10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

For the Quarter Ended September 30, 2016

Commission File Number 000-13789

MARINA BIOTECH, INC.

(Exact name of registrant as specified in its charter)

Delaware	11-2658569
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
P.O. Box 1559, Bothell, WA	98041
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (425) 892-4322

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [  ]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [X] No [  ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check One):

Large accelerated filer	[  ]	Accelerated filer	[  ]
Non-accelerated filer	[  ] (Do not check if a smaller reporting company)	Smaller reporting company	[X]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [  ] No [X]

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:

Date	Class		Shares Outstanding
November 18, 2016		Common stock — $0.006 par value		89,771,379

MARINA BIOTECH, INC. AND SUBSIDIARIES

TABLE OF CONTENTS

PART I — FINANCIAL INFORMATION
ITEM 1 — FINANCIAL STATEMENTS (UNAUDITED)	3
Condensed Consolidated Balance Sheets as of December 31, 2015 and September 30, 2016	3
Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2015 and 2016	4
Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2015 and 2016	5
Notes to Condensed Consolidated Financial Statements	6
ITEM 2 — MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	14
ITEM 3 — QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	18
ITEM 4 — CONTROLS AND PROCEDURES	18
PART II — OTHER INFORMATION
ITEM 6 — EXHIBITS	19
SIGNATURES	20
EXHIBIT INDEX	21

Items 1, 1A, 2, 3, 4 and 5 of PART II have not been included as they are not applicable.

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PART I — FINANCIAL INFORMATION

ITEM 1 — FINANCIAL STATEMENTS

MARINA BIOTECH, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In thousands, except share and per share data)	December 31, 2015			September 30, 2016
ASSETS
Current assets:
Cash	$	710		$	80
Prepaid expenses and other current assets		140			100
Total current assets		850			180
Intangible assets		6,700			6,700
Other assets		45			-
Total assets	$	7,595		$	6,880
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	763		$	1,500
Accrued payroll and employee benefits		377			71
Other accrued liabilities		1,296			1,130
Promissory notes		-			307
Total current liabilities		2,436			3,008
Fair value liability for price adjustable warrants		2,491			109
Fair value of stock to be issued to settle liabilities		60			15
Deferred income tax liabilities		2,345			2,345
Total liabilities		7,332			5,477
Commitments and contingencies
Stockholders’ equity:
Preferred stock, $0.01 par value; 100,000 shares authorized
Series C convertible preferred stock, $0.01 par value; 1,200 shares authorized, 1,020 shares issued and outstanding at December 31, 2015 and September 30, 2016, respectively (preference in liquidation of $5,100 at September 30, 2016)		-			-
Series D convertible preferred stock, $0.01 par value; 220 shares authorized, 170 and 60 shares issued and outstanding at December 31, 2015 and September 30, 2016, respectively (preference in liquidation of $300 at September 30, 2016)		-			-
Common stock, $0.006 par value; 180,000,000 shares authorized, 27,704,340 and 29,759,503 shares issued and outstanding at December 31, 2015 and September 30, 2016, respectively		166			179
Additional paid-in capital		334,548			335,289
Accumulated deficit		(334,451	)		(334,065	)
Total stockholders’ equity		263			1,403
Total liabilities and stockholders’ equity	$	7,595		$	6,880

See accompanying notes to the condensed consolidated financial statements.

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MARINA BIOTECH, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
(In thousands, except per share amounts)	2015			2016			2015			2016
License and other revenues	$	80		$	50		$	480		$	300
Operating expenses:
Research and development		90			17			574			240
General and administrative		1,022			574			3,275			1,963
Total operating expenses		1,112			591			3,849			2,203
Loss from operations		(1,032	)		(541	)		(3,369	)		(1,903	)
Other income (expense):
Change in fair value liability for price adjustable warrants		2,485			510			6,128			2,296
Interest expense		-			(7	)		-			(7	)
Gain on settled liabilities		6			-			18			-
Total other income, net		2,491			503			6,146			2,289
Net income (loss)		1,459			(38	)		2,777			386
Deemed dividend related to discount on beneficial Conversion feature in Series D convertible preferred shares		(690	)		-			(690	)		-
Net income (loss) applicable to common stockholders	$	769		$	(38	)	$	2,087		$	386
Net income (loss) per common share
Basic	$	0.03		$	(0.00	)	$	0.08		$	0.01
Diluted	$	(0.06	)	$	(0.05	)	$	(0.12	)	$	(0.05	)
Shares used in computing net income (loss) per share
Basic		26,462			29,760			26,047			29,264
Diluted		30,939			2,647			33,484			5,752

See accompanying notes to the condensed consolidated financial statements.

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MARINA BIOTECH, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	Nine months ended September 30,
(In thousands)	2015			2016
Operating activities:
Net income	$	2,777		$	386
Adjustments to reconcile net income to net cash used in operating activities:
Non-cash license expense		132			90
Non-cash gain on settlement of liabilities		(18	)		-
Compensation related to stock options and warrants		412			533
Changes in fair market value of liabilities:
Price adjustable warrants		(6,128	)		(2,296	)
Cash changes in assets and liabilities:
Accounts receivable		500			-
Prepaid expenses and other assets		82			85
Accounts payable		90			737
Accrued and other liabilities		546			(465	)
Net cash used in operating activities		(1,607	)		(930	)
Financing activities:
Proceeds from promissory notes		-			300
Proceeds from sales of Series D preferred shares and warrants, net		1,095			-
Proceeds from exercise of warrants for common stock		1			-
Net cash provided by financing activities		1,096			300
Net decrease in cash		(511	)		(630	)
Cash — Beginning of period		1,824			710
Cash — End of period	$	1,313		$	80
Supplemental disclosure of cash flow information and non-cash financing activities:
Issuance of common stock to settle liabilities	$	195		$	135
Fair value of warrants issued to purchase common stock to settle liabilities	$	65		$	-
Deemed dividend to Series D convertible preferred stockholders	$	690		$	-
Par value of common stock issued upon conversion of Series C convertible preferred stock	$	4		$	-
Par value of common stock issued upon conversion of Series D convertible preferred stock	$	-		$	8
Fair value of derivative warrant liability reclassified to additional paid-in capital	$	-		$	86

See accompanying notes to the condensed consolidated financial statements.

 5

MARINA BIOTECH, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the three and nine months ended September 30, 2015 and 2016

(Unaudited)

Note 1 — Business, Liquidity and Summary of Significant Accounting Policies

Business

Marina Biotech, Inc. (“we”, “Marina, or the “Company”) is a biotechnology company that has focused on the discovery, development and commercialization of nucleic acid-based therapies to treat orphan diseases. Our pipeline includes CEQ508, a product in clinical development for the treatment of Familial Adenomatous Polyposis (“FAP”), for which we have received Orphan Drug Designation (“ODD”) and Fast Track Designation (“FTD”) from the U.S. Food and Drug Administration (“FDA”), and preclinical programs for the treatment of type 1 myotonic dystrophy (“DM1”) and Duchenne muscular dystrophy (“DMD”).

Since 2010, we have strategically acquired/in-licensed and further developed nucleic acid chemistry and delivery-related technologies in order to establish a novel and differentiated drug discovery platform. This platform allows us to distinguish ourselves from others in the nucleic acid therapeutics area in that we are the only company capable of creating a wide variety of therapeutics targeting coding and non-coding RNA via multiple mechanisms of action such as RNA interference (“RNAi”), messenger RNA translational inhibition, exon skipping, microRNA (“miRNA”) replacement, miRNA inhibition, and steric blocking in order to modulate gene expression either up or down depending on the specific mechanism of action. Our goal has been to dramatically improve the lives of the patients and families affected by orphan diseases through either our own efforts or those of our collaborators and licensees.

Merger with IthenaPharma

On November 15, 2016, we entered into, and consummated the transactions contemplated by, an Agreement and Plan of Merger between and among our company, IthenaPharma Inc., a Delaware corporation (“Ithena”), Ithena Acquisition Corporation, a Delaware corporation and wholly-owned subsidiary of Marina (“Merger Sub”), and Vuong Trieu as the Ithena representative (the “Merger Agreement”), pursuant to which Ithena merged into Merger Sub (the “Merger”). Upon completion of the Merger and subject to the applicable provisions of the Merger Agreement, Merger Sub has ceased to exist and Ithena continues as the surviving corporation of the Merger and as a wholly-owned subsidiary of Marina. As consideration for the Merger, the Company issued to the former shareholders of Ithena 58,392,828 shares of the Company’s common stock, representing approximately 65% of the issued and outstanding shares of the Company’s common stock following the completion of the Merger. In addition, the Company assumed warrants to purchase 300,000 shares of Ithena common stock, appointed Vuong Trieu, the president of Ithena, as the Chairman of the Board of Directors of the Company and gave the right to appoint one additional member of the Board of Director to the former shareholders of Ithena.

In the Merger, Marina acquired the business and assets of Ithena, which consist primarily of pharmaceutical compounds in various stages of development. In addition, Vuong Trieu, the Chief Executive Officer of Ithena, extended to the Company a $540,000 demand line of credit, of which $15,000 had been drawn at November 18, 2016.

Moreover, we entered into a License Agreement with Autotelic LLC, a stockholder of Ithena, pursuant to which (A) we will license to Autotelic LLC certain patent rights, data and know-how relating to Familial Adenomatous Polyposis and nasal insulin, for human therapeutics other than for oncology-related therapies and indications, and (B) Autotelic LLC licensed to us certain patent rights, data and know-how relating to IT-102 and IT-103, in connection with individualized therapy of pain using a non-steroidal anti-inflammatory drug and an anti-hypertensive without inducing intolerable edema, and treatment of certain aspects of proliferative disease, but not including rights to IT-102/IT-103 for TDM guided dosing for all indications using an Autotelic TDM Device. We also granted a right of first refusal to Autotelic LLC with respect to any license by us of the rights licensed by or to us under the License Agreement in any cancer indication outside of gastrointestinal cancers.

Further, we entered into a Master Services Agreement with Autotelic Inc., a stockholder of Ithena, pursuant to which Autotelic Inc. agreed to provide certain business functions and services from time to time during regular business hours at our request.

As the former shareholders of Ithena will control greater than 50% of the Company subsequent to the Merger, it is anticipated that Ithena will be considered the acquirer for accounting purposes and that future financial disclosures for the Company will be the historical information of Ithena. Ithena will account for the acquisition of the Company under the purchase accounting method following completion.

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We will need additional capital to execute our business, which may involve acquiring other assets or selling existing assets. If we are not successful in raising additional capital, strategic alternatives will be considered, which may include delaying the development of certain compounds, selling (or otherwise losing our rights to) existing technology or ceasing operations.

For further information regarding the Merger Agreement, the Merger, and the other documents and transactions contemplated thereby, see our Current Report on Form 8-K filed with the Securities and Exchange Commission on November 18, 2016.

Recent Licensing and IP Developments

In February 2016, we entered into an evaluation and option agreement covering certain of our platforms for the delivery of an undisclosed genome editing technology. The agreement contains an option provision for the exclusive license of our SMARTICLES platform in a specific gene editing field.

In March 2016, we entered into a license agreement covering certain of our platforms for the delivery of an undisclosed genome editing technology. Under the terms of the agreement, we received an upfront license fee of $0.25 million, and could receive up to $40 million in success-based milestones.

In July 2016, we entered into a license agreement with an undisclosed licensee that grants such licensee rights to use our technology and intellectual property to develop and commercialize products combining certain molecules with our liposomal delivery technology known as NOV582. Under the terms of this agreement, the licensee agreed to pay to us an upfront license fee in the amount of $0.35 million (to be paid in installments through the end of 2017), along with milestone payments on a per-licensed-product basis and royalty payments in the low single digit percentages. As of September 30, 2016, we have received $0.05 million per the terms of this license agreement. In conjunction with this transaction, we pledged to issue common stock valued at $0.002 million to Novosom. This obligation is included in Fair Value of Stock to be Issued to Settle Liabilities at September 30, 2016.

We believe that, as a result of the issuance of US patent no. 9,023,793 on May 5, 2015, we became entitled to receive a milestone payment in the amount of $2 million under an Asset Purchase Agreement dated August 25, 2010 between us and Cypress Biosciences (“Cypress”), which was subsequently assigned by Cypress to Kyalin Biosciences, Inc., and further assigned to Retrophin, Inc. (“Retrophin”). We have advised Retrophin of our claim to payment of this milestone. However, Retrophin has denied our claim. Although we intend to vigorously pursue our right to receive the milestone payment, there can be no assurance that we will be successful in our endeavors to receive the payments to which we believe we are entitled.

Note Purchase Agreement

On June 20, 2016, we entered into a Note Purchase Agreement (the “Purchase Agreement”) with certain investors (the “Purchasers”), pursuant to which we issued to the Purchasers unsecured promissory notes in the aggregate principal amount of $0.3 million (the “Notes”). Interest shall accrue on the unpaid principal balance of the Notes at the rate of 12% per annum beginning on September 20, 2016. The Notes will become due and payable on June 20, 2017, provided, that, upon the closing of a financing transaction that occurs while the Notes are outstanding, each Purchaser shall have the right to either: (i) accelerate the maturity date of the Note held by such Purchaser or (ii) convert the entire outstanding principal balance under the Note held by such Purchaser and accrued interest thereon into our securities that are issued and sold at the closing of such financing transaction.

Further, if we at any time while the Notes are outstanding receive any cash payments in the aggregate amount of not less than $0.25 million, as a result of the licensing, partnering or disposition of any of the technology held by us or any related product or asset, we shall pay to the holders of the Notes, on a pro rata basis, an amount equal to 25% of each payment actually received by us, which payments shall be applied against the outstanding principal balance of the Notes and the accrued and unpaid interest thereon, until such time as the Notes are repaid in full.

As of September 30, 2016, the accrued interest expense on the Notes amounted to $0.007.

