If funding does not improve, firm will consider axing activities completely.

Marina Biotech has implemented a furlough of approximately 90% of its employees and ceased most day-to-day operations. The move is based on the company’s need to conserve available cash as it does not have adequate funding to continue implementing its business plan. The decision includes the halt of Marina’s Phase I trial with CEQ508 in familial adenomatous polyposis (FAP). The firm also has two preclinical programs in bladder cancer and hepatocellular carcinoma.

The company previously engaged banking teams to identify strategic opportunities and to seek additional funding, and their efforts are ongoing. If sufficient additional funds are not received in the near-term, the company may need to further reduce or cease operations completely.

For now the company has negotiated an extension on its secured loan, which is now due and payable in its entirety June 15, 2012, through the issuance to the secured lenders of five-year warrants to purchase approximately 425,000 shares of common stock.

Marina is focused on oligonucleotide-based therapeutics. The company has had a relatively active past year and half in terms of license deals. In fact, in January, J. Michael French, president and CEO, noted, “In the last quarter alone, we brought in over $1.5 million of nondilutive capital from partnerships and licensing agreements.

“In 2011, I believe we were the only company to complete two deals in two distinct oligonucleotide therapeutic areas: RNAi and microRNA,” French continued. “In addition, we are the only company with two different technologies in clinical development pursuing two different oligonucleotide therapeutic approaches: RNAi and DNAi.”

With regard to this year, French said, “Our goals in 2012 are very straightforward, continue to broaden our drug discovery platform through licenses and partnerships and advance our preclinical and clinical programs. I am encouraged by not only our own progress but that of the entire sector and believe that 2012 will be an important year for Marina Biotech as well as the nucleic acid-based therapeutics field.”

A month after these statements, however, Marina Biotech shuttered its Cambridge site and consolidated all R&D efforts at its headquarters in Bothell, WA. “The closing of the Cambridge site is consistent with our continued efforts to reduce our cash utilization,” French explained.

Marina’s collaborative efforts started last February with Debiopharm agreeing to develop and commercialize the bladder cancer program. Debiopharm will shoulder all associated R&D costs and also retain full responsibility for the development and commercialization of any resulting products. Marina could receive up to $25 million in R&D milestones plus royalties.

In December 2011, Mirna Therapeutics licensed Marina’s Smarticles® technology for the delivery of miRNA mimics. It agreed to pay $63 million in total up-front fees as well as clinical and commercialization milestone payments over and above royalties on sales. Another Smarticles license arrangement came this March. ProNAi Therapeutics entered the deal to bolster development of its DNAi-based therapeutics and ProNAi has the option to select any number of gene targets. Marina could receive up to $14 million for each target in total up-front and milestone fees.

On May 8, Marina entered into an agreement with Monsanto for Marina’s delivery and chemistry technologies. And on May 21, Girindus obtained the exclusive rights to develop, supply, and commercialize certain oligonucleotide constructs using Marina Biotech’s conformationally restricted nucleotide (CRN) chemistry. In return Marina will receive royalties from the sale of CRN-based oligonucleotide reagents as well as a supply of cGMP material.

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