SOURCE: Marina Biotech, Inc.

Marina Biotech, Inc.

February 25, 2015 08:30 ET

Marina Biotech Provides 2014 Year-End Financials and Update

Company Expands Global Intellectual Property Estate to Over 140 Issued and Allowed Patents

BOTHELL, WA--(Marketwired - Feb 25, 2015) - Marina Biotech, Inc. (OTCQB: MRNA), a leading nucleic acid-based drug discovery and development company focused on rare diseases, today reported year-end corporate highlights and financial results for 2014. In addition, the Company also highlighted key patent grants that significantly expanded its intellectual property estate.

"The Company continued to make significant progress toward commercializing our nucleic acid therapeutics platform throughout 2014," stated J. Michael French, president and chief executive officer of Marina Biotech. "Foremost, we executed on our objective to continue to pursue and consummate additional licensing and partnering opportunities by establishing another SMARTICLES® license, this time with MiNA Therapeutics, to deliver now a third type of nucleic acid payload - small activating RNA. In addition, as part of our rare disease pipeline focus, we established a strategic partnership with Rosetta Genomics and initiated a clinical study to identify novel microRNA candidates for the treatment of Duchenne Muscular Dystrophy (DMD), one of our preclinical programs. With regard to our product pipeline, we made great strides toward restarting our Phase 1 program for CEQ508, a product in clinical development for the treatment of Familial Adenomatous Polyposis. In January 2015, we completed our analysis of Cohort 2, applied for Fast Track designation with the U.S. Food and Drug Administration and identified a new contract manufacturing organization. We intend to manufacture new clinical material before dosing Cohort 3 to ensure the availability of sufficient material to complete the Phase 1 and then intend to move quickly into the Phase 2 trial with a more efficient fermentation process. Though this will delay our dosing of Cohort 3, we do not expect it to delay our projected commercial launch in 2018. I am looking forward to additional progress in 2015 as I expect Marina to deliver advances to our pipeline programs and significant pharma collaborations."

Regarding our intellectual property estate, over 40 new patent grants were issued over the last six months of 2014 covering our major technology platforms, including SMARTICLES, tkRNAi, DILA2, lipopeptide delivery, and formulation processes. Marina Biotech's global intellectual property estate covering its biochemistry and delivery technologies has expanded to over 144 issued and allowed patents, and further includes over 90 pending U.S. and foreign patent applications. We believe the patent portfolio provides global protection and freedom to operate for the development of nucleic acid-based therapeutics, as well as molecular diagnostics, applicable to a wide range of human conditions and diseases. 

KEY RECENT IP ISSUANCES AND ALLOWANCES

  • SMARTICLES
    • Patent allowance in the United States (12/807,707) and an issuance in Japan (Pat No 5,571,308) covering a leading SMARTICLES formulation for RNA delivery, NOV340. NOV340 is currently used for delivery of a single-stranded DNA decoy and a double-stranded microRNA mimic in clinical studies by licensees ProNAi Therapeutics and Mirna Therapeutics, respectively.
    • Patent issued in Australia (Pat No 2008309880) that broadens the compositional scope of NOV340-like formulations to discourage design-around and to provide further options for clinic development. 
    • Patent issued in Japan (Pat No 5,480,764) covering serum-stable formulations of the NOV340-like formulations.
    • Patent issued in Japan (Pat No 5,424,885) covering processes for making amphoteric liposomes of the NOV340-like formulations.
    • Patent issuances in the United States (Pat No 8,580,297), as well as an allowance in Europe (07856910.0) covering lipid assemblies composed of a broad genus of amphoteric molecules.
  • transKingdom RNAi
    • Patent issued in Japan (Pat No 5,601,756) covering the tkRNAi bacterial-mediated delivery technology, which along with Europe (Pat No 1,838,838) provides extraordinarily broad coverage of the technology.
    • Patent allowed in the United States (Pat No 12/632,985) covering a plasmid carrying a key prokaryotic promoter for the technology and a bacterial carrier therefor. 
  • Di-terminal Amino Acid Lipids
    • Patents issued in the United States (Pat Nos. 8,501,824; 8,877,729), Europe (EP Pat No 2,157,982), Japan (Pat No 5,475,643), China, Australia, as well as other key jurisdictions broadly covering the library of DILA2 delivery molecules and their uses with strong composition of matter claims.
  • Lipopeptide Delivery Technologies
    • Patent issuances in China (Pat No 200880110140.7) covering part of the Company's proprietary lipopeptide delivery technology which are molecules with enhanced nucleic acid delivery capabilities and include lipid-like tails.
    • Patent issuances in the United States (Pat No 8,299,236) and Europe (EP Pat No 2,145,957) covering the Company's peptide-enhanced delivery formulations.

2014 FINANCIAL RESULTS

Cash
At December 31, 2014, we had cash of $1.8 million and assets totaling $9.2 million compared to cash of $0.9 million and assets totaling $7.7 million at December 31, 2013.

