RXi Pharmaceuticals Reports Financial Results for the First Quarter of 2013

RXi Pharmaceuticals Reports Financial Results for the First Quarter of 2013 
Acquired Substantially All of OPKO Health, Inc.'s siRNA Assets in
Early 2013; Completed a Private Placement in March 2013 With Gross
Proceeds of $16.4 Million, Led by OPKO Health, Inc. and Frost Gamma
Investments Trust; Completion of Enrollment in Second Phase 1 Trial
for RXI-109 Program 
WESTBOROUGH, MA -- (Marketwired) -- 05/15/13 --  RXi Pharmaceuticals
Corporation (OTCQB: 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 quarter ended March 31,
2013, and provided a business update. 
"The first quarter of 2013 has been a good one for RXi
Pharmaceuticals, with steady progress -- in line with our planning
and budget -- for our research and development activities", commented
Dr Geert Cauwenbergh, President and CEO of the Company. He added
that, "In addition to coming near the end of the Phase 1 clinical
development stage for our anti-scarring compound RXI-109, RXi
Pharmaceuticals has been able to significantly strengthen its cash
balance by attracting new investors in its recent financing,
including our largest new shareholders, OPKO Health Inc., Frost Gamma
Investments Trust and Broadfin Capital, LLC, in addition to existing
investors like Tang Capital Partners, LP and RTW Investments, LLC." 
Quarterly Financial Highlights 
Cash and Cash Equivalents  
At March 31, 2013, RXi had cash and cash equivalents of approximately
$19.6 million, compared with $5.1 million at December 31, 2012.  
Net Loss and Net Loss Applicable to Common Stockholders 
The net loss for the three months ended March 31, 2013 was $14.4
million, including $0.6 million in non-cash share based compensation
expense, compared with a net loss of $1.9 million, including $0.2
million in non-cash share based compensation expense, for the three
months ended March 31, 2012. The increase in the net loss of $12.5
million was primarily attributable to a one-time charge of $12.3
million related to the fair value of common shares issued to OPKO
Health, Inc. ("OPKO") for the purchase of substantially all of OPKO's
RNAi-related assets. 
Net loss applicable to com
mon stockholders for the three months ended
March 31, 2013 was $17.9 million compared with a net loss applicable
to common stockholders of $1.9 million for the comparable period in
2012. The increase in net loss applicable to common stockholders of
$16.0 million was primarily attributable to the aforementioned
increase in the net loss as compared to prior year and $3.5 million
of dividends paid in the form of preferred stock to the Company
preferred shareholders. 
Revenues 
Total revenues for the three months ended March 31, 2013 was $0.1
million as compared with no revenue for the comparable period in
2012. The increase in total revenues for the three months ended March
31, 2013 was due to the recognition of work completed on the
Company's government grants during the period. 
Research and Development Expense 
Research and development expenses for the three months ended March
31, 2013 were $13.8 million, compared with $1.2 million for the three
months ended March 31, 2012. The increase of $12.6 million is largely
due to the one-time charge of $12.3 million related to the fair value
of common shares issued to OPKO for the purchase of substantially all
of OPKO's RNAi-related assets and an increase of $0.3 million in
employee stock-based compensation expense. 
General and Administrative Expenses 
General and administrative expenses for the three months ended March
31, 2013 were $0.7 million, compared with $0.8 million for the three
months ended March 31, 2012. The decrease in general administrative
expenses of $0.1 million was an increase in employee stock-based
compensation expense offset by a decrease in general and
administrative expenses, including lower personnel costs and a
decrease in the use of outside professional services and consultants. 
Preferred Stock Dividends 
Accretion of Series A convertible preferred stock dividends was $3.5
million for the three months ended March 31, 2013, compared with no
Series A convertible preferred stock dividends for the year
comparable period in 2012. Upon the Company's completion of the
spin-off from its former parent company, Galena Biopharma, Inc., the
Company issued shares of Series A convertible preferred stock to
certain investors. The increase in preferred stock dividends relates
to the fair value of dividends paid to the Series A preferred stock
holders during the quarterly period.  
First Quarter 2013 and Recent Corporate Highlights 


 
--  Initiation and Completion of Enrollment in Second Phase 1 Clinical
    Trial for RXI-109 Program: The Company initiated and fully enrolled a
    second Phase 1 clinical trial with its anti-scarring drug candidate,
    RXI-109, for the management of surgical and hypertrophic scars and
    keloids. Nine subjects (3 cohorts of 3) were enrolled in this
    multi-dose escalation study, during which subjects were administered
    intradermal injections of RXI-109 on multiple occasions over multiple
    weeks. Dose levels range from 2.5 to 7.5 mg per injection, and
    subjects received injections of RXI-109 in four separate areas of the
    abdomen and placebo injections in four other areas of the abdomen.
    This study not only evaluates safety/tolerance parameters and systemic
    exposure to RXI-109, but also measures mRNA levels of CTGF and various
    other biomarkers considered relevant for wound healing and scarring.
    
