SOURCE: MDRNA, Inc.
May 13, 2010 16:02 ET
MDRNA, Inc. Announces First Quarter 2010 Financial Results
Highlights First Quarter and Recent Corporate Accomplishments
BOTHELL, WA--(Marketwire - May 13, 2010) - MDRNA, Inc. (NASDAQ: MRNA), a leading
RNAi-based drug discovery and development company, today reported financial
results for the first quarter ended March 31, 2010, and recent corporate
accomplishments.
"As we close in on the end of the second quarter 2010, we see the last
twelve months as a year of building," stated J. Michael French, President
and Chief Executive Officer of MDRNA. "Whereas 2008-2009 was a year of
transition, 2009-2010 was a year of building clinical pipelines, technology
platforms, partnerships and a world-class research and management team.
Besides significant advancements in our own efforts, we announced in April
that we entered into a definitive agreement to acquire Cequent
Pharmaceuticals, a privately-held company that has made tremendous progress
developing novel compounds utilizing a proprietary approach, transKingdom
RNAi. We expect this acquisition to give MDRNA the unique advantage of
multiple proprietary RNAi drug discovery platforms capable of delivering
therapeutics via systemic, local and oral administration as well as a
pending Phase 1 human clinical trial in what could possibly be the first
RNAi-based therapeutic to reach the market. Equally important, we have
forged multiple collaborative relationships with major pharmaceutical
companies, including Pfizer and Astra-Zeneca, which further validate the
potential of our proprietary RNAi drug discovery platform consisting of our
novel UsiRNA constructs and DiLA2 delivery technology. We are currently
supporting a total of five early collaborative efforts and expect to enter
two multi-year R&D collaborations this year with one being established as
early as mid-year. We are excited about the coming twelve months which we
see as a year of execution -- A year where we have an on-going human
clinical trial, multiple R&D collaborations with international
pharmaceutical companies and a robust pre-clinical pipeline directed at
oncology and inflammatory diseases."
FINANCIAL RESULTS
Net loss
Net loss for the first quarter of 2010 was approximately $9.5 million or
$0.20 per share, compared to net income of approximately $7.3 million or
$0.23 per share for the same period of 2009.
Revenue
Revenue was approximately $0.2 million for the first quarter of 2010
compared to $14.2 million for the first quarter of 2009. Revenue in the
first quarter of 2009 included licensing fees of $7.25 million from
Novartis, licensing fees of $5.0 million from Roche, and a milestone
payment of $1.0 million from Amylin Pharmaceuticals related to the
amendment to our 2006 License Agreement.
Expenses
Research and development ("R&D") expenses for the first quarter of 2010
decreased 13%, from approximately $4.1 million to $3.6 million, compared to
the prior year quarter. The 2009 period included significant expenses for
patent license fees which did not recur in 2010. Aside from patent license
fees, direct project-related spending increased in the first quarter of
2010 over 2009 as we advanced our RNAi therapeutics pipeline.
Selling, general and administrative ("SG&A") expenses for the first quarter
of 2010 were approximately $2.6 million which represents an increase of
21%, compared to $2.1 million in the prior year quarter. In the first
quarter of 2010 we recorded transaction costs of approximately $0.6 million
relating to the proposed merger between MDRNA and Cequent. Excluding
merger-related costs, SG&A expenses decreased overall in the first quarter
of 2010 compared to the first quarter of 2009.
Interest and Other Expense
We recorded interest and other expense of approximately $0.8 million in the
first quarter of 2010 compared to $0.1 million in the first quarter of
2009. In December 2009 we issued secured promissory notes in the amount of
$1.0 million, along with warrants valued initially at approximately $0.9
million. The December 2009 notes payable were paid in full in January 2010
and the related security interests in our assets were released. The first
quarter of 2010 interest and other expense amount consists primarily of
amortization of debt issuance costs and non-cash amortization of the debt
discount resulting from the fair value at issuance of the warrants issued
to the note holders. The first quarter of 2009 interest expense relates to
our former capital lease obligations with GE Capital which were converted
to a note payable in January 2009 and subsequently paid in full in June
2009.
Other Income/(Expense)
We recorded a net gain on settlement of liabilities during the first
quarter of 2009 of approximately $0.7 million related to our efforts during
early 2009 to restructure our outstanding liabilities, including our
capital lease obligations with GE Capital, severance compensation and other
accounts payable. We also recorded expenses of approximately $2.7 million
and $1.0 million in the first quarter of 2010 and 2009, respectively,
related to the
re-measurement of price-adjustable warrants required to be classified as
liabilities beginning January 1, 2009. The liability is
re-measured at the end of each accounting period, and increases or
decreases with changes in our stock price and variables in our
Black-Scholes-Merton valuation model.