In the Purchase Agreement, we agreed: (x) to extend the termination date of all of the warrants to purchase shares of our common stock (such warrants, the “Prior Warrants”) that were delivered to the purchasers pursuant to that certain Note and Warrant Purchase Agreement, dated as of February 10, 2012 between us and the purchasers identified on the signature pages thereto, as it has been amended to date, to February 10, 2020 and (y) to extend the exercise price protection afforded of the Prior Warrants so that such protection would apply to any financing transaction effected by us on or prior to June 19, 2017 (with any such adjustment only applying to 80% of the Prior Warrants, ad with such protection not resulting in the issuance of any additional shares of our common stock). As the Prior Warrants were already recorded at fair value as a result of price adjustable terms, the impacts of the modification of the terms is included in the change in fair value of price adjustable warrants in the statement of operations.

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Liquidity

The accompanying condensed consolidated financial statements have been prepared on the basis that we will continue as a going concern, which contemplates realization of assets and the satisfaction of liabilities in the normal course of business. At September 30, 2016, we had an accumulated deficit of approximately $334.1 million, $108.3 million of which has been accumulated since we focused on RNA therapeutics in June 2008. To the extent that sufficient funding is available, we will continue to incur operating losses as we execute our plan to raise additional funds and investigate strategic and business development initiatives. In addition, we have had and will continue to have negative cash flows from operations. We have funded our losses primarily through the sale of common and preferred stock and warrants, the sale of the Notes, revenue provided from our license agreements and, to a lesser extent, equipment financing facilities and secured loans. In 2015 and 2016, we funded operations with a combination of the issuance of the Notes, preferred stock and license-related revenues. At September 30, 2016, we had negative working capital of $2.8 million and $0.1 million in cash. Our limited operating activities consume the majority of our cash resources.

We believe that our current cash resources, including the proceeds from the Notes received in June 2016 as noted above, and the $0.54 million line of credit associated with the Merger Agreement, will enable us to fund our intended operations through March 2017. Our ability to execute our operating plan beyond March 2017 depends on our ability to obtain additional funding. The volatility in our stock price, as well as market conditions in general, could make it difficult for us to raise capital on favorable terms, or at all. If we fail to obtain additional capital when required, we may have to modify, delay or abandon some or all of our planned activities, or terminate our operations. There can be no assurance that we will be successful in any such endeavors. The accompanying consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Basis of Preparation and Summary of Significant Accounting Policies

Basis of Preparation — The accompanying condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and note disclosures required by U.S. generally accepted accounting principles (“U.S. GAAP”) for complete financial statements. The accompanying unaudited financial information should be read in conjunction with the audited consolidated financial statements, including the notes thereto, as of and for the year ended December 31, 2015, included in our 2015 Annual Report on Form 10-K filed with the SEC. The information furnished in this report reflects all adjustments (consisting of normal recurring adjustments), which are, in the opinion of management, necessary for a fair presentation of our financial position, results of operations and cash flows for each period presented. The results of operations for the three and nine months ended September 30, 2016 are not necessarily indicative of the results for the year ending December 31, 2016 or for any future period.

Use of Estimates — The preparation of financial statements in conformity with U.S. GAAP requires our management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting periods. Estimates having relatively higher significance include revenue recognition, stock-based compensation, valuation of warrants, valuation and estimated lives of identifiable intangible assets, impairment of long-lived assets, valuation of features embedded within note agreements and amendments, and income taxes. Actual results could differ from those estimates.

Reclassifications — Certain amounts have been reclassified in prior period condensed consolidated financial statements to conform to the current year presentation.

Fair Value of Financial Instruments — We consider the fair value of cash, accounts payable, accrued liabilities and promissory notes to not be materially different from their carrying value. These financial instruments have short-term maturities.

We follow authoritative guidance with respect to fair value reporting issued by the Financial Accounting Standards Board (“FASB”) for financial assets and liabilities, which defines fair value, provides guidance for measuring fair value and requires certain disclosures. The guidance does not apply to measurements related to share-based payments. The guidance discusses valuation techniques, such as the market approach (comparable market prices), the income approach (present value of future income or cash flow), and the cost approach (cost to replace the service capacity of an asset or replacement cost). The guidance establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The following is a brief description of those three levels:

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Level 1: Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2: Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.

Level 3: Unobservable inputs in which little or no market data exists, therefore developed using estimates and assumptions developed by us, which reflect those that a market participant would use.

Our cash is subject to fair value measurement and value is determined by Level 1 inputs. We measure the liability for committed stock issuances with a fixed share number using Level 1 inputs. We measure the liability for price adjustable warrants and certain features embedded in notes using the Black-Scholes option pricing model (“Black-Scholes”) under various probability weighted scenarios, using Level 3 inputs. The following tables summarize our liabilities measured at fair value on a recurring basis as of December 31, 2015 and September 30, 2016:

			Level 1				Level 3
			Quoted prices in		Level 2		Significant
	Balance at		active markets for		Significant other		unobservable
(In thousands)	December 31, 2015		identical assets		observable inputs		inputs
Liabilities:
Fair value liability for price adjustable warrants	$	2,491	$	-	$	-	$	2,491
Fair value liability for shares to be issued		60		60		-		-
Total liabilities at fair value	$	2,551	$	60	$	-	$	2,491

				Level 1			Level 3
				Quoted prices in	Level 2		Significant
	Balance at			active markets for	Significant other		unobservable
(In thousands)	September 30, 2016			identical assets	observable inputs		inputs
Liabilities:
Fair value liability for price adjustable warrants	$	109	$	-	$	-	$	109
Total liabilities at fair value	$	109	$	-	$	-	$	109

The following presents activity of the fair value liability of price adjustable warrants determined by Level 3 inputs for the nine-month period ended September 30, 2016, including the impact of the modifications to the Prior Warrants made in conjunction with the Purchase Agreement:

	Fair value
	liability for price			Weighted average as of each measurement date
	adjustable warrants			Exercise		Stock					Contractual life		Risk free
	(in thousands)			Price		Price		Volatility			(in years)		rate
Balance at December 31, 2015	$	2,491		$	0.42	$	0.27		99	%		1.79		0.46	%
Fair value of derivative warrant liability reclassified to additional paid-in capital		(86	)
Change in fair value included in Statement of Operations		(2,296	)
Balance at September 30, 2016	$	109		$	0.43	$	0.18		90	%		1.73		0.02	%

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Net Income (Loss) per Common Share — Basic net income (loss) per common share is computed by dividing the net income (loss) by the weighted average number of common shares outstanding during the period. Diluted net income (loss) per share includes the effect of common stock equivalents (stock options, unvested restricted stock and warrants) when, under either the treasury or if-converted method, such inclusion in the computation would be dilutive. The following number of shares have been excluded from diluted net income (loss) since such inclusion would be anti-dilutive:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2015		2016		2015		2016
Stock options outstanding		1,316,106		1,548,106		1,316,106		1,548,106
Warrants		1,236,946		3,416,104		1,236.946		3,416,104
Convertible preferred stock		10,150,000		7,550,000		10,150,000		7,550,000
Total		12,703,052		12,514,210		12,703,052		12,514,210

The following is a reconciliation of basic and diluted net income (loss) per share:

	Three Months Ended September 30,						Nine Months Ended September 30,
(In thousands except per share amounts)	2015			2016			2015			2016
Net income (loss) – numerator basic	$	769		$	(38	)	$	2,087		$	386
Change in fair value liability for price adjustable warrants		(2,485	)		(82	)		(6,128	)		(685	)
Net loss excluding change in fair value liability for price adjustable warrants	$	(1,716	)	$	(120	)	$	(4,041	)	$	(299	)
Weighted average common shares outstanding – denominator basic		26,462			29,760			26,047			29,264
Effect of price adjustable warrants		4,477			(27,113	)		7,437			(23,512	)
Weighted average dilutive common shares outstanding		30,939			2,647			33,484			5,752
Net income (loss) per common share – basic	$	0.03		$	(0.00	)	$	0.08		$	0.01
Net income (loss) per common share – diluted	$	(0.06	)	$	(0.05	)	$	(0.12	)	$	(0.05	)

Impairment of long-lived assets — We review all of our long-lived assets for impairment indicators throughout the year and perform detailed testing whenever impairment indicators are present. In addition, we perform detailed impairment testing for indefinite-lived intangible assets, specifically IPR&D, at least annually at December 31. When necessary, we record charges for impairments. Specifically:

● For finite-lived intangible assets, such as developed technology rights, and for other long-lived assets, such as property and equipment, we compare the undiscounted amount of the projected cash flows associated with the asset, or asset group, to the carrying amount. If the carrying amount is found to be greater, we record an impairment loss for the excess of book value over fair value. In addition, in all cases of an impairment review, we re-evaluate the remaining useful lives of the assets and modify them, as appropriate; and

● For indefinite-lived intangible assets, such as IPR&D assets, each year and whenever impairment indicators are present, we determine the fair value of the asset and record an impairment loss for the excess of book value over fair value, if any.

Note 2 — Stockholders’ Equity

Preferred Stock — Our board of directors has the authority, without action by the stockholders, to designate and issue up to 100,000 shares of preferred stock in one or more series and to designate the rights, preferences and privileges of each series, any or all of which may be greater than the rights of our common stock. We have designated 1,000 shares as Series B Preferred Stock (“Series B Preferred”) and 90,000 shares as Series A Junior Participating Preferred Stock (“Series A Preferred”). No shares of Series B Preferred or Series A Preferred are outstanding. In March 2014, we designated 1,200 shares as Series C Convertible Preferred Stock (“Series C Preferred”). In August 2015, we designated 220 shares as Series D Convertible Preferred Stock (“Series D Preferred”).

In August 2015, we entered into a Securities Purchase Agreement with certain investors pursuant to which we sold 220 shares of Series D Preferred, and warrants to purchase up to 3.44 million shares of our common stock at an initial exercise price of $0.40 per share before August 2021, for an aggregate purchase price of $1.1 million. We incurred $0.01 million of stock issuance costs in conjunction with the Series D Preferred, which were netted against the proceeds. The warrants issued in connection with Series D Preferred contain an exercise price protection provision whereby the exercise price per share to purchase common stock covered by these warrants is subject to reduction in the event of certain dilutive stock issuances at any time within two years of the issuance date, but not to be reduced below $0.28 per share. Any such adjustment will not result in the issuance of any additional shares of our common stock. Each share of Series D Preferred has a stated value of $5,000 per share and is convertible into shares of common stock at a conversion price of $0.40 per share. The Series D Preferred is initially convertible into an aggregate of 2,750,000 shares of our common stock, subject to certain limitations and adjustments, has a 5% stated dividend rate, is not redeemable and has voting rights on an as-converted basis.

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To account for the issuance of the Series D Preferred and warrants, we first assessed the terms of the warrants and determined that, due to the exercise price protection provision, they should be recorded as derivative liabilities. We determined the fair value of the warrants on the issuance date and recorded a liability and a discount of $0.6 million on the Series D Preferred resulting from the allocation of proceeds to the warrants. We then determined the effective conversion price of the Series D Preferred which resulted in a beneficial conversion feature of $0.7 million. The beneficial conversion feature was recorded as both a debit and a credit to additional paid-in capital and as a deemed dividend on the Series D Preferred in determining net income applicable to common stock holders in the consolidated statements of operations.

Each share of Series C Preferred has a stated value of $5,000 per share and is convertible into shares of common stock at a conversion price of $0.75 per share. In June 2015, an investor converted 90 shares of Series C Preferred into 0.6 million shares of common stock. In November 2015, an investor converted an additional 90 shares of Series C Preferred into 0.6 million shares of common stock. Also in November 2015, an investor converted 50 shares of Series D Preferred into 0.6 million shares of common stock.

In February 2016, an investor converted 110 shares of Series D Preferred into 1.4 million shares of common stock.

Common Stock —Holders of our common stock are entitled to one vote for each share held of record on all matters submitted to a vote of the holders of our common stock. Subject to the rights of the holders of any class of our capital stock having any preference or priority over our common stock, the holders of our common stock are entitled to receive dividends that are declared by our board of directors out of legally available funds. In the event of our liquidation, dissolution or winding-up, the holders of common stock are entitled to share ratably in our net assets remaining after payment of liabilities, subject to prior rights of preferred stock, if any, then outstanding. Our common stock has no preemptive rights, conversion rights, redemption rights or sinking fund provisions, and there are no dividends in arrears or default. All shares of our common stock have equal distribution, liquidation and voting rights, and have no preferences or exchange rights. Our common stock currently trades on the OTCQB tier of the OTC Markets.

In February 2016, we issued 0.21 million shares with a value of $0.06 million to Novosom as the equity component owed under our December 2015 milestone payment from MiNA Therapeutics. In April 2016, we issued 0.47 million shares with a value of $0.075 million to Novosom as the equity component owed under a March 2016 license agreement covering certain of our platforms for the delivery of an undisclosed genome editing technology.

In July 2016, we pledged to issue common stock valued at $0.015 million to Novosom for the portion due under our July 2010 Asset Purchase Agreement with Novosom, related to our license agreement with an undisclosed licensee that grants such licensee rights to use our technology and intellectual property to develop and commercialize products combining certain molecules with our liposomal delivery technology known as NOV582. As of September 30, 2016, the pledge was issued as a dollar denominated liability and was not influenced by changes in stock price. This obligation is included in Fair Value of Stock to be Issued to Settle Liabilities at September 30, 2016. In November 2016, we issued 0.12 million shares with a value of $0.015 million to Novosom as the equity component owed under our July 2016 license agreement

In November 2016, we issued 1,500,000 shares of common stock to Novosom in connection with a letter agreement that we entered into with Novosom on November 15, 2016 relating to that certain Asset Purchase Agreement dated as of July 27, 2010 between and among our company, Novosom and Steffen Panzner, Ph.D.

Warrants —As noted above, in the Purchase Agreement, we agreed: (x) to extend the termination date of all of the Prior Warrants to February 10, 2020 and (y) to extend the exercise price protection afforded of the Prior Warrants so that such protection would apply to any financing transaction effected by us on or prior to June 19, 2017 (with any such adjustment only applying to 80% of the Prior Warrants, and with such protection not resulting in the issuance of any additional shares of our common stock). In conjunction with this modification, the fair value of the derivative warrant liability associated with the 20% of the Prior Warrants that no longer have the anti-dilution protection equal to $0.09 million was reclassified to additional paid-in capital.