Net loss
Net loss for the year ended December 31, 2014 was $6.5 million compared to net loss of $1.6 million for the year ended December 31, 2013. This change was due primarily to changes in the fair value of certain liabilities and derivatives, changes in other income and expenses related to debt extinguishment accounting in 2013, and increased operating expenses related to 2014 resumption of business operations.

Revenue
Revenue of $0.5 million was recorded for the year ended December 31, 2014 for a licensing agreement with MiNA Therapeutics, compared to revenues of $2.1 million for certain agreements related to the sale or licensing of our chemistry and delivery technologies during the year ended December 31, 2013.

Operating Expenses
Research and development (R&D) expense remained relatively flat at $0.7 million for the years ended December 31, 2013 and 2014. R&D expenses were primarily related to increased investment in CEQ508 product development offset by reduced sublicensing fees. G&A costs increased from $1.8 million for the year ended December 31, 2013 to $3.3 million for the year ended December 31, 2014. General and administrative (G&A) increases were primarily due to expenses related to regaining SEC compliance, conducting our annual shareholder meeting, and director and officer compensation. R&D and G&A expense increases were partially offset by reversal of compensation charges associated with staff reductions.

Other Income and Expense
Net other expense increased from $1.2 million in the year ended December 31, 2013 to $3.0 million for the year ended December 31, 2014. Changes in fair value measurements of certain liabilities and derivatives resulted in a gain of $1.0 million for the year ended December 31, 2013 compared to a loss of $2.5 million for the year ended December 31, 2014. This change in fair value is related to stock price changes over each period impacting the fair value of certain liabilities and derivatives. Other expenses related to interest, fair value adjustments of debt features, and debt extinguishment accounting totaled $2.3 million for the year ended December 31, 2013, compared to an expense of $1.0 million related to the fair value of an embedded feature in the Series C Convertible Preferred Stock recorded as interest expense for the year ended December 31, 2014. Additionally, we sold equipment for an immaterial gain in the year ended December 31, 2013 and we recorded a $0.5 million gain on settled liabilities in the year ended December 31, 2014.

About Marina Biotech, Inc.
Marina Biotech is an oligonucleotide therapeutics company with broad drug discovery technologies providing the ability to develop proprietary single and double-stranded nucleic acid therapeutics including siRNAs, microRNA mimics, antagomirs, and antisense compounds, including messengerRNA therapeutics. These technologies were built via a roll-up strategy to discover and develop different types of nucleic acid therapeutics in order to modulate (up or down) a specific protein(s) which is either being produced too much or too little thereby causing a particular disease. We believe that the Marina Biotech technologies have unique strengths as a drug discovery engine for the development of nucleic acid-based therapeutics for rare and orphan diseases. Further, we believe Marina Biotech is the only company in the sector that has a delivery technology in human clinical trials with differentiated classes of payloads, through licensees ProNAi Therapeutics and Mirna Therapeutics, delivering single-stranded and double-stranded nucleic acid payloads, respectively. Our novel chemistries and other delivery technologies have been validated through license agreements with Roche, Novartis, MiNA, Monsanto, and Tekmira. The Marina Biotech pipeline currently includes a clinical program in Familial Adenomatous Polyposis (a precancerous syndrome) and a preclinical program in myotonic dystrophy. Marina Biotech's goal is to improve human health through the development of RNAi- and oligonucleotide-based compounds and drug delivery technologies that together provide superior therapeutic options for patients. Additional information about Marina Biotech is available at www.marinabio.com.

Marina Biotech 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 Marina Biotech to obtain additional funding; (ii) the ability of Marina Biotech to attract and/or maintain manufacturing, research, development and commercialization partners; (iii) the ability of Marina Biotech and/or a partner to successfully complete product research and development, including preclinical and clinical studies and commercialization; (iv) the ability of Marina Biotech and/or a partner to obtain required governmental approvals; and (v) the ability of Marina Biotech and/or a partner to develop and commercialize products prior to, and that can compete favorably with those of, competitors. Additional factors that could cause actual results to differ materially from those projected or suggested in any forward-looking statements are contained in Marina Biotech's most recent filings with the Securities and Exchange Commission. Marina Biotech assumes no obligation to update or supplement forward-looking statements because of subsequent events.

   
   
MARINA BIOTECH, INC. AND SUBSIDIARIES  
CONSOLIDATED BALANCE SHEETS  
   
    December 31,     December 31,  
(In thousands, except per share data)   2013     2014  
             
