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RXi Pharmaceuticals Reports Financial Results for the Third Quarter of 2012



  RXi Pharmaceuticals Reports Financial Results for the Third Quarter of 2012

  * Appointment of Jeannette Graf, M.D. and Leroy Young, M.D., and
    re-appointment of Craig Mello, Ph.D., Nobel Laureate for the discovery of
    the RNAi mechanism, to the Company’s Scientific Advisory Board.
  * Receipt of a Small Business Innovation Research (SBIR) grant for
    approximately $300,000 from the National Cancer Institute (NCI) of the
    National Institutes of Health (NIH).

  * Completion of dosing in Phase 1 Trial for RXI-109 Program.

Business Wire

WESTBOROUGH, Mass. -- November 14, 2012

RXi Pharmaceuticals Corporation (OTC: RXII), a biotechnology company focused
on discovering, developing and commercializing innovative therapies addressing
major unmet medical needs using RNA-targeted technologies, today reported its
financial results for the quarter ended September 30, 2012.

“We have continued to execute according to plan in the third quarter of 2012,
with the final reports for our first Phase 1 study due in Q1 2013,” said Dr.
Geert Cauwenbergh, President and CEO of RXi Pharmaceuticals. He added that,
“The excellent safety profile observed with RXI-109 in our single dose Phase 1
study has helped us to finalize the preparations and dose selections for our
next Phase 1 study, which will focus on multiple dosing in volunteers. We
expect this study to start before the end of 2012. All this has been done with
a cash burn completely in line with our projections and assets. As a new
independent company, we are very pleased with our continued transition from a
technology platform company into a company developing commercially viable
assets.”

Recent Highlights

Quarterly Financial Highlights:

Cash and Cash Equivalents

At September 30, 2012, RXi had cash and cash equivalents of approximately
$6.3 million, compared with $0.5 million at December 31, 2011. The increase in
cash and cash equivalents is primarily attributable to the net proceeds of
approximately $8.1 million received from the issuance of the Company’s
convertible preferred stock upon completion of the spin-off from the Company’s
former parent company, Galena Biopharma, Inc. on April 27, 2012.

Net Loss Applicable to Common Stockholders

Net loss applicable to common stockholders for the third quarter of 2012 was
$2.9 million, or $0.02 per basic and diluted share, compared with a net loss
applicable to common stockholders of $2.0 million, or $0.05 per basic and
diluted share, for the comparable period in 2011. The increase in net loss
applicable to common stockholders was primarily attributable to the fair value
of the non-cash dividend of $1.3 million payable to the Company’s preferred
shareholders.

Revenues

Revenues for the quarter ended September 30, 2012 were $0.1 million as
compared with no revenues for the same period in the prior year. Revenues
during the quarter related to the recognition of work completed on the
Company’s government grants.

Research and Development Expense

Research and development expenses for the third quarter of 2012 were $1.2
million, compared with $1.1 million for the third quarter of 2011. The
increase of $0.1 million as compared to the prior year period was primarily
due to an increase of $0.05 million in research and development expenses to
run the clinical trial for the Company’s RXI-109 program and an increase of
$0.06 million in employee stock based compensation expense.

General and Administrative Expenses

General and administrative expenses for the third quarter of 2012 were $0.5
million, compared with $1.0 million for the third quarter of 2011. The
decrease of $0.5 million was primarily due to a decrease of $0.3 million in
general and administrative expenses due to lower personnel related costs,
board fees and expenses, and professional outside services and a decrease of
$0.2 million in employee stock based compensation.

Preferred Stock Accretion and Dividends

Accretion of Series A Preferred Stock and dividends was $1.3 million for the
third quarter of 2012 compared with no accretion of Series A Preferred Stock
and dividends for the third quarter of 2011. The $1.3 million relates to the
fair value of the dividends paid to preferred shareholders during the third
quarter of 2012.

Corporate Highlights

  * Receipt of a Small Business Innovation Research (SBIR) grant from the
    National Cancer Institute (NCI) of the National Institutes of Health
    (NIH): The grant provides approximately $300,000 in funding for a project
    enabling the discovery and preclinical development of sd-rxRNAs® as
    potential therapy for retinoblastoma, a pediatric ocular malignancy. The
    project will be completed in collaboration with Dr. David Cobrinik and
    colleagues at the Memorial Sloan-Kettering Cancer Center.

