SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
SCHEDULE
13D
Under the
Securities Exchange Act of 1934
Amendment
No. __ /*/
Targeted Genetics
Corporation
|
(Name
of Issuer)
|
|
Common Stock, par value $.01 per
share
|
(Title
of Class of Securities)
|
|
87612M3067
|
(CUSIP
Number)
|
|
Zachary
Prensky
800
Third Avenue, 10
th
Floor
New
York, NY 10022
(212) 354-4866
|
(Name,
Address and Telephone Number of Person Authorized to Receive Notices and
Communications)
|
|
August 2, 2010
|
(Date
of Event Which Requires Filing of this
Statement)
|
If the
filing person has previously filed a statement on Schedule 13G to report the
acquisition that is the subject of this Schedule 13D, and is filing this
schedule because of Rules 13d-1(e), 13d-1(f) or 13d-1(g), check the following
box
þ
.
/*/ The
remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The
information required on the remainder of this cover page shall not be deemed to
be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934
("Act") or otherwise subject to the liabilities of that Section of the Act but
shall be subject to all other provisions of the Act (however, see the
Notes).
SCHEDULE
13D
|
CUSIP
NO. 87612M3067
|
|
|
1.
|
NAMES
OF REPORTING PERSONS
I.R.S.
IDENTIFICATION NOS. OF ABOVE PERSONS (entities only)
Zachary
Prensky
|
2.
|
CHECK
THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a)
þ
(b)
o
|
3.
|
SEC
USE ONLY
|
4.
|
SOURCE
OF FUNDS
PF
|
5.
|
CHECK
BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED
PURSUANT TO ITEM 2(d) OR 2(e)
o
|
6.
|
CITIZENSHIP
OR PLACE OF ORGANIZATION
United
States
|
NUMBER OF
SHARES
BENEFICIALLY
OWNED BY
EACH
REPORTING
PERSON WITH
|
7.
|
SOLE
VOTING POWER
811,000
|
8.
|
SHARED
VOTING POWER
1,152,000
|
9.
|
SOLE
DISPOSITIVE POWER
811,000
|
10.
|
SHARED
DISPOSITIVE POWER
1,152,000
|
11.
|
AGGREGATE
AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,963,000
|
12.
|
CHECK
BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES
o
|
13.
|
PERCENT
OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
8.9%
|
14.
|
TYPE
OF REPORTING PERSON
IN
|
SCHEDULE
13D
|
CUSIP
NO. 87612M3067
|
|
|
1.
|
NAMES
OF REPORTING PERSONS
I.R.S.
IDENTIFICATION NOS. OF ABOVE PERSONS (entities only)
Jeffrey
Mann
|
2.
|
CHECK
THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a)
þ
(b)
o
|
3.
|
SEC
USE ONLY
|
4.
|
SOURCE
OF FUNDS
PF
|
5.
|
CHECK
BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED
PURSUANT TO ITEM 2(d) OR 2(e)
o
|
6.
|
CITIZENSHIP
OR PLACE OF ORGANIZATION
United
States
|
NUMBER OF
SHARES
BENEFICIALLY
OWNED BY
EACH
REPORTING
PERSON WITH
|
7.
|
SOLE
VOTING POWER
25,000
|
8.
|
SHARED
VOTING POWER
1,152,000
|
9.
|
SOLE
DISPOSITIVE POWER
25,000
|
10.
|
SHARED
DISPOSITIVE POWER
1,152,000
|
11.
|
AGGREGATE
AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,177,000
|
12.
|
CHECK
BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES
o
|
13.
|
PERCENT
OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
5.3%
|
14.
|
TYPE
OF REPORTING PERSON
IN
|
SCHEDULE
13D
|
CUSIP
NO. 87612M3067
|
|
|
1.
|
NAMES
OF REPORTING PERSONS
I.R.S.
