Targeted Genetics Annual Stockholders Meeting 5/26/05
CAVEAT
I'm an amateur investor and not a professional in any of the relevant fields involved in this company. Of course, there are very few people on this planet that are experts. I'm human so mistakes will be made. When in doubt remember that I didn't get paid for this and the OFFICIAL answers are probably over at SEC, FDA, and Investor Relations.
INTRODUCTION
Well, Targeted Genetics made it to another meeting. That can be a significant accomplishment for a startup that has had bad news. Keep in mind that this startup has been starting up for over ten years now. Biotech takes a long time to develop.
The meeting was in the same place as last time. There were about 50 to 100 people there. Considering that about half of those are directors, management, and finance types, there were probably about a dozen or two individual stockholders. We were the ones taking the best advantage of the free food.
FORMAL MEETING
These never take very long. Everything passed.
BUSINESS PRESENTATION
The CEO ran the show as usual. She started by emphasizing that their vision is still to develop treatments and that it is still a new technology. (my comment: That use of "still" made it sound a bit like this has been going on for a lot of years.) They are emphasizing development over research. Their AAV manufacturing capability is unmatched, which provides opportunities for companies that need such a capability.
She made an interesting comment on AAV. They don't know why it exists. They use it because it is so slow growing and long lasting, which is good for a delivery system, but is atypical for most life forms that are trying to exist in some other body. Coupling it with gene therapies allows treatments to be delivered inside barriers within the body, like within joints.
The manufacturing process is like that used for monoclonals, which aids discussions with FDA and collaborators.
CLINICAL TRIALS
Rheumatoid Arthritis (RA)
This is now the lead program. Results from the phase one trial will be released in mid-2005. (me: That sounds soon.) The existing and new technology of anti-TNF (me: whatever that is, EMBREL?), is looking at $7B sales in 2011. Targeted Genetics is concentrating on the 15%-40% that still have disease in one or more joints. The Targeted Genetics approach doesn't leak out of the joint, yet might be able to cure the contralateral (me; fancy name for other?) joint . They've expanded beyond just RA, which got them more participants.
AIDS
Their collaboration with IAVI is currently extended to the end of 2006, so IAVI funds the development and gets to distribute it to Africa for non-profit, while the company commercializes it through the developed world. Phase 1 was completed in Europe. India is ongoing. AIDS has multiple antigens so the treatment includes more than one.
Cystic Fibrosis (CF)
They've stopped the trials after the phase 2 trial did not meet its primary endpoint. They're looking over the data to understand what happened. At least it paved the way with the FDA for future AAV submissions.
Congestive Heart Failure (CHF)
This is pre-clinical and is being pursued with Celladon. It accounts for 300,000 deaths in the US each year. It is hard to get drugs into the protected tissues of the heart so the idea is that gene therapy will get the body to produce the drugs on-site.
Huntington's Disease
This is a pre-clinical approach involving RNA inhibitors and a company called Sirna. In the US there are 30,000 affected and 150,000 at risk.
FINANCES
The company had $30M in cash at the end of 1Q05, with a burn rate of $20M-$25M, so they can make it to mid-2006 without help, but they will seek partners and financing because they have a long way to go. IAVI and other such commitments aren't included in those numbers.
QUESTIONS & ANSWERS - paraphrased to make my life easier
> The negotiations with Amgen over RA are still ongoing and still cordial.
> CF is a tough disease with endpoints that are difficult to measure. The technology is fine.
> missed one, sorry
> AIDS has many antigens so the vaccine has to use more than one.
> Cash burn and cash are enough to get into mid-2006, but they'll hunt for funds through financing or partners.
> Additional shares were authorized to be ready for opportunities, but there are no plans for them yet.
> There are no plans for a Corixa-style takeover, and Targeted Genetics is not in the same situation.
> No one else is further along with AAV, but others are looking at it. That is a good confirmation and a potential revenue source if anyone else gets serious.
END OF MEETING - total time less than one hour
SUMMARY (my speculations, for what they're worth)
Targeted Genetics still is a startup that has a lot of work to do, not enough money yet, and an unproven technology. There is a lot riding on the RA and AIDS work. The CF failure means a delay in profitability. It was the furthest along, so that's a pity. Of course, if they cure AIDS, and RA then the company is an obvious winner, but no one will know that for years. If that happens before the stock price recovers then the company will probably be bought out. The risk is awfully high at this point. Or let me put it this way, the greatest reward to investors would be to own TGEN now and ride it through success in AIDS and RA. That reward is unlikely though, because before it gets there they'll probably get bought. The company is cheap and if the technology proves itself, then someone else can buy excellent goods at a great discount. Of course I am writing this on a 20% up day so maybe we'l be able to hang on through the whole ride as an independent company.
For the sake of the patients, I hope the technology works. For the sake of investors, I hope the company survives independently. In the meantime I'll HOLD and watch and not get my hopes up too high.
DISCLAIMER
LTBH of TGEN since 2000 and way underwater. |