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In connection with the Merger, and pursuant to the terms and conditions of the Merger Agreement, we assumed warrants to purchase up to 300,000 shares of Ithena common stock, which warrants were converted into warrants representing the right to purchase up to 3,153,211 shares of our common stock. The number of shares underlying the assumed warrants and the exercise price thereof was adjusted by the exchange ratio used in the Merger (10.510708), with any fractional shares rounded down to the next lowest number of whole shares.

As of September 30, 2016, there were 24,466,783 warrants outstanding, with a weighted average exercise price of $0.47 per share, and annual expirations as follows:

Expiring in 2016	-
Expiring in 2017	2,630,545
Expiring in 2018	113,831
Expiring thereafter	21,722,407

Note 3 — Stock Incentive Plans

Stock-based Compensation. Certain option and share awards provide for accelerated vesting if there is a change in control as defined in the applicable plan and certain employment agreements. The following table summarizes stock-based compensation expense:

	Three months ended September 30,				Nine months ended September 30,
(In thousands)	2015		2016		2015		2016
Research and development	$	5	$	2	$	36	$	15
General and administrative		111		364		376		518
Total	$	116	$	366	$	412	$	533

Stock Options — Stock option activity was as follows:

	Options Outstanding
	2016
	Shares		Weighted Average Exercise Price
Outstanding, January 1		1,316,106	$	4.66
Options Issued		232,000	$	0.26
Outstanding, September 30		1,548,106	$	4.00
Exercisable, September 30		1,432,106	$	4.31

The following table summarizes additional information on our stock options outstanding at September 30, 2016:

	Options Outstanding						Options Exercisable
Range of Exercise Prices	Number Outstanding		Weighted- Average Remaining Contractual Life (Years)		Weighted Average Exercise Price		Number Exercisable		Weighted Average Exercise Price
$0.26 - 0.82		484,000		3.73	$	0.46		368,000	$	0.53
$1.07 - $2.20		1,021,500		1.68		1.07		1,021,500		1.07
$47.60 - $87.60		21,000		1.69		67.60		21,000		67.60
$127.60 - $207.60		21,500		1.69		158.30		21,500		158.30
526.40		106		0.35		526.40		106		526.40
Totals		1,548,106		2.32	$	4.00		1,432,106	$	4.31
		Weighted-Average Exercisable Remaining Contractual Life (Years)								2.16

In January 2016, we issued options to purchase up to an aggregate of 0.152 million shares of our common stock to non-employee members of our board of directors at an exercise price of $0.26 per share as the annual grant to such directors for their service on our board of directors during 2016, and we issued options to purchase up to an aggregate of 0.08 million shares of our common stock to the members of our scientific advisory board at an exercise price of $0.26 per share as the annual grant to such persons for their service on our scientific advisory board during 2016.

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At September 30, 2016, we had $0.06 million of total unrecognized compensation expense related to unvested stock options. We expect to recognize this cost over a weighted average period of 0.25 years.

At September 30, 2016, the intrinsic value of options outstanding or exercisable was zero as there were no options outstanding with an exercise price less than $0.13, the per share closing market price of our common stock at that date.

Our Chief Executive Officer resigned from our company effective June 10, 2016, ceasing all work for our company at such time. On July 22, 2016, we entered into an agreement with our former CEO, pursuant to which we agreed (x) to pay $0.07 million of back wages at such time as funds become reasonably available, all of which wages have been accrued as of June 30, 2016, and (y) that all remaining unvested options to purchase shares of our common stock would vest immediately, with the exercise period of such options (as well as such options held by our former CEO that had already vested as of June 10, 2016) extended through the earlier of the option’s exercise period or December 31, 2017. We recognized the remaining compensation expense of $0.3 million associated with these unvested 321,250 options, including the incremental cost resulting from modification of such options grant to extend their exercise period, in the quarter ended September 30, 2016, upon the modification.

In connection with and subject to the completion of the Merger, we granted to each of the current members of our Board of Directors options to purchase up to 35,000 shares of our common stock at an exercise price of $0.10 per share. The options will be exercisable for the five-year period beginning on the date of grant.

Note 4 — Intellectual Property and Collaborative Agreements

In July 2010, we entered into an agreement pursuant to which we acquired intellectual property for Novosom’s SMARTICLES-based liposomal delivery system. In February 2016, we issued Novosom 0.21 million shares of common stock valued at $0.06 million for amounts due and included in Fair Value of Stock to be Issued to Settle Liabilities at December 31, 2015.

In March 2016, we entered into a license agreement covering certain of our platforms for the delivery of an undisclosed genome editing technology. Under the terms of the agreement, we received an upfront license fee of $0.25 million and could receive up to $40 million in success-based milestones. In April 2016, we issued Novosom 0.47 million shares of common stock valued at $0.075 million for amounts due under this agreement.

In July 2016, we entered into a license agreement with an undisclosed licensee that grants such licensee rights to use our technology and intellectual property to develop and commercialize products combining certain molecules with our liposomal delivery technology known as NOV582. Under the terms of this agreement, the licensee agreed to pay to us an upfront license fee in the amount of $0.35 million (to be paid in installments through the end of 2017), along with milestone payments on a per-licensed-product basis and royalty payments in the low single digit percentages. As of September 30, 2016, we have received $0.05 million per the terms of this license agreement. In conjunction with this transaction, we pledged to issue common stock valued at $0.015 million to Novosom. This obligation is included in Fair Value of Stock to be Issued to Settle Liabilities at September 30, 2016. In November 2016, we issued 0.12 million shares with a value of $0.015 million to Novosom as the equity component owed under our July 2016 license agreement.

Note 5 — Commitments and Contingencies

Contingencies —We are subject to various legal proceedings and claims that arise in the ordinary course of business. Our management currently believes that resolution of such legal matters will not have a material adverse impact on our consolidated financial position, results of operations or cash flows.

Note 6 — Subsequent Events

All material subsequent events have been included within footnote 1 of the Condensed Consolidated Financial Statements.

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ITEM 2 — MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Overview

Statements contained herein that are not historical fact may be forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act, that are subject to a variety of risks and uncertainties. There are a number of important factors that could cause actual results to differ materially from those projected or suggested in any forward-looking statement made by us. These factors include, but are not limited to: (i) the ability of our company to obtain additional and substantial funding in the near term; (ii) our ability to successfully complete the Merger and integrate the business of Ithena; (iii) the ability of our company to attract and/or maintain research, development, commercialization and manufacturing partners; (iv) the ability of our company and/or a partner to successfully complete product research and development, including pre-clinical and clinical studies and commercialization; (v) the ability of our company and/or a partner to obtain required governmental approvals, including product and patent approvals; and (vi) the ability of our company and/or a partner to develop and commercialize products that can compete favorably with those of competitors. In addition, significant fluctuations in quarterly results may occur as a result of the timing of milestone payments, the recognition of revenue from milestone payments and other sources, and the timing of costs and expenses related to our research and development programs. Additional factors that could cause actual results to differ materially from those projected or suggested in any forward-looking statements are contained in our filings with the Securities and Exchange Commission, including those factors discussed under the captions “Risk Factors” and “Forward-Looking Statements” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2015, as may be supplemented or amended from time to time, which we urge investors to consider. We undertake no obligation to publicly release revisions in such forward-looking statements that may be made to reflect events or circumstances after the date hereof or to reflect the occurrences of unanticipated events or circumstances, except as otherwise required by securities and other applicable laws.

Business

We are a biotechnology company that has focused on the discovery, development and commercialization of nucleic acid-based therapies to treat orphan diseases. Our pipeline includes CEQ508, a product in clinical development for the treatment of Familial Adenomatous Polyposis (“FAP”), for which we have received Orphan Drug Designation (“ODD”) and Fast Track Designation (“FTD”) from the U.S. Food and Drug Administration (“FDA”), and preclinical programs for the treatment of type 1 myotonic dystrophy (“DM1”) and Duchenne muscular dystrophy (“DMD”).

Since 2010, we have strategically acquired/in-licensed and further developed nucleic acid chemistry and delivery-related technologies in order to establish a novel and differentiated drug discovery platform. This platform allows us to distinguish ourselves from others in the nucleic acid therapeutics area in that we are the only company capable of creating a wide variety of therapeutics targeting coding and non-coding RNA via multiple mechanisms of action such as RNA interference (“RNAi”), messenger RNA translational inhibition, exon skipping, microRNA (“miRNA”) replacement, miRNA inhibition, and steric blocking in order to modulate gene expression either up or down depending on the specific mechanism of action. Our goal has been to dramatically improve the lives of the patients and families affected by orphan diseases through either our own efforts or those of our collaborators and licensees.

Merger with IthenaPharma

On November 15, 2016, we entered into, and consummated the transactions contemplated by, an Agreement and Plan of Merger between and among our company, IthenaPharma Inc., a Delaware corporation (“Ithena”), Ithena Acquisition Corporation, a Delaware corporation and wholly-owned subsidiary of Marina (“Merger Sub”), and Vuong Trieu as the Ithena representative (the “Merger Agreement”), pursuant to which Ithena merged into Merger Sub (the “Merger”). Upon completion of the Merger and subject to the applicable provisions of the Merger Agreement, Merger Sub has ceased to exist and Ithena continues as the surviving corporation of the Merger and as a wholly-owned subsidiary of Marina. As consideration for the Merger, the Company issued to the former shareholders of Ithena 58,392,828 shares of the Company’s common stock, representing approximately 65% of the issued and outstanding shares of the Company’s common stock following the completion of the Merger. In addition, the Company assumed warrants to purchase 300,000 shares of Ithena common stock, appointed Vuong Trieu, the president of Ithena, as the Chairman of the Board of Directors of the Company and gave the right to appoint one additional member of the Board of Director to the former shareholders of Ithena.

In the Merger, Marina acquired the business and assets of Ithena, which consist primarily of pharmaceutical compounds in various stages of development. In addition, Vuong Trieu, the Chief Executive Officer of Ithena, extended to the Company a $540,000 demand line of credit, of which $15,000 had been drawn at November 18, 2016.

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Moreover, we entered into a License Agreement with Autotelic LLC, a stockholder of Ithena, pursuant to which (A) we will license to Autotelic LLC certain patent rights, data and know-how relating to Familial Adenomatous Polyposis and nasal insulin, for human therapeutics other than for oncology-related therapies and indications, and (B) Autotelic LLC licensed to us certain patent rights, data and know-how relating to IT-102 and IT-103, in connection with individualized therapy of pain using a non-steroidal anti-inflammatory drug and an anti-hypertensive without inducing intolerable edema, and treatment of certain aspects of proliferative disease, but not including rights to IT-102/IT-103 for TDM guided dosing for all indications using an Autotelic TDM Device. We also granted a right of first refusal to Autotelic LLC with respect to any license by us of the rights licensed by or to us under the License Agreement in any cancer indication outside of gastrointestinal cancers.

Further, we entered into a Master Services Agreement with Autotelic Inc., a stockholder of Ithena, pursuant to which Autotelic Inc. agreed to provide certain business functions and services from time to time during regular business hours at our request.

As the former shareholders of Ithena will control greater than 50% of the Company subsequent to the Merger, it is anticipated that Ithena will be considered the acquirer for accounting purposes and that future financial disclosures for the Company will be the historical information of Ithena. Ithena will account for the acquisition of the Company under the purchase accounting method following completion.

We will need additional capital to execute our business, which may involve acquiring other assets or selling existing assets. If we are not successful in raising additional capital, strategic alternatives will be considered, which may include delaying the development of certain compounds, selling (or otherwise losing our rights to) existing technology or ceasing operations.

For further information regarding the Merger Agreement, the Merger, and the other documents and transactions contemplated thereby, see our Current Report on Form 8-K filed with the Securities and Exchange Commission on November 18, 2016.

Recent Licensing and IP Developments

In February 2016, we entered into an evaluation and option agreement covering certain of our platforms for the delivery of an undisclosed genome editing technology. The agreement contains an option provision for the exclusive license of our SMARTICLES platform in a specific gene editing field.

In March 2016, we entered into a license agreement covering certain of our platforms for the delivery of an undisclosed genome editing technology. Under the terms of the agreement, we received an upfront license fee of $0.25 million, and could receive up to $40 million in success-based milestones.

In July 2016, we entered into a license agreement with an undisclosed licensee that grants such licensee rights to use our technology and intellectual property to develop and commercialize products combining certain molecules with our liposomal delivery technology known as NOV582. Under the terms of this agreement, the licensee agreed to pay to us an upfront license fee in the amount of $0.35 million (to be paid in installments through the end of 2017), along with milestone payments on a per-licensed-product basis and royalty payments in the low single digit percentages. As of September 30, 2016, we have received $0.05 million per the terms of this license agreement. In conjunction with this transaction, we pledged to issue common stock valued at $0.015 million to Novosom. This obligation is included in Fair Value of Stock to be Issued to Settle Liabilities at September 30, 2016. In November 2016, we issued 0.12 million shares with a value of $0.015 million to Novosom as the equity component owed under our July 2016 license agreement.

We believe that, as a result of the issuance of US patent no. 9,023,793 on May 5, 2015, we became entitled to receive a milestone payment in the amount of $2 million under an Asset Purchase Agreement dated August 25, 2010 between us and Cypress Biosciences (“Cypress”), which was subsequently assigned by Cypress to Kyalin Biosciences, Inc., and further assigned to Retrophin, Inc. (“Retrophin”). We have advised Retrophin of our claim to payment of this milestone. However, Retrophin has denied our claim. Although we intend to vigorously pursue our right to receive the milestone payment, there can be no assurance that we will be successful in our endeavors to receive the payments to which we believe we are entitled.

Note Purchase Agreement

On June 20, 2016, we entered into a Note Purchase Agreement (the “Purchase Agreement”) with certain investors (the “Purchasers”), pursuant to which we issued to the Purchasers unsecured promissory notes in the aggregate principal amount of $0.3 million (the “Notes”). Interest shall accrue on the unpaid principal balance of the Notes at the rate of 12% per annum beginning on September 20, 2016. The Notes will become due and payable on June 20, 2017, provided, that, upon the closing of a financing transaction that occurs while the Notes are outstanding, each Purchaser shall have the right to either: (i) accelerate the maturity date of the Note held by such Purchaser or (ii) convert the entire outstanding principal balance under the Note held by such Purchaser and accrued interest thereon into our securities that are issued and sold at the closing of such financing transaction.