IDENTIFICATION NOS. OF ABOVE PERSONS (entities only)
Koyote
Trading LLC (80-0308646)
|
2.
|
CHECK
THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a)
þ
(b)
o
|
3.
|
SEC
USE ONLY
|
4.
|
SOURCE
OF FUNDS
WC
|
5.
|
CHECK
BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED
PURSUANT TO ITEM 2(d) OR 2(e)
o
|
6.
|
CITIZENSHIP
OR PLACE OF ORGANIZATION
Delaware
|
NUMBER OF
SHARES
BENEFICIALLY
OWNED BY
EACH
REPORTING
PERSON WITH
|
7.
|
SOLE
VOTING POWER
0
|
8.
|
SHARED
VOTING POWER
1,152,000
|
9.
|
SOLE
DISPOSITIVE POWER
0
|
10.
|
SHARED
DISPOSITIVE POWER
1,152,000
|
11.
|
AGGREGATE
AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,152,000
|
12.
|
CHECK
BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES
o
|
13.
|
PERCENT
OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
5.2%
|
14.
|
TYPE
OF REPORTING PERSON
OO
|
ITEM 1.
|
SECURITY AND
ISSUER.
|
The class
of equity securities to which this Schedule 13D relates is the Common Stock, par
value $0.01 per share (the "Common Stock"), of Targeted Genetics Corporation, a
Washington corporation (the "Issuer"). The address of the principal
executive office of the Issuer is 1100 Olive Way, Suite 100, Seattle, WA
98101.
ITEM 2.
|
IDENTITY AND
BACKGROUND.
|
This
Schedule 13D is being filed by (i) Zachary Prensky, a natural person who is a
citizen of the United States (“Mr. Prensky”), (ii) Jeffrey Mann, a natural
person who is a citizen of the United States (“Mr. Mann”), and (iii) Koyote
Trading LLC, a Delaware limited liability company (“Koyote”; collectively with
Mr. Prensky and Mr. Mann, the “Reporting Persons”). The Reporting
Persons previously filed a Schedule 13G on June 11, 2010 with respect to their
ownership of shares of Common Stock.
The
business address of each of Mr. Prensky and Mr. Mann, and the address of
Koyote’s principal office, is 800 Third Avenue, 10
th
Floor,
New York, NY 10022. Mr. Prensky and Mr. Mann are employed by
Koyote. Koyote’s principal business is financial
investing.
During
the last five years, none of the Reporting Persons has been convicted in a
criminal proceeding.
During
the last five years, none of the Reporting Persons has been a party to a civil
proceeding of a judicial or administrative body of competent jurisdiction that
resulted in such Reporting Person being subject to a judgment, decree or final
order enjoining future violations of, or prohibiting or mandating activities
subject to, federal or state securities laws or finding any violation with
respect to such laws.
ITEM 3.
|
SOURCE AND AMOUNT OF FUNDS OR
OTHER CONSIDERATION.
|
The
purchases of the shares of Common Stock to which this Schedule 13D relates were
made on the open market using each of the Reporting Persons’ own
funds. The amount of funds used for such purchases by the Reporting
Persons was an aggregate of $481,850.
ITEM 4.
|
PURPOSE
OF TRANSACTION.
|
The Reporting Persons are holding the
Issuer’s securities being reported hereunder for investment
purposes. However, consistent with such purposes, the Reporting
Persons intend to engage the Issuer in discussions with respect to all potential
opportunities for the Issuer to maximize shareholder value, including
extraordinary corporate transactions such as selling the Issuer or putting it
into a liquidating trust. As well, to the extent the Reporting
Persons believe that shareholder value is not being maximized by the Issuer, the
Reporting Persons intend to nominate new members to the Issuer’s Board of
Directors. Reference is also made to the letter sent to the Issuer by
the Reporting Persons on August 2, 2010, a copy of which is which is included as
an Exhibit to this Schedule 13D. Consistent with the Reporting
Persons’ investment purposes, each of the Reporting Persons reserves the right
to acquire additional shares of the Issuer’s Common Stock or dispose of shares
of the Issuer’s Common Stock at any time and from time to time in the open
market, through privately negotiated transactions or otherwise, depending on
market conditions and other investment considerations.
ITEM 5.
|
INTEREST
IN SECURITIES OF THE ISSUER.
|
(a)
Mr. Prensky beneficially
owns 1,963,000 shares of Common Stock consisting of (i) 811,000 shares of Common
Stock he owns and (ii) 1,152,000 shares of Common Stock owned by Koyote Trading
LLC over which he has shared voting and dispositive power. Based on a
total of 22,022,697 outstanding shares of Common Stock of the Issuer
(according to information in the Issuer’s public filings) and further in
accordance with the beneficial ownership rules, the shares of Common Stock of
the Issuer beneficially owned by Mr. Prensky represent approximately 8.9% of the
Issuer’s Common Stock.
