The Northwest Biotech Survival Index 2: Companies Scraping By in Downturn

3/25/09Follow @xconomy

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Dendreon will race off to the FDA for permission to take Provenge to the U.S. marketplace. If not, that cash cushion will come in very handy as the company regroups.

MDRNA (NASDAQ: MRNA). This RNA interference drug developer, in Bothell, WA, has been running dangerously low on cash for months, as I reported back in January. The company entered this year with just $3.4 million in cash and investments left, and hung on until it got a boost this week from Novartis, which agreed to pay $7.25 million upfront in exchange for a non-exclusive license to some RNAi delivery technology. But easy come, easy go. MDRNA immediately sent former CEO Steven Quay a severance check for $870,000. The company didn’t say in its latest financial report how long its existing cash reserves ought to last.

Northstar Neuroscience (NASDAQ: NSTR). The Seattle maker of an electrical brain-stimulation device for patients with severe depression was relatively flush with $70.2 million left at the end of September. It had a plan to watch its pennies, spending only about $16 million in 2009. That appalled Northstar’s investors, who didn’t want to see any more money spent at all. Rather than allow the company to continue to develop the technology, RA Capital, a Boston hedge fund, put the screws to Northstar and demanded it shut down and liquidate its assets to shareholders, who had already taken a big-time bath. In January, Northstar threw in the towel and did just that.

Oncothyreon (NASDAQ: ONTY). This Seattle-based cancer drug company was running down to its last few months of cash back in December, when it took drastic measures to keep the company alive. CEO Bob Kirkman sold off the company’s cancer vaccine manufacturing assets to German partner Merck KgAA for $13 million, and consolidated R&D at a central site in Seattle. This helped the company boost its cash reserves to $19.2 million heading into the year, and lower its spending rate this year to about $12 million, meaning it still has more than a year to show it has enough promise against cancer to keep going.

OncoGenex Pharmaceuticals (NASDAQ: OGXI). This cancer drug developer with offices in Bothell and Vancouver, BC, which inherited the balance sheet of Sonus Pharmaceuticals, had $17.2 million at the end of September. That balance was whittled down to $12.4 million as the company headed into 2009, putting it in a delicate bargaining position with potential partners. OncoGenex has some good cards to play—its OGX-011 showed an impressive 10 month survival advantage over standard chemotherapy in a small clinical trial. That boosted its stock price for a while, but OncoGenex is hoping to make a bigger bang when it lets doctors scrutinize its full presentation at the American Society of Clinical Oncology meeting in late May and early June. It had better generate a serious investor frenzy, because CEO Scott Cormack says the budget for final stage clinical trials of this drug will cost $70 million, way more than he has in the company bank account.

Seattle Genetics (NASDAQ: SGEN). This Bothell, WA-based company is starting to separate itself from the pack in Seattle. … Next Page »

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