Rxi Pharmaceuticals (RXII) Research Report 2016
Company Name: Rxi Pharmaceuticals
Company Ticker: RXII
Float: 6 mil shares outstanding as of 5/28/16
Market Cap: $14 million
Current Share price: $2.17
Most Recent Company Presentation For All Programs: May 3, 2016:
Most Recent Company Presentation for Cosmecueitcals program and RXI-109:
Summary: Rxi Pharmaceuticals is a dermatology and ophthalmology biotechnology company that uses RNAi science for unmet medical needs. The company has its main focus in hypertrophic scarring, and has since branched out to scarring due to wet-age related macular degeneration. Other programs include two candidates for cosmeceutical products, and samcyprone for: Warts, melanoma, and alopecia aerata.
Technology: Rxi Pharmaceuticals uses a science known as RNAi or RNA interference which was discovered by Andrew Fire and Dr. Craig Mello. Interesting fact is that Dr. Craig Mello is on the scientific advisory board of Rxi Pharmaceuticals. Rxi uses a mixture of RNAi together with another oligonucleotide technology known as RNA. The combined molecule becomes the company's technology known as sd-rxRNA. What makes this technology so great is that it is a drug molecule that requires no delivery vehicle to penetrate target cells for particular diseases. This is important because RNAi science in the past has failed because there were not appropriate delivery vehicles. Rxi has solved this by just creating a hybrid RNAi + RNA molecule that could solve the delivery issue.
Pipeline Candidates:
Hypertrophic scarring: Hypertrophic scars are scars that are raised with excessive amounts of collagen. Wounds typically heal up normally, but there are times where too much collagen is rushed to the site of injury which sometimes gets out of control. Why is itimportant for Rxi as a biotechnology company to target hypertrophic scars? That's because there are "zero" I repeat zero drugs approved by the FDA to treat scars. This is a huge unmet medical need, one which Rxi has a chance to approach, and if it ultimately receives approval it will create history. The company also initiated keloid studies but because of money issues it put it off for now. The good news is that once a partner is established or new funds come in the company can probably reboot the keloid scar program. There is currently a phase 2a trial in both cohorts 1 and 2 , along with cohorts 3 and 4 ongoing.
As of 2015, a research report shows that Global scar treatment market is estimated to be at $16 billion, and it is estimated that it will rise to $31.9 billion by 2022
Keloid scarring: Keloid scars are like hypertrophic scars, except they grow out from their original wound site. They grow smooth and rough, and far more excessively than hypertrophic scars. As noted above in the link scarring is a huge market and it is a big unmet medical need as there are no approved therapies. Keloid trial has been put on hold for now until further funding is received.
Retinal Scarring Macular Degeneration: With the success of the preliminary phase 2a scar results, the company embarked on retinal scarring for eye indications. The first of which is a phase 1/2 trial in treating patients with age-related macular degeneration. Patients will be treated with RXI-109 to determine if it can reduce scars in patients with Wet-AMD. The phase 1/2 trial will assess safety and Best corrected visual acuity -- BCVA -- improved eyesight. Rxi lists market potential of this drug candidate with greater than $1 billion in the U.S. alone, and a potential of $5 billion globally. Current treatment options include: Lucentis, Avastin, or Eylea. The problem is that those drugs cover the anti-VEGF portion of macular degeneration, but don't do anything for the sub-retinal scarring that occurs thereafter. This means that the company has another candidate that has no FDA approved therapies for, and another unmet medical need. This is great again as there is no competition for this.
Corneal Scarring: The company is taking it one step further in eye scarring. It is targeting corneal scarring which is another huge unmet medical need. Current treatment options include eye surgery, and laser surgery. Those treatment options are painful, and can be quite risky. With Rxi's approach of using a topical gel it can be easier to treat. Think of only having to apply a gel to the eye, and then take effect of the scar/wound. Thus far in pre-clinical research the company has been able to successfully delivery eye drops or gel throughout the entire cornea. There are around 30,000 to 40,000 corneal transplants performed each year, which means another lucrative market for the company.
Cosmecueitcals: The company has chosen to branch off into the cosmecueitcal market. Using its RNAi technology it is developing products for consumer health. This is good because it will be able to take these products to market at a quicker rate compared to the therapeutics pipeline. That's because there is no need for FDA approval of cosmetic products. In addition, there are fewer steps to take to bring such products to market. The company has developed two different product candidates for such development.