Mr. Mann
beneficially owns 1,177,000 shares of Common Stock consisting of (i) 25,000
shares of Common Stock he owns and (ii) 1,152,000 shares of Common Stock owned
by Koyote Trading LLC over which he has shared voting and dispositive
power. Based on a total of 22,022,697 outstanding shares of
Common Stock of the Issuer (according to information in the Issuer’s public
filings) and further in accordance with the beneficial ownership rules, the
shares of Common Stock of the Issuer beneficially owned by Mr. Mann represent
approximately 5.3% of the Issuer’s Common Stock.
Koyote beneficially owns 1,152,000
shares of Common Stock, all of which it owns, but over which it has shared
voting and dispositive power with Mr. Prensky and Mr. Mann. Based on
a total of 22,022,697 outstanding shares of Common Stock of the Issuer
(according to information in the Issuer’s public filings) and further in
accordance with the beneficial ownership rules, the shares of Common Stock of
the Issuer beneficially owned by Koyote represent approximately 5.2% of the
Issuer’s Common Stock.
The Reporting Persons collectively
beneficially own an aggregate of 1,988,000 shares of Common
Stock. Based on a total of 22,022,697 outstanding shares of
Common Stock of the Issuer (according to information in the Issuer’s public
filings) and further in accordance with the beneficial ownership rules, the
shares of Common Stock of the Issuer beneficially owned collectively by the
Reporting Persons represent approximately 9.0% of the Issuer’s Common
Stock.
|
(b)
|
Number
of shares of Common stock as to which such Reporting Person
has:
|
ZACHARY
PRENSKY
:
|
(i)
|
Sole power to vote or to direct
the vote:
811,000
|
|
(ii)
|
Shared power to vote or to direct
the
vote: 1,152,000
|
|
(iii)
|
Sole power to dispose or to
direct the disposition of:
811,000
|
|
(iv)
|
Shared power to dispose or to
direct the disposition
of: 1,152,000
|
JEFFREY
MANN
:
|
(i)
|
Sole power to vote or to direct
the vote:
25,000
|
|
(ii)
|
Shared power to vote or to direct
the
vote: 1,152,000
|
|
(iii)
|
Sole power to dispose or to
direct the disposition of:
25,000
|
|
(iv)
|
Shared power to dispose or to
direct the disposition
of: 1,152,000
|
KOYOTE TRADING
LLC
:
|
(i)
|
Sole power to vote or to direct
the vote:
0
|
|
(ii)
|
Shared power to vote or to direct
the vote: 1,152,000
|
|
(iii)
|
Sole power to dispose or to
direct the disposition of:
0
|
|
(iv)
|
Shared power to dispose or to
direct the disposition
of: 1,152,000
|
(c)
During the past sixty days,
Mr. Prensky has not sold any shares of Common Stock and has made the following
purchases of shares of Common Stock on the open market:
Date
|
|
Number of Shares
|
|
|
Average Price
|
|
7/30/2010
|
|
|
4,000
|
|
|
$
|
0.400
|
|
7/29/2010
|
|
|
2,000
|
|
|
$
|
0.410
|
|
7/27/2010
|
|
|
3,000
|
|
|
$
|
0.399
|
|
7/26/2010
|
|
|
2,000
|
|
|
$
|
0.399
|
|
7/15/2010
|
|
|
5,000
|
|
|
$
|
0.390
|
|
7/13/2010
|
|
|
1,000
|
|
|
$
|
0.420
|
|
7/13/2010
|
|
|
2,000
|
|
|
$
|
0.380
|
|
7/12/2010
|
|
|
300
|
|
|
$
|
0.400
|
|
7/12/2010
|
|
|
1,700
|
|
|
$
|
0.420
|
|
6/17/2010
|
|
|
10,000
|
|
|
$
|
0.425
|
|
6/7/2010
|
|
|
260
|
|
|
$
|
0.430
|
|
6/7/2010
|
|
|
2,135
|
|
|
$
|
0.488
|
|
6/7/2010
|
|
|
8,000
|
|
|
$
|
0.470
|
|
6/7/2010
|
|
|
9,605
|
|
|
$
|
0.450
|
|
6/3/2010
|
|
|
5,000
|
|
|
$
|
0.440
|
|
6/2/2010
|
|
|
2,000
|
|
|
$
|
0.440
|
|
6/2/2010
|
|
|
5,000
|
|
|
$
|
0.440
|
|
During
the past sixty days, Mr. Mann has not sold or bought any shares of Common
Stock.
