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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported) June 19, 1996
TARGETED GENETICS CORPORATION
(Exact Name of Registrant as Specified in Charter)
WASHINGTON 0-23930 91-1549568
(State or Other Jurisdiction (Commission File Number) (IRS Employer
of Incorporation) Identification No.)
1100 OLIVE WAY, SUITE 100, SEATTLE, WASHINGTON 98101
(Address of Principal Executive Offices) (Zip Code)
(206) 623-7612
Registrant's telephone number, including area code
NONE
(Former Name or Former Address, if Changed Since Last Report)
Page 1 of 9
Exhibit Index is at Page 7
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
Agreement and Plan of Merger. On June 19, 1996, Targeted Genetics
Corporation ("Targeted") completed its acquisition (the "Merger") of RGene
Therapeutics, Inc., a Delaware corporation ("RGene"), pursuant to an Agreement
and Plan of Merger dated April 16, 1996 (the "Merger Agreement") by and among
Targeted, RGene, and TGC Acquisition Corporation, a Delaware corporation and a
wholly owned subsidiary of Targeted ("Acquisition"). In connection with the
Merger Agreement, Targeted will issue 3,636,364 shares of its common stock, $.01
par value per share (the "Targeted Common Stock"), to RGene's former
stockholders in a tax-free stock-for-stock exchange, and RGene has become a
wholly owned subsidiary of Targeted. The Merger is expected to be accounted for
using the purchase method of accounting.
RGene's former stockholders will have the right to receive an
additional $5 million of Targeted Common Stock if certain milestones relating to
RGene's potential products are achieved prior to December 31, 1998. The first
such milestone (the "First Milestone") relates to the enrollment of at least one
patient in a Phase II clinical trial for RGene's E1A tumor suppressor gene
therapy in the United States and the enrollment of at least one patient in a
similar clinical trial in a member country of the European Economic Union.
Achievement of the First Milestone would result in the issuance of $1 million,
$2 million or $3 million of Targeted Common Stock, depending upon whether the
First Milestone is achieved on or before December 31, 1997 or December 31, 1998,
and depending upon whether the First Milestone is achieved in the United States
only or in the United States and Europe, as set forth in the following table:
<TABLE>
<CAPTION>
MILESTONE ACHIEVEMENT
GEOGRAPHIC TERRITORY DEADLINE COMMON STOCK ISSUABLE
-------------------- -------- ---------------------
<S> <C> <C>
United States only December 31, 1997 $2 million
Europe only December 31, 1997 $0
United States and Europe December 31, 1997 $3 million
United States only December 31, 1998 $1 million
Europe only December 31, 1998 $1 million(1)
United States and Europe December 31, 1998 $2 million(2)
</TABLE>
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(1) To be issued only if the First Milestone is achieved in the United
States during calendar year 1998. If the First Milestone is achieved in
the United States prior to January 1, 1998, or if it is not achieved at
all in the United States, then no Targeted Common Stock will be issued
for achieving the First Milestone in Europe during 1998.
(2) The maximum amount of Targeted Common Stock that may be issued in the
event that the First Milestone is not achieved in the United States
until 1998 is $2 million.
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The second milestone (the "Second Milestone") is the execution on or
before December 31, 1997 of a definitive collaboration agreement with a third
party for the development of genetic vaccines based on RGene's technology, which
collaboration agreement must provide minimum revenue to RGene of $2 million
during the first year following its execution, of which at least $1.5 million
may not be subject to any specific funding commitment under any license or
research agreement. Achievement of the Second Milestone would result in the
issuance of $2 million of Targeted Common Stock.
The actual number of shares of Targeted Common Stock issued in
connection with a milestone achievement will be based on the average closing
sale price for the Targeted Common Stock for the 30 trading days preceding the
date of achievement of the milestone. For a period of one year after completion
of the Merger, Targeted will hold in escrow 363,636 of the shares issued in the
Merger to satisfy potential claims made by Targeted against RGene's former
stockholders in connection with any breach by RGene of any representation or
warranty, or any failure by RGene to comply with any covenant or agreement,
contained in the Merger Agreement.
The foregoing descriptions are qualified in their entirety by reference
to the full text of the Merger Agreement which was filed with the Securities
and Exchange Commission on May 29, 1996 as Appendix A to Targeted's Definitive
Proxy Statement mailed to Shareholders in connection with the Special Meeting
of Shareholders held on June 19, 1996, and is incorporated herein by reference.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements of Business Acquired.
The balance sheets of RGene as of December 31, 1994 and 1995, and
the related statements of operations, stockholders' equity and cash
flows for the years ended December 31, 1994 and 1995, and the
period from inception (August 27, 1993) through December 31, 1995
along with the notes thereto and the report of Arthur Andersen LLP
dated April 10, 1996 relating to such financial statements are
incorporated herein by reference from Targeted's final Prospectus
dated June 20, 1996 contained in Targeted's Registration Statement
on Form S-1 (Registration No. 333-03592) and filed with the
Securities and Exchange Commission pursuant to Rule 424(b) under
the Securities Act of 1933, as amended.
