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CEO of Cash-Poor MDRNA Says Money-Making Deals On Horizon, But Stays Mum on Specifics

Just months after a sweeping corporate reorganization, MDRNA’s top official last week tried to assure investors that the company is poised to hit a number of key financial goals — even as it faces a dwindling cash supply and a stock price that has dropped almost 90 percent since the beginning of the year.
At the same time, President and CEO Michael French was short on specifics, saying only that he expects MDRNA, formerly Nastech Pharmaceutical to be able find the funding necessary to reach its goal of launching late next year a phase I study of its lead RNAi drug candidate, the apolipoprotein B-targeting hypercholesterolemia therapy MDR-04227.
“We continue to pursue multiple options for improving our balance sheet, including non-dilutive financing through partnerships, as well as other potential fundraising prospects,” French said during a conference call held to discuss the company’s third-quarter financial results. “Cash right now is both competitive and expensive, but I feel strongly that our capability and technology are sufficiently robust and impressive enough to raise the necessary capital to hit key value inflection points and rebuild shareholder value.”
Shareholder value is something MDRNA has been lacking as of late with its shares losing more than 97 percent of their value since this time last year. By midday Thursday, the company’s stock was trading around $0.33 per share, down from a 52-week high of almost $5 and well off the roughly $19 it was trading at just two years ago when the company was still operating as Nastech.
“Investors are understandably concerned about the challenges of raising cash in this market,” French said. “While I can’t talk about the specific details of our plan, I can say to you with confidence that I expect we will achieve our objectives so that we can execute our business plan for 2009 and beyond.”
As of Sept. 30, MDRNA had cash and cash equivalents totaling $10.9 million, which CFO Bruce York said during the call is enough to fund the company’s planned operations only into the first quarter of next year.
French indicated that the company aims to shore up its balance sheet by forging collaborations with big pharmas. And while he said that “active” discussions with undisclosed potential partners are ongoing, he did not provide any guidance for when a deal might be struck.
“I feel the company is progressing well in its discussions with pharma partners, and our prospects of closing collaborations are good,” he said without elaborating.

“Investors are understandably concerned about the challenges of raising cash in this market. While I can’t talk about the specific details of our plan, I can say to you with confidence that I expect we will achieve our objectives so that we can execute our business plan for 2009 and beyond.”

He stressed that while MDRNA has a handful of RNAi projects moving through its pipeline, including ones in hypercholesterolemia, bladder cancer, lung cancer, rheumatoid arthritis, and inflammatory bowel disease (see RNAi News, 8/7/2008), these are early-stage and therefore not likely to be the focus of any partnership in the near term.
Rather, deals will likely involve access to the company’s RNAi technology platform, which gives a partner “an additional means of treating diseases besides small molecules and monoclonal antibodies,” he said.
French conceded that the partnering landscape has become challenging for RNAi drug companies, partly because there is an increasing number of players in the field and therefore greater competition for big pharma-alliance dollars.
But at the same time, he said he expects MDRNA’s drug-development capabilities to be a deciding factor in its favor.
“Pharma is looking for companies that have some in-house capability to do everything from delivery to in vivo efficacy studies,” he said. With legacy experience from its time as Nastech, “we can actually take [a drug candidate] all the way from target identification … to IND submission.”
He also said that MDRNA’s stable of RNAi approaches, some that extend beyond traditional RISC-mediated siRNAs, will help to differentiate the company from its rivals.
Aside from the Dicer-substrate technology MDRNA acquired in 2006 (see RNAi News, 11/9/2006), the firm has developed what it calls meroduplexes, which are essentially siRNAs containing a nick or gap in the sense strand designed to prevent sense-strand loading into RISC and subsequent off-target effects.  
And last month, the company acquired from RiboTask the therapeutic rights to unlocked nucleic acid technology designed to improve siRNA efficacy while reducing off-target effects (see RNAi News, 10/23/2008).
The Quarter
For the third quarter, MDRNA reported that its net loss narrowed to $16.1 million, or $0.52 per share, from $16.5 million, or $0.66 per share, in the same period a year earlier.
Revenues for the three months ended Sept. 30 plunged to $400,000 from $1.9 million the year before, in part reflecting the loss of payments from collaborators on non-RNAi programs that had been under development by Nastech.
Research and development spending dropped to $7.6 million in the quarter from $13.8 million in 2007, while selling, general, and administrative expenses fell to $2.5 million from $5 million.
MDRNA also recorded a $6.2 million charge in this year’s third quarter related to costs associated with its restructuring.
Although Nastech had been working on RNAi along with its core intranasal-delivery programs since 2006 when it acquired the RNAi assets of privately held Galenea (see RNAi News, 2/23/2006), the company fully committed itself to the gene-silencing technology late last year when Procter & Gamble pulled out of a key collaboration to develop a nasal spray-based treatment for osteoporosis.
The resulting loss of alliance funding and accompanying drop in stock price forced the company to reconsider spinning out its RNAi assets into a separate company and instead take on the identity of that new company itself (see RNAi News, 5/15/2008). The change was cleared by shareholders this summer (see RNAi News, 6/12/2008).

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