During
the past sixty days, Koyote has not sold any shares of Common Stock and has made
the following purchases of shares of Common Stock on the open
market:
Date
|
|
Number of Shares
|
|
|
Average Price
|
|
7/30/2010
|
|
|
18,500
|
|
|
$
|
0.389
|
|
7/29/2010
|
|
|
1,476
|
|
|
$
|
0.402
|
|
7/28/2010
|
|
|
6,024
|
|
|
$
|
0.393
|
|
7/27/2010
|
|
|
10,000
|
|
|
$
|
0.400
|
|
7/26/2010
|
|
|
1,000
|
|
|
$
|
0.389
|
|
7/21/2010
|
|
|
15,000
|
|
|
$
|
0.385
|
|
7/19/2010
|
|
|
10,000
|
|
|
$
|
0.380
|
|
7/16/2010
|
|
|
12,200
|
|
|
$
|
0.382
|
|
7/15/2010
|
|
|
12,300
|
|
|
$
|
0.383
|
|
7/14/2010
|
|
|
500
|
|
|
$
|
0.396
|
|
7/13/2010
|
|
|
40,000
|
|
|
$
|
0.378
|
|
7/12/2010
|
|
|
19,000
|
|
|
$
|
0.411
|
|
7/9/2010
|
|
|
5,300
|
|
|
$
|
0.411
|
|
7/8/2010
|
|
|
300
|
|
|
$
|
0.417
|
|
7/7/2010
|
|
|
3,400
|
|
|
$
|
0.380
|
|
7/6/2010
|
|
|
5,000
|
|
|
$
|
0.380
|
|
7/2/2010
|
|
|
1,000
|
|
|
$
|
0.429
|
|
7/1/2010
|
|
|
6,000
|
|
|
$
|
0.373
|
|
6/28/2010
|
|
|
10,000
|
|
|
$
|
0.390
|
|
6/15/2010
|
|
|
5,000
|
|
|
$
|
0.420
|
|
6/9/2010
|
|
|
10,000
|
|
|
$
|
0.450
|
|
6/8/2010
|
|
|
5,000
|
|
|
$
|
0.460
|
|
6/7/2010
|
|
|
15,000
|
|
|
$
|
0.452
|
|
6/4/2010
|
|
|
75,000
|
|
|
$
|
0.442
|
|
(d)
Not
applicable.
(e)
Not
applicable.
ITEM
6.
|
CONTRACTS,
ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO SECURITIES
OF THE ISSUER.
|
There are no contracts, arrangements,
understandings or relationships between the Reporting Person and any person with
respect to any securities of the Issuer.
ITEM
7.
|
MATERIAL
TO BE FILED AS EXHIBITS.
|
Exhibit A: Joint Filing
Agreement
Exhibit B: Letter to
Targeted Genetics Corporation, dated August 2, 2010
SIGNATURE.
After
reasonable inquiry and to the best of my knowledge and belief, I certify that
the information set forth in this statement is true, complete and
correct.
Date: August
3, 2010
|
ZACHARY
PRENSKY
|
|
|
|
|
|
/s/
Zachary Prensky
|
|
|
|
|
Date: August
3, 2010
|
JEFFREY
MANN
|
|
|
|
|
|
/s/
Jeffrey Mann
|
|
|
|
|
Date: August
3, 2010
|
KOYOTE
TRADING LLC
|
|
|
|
|
|
By:
/s/ Roger Jassie
|
|
|
Roger
Jassie, Chief Compliance Officer
|
|
ATTENTION: INTENTIONAL MISSTATEMENTS OR
OMISSIONS OF FACT CONSTITUTE FEDERAL CRIMINAL VIOLATIONS (SEE 18
U.S.C. 1001)
Exhibit A
Agreement
of Joint Filing of Schedule 13D
Pursuant
to Rule 13d-1(k)(1) under the Securities Exchange Act of 1934, as amended,
the undersigned hereby agree to the joint filing on behalf of each of them of a
statement on Schedule 13D (including amendments thereto) with respect to
the ownership by each of the undersigned of shares of stock of the
Issuer.
