Regenerative medicine firm Tengion’s (OTC:TNGN) steady progress on its two leading product candidates means the company has a calendar of targets and goals outlined for 2013. But Tengion is running low on cash to meet them.
As of the end of 2012, the Tengion had $7.5 million in cash and cash equivalents – enough to last until May, CFO Brian Davis said during a conference call to discuss fourth quarter and full-year financial results. Tengion has been in this cash crunch position before.
In 2011, Tengion was running low on funds until a private placement that included medical device giant Medtronic (NYSE:MDT) provided the company enough money to keep on running. As that cash dried up Tengion implemented a corporate restructuring that led to layoffs.
Last spring Tengion announced it had only enough cash to last through the third quarter. But in September, the company received $1 million in bridge financing. Soon afterward in October, the company completed a $15 million private placement consisting of convertible debt financing. The money from that financing is being spent on research and testing of Tengion’s regenerative technologies.
Tengion, a spinout from Wake Forest University’s Institute for Regenerative Medicine, has developed a way to regenerate tissue from a patient’s own cells. The company has focused its efforts on its two leading product candidates. The neo-urinary conduit is in phase I clinical trials as a way to generate a new urinary pathway for bladder cancer patients who have had their bladders removed. The company’s neo-kidney augment, in pre-clinical studies, is ready for an investigative filing with the Food and Drug Administration, which would pave the way to start clinical trials. This technology would help patients who have advanced chronic kidney disease.
The October private placement could be key to securing the additional financing Tengion needs to continue work on both programs. Davis said that purchasers of the convertible debt were also granted the right to purchase up to $20 million of the same securities on the same terms any time through June 30. So if those investors like the progress in Tengion’s programs, they can step up again.
One of them could end up licensing or acquiring the neo-urinary conduit technology. Biopharmaceutical company Celgene (NASDAQ:CELG) was granted the right of first negotiation on the neo-urinary conduit program in exchange for receiving fewer warrants than the other lenders, according to securities filings.
The neo-urinary conduit clinical trial has enrolled seven patients in the phase I study that could reach up to 10 patients. Tengion now has five sites that are recruiting for the trial. CEO John Miclot said that based on the information from this trial, Tengion plans to work with the FDA this year to plan for phase II and III trials of the product candidate.
The neo-kidney augment program is set to start a phase I study in Sweden in up to five patients in the second quarter. The company said it also plans to file an investigational new drug application with the FDA in second quarter. If approved, Tengion expects to start phase I studies in the United States in the fourth quarter.