Armata Pharmaceuticals, Inc. (ARMP) 2008 Q4 法說會逐字稿

Good afternoon, ladies and gentlemen, and welcome the Targeted Genetics fourth quarter and full year 2008 financial results conference call. Today's presenters are Susan Robinson, President and CEO of Targeted Genetics and David Poston, Targeted Genetics' Chief Financial Officer. Ms. Robinson will open today's call with a corporate update and 2009 outlook. Her comments will be followed by a financial update from Mr. Poston. The call will then be opened up to a question-and-answer session. Following today's presentation instructions will be given for the question-and-answer session. (Operator Instructions). As a reminder, this conference is being recorded this Tuesday afternoon, March 31st, 2009. I'd now like to turn the conference over to Ms. Susan Robinson. Pleases go ahead, ma'am.

女士們、先生們，午安！歡迎參加 Targeted Genetics 公司 2008 年第四季及全年財務業績電話會議。今天的演講嘉賓是 Targeted Genetics 公司總裁兼執行長 Susan Robinson 和財務長 David Poston。 Robinson 女士將在今天的電話會議上首先介紹公司最新情況和 2009 年展望。之後，Poston 先生將介紹財務最新情況。然後，電話會議將進入問答環節。今天的演講結束後，將提供問答環節的指示。 （操作員指示）。提醒一下，本次會議將於 2009 年 3 月 31 日星期二下午錄製。現在，我想將會議交給 Susan Robinson 女士。請開始，女士。

Thank you, David. Before we begin I would like to remind you that during the course of this call we may make projections and other forward-looking statements regarding future events or future financial performance of the Company. We wish to caution you that such statements are only predictions and actual events or results may differ materially from the statements we make. So please see our documents that we file from time to time with the SEC for information about risks that may affect the Company including our most recent Form 10-K for 2008 that we filed today.

謝謝，David。在開始之前，我想提醒您，在本次電話會議期間，我們可能會對公司未來事件或未來財務表現做出預測和其他前瞻性陳述。我們在此提醒您，此類陳述僅為預測，實際事件或結果可能與我們的陳述有重大差異。因此，請參閱我們不時向美國證券交易委員會 (SEC) 提交的文件，以了解可能影響公司的風險，包括我們今天提交的最新 2008 年 10-K 表格。

Thank you all for joining us this afternoon. As you well know, 2008 has been a year of change and challenge for the Company. As the new President and CEO, I want to assure you that we are working diligently and as quickly as possible to evaluate and implement strategies for moving Targeted Genetics forward. I am committed to working with our Board and management team to navigate a successful path for Targeted Genetics in this environment. We maintain great belief in the promise of our Adeno-Associated Virus or AAV platform technology, and our current product development program. However, we have a short cash horizon and access in the capital we need to move these programs forward has become increasingly difficult given the current volatile financial environment. As a result, over the last several months we have set out to achieve three primary objectives.

感謝各位今天下午的到來。眾所周知，2008年對公司來說是充滿變革和挑戰的一年。身為新任總裁兼首席執行官，我想向各位保證，我們正在勤勉工作，並儘快評估和實施推動Targeted Genetics發展的策略。我將致力於與董事會和管理團隊攜手合作，在當前的環境下為Targeted Genetics開闢一條成功之路。我們對腺相關病毒（AAV）平台技術以及我們目前的產品開發專案前景充滿信心。然而，我們的現金流有限，在當前動盪的金融環境下，要取得推進這些項目所需的資金變得越來越困難。因此，在過去幾個月裡，我們著手實現三個主要目標。

First, to identify and execute on transactions to provide the financial resources we need to realize the potential of our technology and product development efforts. Second, to restructure our product pipeline and expense structure to maximize use of our limited resources. And third, to identify and implement strategies to monetize non-core assets including certain product development programs. Our primary objective is to identify and engage in one or more strategic transactions that contribute to longer term value creation, such activities could include M&A activity, new or expanded partnerships, an equity or debt transaction and licensing or sale of technology assets. We believe that a strategic partner could realize significant value over time, while providing Targeted with the financial resources needed to advance our AAV platform and product development program. We are in the midst of a number of discussions on this front.

首先，識別並執行交易，以提供我們實現技術和產品開發潛力所需的財務資源。其次，重組我們的產品線和支出結構，以最大限度地利用我們有限的資源。第三，辨識並實施將非核心資產（包括某些產品開發項目）貨幣化的策略。我們的主要目標是識別並參與一項或多項有助於長期價值創造的策略交易，這些活動可能包括併購活動、新的或擴大的合作夥伴關係、股權或債務交易以及技術資產的許可或出售。我們相信，策略夥伴可以隨著時間的推移實現巨大的價值，同時為Targeted提供推進AAV平台和產品開發專案所需的財務資源。我們正在就此進行一系列討論。

To maximize our ability to achieve our near-term product development goals and complete one or more of these strategic transactions, we took a number of significant steps to maximize our limited resources in the last quarter of 2008. First, we reduced our anticipated 2009 personnel costs by 25%, by, A, reducing the number of employees from 68 at September 30, to fewer than 50 now. B, implementing salary reductions for our most highly compensated employees. And C, moving some of our staff to half time status. And second, we made additional adjustments our intellectual property portfolio and capital expenditures designed to further reduce our 2009 costs, by 15% compared to 2008.