ASSETS  
Current assets:            
  Cash   $ 909     $ 1,824  
  Accounts receivable     5       500  
  Prepaid expenses and other current assets     128       192  
    Total current assets     1,042       2,516  
  Intangible assets     6,700       6,700  
    Total assets   $ 7,742     $ 9,216  
LIABILITIES AND STOCKHOLDERS' DEFICIT  
Current liabilities:                
  Accounts payable   $ 1,614     $ 687  
  Accrued payroll and employee benefits     1,505       183  
  Accrued interest     147       -  
  Other accrued liabilities     1,315       1,072  
  Accrued restructuring     12       -  
  Notes payable     1,615       -  
  Other debt     8       -  
    Total current liabilities     6,216       1,942  
Fair value liability for price adjustable warrants     5,226       9,225  
Fair value of stock to be issued to settle liabilities     1,019       75  
Deferred tax liabilities     2,345       2,345  
    Total liabilities   $ 14,806     $ 13,587  
Commitments and contingencies                
Stockholders' deficit:                
    Preferred stock, $.01 par value; 100,000 shares authorized, 0 and 1,200 shares of Series C convertible preferred stock issued and outstanding at December 31, 2013 and 2014, respectively (preference in liquidation of Series C convertible preferred stock of $6,000,000 at December 31, 2014)     -       -  
    Common stock, $0.006 par value; 180,000,000 shares authorized, 16,937,661 and 25,523,216 shares issued and outstanding at December 31, 2013 and 2014, respectively     102       153  
    Additional paid-in capital     324,145       333,264  
    Accumulated deficit     (331,311 )     (337,788 )
      Total stockholders' deficit     (7,064 )     (4,371 )
      Total liabilities and stockholders' deficit   $ 7,742     $ 9,216  
                 
See report of independent registered public accounting firm and accompanying notes to the consolidated financial statements.  
   
   
MARINA BIOTECH, INC. AND SUBSIDIARIES  
             
CONSOLIDATED STATEMENTS OF OPERATIONS  
    Year Ended December 31,  
(In thousands, except per share data)   2013     2014  
License and other revenue   $ 2,115     $ 500  
Operating expenses:                
  Research and development     715       686  
  General and administrative     1,765       3,334  
Total operating expenses     2,480       4,020  
Loss from operations     (365 )     (3,520 )
Other income (expense):                
  Interest and other expense     (249 )     (1,006 )
  Change in fair value liability for price adjustable warrants     151       13  
  Change in fair value of stock reserved for issuance to settle liabilities     31       (2,503 )
  Change in fair value of embedded features in notes payable and amendments to notes payable     829       -  
  Gain (loss) on debt extinguishment     (2,037 )     5  
  Gain on equipment disposal     30       -  
  Gain on settled liabilities     -       534  
Total other expense, net     (1,245 )     (2,957 )
Loss before income tax     (1,610 )     (6,477 )
  Income tax benefit     (39 )     -  
Net loss   $ (1,571 )   $ (6,477 )
Net loss per common share -- basic and diluted   $ (0.09 )   $ (0.26 )
Shares used in computing net loss per share -- basic and diluted     16,937,661       24,634,535  
                 
See report of independent registered public accounting firm and accompanying notes to the consolidated financial statements.  
   
   
MARINA BIOTECH, INC. AND SUBSIDIARIES  
             
CONSOLIDATED STATEMENTS OF CASH FLOWS  
    Year Ended December 31,  
(In thousands)   2013     2014  
Operating activities:            
  Net loss   $ (1,571 )   $ (6,477 )
  Adjustments to reconcile net loss to net cash provided by (used in) operating activities:                
      Non-cash (gain)/loss on debt extinguishment     2,037       (5 )
      Non-cash interest expense     249       1,006  
      Non-cash gain on settlement of liabilities     -       (534 )
      Deferred income tax benefit     (39 )     -  
        Compensation related to stock options, restricted stock and employee stock purchase plan     135       277  
      Gain on disposition of property and equipment     (30 )     -  
      Changes in fair market value of liabilities:                
        Stock reserved for issuance to settle liabilities     (31 )     2,503  
        Embedded debt features     (829 )     -  
        Price adjustable warrants     (151 )     (13 )
      Changes in assets and liabilities:                
        Accounts receivable     2       (495 )
        Prepaid expenses and other assets     22       (181 )
        Accounts payable     8       (563 )
        Deferred revenue     (115 )     -  
        Accrued restructuring     (380 )     (12 )
        Accrued and other liabilities     978       (285 )
    Net cash provided by (used in) operating activities     285       (4,779 )
Investing activities:                
Change in restricted cash     380       -  
Proceeds from the sale of property and equipment     30       -  
    Net cash provided by investing activities     410       -  
Financing activities:                
  Proceeds from sales of Series C preferred shares and warrants, net     -       5,929  
  Cash payments of notes payable     -       (250 )
  Cash proceeds from exercise of warrants             23  
  Insurance financing     (2 )     (8 )
    Net cash provided by (used in) financing activities     (2 )     5,694  
Net increase in cash     693       915  
Cash and cash equivalents -- beginning of year     216       909  
Cash and cash equivalents -- end of year   $ 909     $ 1,824  
Non-cash financing activities:                
    Reclassification of fair value liability for price adjustable warrants exercised     -     $ 1,917  
    Issuance of common stock to settle liabilities     -     $ 3,517  
    Debt conversion to common shares     -     $ 1,479  
    Deemed dividend to Series C convertible preferred stockholders     -     $ 6,000  
Supplemental Disclosure                
    Cash paid for interest   $ 1     $ 83  
                     
See report of independent registered public accounting firm and accompanying notes to the condensed consolidated financial statements.  

Contact Information