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Further, if we at any time while the Notes are outstanding receive any cash payments in the aggregate amount of not less than $0.25 million, as a result of the licensing, partnering or disposition of any of the technology held by us or any related product or asset, we shall pay to the holders of the Notes, on a pro rata basis, an amount equal to 25% of each payment actually received by us, which payments shall be applied against the outstanding principal balance of the Notes and the accrued and unpaid interest thereon, until such time as the Notes are repaid in full.

In the Purchase Agreement, we agreed: (x) to extend the termination date of all of the warrants to purchase shares of our common stock (such warrants, the “Prior Warrants”) that were delivered to the purchasers pursuant to that certain Note and Warrant Purchase Agreement, dated as of February 10, 2012 between us and the purchasers identified on the signature pages thereto, as it has been amended to date, to February 10, 2020 and (y) to extend the exercise price protection afforded of the Prior Warrants so that such protection would apply to any financing transaction effected by us on or prior to June 19, 2017 (with any such adjustment only applying to 80% of the Prior Warrants, ad with such protection not resulting in the issuance of any additional shares of our common stock). As the Prior Warrants were already recorded at fair value as a result of price adjustable terms, the impacts of the modification of the terms is included in the change in fair value of price adjustable warrants in the statement of operations.

Liquidity

The accompanying condensed consolidated financial statements have been prepared on the basis that we will continue as a going concern, which contemplates realization of assets and the satisfaction of liabilities in the normal course of business. At September 30, 2016, we had an accumulated deficit of approximately $334.1 million, $108.3 million of which has been accumulated since we focused on RNA therapeutics in June 2008. To the extent that sufficient funding is available, we will continue to incur operating losses as we execute our plan to raise additional funds and investigate strategic and business development initiatives. In addition, we have had and will continue to have negative cash flows from operations. We have funded our losses primarily through the sale of common and preferred stock and warrants, the sale of the Notes, revenue provided from our license agreements and, to a lesser extent, equipment financing facilities and secured loans. In 2015 and 2016, we funded operations with a combination of the issuance of the Notes, preferred stock and license-related revenues. At September 30, 2016, we had negative working capital of $2.8 million and $0.1 million in cash. Our limited operating activities consume the majority of our cash resources.

We believe that our current cash resources, including the proceeds from the Notes received in June 2016 as noted above, and the $0.54 million line of credit associated with the Merger Agreement, will enable us to fund our intended operations through March 2017. Our ability to execute our operating plan beyond March 2017 depends on our ability to obtain additional funding. The volatility in our stock price, as well as market conditions in general, could make it difficult for us to raise capital on favorable terms, or at all. If we fail to obtain additional capital when required, we may have to modify, delay or abandon some or all of our planned activities, or terminate our operations. There can be no assurance that we will be successful in any such endeavors. The accompanying consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Cash flows

Our operating activities used cash of $0.9 million in the nine months ended September 30, 2016, compared to $1.6 million in the nine months ended September 30, 2015. In the nine months ended September 30, 2016, cash used in operating activities related primarily to funding our operating loss, adjusted for non-cash items. Adjustments for non-cash items, totaling $1.7 million, represented the change in fair value of price adjustable warrants, partially offset by stock compensation charges. Changes in operating assets and liabilities provided $0.4 million from the deferred payments to vendors, partially offset by the reduction of certain accrued liabilities. During the nine months ended September 30, 2015, cash used in operating activities related primarily to funding our operating loss, adjusted for non-cash items. Adjustments for non-cash items, totaling $5.6 million, represented stock compensation, gain on settled liabilities, license expense and the change in fair value of price adjustable warrants.

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Changes in operating assets and liabilities provided $1.2 million from collecting $0.5 million due under a licensing agreement, and $0.7 million driven mainly by changes in accounts payable and accrued liabilities associated with costs incurred related to SEC filings in preparation for financing activities.

We had no investing activities in the nine months ended September 30, 2016 or 2015.

We received $0.3 million from the Notes during the nine months ended September 30, 2016, compared to an immaterial amount of proceeds from warrant exercises in the nine months ended September 30, 2015. Cash provided by financing activities in 2015 are primarily due to the sale of our Series D preferred shares and warrants to purchase common stock.

Consolidated Results of Operations

Comparison of Results of Operations for the three and nine months ended September 30, 2016 to the three and nine months ended September 30, 2015

Revenue. We recorded $0.05 million in revenue in the three months ended September 30, 2016, and $0.3 million in revenue in the nine months ended September 30, 2016, which consisted of upfront license fees from two license agreements covering certain platforms for the delivery of an undisclosed genome editing technology. The majority of our licensing deals provide for clinical and regulatory milestones, so significant revenues could result from the existing licenses, but are uncertain as to timing or probability. We will seek R&D collaborations as well as licensing transactions to fund business operations.

We recorded $0.08 million and $0.5 million in revenue in the three and nine months ended September 30, 2015, respectively, which consisted of an accelerated milestone payment from Mirna under our 2011 licensing agreement.

Research and Development. Research & development (“R&D”) expense consists primarily of costs of sublicensing fees, clinical development and pre-clinical studies, consulting and other outside services, and other costs. R&D expense decreased $0.088 million from $0.09 million, and $0.35 million from $0.57 million in the three and nine months ended September 30, 2015, respectively, to $0.002 million and $0.22 million in the three and nine months ended September 30, 2016, respectively, primarily due to the elimination of most consulting and clinical studies, offset partially by a slight increase in the sublicensing fees payable to Novosom from the above mentioned technology license and milestone payment.

General and administrative. General and administrative (“G&A”) expense consists primarily of salaries and other personnel-related expenses to support our R&D activities, stock-based compensation for G&A personnel and non-employee members of our Board, professional fees, such as accounting and legal, and corporate insurance costs. G&A costs decreased $0.45 million from $1.02 million, and decreased $1.31 million from $3.28 million in the three and nine months ended September 30, 2015, respectively, to $0.57 million and $1.96 million in the three and nine months ended September 30, 2016, respectively.

Other income (expense). We incurred no interest or other expense in the three and nine months ended September 30, 2015. We have determined that the three month interest-free period on the Notes is not material, and thus have chosen not to reduce the carrying value of the notes for any small embedded discount. During the three and nine months ended September 30, 2015, we recorded a $0.01 million and $0.02 million gains, respectively, related to credits on vendor payables. We incurred interest expense on the Notes of $0.07 million in the three and nine months ended September 30, 2016.

Change in fair value liability for price adjustable warrants. The fair value liability is revalued each balance sheet date utilizing Black-Scholes computations, with the decrease or increase in fair value being reported in the statement of operations as other income or expense, respectively. Stock price decreases, offset by the modifications to the expiration dates on the Prior Warrants, resulted in a $0.51 million and a $2.3 million gains during the three month and nine month periods ended September 30, 2016, respectively. Stock price decreases resulted in a $2.49 million gain and a $6.13 million gain during the three month and six month periods ended September 30, 2015, respectively.

Off-Balance Sheet Arrangements

As of September 30, 2016, we did not have any off-balance sheet arrangements, as defined in Item 303(a)(4)(ii) of SEC Regulation S-K.

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ITEM 3 — QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable.

ITEM 4 — CONTROLS AND PROCEDURES

(a) Disclosure Controls and Procedures. As of the end of the period covered by this Quarterly Report on Form 10-Q, we carried out an evaluation, under the supervision and with the participation of our senior management, including our principal executive officer and principal financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). Based on that evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were effective in recording, processing, summarizing and reporting, on a timely basis, information required to be disclosed by us in the reports that we file or submit under the Exchange Act.

(b) Internal Control Over Financial Reporting. There have been no changes in our internal control over financial reporting during the fiscal quarter ended September 30, 2016, that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II — OTHER INFORMATION

ITEM 6 — EXHIBITS

The exhibits required by this item are set forth in the Exhibit Index attached hereto.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned, duly authorized, on November 21, 2016.

MARINA BIOTECH, INC.
By:	/s/ Joseph W. Ramelli
	Joseph W. Ramelli
	Interim Chief Executive Officer
	(Principal Executive Officer and Principal Financial Officer)

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EXHIBIT INDEX

Exhibit No.	Description
31.1	Certification of our Principal Executive Officer and Principal Financial Officer pursuant to Rules 13a-14 and 15d-14 under the Securities Exchange Act of 1934, as amended. (1)
32.1	Certification of our Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (2)
101.INS	XBRL Instance Document (2)
101.SCH	XBRL Taxonomy Extension Schema Document (2)
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document (2)
101.DEF	XBRL Taxonomy Extension Definitions Linkbase Document (2)
101.LAB	XBRL Taxonomy Extension Label Linkbase Document (2)
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document (2)

(1)	Filed Herewith.
(2)	Furnished Herewith.

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EX-31.1

Exhibit 31.1

CHIEF EXECUTIVE OFFICER CERTIFICATION

REQUIRED BY RULES 13A-14 AND 15D-14 UNDER THE SECURITIES EXCHANGE ACT OF 1934,

AS AMENDED

I, Joseph W. Ramelli, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Marina Biotech, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and I have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under my supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to me by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under my supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report my conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation;

d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. I have disclosed, based on my most recent evaluation, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent function):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: November 21, 2016	By:	/s/ Joseph W. Ramelli
	Name:	Joseph W. Ramelli
	Title:	Interim Chief Executive Officer
		(Principal Executive Officer and
		Principal Financial Officer)

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, Joseph W. Ramelli, the Interim Chief Executive Officer of Marina Biotech, Inc. (“Marina Biotech”), certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Quarterly Report of Marina Biotech on Form 10-Q for the fiscal quarter ended September 30, 2016 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, and that the information contained in the Quarterly Report on Form 10-Q fairly presents in all material respects the financial condition and results of operations of Marina Biotech.

By:	/s/ Joseph W. Ramelli
Name:	Joseph W. Ramelli
Title:	Interim Chief Executive Officer
	(Principal Executive Officer and
	Principal Financial Officer)

Date: November 21, 2016

A signed original of this written statement required by Section 906 has been provided to Marina Biotech and will be retained by Marina Biotech and furnished to the Securities Exchange Commission or its staff upon request.

This certification accompanies each periodic report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed by Marina Biotech for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.

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Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2016	Nov. 18, 2016
Document And Entity Information
Entity Registrant Name	Marina Biotech, Inc.
Entity Central Index Key	0000737207
Document Type	10-Q
Document Period End Date	Sep. 30, 2016
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		89,771,379
Trading Symbol	MRNA
Document Fiscal Period Focus	Q3
Document Fiscal Year Focus	2016

XML

Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Current assets:
Cash	$ 80	$ 710
Prepaid expenses and other current assets	100	140
Total current assets	180	850
Intangible assets	6,700	6,700
Other assets		45
Total assets	6,880	7,595
Current liabilities:
Accounts payable	1,500	763
Accrued payroll and employee benefits	71	377
Other accrued liabilities	1,130	1,296
Promissory notes	307
Total current liabilities	3,008	2,436
Fair value liability for price adjustable warrants	109	2,491
Fair value of stock to be issued to settle liabilities	15	60
Deferred income tax liabilities	2,345	2,345
Total liabilities	5,477	7,332
Commitments and contingencies
Stockholders’ equity:
Common stock, $0.006 par value; 180,000,000 shares authorized, 27,704,340 and 29,759,503 shares issued and outstanding at December 31, 2015 and September 30, 2016, respectively	179	166
Additional paid-in capital	335,289	334,548
Accumulated deficit	(334,065)	(334,451)
Total stockholders’ equity	1,403	263
Total liabilities and stockholders’ equity	6,880	7,595
Series C Convertible Preferred Stock [Member]
Stockholders’ equity:
Preferred stock, Value
Series D Convertible Preferred Stock [Member]
Stockholders’ equity:
Preferred stock, Value

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Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Preferred stock, par value	$ 0.01	$ 0.01
Preferred stock, shares authorized	100,000	100,000
Preferred stock, shares issued	100,000	100,000
Common stock, par value	$ 0.006	$ 0.006
Common stock, shares authorized	180,000,000	180,000,000
Common stock, shares issued	27,704,340	29,759,503
Common stock, shares outstanding	27,704,340	29,759,503
Series C Convertible Preferred Stock [Member]
Preferred stock, par value	$ 0.01	$ 0.01
Preferred stock, shares authorized	1,200	1,200
Preferred stock, shares issued	1,020	1,020
Preferred stock, shares outstanding	1,020	1,020
Preferred stock, liquidation Preference value	$ 5,100	$ 5,100
Series D Convertible Preferred Stock [Member]
Preferred stock, par value	$ 0.01	$ 0.01
Preferred stock, shares authorized	220	220
Preferred stock, shares issued	60	170
Preferred stock, shares outstanding	60	170
Preferred stock, liquidation Preference value	$ 30	$ 30

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Condensed Consolidated Statements Of Operations (Unaudited) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Income Statement [Abstract]
License and other revenues	$ 50	$ 80	$ 300	$ 480
Operating expenses:
Research and development	17	90	240	574
General and administrative	574	1,022	1,963	3,275
Total operating expenses	591	1,112	2,203	3,849
Loss from operations	(541)	(1,032)	(1,903)	(3,369)
Other income (expense):
Change in fair value liability for price adjustable warrants	510	2,485	2,296	6,128
Interest expense	(7)		(7)
Gain on settled liabilities		6		18
Total other income, net	503	2,491	2,289	6,146
Net income (loss)	(38)	1,459	386	2,777
Deemed dividend related to discount on beneficial		(690)		(690)
Net income (loss) applicable to common stockholders	$ (38)	$ 769	$ 386	$ 2,087
Net income (loss) per common share
Basic	$ (0.00)	$ 0.03	$ 0.01	$ 0.08
Diluted	$ (0.05)	$ (0.06)	$ (0.05)	$ (0.12)
Shares used in computing net income (loss) per share
Basic	29,760	26,462	29,264	26,047
Diluted	2,647	30,939	5,752	33,484