Retinal Scarring Macular Degeneration: With the success of the preliminary phase 2a scar results, the company embarked on retinal scarring for eye indications. The first of which is a phase 1/2 trial in treating patients with age-related macular degeneration. Patients will be treated with RXI-109 to determine if it can reduce scars in patients with Wet-AMD. The phase 1/2 trial will assess safety and Best corrected visual acuity -- BCVA -- improved eyesight. Rxi lists market potential of this drug candidate with greater than $1 billion in the U.S. alone, and a potential of $5 billion globally. Current treatment options include: Lucentis, Avastin, or Eylea. The problem is that those drugs cover the anti-VEGF portion of macular degeneration, but don't do anything for the sub-retinal scarring that occurs thereafter. This means that the company has another candidate that has no FDA approved therapies for, and another unmet medical need. This is great again as there is no competition for this.
Corneal Scarring: The company is taking it one step further in eye scarring. It is targeting corneal scarring which is another huge unmet medical need. Current treatment options include eye surgery, and laser surgery. Those treatment options are painful, and can be quite risky. With Rxi's approach of using a topical gel it can be easier to treat. Think of only having to apply a gel to the eye, and then take effect of the scar/wound. Thus far in pre-clinical research the company has been able to successfully delivery eye drops or gel throughout the entire cornea. There are around 30,000 to 40,000 corneal transplants performed each year, which means another lucrative market for the company.
Cosmecueitcals: The company has chosen to branch off into the cosmecueitcal market. Using its RNAi technology it is developing products for consumer health. This is good because it will be able to take these products to market at a quicker rate compared to the therapeutics pipeline. That's because there is no need for FDA approval of cosmetic products. In addition, there are fewer steps to take to bring such products to market. The company has developed two different product candidates for such development.
- RXI-231: this is an sd-rxRNA that targets Tyrosinase. With this compound the company can fix uneven skin, and skin pigmentation.
- RXI-185: this is also and sd-rxRNA but it targets collagenase. With this compound the company can go after skin wrinkles
This program is especially important because of the fact that it targets a large market. The market potential of both products can reach up to $200 billion. It is a large market but think of it this way even if the company only achieves 10% of the total market that would still be a $20 billion market opportunity. In addition, to the two products mentioned above being turned into cosmetic products, they are flexible because they can also be used to target other therapeutic diseases as well. Such therapeutic candidates could potentially be: melanoma, lung cancer, Neuroblastoma etc.
Partnerships:
Thus far, Rxi has engaged in small partnerships that have long-term value in mind. The two partnerships that Rxi has gotten into are the MirImmune Partnership and Thera Neuropharma. Rxi's sd-rxRNA transfects cells easily and these small cap players are licensing Rxi's tech in order to achieve this objective. These deals are small, but they offer Rxi some future milestone payments for using sd-rxRNA, along with 10% ownership of these companies with non-dilutive effect.
- MirImmune Partnershisp: With the MirImmune partnership Rxi has been able to enter the arena of cancer immunotherapy. MirImmune is still in the early stages but the pre-clinical results have been pretty good.
From the February 6, 2016 conference on slide # 27 below in the link Rxi posted some preliminary data of MirImmune using Rxi's sdRNA platform together with anti-PD1 therapy:
- Thera Neuropharma Partnershp: Just recently on May 3, 2016 Rxi entered into a partnership with Thera Neuropharma to develop a product candidate for ALS or Lou Gherig's disease. This is another clear unmet medical need in the medicine field and another good opportunity for Rxi:
This is all good for Rxi, but despite advanced in clinical research with positive phase 2 results, and many good partnership deals the stock has tanked. One part of the reason is that Tang Capital converted preferred shares in the year prior dragging down the share price. The other part of the reason is lack of market acknowledgement. That is why I believe this company trading only with a $14 mil market cap is extremely attractive. So much so that even the company itself has decided to build shareholder value.