為了最大限度地提高我們實現近期產品開發目標的能力並完成一項或多項策略交易，我們在2008年最後一個季度採取了一系列重要措施，以最大限度地利用我們有限的資源。首先，我們將2009年的預期人事成本降低了25%，具體措施包括：A、將員工人數從9月30日的68人減少到目前的不到50人；B、對薪酬最高的員工進行減薪；C、將部分員工轉為半職。其次，我們對智慧財產權組合和資本支出進行了額外調整，旨在進一步降低2009年的成本，與2008年相比，成本降低了15%。

Consistent with these efforts, in February 2009 we announced a renegotiation of our relationship with Celladon Corporation and entered into new license and manufacturing agreements that replace our prior agreements. This renegotiation followed a strategic analysis of the best way to maximize our value and reduce the cost of AAV manufacturing. We concluded that accessing a contract manufacturing organization or CMO in addition to or instead of funding our own internal manufacturing capabilities could provide operational and financial flexibility in addressing future manufacturing needs. We believe that the transfer of our AAV vector manufacturing know how to CMOs could significantly reduce the funding we need for continued operations.

為配合這些努力，我們於2009年2月宣布與Celladon Corporation重新談判合作關係，並簽訂了新的許可和生產協議，以取代先前的協議。此次重新談判是基於對最大化我們價值並降低AAV生產成本的最佳途徑的策略分析。我們得出結論，除了投資自有生產能力之外，或替代投資自有生產能力，與合約生產組織（CMO）合作，可以為滿足未來的生產需求提供營運和財務靈活性。我們相信，將我們的AAV載體生產技術轉移給CMO可以顯著減少我們持續營運所需的資金。

As part of this measure we granted Celladon exclusive use of our AAV technologies in a limited field that will enable Celladon to manufacture its product candidate MYDICAR a genetically targeted enzyme replacement therapy for heart failure through a CMO or commercial partner of their choice. Under the terms of the new agreement, Celladon will increase its payments to Targeted Genetics in the first six months of 2009 to support our manufacture of MYDICAR for Celladon's Phase III clinical program. In addition, we and Celladon agreed to a new milestone and royalty structure on development and commercialization of products in the permitted field. If Celladon is successful in commercializing a product covered by the license agreement, we could receive significant future revenue pursuant to these milestone and royalty provisions. If we are not successful in the near term with raising additional capital, we intend to phase out our manufacturing operations infrastructure following completion of the current Celladon manufacturing campaign. Such a reduction would include reducing our manufacturing headcount from approximately 35 full-time equivalent staff, to five or fewer manufacturing related staff. This endeavor would also include other infrastructure cost reductions.

作為此措施的一部分，我們授權 Celladon 在有限領域獨家使用我們的 AAV 技術，這將使 Celladon 能夠透過其選擇的 CMO 或商業合作夥伴生產其候選產品 MYDICAR，這是一種用於治療心臟衰竭的基因靶向酶替代療法。根據新協議的條款，Celladon 將在 2009 年上半年增加向 Targeted Genetics 支付的費用，以支持我們為 Celladon 的 III 期臨床計畫生產 MYDICAR。此外，我們與 Celladon 就授權領域產品的開發和商業化達成了新的里程碑和特許權使用費結構。如果 Celladon 成功將授權協議涵蓋的產品商業化，我們將根據這些里程碑和特許權使用費條款獲得可觀的未來收入。如果我們短期內無法成功籌集更多資金，我們計劃在完成目前的 Celladon 生產活動後逐步淘汰我們的生產營運基礎設施。此舉將包括將我們的生產員工人數從大約 35 名全職員工減少到 5 名或更少。此舉還將包括降低其他基礎設施成本。

In the last quarter of 2008, we also conducted a strategic review of our product development portfolio, looking with a critical eye at the near-term costs and objectives within each program and made a number of strategic shifts in our product development focus. We have reprioritized our pipeline to focus our AAV technology and expertise on our ocular and neurological product candidates including our first product development effort to evaluate the use of AAV to deliver expressed RNAi. The most advanced of these priority programs is a gene-based therapy for Leber's Congenital Amourosis or LCA, a retinal disease that typically leads to blindness before adulthood. LCA is caused by mutations in one of a number of genes including the RPE65 gene.

