On August 12, 2015 RXi Pharmaceuticals Corporation (NASDAQ: RXII), a biotechnology company focused on discovering and developing innovative therapeutics primarily in the areas of dermatology and ophthalmology, reported its financial results for the quarter ended June 30, 2015 and provided a business update (Press release, RXi Pharmaceuticals, AUG 12, 2015, View Source;FID=30674060 [SID:1234507211]).
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"In the second quarter, RXi reached a major milestone in our shareholder structure with the elimination of the preferred shares and their associated dilutive quarterly dividend. In addition, several investment funds became new shareholders in our recently completed financing," said Dr. Geert Cauwenbergh, President and CEO of RXi Pharmaceuticals. He added, "This financing provides us with at least an additional year of cash. This cash and time will allow us to focus on rebuilding our share price, which was significantly affected in the last 18 months by the conversion and sale of the preferred into common shares. We will aim to: (1) advance our preclinical and clinical pipeline, (2) generate partnership deals, and (3) deploy our sd-rxRNA technology platform in a portfolio approach akin to the way venture capital firms deploy their capital, through establishing equity positions in young biotechnology companies to create value for our investors."
The Company will host a conference call today at 4:30 p.m. EDT to discuss financial results and provide an update on the Company. The webcast link will be available under the "Investors" section of the Company’s website, www.rxipharma.com. The event may also be accessed by dialing toll-free in the United States and Canada: +1 888-669-0684. International participants may access the event by dialing: +1 862-225-5361. An archive of the webcast will be available on the Company’s website approximately two hours after the presentation.
Selected Second Quarter 2015 Financial Highlights
Preferred Shares
The Company’s capital structure has been simplified with the full conversion of all remaining outstanding shares of Series A and Series A-1 convertible preferred stock during the second quarter of 2015 and with the acceleration of the next quarterly dividend payment date from June 30, 2015 to May 27, 2015, at which time the dividend shares were immediately converted into common stock. As a result, no shares of preferred stock remain outstanding and no further dividends on those preferred shares will accrue.
Cash Position
At June 30, 2015, the Company had cash, cash equivalents and short-term investments of approximately $14.0 million, compared with cash and cash equivalents of $8.5 million at December 31, 2014.
The Company enhanced its balance sheet with the completion of a public offering of common stock and warrants. The Company sold a total of 26 million units at a price per unit of $0.40 in the public offering that included both institutional and retail investors. Each unit consisted of one share of common stock, a 13-month overallotment purchase right to purchase one-half of one share of common stock at a price of $0.455 per full share and a 5-year warrant to purchase one-half of one share of common stock at a price of $0.52 per full share. The Company received gross proceeds of $10.4 million and net proceeds of $9.2 million after payment of placement agent fees and other offering expenses, and assuming the overallotment purchase rights and warrants are not exercised.
The Company believes that its existing cash, cash equivalents and short-term investments should be sufficient to fund operations for at least one year.
Research and Development Expenses
Research and development expenses for the quarter ended June 30, 2015 were $1.4 million, which included $0.2 million of non-cash stock-based compensation expense, as compared with $1.2 million for the quarter ended June 30, 2014, which included $0.2 million of non-cash stock-based compensation expense. The increase in research and development expenses in the second quarter of 2015 as compared to the second quarter of 2014 was primarily due to subject and trial-related fees for the Company’s ongoing three clinical trials, mainly Study 1402.
General and Administrative Expenses
General and administrative expenses for the quarter ended June 30, 2015 were $0.8 million, which included $0.2 million of non-cash stock-based compensation expense, as compared with $0.9 million for the quarter ended June 30, 2014, which included $0.3 million of non-cash stock-based compensation expense. The decrease in general and administrative expenses in the second quarter of 2015 as compared to the second quarter of 2014 was primarily due to a reduction in legal fees.
Net Loss Applicable to Common Stockholders
Net loss applicable to common stockholders for the quarter ended June 30, 2015 was $2.2 million, compared with $3.2 million for the quarter ended June 30, 2014. The decrease in net loss applicable to common stockholders in the second quarter of 2015 as compared to the second quarter of 2014 was due to the change in operating expenses, as described above, and a decrease in the Company’s preferred stock dividends related to decreases in the Company’s closing common stock price on the dividend payment dates and the number of preferred shares earning dividends each quarter.
Second Quarter 2015 and Recent Corporate Highlights
Positive Advancements within our Ophthalmology Franchise
As projected in the Company’s 2015 corporate goals, RXi submitted an IND application to the U.S. Food and Drug Administration (FDA) for RXI-109 as a potential therapeutic for the scarring component of retinal diseases in the eye, such as wet age-related macular degeneration. Following the FDA 30-day review period for the IND, the Company plans to initiate a Phase 1 / 2 clinical trial before the end of 2015.
