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Benitec, Marina Announce Financing Deals amid Corporate Turnaround Efforts

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Amid a resurgence of investor interest in RNAi as a therapeutic modality, two of the field's smaller players this week announced financing arrangements expected to help them reach key inflection points — news that prompted double-digit jumps in each company's share price.

The first, Australia's Benitec Biopharma, plans to use the proceeds of its A$31.5 million ($28.5 million) private stock placement to speed its sole clinical candidate, the hepatitis C treatment TT-034, through clinical testing — a major milestone for a company that several years ago had been flirting with bankruptcy.

The second, Marina Biotech, hopes the $6 million it raises from sale of convertible preferred stock will allow it to turn itself around after money troubles forced it to essentially shut down operations in mid-2012.

According to Benitec, it has signed agreements to sell up to around 29.4 million shares of its common stock for A$1.07 apiece. Investors in the offering will also receive five-year options to buy another 13.2 million shares at A$1.26 each.

Following news of the financing, shares of Benitec were trading up more than 20 percent around A$2.24.

The stock placement will occur in two tranches of 14.7 million shares and 6.6 million options each. The first is expected to close around the end of February and will not require shareholder approval. The second is subject to a stockowner vote at Benitec's general meeting, which is expected to occur during the first week of April.

Proceeds of the stock placement, Benitec said, will be used to "accelerate the clinical development" of TT-034, as well as to advance earlier stage pipeline programs in lung cancer, age-related macular degeneration, and hepatitis B.

Finding investors interested in ponying up almost $30 million represents a significant change in fortune for Benitec, which started off as a high flyer in the RNAi drugs space but ran aground under the weight of overexpansion and costly patent litigation.

Headquartered in Australia, the company established a US presence through its 2004 acquisition of expressed RNAi startup Avocel. Around this time, Benitec also initiated a series of lawsuits over alleged infringement of its intellectual property.

When the costs of maintaining operations in two countries and protracted litigation became too much, Benitec was forced to restructure as a much smaller company back in Australia. Meanwhile, questions over the validity of its IP that had been raised during the patent lawsuit made fundraising difficult, and in 2006 Benitec shut down its research and development efforts, including work on TT-034.

Since then, however, Benitec has steadily rebuilt itself, securing a US Patent and Trademark Office ruling upholding its IP and closing a number of financing deals, including ones worth more than A$17 million last year alone. Importantly, the company was also able to acquire Tacere Therapeutics, which had previously licensed TT-034 from Benitec and conducted the bulk of its preclinical development with one-time partner Pfizer.

Reinvigorated, and poised to pull in A$31.5 million in the next few months, Benitec is now on track to push TT-034 into phase I/IIa testing in mid-March.

As for Marina, it announced that it has entered into a binding term sheet with a group of investors to sell $6 million in preferred stock that is convertible into common stock at $0.75 a share. In addition, the investors will receive warrants to buy 6 million shares of Marina, also at $0.75 apiece.

The transaction, which pushed shares of Marina up nearly 12 percent in mid-morning trading on Tuesday to $1.59, is expected to close in early March.

Marina's upcoming cash infusion couldn't come soon enough for the beleaguered drug developer, which had been on a tear of technology acquisitions as it promised to be all things to all partners before hitting a wall.

Marina was created in 2010 when MDRNA (formerly Nastech Pharmaceutical) acquired Cequent Pharmaceuticals, the developer of a novel oral RNAi technology known as transkingdom RNAi, as part of a bid to tie up a variety of technologies in one company.

Prior to that deal, MDRNA had already picked up access to City of Hope's Dicer-substrate technology, the rights to RiboTask's unlocked nucleobase analogs (UNAs) for both therapeutic and diagnostic applications, and conformationally restricted nucleotides from Valeant Pharmaceuticals.

And shortly after the Cequent deal, Marina bought Novosom's Smarticle liposome delivery technology.

To Marina President and CEO Michael French, these deals represented a way for the company to be able to offer large pharma partners interested in RNAi a portfolio of different technologies from which to choose. However, no such deals materialized, and with investors wary about the Marina's future, the company collapsed in mid-2012 under a cash crunch.

Although it has technically stayed afloat, Marina has had virtually no employees since then and has been paying its debts by out-licensing or selling off assets, including the UNA technology to startup Arcturus Therapeutics last year.

But with Wall Street's perception of RNAi therapeutics becoming more sanguine, as evidenced by Dicerna Pharmaceuticals' recent $90 million initial public offering, Marina has now managed to attract investment.

"This is the first equity financing we have closed in nearly two years," French said in a statement.

Proceeds of the transaction, he added, will help Marina once again regain compliance with its financial reporting obligations as a public company; pursue licensing and partnering opportunities with large pharmaceutical companies; settle existing liabilities; reestablish strategic partnerships and alliances; and set up offices in the Boston area.

Perhaps most importantly, the money will allow Marina to continue work on CEQ508, a transkingdom RNAi-based drug for familial adenomatous polyposis that had been in the middle of phase I testing when the company closed its doors.

French said that Marina now plans to analyze the data available from that trial to determine if the drug had knocked down its intended target, and to begin animal testing in a preclinical myotonic dystrophy program.

The company won't, however, conduct such work internally, he noted. Rather, Marina plans to hire contract research organizations and partner with academic institutions to advance its pipeline until it can formalize a "sponsored research and development collaboration" with a partner.

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