Tengion Provides Clinical Update and Reports Second Quarter 2014 Financial Results

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| Source: Tengion, Inc.

WINSTON-SALEM, N.C., Aug. 13, 2014 (GLOBE NEWSWIRE) -- Tengion, Inc. (OTCQB:TNGN), a leader in regenerative medicine, today reported key clinical data along with financial and operating results for the quarter ended June 30, 2014.

"Today, we are pleased to announce encouraging six-month interim data for the first five patients implanted in the Phase 1 clinical trial of our Neo-Kidney Augment (NKA) cellular therapy being conducted in Sweden. We believe these early trends support the promising potential of this cellular therapy, and based on our review of the six-month data for measurements of kidney function, including hemoglobin, serum creatinine, calculated estimated Glomerular Filtration Rate (eGFR), magnetic resonance imaging (MRI), and renal scintigraphy, we believe clinical investigation should continue aggressively. We look forward to reporting full data for this trial and our U.S. trial after completing patient enrollment in both trials, which we expect in the first half of 2015. Based on early investigator experience, we have modified a number of trial design elements, including inclusion and exclusion criteria for patient qualification to participate in the trials, and are exploring the use of a minimally invasive implantation method in the future in order to improve our initial rate of patient enrollment, which has been slower than anticipated," commented John L. Miclot, President and Chief Executive Officer of Tengion. "We remain focused on our mission of providing life-changing advantages for patients in need of improvements over the current standards of care using our proprietary platform enabling the generation of native-like organs and tissues."

Neo-Kidney Augment™ Cellular Therapy Clinical Update

Tengion is currently conducting Phase 1 clinical trials for its NKA cellular therapy in Sweden and the United States and expects to enroll up to 15 and 12 patients, respectively, in these two trials. Both Phase 1 trials are designed to evaluate the safety and delivery of an active regenerative dose of NKA cellular therapy, including two years of follow-up, in patients with chronic kidney disease (CKD). The Company expects to complete patient enrollment in these two clinical trials during the first half of 2015.

Today, the Company announced six-month interim data for the first five patients with advanced CKD implanted in the Phase 1 clinical trial being conducted at the Karolinska Institute in Stockholm, Sweden. NKA cellular therapy was successfully implanted into one kidney of each patient. Four surgical procedure-related serious adverse events were recorded in this trial. None of these events were determined to be related to the NKA material and none caused the patients to discontinue the trial or the Data Safety Monitoring Board to stop the trial. None of the reported adverse events were kidney-related.

Neo-Urinary Conduit™ Clinical Program Update

Tengion has completed enrollment in its ongoing Phase 1 clinical trial for the Neo-Urinary Conduit. Bladder cancer patients were enrolled in the trial to assess the safety and preliminary efficacy of the Neo-Urinary Conduit, as well as to translate the surgical implantation procedure utilized in preclinical studies. The Company is working with key opinion leaders on future development plans for the Neo-Urinary Conduit, and will seek to execute a strategic or financial transaction to provide targeted funding for future development of the Neo-Urinary Conduit. In the absence of such funding, the Company does not plan to continue independent development of the Neo-Urinary Conduit program.

Second Quarter 2014 and the Six Months Ended 2014 Financial Results

For the quarter ended June 30, 2014, the Company reported an adjusted net loss of $6.5 million, or $0.30 per basic and diluted common share, compared to an adjusted net loss of $5.8 million, or $1.75 per basic and diluted common share, for the same period in 2013. The increased adjusted net loss for the 2014 period was primarily due to an increase in research and development expense of $0.3 million and an increase in general and administrative expense of $0.4 million.

For the six months ended June 30, 2014, the Company reported an adjusted net loss of $12.7 million, or $0.72 per basic and diluted common share, compared with an adjusted net loss of $11.4 million, or $3.74 per basic and diluted common share, for the same period in 2013. The increased adjusted net loss for the 2014 period was primarily due to increases in interest expense of $0.5 million, in research and development expense of $0.5 million and in general and administrative expense of $0.3 million.

The increase in research and development expense for the quarter and six months ended June 30, 2014 was primarily due to an increase in compensation and related expenses resulting from additional employees and an increased use of clinical and regulatory consultants, as well as an increase in external services related to the clinical trials for the Neo-Kidney Augment program. The increase in general and administrative expense for the quarter and six months ended June 30, 2014 was primarily due to an increase in legal fees and professional services related to the preparation of a market assessment of the Neo-Kidney Augment program.The increase in interest expense for the six months ended June 30, 2014 was primarily due to non-cash interest expense associated with the 2012 Convertible Notes issued in the fourth quarter of 2012 and the 2013 Convertible Notes issued in the second quarter of 2013.

As of June 30, 2014, the Company held $10.1 million in cash and cash equivalents. Based on the Company's current expected operating expenditures and debt repayment, and assuming it is not required to settle any outstanding warrants in cash or redeem, or pay cash interest on, any of its convertible notes, the Company expects to be able to fund its operations through December 31, 2014.

About the Neo-Kidney Augment™

The Neo-Kidney Augment is being developed to prevent or delay the need for dialysis by increasing renal function in patients with advanced chronic kidney disease. The Neo-Kidney Augment cellular therapy consists of selected regenerative renal cells obtained from a cortical biopsy of the patient's kidney, expanded ex vivo, and then formulated in a thermolabile gelatin for laparoscopic injection into the patient's kidney by a multi-ported needle, which allows the Neo-Kidney Augment cells to diffuse throughout the kidney and catalyze regeneration of functional kidney tissue.

