$2 a share. That new offering raised $10.5 million that day.
That infusion gave French some new flexibility to manuever. He used the new cash to pay off debt with GE Capital. “In one year, we essentially went from being $6 million or so in debt and with a $25 million burn rate to having no debt and probably then about a $15 million per year burn rate,” he says.
Still, the company struggled to find any way to build sustainable value. It had no proprietary RNAi products in clinical trials, generating the kind of experimental data that would show investors it had a promising new drug in its pipeline. And the gee-whiz science story around RNAi had worn thin. People in the industry were snickering about how Merck had overpaid for Sirna.
“In 2006, the fact you could knock down something in a mouse was front page science news,” French says. “Now we know you can look at a mouse funny and knock stuff down with RNAi. Now it’s about the extension of the capability, for systemic delivery, that is requiring significant brainpower. And pharma recognizes that.”
Instead of moving its own technology along into clinical trials, MDRNA did what a lot of pharma companies do—it used its cash, the leverage its stock ticker provided, to acquire an innovative asset in development. In this case, it was through acquiring a private company, Cambridge, MA-based Cequent Pharmaceuticals. MDRNA structured this as a $46 million all-stock deal in which it obtained the rights to an oral pill Cequent had developed, and which was poised to enter clinical trials, for a rare disease called FAP that is a precursor to colon cancer.
MDRNA shareholders retained a controlling stake in the merged company, and French was able to remain as CEO. Besides providing MDRNA with the clinical-stage asset it needed to attract investors, Cequent also had some cash on its balance sheet. The new drug offered a potentially large benefit to patients with a rare disease, and what looked like a relatively low-cost, easy to manage clinical trial plan to reach the marketplace. “If ever there were a product a small biotech could take to the market on its own, this is it,” French says.
Partly to distance itself from the baggage of its Nastech nasal spray days, and to distance itself again from the always-on-the-brink reputation of MDRNA, the company chose to change its name one more time. In this case, French and his team played around with
