Tengion Inc. Raises $33.6 Million to Advance Platform

Tengion, Inc. recently announced the closing of transactions totaling $33.6 million to fund its two lead clinical programs, the Neo-Kidney Augment and the Neo-Urinary Conduit. As part of the $33.6 million in transactions, Tengion announced a strategic investment from Celgene Corporation in the form of a $15-million payment in cash, in return for which Celgene was granted a right of first negotiation on Tengion’s Neo-Kidney Augment program. Celgene also entered into a collaboration and obtained an exclusive option to acquire assets, including the rights to utilize the company’s technology, related to the development of a neo-esophageal implant. Celgene has also received warrants to purchase shares of Tengion’s common stock. Celgene invested $5 million in the company’s October 2012 financing.

Tengion also announced the closing of an $18.6-million financing in which the company issued Senior Secured Convertible Notes. Investors in the Notes included both existing investors RA Capital Management LLC, Deerfield Management Company, LP, Bay City Capital, and HealthCap, in addition to new investors that included Perceptive Life Sciences and QVT Financial LP.

“The completion of these transactions allows us to continue our focus on advancing both the Neo-Kidney Augment and the Neo-Urinary Conduit to key clinical milestones,” said John Miclot, President and Chief Executive Officer of Tengion. “We are eager to make progress toward our primary objectives of establishing new standards of care for patients with chronic kidney disease and for bladder cancer patients undergoing cystectomy, or removal of their bladder.”

Tengion intends to use the net proceeds of these transactions primarily to fund research and development activities for its two lead programs, including the funding of two planned Phase I clinical trials for the company’s Neo-Kidney Augment in Sweden and the US while completing enrollment in the Phase I clinical trial for its Neo-Urinary Conduit, for which Celgene continues to have a right of first negotiation. Roth Capital Partners, LLC acted as sole placement agent to Tengion.

“We are very pleased to receive this investment from Celgene, a recognized leader in the biopharmaceutical industry. Celgene Cellular Therapeutics’ expertise and focus on the advancement of cellular therapies, including regenerative medicine, is highly complementary to Tengion’s capabilities. In addition, the capital investment from very knowledgeable investors in our field strengthens the company and reflects a shared belief in the value of our regenerative medicine platform,” said David Scheer, Chairman of the Tengion Board of Directors. “We are looking forward to building value through our active clinical development programs.”

The Notes are convertible under certain circumstances into shares of the company’s common stock at a conversion rate of 1,449 shares per $1,000 of principal amount of the Notes. The conversion rate is subject to adjustment under certain circumstances. In addition, holders of the Notes received warrants to purchase approximately 80.8 million shares of common stock at an initial exercise price of $0.69 per share. The exercise price and number of shares issuable upon exercise of the warrants are subject to adjustment under certain circumstances.

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.