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Condensed Consolidated Statements Of Cash Flows (Unaudited) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
Operating activities:
Net income	$ 386	$ 2,777
Adjustments to reconcile net income to net cash used in operating activities:
Non-cash license expense	90	132
Non-cash gain on settlement of liabilities		(18)
Compensation related to stock options and warrants	533	412
Changes in fair market value of liabilities:
Price adjustable warrants	2,296	6,128
Cash changes in assets and liabilities:
Accounts receivable		500
Prepaid expenses and other assets	85	82
Accounts payable	737	90
Accrued and other liabilities	(465)	546
Net cash used in operating activities	(930)	(1,607)
Financing activities:
Proceeds from promissory notes	300
Proceeds from sales of Series D preferred shares and warrants, net		1,095
Proceeds from exercise of warrants for common stock		1
Net cash provided by financing activities	300	1,096
Net decrease in cash	(630)	(511)
Cash - Beginning of period	710	1,824
Cash - End of period	80	1,313
Supplemental disclosure of cash flow information and non-cash financing activities:
Issuance of common stock to settle liabilities	135	195
Fair value of warrants issued to purchase common stock to settle liabilities		65
Deemed dividend to Series D convertible preferred stockholders		690
Fair value of derivative warrant liability reclassified to additional paid-in capital	86
Series C Preferred Stock [Member]
Supplemental disclosure of cash flow information and non-cash financing activities:
Par value of common stock issued upon conversion		4
Series D Preferred Stock [Member]
Supplemental disclosure of cash flow information and non-cash financing activities:
Par value of common stock issued upon conversion	$ 8

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Business, Liquidity and Summary of Significant Accounting Policies

9 Months Ended

Sep. 30, 2016

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Business, Liquidity and Summary of Significant Accounting Policies

Note 1 — Business, Liquidity and Summary of Significant Accounting Policies

Business

Marina Biotech, Inc. (“we”, “Marina, or the “Company”) is a biotechnology company that has focused on the discovery, development and commercialization of nucleic acid-based therapies to treat orphan diseases. Our pipeline includes CEQ508, a product in clinical development for the treatment of Familial Adenomatous Polyposis (“FAP”), for which we have received Orphan Drug Designation (“ODD”) and Fast Track Designation (“FTD”) from the U.S. Food and Drug Administration (“FDA”), and preclinical programs for the treatment of type 1 myotonic dystrophy (“DM1”) and Duchenne muscular dystrophy (“DMD”).

Since 2010, we have strategically acquired/in-licensed and further developed nucleic acid chemistry and delivery-related technologies in order to establish a novel and differentiated drug discovery platform. This platform allows us to distinguish ourselves from others in the nucleic acid therapeutics area in that we are the only company capable of creating a wide variety of therapeutics targeting coding and non-coding RNA via multiple mechanisms of action such as RNA interference (“RNAi”), messenger RNA translational inhibition, exon skipping, microRNA (“miRNA”) replacement, miRNA inhibition, and steric blocking in order to modulate gene expression either up or down depending on the specific mechanism of action. Our goal has been to dramatically improve the lives of the patients and families affected by orphan diseases through either our own efforts or those of our collaborators and licensees.

Merger with IthenaPharma

On November 15, 2016, we entered into, and consummated the transactions contemplated by, an Agreement and Plan of Merger between and among our company, IthenaPharma Inc., a Delaware corporation (“Ithena”), Ithena Acquisition Corporation, a Delaware corporation and wholly-owned subsidiary of Marina (“Merger Sub”), and Vuong Trieu as the Ithena representative (the “Merger Agreement”), pursuant to which Ithena merged into Merger Sub (the “Merger”). Upon completion of the Merger and subject to the applicable provisions of the Merger Agreement, Merger Sub has ceased to exist and Ithena continues as the surviving corporation of the Merger and as a wholly-owned subsidiary of Marina. As consideration for the Merger, the Company issued to the former shareholders of Ithena 58,392,828 shares of the Company’s common stock, representing approximately 65% of the issued and outstanding shares of the Company’s common stock following the completion of the Merger. In addition, the Company assumed warrants to purchase 300,000 shares of Ithena common stock, appointed Vuong Trieu, the president of Ithena, as the Chairman of the Board of Directors of the Company and gave the right to appoint one additional member of the Board of Director to the former shareholders of Ithena.

In the Merger, Marina acquired the business and assets of Ithena, which consist primarily of pharmaceutical compounds in various stages of development. In addition, Vuong Trieu, the Chief Executive Officer of Ithena, extended to the Company a $540,000 demand line of credit, of which $15,000 had been drawn at November 18, 2016.

Moreover, we entered into a License Agreement with Autotelic LLC, a stockholder of Ithena, pursuant to which (A) we will license to Autotelic LLC certain patent rights, data and know-how relating to Familial Adenomatous Polyposis and nasal insulin, for human therapeutics other than for oncology-related therapies and indications, and (B) Autotelic LLC licensed to us certain patent rights, data and know-how relating to IT-102 and IT-103, in connection with individualized therapy of pain using a non-steroidal anti-inflammatory drug and an anti-hypertensive without inducing intolerable edema, and treatment of certain aspects of proliferative disease, but not including rights to IT-102/IT-103 for TDM guided dosing for all indications using an Autotelic TDM Device. We also granted a right of first refusal to Autotelic LLC with respect to any license by us of the rights licensed by or to us under the License Agreement in any cancer indication outside of gastrointestinal cancers.

Further, we entered into a Master Services Agreement with Autotelic Inc., a stockholder of Ithena, pursuant to which Autotelic Inc. agreed to provide certain business functions and services from time to time during regular business hours at our request.

As the former shareholders of Ithena will control greater than 50% of the Company subsequent to the Merger, it is anticipated that Ithena will be considered the acquirer for accounting purposes and that future financial disclosures for the Company will be the historical information of Ithena. Ithena will account for the acquisition of the Company under the purchase accounting method following completion.

We will need additional capital to execute our business, which may involve acquiring other assets or selling existing assets. If we are not successful in raising additional capital, strategic alternatives will be considered, which may include delaying the development of certain compounds, selling (or otherwise losing our rights to) existing technology or ceasing operations.

For further information regarding the Merger Agreement, the Merger, and the other documents and transactions contemplated thereby, see our Current Report on Form 8-K filed with the Securities and Exchange Commission on November 18, 2016.

Recent Licensing and IP Developments

In February 2016, we entered into an evaluation and option agreement covering certain of our platforms for the delivery of an undisclosed genome editing technology. The agreement contains an option provision for the exclusive license of our SMARTICLES platform in a specific gene editing field.

In March 2016, we entered into a license agreement covering certain of our platforms for the delivery of an undisclosed genome editing technology. Under the terms of the agreement, we received an upfront license fee of $0.25 million, and could receive up to $40 million in success-based milestones.

In July 2016, we entered into a license agreement with an undisclosed licensee that grants such licensee rights to use our technology and intellectual property to develop and commercialize products combining certain molecules with our liposomal delivery technology known as NOV582. Under the terms of this agreement, the licensee agreed to pay to us an upfront license fee in the amount of $0.35 million (to be paid in installments through the end of 2017), along with milestone payments on a per-licensed-product basis and royalty payments in the low single digit percentages. As of September 30, 2016, we have received $0.05 million per the terms of this license agreement. In conjunction with this transaction, we pledged to issue common stock valued at $0.002 million to Novosom. This obligation is included in Fair Value of Stock to be Issued to Settle Liabilities at September 30, 2016.

We believe that, as a result of the issuance of US patent no. 9,023,793 on May 5, 2015, we became entitled to receive a milestone payment in the amount of $2 million under an Asset Purchase Agreement dated August 25, 2010 between us and Cypress Biosciences (“Cypress”), which was subsequently assigned by Cypress to Kyalin Biosciences, Inc., and further assigned to Retrophin, Inc. (“Retrophin”). We have advised Retrophin of our claim to payment of this milestone. However, Retrophin has denied our claim. Although we intend to vigorously pursue our right to receive the milestone payment, there can be no assurance that we will be successful in our endeavors to receive the payments to which we believe we are entitled.

Note Purchase Agreement

On June 20, 2016, we entered into a Note Purchase Agreement (the “Purchase Agreement”) with certain investors (the “Purchasers”), pursuant to which we issued to the Purchasers unsecured promissory notes in the aggregate principal amount of $0.3 million (the “Notes”). Interest shall accrue on the unpaid principal balance of the Notes at the rate of 12% per annum beginning on September 20, 2016. The Notes will become due and payable on June 20, 2017, provided, that, upon the closing of a financing transaction that occurs while the Notes are outstanding, each Purchaser shall have the right to either: (i) accelerate the maturity date of the Note held by such Purchaser or (ii) convert the entire outstanding principal balance under the Note held by such Purchaser and accrued interest thereon into our securities that are issued and sold at the closing of such financing transaction.

Further, if we at any time while the Notes are outstanding receive any cash payments in the aggregate amount of not less than $0.25 million, as a result of the licensing, partnering or disposition of any of the technology held by us or any related product or asset, we shall pay to the holders of the Notes, on a pro rata basis, an amount equal to 25% of each payment actually received by us, which payments shall be applied against the outstanding principal balance of the Notes and the accrued and unpaid interest thereon, until such time as the Notes are repaid in full.

As of September 30, 2016, the accrued interest expense on the Notes amounted to $0.007.

In the Purchase Agreement, we agreed: (x) to extend the termination date of all of the warrants to purchase shares of our common stock (such warrants, the “Prior Warrants”) that were delivered to the purchasers pursuant to that certain Note and Warrant Purchase Agreement, dated as of February 10, 2012 between us and the purchasers identified on the signature pages thereto, as it has been amended to date, to February 10, 2020 and (y) to extend the exercise price protection afforded of the Prior Warrants so that such protection would apply to any financing transaction effected by us on or prior to June 19, 2017 (with any such adjustment only applying to 80% of the Prior Warrants, ad with such protection not resulting in the issuance of any additional shares of our common stock). As the Prior Warrants were already recorded at fair value as a result of price adjustable terms, the impacts of the modification of the terms is included in the change in fair value of price adjustable warrants in the statement of operations.

Liquidity

The accompanying condensed consolidated financial statements have been prepared on the basis that we will continue as a going concern, which contemplates realization of assets and the satisfaction of liabilities in the normal course of business. At September 30, 2016, we had an accumulated deficit of approximately $334.1 million, $108.3 million of which has been accumulated since we focused on RNA therapeutics in June 2008. To the extent that sufficient funding is available, we will continue to incur operating losses as we execute our plan to raise additional funds and investigate strategic and business development initiatives. In addition, we have had and will continue to have negative cash flows from operations. We have funded our losses primarily through the sale of common and preferred stock and warrants, the sale of the Notes, revenue provided from our license agreements and, to a lesser extent, equipment financing facilities and secured loans. In 2015 and 2016, we funded operations with a combination of the issuance of the Notes, preferred stock and license-related revenues. At September 30, 2016, we had negative working capital of $2.8 million and $0.1 million in cash. Our limited operating activities consume the majority of our cash resources.

We believe that our current cash resources, including the proceeds from the Notes received in June 2016 as noted above, and the $0.54 million line of credit associated with the Merger Agreement, will enable us to fund our intended operations through March 2017. Our ability to execute our operating plan beyond March 2017 depends on our ability to obtain additional funding. The volatility in our stock price, as well as market conditions in general, could make it difficult for us to raise capital on favorable terms, or at all. If we fail to obtain additional capital when required, we may have to modify, delay or abandon some or all of our planned activities, or terminate our operations. There can be no assurance that we will be successful in any such endeavors. The accompanying consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Basis of Preparation and Summary of Significant Accounting Policies

Basis of Preparation — The accompanying condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and note disclosures required by U.S. generally accepted accounting principles (“U.S. GAAP”) for complete financial statements. The accompanying unaudited financial information should be read in conjunction with the audited consolidated financial statements, including the notes thereto, as of and for the year ended December 31, 2015, included in our 2015 Annual Report on Form 10-K filed with the SEC. The information furnished in this report reflects all adjustments (consisting of normal recurring adjustments), which are, in the opinion of management, necessary for a fair presentation of our financial position, results of operations and cash flows for each period presented. The results of operations for the three and nine months ended September 30, 2016 are not necessarily indicative of the results for the year ending December 31, 2016 or for any future period.

Use of Estimates — The preparation of financial statements in conformity with U.S. GAAP requires our management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting periods. Estimates having relatively higher significance include revenue recognition, stock-based compensation, valuation of warrants, valuation and estimated lives of identifiable intangible assets, impairment of long-lived assets, valuation of features embedded within note agreements and amendments, and income taxes. Actual results could differ from those estimates.

Reclassifications — Certain amounts have been reclassified in prior period condensed consolidated financial statements to conform to the current year presentation.

Fair Value of Financial Instruments — We consider the fair value of cash, accounts payable, accrued liabilities and promissory notes to not be materially different from their carrying value. These financial instruments have short-term maturities.

We follow authoritative guidance with respect to fair value reporting issued by the Financial Accounting Standards Board (“FASB”) for financial assets and liabilities, which defines fair value, provides guidance for measuring fair value and requires certain disclosures. The guidance does not apply to measurements related to share-based payments. The guidance discusses valuation techniques, such as the market approach (comparable market prices), the income approach (present value of future income or cash flow), and the cost approach (cost to replace the service capacity of an asset or replacement cost). The guidance establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The following is a brief description of those three levels:

Level 1: Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2: Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.

Level 3: Unobservable inputs in which little or no market data exists, therefore developed using estimates and assumptions developed by us, which reflect those that a market participant would use.