Positive Advancements within our Dermatology Franchise
The Company continues to advance additional preclinical and discovery programs using our sd-rxRNA technology. In particular, the Company has selected collagenase and tyrosinase as new discovery stage targets for our self-delivering RNAi platform. Collagenase, or MMP1, is a matrix metalloproteinase involved in the breakdown of extracellular matrix. Selected reduction of MMP1 may be beneficial in the treatment of skin aging disorders, arthritis, acne scarring, blistering skin disorders, corneal erosions, endometriosis and possible cancer metastasis. Tyrosinase is the key enzyme in the synthesis of melanin. Melanin is produced by melanocytes and is the pigment that gives human skin, hair and eyes their color. The inhibition of tyrosinase can play a key role in the management of diseases such as cutaneous hyperpigmentation disorders such as lentigines (freckles, age spots and liver spots), and possibly melanoma.
These two discovery targets were selected because they have great potential as clinically relevant pharmaceutical gene targets, however, they also have great potential as cosmeceutical targets. The term ‘cosmeceuticals’ refers to compounds that can affect the appearance of the skin. For example, by targeting tyrosinase, a superficial reduction of melanin could potentially change the appearance of the darkened skin spots known as age spots and freckles or lighten the skin overall. Cosmeceuticals that make no therapeutic claims can be developed more rapidly than pharmaceutical drugs, and the path to market could be much shorter and less expensive.
The Company presented promising new data in June at the 74th Annual Meeting of the Society for Investigative Dermatology with its self-delivering RNAi (sd-rxRNA) compounds developed to target tyrosinase (TYR) and collagenase (MMP1). sd-rxRNA compounds developed to target TYR lead to a visible reduction of pigmentation in melanocytes in a 3-dimensional tissue culture model of human epidermis. Results from experiments in this model show that sd-rxRNA compounds targeting TYR are at least one hundred times more potent than kojic acid, a well-characterized skin lightening agent. sd-rxRNA compounds developed to target MMP1 resulted in a reduction in MMP1 mRNA levels that correspond to a similar reduction in MMP1 enzyme activity in cell culture in vitro. In addition, silencing of MMP1 expression in an in vitro scratch assay resulted in reduced migration of A549 cells, a clinically relevant non-small cell lung cancer cell line. Reduced migration in a scratch assay may indicate a reduction in the invasive nature of the cancer cell due to MMP1 reduction as a result of sd-rxRNA treatment.
In our clinical program with RXI-109, an sd-rxRNA compound developed for the reduction of dermal scar formation, there are currently three ongoing Phase 2a clinical trials evaluating the effect of RXI-109 on scar formation at surgical revision sites for either hypertrophic scars or keloids. Two of the three studies are fully enrolled and the subjects are being followed to completion. Preliminary data from these two trials helped to amend the initial design of Study 1402 to include an extended dosing regimen for longer coverage of the proliferation phase of wound healing in order to better reduce the excess collagen production that can lead to hypertrophic scars or keloids. Additional cohorts are being designed for Study 1402 that will be submitted in the near future, which will further extend the dosing regimen.
Samcyprone, RXi’s second clinical candidate, is a proprietary topical formulation of diphenylcyclopropenone (DPCP), which is an immunomodulator that works by initiating a T-cell response. Samcyprone is initially being developed for the treatment of such disorders as alopecia areata, warts, and cutaneous metastases of melanoma. The Company expects to initiate a Phase 2 trial evaluating the effect of Samcyprone on warts before the end of the year.
In April of this year, the FDA granted Orphan Drug Designation to RXi for Samcyprone for the treatment of Malignant Melanoma Stage IIb to IV. A number of patients with Stage IIb to IV malignant melanoma develop cutaneous metastases. Samcyprone is being studied for treatment of these metastases in an ongoing investigator-sponsored trial.
Intellectual Property
The Company has strengthened its patent portfolio by securing protection for its novel RNAi platform through three granted patents from the United States Patent and Trademark Office (USPTO).
A core patent that covers methods of use of the Company’s VEGF-targeting and CTGF-targeting sd-rxRNAs, including RXI-109, for use in the eye has been issued. A therapeutic, such as RXI‑109, that is effective in reducing the activity of CTGF could have great benefit for patients whose ocular condition has an active scarring component.
The second issued patent expands the scope of coverage to RXi’s novel, self-delivering RNAi platform (sd-rxRNA). Importantly, this patent incorporates novel oligonucleotide chemical modifications which result in improved biodistribution following systemic administration and may be beneficial for local delivery applications in the central nervous system.
In addition, RXi was also issued a patent covering the composition and methods of use for rxRNAori compounds targeting Mitogen-activated protein kinase kinase kinase kinase 4 (MAP4K4). These compounds may be beneficial for the treatment of inflammatory diseases and/or metabolic diseases. RXi’s rxRNAori platform are highly potent RNAi compounds which will require delivery vehicles to facilitate transport to the tissues of interest and to be taken up by cells.