Balance Sheet
As of March 31, 2010 we had cash and cash equivalents of approximately $3.8
million compared to $1.7 million as of December 31, 2009. As a result of
our cash position, we received a "going concern" opinion from KPMG LLP, our
independent registered public accounting firm, which was included in our
10-K for the 2009 fiscal year.
In connection with the merger agreement between MDRNA and Cequent, we
entered into a loan agreement under which Cequent agreed to loan us up to
$3 million to fund our operations. In April 2010 we drew down $1 million
under the loan agreement. We believe that our current resources, including
the available draw downs on the Cequent loan, will be sufficient to fund
our planned operations into the third quarter of 2010. In addition, cash
brought to the company through the closing of the Cequent acquisition will
be sufficient to fund the combined company operations into December 2010.
FIRST QUARTER AND RECENT CORPORATE ACCOMPLISHMENTS
Acquisition of Cequent Pharmaceuticals:
-- Announced acquisition of Cequent Pharmaceuticals which will expand our
oncology pipeline with a pending Phase 1 human trial in Familial
Adenomatous Polyposis expected to begin in the third quarter, expanding
our RNAi drug discovery platform capabilities with the addition of the
transKingdom RNAi platform -- an orally delivered RNAi-based
therapeutic approach to gastrointestinal diseases.
-- Pending MDRNA shareholder approval, the acquisition is expected to
close in July 2010.
Advanced RNAi Oncology Programs:
-- Demonstrated significant knockdown ( > 60%) of survivin mRNA with
MRNA-046 in a orthotopic liver tumor model and an associated
significant decrease in tumor weight (~65%) at study termination.
-- Demonstrated significant knockdown of up to 90% for survivin mRNA with
MRNA-046 via local (intravesical) delivery to mouse bladder. There was
a dose-dependent decrease in bioluminescence of up to 90% at 1 mg/kg in
MRNA-046-treated mice, indicating significant reduction in tumor volume.
-- Demonstrated potent anti-tumor activity with a UsiRNA targeting PLK1
(Polo-like Kinase 1) in a mouse orthotopic bladder cancer model. Data
following local administration of the PLK1 UsiRNA in a DiLA2 liposome
formulation demonstrated a dose-dependent decrease in bioluminescence of
greater than 90% at a dose of 1 mg/kg indicating significant reduction
in tumor volume.
-- Demonstrated increased tumor reduction when two UsiRNAs were combined
within a single DiLA2 formulation. For a survivin/PLK1 combination,
tumor bioluminescence and survivin mRNA expression was notably lower
(~30% for each endpoint) when compared to a survivin alone (MRNA-046).
Similar results for tumor bioluminescence and mRNA were found with the
survivin/FGFR3 combination. With the survivin/HRAS combination there was
a ~40% greater decrease in tumor bioluminescence and ~50% greater
inhibition of survivin mRNA compared to MRNA-046 alone.
Advanced RNAi Drug Discovery Platform:
-- Demonstrated that strategic placement of UNA (unlocked nucleobase
analogs) within short-interfering RNAs, termed UsiRNAs, results in
greater strand-specific activity and minimizes off-target activity when
compared to standard siRNAs.
-- Reported substantial advances in delivery efficiency with the DiLA2
technology.
-- A second generation DiLA2 formulation, when paired with an UsiRNA
construct delivered via systemic injection, resulted in 50% knockdown of
Factor VII (FVII) protein at a 80 microgram per kilogram dose.
-- Demonstrated exceptional stability of DiLA2 formulation over a one year
period under a variety of conditions with no observed loss in potency or
change in particle characteristics.
Advanced R&D Collaboration Opportunities:
-- Announced a research study with Pfizer (NYSE: PFE). The relationship is
focused on the evaluation of MDRNA's proprietary DiLA2 platform and
UsiRNA constructs for RNAi
-- Announced an early collaborative effort with AstraZeneca Investment
(China) Company, Ltd. focused on our proprietary DiLA2 delivery system
for systemic delivery in hepatocellular carcinoma (HCC).
-- Announced an additional early collaborative effort with an undisclosed
RNA-based therapeutics company focused on microRNA (miRNA)-directed
oncology therapies.
-- Announced one additional early collaborative effort with a major
international pharmaceutical company to utilize the broad capabilities
of our proprietary drug discovery engine for RNAi therapeutics.