Date: August
3, 2010
|
ZACHARY
PRENSKY
|
|
|
|
|
|
/s/
Zachary Prensky
|
|
|
|
|
Date: August
3, 2010
|
JEFFREY
MANN
|
|
|
|
|
|
/s/
Jeffrey Mann
|
|
|
|
|
Date: August
3, 2010
|
KOYOTE
TRADING LLC
|
|
|
|
|
|
By:
/s/ Roger Jassie
|
|
|
Roger
Jassie, Chief Compliance Officer
|
|
Exhibit B
KOYOTE
TRADING LLC
August 2,
2010
Susan
Robinson
President
& Chief Executive Officer
Targeted
Genetics, Inc.
1100
Olive Way
Suite
100
Seattle,
WA 98101
Dear Ms.
Robinson:
We are
the beneficial owners of 1,988,000 or 9% of the companies’ common stock. As one
of the largest shareholders of Targeted Genetics, Inc. (the “Company” or
“Targeted”) we are extremely concerned that the Company and its’ management will
not do their utmost to ensure that the significant value inherent in
the Company’s intellectual property is realized and will accrue to its’
shareholders.
It has been more than seven months
since the Company’s January 13
th
, 2010
press release whereby you made the decision to delist the common stock and
continue to reduce personnel costs following the sale of the manufacturing
assets of the Company to Genzyme. While certain personnel were let go, there
continues to exist a significant amount of overhead which is non-productive. It
is our opinion that the time has long since come for the Company to move
convincingly to protect shareholders. We do not believe at this late date that
shareholders are benefiting from a continued “wait and see” approach, while
incurring significant overhead without owning any corresponding operating
assets.
In fact,
this past April, to the detriment of shareholders, you were personally issued
750,000 shares of common stock as part of an agreement with the Company for your
continued employment and the Company’s CFO was granted 500,000 shares.
Shareholders were further diluted by a grant two months later to the two Board
members who approved your grants; in total Targeted issued 1,370,000 shares.
This is more than 6.5% of the total outstanding shares of the Company to reward
4 individuals, none of whom work full-time for the Company! This is precisely
the kind of self-dealing, value destroying behavior we want to ensure does not
continue.
Instead of continuing with the
Company’s current approach which has resulted in extraneous expenses and
significant dilution, we believe the Company should engage in a structured sale
process whereby the Company could be sold for fair value - which we believe far
exceeds the current market capitalization. To the extent that such a
sale process cannot be consummated by years end, the Company should be placed
into a liquidating trust in order that all expected cash flows are returned to
shareholders and not spent on salaries, R&D or other expenses; considering
the current state of the Company such a course would only benefit management and
not its’ current shareholders.
We
believe the above options are the best course for the Company as the
opportunities for both near- and long-term cash flow from the Company’s two
marquee intellectual property assets are excellent, as delineated
below:
MYDICAR
MYDICAR is a gene therapy currently
being developed by Celladon Corp. (“Celladon”) to treat advanced heart failure
utilizing Targeted proprietary AAV-1 technology. Over 500,000 Americans are
diagnosed with heart failure every year, and there is currently no treatment for
those patients. Presently, without a transplant the vast majority of heart
failure patients die within 5-7 years. If MYDICAR is ultimately
approved for use by the FDA, Celladon would be required to pay the Company a
royalty of 10% of sales, subject to certain reductions in some cases. Celladon
is also required to make milestone payments totaling $20 million (including $5
million upon the commencement of a Phase III trial for MYDICAR) as well as a
percentage of either a sale or partnership of MYDICAR.
800
Third Avenue – 10
th
Floor
New
York, New York 10022
Telephone
(212) 300-2200 Facsimile (212) 838-5820
KOYOTE
TRADING LLC
On Sunday, May 30
th
, 2010,
Celladon presented at the European Society of Cardiology (“ESCO”) in Berlin
6-month data from CUPID, its’ Phase II trial of MYDICAR. The CUPID trial was a
randomized, double-blind, placebo-controlled study to assess the efficacy and
safety of MYDICAR. Locations involved in the trial CUPID included highly
respected cardiology centers such as the University of Chicago Medical Center
and Columbia University in New York City. The data was presented by the lead
investigator on the trial, Dr. Barry Greenberg, Professor of Medicine at the
University of California, San Diego, and a past president of the Heart Failure
Society of America. A critique of data was given by Dr. Zeiher of the University
of Frankfurt. Copies of the slides of both presentations can be found at the
following website :
http://www.escardio.org/congresses/HF2010/slides-trials/Pages/CUPIDTrial.aspx
The study
results showed that that there was a reduction in patients treated with high
dose of MYDICAR in cardiovascular events as defined by death, the need for left
ventricular assist device (LVAD) or cardiac transplant, worsening of heart
failure or heart failure related hospitalizations, which translated into a 50%
risk-reduction in favor of high dose MYDICAR. Furthermore, the mean duration of
hospitalization in the MYDICAR high dose group during the six-month period was
0.2 days/patient, a substantially shorter period of time than the 2.1
days/patient of the placebo treated group.
