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MDRNA Aims to Stay on Nasdaq Global Market, Arrowhead Shifts Shares to Capital Market

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As the troubled global financial markets continue to take their toll on the biotechnology sector, MDRNA last week announced that its shares have taken one step closer to being delisted from the Nasdaq Global Market after the RNAi drug developer failed to regain compliance with the exchange's listing requirements.

Meanwhile, Arrowhead Research, the parent firm of Calando Pharmaceuticals, disclosed that it has successfully petitioned the Nasdaq to move its shares from the Global Market onto the Nasdaq Capital Market after failing to meet the former's listing requirements.

Shares in MDRNA, whose market cap is $7.8 million, were trading at $0.25 apiece as of Thursday morning, down more than 90 percent since one year earlier. Shares in Arrowhead, whose market cap is $29 million, were trading at $0.51 as of Thursday morning. They have around 70 percent of their value since this time last year.

In November 2008, MDRNA was first notified that it failed to comply with the Nasdaq's $10 million minimum stockholders' equity requirement for continued listing on the Global Market. The company said at the time that it would by early December provide the exchange with a "plan to achieve and sustain compliance with all listing requirements" in order to receive a 180-day extension period — through March 3 — to remain listed.

This week, however, MDRNA said that it had received a notice from the exchange "indicating that the company has not regained compliance with [the equity requirement] … within the extension period granted."

Still, the company's shares won't be delisted just yet. MDRNA said that it will request an oral hearing with Nasdaq officials to review the exchange's decision, adding that it "believes it will be able to show compliance with the requirement at the time of the hearing."

In a statement, MDRNA President and CEO Michael French said that the company is "confident that our strategy and plan to rebuild shareholder value and regain compliance are sound and we are committed to remaining on the Nasdaq Global Market."

An MDRNA spokesman told RNAi News in an e-mail that details of that plan to come back into Nasdaq compliance remain undisclosed, but that the company is considering providing information on the matter during its as-of-yet unscheduled fourth-quarter and full-year 2008 earnings conference call.

Since it was established last summer out of nasal-delivery technology firm Nastech Pharmaceutical (see RNAi News, 6/12/2008), MDRNA has struggled to find its financial footing.

When it reported its third-quarter financial results in November, the company disclosed that it only had enough funds to continue operations into the first quarter of this year (see RNAi News, 11/20/2008). Meanwhile, in a filing with the US Securities and Exchange Commission that same month, MDRNA noted that it had an accumulated debt of about $241.8 million as of Sept. 30.

At the time, French said that MDRNA expected to have found enough financing to meet its goal of launching a phase I study in late 2009 of its RNAi-based hypercholesterolemia drug and was pursuing “multiple options for improving our balance sheet, including non-dilutive financing through partnerships."

Since then, the company has made no statements regarding the status of these fundraising efforts, although it did announce the receipt of an accelerated milestone payment related to a partnership inherited from Nastech (see RNAi News, 2/5/2009).

Another Path

Although MDRNA's top executive said the firm is not be interested in moving its shares off the Nasdaq Global Market, that is exactly the approach Arrowhead has taken in order to keep its shares trading on the exchange.

In February, the company reported that it had been notified by the exchange that it, too, had failed to meet the minimum shareholders' equity requirement for continued listing on the Nasdaq Global Market.

Although Arrowhead said at the time that it had been asked to submit a "specific plan to achieve and sustain compliance with all Nasdaq listing requirements," last week that company announced that it had instead asked to have its stock shifted to the Nasdaq Capital Market, a request that the exchange granted.

The Capital Market requires that a company's stockholders' equity be at least $2.5 million.

"Our transfer to the Capital Market continues our Nasdaq listing status, allowing our investors to continue to benefit from the liquidity provided by the Nasdaq Stock Market and also maintaining our visibility to the investment community," Arrowhead President and CEO Christopher Anzalone said in a statement.

"It is an unfortunate byproduct of the current economic environment that many companies our size can no longer satisfy the requirements to maintain their … Global Market listing," he added. "However, the transfer allows us to continue to execute on our business plan."

As a company focused on building up its numerous subsidiaries to the point where they can be monetized, usually through either a divestiture or initial public offering, Arrowhead has been weighing the possibility of selling off Calando since at least last spring in a bid to cash in on its siRNA-delivery technology (see RNAi News, 5/1/2008).

Since that time, Arrowhead has been dealing with a cash shortage that led the company to disclose in an SEC filing last month that it may have Calando slow the development of its clinical drug candidates, which include the phase I siRNA-based cancer therapy CALAA-01 (see RNAi News, 2/12/2009).

A few months before, Arrowhead said that Calando would not advance any of its preclinical programs into human studies until it struck at least one money-generating deal (see RNAi News, 12/18/2008).

In February, when Arrowhead reported its fiscal first-quarter financial results, Anzalone said during a conference call that the company was pursuing a number of financing opportunities, including industry partnerships or the sale of Calando.

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