About the Neo-Urinary Conduit™

The Neo-Urinary Conduit is designed to replace the standard of care for bladder cancer patients undergoing cystectomy (removal of bladder). There are over 25,000 cystectomies performed annually in bladder cancer patients in the United States and Europe. The Neo-Urinary Conduit is an implant made from a patient's own cells and is intended to catalyze regeneration of native-like urinary tissue, thereby eliminating the need to use bowel tissue in the current standard of care surgery.

About Tengion

Tengion, a clinical-stage regenerative medicine company, is focused on developing its Organ Regeneration Platform™ to harness the intrinsic regenerative pathways of the body to regenerate a range of native-like organs and tissues with the goal of delaying or eliminating the need for chronic disease therapies, organ transplantation, and the administration of anti-rejection medications. The Company is currently conducting Phase 1 clinical trials in Sweden and the United States for its Neo-Kidney Augment cellular therapy, which is intended to prevent or delay dialysis and transplantation by increasing renal function in patients with advanced chronic kidney disease. A Phase 1 trial for the Company's Neo-Urinary Conduit, an autologous implant that is intended to catalyze regeneration of native-like urinary tissue for bladder cancer patients requiring a urinary diversion following bladder removal, has completed enrollment.

Forward-Looking Statements

Except for the historical information contained herein, the matters set forth in this press release, including statements regarding Tengion's plans, potential opportunities, or other expectations, projections, goals, objectives, strategies, timelines, clinical studies, product development and the potential benefits of its products under development, are forward-looking statements within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially, including the risks and uncertainties associated with Tengion's operating performance and financial position and the risk of being able to raise additional funds on terms favorable to the company, research, development and commercialization of products, the risks and uncertainties associated with meeting the objectives of its clinical studies, including, but not limited to, risks related to availability of continued funding, delays or failures resulting from slower than expected enrollment in clinical trials or clinical holds, and the occurrence of adverse safety events, obtaining regulatory approvals, risks related to Tengion's ability to complete any business development agreements on a timely basis or at all or on terms that are most beneficial for the company, and other risks detailed from time to time in the Company's most recent Annual Report on Form 10-K and other documents subsequently filed with or furnished to the Securities and Exchange Commission. These forward-looking statements are based on current information that may change and you are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. All forward-looking statements are qualified in their entirety by this cautionary statement, and the Company undertakes no obligation to revise or update any forward-looking statement to reflect events or circumstances after the issuance of this press release.

TENGION, INC.
         
Statements of Operations 
(in thousands, except per share data)
(unaudited)
         
  Three Months Ended
June 30,
Six Months Ended
June 30,
  2013 2014 2013 2014
         
Revenue  $ — $ — $ — $ —
         
Operating expenses:    
Research and development   $ 2,480  $ 2,766  $ 4,660  $ 5,250
General and administrative  1,445 1,839 3,295 3,562
Depreciation  62 53 145 102
Other expense, net  91 151 121 304
         
Total operating expenses  4,078 4,809 8,221 9,218
         
Loss from operations  (4,078) (4,809) (8,221) (9,218)
         
Interest income  2 5 7 14
Interest expense  (1,830) (1,881) (3,257) (3,845)
Change in fair value of embedded derivative and derivative liability  (4,104) (114) (4,438) (3,775)
Change in fair value of warrant liability  (1,925) (11,056) (1,800) (35,289)
         
Net loss   $ (11,935)  $ (17,855)  $ (17,709)  $ (53,113)
         
Basic and diluted net loss per share  $ (3.59)  $ (0.82)  $ (5.84)  $ (2.96)
         
Weighted-average common stock outstanding – basic and diluted 3,325 21,772 3,034 17,633
 
TENGION, INC.
     
BALANCE SHEET DATA
(in thousands)
(unaudited)
     
  December 31,
2013
June 30, 2014
Cash and cash equivalents   $ 21,510  $ 10,124
Total assets  25,724 14,197
Warrant liability  11,425 47,000
Total debt and embedded derivative, net of debt discount  26,952 29,727
Total liabilities  42,580 80,065
Total stockholders' deficit  (16,856) (65,868)
 
TENGION, INC.
         
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(in thousands, except per share data)
(unaudited)
         
In accordance with Regulation G of the Securities and Exchange Commission, the table set forth below reconciles certain financial measures used in this press release that were not calculated in accordance with generally accepted accounting principles, or GAAP, with the most directly comparable financial measure calculated in accordance with GAAP. 
         
  Three Months Ended
June 30,
Six Months Ended 
June 30,
  2013 2014 2013 2014
Net loss – GAAP   $ (11,935)  $ (17,855)  $ (17,709)  $ (52,113)
Change in fair value of embedded derivative and derivative liability  4,104 114 4,438 3,775
Change in fair value of warrant liability  1,925 11,056 1,800 35,289
Other expense, net  91 151 121 304
Adjusted net loss   $ (5,815)  $ (6,534)  $ (11,350)  $ (12,745)
         
Shares used in computing basic and diluted net loss attributable to common stockholders:      
Basic and diluted  3,325 21,772 3,034 17,633
         
         
Basic and diluted net loss per share-- `GAAP   $ (3.59)  $ (0.82)  $ (5.84)  $ (2.96)
Adjustment per share   $ 1.84  $ 0.52  $ 2.10  $ 2.24
Basic and diluted net loss per share - adjusted   $ (1.75)  $ (0.30)  $ (3.74)  $ (0.72)
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A. Brian Davis

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