Tengion Provides Business Update and Reports Second Quarter 2013 Financial Results

  Tengion Provides Business Update and Reports Second Quarter 2013 Financial
                                   Results

-- $33.6 million raised in Celgene and Convertible Note transactions --

-- Recruiting ongoing for Neo-Urinary Conduit™ Phase 1 trial in U.S. --

-- Neo-Kidney Augment™ trial initiated in Sweden --

PR Newswire

WINSTON-SALEM, N.C., Aug. 14, 2013

WINSTON-SALEM, N.C., Aug. 14, 2013 /PRNewswire/ --Tengion, Inc. (OTCQB:
TNGN), a leader in regenerative medicine, today provided a business update and
reported its financial results for the second quarter ended June 30, 2013.

"We made strong progress advancing our Neo-Kidney Augment into the clinic this
quarter and will continue to focus on this program as well as completing
enrollment in our Neo-Urinary Conduit trial. During the quarter, we received a
$15.0 million strategic investment from Celgene and completed a $18.6 million
financing with other experienced investors to fund our efforts to accomplish
these goals," commented John L. Miclot, President and Chief Executive Officer
of Tengion. "Following the April approval by the Swedish Medical Products
Agency for the Neo-Kidney Augment Phase 1 trial, we began activities to enroll
patients with chronic kidney disease. We also continue to actively recruit
patients in the Neo-Urinary Conduit Phase 1 trial to further advance that
program toward completed enrollment."

Neo-Urinary Conduit Clinical Program Update
Tengion's most advanced product candidate is the Neo-Urinary Conduit, which is
designed to replace the standard of care for bladder cancer patients
undergoing cystectomy (removal of bladder). The Neo-Urinary Conduit is
intended to eliminate the need for bowel resection and the occurrence of
typical post-operative co-morbidities associated with current standard of care
including urine absorption-related metabolic disorders. It also offers
patients potential improvements over the standard of care, including a shorter
and less complex surgical procedure, improved recovery times and faster
hospital discharges.

Tengion has implanted seven patients with the Neo-Urinary Conduit and is
actively seeking to enroll three additional patients by the end of 2013. The
trial is designed to translate the surgical procedure successfully used in
preclinical animal models into clinical trials with human patients, as well as
to assess the safety and preliminary efficacy of the Neo-Urinary Conduit.

Neo-Kidney Augment Program Update
The Neo-Kidney Augment is Tengion's second clinical program and is being
developed with the goal of using a patient's own kidney cells to augment or
replace renal function for patients with chronic kidney disease (CKD) who are
rapidly progressing toward end stage renal disease (ESRD). The Neo-Kidney
Augment is intended to prevent or delay the need for dialysis or kidney
transplant by catalyzing the regeneration of functional kidney tissue in
patients with ESRD.

In April 2013, Tengion announced the acceptance of the Company's Clinical
Trial Application filed with the Medical Products Agency in Sweden to initiate
a Phase 1 clinical trial to evaluate the safety and delivery of the Neo-Kidney
Augment, in patients with CKD. The Company plans to enroll up to five patients
in the Phase 1 trial in 2013 and will follow each patient for up to two years.
The trial will involve delivery of an active regenerative dose of Neo-Kidney
Augment in patients with CKD. The Company plans to initiate a Phase 1 trial in
the U.S. during the fourth quarter of 2013 to evaluate the Company's
Neo-Kidney Augment in patients with CKD.

Recent Corporate Highlights
In June 2013, Tengion closed transactions totaling $33.6 million, including a
strategic investment from Celgene Corporation in the form of a $15 million
payment in cash. Celgene was granted right of first negotiation on the
Neo-Kidney Augment program and also the exclusive option to acquire the assets
required for development of a neo-esophageal implant. Celgene also received
warrants to purchase shares of Tengion common stock. Additionally, the Company
completed a private placement of $18.6 million aggregate principal amount of
Senior Secured Convertible Notes and warrants to both new and existing
investors.

Second Quarter Financial Update
For the second quarter ended June 30, 2013, the Company reported an adjusted
net loss of $5.8 million, or $1.75 per basic and diluted common share,
compared to an adjusted net loss of $4.5 million, or $1.89 per basic and
diluted common share, for the same period in 2012. The increased adjusted net
loss for the 2013 period was primarily due to an increase in interest expense
of $1.7 million, offset in part by a decrease in research and development
expense of $0.3 million.

The increase in interest expense was primarily due to amortization of $1.3
million of debt discount and deferred financing costs associated with the
private placement of $15.0 million and the private placement of $18.6 million
aggregate principal amount of Senior Secured Convertible Notes completed in
October 2012 and June 2013, respectively. The decrease in research and
development expense for the three months ended June 30, 2013 was primarily due
to a reduction in compensation and related expenses resulting from fewer
employees as compared to the three months ended June 30, 2012, as well as a
reduction in external services.

As of June 30, 2013, the Company held $13.9 million in cash and cash
equivalents. The Company received proceeds of $20.6 million in July 2013
relating to the Celgene and financing transactions consummated in June 2013.

About Tengion
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. An initial clinical trial is ongoing for the
Company's Neo-Urinary Conduit™, an autologous implant that is intended to
catalyze regeneration of native-like urinary tissue for bladder cancer
patients requiring a urinary diversion following bladder removal. Seven
patients have been implanted with the Neo-Urinary Conduit to date. The Company
commenced a Phase 1 clinical trial in May 2013 in Sweden for its Neo-Kidney
Augment™, which is designed to prevent or delay dialysis or kidney
transplantation by increasing renal function in patients with advanced chronic
kidney disease. In addition, the Company plans to initiate a Phase 1 trial in
the U.S. during the fourth quarter of 2013 to evaluate the Company's
Neo-Kidney Augment in patients with chronic kidney disease.

