MDRNA Inc. (MRNA, Financial) filed Quarterly Report for the period ended 2009-06-30.
MDRNA INC. is a biotechnology company developing RNAi-based therapeutics. The Company\'s primary focus is on the safe and effective delivery of MDRNAi and siRNA drug candidates for the treatment of a wide range of human diseases including inflammation viral infections cancer and metabolic disorders. MDRNA will continue to leverage its expertise and capabilities toward innovation in novel and useful RNA-based compositions in order to increase the value proposition of MDRNA to investors and partners. MDRNA Inc. has a market cap of $64 million; its shares were traded at around $1.8399 with and P/S ratio of 24.5.
We have prepared our consolidated financial statements assuming that we will continue as a going concern, which contemplates realization of assets and the satisfaction of liabilities in the normal course of business. As of June 30, 2009, we had an accumulated deficit of approximately $255.2 million and expect to incur additional losses in the future as we continue our R&D activities. We have funded our losses primarily through the sale of common stock and warrants in the public markets and private placements, revenue provided by our collaboration partners and, to a lesser extent, equipment financing facilities. The further development of our RNAi programs will require capital. At June 30, 2009, we had working capital (current assets less current liabilities) of $6.4 million and approximately $9.4 million in cash and cash equivalents, including $1.5 million in restricted cash. Our operating expenses, primarily R&D, will consume the majority of our cash resources. We have received an opinion from our independent registered public accounting firm indicating the substantial doubt about our ability to continue as a going concern due primarily to our cash position at December 31, 2008.
Our financing activities in the first half of 2009 consisted of net proceeds from the sale of common stock and warrants of $9.3 million, offset by fully paying off our note payable with GECC in the amount of approximately $5.5 million. In the first half of 2008, our financing activities consisted of regular monthly lease payments under our former capital lease obligations with GECC which amounted to approximately $2.5 million in total for the first half of 2008, offset by net proceeds from the sale of common stock and warrants of $7.3 million.
In January 2008, we filed a universal shelf registration statement with the SEC pursuant to which we can issue up to $50.0 million of our common stock, preferred stock, debt securities, warrants to purchase any of the foregoing securities and units comprised of any of the foregoing securities. The universal shelf registration statement was declared effective by the SEC on February 4, 2008. We accessed our universal shelf registration statement in connection with our April 2008 and June 2009 registered direct offerings of common stock and warrants described below. As of June 30, 2009, we had approximately $8.6 million remaining on our universal shelf registration statement. As of June 30, 2009, we also had approximately $82.8 million remaining on the registration statement that we filed with the SEC on October 19, 2006, and that was subsequently declared effective by the SEC on November 29, 2006, pursuant to which we were originally eligible to issue up to $125.0 million of our common stock. We previously accessed this latter registration statement in connection with our January 2007 offering of common stock.
On June 12, 2009, we raised net proceeds of approximately $9.3 million in a private placement of 5,250,000 shares of common stock along with warrants to purchase up to 5,250,000 shares of common stock at a negotiated purchase price of $2.00 per share, which warrants are exercisable during the five-year period beginning December 12, 2009 at a price of $2.38 per share. The warrants contain down-round provisions and as such, are subject to the provisions of EITF Issue No. 07-5, Determining Whether an Instrument (or Embedded Feature) Is Indexed to an Entitys Own Stock (EITF 07-5). The warrants were valued at June 12, 2009 at $8.1 million which was recorded as fair value liability for price adjustable warrants, based on a per share price of $1.91 as of June 12, 2009. The warrants will be revalued quarterly during the periods that the warrants remain outstanding.