Based on
our due diligence at the ESCO conference and our confidence that the CUPID trial
met and exceeded its’ endpoints, we believe it is very likely that Celladon will
initiate a Phase III trial for MYDICAR within the next 6-9 months. This would
result in Celladon having to pay Targeted the agreed upon $5 million Phase II
initiation milestone payment.
Over the
long-term, MYDICAR has the potential to generate a staggering amount of
royalties payable to Targeted. We have modeled a successful Phase III trial and
launch of MYDICAR, and our medium-case analysis of cash flows from 2012-2015
yield payments to Targeted in excess of $100,000,000.
Glybera
Glybera
is a gene therapy treatment developed by Amsterdam Molecular Technologies
(“AMT”) for the treatment of Lipoprotein Lipase Deficiency (“LPLD”), an
extremely rare condition associated with significant morbidity and mortality.
AMT has completed a number of trials of Glybera and is awaiting approval from
the EU. Management of AMT, during a recent presentation at the BIO CEO &
Investor Conference in New York City, indicated that they expect approval of
Glybera in the early part of 2011.
Glybera,
similar to MYDICAR, relies upon Targeted’s patented AAV-1
technology. Although you have not publically released either the size
of the milestone payment or the percentage of royalties payable by AMT to
Targeted, after conversations with both AMT and industry participants we believe
a conservative figure is $1.25m upon approval and 3.5% royalties.
While the
addressable market is small as only 300-350 patients exist in Europe, management
of AMT is on record as stating that they expect to charge something approaching
$750,000 per patient. Assuming AMT reaches its projections, royalties and/or
milestones payable to Targeted over the next decade could exceed
$6,000,000.
800
Third Avenue – 10
th
Floor
New
York, New York 10022
Telephone
(212) 300-2200 Facsimile (212) 838-5820
KOYOTE
TRADING LLC
Given all
of the above and to the extent a sale does not occur by the end of the year, it
is our opinion that
there is a very high
likelihood that the Company will generate at least $6.25 million in milestone
and/or royalty revenues in the first half of 2011. Our position, should this
occur, is very clear: at least $5.25 million, or approximately 24 cents a share,
should be returned to shareholders. The simplest and most tax-efficient way to
do so is to transition the Company into a liquidating trust. Based upon your
public statements, Targeted should end 2010 with approximately $2.8 million in
cash. By moving towards a liquidating trust and ceasing all non-essential (i.e.
expenses not related to maintaining our patent portfolio) Targeted can maintain
this cash position and begin returning to shareholders virtually
all
cash flows arising from
its’ intellectual property in 2011.
Transitioning
the Company into a liquidating trust gives current shareholders the confidence
that Targeted will not engage in any future dilutive stock issuances or
value-destroying usages of its’ remaining cash position. Both have been
stumbling blocks that have plagued Targeted in the past. Over the past twenty
years Targeted burnt through more than $300,000,000 in capital developing
products that failed to reach the marketplace - and it’s worth noting that a
good portion of that cash burn occurred on your watch as CEO.
We
sincerely hope you agree with us that Targeted’s cash flows belong to its’
shareholders. If that is the case, then we are more than willing to work with
you to implement the above plan and creating value for all shareholders. If
however, you maintain your current “wait and see” approach and continue on a
path of enriching management at the expense of shareholders then we intend to
vigorously contest the current Board members at the next election and will
ensure individuals are elected who will take their duties of care towards
shareholders more seriously than the current Board has to date.
The
stakes could not be higher. We cannot be more excited about the potential for
Glybera to produce revenues to Targeted in 2011, and for MYDICAR to contribute
enormous potential royalties over the medium to long term. Again, I reiterate my
interest in working together and not at cross-purposes. Based upon our phone
conversations with you to date, it seems to us you feel strongly about creating
shareholder value. If that is the case than I look forward to working together
to unlock the incredible value we feel exists within Targeted.
Zachary
Prensky,
Koyote
Trading LLC
800
Third Avenue – 10
th
Floor
New
York, New York 10022
Telephone
(212) 300-2200 Facsimile (212) 838-5820
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