2008年最後一個季度，我們也對產品開發組合進行了策略評估，以批判的眼光審視了每個專案的近期成本和目標，並對產品開發重點進行了一系列策略調整。我們重新調整了產品線的優先級，將AAV技術和專業知識集中於眼科和神經科候選產品，其中包括我們首個產品開發項目，旨在評估使用AAV遞送表達RNAi的可行性。這些優先項目中進展最快的是針對萊伯氏先天性視網膜色素上皮（LCA）的基因療法，這是一種通常會導致成年前失明的視網膜疾病。 LCA是由包括RPE65基因在內的多種基因突變引起的。

Targeted Genetics manufactured the AAV vector to deliver a normal copy of the RPE65 gene to cells within the retina for a Phase I, II trial in collaboration with leading researchers from the University of College London and Moorefield's Eye Hospital. Ground breaking Phase I, II data demonstrating proof of principle and early clinical benefit in LCA were presented in April of 2008 at the leading association meeting for research and vision in ophthalmology. These results were also published in the New England Journal of Medicine in May 2nd 8. From a commercial standpoint given the clear unmet medical need in this indication, we believe that positive results from this program could provide us with the relatively short trajectory to commercialization. Moreover, and importantly, success in LCA could open doors to the use of AAV in other ocular diseases, a promising area for AAV delivery of genetic constructs.

Targeted Genetics 公司與倫敦大學學院和摩爾菲爾德眼科醫院的頂尖研究人員合作，製造了 AAV 載體，用於將 RPE65 基因的正常拷貝遞送至視網膜細胞，以進行 I、II 期臨床試驗。 2008 年 4 月，在眼科研究和視覺領域的頂級協會會議上，展示了突破性的 I、II 期數據，證明了 LCA 的原理驗證和早期臨床益處。這些結果也於 5 月 2 日發表在《新英格蘭醫學雜誌》。從商業角度來看，鑑於該適應症明顯未被滿足的醫療需求，我們相信該計畫的正面結果可以為我們提供相對較短的商業化軌跡。此外，重要的是，LCA 的成功可以為 AAV 在其他眼部疾病中的應用打開大門，這是 AAV 傳遞基因構建體的有希望的領域。

Our second priority development program is in Huntington's disease or HD. This program is being conducted in collaboration with Beverly Davidson at the University of Iowa and utilizes our AAV platform to deliver and, designed to inhibit production of the mutated Huntington protein. We believe we have a small intellectual property position in the use of AAV to deliver an express interfering RNA or RNAi molecules which may have potential in HD and other diseases caused by production of abnormal proteins. There are no cures for HD and we believe that there is great clinical and commercial opportunity for an AAV RNAi therapy that provides clinical benefit to HD patients. In addition, results from studies evaluating this candidate could serve as proof of concept for using AAV to deliver other RNA therapeutics including micro RNAs.

我們的第二個重點開發項目是亨廷頓舞蹈症（HD）。該計畫正與愛荷華大學的貝弗利·戴維森合作開展，利用我們的腺相關病毒（AAV）平台遞送並抑制突變亨廷頓蛋白的產生。我們相信，我們在利用AAV遞送表達幹擾RNA或RNAi分子方面擁有少量知識產權，這些分子可能對亨廷頓舞蹈症和其他由異常蛋白質產生引起的疾病具有治療潛力。目前，亨廷頓舞蹈症尚無根治方法，我們相信AAV RNAi療法具有巨大的臨床和商業潛力，能為亨廷頓舞蹈症患者帶來臨床益處。此外，評估此候選藥物的研究結果可作為使用AAV遞送其他RNA療法（包括micro RNA）的概念驗證。

Our third development priority is our small molecule program in the area of Amyotrophic Lateral Sclerosis or ALS. Also known as Lou Gehrig's disease. ALS is a progressive neurodegenerative disorder for which there is no cure. This program while outside our historic focus on gene based therapies is the outgrowth of a highly productive collaboration with Dr. John Engelhardt at the University of Iowa and is attractive given the substantial unmet medical need that ALS patients face. With Targeted Genetics funding and funding from the US Department of Defense, we are conducting preclinical studies to advance a candidate appropriate for human clinical studies. While initial product development efforts will focus on ALS, we believe there is a longer term opportunity to explore expansion of the program into additional neurodegenerative disorders, also thought to be impacted by the same mechanism.

我們的第三個發展重點是肌萎縮側索硬化症（ALS，又稱盧伽雷氏症）領域的小分子計畫。 ALS 是一種進行性神經退化性疾病，目前尚無治癒方法。該計畫雖然不屬於我們一直以來專注於基因療法的領域，但它是與愛荷華大學 John Engelhardt 博士富有成效的合作的成果，鑑於 ALS 患者面臨的大量未滿足的醫療需求，該計畫具有吸引力。在標靶遺傳學計畫和美國國防部的資助下，我們正在進行臨床前研究，以推進適合人體臨床研究的候選藥物。雖然初期產品開發工作將專注於 ALS，但我們相信，從長遠來看，該專案有機會擴展到其他被認為受相同機制影響的神經退化性疾病。

And finally, as previously reported in 2008, part of our reprioritization included moving our core focus away from the advancement of our inflammatory arthritis and HIV vaccine programs. We completed the Phase I, II program for the inflammatory arthritis candidate and have reached the end of our current HIV/AIDS vaccine product candidate work with the Children's Hospital of Philadelphia as that program moves toward clinical testing. We believe that further advancement of these programs will best be undertaken by partners able to support clinical development and subsequent commercialization activities. We are actively evaluating ways to monetize our non-core programs and assets including the inflammatory arthritis and HIV/AIDS vaccine programs. Other assets we are trying to monetize include our platform technology, intellectual property, manufacturing capabilities and product development expertise. Obviously our ability to move our programs forward as well as develop exciting new product opportunities for AAV to deliver RNA therapeutics requires significant additional capital. I want to reiterate that we are wholly focused on completing one or more strategic transactions to raise capital and to support longer term value creation as outlined earlier.