Our cash is subject to fair value measurement and value is determined by Level 1 inputs. We measure the liability for committed stock issuances with a fixed share number using Level 1 inputs. We measure the liability for price adjustable warrants and certain features embedded in notes using the Black-Scholes option pricing model (“Black-Scholes”) under various probability weighted scenarios, using Level 3 inputs. The following tables summarize our liabilities measured at fair value on a recurring basis as of December 31, 2015 and September 30, 2016:

			Level 1				Level 3
			Quoted prices in		Level 2		Significant
	Balance at		active markets for		Significant other		unobservable
(In thousands)	December 31, 2015		identical assets		observable inputs		inputs
Liabilities:
Fair value liability for price adjustable warrants	$	2,491	$	-	$	-	$	2,491
Fair value liability for shares to be issued		60		60		-		-
Total liabilities at fair value	$	2,551	$	60	$	-	$	2,491

				Level 1			Level 3
				Quoted prices in	Level 2		Significant
	Balance at			active markets for	Significant other		unobservable
(In thousands)	September 30, 2016			identical assets	observable inputs		inputs
Liabilities:
Fair value liability for price adjustable warrants	$	109	$	-	$	-	$	109
Total liabilities at fair value	$	109	$	-	$	-	$	109

The following presents activity of the fair value liability of price adjustable warrants determined by Level 3 inputs for the nine-month period ended September 30, 2016, including the impact of the modifications to the Prior Warrants made in conjunction with the Purchase Agreement:

	Fair value
	liability for price			Weighted average as of each measurement date
	adjustable warrants			Exercise		Stock					Contractual life		Risk free
	(in thousands)			Price		Price		Volatility			(in years)		rate
Balance at December 31, 2015	$	2,491		$	0.42	$	0.27		99	%		1.79		0.46	%
Fair value of derivative warrant liability reclassified to additional paid-in capital		(86	)
Change in fair value included in Statement of Operations		(2,296	)
Balance at September 30, 2016	$	109		$	0.43	$	0.18		90	%		1.73		0.02	%

Net Income (Loss) per Common Share — Basic net income (loss) per common share is computed by dividing the net income (loss) by the weighted average number of common shares outstanding during the period. Diluted net income (loss) per share includes the effect of common stock equivalents (stock options, unvested restricted stock and warrants) when, under either the treasury or if-converted method, such inclusion in the computation would be dilutive. The following number of shares have been excluded from diluted net income (loss) since such inclusion would be anti-dilutive:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2015		2016		2015		2016
Stock options outstanding		1,316,106		1,548,106		1,316,106		1,548,106
Warrants		1,236,946		3,416,104		1,236.946		3,416,104
Convertible preferred stock		10,150,000		7,550,000		10,150,000		7,550,000
Total		12,703,052		12,514,210		12,703,052		12,514,210

The following is a reconciliation of basic and diluted net income (loss) per share:

	Three Months Ended September 30,						Nine Months Ended September 30,
(In thousands except per share amounts)	2015			2016			2015			2016
Net income (loss) – numerator basic	$	769		$	(38	)	$	2,087		$	386
Change in fair value liability for price adjustable warrants		(2,485	)		(82	)		(6,128	)		(685	)
Net loss excluding change in fair value liability for price adjustable warrants	$	(1,716	)	$	(120	)	$	(4,041	)	$	(299	)
Weighted average common shares outstanding – denominator basic		26,462			29,760			26,047			29,264
Effect of price adjustable warrants		4,477			(27,113	)		7,437			(23,512	)
Weighted average dilutive common shares outstanding		30,939			2,647			33,484			5,752
Net income (loss) per common share – basic	$	0.03		$	(0.00	)	$	0.08		$	0.01
Net income (loss) per common share – diluted	$	(0.06	)	$	(0.05	)	$	(0.12	)	$	(0.05	)

Impairment of long-lived assets — We review all of our long-lived assets for impairment indicators throughout the year and perform detailed testing whenever impairment indicators are present. In addition, we perform detailed impairment testing for indefinite-lived intangible assets, specifically IPR&D, at least annually at December 31. When necessary, we record charges for impairments. Specifically:

●  For finite-lived intangible assets, such as developed technology rights, and for other long-lived assets, such as property and equipment, we compare the undiscounted amount of the projected cash flows associated with the asset, or asset group, to the carrying amount. If the carrying amount is found to be greater, we record an impairment loss for the excess of book value over fair value. In addition, in all cases of an impairment review, we re-evaluate the remaining useful lives of the assets and modify them, as appropriate; and

●  For indefinite-lived intangible assets, such as IPR&D assets, each year and whenever impairment indicators are present, we determine the fair value of the asset and record an impairment loss for the excess of book value over fair value, if any.

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Stockholders’ Equity

9 Months Ended

Sep. 30, 2016

Equity [Abstract]

Stockholders’ Equity

Note 2 — Stockholders’ Equity

Preferred Stock — Our board of directors has the authority, without action by the stockholders, to designate and issue up to 100,000 shares of preferred stock in one or more series and to designate the rights, preferences and privileges of each series, any or all of which may be greater than the rights of our common stock. We have designated 1,000 shares as Series B Preferred Stock (“Series B Preferred”) and 90,000 shares as Series A Junior Participating Preferred Stock (“Series A Preferred”). No shares of Series B Preferred or Series A Preferred are outstanding. In March 2014, we designated 1,200 shares as Series C Convertible Preferred Stock (“Series C Preferred”). In August 2015, we designated 220 shares as Series D Convertible Preferred Stock (“Series D Preferred”).

In August 2015, we entered into a Securities Purchase Agreement with certain investors pursuant to which we sold 220 shares of Series D Preferred, and warrants to purchase up to 3.44 million shares of our common stock at an initial exercise price of $0.40 per share before August 2021, for an aggregate purchase price of $1.1 million. We incurred $0.01 million of stock issuance costs in conjunction with the Series D Preferred, which were netted against the proceeds. The warrants issued in connection with Series D Preferred contain an exercise price protection provision whereby the exercise price per share to purchase common stock covered by these warrants is subject to reduction in the event of certain dilutive stock issuances at any time within two years of the issuance date, but not to be reduced below $0.28 per share. Any such adjustment will not result in the issuance of any additional shares of our common stock. Each share of Series D Preferred has a stated value of $5,000 per share and is convertible into shares of common stock at a conversion price of $0.40 per share. The Series D Preferred is initially convertible into an aggregate of 2,750,000 shares of our common stock, subject to certain limitations and adjustments, has a 5% stated dividend rate, is not redeemable and has voting rights on an as-converted basis.

To account for the issuance of the Series D Preferred and warrants, we first assessed the terms of the warrants and determined that, due to the exercise price protection provision, they should be recorded as derivative liabilities. We determined the fair value of the warrants on the issuance date and recorded a liability and a discount of $0.6 million on the Series D Preferred resulting from the allocation of proceeds to the warrants. We then determined the effective conversion price of the Series D Preferred which resulted in a beneficial conversion feature of $0.7 million. The beneficial conversion feature was recorded as both a debit and a credit to additional paid-in capital and as a deemed dividend on the Series D Preferred in determining net income applicable to common stock holders in the consolidated statements of operations.

Each share of Series C Preferred has a stated value of $5,000 per share and is convertible into shares of common stock at a conversion price of $0.75 per share. In June 2015, an investor converted 90 shares of Series C Preferred into 0.6 million shares of common stock. In November 2015, an investor converted an additional 90 shares of Series C Preferred into 0.6 million shares of common stock. Also in November 2015, an investor converted 50 shares of Series D Preferred into 0.6 million shares of common stock.

In February 2016, an investor converted 110 shares of Series D Preferred into 1.4 million shares of common stock.

Common Stock —Holders of our common stock are entitled to one vote for each share held of record on all matters submitted to a vote of the holders of our common stock. Subject to the rights of the holders of any class of our capital stock having any preference or priority over our common stock, the holders of our common stock are entitled to receive dividends that are declared by our board of directors out of legally available funds. In the event of our liquidation, dissolution or winding-up, the holders of common stock are entitled to share ratably in our net assets remaining after payment of liabilities, subject to prior rights of preferred stock, if any, then outstanding. Our common stock has no preemptive rights, conversion rights, redemption rights or sinking fund provisions, and there are no dividends in arrears or default. All shares of our common stock have equal distribution, liquidation and voting rights, and have no preferences or exchange rights. Our common stock currently trades on the OTCQB tier of the OTC Markets.

In February 2016, we issued 0.21 million shares with a value of $0.06 million to Novosom as the equity component owed under our December 2015 milestone payment from MiNA Therapeutics. In April 2016, we issued 0.47 million shares with a value of $0.075 million to Novosom as the equity component owed under a March 2016 license agreement covering certain of our platforms for the delivery of an undisclosed genome editing technology.

In July 2016, we pledged to issue common stock valued at $0.015 million to Novosom for the portion due under our July 2010 Asset Purchase Agreement with Novosom, related to our license agreement with an undisclosed licensee that grants such licensee rights to use our technology and intellectual property to develop and commercialize products combining certain molecules with our liposomal delivery technology known as NOV582. As of September 30, 2016, the pledge was issued as a dollar denominated liability and was not influenced by changes in stock price. This obligation is included in Fair Value of Stock to be Issued to Settle Liabilities at September 30, 2016. In November 2016, we issued 0.12 million shares with a value of $0.015 million to Novosom as the equity component owed under our July 2016 license agreement

In November 2016, we issued 1,500,000 shares of common stock to Novosom in connection with a letter agreement that we entered into with Novosom on November 15, 2016 relating to that certain Asset Purchase Agreement dated as of July 27, 2010 between and among our company, Novosom and Steffen Panzner, Ph.D.

Warrants —As noted above, in the Purchase Agreement, we agreed: (x) to extend the termination date of all of the Prior Warrants to February 10, 2020 and (y) to extend the exercise price protection afforded of the Prior Warrants so that such protection would apply to any financing transaction effected by us on or prior to June 19, 2017 (with any such adjustment only applying to 80% of the Prior Warrants, and with such protection not resulting in the issuance of any additional shares of our common stock). In conjunction with this modification, the fair value of the derivative warrant liability associated with the 20% of the Prior Warrants that no longer have the anti-dilution protection equal to $0.09 million was reclassified to additional paid-in capital.

In connection with the Merger, and pursuant to the terms and conditions of the Merger Agreement, we assumed warrants to purchase up to 300,000 shares of Ithena common stock, which warrants were converted into warrants representing the right to purchase up to 3,153,211 shares of our common stock. The number of shares underlying the assumed warrants and the exercise price thereof was adjusted by the exchange ratio used in the Merger (10.510708), with any fractional shares rounded down to the next lowest number of whole shares.

As of September 30, 2016, there were 24,466,783 warrants outstanding, with a weighted average exercise price of $0.47 per share, and annual expirations as follows:

Expiring in 2016	-
Expiring in 2017	2,630,545
Expiring in 2018	113,831
Expiring thereafter	21,722,407

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Stock Incentive Plans

9 Months Ended

Sep. 30, 2016

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Stock Incentive Plans

Note 3 — Stock Incentive Plans

Stock-based Compensation. Certain option and share awards provide for accelerated vesting if there is a change in control as defined in the applicable plan and certain employment agreements. The following table summarizes stock-based compensation expense:

	Three months ended September 30,				Nine months ended September 30,
(In thousands)	2015		2016		2015		2016
Research and development	$	5	$	2	$	36	$	15
General and administrative		111		364		376		518
Total	$	116	$	366	$	412	$	533

Stock Options — Stock option activity was as follows:

	Options Outstanding
	2016
	Shares		Weighted Average Exercise Price
Outstanding, January 1		1,316,106	$	4.66
Options Issued		232,000	$	0.26
Outstanding, September 30		1,548,106	$	4.00
Exercisable, September 30		1,432,106	$	4.31

The following table summarizes additional information on our stock options outstanding at September 30, 2016:

	Options Outstanding						Options Exercisable
Range of Exercise Prices	Number Outstanding		Weighted- Average Remaining Contractual Life (Years)		Weighted Average Exercise Price		Number Exercisable		Weighted Average Exercise Price
$0.26 - 0.82		484,000		3.73	$	0.46		368,000	$	0.53
$1.07 - $2.20		1,021,500		1.68		1.07		1,021,500		1.07
$47.60 - $87.60		21,000		1.69		67.60		21,000		67.60
$127.60 - $207.60		21,500		1.69		158.30		21,500		158.30
526.40		106		0.35		526.40		106		526.40
Totals		1,548,106		2.32	$	4.00		1,432,106	$	4.31
		Weighted-Average Exercisable Remaining Contractual Life (Years)								2.16

In January 2016, we issued options to purchase up to an aggregate of 0.152 million shares of our common stock to non-employee members of our board of directors at an exercise price of $0.26 per share as the annual grant to such directors for their service on our board of directors during 2016, and we issued options to purchase up to an aggregate of 0.08 million shares of our common stock to the members of our scientific advisory board at an exercise price of $0.26 per share as the annual grant to such persons for their service on our scientific advisory board during 2016.

At September 30, 2016, we had $0.06 million of total unrecognized compensation expense related to unvested stock options. We expect to recognize this cost over a weighted average period of 0.25 years.

At September 30, 2016, the intrinsic value of options outstanding or exercisable was zero as there were no options outstanding with an exercise price less than $0.13, the per share closing market price of our common stock at that date.

Our Chief Executive Officer resigned from our company effective June 10, 2016, ceasing all work for our company at such time. On July 22, 2016, we entered into an agreement with our former CEO, pursuant to which we agreed (x) to pay $0.07 million of back wages at such time as funds become reasonably available, all of which wages have been accrued as of June 30, 2016, and (y) that all remaining unvested options to purchase shares of our common stock would vest immediately, with the exercise period of such options (as well as such options held by our former CEO that had already vested as of June 10, 2016) extended through the earlier of the option’s exercise period or December 31, 2017. We recognized the remaining compensation expense of $0.3 million associated with these unvested 321,250 options, including the incremental cost resulting from modification of such options grant to extend their exercise period, in the quarter ended September 30, 2016, upon the modification.

In connection with and subject to the completion of the Merger, we granted to each of the current members of our Board of Directors options to purchase up to 35,000 shares of our common stock at an exercise price of $0.10 per share. The options will be exercisable for the five-year period beginning on the date of grant.

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Intellectual Property and Collaborative Agreements

9 Months Ended

Sep. 30, 2016

Goodwill and Intangible Assets Disclosure [Abstract]

Intellectual Property and Collaborative Agreements

Note 4 — Intellectual Property and Collaborative Agreements

In July 2010, we entered into an agreement pursuant to which we acquired intellectual property for Novosom’s SMARTICLES-based liposomal delivery system. In February 2016, we issued Novosom 0.21 million shares of common stock valued at $0.06 million for amounts due and included in Fair Value of Stock to be Issued to Settle Liabilities at December 31, 2015.

