo. Does this mean it is a monthly treatment? Is a significant improvement or nothing special?
AIDS Vaccine
There's been lots of press about this. Suffice it to say that they are getting ready for clinical trails and are fortunate enough to have this development fully funded by a not-for-profit organization (IAVI?). The preclinical trail results were a 90% detectable blocking of some aspect of HIV.
Arthritis
They will file for clinical trails this year. The preclinical results are encouraging because the reduction in bone and cartilage destruction spread beyond the specific joint treated. Treat one knee and the other gets better. No humans have tried this yet though, but if it works there is a potentially large market. If I recall correctly the CFO mentioned that Immunex's Enbrel product is targeting a $4B market. Targeted's target would probably be to get a subset of that which are those people that aren't responding to the other treatments. Of course of Targeted's therapy was better and cheaper wouldn't it take over?
Ovarian Cancer
The phase one data was that it was well tolerated with decreased marker levels (whatever that means). Evidently the trial patients had severe conditions and this late after the trail 87% are still alive. It would be informative to know what the placebo candidate survival rate was. I think this is one of the items that lacks funding so is shelved for now.
Metastatic Cancer
Targeted has the only systemic gene delivery system (LPD?). It demonstrated a reduction in animal tumors and increased animal survivor. It lacks funding too.
Hemophilia
I didn't catch the preclinical results except to say that the gene delivery is through the lungs. That sounds like using an inhaler for treatment. That sounds simple. Again this too doesn't have funding.
2002 Finances - the bad news
She told us this section would go fast. To do it slow would require Prozac for all involved. The bad news is that Targeted Genetics is a high tech biotech startup trying to bring products to market during a horrendous financial environment. That's why they've cut back on unfunded programs, headcount and facilities and also are trying to get new money from familiar places and even getting into contract manufacturing to generate some revenue.
2003 Goals
AIDS Vaccine
They've lined up $5.6M. They plan to initiate phase one trails in the second half of this year. The preclinical and manufacturing work are complete and they are working on the protocols (Huh?).
Cystic Fibrosis
There will be a phase 2b trail that will be large (100 patients) which will take about a year. It takes a while to sign everyone up. The Cystic Fibrosis Foundation provided them with $1.7M for the task. They will be looking for change in lung function.
Manufacturing
They hadn't planned on becoming a contract drug manufacturer but they have the facilities and need the money. The plan is to only do this to the extent that it doesn't interfere with Targeted's pipeline. They have one contract already (GenVac?) and are looking for more. They did not provide a revenue estimate.
Financing
She said they have enough to get into 2004, but I am unsure if that is cash in hand or moneys allocated but not received.
Questions and Answers
I've paraphrased this section.
> The Phase 2b Cystic Fibrosis trail will treat the patients at day 0 and day 30.
> Best prospects for money are familiar places including Europe but she couldn't be specific
> Cancelled partners might come back once the partners resolve their issues. Some of the cancellations weren't due to Targeted's progress but due to problems at the partner's companies.
> They have enough money to get into 2004. AIDS work is fully funded. The Cystic Fibrosis work is almost fully funded except for some stuff that sounded internal and administrative.
Conclusion
That was it. The entire meeting took less time that my morning stint at the tea and pastry table. She invited us all to go back there and each as much free food as we could. Maybe they should provide doggy bags. This meeting and some other startups' meeting all seem to have the same environment; the science is good, the work isn't perfectly trouble free, but the money is tight and would benefit greatly from just a slight easing of cash. Companies that survive this will be tough enough to get through anything. In the meantime the stockholders either seem to pester the directors unmercifully or tend to sit back in silence waiting to see what the storm does to the ship. When the big waves hit ya there's nothing else to do but see if you can ride it out. Well, within the world of investing there is the opportunity to sell and take your losses.
I await the results like so many others. I would feel better about buying more now if I saw more of the insiders purchasing these cheap shares. Beyond a few with probably personal reasons, why don't they? I also don't feel like selling. On the pragmatic level there is no reason to do so with the price so low. On the optimistic side, if they make great progress with any gene therapy while also curing CF, AIDS or Arthritis, then this will be an astonishing time to hang in there. While I could buy in on the way up, I also know that I follow best the companies that I own. The others tend to slip by when I am not looking. I wouldn't want to miss out on this one. That sounds like HOLD doesn't it?
Disclaimer
LTBH for over four years now and have acquired more along the way. And hoping for the best without betting the bank. |
