Struggling Tengion Inc. Files for Chapter 7 Bankruptcy Protection

Struggling Tengion Inc. Files for Chapter 7 Bankruptcy Protection
December 30, 2014
By Mark Terry, BioSpace.com Breaking News Staff

Winston-Salem, N.C.-based Tengion Inc. filed for Chapter 7 bankruptcy protection yesterday. The bankruptcy will have Tengion defaulting on two promissory notes, one from Oct. 2, 2012 and one from June 28, 2013. Under those agreements, Tengion owed $31.6 million in principal and interest.

In the company’s third quarter report filed Sept. 30, Tengion reported an adjusted net loss of $6.6 million, or $0.26 per basic and diluted common share. The company reported in the same period a year earlier an adjusted net loss of $6.0 million, or $1.40 per basic and diluted common share.

“The increased adjusted net loss for the 2014 period was primarily due to an increase in research and development expense of $0.9 million, an increase in general and administrative expense of $0.1 million offset by a decrease in interest expense of $0.4 million,” the company said in a statement.

Tengion focuses on regenerative medicine. It has a proprietary Organ Regeneration Platform, which uses a patient’s own regenerative cells to regrow organs or tissues. The company’s first clinical program is the Neo-Kidney Augment (NKA), which was intended to prevent or delay dialysis and transplantation by improving renal function in people with advanced chronic kidney disease (CKD).

NKA is currently in Phase 1 clinical trials in Sweden and the U.S. The trials are designed to evaluate safety and delivery of an active regenerative dose of NKA cellular therapy, with two years of follow-up.

Tengion is also conducting Phase 1 clinical trials for its Neo-Urinary Conduit Clinical Program. This trial works with bladder cancer patients to test the safety and preliminary efficacy of the Neo-Urinary Conduit.

In September Tengion announced it had retained Jefferies LLC as an exclusive financial advisor to help with reviewing and structuring possible strategic transactions.

“We believe this decision increases our ability to realize the value of our Organ Regeneration Platform,” said John Miclot, president and chief executive of Tengion in a statement, “and we remain committed to maximizing value for our stakeholders.”

Tengion stock went for $5 per share at its initial public offering in April 2010, selling 6 million shares. It is currently listed at $0.01.

Tengion was founded in 2003 with capital from HealthCap, Oak Investment Partners and J&J Development Corporation. Additional financing came from L. Capital Partners, Bain Capital, Quake Bioventures, Brookside Capital and others. In what now seems prescient, analysts wrote in 2013, “While Tengion might be making incremental headway in a complex space, investors who buy on the open market are in for a rude awakening—TNGN is a value trap of epic proportions, and shareholders won’t want to be stuck holding the bag as conversions materialize, diluting their existing shares by more than 6,600 percent.”

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