Forward-Looking Statements
Certain statements set forth above may constitute forward-looking statements
within the meaning of the Private Securities Litigation Reform Act of 1995.
Statements using words such as anticipate, expect, project, intend, plan,
believe, words and terms of similar substance and any discussion of future
plans, actions, or events generally identify forward-looking statements.
Forward-looking statements regarding the Company include but are not limited
to (i) the Company's use of proceeds for its most recently completed
investment rounds; (ii) plans to develop and commercialize its product
candidates, including the Neo-Urinary Conduit and the Neo-Kidney Augment; and
(iii) expectations regarding ongoing and planned preclinical studies, clinical
trials and related filings or submissions with regulatory authorities.
Although Tengion believes that these statements are based upon reasonable
assumptions within the bounds of its knowledge of its business and operations,
there are a number of factors that may cause actual results to differ from
these statements. Tengion's business is subject to significant risks and
uncertainties and there can be no assurance that actual results will not
differ materially from expectations. Factors which could cause actual results
to differ materially from expectations include, among others: (i) regulatory
agencies, such as the U.S. Food and Drug Administration or Sweden's Medical
Products Agency, could place the Company's clinical trials on clinical hold;
(ii) patients enrolled in the Neo-Urinary Conduit or Neo-Kidney Augment
clinical trials may experience adverse events; (iii) the Company may have
difficulty enrolling patients in its clinical trials; (iv) data from the
Company's ongoing preclinical studies, including the GLP program for the
Neo-Kidney Augment, may not continue to be supportive of advancing such
preclinical product candidates; and (v) the Company may be unable to progress
its product candidates that are undergoing preclinical testing into clinical
trials and the Company may not be successful in designing such clinical trials
in a manner that supports development of such product candidates. Any of these
factors could delay one of the Company's clinical trials or cause the Company
to terminate the development of one of its product candidates. For additional
factors that could cause actual results to differ from expectations, you
should refer to the reports filed by the Company with the Securities and
Exchange Commission under the Securities Exchange Act of 1934, as amended. The
forward-looking statements in this release are made only as of the date hereof
and the Company disclaims any intention or responsibility for updating
predictions or expectations in this release.

TENGION, INC.
(A Development-Stage Company)

Statements of Operations

(in thousands, except per share data)

(unaudited)
                            Three Months Ended       Six Months Ended

                            June 30,                 June 30,
                            2012        2013         2012         2013
Revenue                     $ —         $ —          $ —          $ —
Operating expenses:
 Research and        $ 2,789     $ 2,480      $ 5,483      $ 4,660
development
 General and           1,438       1,445        2,819        3,295
administrative
Depreciation          115         62           251          145
 Other expense, net    44          91           92           121

                              4,386       4,078        8,645        8,221
 Total
operating expenses

                              (4,386)     (4,078)      (8,645)      (8,221)
Loss from operations

                              4           2            11           7
Interest income
Interest expense              (151)       (1,830)      (325)        (3,257)
Change in fair value of
embedded derivative and       —           (4,104)      —            (4,438)
derivative liability
Change in fair value of       1,214       (1,925)      691          (1,800)
warrant liability

                            $ (3,319)   $ (11,935)   $ (8,268)    $ (17,709)
Net loss
Basic and diluted net loss  $ (1.40)    $ (3.59)     $ (3.49)     $ (5.84)
per share


Weighted-average common       2,373       3,325        2,371        3,034
stock outstanding – basic
and diluted



TENGION, INC.
(A Development-Stage Company)





BALANCE SHEET DATA

(in thousands)

(unaudited)
                                                     December 31,  June 30,

                                                     2012          2013
Cash and cash equivalents                            $  7,536      $ 13,873
Total assets                                            12,435       38,970
Derivative liability                                    2,449        —
Warrant liability                                       6,178        21,010
Long-term debt (including current portion and           11,269       28,510
embedded derivative)
Total liabilities                                       23,778       55,480
Total stockholders' deficit                             (11,343)     (16,510)



TENGION, INC.
(A Development-Stage Company)

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

(in thousands)

(unaudited)
In accordance with Regulation G of the Securities and Exchange Commission,
the table set forth below reconciles certain financial measures used in this

press release that were not calculated in accordance with generally accepted
accounting principles, or GAAP, with the most directly comparable

financial measure calculated in accordance with GAAP.
                            Three Months Ended        Six Months Ended
                                                      June 30,
                            June 30,
                            2012         2013         2012        2013
Net loss attributable to
common stockholders –       $  (3,319)   $ (11,935)   $ (8,268)   $ (17,709)

GAAP
Change in fair value of
embedded derivative            —           4,104        —           4,438

and derivative liability
Change in fair value of        (1,214)     1,925        (691)       1,800
warrant liability
Other expense, net             44          91           92          121

                            $  (4,489)   $ (5,815)    $ (8,867)   $ (11,350)
Adjusted net loss
Shares used in computing
basic and diluted net
loss:
Basic and diluted              2,373       3,325        2,371       3,034
Basic and diluted net       $  (1.40)    $ (3.59)     $ (3.49)    $ (5.84)
loss per share – GAAP
Adjustment per share           (0.49)      1.84         (0.25)      2.10

                            $  (1.89)    $ (1.75)     $ (3.74)    $ (3.74)
Basic and diluted net
loss per share - adjusted



SOURCE Tengion, Inc.

Website: http://www.tengion.com
Contact: Investor and Media Contact: A. Brian Davis, brian.davis@tengion.com,
336.201.0155
 
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