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MDRNA Eyes Second 'Early Collaborative Effort' Before Year-End, Large Alliance in 2010

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By Doug Macron

Officials from MDRNA last week said that the company is on track to sign a second early-stage technology-evaluation deal with a large biopharmaceutical partner before the end of the year, and that it continues to expect it will forge a separate strategic research and development alliance by the middle of 2010.

“Our strategic partnering objectives are to establish target- and/or therapeutic-based research and development collaborations” that include up-front fees, research funding, milestone payments, and royalties, June Ameen, MDRNA’s vice president of corporate development, said during a conference call held last week to discuss the company’s third-quarter financial results.

“In striving to achieve our strategic partnering objectives, we view early collaborative efforts as a means to establishing broader R&D collaborations with certain partners,” she noted. “In August, the company entered into one of these early collaborative efforts with a large, international pharmaceutical company to demonstrate the broad capabilities of both our proprietary RNAi drug-discovery engine and our … research team.”

That collaboration is focused on optimizing MDRNA’s so-called DiLA2 drug-delivery platform for use in carrying RNAi molecules to a specific, undisclosed tissue system, and is unrelated to the company’s work on liver and bladder delivery, she said. “At this point, we are unable to disclose the name of the company, but we can report that the collaboration is progressing as anticipated.”

Meanwhile, “We’re having ongoing discussions with multiple large, international pharmaceutical companies … [and] expect to establish at least one more early collaborative effort by the end of the year,” Ameen added.

During the call, MDRNA President and CEO Michael French noted that the company also anticipates signing at least one “large, strategic R&D collaboration” by mid-2010, adding that such a deal could enable the firm to expand its pipeline beyond the current programs in liver and bladder cancers.

Currently, work on those indications is proceeding apace, and French confirmed during the call that MDRNA still expects to file an investigational new drug application on either a liver cancer or bladder cancer candidate before the end of next year.

While liver cancer had initially been MDRNA’s most-developed program, last month French told RNAi News that the bladder cancer effort has been so promising that it might jump to the head of the queue and yield the company’s first IND (see RNAi News, 10/15/2009).

At the same time, MDRNA continues to optimize its drug formulations in non-human primates as part of an effort that was first disclosed this summer (see RNAi News, 8/6/2009).

While French declined to provide specific details on that work in response to an analyst’s question during the conference call, the company did release some data last week, stating that a single, systemic, 0.3 mg/kg dose of its UsiRNA constructs, delivered in two distinct DiLA2 formulations, resulted in the significant knockdown of a primate liver gene.

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Although the company did not disclose the gene that was targeted, MDRNA CSO Barry Polisky previously said that the non-human primate work was focusing on Factor VII.

Nasdaq Notice and the Third Quarter

Separately last week, MDRNA announced that it had been notified by the Nasdaq Stock Market that it was not in compliance with the exchange’s listing requirements.

“Since our market capitalization fell below $10 million for 10 consecutives days in late October and early November, we were issued a notice of deficiency for which we have a 90-day grace period to regain compliance,” French said during the call.

“Valuations in the RNAi sector and smaller-cap biotech companies in general have pulled back over the past few weeks, and we have not been immune to that trend,” he noted. Still, “based upon our business outlook … we are confident that we will be able to meet the Nasdaq Global Market’s listing requirements by February 4, 2010.”

As for MDRNA’s financial situation, the company reported a sharply decreased third-quarter net loss, which fell to $7 million, or $0.17 per share, from a year-ago loss of $16.1 million, or $0.52 per share.

Revenues in the quarter fell to $100,000 from $400,000, while R&D spending shrank 56 percent, to $3.3 million from $7.6 million, reflecting the company’s termination of the intranasal drug-delivery programs from when it was Nastech Pharmaceutical.

Selling, general, and administrative costs in the quarter jumped 39 percent to $3.5 million from $2.5 million, primarily due to an increase in non-cash stock-based compensation related to the accelerated vesting of stock options for a departing senior executive, the company said.

As of Sept. 30, MDRNA had cash and cash equivalents totaling $4.6 million.

“We previously reported that our current financial resources are sufficient to fund our planned operations through the end of the year,” MDRNA CFO Peter Garcia said during the call. “We are currently evaluating near-term opportunities that, if successful, will strengthen our cash position.”

As such, “we fully expect to end the year with additional cash needed to fund our ongoing efforts well into the next year,” he said.

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