Running short of cash, Tengion Inc. has turned to a PIPE transaction to raise money to continue development of its regenerative medicine products.
The East Norriton life-sciences firm said that Medtronic Inc., the huge medical device company, was one of the participants in the "private investment/public equity" deal through which Tengion hopes to raise $31.4 million.
Under the terms, Medtronic gets "right of first refusal" on Tengion's lead product, called Neo-Kidney Augment, which would use a patient's own cells to augment or replace kidney function in those who are dependent on dialysis treatment. That product is not yet in clinical development.
Minneapolis-based Medtronic and the other investors, who were not identified, will receive 11,079,250 shares of Tengion common stock and warrants to buy 10,460,875 shares in exchange for that much-needed cash. Previously, Tengion had said it had only enough cash to fund operations through April.
The warrants would be exercisable for five years at $2.88 per share. Shares of Tengion were trading at $2.50 per share Tuesday morning, down 22 cents. Tengion shares have lost 50 percent of their value since it went public at $5 per share on April 14.