A recent Press Release released by the company states that it had engaged Griffin Securities to either assist in a possible merger with another pharmaceutical company, or a potential partnership deal:
Management:
President and CEO: Geert Cauwenbergh, Dr. Med. sc: Dr. Cauwenbergh was appointed President and Chief Executive Officer of RXi Pharmaceuticals Corporation in April of 2012. Prior to joining RXi, Dr. Cauwenbergh served as Chairman and Chief Executive Officer of Barrier Therapeutics, Inc., a publicly-traded biopharmaceutical company he founded in 2001 that focused on dermatology drug development. Barrier was acquired by Stiefel Laboratories, Inc. in 2008. Prior to founding Barrier, Dr. Cauwenbergh held a number of ascending senior management positions at Johnson & Johnson, where he was employed for 23 years. As Vice President, Research and Development for Johnson & Johnson’s Skin Research Center, he was responsible for the worldwide research and development of all skin care products for the Johnson & Johnson consumer companies. He is a member of the board of directors of Phosphagenics and Moberg Pharmaceuticals. In 2005, Dr. Cauwenbergh was inducted into the New Jersey High-Tech Hall of Fame, and, from 2009 to 2010, he served as Chairman of the Board of Trustees of BioNJ. He has authored more than 100 publications and has been a guest editor for a number of books in mycology and infectious diseases. Dr. Cauwenbergh received his Doctorate in Medical Sciences from the Catholic University of Leuven, Faculty of Medicine (Belgium), where he also completed his masters and undergraduate work.
Chief Development Officer: Pamela Pavco: Dr. Pavco currently serves as Chief Development Officer for RXi Pharmaceuticals, Corporation. She joined Galena Biopharma, Inc. in March of 2007 and most recently served as the Senior Vice President of Pharmaceutical Development until April 2012. Dr. Pavco has over 20 years of research and development experience in oligonucleotides. Dr. Pavco was Senior Director, Research and Development Project Management at Sirna Therapeutics, Inc., from 2002 until 2006, when it was acquired by Merck & Co., Inc. for $1.1 billion. While at Sirna, she was responsible for the discovery research and development of Sirna-027, the first chemically modified siRNA to enter clinical trials. Dr. Pavco also managed Sirna’s alliance with Allergan, Inc. that was initiated to continue discovery research in the area of ophthalmology and take Sirna-027 forward into Phase 2 clinical studies. While at Sirna, Dr. Pavco served in various additional capacities, including Director of Biology Research and Director of Pharmacology and she also managed numerous corporate collaborations and internal programs focusing on the development of therapeutic oligonucleotides in the fields of oncology, anti- angiogenesis, hepatitis, respiratory disease and Huntington’s disease. Dr. Pavco has authored numerous scientific articles and contributed to approximately 58 patents and patent applications in the oligonucleotide therapeutics field. Dr. Pavco received a Ph.D. in Biochemistry from Virginia Commonwealth University in 1983 and did her post-doctoral work at Duke University. She is a member of the American Association of Cancer Research and the Association for Research and Vision in Ophthalmology.
Vice President Medical Affairs & Safety Assessment: Lyn Libertine, M.D : Dr. Libertine currently serves as Vice President Medical Affairs & Safety Assessment for RXi Pharmaceuticals, Corporation. She joined Galena Biopharma, Inc. in August of 2007 and served as the Director of Pharmacology until April 2012. Prior to Galena, Dr. Libertine spent 5 years at Critical Therapeutics, Inc., which was acquired by Cornerstone Therapeutics Inc., where she was an integral member of the development team responsible for filing the sNDA for Zyflo, an oral medication for the treatment of asthma. Her asthma research resulted in the re-branding of Zyflo as a treatment specifically aimed to patients suffering from severe asthma. Prior to joining Critical Therapeutics, she held various research positions in pharmacology and toxicology at CytoMed, Inc., which was acquired by UCB Pharma in 2000. As part of the research team at UCB Pharma, Dr. Libertine managed a team focused on dystrophia myotonica protein kinase (DMPK) for pre-clinical candidate selection and was project leader for neurological and pain programs. Dr. Libertine did her undergraduate work in Chemistry and Biology at Boston University and received her medical degree at the University of Massachusetts. Throughout her career in research she has managed pharmacology and multi-disciplinary groups and used her medical background to oversee clinical projects through all stages of clinical development through marketing and life-cycle management. Dr. Libertine is a member of the American Medical Association, Massachusetts Medical Society, American Chemical Society, American Thoracic Society and the Association for Research and Vision in Ophthalmology.
