Targeted Genetics announces third quarter 2009 results; reports net income of $0.03 per common share

Nov 17 2009

Targeted Genetics Corporation (NASDAQ: TGEN) today announced its financial results for the third quarter ended September 30, 2009.

For the quarter ended September 30, 2009, the Company reported net income of $671,000, or $0.03 per common share, compared to a net loss of $2.7 million, or $0.13 per common share, for the third quarter of 2008. These results reflect the September 2009 sale and license of certain assets, including manufacturing technologies and adeno-associated viral vector (AAV) technologies to Genzyme Corporation. For the nine-month period ended September 30, 2009, the Company reported net income of $6.2 million, or $0.30 per common share reflecting earnings from the Genzyme transaction combined with the June 2009 termination of the Company’s Bothell facility lease and revenue the Company recognized in the first half of 2009 in connection with its delivery of MYDICAR® product candidate to its partner Celladon Corporation.

Revenue for the third quarter of 2009 rose to $3.7 million, compared to $1.7 million for the same quarter in 2008, as a result of revenue earned from the sale and license of manufacturing and AAV technologies to Genzyme. This increase in third quarter revenue was offset, in part, by reduced revenue from the Celladon heart failure collaboration as we completed the manufacture of the MYDICAR® product candidate in the second quarter of 2009 and, in part, by lower 2009 revenue generated by the NIAID-funded HIV/AIDS vaccine project. Revenue increased to $9.1 million for the nine months ended September 30, 2009, from $6.5 million for the same period in 2008, primarily as the result of revenue earned for the transfer of manufacturing technologies and other AAV vector technology under the Genzyme asset purchase agreement, as well as increased revenue generated by both pre-manufacturing and manufacturing efforts in our Celladon collaboration. This increase in revenue was partially offset by decreases in year-to-date 2009 revenue for the HIV/AIDS vaccine project, as 2008 results included revenue from a vaccine product candidate manufacturing campaign and higher vaccine project pass-through costs.

Research and development expenses for the third quarter of 2009 decreased to $1.5 million, compared to $3.2 million for the same quarter in 2008. Research and development expenses for the nine months ended September 30, 2009, decreased to $5.5 million, compared to $11.3 million for the same period in 2008. The decreases in both periods reflect lower costs for support of the Celladon heart failure program and lower outside services and lab supplies under our NIAID-funded HIV/AIDS vaccine subcontract. For the nine month period, research and development expenses were also lower in 2009, compared to 2008, reflecting lower employee costs and lower clinical trial costs as the Company completed most of its Phase 1/2 inflammatory arthritis program clinical trial by mid-2008.

General and administrative expenses for the third quarter of 2009 increased to $1.4 million, compared to $1.2 million same quarter in 2008. General and administrative expenses for the nine months ended September 30, 2009, decreased to $3.7 million, compared to $4.9 million for the same period in 2008. The increase for the third quarter, compared to the prior year third quarter, primarily reflects management incentive bonuses earned with the successful execution of the Genzyme transaction and higher legal costs associated with the Genzyme transaction offset, in part, by lower employee costs resulting from reductions in force and lower intellectual property costs resulting from our return of licensed patent rights and cessation of prosecution of patents that were not specific to our current development program efforts. The decrease in general and administrative expenses for the nine month period primarily reflects lower intellectual property costs, lower employee costs, lower stock-based compensation charges and lower shareholder annual meeting-related costs partially offset by the management incentive bonuses earned in the third quarter of 2009.

The Company's cash balance was $4.0 million at September 30, 2009, compared to $5.2 million at December 31, 2008. “We believe that our current financial resources, together with up to an additional $3.5 million in installments payable upon completion of specified Genzyme transfer plan deliverables, will be adequate to fund operations through 2010,” said Susan Robinson, president and chief executive officer of the Company. “We continue to explore opportunities to maximize the value of our business and assets.”