Tengion reports net loss attributable to common stockholders of $14.33 per share for first-quarter 2010

May 18 2010

Tengion Inc. (Nasdaq: TNGN) today reported its financial results for the quarter ended March 31, 2010 and provided a corporate and clinical development update. "The progression of our Neo-Urinary Conduit into clinical trials marks an important milestone for Tengion and for bladder cancer patients who need a better alternative than use of their own bowel tissue to construct incontinent urinary diversions after removal of their bladder," stated Steven Nichtberger, M.D., President and CEO of Tengion. "In April we closed our initial public offering, providing us with the capital to advance development of our urologic, renal, and other pipeline products."  

Neo-Urinary Conduit^™ Clinical Update

In March 2010, the Company commenced a phase I clinical trial for its lead product candidate, the Neo-Urinary Conduit in patients with bladder cancer. The Neo-Urinary Conduit is an implant designed to catalyze regeneration of native-like bladder tissue, in patients with bladder cancer who require a urinary diversion following bladder removal, or cystectomy. It has been developed based upon data from Tengion's experience with its phase II clinical program for the Neo-Bladder Augment^™, which was evaluated in patients with neurogenic bladder due to spina bifida or spinal cord injury.

For many bladder cancer patients, radical cystectomy, or total bladder removal, is necessary. The current standard of care for most patients who have their cancerous bladder removed is the surgical creation of a urinary diversion using a segment of the patient's own intestinal tissue. Tengion's Neo-Urinary Conduit is intended to replace the current use of bowel tissue in bladder cancer patients requiring a non-continent urinary diversion after bladder removal. It is produced using Tengion's proprietary technology that enables the use of the patient's own smooth muscle cells from a routine fat biopsy and not cells from the diseased bladder, eliminating the risk of reintroducing cancerous cells from the bladder into the patient. By using a patient's own cells, there is no risk of rejection or need for immune suppression therapy. The phase I clinical trial is an open-label, single-arm study, which will allow optimization of the surgical procedure and post-surgical care in a controlled setting. Patients will be monitored throughout the trial with interim assessments at 3, 6, and 9 months and full analyses conducted at 12 months post-implantation. The primary focus of the study is safety with a focus on the surgical procedure.  A second objective of the study is to collect prospectively defined efficacy data.  An important efficacy measure in the trial is the patency and structural integrity of the neo-urinary conduit.  The trial is being conducted at the University of Chicago with Gary Steinberg M.D., Director of Urologic Oncology, acting as the study's principal investigator. 

"Today's current surgical procedure and standard of care carries with it the risk of complications associated with the use of intestinal tissue in the urinary tract as well as those associated with the surgery to harvest the intestinal tissue," stated Dr. Steinberg. "As a urologic oncology surgeon taking care of bladder cancer patients, I am looking forward to exploring the potential to replace the use of intestinal tissue with a safe and effective alternative."

Preclinical animal studies conducted by Tengion have demonstrated that implantation of the Neo-Urinary Conduit results in the formation of a functional conduit of tri-layered native-like bladder tissue that functions similarly to native bladder tissue by allowing the water-tight elimination of urine without any unwanted absorption or secretion issues.

Upcoming Scientific Presentations

Tengion also announced today that three of the Company's scientists have been invited to make podium presentations at the upcoming 16^th Annual Meeting of the International Society for Cellular Therapy (ISCT) being held May 23-26, 2010 in Philadelphia, PA. These presentations will focus on preclinical data highlighting key findings in Tengion's Neo-Urinary Conduit and Neo-Kidney Augment programs.  The Company's scientists will highlight our work with various cell types – adipose-derived smooth muscle cells and human kidney cells – that support some of its current and planned clinical development programs.

"These presentations demonstrate the data driven approach we take to development of our technology platform and highlight the progress we are making in advancing development of our product candidates", said Dr. Timothy Bertram, D.V.M., Ph.D., Senior Vice President of Science and Technology for Tengion.  "We look forward to discussing these results in further detail following their full presentation to the scientific community."  

Financial Update

Tengion operated as a private company throughout the first quarter of 2010 and those results are shown below.  For the three months ended March 31, 2010, Tengion reported a net loss attributable to common stockholders of $10.1 million or $14.33 per share as compared to a net loss attributable to common stockholders of $13.1 million or $18.86 per share for the same period in 2009. Total operating expenses for the three months ended March 31, 2010, were $6.0 million compared to $8.9 million for the same period in 2009, representing a 33% decrease, mainly driven by lower spending in research and development for patient follow-up in our phase II Neo-Bladder Augment trials compared to the prior year. In April 2010, Tengion completed an initial public offering, selling 6,000,000 shares at a price of $5 per share resulting in net proceeds of $28.2 million after underwriting fees.  In connection with the closing of this offering, all outstanding preferred shares converted automatically into shares of common stock.  After adjusting for the automatic conversion of the outstanding shares of preferred stock into 5,651,955 shares of common stock as though the completion of the initial public offering had occurred on March 31, 2010, the adjusted net loss for the three months ended March 31, 2010 was $6.4 million or $1.01 per share as compared to an adjusted net loss of $9.7 million or $1.53 per share for the same period in 2009.  Cash, cash equivalents, and short-term investments, after adjusting for the receipt of net proceeds after underwriting fees as though the completion of the initial public offering had occurred on March 31, 2010 was $37.4 million.