最後，正如2008年所報導的那樣，我們重新調整了優先事項，其中包括將核心重點從發炎性關節炎和HIV疫苗計畫的推進上移開。我們完成了發炎性關節炎候選藥物的I期和II期項目，與費城兒童醫院合作的HIV/AIDS疫苗產品候選產品的研發工作也已接近尾聲，該項目正在推進臨床試驗。我們認為，這些計畫的進一步推進最好由能夠支持臨床開發和後續商業化活動的合作夥伴來承擔。我們正在積極評估將我們的非核心項目和資產（包括發炎性關節炎和HIV/AIDS疫苗計畫）貨幣化的方法。我們試圖貨幣化的其他資產包括我們的平台技術、智慧財產權、製造能力和產品開發專業知識。顯然，為了推進我們的項目，並為AAV（腺相關病毒）開發令人興奮的新產品機會以遞送RNA療法，我們需要大量的額外資金。我想重申，我們正全力以赴地完成一項或多項策略交易，以籌集資金並支持如前所述的長期價值創造。

Before I turn the call over to David to report on our current cash horizon and financial results, I would like to make a few acknowledgements. First as I'm sure you appreciate our restructuring efforts have been very difficult for our employees. I'd like to take this opportunity to acknowledge and to deeply thank our valued staff. All of whom continue to demonstrate an amazing capacity to adapt to a dynamic environment while remaining focused on executing changing program group and Company priorities. I would also like to acknowledge the significant contributions of our past executives, most notably, Stewart Parker and Barrie Carter, as well as staff members who are no longer with us. Thank you all. I'll now turn the call over to David.

在將電話轉給David匯報我們目前的現金流量和財務業績之前，我想先致謝幾句。首先，我相信您理解我們的重組工作對我們的員工來說非常艱難。我想藉此機會，對我們尊貴的員工表示深深的感謝。他們所有人都展現出驚人的能力，能夠適應不斷變化的環境，同時仍然專注於執行不斷變化的專案組和公司優先事項。我還要感謝我們前任高階主管，尤其是Stewart Parker和Barrie Carter，以及已離職的員工所做的傑出貢獻。謝謝大家。現在，我將電話轉給David。

Thanks, Susan and thanks to everyone for joining us this afternoon. Today, I will review our financial position, outline some of our financial expectations for 2009, provide a summary of our fourth quarter and full year financial results, and wrap up with discussion of our goodwill impairment, our Basel facility status and our NASDAQ listing. As Susan has highlighted, there is no doubt that this has been our most challenging year. We are focused on addressing these challenges head-on. We've taken substantial measures to reprioritize our product development efforts and to scale our operations to match our projected financial resources.

謝謝蘇珊，也謝謝各位今天下午的到來。今天，我將回顧我們的財務狀況，概述我們對2009年的一些財務預期，總結我們第四季度和全年的財務業績，最後討論我們的商譽減值、巴塞爾協議的履行情況以及我們在納斯達克的上市情況。正如蘇珊所強調的，毫無疑問，這是我們面臨的最具挑戰性的一年。我們正致力於迎難而上，應對這些挑戰。我們已採取重大措施，重新調整產品開發工作的優先級，並擴大營運規模，以配合我們預期的財務資源。

We began 2008 with $16.4 million of cash and cash equivalents and finished 2008 with $5.2 million. This decrease primarily reflects our net loss from operations. Based on this starting cash balance for 2009, combined with our operating plan, which was improved by both the Celladon program restructuring and the cost decreases that Susan outlined earlier in our call, we now project adequate cash to support our operations only through the first half of 2009. As a result of this short cash horizon, the audit report from Ernst & Young, our independent registered public accounting firm, that is in our Form 10-K, contains a going concern qualification. I'd like to discuss what it means.

2008年初，我們的現金及現金等價物餘額為1,640萬美元，而2008年末僅為520萬美元。這項減少主要反映了我們的經營淨虧損。基於2009年的期初現金餘額，結合我們的營運計畫（該計畫因Celladon計畫重組和Susan先前在電話會議上概述的成本削減而得到改進），我們預計現金僅夠維持到2009年上半年的營運。由於現金期限較短，我們獨立註冊會計師事務所安永（Ernst & Young）的審計報告（包含在我們10-K表格中）包含持續經營保留意見。我想解釋一下它的意義。

The language in the report indicates that our current limited working capital combined with our recurring losses and negative cash flows raise substantial doubt about our ability to continue as a going concern. As part of E&Y's audit, the independent auditor rules required them to compare our projected 2009 cash balances, December 2009 cash balances with our projected payables and payroll liabilities at that point. Following these accounting metrics, Ernst & Young concluded that they needed to include the going concern qualification in their audit report. This opinion does not change the business challenges that we face or our strategy for facing them. Simply put, we must gain additional funding for continued operations.

