Doubt cast on Nastech survival

Nastech Pharmaceutical’s independent auditors expressed concern about the biotech company’s ability to survive due to a possible cash crunch, according to a regulatory filing Monday.

Accounting firm KPMG stated that recurring losses, negative cash flows and an accumulated deficit “raised substantial doubt” about the Bothell company’s ability “to continue as a going concern.”

The company, which disclosed the auditors’ comments as it announced its financial results, said it was in the midst of a major effort to reduce its cash burn and raise new money.

Moves include layoffs, the potential consolidation of its Bothell operations into a single facility, and a plan to sell up to $50 million in stock.

At the end of 2007, Nastech had about $42 million in cash, cash equivalents and short-term investments.

The company reported about $52 million in losses for the year.

The auditors’ red flag underscores the troubles that began late last year when Procter & Gamble pulled out of a lucrative research partnership to develop a nasal osteoporosis treatment.

That rebuff cut off a major source of revenue for the company, sent the stock into a nose-dive and led to intensive belt-tightening.

Nastech stock, which last year soared to more than $17 a share, closed at $2.15 Monday, down 6.52 percent.