than they had appeared.
“I knew there was something here, and fairly confident it was a viable approach from a scientific perspective,” French says. “I don’t think I knew the extent of the infrastructure challenges when I joined. I had to get my hands around $7 to $8 million of debt, an empty building that we were trying to vacate, and we had about four months of cash left. There were challenges.”
Three months later, another bad thing happened that everyone remembers. The collapse of Lehman, Merrill, et al., and the resulting havoc in the global financial markets, looked like a sure death blow to a lot of struggling biotechs like Marina. By October 24, 2008, the stock dipped as low as 14 cents a share. French recalls the company having a market valuation of less than $5 million, while it was still sitting on a pile of more than $7 million in debt, and was coming off a year in which it spent $25 million just to keep operating. With stock that’s essentially worthless, it’s almost impossible to sell more shares to raise more money.
“With a $5 million market cap, you have to ask yourself, how can you survive?” French says.
The company was so low on cash, it almost failed to make payroll in January 2009. The company cut salaries the last two weeks of that month, while still making payroll, as it was frantically negotiating on multiple fronts. French thought he had found a way forward, lining up an agreement with venture capitalists to pump $30 million into the company. At the same time, French was negotiating with Kenilworth, NJ-based Schering-Plough to provide the company with RNAi technology in a deal that would have brought in a $16 million upfront payment.
What French didn’t know at the time was that Schering-Plough was in advanced talks to be acquired by pharma giant Merck, in a mega-merger that was announced two months later. Merck, the owner of Sirna, didn’t need any more RNAi technology. So at the proverbial 11th hour, the Schering-Plough deal fizzled. And when that happened, the VC cash disappeared, too. The VCs wanted their money to advance RNAi, not pay partially pay down some of the old Nastech debts, French says.
The unraveling of those two deals prompted a lot of scrambling the next several weeks. French turned to one of the old Nastech partners, San Diego-based Amylin Pharmaceuticals, and said he’d take $1 million immediately instead of $3 million he was entitled to later. Amylin said yes. The deal was announced February 3, 2009. “That enabled us to pay everybody” on staff, French says.
It essentially bought French a little time. Ten days later,