In March 2016, we entered into a license agreement covering certain of our platforms for the delivery of an undisclosed genome editing technology. Under the terms of the agreement, we received an upfront license fee of $0.25 million and could receive up to $40 million in success-based milestones. In April 2016, we issued Novosom 0.47 million shares of common stock valued at $0.075 million for amounts due under this agreement.

In July 2016, we entered into a license agreement with an undisclosed licensee that grants such licensee rights to use our technology and intellectual property to develop and commercialize products combining certain molecules with our liposomal delivery technology known as NOV582. Under the terms of this agreement, the licensee agreed to pay to us an upfront license fee in the amount of $0.35 million (to be paid in installments through the end of 2017), along with milestone payments on a per-licensed-product basis and royalty payments in the low single digit percentages. As of September 30, 2016, we have received $0.05 million per the terms of this license agreement. In conjunction with this transaction, we pledged to issue common stock valued at $0.015 million to Novosom. This obligation is included in Fair Value of Stock to be Issued to Settle Liabilities at September 30, 2016. In November 2016, we issued 0.12 million shares with a value of $0.015 million to Novosom as the equity component owed under our July 2016 license agreement.

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Commitments and Contingencies

9 Months Ended

Sep. 30, 2016

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Note 5 — Commitments and Contingencies

Contingencies —We are subject to various legal proceedings and claims that arise in the ordinary course of business. Our management currently believes that resolution of such legal matters will not have a material adverse impact on our consolidated financial position, results of operations or cash flows.

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Subsequent Events

9 Months Ended

Sep. 30, 2016

Subsequent Events [Abstract]

Subsequent Events

Note 6 — Subsequent Events

All material subsequent events have been included within footnote 1 of the Condensed Consolidated Financial Statements.

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Business, Liquidity and Summary of Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2016

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of Preparation

Basis of Preparation — The accompanying condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and note disclosures required by U.S. generally accepted accounting principles (“U.S. GAAP”) for complete financial statements. The accompanying unaudited financial information should be read in conjunction with the audited consolidated financial statements, including the notes thereto, as of and for the year ended December 31, 2015, included in our 2015 Annual Report on Form 10-K filed with the SEC. The information furnished in this report reflects all adjustments (consisting of normal recurring adjustments), which are, in the opinion of management, necessary for a fair presentation of our financial position, results of operations and cash flows for each period presented. The results of operations for the three and nine months ended September 30, 2016 are not necessarily indicative of the results for the year ending December 31, 2016 or for any future period.

Use of Estimates

Use of Estimates — The preparation of financial statements in conformity with U.S. GAAP requires our management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting periods. Estimates having relatively higher significance include revenue recognition, stock-based compensation, valuation of warrants, valuation and estimated lives of identifiable intangible assets, impairment of long-lived assets, valuation of features embedded within note agreements and amendments, and income taxes. Actual results could differ from those estimates.

Reclassifications

Reclassifications — Certain amounts have been reclassified in prior period condensed consolidated financial statements to conform to the current year presentation.

Fair Value of Financial Instruments

Fair Value of Financial Instruments — We consider the fair value of cash, accounts payable, accrued liabilities and promissory notes to not be materially different from their carrying value. These financial instruments have short-term maturities.

We follow authoritative guidance with respect to fair value reporting issued by the Financial Accounting Standards Board (“FASB”) for financial assets and liabilities, which defines fair value, provides guidance for measuring fair value and requires certain disclosures. The guidance does not apply to measurements related to share-based payments. The guidance discusses valuation techniques, such as the market approach (comparable market prices), the income approach (present value of future income or cash flow), and the cost approach (cost to replace the service capacity of an asset or replacement cost). The guidance establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The following is a brief description of those three levels:

Level 1: Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2: Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.

Level 3: Unobservable inputs in which little or no market data exists, therefore developed using estimates and assumptions developed by us, which reflect those that a market participant would use.

Our cash is subject to fair value measurement and value is determined by Level 1 inputs. We measure the liability for committed stock issuances with a fixed share number using Level 1 inputs. We measure the liability for price adjustable warrants and certain features embedded in notes using the Black-Scholes option pricing model (“Black-Scholes”) under various probability weighted scenarios, using Level 3 inputs. The following tables summarize our liabilities measured at fair value on a recurring basis as of December 31, 2015 and September 30, 2016:

			Level 1				Level 3
			Quoted prices in		Level 2		Significant
	Balance at		active markets for		Significant other		unobservable
(In thousands)	December 31, 2015		identical assets		observable inputs		inputs
Liabilities:
Fair value liability for price adjustable warrants	$	2,491	$	-	$	-	$	2,491
Fair value liability for shares to be issued		60		60		-		-
Total liabilities at fair value	$	2,551	$	60	$	-	$	2,491

				Level 1			Level 3
				Quoted prices in	Level 2		Significant
	Balance at			active markets for	Significant other		unobservable
(In thousands)	September 30, 2016			identical assets	observable inputs		inputs
Liabilities:
Fair value liability for price adjustable warrants	$	109	$	-	$	-	$	109
Total liabilities at fair value	$	109	$	-	$	-	$	109

The following presents activity of the fair value liability of price adjustable warrants determined by Level 3 inputs for the nine-month period ended September 30, 2016, including the impact of the modifications to the Prior Warrants made in conjunction with the Purchase Agreement:

	Fair value
	liability for price			Weighted average as of each measurement date
	adjustable warrants			Exercise		Stock					Contractual life		Risk free
	(in thousands)			Price		Price		Volatility			(in years)		rate
Balance at December 31, 2015	$	2,491		$	0.42	$	0.27		99	%		1.79		0.46	%
Fair value of derivative warrant liability reclassified to additional paid-in capital		(86	)
Change in fair value included in Statement of Operations		(2,296	)
Balance at September 30, 2016	$	109		$	0.43	$	0.18		90	%		1.73		0.02	%

Net Income (loss) Per Common Share

Net Income (Loss) per Common Share — Basic net income (loss) per common share is computed by dividing the net income (loss) by the weighted average number of common shares outstanding during the period. Diluted net income (loss) per share includes the effect of common stock equivalents (stock options, unvested restricted stock and warrants) when, under either the treasury or if-converted method, such inclusion in the computation would be dilutive. The following number of shares have been excluded from diluted net income (loss) since such inclusion would be anti-dilutive:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2015		2016		2015		2016
Stock options outstanding		1,316,106		1,548,106		1,316,106		1,548,106
Warrants		1,236,946		3,416,104		1,236.946		3,416,104
Convertible preferred stock		10,150,000		7,550,000		10,150,000		7,550,000
Total		12,703,052		12,514,210		12,703,052		12,514,210

The following is a reconciliation of basic and diluted net income (loss) per share:

	Three Months Ended September 30,						Nine Months Ended September 30,
(In thousands except per share amounts)	2015			2016			2015			2016
Net income (loss) – numerator basic	$	769		$	(38	)	$	2,087		$	386
Change in fair value liability for price adjustable warrants		(2,485	)		(82	)		(6,128	)		(685	)
Net loss excluding change in fair value liability for price adjustable warrants	$	(1,716	)	$	(120	)	$	(4,041	)	$	(299	)
Weighted average common shares outstanding – denominator basic		26,462			29,760			26,047			29,264
Effect of price adjustable warrants		4,477			(27,113	)		7,437			(23,512	)
Weighted average dilutive common shares outstanding		30,939			2,647			33,484			5,752
Net income (loss) per common share – basic	$	0.03		$	(0.00	)	$	0.08		$	0.01
Net income (loss) per common share – diluted	$	(0.06	)	$	(0.05	)	$	(0.12	)	$	(0.05	)

Impairment of Long-lived Assets

Impairment of long-lived assets — We review all of our long-lived assets for impairment indicators throughout the year and perform detailed testing whenever impairment indicators are present. In addition, we perform detailed impairment testing for indefinite-lived intangible assets, specifically IPR&D, at least annually at December 31. When necessary, we record charges for impairments. Specifically:

●  For finite-lived intangible assets, such as developed technology rights, and for other long-lived assets, such as property and equipment, we compare the undiscounted amount of the projected cash flows associated with the asset, or asset group, to the carrying amount. If the carrying amount is found to be greater, we record an impairment loss for the excess of book value over fair value. In addition, in all cases of an impairment review, we re-evaluate the remaining useful lives of the assets and modify them, as appropriate; and

●  For indefinite-lived intangible assets, such as IPR&D assets, each year and whenever impairment indicators are present, we determine the fair value of the asset and record an impairment loss for the excess of book value over fair value, if any.

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Business, Liquidity and Summary of Significant Accounting Policies (Tables)

9 Months Ended

Sep. 30, 2016

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Schedule of Liabilities Measured at Fair Value On a Recurring Basis

The following tables summarize our liabilities measured at fair value on a recurring basis as of December 31, 2015 and September 30, 2016:

			Level 1				Level 3
			Quoted prices in		Level 2		Significant
	Balance at		active markets for		Significant other		unobservable
(In thousands)	December 31, 2015		identical assets		observable inputs		inputs
Liabilities:
Fair value liability for price adjustable warrants	$	2,491	$	-	$	-	$	2,491
Fair value liability for shares to be issued		60		60		-		-
Total liabilities at fair value	$	2,551	$	60	$	-	$	2,491

				Level 1			Level 3
				Quoted prices in	Level 2		Significant
	Balance at			active markets for	Significant other		unobservable
(In thousands)	September 30, 2016			identical assets	observable inputs		inputs
Liabilities:
Fair value liability for price adjustable warrants	$	109	$	-	$	-	$	109
Total liabilities at fair value	$	109	$	-	$	-	$	109

Schedule of Fair Value Liability of Price Adjustable Warrants Determined by Level 3

The following presents activity of the fair value liability of price adjustable warrants determined by Level 3 inputs for the nine-month period ended September 30, 2016, including the impact of the modifications to the Prior Warrants made in conjunction with the Purchase Agreement:

	Fair value
	liability for price			Weighted average as of each measurement date
	adjustable warrants			Exercise		Stock					Contractual life		Risk free
	(in thousands)			Price		Price		Volatility			(in years)		rate
Balance at December 31, 2015	$	2,491		$	0.42	$	0.27		99	%		1.79		0.46	%
Fair value of derivative warrant liability reclassified to additional paid-in capital		(86	)
Change in fair value included in Statement of Operations		(2,296	)
Balance at September 30, 2016	$	109		$	0.43	$	0.18		90	%		1.73		0.02	%

Schedule of Anti-dilutive Securities

. The following number of shares have been excluded from diluted net income (loss) since such inclusion would be anti-dilutive:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2015		2016		2015		2016
Stock options outstanding		1,316,106		1,548,106		1,316,106		1,548,106
Warrants		1,236,946		3,416,104		1,236.946		3,416,104
Convertible preferred stock		10,150,000		7,550,000		10,150,000		7,550,000
Total		12,703,052		12,514,210		12,703,052		12,514,210

Schedule of Reconciliation of Basic and Diluted Net Income (loss)

The following is a reconciliation of basic and diluted net income (loss) per share:

	Three Months Ended September 30,						Nine Months Ended September 30,
(In thousands except per share amounts)	2015			2016			2015			2016
Net income (loss) – numerator basic	$	769		$	(38	)	$	2,087		$	386
Change in fair value liability for price adjustable warrants		(2,485	)		(82	)		(6,128	)		(685	)
Net loss excluding change in fair value liability for price adjustable warrants	$	(1,716	)	$	(120	)	$	(4,041	)	$	(299	)
Weighted average common shares outstanding – denominator basic		26,462			29,760			26,047			29,264
Effect of price adjustable warrants		4,477			(27,113	)		7,437			(23,512	)
Weighted average dilutive common shares outstanding		30,939			2,647			33,484			5,752
Net income (loss) per common share – basic	$	0.03		$	(0.00	)	$	0.08		$	0.01
Net income (loss) per common share – diluted	$	(0.06	)	$	(0.05	)	$	(0.12	)	$	(0.05	)

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Stockholders' Equity (Tables)

9 Months Ended

Sep. 30, 2016

Equity [Abstract]

Schedule of Warrant Activity

As of September 30, 2016, there were 24,466,783 warrants outstanding, with a weighted average exercise price of $0.47 per share, and annual expirations as follows:

Expiring in 2016	-
Expiring in 2017	2,630,545
Expiring in 2018	113,831
Expiring thereafter	21,722,407

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Stock Incentive Plans (Tables)

9 Months Ended

Sep. 30, 2016

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Schedule of Stock-based Compensation Expense

The following table summarizes stock-based compensation expense:

	Three months ended September 30,				Nine months ended September 30,
(In thousands)	2015		2016		2015		2016
Research and development	$	5	$	2	$	36	$	15
General and administrative		111		364		376		518
Total	$	116	$	366	$	412	$	533

Schedule of Stock Option Activity

Stock Options — Stock option activity was as follows:

	Options Outstanding
	2016
	Shares		Weighted Average Exercise Price
Outstanding, January 1		1,316,106	$	4.66
Options Issued		232,000	$	0.26
Outstanding, September 30		1,548,106	$	4.00
Exercisable, September 30		1,432,106	$	4.31

Schedule of Summary of Additional Information On Stock Options Outstanding

The following table summarizes additional information on our stock options outstanding at September 30, 2016:

	Options Outstanding						Options Exercisable
Range of Exercise Prices	Number Outstanding		Weighted- Average Remaining Contractual Life (Years)		Weighted Average Exercise Price		Number Exercisable		Weighted Average Exercise Price
$0.26 - 0.82		484,000		3.73	$	0.46		368,000	$	0.53
$1.07 - $2.20		1,021,500		1.68		1.07		1,021,500		1.07
$47.60 - $87.60		21,000		1.69		67.60		21,000		67.60
$127.60 - $207.60		21,500		1.69		158.30		21,500		158.30
526.40		106		0.35		526.40		106		526.40
Totals		1,548,106		2.32	$	4.00		1,432,106	$	4.31
		Weighted-Average Exercisable Remaining Contractual Life (Years)								2.16

