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Marina Says Cash Will Run out at the End of the Month, Reports 2011 Financials

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Roughly six months after stating that it could not file its 2011 annual report on time due to “financial and strategic uncertainties,” Marina Biotech has released its financial results for last year and, in doing so, disclosed that it will be out of money by the end of October.

As of Dec. 31, 2011, Marina had just $2 million in cash, $1 million of which was restricted, it said in filing with the US Securities and Exchange Commission released last week.

“We have experienced and continue to experience operating losses and negative cash flows from operations, as well as an ongoing requirement for substantial additional capital investment,” the company added. “We expect that we will need to raise substantial additional capital to continue our operations beyond October 31.”

If it is unable to find this funding, Marina said that it may have to “further delay, reduce the scope of, or eliminate one or more of our development programs.” Given that the company recently shut down virtually all of its business activities, including a phase I trial of its sole clinical candidate, it is possible that a lack of new financing would force the firm to discontinue operations entirely.

“As a result, there is a significant possibility that we will file for bankruptcy,” Marina cautioned in the SEC filing. “If we restructure our debt or file for bankruptcy protection, it is very likely that our common stock will be severely diluted, if not eliminated entirely.”

That stock, which was booted from the Nasdaq to the over-the-counter markets in February, was trading around $0.30 a share this week.

Despite the warning, Marina President and CEO Michael French indicated that Oct. 31 isn't necessarily the “drop-dead date” for the firm.

“We have certain disclosure requirements” that prompted the company to offer the end-of-the-month guidance, he said, but “we plan for success, not failure, and continue to look for opportunities to raise capital.” These include strategic partnerships, equity financings, and technology-licensing deals.

“There's nothing to say that we can't squeak beyond” Oct. 31, giving Marina the chance to find a new source of funding, French said, noting that the company has signed a number of licensing deals in recent months, such as ones with Novartis and Girindus for its conformationally restricted nucleotide technology and one with Monsanto for its RNAi delivery and chemistry technologies.

Still, given the expenditures and losses revealed in its 2011 financial report, Marina will need a significant influx of capital if it aims to pick up where it left off.

For the full year 2011, Marina's net loss rose to $29.4 million, or $4.65 a share, from $27.8 million, or $15.80 a share, the year before.

Revenues last year came in at $2.2 million, down slightly from $2.5 million in 2010.

Operating costs jumped to $37.2 million from $32 million, despite a $6.6 million drop in research and development spending to $11.4 million, reflecting the impact of a $16 million special charge tied to Marina's 2010 acquisition of Cequent Pharmaceuticals. Excluding the charge, the company spent about $21 million last year.

To preserve itself amid a massive cash crunch, Marina announced in July that it had halted virtually all of its day-to-day operations, and that it had furloughed roughly 90 percent of its 35 employees (GSN 7/7/2012). This move included the suspension of a phase I trial of the familial adenomatous polyposis treatment CEQ508.

According to Bothell, Wash.-based Marina, “substantially all” furloughed employees have now been let go, and the company now has about 11 employees remaining, including all of its executives, who are either furloughed or receiving a reduced salary.

French noted that, if a money-making arrangement is not concluded in the near future, Marina would likely begin to liquidate its assets and close its doors.

Should Marina end up doing so, it would mark the end of one of the RNAi drug industry's most circuitous journeys.

The company began as Nastech Pharmaceuticals, which was founded to develop intranasal drug-delivery technologies. In early 2006, that company acquired startup Galena and its fledgling influenza program in a bid to enter the burgeoning RNAi space.

However, Nastech's RNAi efforts failed to make headway and the company began planning to spin out its RNAi assets into a new company called MDRNA. Amid its own difficulties, Nastech decided in 2008 to restructure itself as MDRNA, shelving its intranasal programs and focusing entirely on gene silencing.

After shedding Nastech's management, MDRNA acquired privately held Cequent Pharmaceuticals in 2010, picking up CEQ508 in the process. It again changed its name, this time to Marina. In February, Marina shuttered Cequent's Cambridge, Mass., facility to curb costs.

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