報告中的措辭表明，我們目前有限的營運資金，加上經常性虧損和負現金流，對我們持續經營的能力構成了重大質疑。作為安永審計的一部分，獨立審計師規則要求他們將我們2009年的預計現金餘額、2009年12月的現金餘額與我們當時預計的應付款項和工資負債進行比較。根據這些會計指標，安永得出結論，他們需要在審計報告中納入持續經營的保留意見。這項意見不會改變我們面臨的業務挑戰或應對這些挑戰的策略。簡而言之，我們必須獲得額外資金才能持續營運。

If we are able to obtain such funding, we will invest our capital in product development efforts in ocular and neurological indications and/or earlier stage opportunities, focusing on AAV to deliver RNA therapeutics which include interfering RNA sequences and micro RNAs. Also, as Susan has outlined, if we are not successful in the very near term with raising additional capital, we intend to narrow our focus just to therapeutics development. In that event we would phase out our manufacturing operations and make other infrastructure cost reductions. We also continue to evaluate other alternatives if we are unable to secure sufficient funding for continued operations.

如果我們能夠獲得這筆資金，我們將把資金投入到眼科和神經系統疾病的產品開發以及/或早期投資機會中，重點關注腺相關病毒（AAV）用於遞送RNA療法，包括幹擾RNA序列和微小RNA。此外，如Susan所述，如果我們短期內無法成功籌集更多資金，我們打算將重點縮小到療法開發上。在這種情況下，我們將逐步停止生產運營，並削減其他基礎設施成本。如果我們無法獲得足夠的資金來維持運營，我們也會繼續評估其他替代方案。

I'll now review our fourth quarter and full year financial results. This afternoon we reported financial results for the fourth quarter and 12 months ended December 31st, 2008. We reported fourth quarter revenue of $2.2 million, compared to revenue of $3.2 million for the same quarter in 2007. For the full year ended December 31st, 2008 our revenue was $8.7 million, down from $10.3 million for 2007. Our 2008 revenue results for both the fourth quarter and the full year primarily reflect revenue from R&D and manufacturing activities, earned under our heart failure collaboration with Celladon and to a lesser extent from the NIAID-funded HIV/AIDS vaccine project in collaboration with Children's Hospital of Philadelphia and nationwide Children's Hospital. Our 2007 revenue results for both the fourth quarter and full year consisted primarily of R&D revenue earned under the NIAID HIV/AIDS vaccine project. 2007 revenue results also include revenue generated by the Company's heart failure collaboration and licensing revenue primarily from a milestone payment.

現在我將回顧我們第四季和全年的財務表現。今天下午，我們公佈了截至2008年12月31日的第四季和全年的財務表現。我們報告的第四季營收為220萬美元，而2007年同期的營收為320萬美元。截至2008年12月31日的全年收入為870萬美元，低於2007年的1030萬美元。我們2008年第四季和全年的收入主要反映了研發和生產活動的收入，這些收入來自我們與Celladon合作開展的心臟衰竭研究，以及在較小程度上來自與費城兒童醫院和全國兒童醫院合作開展的由美國國家過敏和傳染病研究所資助的愛滋病毒/愛滋病疫苗計畫的收入。我們2007年第四季和全年的收入主要來自NIAID愛滋病毒/愛滋病疫苗計畫的研發收入。 2007 年的收入結果還包括公司心臟衰竭合作產生的收入和主要來自里程碑付款的授權收入。

Research and Development expenses for the fourth quarter of 2008 decreased to $3.9 million from $4.9 million in the fourth quarter of 2007. And decreased to $15.2 million for the year ended December 31st, 2008 from $17.7 million for the prior year. The drivers for both periods were due to lower clinical trial costs for the Company's inflammatory arthritis program, due to the completion of this clinical trial. This decrease was partially offset by increased activity on the heart failure collaboration with Celladon during 2008.

2008年第四季研發費用從2007年第四季的490萬美元降至390萬美元。截至2008年12月31日的年度，研發費用也從去年的1,770萬美元降至1,520萬美元。這兩季研發費用的下降均是由於公司發炎性關節炎計畫臨床試驗的完成降低了臨床試驗成本。 2008年與Celladon公司在心臟衰竭領域合作的增加部分抵消了這一下降。

Our general and administrative expenses for the fourth quarter of 2008 were $957,000, compared to $2.2 million for the fourth quarter of 2007, and were $5.8 million and $7.0 million for the years ended December 31st, 2008 and 2007 respectively. The decreases for both periods reflected decreased employee costs including lower executive compensation expense, no 2008 bonus expense, and lower overall compensation expense as a result of the November 2008 reduction in force implemented with the realigned product development priorities. Additionally, we incurred lower shareholder costs, lower patent expenses and lower stock-based compensation charges in 2008.