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Business, Liquidity and Summary of Significant Accounting Policies (Details Narrative) - USD ($) $ in Thousands							1 Months Ended	3 Months Ended		9 Months Ended
	Jul. 31, 2016	Jun. 20, 2016	Apr. 30, 2016	Mar. 31, 2016	Feb. 29, 2016	May 05, 2015	Jul. 31, 2016	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015	Dec. 31, 2015	Jun. 30, 2008
Issuance of common stock, shares			470,000		210,000
Issuance of common stock	$ 15		$ 75		$ 60					$ 2
Line of credit								$ 540		540
License fee	$ 350				250
License and success-based milestones					$ 40,000			50	$ 80	$ 300	$ 480
Prior warrant percent										20.00%
Accumulated deficit								334,065		$ 334,065		$ 334,451
Working capital										2,800
Cash								100		100
License Agreement [Member]
Issuance of common stock										15
License fee				$ 250
License and success-based milestones				$ 40,000
Accounts receivable								$ 50		$ 50
License Agreement [Member] | November 2016 [Member]
License fee							$ 350
Asset Purchase Agreement [Member]
Revenue milestone payment						$ 2,000
Asset Purchase Agreement [Member] | November 2016 [Member]
Issuance of common stock, shares										1,500,000
Note Purchase Agreement [Member]
Ownership percentage of issued and outstanding shares		25.00%
Debt principal amount		$ 300
Debt interest rate		12.00%
Payments for cash outstanding		$ 250
Accrued interest expense										$ 7
Prior warrant percent										80.00%
IthenaPharma Inc [Member]
Issuance of common stock, shares										58,392,828
Ownership percentage of issued and outstanding shares										65.00%
Warrants to purchase shares								300,000		300,000
Maximum percentage of subsequent to the merger								50.00%		50.00%
IthenaPharma Inc [Member] | Vuong Trieu [Member]
Line of credit								$ 540		$ 540
Line of credit current borrowing capacity								$ 15		$ 15
RNA Therapeutics [Member]
Accumulated deficit													$ 1,083

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Business, Liquidity and Summary of Significant Accounting Policies - Schedule Of Liabilities Measured At Fair Value On A Recurring Basis (Details) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Fair value liability for price adjustable warrants	$ 109	$ 2,491
Fair value liability for shares to be issued	15	60
Total liabilities at fair value	109	2,551
Level 1 Quoted Prices in Active Markets for Identical Assets[Member]
Fair value liability for price adjustable warrants
Fair value liability for shares to be issued		60
Total liabilities at fair value		60
Level 2 Significant Other Observable Inputs[Member]
Fair value liability for price adjustable warrants
Fair value liability for shares to be issued
Total liabilities at fair value
Level 3 Significant Unobservable Inputs [Member]
Fair value liability for price adjustable warrants	109	2,491
Fair value liability for shares to be issued
Total liabilities at fair value	$ 109	$ 2,491

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Business, Liquidity and Summary of Significant Accounting Policies - Schedule Of Fair Value Liability Of Price Adjustable Warrants Determined By Level 3 (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Balance			$ 2,551
Fair value of derivative warrant liability reclassified to additional paid-in capital			(86)
Change in fair value liability for price adjustable warrants	$ 510	$ 2,485	2,296	$ 6,128
Balance	$ 109		$ 109
Weighted average, exercise price			$ 0.42
Weighted average, exercise price	$ 0.43		0.43
Weighted average, stock price			0.27
Weighted average, stock price	$ 0.18		$ 0.18
Weighted average, volatility			99.00%
Weighted average, volatility			90.00%
Weighted average, contractual life (in years)			1 year 9 months 15 days
Weighted average, contractual life (in years)			1 year 8 months 23 days
Weighted average, risk free rate			0.46%
Weighted average, risk free rate			0.02%

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Business, Liquidity and Summary of Significant Accounting Policies - Schedule Of Anti-Dilutive Securities (Details) - shares	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Anti-dilutive securities	12,514,210	12,703,052	12,514,210	12,703,052
Convertible Preferred Stock[Member]
Anti-dilutive securities	7,550,000	10,150,000	7,550,000	10,150,000
Warrant[Member]
Anti-dilutive securities	3,416,104	1,236,946	3,416,104	1,236.946
Stock Option [Member]
Anti-dilutive securities	1,548,106	1,316,106	1,548,106	1,316,106

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Business, Liquidity and Summary of Significant Accounting Policies - Schedule of Reconciliation of Basic and Diluted Net Income (Loss) (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Net income (loss) - numerator basic	$ (38)	$ 769	$ 386	$ 2,087
Change in fair value liability for price adjustable warrants	510	2,485	2,296	6,128
Net loss excluding change in fair value liability for price adjustable warrants	$ (120)	$ (1,716)	$ (299)	$ (4,041)
Weighted average common shares outstanding - denominator basic	29,760	26,462	29,264	26,047
Effect of price adjustable warrants	(27,113)	4,477	(23,512)	7,437
Weighted average dilutive common shares outstanding	2,647	30,939	5,752	33,484
Net income (loss) per common share - basic	$ (0.00)	$ 0.03	$ 0.01	$ 0.08
Net income (loss) per common share - diluted	$ (0.05)	$ (0.06)	$ (0.05)	$ (0.12)

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Stockholders' Equity (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands							1 Months Ended			3 Months Ended		9 Months Ended
	Jul. 31, 2016	Apr. 30, 2016	Feb. 29, 2016	Nov. 30, 2015	Aug. 31, 2015	Jun. 30, 2015	Jul. 31, 2016	Apr. 30, 2016	Feb. 29, 2016	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015	Dec. 31, 2015	Mar. 31, 2014
Preferred stock, shares issued										100,000		100,000		100,000
Issuance of common stock	$ 15	$ 75	$ 60									$ 2
Issuance of common stock, shares		470,000	210,000
Common stock, par value										$ 0.006		$ 0.006		$ 0.006
Change in fair value liability for price adjustable warrants										$ (510)	$ (2,485)	$ (2,296)	$ (6,128)
Prior warrant percent												20.00%
Warrant[Member]
Warrants to purchase, shares										300,000		300,000
Common stock exercise price, per share										$ 0.18		$ 0.18
Change in fair value liability for price adjustable warrants												$ 90
Prior warrant percent												80.00%
Percentage of no prior warrants												20.00%
Warrant exchange ratio description												Exchange ratio used in the Merger (10.510708),
Number of warrants outstanding, shares										24,466,783		24,466,783
Weighted average exercise price										$ 0.47		$ 0.47
Warrant[Member] | Maximum [Member]
Issuance of common stock, shares												3,153,211
MiNA Therapeutics [Member]
Number of shares issued for equity components								470,000	210,000
Number of value issued for equity components								$ 75	$ 60
License Agreement [Member]
Issuance of common stock												$ 15
License Agreement [Member] | November 2016 [Member]
Number of shares issued for equity components							120,000					120,000
Number of value issued for equity components							$ 15					$ 15
Asset Purchase Agreement [Member] | November 2016 [Member]
Issuance of common stock, shares												1,500,000
Series B Preferred Stock [Member]
Preferred stock designated, shares										1,000		1,000
Series A Preferred Stock [Member]
Preferred stock designated, shares										90,000		90,000
Series C Preferred Stock [Member]
Preferred stock designated, shares															1,200
Common stock, par value					$ 5,000
Common stock at a conversion price, per share					$ 0.75
Series C Preferred Stock [Member] | Investor [Member]
Conversion of stock, shares converted				90		90
Issuance of common stock, shares				600,000		600,000
Series D Preferred Stock [Member]
Preferred stock designated, shares					220
Warrants to purchase, shares					3,440,000
Common stock, par value					$ 5,000
Series D Preferred Stock [Member] | Investor [Member]
Conversion of stock, shares converted				50					110
Issuance of common stock, shares				600,000					1,400,000
Series D Preferred Stock [Member] | Securities Purchase Agreement [Member]
Sale of stock, shares					220
Warrants to purchase, shares					3.44
Common stock exercise price, per share					$ 0.40
Payments to warrant purchase price					$ 1,100
Issuance of common stock					$ 10
Issuance of common stock, shares					2,750,000
Warrant reduction per share					$ 0.28
Common stock, par value					5,000
Common stock at a conversion price, per share					$ 0.40
Common stock stated dividend rate					5.00%
Change in fair value liability for price adjustable warrants					$ 600
Debt beneficial conversion feature					$ 700

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Stockholders’ Equity - Schedule of Warrant Activity (Details)	9 Months Ended
	Sep. 30, 2016 shares
Stockholders Equity - Schedule Of Warrant Activity Details
Expiring in 2016
Expiring in 2017	2,630,545
Expiring in 2018	113,831
Expiring thereafter	21,722,407

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Stock Incentive Plans (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands			9 Months Ended
	Jul. 22, 2016	Jan. 02, 2016	Sep. 30, 2016
Options to purchase, shares		152,000	80,000
Options to purchase exercise price, per share		$ 0.26	$ 0.26
Stock option unrecognized compensation expense			$ 60
Stock option unrecognized compensation expense, shares			321,250
Stock option weighted average period term			3 months
Stock option outstanding, intrinsic value			$ 0
Stock option exercisable, intrinsic value			$ 0
Stock option outstanding exercise price			$ 0.13
Compensation expenses			$ 300
Chief Executive Officer [Member]
Wages compensation	$ 70
Board of Directors [Member]
Options to purchase, shares			35,000
Options to purchase exercise price, per share			$ 0.10
Stock option weighted average period term			5 years

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Stock Incentive Plans - Schedule of Stock-based Compensation Expense (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Stock-based compensation	$ 366	$ 116	$ 533	$ 412
Research and Development Expense [Member]
Stock-based compensation	2	5	15	36
General and Administrative Expense [Member]
Stock-based compensation	$ 364	$ 111	$ 518	$ 376

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Stock Incentive Plans - Schedule of Stock Option Activity (Details)	9 Months Ended
	Sep. 30, 2016 $ / shares shares
Stock Incentive Plans - Schedule Of Stock Option Activity Details
Options Outstanding Beginning, Shares | shares	1,316,106
Options Outstanding Issued, Shares | shares	232,000
Options Outstanding Ending, Shares | shares	1,548,106
Options Outstanding Exercisable, Shares | shares	1,432,106
Options Outstanding Weighted Average Exercise Price, Beginning | $ / shares	$ 4.66
Options Outstanding Issued Weighted Average Exercise Price | $ / shares	0.26
Options Outstanding Weighted Average Exercise Price, Ending | $ / shares	4.00
Options Exercisable Weighted Average Exercise Price | $ / shares	$ 4.31

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Stock Incentive Plans - Schedule of Summary of Additional Information On Stock Options Outstanding (Details)	9 Months Ended
	Sep. 30, 2016 $ / shares shares
Number of Options Outstanding, Shares | shares	1,548,106
Options Outstanding Weighted-average Remaining Contractual Life (years)	2 years 3 months 26 days
Options Outstanding Weighted Average Exercise Price	$ 4.00
Number of Option Exercisable, Shares | shares	1,432,106
Options Exercisable Weighted Average Exercise Price	$ 4.31
Options Exercisable Weighted-average Remaining Contractual Life (years)	2 years 1 month 28 days
Range One [Member]
Range of Exercise Prices, Lower	$ 0.26
Range of Exercise Prices, Upper	$ 0.82
Number of Options Outstanding, Shares | shares	484,000
Options Outstanding Weighted-average Remaining Contractual Life (years)	3 years 8 months 23 days
Options Outstanding Weighted Average Exercise Price	$ 0.46
Number of Option Exercisable, Shares | shares	368,000
Options Exercisable Weighted Average Exercise Price	$ 0.53
Range Two [Member]
Range of Exercise Prices, Lower	1.07
Range of Exercise Prices, Upper	$ 2.20
Number of Options Outstanding, Shares | shares	1,021,500
Options Outstanding Weighted-average Remaining Contractual Life (years)	1 year 8 months 5 days
Options Outstanding Weighted Average Exercise Price	$ 1.07
Number of Option Exercisable, Shares | shares	1,021,500
Options Exercisable Weighted Average Exercise Price	$ 1.07
Range Three [Member]
Range of Exercise Prices, Lower	47.60
Range of Exercise Prices, Upper	$ 87.60
Number of Options Outstanding, Shares | shares	21,000
Options Outstanding Weighted-average Remaining Contractual Life (years)	1 year 8 months 9 days
Options Outstanding Weighted Average Exercise Price	$ 67.60
Number of Option Exercisable, Shares | shares	21,000
Options Exercisable Weighted Average Exercise Price	$ 67.60
Range Four [Member]
Range of Exercise Prices, Lower	127.60
Range of Exercise Prices, Upper	$ 207.60
Number of Options Outstanding, Shares | shares	21,500
Options Outstanding Weighted-average Remaining Contractual Life (years)	1 year 8 months 9 days
Options Outstanding Weighted Average Exercise Price	$ 158.30
Number of Option Exercisable, Shares | shares	21,500
Options Exercisable Weighted Average Exercise Price	$ 158.30
Range Five [Member]
Range of Exercise Prices, Upper	$ 526.40
Number of Options Outstanding, Shares | shares	106
Options Outstanding Weighted-average Remaining Contractual Life (years)	4 months 6 days
Options Outstanding Weighted Average Exercise Price	$ 526.40
Number of Option Exercisable, Shares | shares	106
Options Exercisable Weighted Average Exercise Price	$ 526.40

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Intellectual Property and Collaborative Agreements (Details Narrative) - USD ($) $ in Thousands					1 Months Ended	3 Months Ended		9 Months Ended
	Jul. 31, 2016	Apr. 30, 2016	Mar. 31, 2016	Feb. 29, 2016	Jul. 31, 2016	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Issuance of common stock, shares		470,000		210,000
Issuance of common stock	$ 15	$ 75		$ 60				$ 2
License fee	$ 350			250
License and success-based milestones				$ 40,000		$ 50	$ 80	300	$ 480
License Agreement [Member]
Issuance of common stock								15
License fee			$ 250
License and success-based milestones			$ 40,000
Accounts receivable						$ 50		$ 50
License Agreement [Member] | November 2016 [Member]
License fee					$ 350
Number of shares issued for equity components					120,000			120,000
Number of value issued for equity components					$ 15			$ 15