(b) Pro Forma Financial Information.
The unaudited pro forma consolidated balance sheet as of March 31,
1996, and the unaudited pro forma consolidated statements of
operations for the year ended December 31, 1995, and for the three
months ended March 31, 1996, along with the notes thereto are
incorporated herein by reference from Targeted's final Prospectus
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dated June 20, 1996 contained in Targeted's Registration Statement
on Form S-1 (Registration No. 333-03592) and filed with the
Securities and Exchange Commission pursuant to Rule 424(b) under
the Securities Act of 1933, as amended.
(c) Exhibits.
2.1 Agreement and Plan of Merger among Targeted Genetics
Corporation, TGC Acquisition Corporation and RGene
Therapeutics, Inc. dated April 16, 1996 (incorporated herein
by reference to Appendix A of Targeted's Definitive Proxy
Statement mailed to Shareholders of Targeted in connection
with the Special Meeting of Shareholders held on June 19,
1996, and filed with the Securities and Exchange Commission on
May 29, 1996)
23.1 Consent of Arthur Andersen LLP (contained on page 6)
99.1 Press release issued by Targeted Genetics Corporation on June
19, 1996
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
TARGETED GENETICS CORPORATION
By: /s/ James A. Johnson
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James A. Johnson
Vice President-Finance, Chief Financial
Officer, Treasurer and Secretary
Dated: July 3, 1996
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CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation of our
report incorporated by reference in this Form 8-K, into the Company's previously
filed Registration Statements File Nos. 33-83064, 333-03889, and 33-94478.
ARTHUR ANDERSEN LLP
Houston, Texas
July 2, 1996
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EXHIBIT INDEX
Exhibit Number Description
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2.1 Agreement and Plan of Merger among Targeted Genetics
Corporation, TGC Acquisition Corporation and RGene
Therapeutics, Inc. dated April 16, 1996 (incorporated
herein by reference to Appendix A of Targeted's Definitive
Proxy Statement mailed to Shareholders of Targeted in
connection with the Special Meeting of Shareholders held
on June 19, 1996, and filed with the Securities and
Exchange Commission on May 29, 1996)
23.1 Consent of Arthur Andersen LLP (contained on page 6)
99.1 Press release issued by Targeted Genetics Corporation on
June 19, 1996
Page 7
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EXHIBIT 99.1
PRESS RELEASE
TARGETED GENETICS' ACQUISITION OF RGENE THERAPEUTICS
APPROVED BY SHAREHOLDERS
Acquisition expands Targeted Genetics' technology capabilities and
product pipeline
SEATTLE--June 19, 1996--Targeted Genetics Corporation (Nasdaq: TGEN)
today announced that its agreement to acquire RGene Therapeutics, Inc. of The
Woodlands, Texas has been approved by Targeted Genetics shareholders and the
acquisition is effective immediately. RGene stockholders previously approved the
acquisition.
The acquisition of RGene by Targeted Genetics in a stock-swap buyout
was announced on April 16, 1996, but was subject to approval by the companies'
shareholders. Under terms of the merger agreement, Targeted Genetics acquires
all outstanding shares of RGene stock in exchange for approximately 3.64 million
unregistered shares of Targeted Genetics Common Stock.
As a result of the merger, Targeted Genetics acquires proprietary
non-viral gene delivery technology that complements the viral technologies the
company currently has under development; a potential gene therapy product for
the treatment of cancer that is already in Phase I clinical trials; and key
relationships with leading scientists in the gene therapy field.
"With the acquisition of RGene Therapeutics, Targeted Genetics gains a
leading position in non-viral gene delivery, and becomes the only company with
ongoing clinical trials using three different delivery systems: retroviral
vectors, adeno-associated viral (AAV) vectors, and now non-viral vectors. This
broad base of gene delivery systems can be used to address a broad spectrum of
diseases," said H. Stewart Parker, Targeted Genetics president and chief
executive officer. "Also, the acquisition brings together a critical mass of
technology and know-how in the cancer field."
Targeted Genetics is currently conducting two Phase I clinical trials
examining the use of adeno-associated viral (AAV) vectors for the treatment of
cystic fibrosis by in vivo delivery of the cystic fibrosis transmembrane
regulator (CFTR) gene; and a
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Phase I trial examining the use of human immunodeficiency virus (HIV)-specific
CTLs to prevent the onset of full-blown AIDS in patients with HIV.
Targeted Genetics Corporation develops gene and cell therapies for the
treatment of certain acquired and inherited diseases. The company's principal
focus is on in vivo adeno-associated virus (AAV) gene therapy, initially for
cystic fibrosis; CTL immunotherapy for infectious diseases and cancer; and stem
cell gene therapy.
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