Tengion’s future cloudy after talks with potential buyer break down
By Richard Craver
Published: February 16, 2011
Updated: February 16, 2011 – 12:12 PM
The recent roller-coaster ride of Tengion Inc. took another downward turn today when the company said that talks with a potential unidentified buyer ended because of the sharp rise in its share price in the past week.
Tengion’s share price had jumped from a 52-week low of $2.03 on Dec. 2 to a 52-week high of $6.24 on Tuesday before closing at $5.51.
However, the share price had plunged 48 percent from the start of trading today to $2.89 at noon.
It was the company’s first public acknowledgment that it was pursuing being bought.
It had listed the possibility in standard business-operational warnings in Securities and Exchange Commission filings.
The company also said in the statement that if it cannot find a buyer or new financing sources through partnerships or investment groups, it may “need to take steps to wind down its operations so as to preserve the value of its assets for the benefit of its creditors and stockholders.”
Tengion said it believes it has enough cash on hand to operate into April.
Tengion, based in East Norriton, Pa., is best known for the research of Anthony Atala, its founder, who runs the Wake Forest Institute for Regenerative Medicine in Piedmont Triad Research Park. About 45 of its 68 employees are based here.
The company is developing a neo-urinary conduit to help patients with a bladder disorder to divert urine through the use of their own cells to an external bag rather than through bowel tissue.
Tengion’s new warning of its financial struggles comes as some of Tengion’s top shareholders increased their stakes in the past week.
Oak Investment Partners XI LP reported in a regulatory filing Monday that it raised its ownership stake in Tengion by 800,000 shares to 2.04 million, or 16.5 percent. It held a 10.1 percent stake after Tengion completed its initial public offering in April.
The Oak Investment filing came three days after Health Cap IV LP and its affiliates nearly doubled their stake in Tengion to 1.78 million shares, or 14.4 percent.