Targeted Genetics amends Biogen funding agreement, pushing out debt repayments

By Sara Rosenberg

New York, Sept. 1 - Targeted Genetics Corp. amended its funding agreement with Biogen Idec Inc. to restructure the repayment of outstanding debt that was due over the next year of about $10.7 million, according to an 8-K filed with the Securities and Exchange Commission Thursday.

Under the amended agreements, Targeted Genetics made an initial payment on Thursday to Biogen Idec of $2.5 million, and agreed to make additional payments of about $3.1 million in August 2007 and $2.5 million in each of August 2008 and August 2009.

As part of the restructuring agreement, Targeted Genetics has agreed to apply one-third of certain up-front or milestone payments received from potential corporate collaborations to repayment of the outstanding debt.

In addition, Targeted Genetics granted Biogen Idec a right of co-sale in certain equity financings approved by Targeted Genetics' board of directors before Nov. 30, and Biogen Idec agreed not to sell any of its shares of common stock until the earlier of Nov. 30, and the completion of such a sale.

Biogen Idec also agreed to enter into an additional lock-up agreement if Targeted Genetics completes an equity financing before Nov. 30.

"The successful renegotiation of this debt with Biogen Idec provides us a more manageable debt structure and is clearly an important component of our overall long-term financing strategy," said H. Stewart Parker, president and chief executive officer, in a company news release. "We are managing our cash position carefully and continue to look for ways to leverage value from our capabilities to build additional financial resources."

Targeted Genetics is a Seattle-based biotechnology company.

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