  * Appointment of Scientific Advisory Board Members and re-appointment of
    Craig Mello, Ph.D., Nobel Laureate for the discovery of the RNAi
    mechanism, to the Company’s Scientific Advisory Board: RXi appointed Dr.
    Jeannette Graf and Dr. Leroy Young to the Company’s Scientific Advisory
    Board and re-appointed Craig Mello, Ph.D. to the Company’s Scientific
    Advisory Board. The addition of these two highly esteemed clinicians
    provides RXi with invaluable experience and clinical research expertise
    that are key to the ongoing development of the Company’s RXI-109 program.

Scientific Achievements

  * Completion of dosing in Phase 1 Trial for RXI-109 Program: Dosing with the
    Company’s first product candidate, in its first Phase 1 study, was
    completed during September 2012. RXI-109 is being developed to prevent or
    reduce dermal scarring following surgery or trauma, as well as for the
    management of hypertrophic scars and keloids. Fifteen subjects were
    enrolled in a double-blind dose, escalation study during which single
    intradermal injections were administered in a dose dependent manner to 5
    cohorts of 3 subjects each. Subjects received an injection of RXI-109 in 2
    separate areas on the abdomen and placebo injections in two other areas of
    the abdomen. Data on safety and tolerance were collected and evaluated for
    each cohort before moving to the next cohort with a higher dose level.
    RXI-109 was well tolerated by intradermal injection. No serious local or
    systemic side effects were observed in the subjects at any of the doses
    administered.

About RXI-109

RXi Pharmaceutical’s first clinical program centers around RXI-109, a
self-delivering RNAi compound (sd-rxRNA®) developed by RXi for the reduction
of dermal scarring in planned surgeries. RXI-109 is designed to reduce the
expression of CTGF (connective tissue growth factor), a critical regulator of
several biological pathways involved in fibrosis, including scar formation in
the skin. The first clinical trial of RXI-109, initiated in June 2012, has
been designed to evaluate the safety and tolerability of several dose levels
of RXI-109 in humans and may provide preliminary evidence of surgical scar
reduction. As there are currently no FDA-approved drugs to prevent scar
formation, a therapeutic of this type could have great benefit for trauma and
surgical patients (especially relating to raised or hypertrophic scarring), as
a treatment during the surgical revision of existing unsatisfactory scars, and
in the treatment, removal and inhibition of keloids (scars which extend beyond
the original skin injury).

About RXi Pharmaceuticals Corporation

RXi Pharmaceuticals Corporation (OTC: RXII) is a biotechnology company focused
on discovering, developing and commercializing innovative therapies based on
its proprietary, next-generation RNAi platform. Therapeutics that use RNA
interference, or “RNAi,” have great promise because of their ability to
“silence,” or down-regulate, the expression of a specific gene that may be
overexpressed in a disease condition. Building on the pioneering work of
scientific founder and Nobel Laureate Dr. Craig Mello, RXi’s first RNAi
product candidate, RXI-109, which targets CTGF (connective tissue growth
factor), entered into a human clinical trial in June 2012 to evaluate its
safety, tolerability and potential efficacy for scar prevention. For more
information, please visit www.rxipharma.com.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of
the Private Securities Litigation Reform Act of 1995. Forward-looking
statements can be identified by words such as: “intend,” “believe,” “expect,”
“may,” “should,” “designed to,” “will” and similar references. Such statements
include, but are not limited to, statements about: our ability to successfully
develop RXI-109 and our other product candidates; the future success of our
first clinical trial with RXI-109; our expectation that our next Phase 1 study
in RXI-109 will start before the end of 2012; and our ability to implement
cost-saving measures. Forward-looking statements are neither historical facts
nor assurances of future performance. Instead they are based only on our
current beliefs, expectations and assumptions regarding the future of our
business, future plans and strategies, projections, anticipated events and
trends, the economy and other future conditions. Because forward-looking
statements relate to the future, they are subject to inherent uncertainties,
risks and changes in circumstances that are difficult to predict and many of
which are outside of our control. Our actual results and financial condition
may differ materially from those indicated in the forward-looking statements.
Therefore, you should not rely on any of these forward-looking statements.
Important factors that could cause our actual results and financial condition
to differ materially from those indicated in the forward-looking statements
include, among others: the risk that our clinical trial with RXI-109 may not
be successful in evaluating the safety and tolerability of RXI-109 or
providing preliminary evidence of surgical scar reduction; the successful and
timely completion of clinical studies; uncertainties regarding the regulatory
process; the availability of funds and resources to pursue our research and
development projects, including our clinical trials with RXI-109; general
economic conditions; and those identified under “Risk Factors” in the
Company’s most recently filed Annual Report on Form 10-K, Quarterly Report on
Form 10-Q and in other filings the Company periodically makes with the SEC.
The Company does not undertake to update any of these forward-looking
statements to reflect a change in its views or events or circumstances that
occur after the date of this press release.

