MDRNA and Cequent Pharma in $46M Merger Deal

4/1/10

MDRNA, the Bothell, WA-based developer of gene-silencing drugs, could give itself a longer cash runway in a proposed merger with Cequent Pharmaceuticals, of Cambridge, MA. The companies announced plans this morning to combine in an all-stock deal worth about $46 million.

Last week, MDRNA (NASDAQ:MRNA) said its cash would keep the company afloat only into the second quarter of this year. Today the company is saying that its merger with Cequent—a venture-backed biotech that has raised at least $17.7 million in equity from backers such as Ampersand Ventures, Pappas Ventures, Yasuda, and Novartis Option Fund—would enable the combined firm to operate for the rest of 2010. Both firms hope to close the proposed merger by July.

In addition to cash, Cequent would bring MDRNA its novel technology in the burgeoning field of RNA interference (RNAi), which involves turning on and off certain genes to treat diseases. Cequent’s technology uses engineered E. coli bacteria to deliver RNAi drugs orally into the gut, and the company’s lead drug candidate for treating a rare genetic disease called familial adenomatous polyposis (FAP) with this approach is due to begin initial human clinical trials sometime between now and the end of June, according to the company.

The proposed merger would give investors in MDRNA a 56 percent ownership stake in the combined outfit, with Cequent’s backers owning the rest of the company. The plan is to keep the company headquartered in Bothell under the leadership of MDRNA’s current CEO, J. Michael French, while Cequent CEO Peter Parker would become the chairman of the company’s board of directors. Cequent’s office in Cambridge would become the combined company’s hub of clinical operations.

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