Tengion Provides Business Update; Announces Restructuring to Advance Two Programs toward Key Milestones in 2012

Tengion, Inc.

today provided a business update, including announcement of a restructuring plan, and reported its financial results for the third quarter ended September 30, 2011. The restructuring plan is designed to fund the Company's lead development programs through key milestones in 2012 while reducing the Company's anticipated cash utilization. As a result of this restructuring, the Company expects to have sufficient cash to fund its planned operations through November 2012. Key aspects of the restructuring and its effects on the Company's development programs are as follows: Continue the Phase 1 clinical trial of the Neo-Urinary Conduit™, which is being evaluated in bladder cancer patients requiring a urinary diversion following bladder removal (cystectomy). This trial is designed to assess the safety and preliminary efficacy of the Neo-Urinary Conduit in up to 10 patients, as well as to allow the clinical investigators to optimize the surgical procedure and post-surgical care by incorporating the outcomes observed in each patient into the surgical approach for subsequent patients, as necessary. Three patients have been enrolled and implanted to date. The Company anticipates implanting a fourth patient during the first quarter of 2012, and, assuming appropriate safety data, up to 10 patients by the end of 2012. Continue preclinical development of the Neo-Kidney Augment™ program through submission of a Pre-IND filing to the U.S. Food and Drug Administration (FDA), which is anticipated during the first half of 2012. Future development of the Neo-Kidney Augment program beyond submission of the Pre-IND filing will be dependent upon obtaining additional funding for the program. As part of this restructuring, Tim Bertram, D.V.M., Ph.D., has been promoted to President, Research and Development and Chief Scientific Officer. Dr. Bertram will assume responsibility for clinical development, regulatory affairs, quality assurance, and business development. In addition, Deepak Jain, Ph.D., has been promoted to Chief Technology Officer. Dr. Jain will continue to report to Dr. Bertram and will assume responsibility for bioprocess research, product development, manufacturing, and technical operations. While the Company continues its search for a new Chief Executive Officer, Dr. Bertram and Brian Davis, Vice President and Chief Financial Officer, will continue to report to the Board of Directors through David I. Scheer, Chairman of the Board of Directors. The Company will centralize its research and development operations in its leased facility in Winston-Salem, North Carolina. The Company will retain a limited number of administrative employees at its leased headquarters and cGMP manufacturing facility in East Norriton, Pennsylvania, and it will explore options to significantly reduce the amount of space it currently rents. Upon completion of the restructuring, the Company will have 22 full-time equivalent employees, a reduction to its current workforce of 30 full-time equivalent employees, or approximately 58%. Most of the employees departing the Company are leaving as a result of the decision to centralize research and development operations in North Carolina. Included among those employees are Sunita Sheth, M.D., Vice President and Chief Medical Officer, and Mark Stejbach, Vice President and Chief Commercial Officer, each of whom will depart the Company following a transition period through the end of 2011. "The restructuring plan should allow us to advance Tengion's regenerative medicine platform to meaningful milestones in 2012," said David I. Scheer, Chairman of the Board of Directors. "This focused approach to advancing our pipeline will enable us to continue to build value in these programs, while also structuring the Company to conserve cash as we continue to pursue strategic partnership and financing discussions. A reduction in force is never an easy decision to make, especially as we have such an excellent team here at Tengion. We want to express our sincere appreciation and gratitude to Sunita Sheth and Mark Stejbach, who have contributed so much to Tengion, as well as to the other employees affected by this restructuring. We wish all of them well in their future endeavors." The Company has offered severance benefits to the terminated employees, and anticipates recording a total charge for personnel-related termination costs of approximately $1.7 million, most of which is anticipated to be recorded in the fourth quarter of 2011. The Company expects to complete payment of these severance benefits by September 2012. In addition, as a result of the restructuring, the Company expects to record, during the fourth quarter of 2011, a non-cash property and equipment impairment charge, as well as a non-cash charge related to excess leased space in Pennsylvania. The Company is unable to estimate the amount of these charges at this time.