RXi PHARMACEUTICALS CORPORATION (REGISTRANT) AND PREDECESSOR (RNAi)
(A Development Stage Company)
CONDENSED STATEMENTS OF OPERATIONS
(Amounts in thousands, except share and per share data)
(Unaudited)
                                                                       
                   RXi               Predecessor      RXi               Predecessor
                   (Registrant)      (RNAi) and RXi   (Registrant)      (RNAi) and RXi
                                     (Registrant)                       (Registrant)
                   For the Three     For the Three    For the Nine      For the Nine
                   Months Ended      Months Ended     Months Ended      Months Ended
                   September 30,     September 30,    September 30,     September 30,
                   2012              2011             2012              2011
Total revenue      $ 57              $ -              $ 57              $ -           
                                                                         
Research and
development          1,214             1,126            9,314             5,074
expense
General and
administrative       539               1,041            2,006             5,206       
expense
Operating loss       (1,696      )     (2,167     )     (11,263     )     (10,280    )
Interest
income               (1          )     1                (29         )     1
(expense)
Other income         53                123              124               2,513       
Net loss             (1,644      )     (2,043     )     (11,168     )     (7,766     )
Accretion of
Series A
convertible          (1,277      )     -                (11,897     )     -           
preferred
stock and
dividends
Net loss
applicable to      $ (2,921      )   $ (2,043     )   $ (23,065     )   $ (7,766     )
common
stockholders
Net loss per
common share
applicable to
common
stockholders:
Basic and
diluted loss       $ (0.02       )   $ (0.05      )   $ (0.18       )   $ (0.23      )
per share
Weighted
average common
shares
outstanding:
Basic and            157,155,222       41,970,481       130,032,178       33,697,704  
diluted
                                                                           

RXi PHARMACEUTICALS CORPORATION (REGISTRANT)
(A Development Stage Company)
CONDENSED BALANCE SHEETS
(Unaudited)
                                         RXi (Registrant)     RXi (Registrant)
                                         September 30,        December 31,
                                         2012                 2011
ASSETS
Current assets:
Cash and cash equivalents                $   6,278            $    503
Restricted cash                              53                    53
Due from Parent                              -                     597
Prepaid expenses and other current           144                   186      
assets
Total current assets                         6,475                 1,339
Equipment and furnishings, net               235                   355
Other assets                                 2                     -        
                                                               
Total assets                             $   6,712            $    1,694    
                                                               
LIABILITIES, CONVERTIBLE PREFERRED        
STOCK AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable                         $   155              $    387
Accrued expenses and other current           877                   544
liabilities
Deferred revenue                             370                   816
Current maturities of capital                9                     29       
lease obligations
Total current liabilities                    1,411                 1,776
Convertible notes payable                    -                     500
Capital lease obligations, net of            -                     5        
current maturities current portion
Total liabilities                            1,411                 2,281
Commitments and contingencies
Total convertible preferred stock            9,575                 -
Total stockholders' deficit                  (4,274   )            (587    )
Total liabilities, convertible
preferred stock and stockholders'        $   6,712            $    1,694    
deficit

Contact:

RXi Pharmaceuticals Corporation
Tamara McGrillen, 508-929-3646
tmcgrillen@rxipharma.com
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