On April 25, 2008, we raised net proceeds of approximately $7.3 million in a registered direct offering of 4,590,277 shares of common stock along with warrants to purchase up to 5,967,361 shares of common stock at a negotiated purchase price of $1.728 per share. Warrants to purchase up to 4,590,277 shares of common stock are exercisable during the seven-year period beginning October 25, 2008 at a price of $2.376 per share. Additional warrants to purchase up to 1,377,084 shares of common stock at a price of $2.17 per share were exercisable during the 90-day period beginning October 25, 2008 and subsequently expired in January 2009. In addition, warrants to purchase up to 229,514 shares of common stock, which are exercisable during the five-year period beginning October 25, 2008 at a price of $2.376 per share, were issued to the placement agent in connection with the transaction. On June 9, 2009, 50,000 of the warrants issued to the placement agent were exercised resulting in $119,000 cash proceeds. The warrants provide that the exercise price of the warrant will be reduced in the event of subsequent financings at an effective price per share less than the exercise price of the warrants, subject to certain exceptions and limitations. These provisions are commonly known as down-round provisions. The warrants were originally evaluated under the guidance set forth in EITF Issue No. 00-19, Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in, a Companys Own Stock (EITF 00-19). We originally considered the provisions of EITF 00-19 with respect to the warrants and had concluded that the warrants may be physically or net-share settled at the investors option and did not contain any net-cash settlement provisions or any provisions deemed under EITF 00-19 to be equivalent to net-cash settlement provisions and were appropriately classified as equity. According to the provisions of EITF 07-5, warrants with down-round provisions are no longer classified as equity. The adoption of EITF 07-5 resulted in a cumulative effect from accounting change of $0.9 million and a non-current liability for the fair value of the warrants as of January 1, 2009, which reflected the net cumulative impact of initial application, determined based upon the amounts that would have been recognized if the guidance in EITF 07-5 had been applied from the issuance date of the warrants. The warrants are revalued quarterly thereafter during the periods that the warrants remain outstanding.
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MDRNA INC. is a biotechnology company developing RNAi-based therapeutics. The Company\'s primary focus is on the safe and effective delivery of MDRNAi and siRNA drug candidates for the treatment of a wide range of human diseases including inflammation viral infections cancer and metabolic disorders. MDRNA will continue to leverage its expertise and capabilities toward innovation in novel and useful RNA-based compositions in order to increase the value proposition of MDRNA to investors and partners. MDRNA Inc. has a market cap of $64 million; its shares were traded at around $1.8399 with and P/S ratio of 24.5.
Highlight of Business Operations:
Our collaboration efforts are expected to generate license fees, non-refundable upfront payments, R&D funding, milestone payments, patent- and product-based royalties and profit sharing. Because of our collaborations and other agreements, we recognized revenue of approximately $0.8 million and $2.0 million in the three and six months ended June 30, 2008 and $0.3 million and $14.5 in the three and six months ended June 30 2009, respectively. In 2008, our revenue related primarily to our intranasal programs including the supply agreement with QOL for Nascobal® and agreements with feasibility partners. In 2009, our revenue was primarily from revenue from licensing our RNAi platforms including agreements with Novartis and Roche.We have prepared our consolidated financial statements assuming that we will continue as a going concern, which contemplates realization of assets and the satisfaction of liabilities in the normal course of business. As of June 30, 2009, we had an accumulated deficit of approximately $255.2 million and expect to incur additional losses in the future as we continue our R&D activities. We have funded our losses primarily through the sale of common stock and warrants in the public markets and private placements, revenue provided by our collaboration partners and, to a lesser extent, equipment financing facilities. The further development of our RNAi programs will require capital. At June 30, 2009, we had working capital (current assets less current liabilities) of $6.4 million and approximately $9.4 million in cash and cash equivalents, including $1.5 million in restricted cash. Our operating expenses, primarily R&D, will consume the majority of our cash resources. We have received an opinion from our independent registered public accounting firm indicating the substantial doubt about our ability to continue as a going concern due primarily to our cash position at December 31, 2008.
