BOTHELL, WA -- (Marketwire) -- 07/29/09 -- MDRNA, Inc. (NASDAQ: MRNA) today reported financial results for the three- and six-month periods ended June 30, 2009. Net loss for the second quarter of 2009 was approximately $7.5 million or $0.21 per share, compared to a net loss of approximately $14.3 million or $0.48 per share for the same period of 2008. The net loss for the six months ended June 30, 2009 was approximately $0.3 million or $0.01 per share, compared to approximately $30.8 million or $1.10 per share for the prior year same six-month period.

"During the second quarter, we successfully completed our transition to an RNAi therapeutics company," stated J. Michael French, President and CEO of MDRNA. "We are pleased with the speed with which we completed this transition and the continued rapid advancement of our RNAi drug discovery platform; in particular, we have repeatedly shown in vivo efficacy data demonstrating effective systemic and local delivery using our proprietary DiLA(2) delivery technology. We believe we now have the breadth of science; broad intellectual property portfolio and strong balance sheet necessary to strengthen our leadership position in the RNAi field. We are excited about our potential moving forward and remain committed to increasing shareholder value."

FINANCIAL RESULTS

Revenue

Revenue for the three months ended June 30, 2009 was $0.3 million, compared to $0.8 million for the three months ended June 30, 2008. Revenue for the six months ended June 30, 2009 was $14.5 million, compared to $2.0 million for the six months ended June 30, 2008. Revenue in 2009 primarily included licensing fees of $7.5 million from Novartis, licensing fees of $5.0 million from Roche, and a milestone payment of $1.0 million from Amylin Pharmaceuticals, Inc. related to the amendment to our 2006 License Agreement. Revenue in 2008 was generated from license and research fees, Nascobal® product sales and government grants.

Expenses

Research and development ("R&D") expenses for the current quarter decreased 49%, from $8.5 million to $4.3 million, compared to the prior year second quarter, and decreased 56%, from $19.4 million to $8.5 million in the six months ended June 30, 2009, compared to the same period last year. The decrease in our R&D expenses in 2009 compared to 2008 is associated with our transition from a clinical-stage intranasal drug delivery company to a pre-clinical RNAi drug discovery company. The 2008 year-to-date period included approximately $3.6 million in clinical trial expenditures, compared to zero in 2009. Additionally we have reduced headcount, facility and other costs from the 2008 periods.

Selling, general and administrative ("SG&A") expenses for the current quarter were $2.3 million which represent a decrease of $1.6 million, or 41%, compared to the prior year second quarter. SG&A expenses decreased $4.3 million or 49% in the six months ended June 30, 2009 compared to the same prior year period. The lower expenses in 2009 are due to headcount reductions and operating efficiency efforts.

Restructuring Charges

We recorded a net restructuring charge in the second quarter of $0.2 million, and $0.3 million in the six months ended June 30, 2009, comprised of facilities related charges. Total restructuring charges of $1.9 million for the 2008 six-month period were primarily comprised of employee severance and related costs of approximately $1.6 million and $0.3 million in fees related to the termination of the clinical trial for intranasal PTH(1-34) for osteoporosis.

Other Income/(Expense)

We recorded a net gain on settlement of liabilities during the six-month period ended June 30, 2009 of $0.7 million related to our efforts during early 2009 to restructure our outstanding liabilities, including our capital lease obligations with GE capital, severance compensation and other accounts payable. We also recorded expenses of $0.9 million and $1.9 million in the three- and six-month periods ending June 30, 2009 related to the re-measurement of price-adjustable warrants required to be classified as liabilities beginning January 1, 2009 under EITF 07-05. The total liability on our balance sheet for these warrants at June 30, 2009 is approximately $10.8 million, which included the valuation of additional warrants issued in our June 2009 financing. The liability is re-measured at the end of each accounting period, and increases or decreases with changes in our stock price and variables in our Black-Scholes valuation model.

Balance Sheet

We netted $9.3 million from a financing transaction in June 2009. We used a portion of the proceeds to pay off our remaining debt of approximately $1.8 million to GE Capital and at June 30, 2009 we are free of any term debt obligations and have approximately $9.4 million in cash and cash equivalents, including $1.5 million in restricted cash.