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MDRNA to Seek Downstream Value from Future Deals, Will Pick Liver Cancer Target by June

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Emboldened by two technology-licensing agreements it has signed within the past three months, MDRNA is actively pursuing additional deals that it expects will be structured so as to provide downstream value, rather than just upfront payments, the company's top executive said last week.

At the same time, the RNAi shop is continuing work on its lead liver cancer program, and expects to have selected a lead target for the effort this summer.

In February, MDRNA non-exclusively licensed a portion of its technology platform to Roche for use in the development of RNAi therapeutics in exchange for a one-time $5 million fee (see RNAi News, 2/19/2009).

About a month later, the company announced that it granted a non-exclusive license to its liposomal-based siRNA-delivery platform, dubbed DiLA2, to Novartis in exchange for $7.25 million upfront (see RNAi News, 3/26/2009).

Those two deals "provided non-dilutive operating capital, as well as technology validation, and laid the foundation upon which we continue our discussions with other pharmaceutical and biotech companies to establish broad target- and therapeutic-specific research and development collaborations," MDRNA President and CEO Michael French said last week during a conference call held to discuss the company's first-quarter financial results.

However, "unlike the Roche and Novartis agreements, we expect these future [research and development] collaborations to be structured in such a manner to bring in upfront cash, research funding, milestone payments, and royalties," he said.

MDRNA provided no specific guidance on when any such deals might be struck, and CFO Bruce York warned during the call that "it is difficult to predict when we will close such transactions and collaborations."

Based on MDRNA's financial standing, however, there is an urgency to forge alliances. As of March 31, the company had $7.7 million in cash and cash equivalents, including $2.2 million in restricted cash.

According to York, these resources are sufficient to fund MDRNA's operations only into the third quarter of this year.

Meantime, MDRNA's stock has been climbing — at least recently. Year to date, the shares have climbed 36 percent. During midday trading on the Nasdaq, shares of the company were trading at around $1.43 a share.

The price is also significantly above a 52-week low of $0.14 but well off the approximately $15 the shares were selling for during the summer of 2007 when MDRNA was operating as Nastech Pharmaceutical (see RNAi News, 5/8/2008).

On the scientific front, MDRNA continues to make progress in its liver cancer program, which will use the company's proprietary usiRNA molecules, and expects to begin in vivo studies with a lead target around the beginning of June, CSO Barry Polisky said during the conference call.

"Efforts are [also] underway to gain a better understanding of the nature of liver delivery and dose tolerability of our lead DiLA2 formulation in a non-human primate system," he added. Such experiments are "intended to demonstrate effective delivery to liver cells and establish a safety profile for systemic administration of our … DiLA2 formulation and usiRNA construct — a key step towards [investigational new drug application] studies for our liver cancer program and expansion of our partnering opportunities."

MDRNA expects to begin testing a usiRNA drug candidate in cynomolgus monkeys in early June, Polisky noted.

Q1

For the three-month period ended March 31, MDRNA posted a sharp increase in revenues to $14.2 million from $1.3 million the year before. These higher revenues consisted primarily of the $12.25 million received from Roche and Novartis, as well as the recognition of $1 million from Amylin Pharmaceuticals under a non-RNAi deal signed in 2006 (see RNAi News, 2/5/2009).

MDRNA's net earnings for the quarter were $7.3 million, or $0.23 per share, compared with a year-ago loss of $16.5 million, or $0.63 per share.

R&D spending, meanwhile, dropped to $4.1 million from $10.9 million while selling, general, and administrative costs declined about 56 percent to $2.1 million as the company worked to control its costs.

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