Our financing activities in the first half of 2009 consisted of net proceeds from the sale of common stock and warrants of $9.3 million, offset by fully paying off our note payable with GECC in the amount of approximately $5.5 million. In the first half of 2008, our financing activities consisted of regular monthly lease payments under our former capital lease obligations with GECC which amounted to approximately $2.5 million in total for the first half of 2008, offset by net proceeds from the sale of common stock and warrants of $7.3 million.
In January 2008, we filed a universal shelf registration statement with the SEC pursuant to which we can issue up to $50.0 million of our common stock, preferred stock, debt securities, warrants to purchase any of the foregoing securities and units comprised of any of the foregoing securities. The universal shelf registration statement was declared effective by the SEC on February 4, 2008. We accessed our universal shelf registration statement in connection with our April 2008 and June 2009 registered direct offerings of common stock and warrants described below. As of June 30, 2009, we had approximately $8.6 million remaining on our universal shelf registration statement. As of June 30, 2009, we also had approximately $82.8 million remaining on the registration statement that we filed with the SEC on October 19, 2006, and that was subsequently declared effective by the SEC on November 29, 2006, pursuant to which we were originally eligible to issue up to $125.0 million of our common stock. We previously accessed this latter registration statement in connection with our January 2007 offering of common stock.
On June 12, 2009, we raised net proceeds of approximately $9.3 million in a private placement of 5,250,000 shares of common stock along with warrants to purchase up to 5,250,000 shares of common stock at a negotiated purchase price of $2.00 per share, which warrants are exercisable during the five-year period beginning December 12, 2009 at a price of $2.38 per share. The warrants contain down-round provisions and as such, are subject to the provisions of EITF Issue No. 07-5, Determining Whether an Instrument (or Embedded Feature) Is Indexed to an Entitys Own Stock (EITF 07-5). The warrants were valued at June 12, 2009 at $8.1 million which was recorded as fair value liability for price adjustable warrants, based on a per share price of $1.91 as of June 12, 2009. The warrants will be revalued quarterly during the periods that the warrants remain outstanding.
On April 25, 2008, we raised net proceeds of approximately $7.3 million in a registered direct offering of 4,590,277 shares of common stock along with warrants to purchase up to 5,967,361 shares of common stock at a negotiated purchase price of $1.728 per share. Warrants to purchase up to 4,590,277 shares of common stock are exercisable during the seven-year period beginning October 25, 2008 at a price of $2.376 per share. Additional warrants to purchase up to 1,377,084 shares of common stock at a price of $2.17 per share were exercisable during the 90-day period beginning October 25, 2008 and subsequently expired in January 2009. In addition, warrants to purchase up to 229,514 shares of common stock, which are exercisable during the five-year period beginning October 25, 2008 at a price of $2.376 per share, were issued to the placement agent in connection with the transaction. On June 9, 2009, 50,000 of the warrants issued to the placement agent were exercised resulting in $119,000 cash proceeds. The warrants provide that the exercise price of the warrant will be reduced in the event of subsequent financings at an effective price per share less than the exercise price of the warrants, subject to certain exceptions and limitations. These provisions are commonly known as down-round provisions. The warrants were originally evaluated under the guidance set forth in EITF Issue No. 00-19, Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in, a Companys Own Stock (EITF 00-19). We originally considered the provisions of EITF 00-19 with respect to the warrants and had concluded that the warrants may be physically or net-share settled at the investors option and did not contain any net-cash settlement provisions or any provisions deemed under EITF 00-19 to be equivalent to net-cash settlement provisions and were appropriately classified as equity. According to the provisions of EITF 07-5, warrants with down-round provisions are no longer classified as equity. The adoption of EITF 07-5 resulted in a cumulative effect from accounting change of $0.9 million and a non-current liability for the fair value of the warrants as of January 1, 2009, which reflected the net cumulative impact of initial application, determined based upon the amounts that would have been recognized if the guidance in EITF 07-5 had been applied from the issuance date of the warrants. The warrants are revalued quarterly thereafter during the periods that the warrants remain outstanding.
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