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Following Private Placement, RXi Has Funds to Last into 2015

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Having just raised $16 million through the sale of around 113 million shares, RXi Pharmaceuticals last week said that it now has the financial means to funds its operations, including the phase II development of its lead RNAi drug candidate, into 2015.

Meanwhile, work continues on other preclinical programs through collaborations and with the support of National Institutes of Health funding, while RXi prepares to start testing the therapeutic potential of the RNAi assets it recently acquired from Opko Health.

The company also released its 2012 financial results last week, reporting a higher net loss as increased research and development spending more than offset a drop in general and administrative costs.

Early last month, RXi announced that it picked up Opko’s RNAi-related assets including patents and patent applications, licenses, and clinical and preclinical data in exchange for 50 million shares of common stock and the promise of milestones and royalties on future products (GSN 3/7/2013).

Concurrent with the deal, RXi agreed to sell nearly 113 million additional shares in a private placement led by Opko and Frost Gamma Investments, a trust controlled by Opko’s CEO, netting $16 million.

This cash infusion, RXi said in a filing with the US Securities and Exchange Commission, will be sufficient to keep the company moving ahead for around the next two years. A key goal during that time will be the launch of phase II development of the anti-scarring agent RXI-109.

Earlier this year, RXi President and CEO Geert Cauwenbergh presented blinded phase I data hinting at the drug’s efficacy (GSN 2/21/2013). Assuming those data prove positive when unblinded, the company is on track to start phase II testing, most likely in patients with hypertrophic scars from previous procedures and who are eligible for scar-revision surgery, before the end of this year.

RXi also has a number of other R&D programs underway, including one examining the use of RXI-109 in a variety of fibrotic conditions including pulmonary fibrosis, liver fibrosis, acute spinal injury, ocular scarring, and vascular restenosis, the company said in the SEC filing.

Also ongoing is a longstanding collaboration with the University of Massachusetts Medical School studying the use of RNAi to treat amyotrophic lateral sclerosis, and in September RXi received a $300,000 NIH grant to develop a treatment for retinoblastoma, a pediatric ocular malignancy, in collaboration with researchers at Memorial Sloan-Kettering Cancer Center and Children’s Hospital Los Angeles.

Both these programs are in the discovery stage, RXi noted.

The company’s most advanced preclinical program is in proliferative vitreal retinopathy, which is caused by scar tissue buildup on the retina. Cauwenbergh previously said that RXi has generated animal data showing that its RNAi compounds can be delivered intravitreally and trigger dose-dependent target gene silencing in retinal cells.

The company did not provide a timeline on when the PVR program might reach the clinic.

RXi noted in the SEC filing that it is also gearing up to “commence development work with preclinical testing to identify potential lead compounds and targets” based on Opko’s RNAi assets, but cautioned that these are at an early stage of development.

2012 Financials

For the 12-month period ended Dec. 31, 2012, RXi posted a net loss of $12.9 million, up from $10.2 million the year before. The company attributed the increase to a one-time charge of $6.2 million related to common stock issued for patent rights.

Revenues for the year were $100,000, compared with zero revenues in 2011, reflecting the recognition of work completed under government grants.

R&D costs jumped to $10.5 million from $6.6 million, again due to the one-time charge tied to patent rights, while general and administrative expenses dropped to $2.6 million in 2012 from $6.1 million a year earlier.

At the end of 2012, RXi had cash and cash equivalents totaling $5.1 million.

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