Tengion, the regenerative medicine company founded by Anthony Atala, M.D., will liquidate its assets through a Chapter 7 bankruptcy following years of indebtedness and its inability earlier this month to win investor approval to issue more stock.
Dr. Atala, director of the Wake Forest Institute for Regenerative Medicine, founded Tengion in 2003 to commercialize his technologies. They included the Neo-Urinary Conduit™, an implant made from a patient’s own cells designed to catalyze regeneration of native-like urinary tissue, thus eliminating the need for bowel tissue in surgery. Neo-Urinary Conduit is in Phase I trials.
Also in Phase I is Tengion’s Neo-Kidney Augment™, which uses a patient's own kidney cells to create an injectable product candidate designed to catalyze the regeneration of functional kidney tissue. A Phase I trial of the Neo-Kidney Augment was launched earlier this year.
Tengion went public in 2010 through a $26 million initial public offering. The company has attracted funding over its history from investors and biopharma giants ranging from Johnson & Johnson entity J&J Development Corp. to Celgene.
According to papers filed in bankruptcy court, Celgene holds a secured claim for more than $5.1 million it invested in the company in 2012—and holds a right-of-first negotiation agreement on intellectual property related to the Neo-Kidney Augment program. Last year, Celgene also took on rights to Tengion’s autologous neo-esophageal implants using the company’s Organ Regeneration Platform™. The biotech giant also joined with new and previous investors last year to raise a combined $33.6 million for Tengion, money intended to support the company’s lead clinical programs.
However, Tengion has long struggled to bring its technologies to market—a financial squeeze the company addressed over the years both through new financings, as well as resturcturing; in 2011, 30 of 52 jobs were eliminated.
In September, Tengion announced it had retained the investment firm Jefferies to explore “all strategic options to maximize the value of its assets.” John L. Miclot, Tengion’s president and CEO, at the time said the company believed that the move “increases our ability to realize the value of our Organ Regeneration Platform and we remain committed to maximizing value for our stakeholders.”’
By November 14, when it released its third-quarter earnings results, the company said it had only $5.7 million in cash remaining. A month later on December 22, Tengion moved to draw more investors to the company by doubling its available stock from 10 million to 20 million shares. While owners of most shares voted in favor by a margin of 16.7 million shares to 7.8 million shares, the action required approval by a majority of shareholders, which failed to materialize, Tengion CFO Brian Davis stated in a Form 8-K filed December 29 with the U.S. Securities and Exchange Commission.
Although were voted against. “This proposal required the affirmative vote of a majority of the company’s stockholders for approval and, as a result, was not approved,” Davis said in the filing.
In papers filed in U.S. Bankruptcy Court for the District of Delaware, Tengion listed almost $32.7 million in total liabilities and only about $2.8 million in assets. Most of the liabilities consist of $31.6 million of principal and accrued, but unpaid, interest in two promissory notes, on which Tengion automatically defaulted as a result of the Chapter 7 filing. One of the notes was issued June 28, 2013, and the other, on October 2, 2012.