Vice President Research: Karen Bulock, Ph.D. : Dr. Bulock currently serves as Vice President Research for RXi Pharmaceuticals, Corporation. She joined Galena Biopharma, Inc. in October of 2007 and served as the Associate Director of Research until April 2012. Dr. Bulock has over twenty years of experience in assay development and discovery project management. Since joining RXi in 2011, and previously while at Galena, Dr. Bulock has managed several key programs, including the discovery and preclinical development of RXI-109, RXi’s first clinical candidate. Prior to joining RXi, Dr. Bulock spent several years leading assay development and screening projects to support small molecule drug discovery programs in the fields of metabolic disease and anti-infectives at CytRx Corporation and Essential Therapeutics, Inc. Dr. Bulock received a Ph.D. in Pharmacology from Yale University. Dr. Bulock has authored numerous scientific articles and is a co-inventor on four patent applications.
The management team is strong and capable of leading charge for these drug candidates as they have years of experience. Each member of management have their own strengths and for that I see a good future for Rxi Pharmaceuticals. It important to also note that one member of the Scientific advisory board, Dr. Craig C. Mello was one of the co-founders of RNAi science. The fact that he is on the scientific advisory board for Rxi is remarkable in itself. All other RNAi companies owe thanks to Dr. Craig Mello and Andrew Fire for discovering RNAi.
Potential Upcoming Catalysts:
- Additional Phase 2 data for RXI-109-1402 in hypertrophic scarring is expected to be released by the 2nd half of 2016
- Preliminary safety and Efficacy data is expected to be released 2nd half 2016 for RXI-109-1501 for retinal scarring of Macular degeneration. Investors will get a small early look at safety and possible efficacy effect of improved vision using Best corrected visual acuity -- BCVA
- Preliminary phase 2 results read out for Samcyprone in Warts 2nd half 2016
- Possible merger or collaboration with another biotechnology company -- Possible to happen in 2016 as noted in merger PR mentioned above
Market Cap: The company is sitting with a tiny market cap of $14 million only. Most other biotechnology companies in the same phase 2 stage of clinical trials trade typically between $300 million to $500 million market cap. Therefore there is a potential here for a large increase in returns pending positive clinical catalysts.
Float: The company just recently enacted a 1 for 10 reverse stock split after the problems it had with Tang capital converting preferred shares into common shares and them dumping them. The good news is that now the company has a small float of only 6 mil shares outstanding and any single catalyst event will move the stock in a wild way. The good news is that there no longer preferred shareholders in place to put upward momentum to the stock.
Cash On Hand:
As with any biotechnology company it is important to note the cash on hand the company has in order to gauge how much money it has left. There are times where these companies can seek dilution, private placement money, partnerships with upfront payments, and other means.
As of the 10-Q SEC Filing on 5/12/2016 Rxi Pharmaceuticals has cash and cash equivalents of $7.7 million as of March 31, 2016. The company believes this cash is enough to last the company at least 12 months. That means that the company should have enough capital until March of 2017 to fund clinical trials.
As mentioned above the company is now using its technology to seek partners who will either want to merge together to pool resources, or to find a partnership with upfront money. This stems from the press release about the company looking into strategic options. There is no guarantee though that such a transaction will take place. If this happens then the company may have to seek dilution options.
Risks:
There is a lot of risk involved investing in such pharmaceutical companies. Even though Rxi has obtained positive preliminary results there is no guarantee that any of the drugs will reach the FDA, let alone for approval. Investors should be aware the risk of loss in investment in such companies and should contact a financial adviser if needed. Everything mentioned here is what the company has put out to date, therefore investors should do full due diligence and only invest in what they can afford to lose.
Conclusion:
Rxi Pharmaceuticals is a biotechnology company focused on unmet medical needs. The company is in good shape because it is targeting diseases that have limited to no competition. As noted above there are no FDA approved products for skin scarring. In addition there are no FDA approved drug products for the scarring of patients with wet-age related macular degeneration. Rxi succeeding in late-stage clinical trials along approval, would mark it the first biotechnology company to receive FDA approval for skin scarring. Therefore the risk/reward has huge potential. There are two phase 2 clinical trials, and one phase 1 clinical trial. Along with many other pre-clinical candidates. The company's unique tech of the sd-rxRNA technology platform along with patent protection affords the potential to outlicense/inlicense its technology to any other biotech it wants to. The fact that it trades at $14 million while many of its peers trade with a market cap of $300 million to $400 million makes it a very compelling investment.
Disclosure: The Author of this report is Long Rxi Pharmaceuticals (RXII). The author has not received any compensation, nor intends to receive such compensation for the production for such a report. The author also has no business relationship with any of the companies mentioned in this report.
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This report has been developed as a free research report for all investors. 2016
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