2008年第四季，我們的一般及行政費用為95.7萬美元，而2007年第四季為220萬美元；截至2008年12月31日的年度及2007年同期，我們的一般及行政費用分別為580萬美元及700萬美元。這兩個期間的一般及行政費用均有所下降，這反映了員工成本的下降，包括高管薪酬支出的降低、2008年獎金支出的減少，以及由於2008年11月實施的裁員以及產品開發重點調整導致的整體薪酬支出的降低。此外，2008年我們的股東成本、專利支出和股票薪酬支出均有所下降。

Our net loss for the fourth quarter of 2008 was $10.8 million, or $0.54 per common share, compared to a net loss of $5.1 million or $0.26 per common share for the fourth quarter of 2007. For the 12 months ended December 31st, 2008 we reported a net loss of $20.7 million or $1.04 per common share compared to $16.1 million or $0.98 per share for the same period in 2007. Our per share results for 2008 reflect the issuance of 2.2 million shares in January 2007 and 6.7 million shares in June 2007 and our net loss for the fourth quarter of 2008 included a $7.9 million non-cash goodwill impairment charge. In the fourth quarter, we took the action to write off the carrying value of our goodwill asset from $7.9 million to 0.

我們2008年第四季的淨虧損為1,080萬美元，即每股普通股0.54美元，而2007年第四季的淨虧損為510萬美元，即每股普通股0.26美元。截至2008年12月31日的12個月，我們報告的淨虧損為2,070萬美元，即每股普通股1.04美元，而2007年同期的淨虧損為1,610萬美元，即每股0.98美元。我們2008年的每股盈餘反映了2007年1月發行的220萬股和2007年6月發行的670萬股，2008年第四季的淨虧損包括790萬美元的非現金商譽減損費用。在第四季度，我們採取行動，將商譽資產的帳面價值從790萬美元減記至0美元。

For those of you who follow the Company closely, you're probably you a wear that we must monitor our goodwill balance and if there are indications of impairment to the value of the goodwill, we must perform a series of tests. Based on those tests, in certain circumstances we must write down the carrying value of goodwill. All of these steps of course follow a Statement of Financial Accounting Standards No. 142 which is entitled goodwill and other intangible assets. For the benefit of those who are not as aware of our goodwill balance and these rules I'll cover some of the key points affecting the Company.

對於那些密切關注公司動態的人來說，您可能已經意識到我們必須監控商譽餘額，如果有跡象表明商譽價值可能減值，我們必須進行一系列測試。基於這些測試，在某些情況下，我們必須減記商譽的帳面價值。所有這些步驟當然都遵循《財務會計準則第142號》，該準則名為「商譽和其他無形資產」。為了方便那些不太了解我們商譽餘額和這些規則的人，我將介紹一些影響公司的關鍵點。

We first recorded our goodwill balance as part of our acquisition of Genovo in the year 2000. The accounting rules relating to goodwill and intangibles require us to perform annual and sometimes interim evaluations of the goodwill balance to test for signs of impairment. Our annual evaluation, which was on October 1st, 2008, did not result in any necessary changes to our goodwill balance. However, towards the end of the fourth quarter of 2008, we triggered the testing requirement within Standard No. 142, to perform an interim test. This was as a result of our November product realignment activities and the continued decrease in our market capitalization at the end of 2008. These tests resulted in a valuation of goodwill of zero which, in turn, resulted in the non-cash charge of $7.9 million that we recognized in the fourth quarter.

我們首次記錄商譽餘額是在2000年收購Genovo時。有關商譽和無形資產的會計準則要求我們對商譽餘額進行年度評估，有時甚至進行中期評估，以測試是否有減損跡象。我們的年度評估是在2008年10月1日進行的，並未導致商譽餘額發生任何必要的變更。然而，在2008年第四季末，我們觸發了準則第142號中的測試要求，進行了中期測試。這是由於我們11月份的產品調整活動以及2008年底市值的持續下降。這些測試導致商譽估值為零，進而導致我們在第四季度確認了790萬美元的非現金費用。

As you can imagine, the details of this accounting standard are complicated, require considerable judgment and would require considerable explanation to fully describe. We have provided a complete description of the application of this accounting standard in our Form 10-K which we filed earlier today with the SEC. The important goodwill impairment take-aways to understand are, first, the goodwill impairment charge is a non-cash charge and does not affect our cash horizon or our upcoming business plans or strategies. Second, as a result of this accounting entry, though our shareholders' equity is minus $3.8 million, which means that we do not meet the NASDAQ minimum net worth requirement of $2.5 million which I will more fully discuss in this call. And finally, and importantly, this does not change our business plans of focusing our attention on increasing our cash horizon and advancing our product and platform opportunities.

