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Investor and Media Contact:
Director, Communications
TARGETED GENETICS REPORTS FIRST QUARTER 2006 FINANCIAL RESULTS
Seattle, WA May 2, 2006 Targeted Genetics Corporation (NASDAQ: TGEN) today announced its
financial results for the first quarter of 2006. As previously announced, the Company will hold a
conference call with analysts at 10:30 AM Eastern Time today. The call will be broadcast live and
can be accessed, along with replay information, at www.targetedgenetics.com.
For the first quarter of 2006, the Company reported a net loss of $3.7 million, or $0.04 per common
share, compared to a net loss of $4.7 million, or $0.05 per common share, for the first quarter of
2005. Revenue for the first quarter of 2006 was $2.4 million, compared to $2.0 million for the
same quarter in the prior year. Revenue in 2006 and 2005 consists primarily of development revenue
earned under a congestive heart failure collaboration agreement with Celladon and the HIV/AIDS
vaccine collaboration with the International AIDS Vaccine Initiative (IAVI). Revenue in 2006 also
consists of development revenue from the NIAID contract to develop AAV-based HIV/AIDS vaccines.
We continue to make good progress in our lead clinical program for the treatment of inflammatory
arthritis and are working towards multiple milestones in 2006. We recently amended the Phase I
clinical study in inflammatory arthritis to include a third-higher dose and 120 patients. Under
this amended protocol, the study is now designated a Phase I/II trial. We are scheduled to present
interim Phase I/II data at the American Society of Gene Therapy (ASGT) meeting in early June, and
we expect to present additional data from this study in the fourth quarter, said H. Stewart
Parker, president and chief executive officer of Targeted Genetics. We have also extended our
cash horizon through a common stock financing and restructured operations to reduce expenses.
These adjustments, combined with our projected funding from collaborations, extend our cash horizon
and give us the resources needed to advance our inflammatory arthritis product candidate.
Operating expenses decreased to $6.2 million for the first quarter of 2006, compared to $6.6
million the first quarter of 2005. Research and development expenses decreased to $3.7 million for
the three months ended March 31, 2006, from $4.5 million for the same period of 2005. General and
administrative expenses for the first quarter of 2006 were $1.5 million, compared to $1.9 million
for the same period in 2005. Cash and cash equivalents were $16.0 million at March 31, 2006 and
guidance for the estimated burn rate for 2006 remains at a range of $13 to $16 million.
First Quarter and Recent 2006 Corporate Highlights
| Amended clinical protocol of Phase I tgAAC94 trial in patients with inflammatory arthritis to include a higher dose and 120 patients; study now designated a Phase I/II; | ||
| Raised $5 million in common stock offering; | ||
| Realigned operations to reduce expenses and concentrate resources on key product development programs and business development activities; reduced anticipated cash burn for 2006 by 25% over 2005 results to a range of $13 $16 million; | ||
| In collaboration with IAVI, initiated Phase II HIV/AIDS Vaccine clinical trials at five sites in Uganda and now Zambia; Parallel trials are currently underway at three sites in South Africa; | ||
| Further strengthened intellectual property portfolio for AAV vector manufacturing processes with the issuance of two additional patents; | ||
| Appointed David J. Poston as Chief Financial Officer. |
Conference call and Webcast information
The company will host a conference call reviewing financial results and its product portfolio,
including an update on the development progress of the Company s inflammatory arthritis 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 homepage of the Company s website at
www.targetedgenetics.com or via telephone at 800.218.8862 (domestic) or 303.262.2138
Webcast replay will be available for approximately 90 days at www.targetedgenetics.com; telephone
replay will be available beginning at 9:30 a.m. Pacific Time today, May 2, 2006, through 11:59 p.m.
Saturday, June 3, 2006, by calling 800-405-2236 (domestic) or 303-590-3000 (international);
About Targeted Genetics
Targeted Genetics Corporation is a biotechnology company committed to the development and
commercialization of innovative targeted molecular therapies for the prevention and treatment of
inflammatory arthritis and other acquired and inherited diseases with significant unmet medical
need. The Company uses its considerable knowledge and capabilities in the development and
manufacturing of gene delivery technologies to advance a diverse product development pipeline. The
Company s product development efforts target inflammatory arthritis, AIDS prophylaxis, congestive
heart failure, Huntington s disease and hyperlipidemia. To learn more about Targeted Genetics,
visit the Company s 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 business strategy, the
Company s product development, the Company s liquidity and the Company s ability to meet the
Company s ongoing financial obligations and other statements about the Company s plans, objectives,
intentions and expectations. These unaudited results announced herein may differ from what the
Company eventually files in its Annual Report on Form 10-K for the fiscal year ended December 31,
2006. In particular, the statements regarding the Company s future plans are forward-looking
statements. 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 the
Company s actual results include, but are not limited to, 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, and the Company s ability to obtain,
maintain and protect the Company s intellectual property, as well as other risk factors described
in the Section 1A entitled Risk Factors in the Company s Annual Report on Form 10-K for the
period ended December 31, 2005. You should not rely unduly on these forward-looking statements,
which apply only as of the date of this release. We undertake 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 | ||||||||
| March 31, | ||||||||
| Statement of Operations Information: | 2006 | 2005 | ||||||
| (unaudited) | (unaudited) | |||||||
| Revenue from collaborative agreements | $ | 2,430 | $ | 2,000 | ||||
| Operating expenses: | ||||||||
| Research development | 3,677 | 4,539 | ||||||
| General administrative | 1,481 | 1,885 | ||||||
| Restructure charges | 1,042 | 219 | ||||||
| Total operating expenses | 6,200 | 6,643 | ||||||
| Loss from operations | (3,770 | ) | (4,643 | ) | ||||
| Investment income | 151 | 100 | ||||||
| Interest expense | (113 | ) | (129 | ) | ||||
| Net loss | $ | (3,732 | ) | $ | (4,672 | ) | ||
| Net loss per common share | $ | (0.04 | ) | $ | (0.05 | ) | ||
| Shares used in computation of net loss per common share | 88,692 | 85,628 |
TARGETED GENETICS CORPORATION
| March 31, | December 31, | |||||||
| Balance Sheet Information: | 2006 | 2005 | ||||||
| (unaudited) | ||||||||
| Cash and cash equivalents | $ | 15,998 | $ | 14,122 | ||||
| Other current assets | 1,610 | 1,063 | ||||||
| Property and equipment, net | 1,611 | 1,747 | ||||||
| Other assets | 31,864 | 31,866 | ||||||
| Total assets | $ | 51,083 | $ | 48,798 | ||||
| Current liabilities | $ | 3,917 | $ | 4,628 | ||||
| Long-term obligations and other liabilities | 15,258 | 13,599 | ||||||
| Shareholders equity | 31,908 | 30,571 | ||||||
| Total liabilities and shareholders equity | $ | 51,083 | $ | 48,798 |