    
--  Completion of Acquisition of RNAi-related Assets from OPKO: On March
    1, 2013, RXi entered into an asset purchase agreement with OPKO, in
    which RXi acquired substantially all of OPKO's RNAi-related assets,
    which included patents, licenses, clinical and preclinical data and
    other assets. As consideration for these assets, RXi issued to OPKO 50
    million shares of its common stock and will make milestone payments to
    OPKO up to an aggregate of $50 million per product tied to the
    successful development and commercialization of products utilizing the
    acquired OPKO intellectual property. In addition, upon
    commercialization of these products, if approved, RXi would make
    royalty payments to OPKO.
    
    
--  Completion of $16.4 million Placement of Common Stock: On March 6,
    2013, RXi entered into definitive agreements related to the private
    placement of approximately 113 million shares of common stock at a
    price of $0.145 per share. The gross proceeds to the Company from the
    offering, which closed on March 12, 2013, were approximately $16.4
    million and net proceeds to RXi, after payment of commissions, were
    approximately $16.0 million. The financing was lead by OPKO and Frost
    Gamma Investments Trust, a trust controlled by Phillip Frost, M.D.
    Other participants included existing investors Tang Capital Partners,
    LP and RTW Investments, LLC as well as new institutional and
    accredited investors.
    
    
--  Appointment of H. Paul Dorman and Curtis A. Lockshin to the Company's
    Board of Directors: In April 2013, RXi appointed H. Paul Dorman and
    Curtis A. Lockshin to serve on the Company's Board of Directors. Mr.
    Dorman's and Dr. Lockshin's significant industry experience will be
    instrumental to supporting RXi's growth and development initiatives.

  
About RXI-10
9 
RXi Pharmaceutical's first clinical program centers on RXI-109, a
self-delivering RNAi compound (sd-rxRNA(R)) 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, was 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. A second Phase 1 trial also initiated in 2012 evaluates
the safety of multiple (3) administrations of RXI-109 over 2 weeks
and will allow the evaluation of RXI-109's effect on scarring-related
biomarkers. 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, 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 (OTCQB: 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 timing and future success of our
clinical trials with RXI-109; our expectation that we are coming near
the end of Phase 1 clinical development stage for RXI-109; 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)                                                                 
                                                                            
                                              For the Three   For the Three 
                                              Months Ended    Months Ended  
                                             March 31, 2013  March 31, 2012 
                                                                            
Total revenues                               $           53  $            - 
                                             --------------  -------------- 
                                                                            
Research and development expenses                    13,771           1,154 
General and administrative expenses                     676             751 
                                             --------------  -------------- 
Total operating expenses                            (14,447)         (1,905)
                                             --------------  -------------- 
Operating loss                                      (14,394)         (1,905)
                                             --------------  -------------- 
Interest income (expense)                                 -             (22)
Other income (expense)                                   (3)              1 
                                             --------------  -------------- 
Net loss                                            (14,397)         (1,926)
Accretion of Series A convertible preferred                                 
 stock and dividends                                 (3,547)              - 
                                             --------------  -------------- 
Net loss applicable to common stockholders   $      (17,944) $       (1,926)
                                             ==============  ============== 
Net loss per common share applicable to                                     
 common stockholders:                                                       
Basic and diluted loss per share             $        (0.09) $        (0.04)
                                             ==============  ============== 
Weighted average common shares outstanding:                                 
Basic and diluted                               194,882,870      47,967,499 
                                             ==============  ============== 
                                                                            
                                                                            
                                                                            
RXi PHARMACEUTICALS CORPORATION (REGISTRANT)                                
(A Development Stage Company)                                               
CONDENSED BALANCE SHEETS                                                    
(Unaudited)                                                                 
                                                                            
                                                   March 31,   December 31, 
                                                      2013         2012     
ASSETS                                                                      
Current assets:                                                             
Cash and cash equivalents                        $      19,643 $      5,127 
Restricted cash                                             53           53 
Prepaid expenses and other current assets                  102          212 
                                                 ------------- ------------ 
Total current assets                                    19,798        5,392 
                                                                            
Equipment and furnishings, net                             172          198 
Other assets                                                 2            2 
                                                 ------------- ------------ 
                                                                            
Total assets                                     $      19,972 $      5,592 
                                                 ============= ============ 
                                                                            
LIABILITIES, CONVERTIBLE PREFERRED STOCK AND                                
 STOCKHOLDERS' EQUITY (DEFICIT)                                             
Current liabilities:                                                        
Accounts payable                                 $         366 $        416 
Accrued expenses and other current liabilities           1,126          767 
Deferred revenue                                           464          491 
Current maturities of capital lease obligations              2            5 
                                                 ------------- ------------ 
Total current liabilities                                1,958        1,679 
Deferred revenue, net of current portion                     -           27 
                                                 ------------- ------------ 
Total liabilities                                        1,958        1,706 
Total convertible preferred stock                        9,896        9,726 
Total stockholders' equity (deficit)                     8,118       (5,840)
                                                 ------------- ------------ 
Total liabilities, convertible preferred stock                              
 and stockholders' equity (deficit)              $      19,972 $      5,592 
                                                 ============= ============ 

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