可以想像，這項會計準則的細節非常複雜，需要大量的判斷，也需要大量的解釋才能完整描述。我們今天稍早向美國證券交易委員會提交的10-K表格中，已經完整地描述了這項會計準則的應用。需要理解的商譽減損重點如下：首先，商譽減損費用是一項非現金費用，不會影響我們的現金期限或即將開展的業務計畫或策略。其次，由於這項會計分錄，我們的股東權益為-380萬美元，這意味著我們不符合納斯達克250萬美元的最低淨資產要求，我將在本次電話會議上更詳細地討論這一點。最後，也是最重要的一點，這不會改變我們專注於延長現金期限和推進產品和平台機會的業務計劃。

Shifting now to our Basel facility, in addition to the leases on our primary laboratory, manufacturing and administrative office space in Seattle, we also have a leased facility in Basel, Washington that was originally leased in the year 2000 for the potential large scale manufacturing of our products. This facility has unfortunately never been occupied and we do not currently plan to build out or utilize this additional space. We have for many years attempted to sublease all or part of this facility and have attempted to revise or somehow reduce the expenditures connected with this facility, all without success.

現在我們轉移到巴塞爾工廠。除了位於西雅圖的主要實驗室、生產和行政辦公空間的租賃外，我們還在華盛頓州巴塞爾擁有一處租賃設施，該設施最初於2000年租賃，用於我們產品的潛在大規模生產。遺憾的是，該設施從未被佔用，我們目前也不打算擴建或利用這額外的空間。多年來，我們一直試圖轉租該設施的全部或部分，並試圖修改或以某種方式減少與該設施相關的支出，但都沒有成功。

In February 2009, we surrendered control of the facility to the building owner and discontinued rent payments and we are pursuing a settlement of our remaining lease obligations with the building owner. These actions were a default under the lease. There can be no assurance that we will be successful in negotiating a settlement with the landlord and the landlord may terminate the lease as a result of our default and among other potential remedies seek to accelerate our obligations due under the lease. I should call out that this action had no financial impact on our 2008 financial statement. Our discussions with the building owner have been underway for quite some time now and we are currently unable to predict how these discussions may turn out or to determine the likelihood of any future adjustments to our accrued restructure charges if any.

2009年2月，我們將該設施的控制權移交給了業主，並停止了租金支付，目前正在尋求與業主就剩餘的租賃義務達成和解。這些行為構成了租賃合約項下的違約。我們無法保證能夠成功與業主達成和解，業主可能會因我們的違約而終止租賃合同，並尋求加速履行我們根據租賃合同到期的義務等其他潛在補救措施。需要指出的是，此舉對我們2008年的財務報表並沒有任何財務影響。我們與業主的談判已經進行了一段時間，目前我們無法預測這些談判的結果，也無法確定未來對我們的應計重組費用進行任何調整的可能性（如果有）。

I'll now wrap with a discussion of where we are with respect to maintaining our NASDAQ listing. Our stock is listed on the NASDAQ capital market. In order to continue to be listed on the NASDAQ capital market, we must meet specific quantitative standards including maintaining a minimum bid price of $1 for our common stock, a public float of $1 million and $2.5 million of shareholders equity. In April of 2008, we received a staff deficiency notice from the NASDAQ stock market informing us that for 30 consecutive business days, the bid price of our common stock had closed below the minimum $1 per share requirement for continued inclusion. The letter stated that we had 180 calendar days to regain compliance with the $1 minimum bid price requirement. In October 2008, due to general market conditions, the NASDAQ suspended enforcement of the bid price rules and has extended this enforcement suspension two more times. At this point, we have until July 27th, 2009, to regain compliance with the minimum bid price requirement.

現在，我將結束討論我們在維持納斯達克上市地位的進展。我們的股票在納斯達克資本市場上市。為了繼續在納斯達克資本市場上市，我們必須滿足特定的量化標準，包括維持普通股1美元的最低買入價、100萬美元的公開流通股和250萬美元的股東權益。 2008年4月，我們收到納斯達克股票市場發出的員工缺陷通知，告知我們，連續30個工作日，我們普通股的買入價收盤價低於繼續納入納斯達克的最低每股1美元要求。信中指出，我們有180個日曆日的時間來重新達到1美元的最低買入價要求。 2008年10月，由於市場普遍狀況，納斯達克暫停了買入價規則的執行，並已兩次延長執行暫停期限。目前，我們必須在2009年7月27日之前重新達到最低買入價要求。

To regain compliance, the bid price of our common stock must close at $1 or more per share for a minimum of 10 business days. Also, if on January -- also, if on July 27th, 2009, we meet all of the NASDAQ capital market's initial listing criteria but have not regained bid price compliance, we may be provided with an additional 180 calendar day compliance period to demonstrate this compliance. Also, as we reported in a recent Form 8-K filing as a result of our fourth quarter goodwill impairment charge, our net worth has fallen to minus $3.8 million. Which is below the NASDAQ $2.5 million net worth requirement.