-- In total, the Company is currently supporting five early collaborative
efforts, including the Pfizer and AstraZeneca efforts.
Advanced Intellectual Property Portfolio:
-- Acquired intellectual property for conformationally restricted
nucleotides (CRN) (formerly called bridged nucleic acids) from Valeant
Pharmaceuticals North America. CRN's enable MDRNA to tailor key
characteristics of UsiRNA constructs to impart greater versatility and
specificity. In addition, the technology permits us the opportunity to
pursue single-stranded and antagomir therapeutic approaches.
-- U.S. Patent and Trademark Office (USPTO) issued patent U.S. 7,704,953
covering methods for the delivery of siRNAs as well as a broad array of
compounds with pharmacological activity, with a targeting peptide that
has preferential affinity for lung tissue. This peptide may be used with
the DiLA2 delivery technology for tissue specific targeting for
respiratory diseases.
-- U.S. Patent and Trademark Office (USPTO) issued a Notice of Allowance
for patent application U.S. 12/701,397 covering methods for the delivery
of siRNAs as well as a broad array of compounds with pharmacological
activity, with a targeting peptide with high binding affinity and
internalization to cells involved in hepatocellular carcinoma. This
peptide may be used with the DiLA2 delivery technology for tissue
specific targeting and cellular uptake for liver diseases.
-- U.S. Patent and Trademark Office (USPTO) issued patent U.S. 7,696,343
covering an siRNA directed against a junctional adhesion molecule-1
(JAM-1) gene.
-- Intellectual Property Office of New Zealand (IPONZ) issued a Notice of
Acceptance for patent application 553828, titled "Methods of Treating
an Inflammatory Disease by Double-Stranded Ribonucleic Acid" with
allowed claims that cover small interfering RNAs (siRNA) directed
against tumor necrosis factor (TNF); further developing a patent
portfolio that is both comprehensive and distinct from other RNAi
companies.
-- Received a Notification of Granting Patent Rights in China for the use
of nucleic acids, such as an siRNA, for the treatment of cancer. This
particular patent describes the modulation of claudins, which are
proteins implicated in tumor progression and metastasis and extends our
oncology patent estate worldwide.
Presented at Numerous Scientific and Investor Meetings and Conferences:
-- Presented at the following scientific meetings: 5th Annual Oxford RNAi;
American Association for Cancer Research 101st Annual Meeting 2010; IBC
Life Sciences' TIDES® 2010; and 4th Annual RNAi & miRNA World
Congress.
-- Presented at the following investor meetings: OneMedForum; BIO CEO &
Investor; Roth OC Growth; Washington Biotechnology & Biomedical
Association Life Science Innovation; 2010 BIO Business Forum; and MDB
Capital Group Bright Lights.
Conference Call and Webcast Information
Management will host a conference call to provide a business update and to
review financial results for the quarter ended March 31, 2010. The call is
scheduled for Thursday, May 13, at 4:30 pm Eastern Time (1:30 pm Pacific
Time).
To participate in the live conference call, U.S. residents should dial
800-561-2693 and international callers should dial 617-614-3523. The
participant code for the live conference call is 48939667. To access the
24-hour telephone replay, U.S. residents should dial 888-286-8010 and
international callers should dial 617-801-6888. The participant code for
the replay is 58238846.
Alternatively, to access the live audio webcast for this conference call,
please go to MDRNA's Web site at http://www.mdrnainc.com approximately 15
minutes prior to the conference call in order to register and download any
necessary software. A replay of the webcast will be available for 30 days
following the event.
About MDRNA, Inc.
MDRNA is a biotechnology company focused on the development and
commercialization of therapeutic products based on RNA interference (RNAi).
Our goal is to improve human health through the development of RNAi-based
compounds and drug delivery technologies that together provide superior
therapeutic options for patients. Over the past decade, we have developed
substantial capabilities in molecular biology, cellular biology, lipid
chemistry, peptide chemistry, pharmacology and bioinformatics, which we are
applying to a wide range of RNAi technologies and delivery approaches.
These capabilities plus the in-licensing of key RNAi-related intellectual
property have rapidly enabled us to become a leading RNAi-based
therapeutics company with a pre-clinical pipeline in oncology. Through our
capabilities, expertise and know-how, we are incorporating multiple RNAi
technologies as well as peptide- and lipid-based delivery approaches into a
single integrated drug discovery platform that will be the engine for our
clinical pipeline as well as a versatile platform for establishing broad
therapeutic partnerships with biotechnology and pharmaceutical companies.
