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the company licensed some of its RNAi intellectual property to Roche—essentially allowing it to kick the tires of the technology—for $5 million. The next month, French persuaded Novartis to chip in $7.25 million for a similar tire-kicking deal. Again, these deals gave French a little breathing space, but not much. He still had to renegotiate about $6 million in debt with GE Capital, using intellectual property as collateral to buy more time.
To hear French talk, there was no bluffing or bluster in these talks. Partners knew they had him over a barrel, and were getting fire sale prices from a man under serious pressure.
“Companies like Roche and Novartis don’t just do deals in four and six weeks, and give people $12.5 million,” he says. “They didn’t do that because Michael French is a good guy. They did it because the science is good.”
He also says he relied heavily on his relationships forged over the years. “The reputation I have, basically, that was important. People know if I come in and say something, it is absolutely, without question, the truth. There are no ifs, ands, or buts about it. When Barry (Polisky, the chief scientist) comes in to the room, it’s the same thing. I told [prospective partners] ‘I need to do this in four weeks, or I won’t have a company left.'”
Even after the Roche and Novartis lifelines, French was still short on cash. Then in June 2009, he got truly lucky. The company issued a press release on June 9, headlined “MDRNA Receives Full FDA Approval of Generic Calcitonin-Salmon Nasal Spray for Osteoporosis.” Anybody who bothered to read the fine print would know that MDRNA wasn’t actually in the nasal spray business anymore, and had licensed that technology to another company, Par Pharmaceutical. But MDRNA technically had the license, and was entitled to issue the press release.
So even though this product didn’t represent any meaningful future cash flow for MDRNA, some investors got giddy about this supposedly surprising good news. The company’s stock went bonkers. It went from $1.54 at the previous day’s close—on volume of a paltry 94,000 shares—to open the next day at $3.28. Given the wild new demand for shares, French turned on a dime, hiring Canaccord Adams that very day to sell a fresh 5.25 million shares to investors at the bargain rate of … Next Page »