為了重新達到合規要求，我們普通股的買入價必須在至少10個工作天內達到每股1美元或以上。此外，如果在2009年1月——或者說，如果在2009年7月27日——我們滿足了納斯達克資本市場的所有首次上市標準，但尚未重新達到買入價合規要求，我們可能會獲得額外180個日曆日的合規期來證明我們已達到合規要求。此外，正如我們在最近提交的8-K表格中所述，由於第四季度商譽減損支出，我們的淨資產已降至負380萬美元。這低於納斯達克250萬美元的淨資產要求。

As a result of this non-compliance, we expect the NASDAQ stock market will notify us earlier than the July 27th, 2009 date that we will be delisted. Upon such notice, we may appeal the NASDAQ staff's determination to a listing's qualifications panel. However, there can be no assurance that if we were to appeal such a determination, that the appeal would be successful. If we were to be delisted from the NASDAQ capital market we would seek to maintain a market for our shares, trading in our shares may continue to be conducted on the over-the-counter bulletin board or in a non-NASDAQ over-the-counter market such as the pink sheet. Delisting of our shares would result in limited release of the market price of our shares and generally limits analyst coverage and it could also restrict investor's interest in our securities. Also a delisting could have a material adverse effect on the trading market and prices for our shares, and our ability to issue additional securities or to secure additional financing.

由於此次違規，我們預計納斯達克股票市場將在2009年7月27日前通知我們下市。收到此類通知後，我們可以就納斯達克工作人員的決定向上市資格審查小組提出上訴。但是，我們無法保證上訴一定會成功。如果我們從納斯達克資本市場退市，我們將努力維持我們股票的市場，我們的股票交易可能會繼續在場外交易市場（OTB）或非納斯達克場外交易市場（例如粉紅單市場）進行。退市將導致我們股票市場價格的揭露受限，通常會限制分析師的關注，也可能限制投資者對我們證券的興趣。此外，退市也可能對我們股票的交易市場和價格，以及我們發行更多證券或獲得額外融資的能力造成重大不利影響。

Our cash horizon is short. But we continue to focus on carefully managing our cash flow as we seek to extend our cash horizon as we work to unlock the potential of AAV. We have successfully navigated our way to better days during other challenging times. And we continue to be committed to seeing this through. Your support as we meet these challenges is sincerely appreciated. At this point, I'll turn the call back over to Susan who will wrap up today's call.

我們的現金週轉期很短。但我們將繼續專注於謹慎管理現金流，力求延長現金週轉期，並努力釋放平均價值 (AAV) 的潛力。在其他充滿挑戰的時期，我們曾經成功渡過難關，走向更好的未來。我們將繼續致力於實現這一目標。衷心感謝您在我們應對這些挑戰時給予的支持。現在，我將把電話轉回給蘇珊，她將結束今天的電話會議。

Thank you, David. I'll close by saying that Targeted Genetics management team is absolutely focused on identifying a path that will extend our cash horizon and enable us to realize the potential of our technology and product development efforts whether as an independent Company or through other strategic transactions. We are working diligently to avoid a scenario where we are forced or decide to suspend our operations and are actively engaged in a variety of discussions with the goal of obtaining a more favorable outcome for Targeted Genetics and for you, our shareholders. While these discussions are complex, we hope to gain clarity on Targeted Genetics prospects for the future in the weeks and months ahead. We appreciate you all for your continued support. At this point we'll give you an opportunity to ask questions.

謝謝，David。最後我想說，Targeted Genetics 管理團隊正全心全意地致力於尋找一條能夠延長我們現金流並最終實現技術和產品開發潛力的途徑，無論是作為一家獨立公司還是透過其他策略交易。我們正在努力避免被迫或決定暫停營運的情況，並積極參與各種討論，以期為 Targeted Genetics 以及各位股東爭取更有利的結果。雖然這些討論很複雜，但我們希望在未來幾週和幾個月內，Targeted Genetics 的未來前景能夠更加明朗。感謝大家一直以來的支持。屆時，我們將為大家提供提問的機會。

Thank you. Ladies and gentlemen, at this time we'll begin the question-and-answer session. (Operator Instructions). One moment, please, for our first question. (Operator Instructions) Ladies and gentlemen, looks like we have no questions at this time.

謝謝。女士們，先生們，現在我們將開始問答環節。 （接線生指示）。請稍等片刻，回答我們的第一個問題。 （接線生指示）女士們，先生們，目前我們還沒有問題。

Thank you, everyone again for joining us. We look forward to speaking with you in the coming weeks.

再次感謝大家的參與。我們期待在接下來的幾週內與您交流。

Ladies and gentlemen, thank you for participating in today's conference call with Targeted Genetics. This presentation will be archived and can be accessed at www.targetedgenetics.com. Thanks again for joining today's presentation.

女士們，先生們，感謝各位參加今天Targeted Genetics的電話會議。本次演講將會存檔，並可在www.targetedgenetics.com上存取。再次感謝您參加今天的演講。