We are also investing in new technologies that we expect to lead to safer
and more effective RNAi-based therapeutics while aggressively building upon
our broad and extensive intellectual property estate. By combining broad
expertise in siRNA science with proven delivery platforms and a strong IP
position, MDRNA is well positioned as a leading RNAi-based drug discovery
and development company. Additional information about MDRNA, Inc. is
available at http://www.mdrnainc.com.
MDRNA Forward-Looking Statements
Statements made in this news release may be forward-looking statements
within the meaning of Federal Securities laws that are subject to certain
risks and uncertainties and involve factors that may cause actual results
to differ materially from those projected or suggested. Factors that could
cause actual results to differ materially from those in forward-looking
statements include, but are not limited to: (i) the ability of MDRNA to
obtain additional funding; (ii) the ability of MDRNA to attract and/or
maintain manufacturing, research, development and commercialization
partners; (iii) the ability of MDRNA and/or a partner to successfully
complete product research and development, including preclinical and
clinical studies and commercialization; (iv) the ability of MDRNA and/or a
partner to obtain required governmental approvals; (v) the ability of MDRNA
and/or a partner to develop and commercialize products that can compete
favorably with those of competitors; and (vi) the failure of the
stockholders of MDRNA to approve the merger with Cequent, the failure of
either party to meet any of the other conditions to closing the merger,
contractual restrictions on the conduct of our business included in the
merger agreement, and any impact on our relationships with third parties as
a result of the announcement of the proposed merger. Additional factors
that could cause actual results to differ materially from those projected
or suggested in any forward-looking statements are contained in MDRNA's
most recent periodic reports on Form 10-K and Form 10-Q that are filed with
the Securities and Exchange Commission. MDRNA assumes no obligation to
update and supplement forward-looking statements because of subsequent
events.
Additional Information about the Merger will be filed with the SEC
This press release may be deemed to be solicitation material regarding the
proposed merger of MDRNA and Cequent. In connection with the proposed
merger, MDRNA intends to file relevant materials and documents with the
Securities and Exchange Commission (SEC), including a proxy statement,
which will be mailed to the stockholders of MDRNA. Investors and the public
are urged to read these materials carefully and in their entirety when they
become available because they will contain important information about the
companies, the proposed merger and the expectations for the combined
company. The proxy statement and other relevant materials (when they become
available), and any and all documents filed with the SEC, may be obtained
free of charge at the SEC's web site at www.sec.gov. In addition, investors
and the public may obtain free copies of the documents filed with the SEC
by MDRNA by directing a written request to MDRNA, Inc., 3830 Monte Villa
Parkway, Bothell, Washington 98021, Attention: Investor Relations. The
directors, executive officers and employees of MDRNA may be deemed to be
participants in the solicitation of proxies in connection with the proposed
merger. Information regarding the special interests of these directors,
executive officers and employees in the proposed merger, if any, will be
included in the proxy statement referred to above.
MDRNA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands, Except Per Share Data)
Three Months Ended
March 31,
2009 2010
----------- -----------
(Unaudited)
License and other revenue $ 14,151 $ 184
----------- -----------
Operating expenses:
Research and development 4,116 3,599
Selling, general and administrative 2,107 2,559
Restructuring 133 26
----------- -----------
Total operating expenses 6,356 6,184
----------- -----------
Income (loss) from operations 7,795 (6,000)
Other income (expense):
Interest income 2 ---
Interest and other expense (143) (780)
Net gain on settlement of liabilities 654 ---
Change in fair value price
adjustable warrants (1,027) (2,710)
----------- -----------
Net income (loss) $ 7,281 $ (9,490)
=========== ===========
Basic and diluted net income (loss) per share:
Net income (loss) per common share -- basic and
diluted $ 0.23 $ (0.20)
=========== ===========
Shares used in computing net income (loss) per
share - basic and diluted 32,243 47,328
=========== ===========
December 31, March 31,
Selected Balance Sheet Data (In Thousands) 2009 2010
----------- -----------
(Unaudited) (Unaudited)
Cash
(includes restricted cash of $998 and $1,156,
respectively) $ 1,746 $ 3,786
Accounts Receivable, net 211 127
Property and Equipment and Other Assets 5,272 4,684
----------- -----------
Total Assets 7,229 8,597
=========== ===========
Fair Value Liability for Price Adjustable
Warrants 7,243 11,214
Other Liabilities 6,872 6,906
----------- -----------
Total Liabilities 14,115 18,120
=========== ===========
Accumulated Deficit (263,017) (272,507)
=========== ===========