RXi Pharmaceuticals announces financial results for the quarter ended September 30, 2009

Nov 16 2009

RXi Pharmaceuticals Corporation (Nasdaq: RXII), a biopharmaceutical company pursuing the development and commercialization of proprietary therapeutics based on RNA interference (RNAi), today reported its financial results for the quarter ended September 30, 2009.

“RXi continues to make excellent progress advancing its RNAi therapeutic platform, most notably self-delivering rxRNA™ compounds for both local and systemic administration,” said Noah Beerman, President and Chief Executive Officer of RXi. “We have reported positive pre-clinical data that outline the unique capabilities of our technology and how RXi is addressing important factors that we believe will lead to the successful development and eventual commercialization of RNAi therapeutics. With my successful track record of building a pipeline of biopharmaceutical products, I believe RXi should be well positioned to capitalize on these opportunities.”

Quarterly and Other Recent Highlights

Corporate Highlights:

• Appointment of Noah D. Beerman as President and Chief Executive Officer. Following this quarter, Noah D. Beerman joined RXi as its new President and Chief Executive Officer as part of a planned succession in leadership as the company looks to advance from the research stage to product development and execution of therapeutic collaborations and partnerships. Mr. Beerman succeeds RXi’s co-founder, Tod Woolf, Ph.D., who will continue as a member of RXi’s Scientific Advisory Board.
• Completed $8.3 million Public Offering. RXi received approximately $7.8 million in net proceeds from the offering that closed on August 4, 2009. Proceeds from the transaction are being used to meet working capital needs and for general corporate purposes.
• Provided Updates at Annual Investor Day. RXi held its 2^nd annual investor day where the public was updated on the status of RXi’s therapeutic indications, research findings, intellectual property and business development efforts.
• Strengthened Position in RXi Proprietary Self-delivering rxRNA™. RXi acquired direct ownership of previously licensed RNAi delivery intellectual property from Advirna LLC. RXi’s self-delivering rxRNA™ (sd-rxRNA™) technology platform, which is based on a combination of Advirna technology and RXi’s internally developed technology, has shown extremely promising pre-clinical results prompting RXi to acquire direct ownership of the Advirna technology. By including the Advirna intellectual property in RXi’s proprietary portfolio, the company gains full control of patent prosecution, enhancing the potential of obtaining broader claims that would further strengthen RXi’s intellectual property position.
• Received Notices of Allowance for a Set of Patents Encompassing siRNA Sequences. Notices of Allowance were issued by the United States Patent Office (USPTO) on patent applications filed by Thermo Fisher Scientific Inc. and licensed to RXi Pharmaceuticals encompassing small interfering RNA (siRNA) sequences targeting a number of human genes. These applications, which contain claims that cover specific siRNA sequences, are the first to have received notices of allowance by the USPTO of many patent applications encompassing siRNA sequences licensed by RXi from Thermo Fisher Scientific. RXi has obtained broad rights to these sequence-specific patent applications.

Scientific Achievements:

• Presented Pre-clinical Animal Data on Self-delivering rxRNA™ Compounds. RXi presented encouraging animal data on its sd-rxRNA™ compounds at its investor day and other key scientific conferences. The new data includes improved pharmacology with both local and systemic administration in animal models. This research with sd-rxRNAs additionally show:
  • Increased serum stability
  • Improved retention in the circulation
  • Minimal immune response activation
  • Efficient cellular uptake and internalization to many diverse cell types
  • Systemic delivery to the liver with effective gene silencing
  • Local delivery via intradermal injection with effective gene silencing
• Continued the Advancement of RNAi Therapeutics Platform. RXi’s comprehensive therapeutic platform, which is comprised of next generation rxRNA™ compounds and advanced delivery approaches, continues to produce promising pre-clinical data, especially as it relates to RXi’s proprietary sd-rxRNA™ compounds. Data has been presented demonstrating the robustness and potential for broad-based applications using sd-rxRNA™ compounds in diverse therapeutic areas that may enable multiple opportunities for developing a sustainable pipeline of RNAi therapeutics for unmet medical needs.
• Established Oligonucleotide Production Capabilities. To progress the development of RXi’s internal programs, collaborations and future partnerships, the company established the expertise to produce oligonucleotides for RNAi compounds at its facility. This will allow the optimization and manufacture of sd-rxRNA™ and other proprietary RNAi compounds and compress discovery timelines.

Financial Highlights:

The Company reported a net loss of $12.2 million, or $0.85 per share, for the nine months ended September 30, 2009, compared to a net loss of $10.3 million, or $0.79 per share, for the same period in 2008. The Company had 16,207,625 common shares outstanding at September 30, 2009, as compared to 13,763,231 common shares outstanding at December 31, 2008.

Research and development expenses for the nine months ended September 30, 2009 were $6.5 million, including approximately $1.6 million in stock based compensation, compared to $5.1 million including $1.8 million in stock-based compensation, for the nine months ended September 30, 2008. The increase of $1.4 million, or 27%, was primarily due to higher staff-related costs resulting from growth in R&D staff, higher supplies cost and increased patent application and prosecution expenses coupled with a decrease of approximately $0.2 million in stock-based compensation. General and administrative expenses for the nine months ended September 30, 2009 were $5.7 million, including $1.5 million in stock based compensation, compared to $5.5 million, including $1.4 million in stock based compensation, for the nine months ended September 30, 2008. The increase of $.2 million, or 4%, was primarily due to non-cash expense totaling $1.1 million associated with warrants issued for business advisory services and common stock issued pursuant to Standby Equity Distribution Agreement (SEDA) that the Company entered into in January 2009 offset by a $1.0 million gain from the change in fair value of common stock warrants issued with our registered direct offering that closed in August 2009.

As of September 30, 2009, cash and cash equivalents totaled $9.0 million, compared to cash and cash equivalents of $9.9 million at December 31, 2008. This decrease is due to cash used in operations of $8.5 million for the nine months ended September 30, 2009 partially offset by the proceeds from the Company's registered direct offering. On July 31, 2009, the Company entered into a definitive agreement relating to the registered direct offering for the purchase of 2,385,715 shares of its common stock at $3.50 per share, and warrants to purchase up to 954,286 shares of common stock at an exercise price of $4.50 per share which will be exercisable beginning on February 3, 2010. The offering closed on August 4, 2009. The Company received approximately $7.8 million in net proceeds from the offering. Proceeds from the transaction will be used to meet working capital needs and for general corporate purposes.