Wednesday, May 27, 2015

RXi Pharmaceuticals Could Be Much More Than Skin Wound Healing

RXi Pharmaceuticals today commenced a secondary offering setting it on course to raise ~$10M, enough to finance the company for another year while expanding its pipeline and technology.  It could thus mark a new chapter in the life of this company which had shoe-boxed itself into a single-product (RXI-109 for dermal wound healing) company following a toxic 2012 financing that gave Tang Capital Partners de facto control over the company (pro tip: when you see the likes of Tang or Deerfield getting involved, it usually is not to the benefit of common stock holders). 

The news this morning that the preferred stock overhang (àTang Capital Partners) had finally been cleared, then paved the way towards the financing (amount and pricing to be determined).  

With RXI-109 winding its way through phase II studies, it became clear that RXi had to open itself up to new opportunities enabled by its promising self-delivering RNAi platform.  The financing will initially allow RXi to develop RXI-109 also for ocular (retinal and corneal) scarring-related indications such as wet AMD and cataract surgery.  First eye-related clinical trials with self-delivering RNAi triggers are expected to commence later this year.

The eye is an interesting application of sd-RNAi technology not only for the lucrative eye disease market (both genetic and age-related of considerable unmet medical need), but also because they seem to be able to penetrate throughout the eye (see image) whereas in the skin, distribution currently is limited to areas close to the injection site barring new delivery breakthroughs (patches, creams and the like).  In addition to cholesterol, it may also be interesting to test other ligands such as Vitamin A and E for enhanced uptake into certain ocular cell types.

Lots of unexplored potential

Beyond the skin and eye, self-delivering RNAi strategies hold considerable promise for other tissue targets, both by direct/local and systemic delivery.  In terms of local delivery, I would be highly interested in the biodistribution of intrathecally administered sd-RNAi triggers in non-human primates.  This is because of their long phosphorothioated single-strand overhang and thus similarity to phosphorothioate antisense oligonucleotides which are starting to show amazing results in the clinic for CNS applications (watch out for update on the infant ISIS-SMNRx study by Isis Pharmaceuticals).

In terms of systemic delivery, sd-RNAi chemistry and structure may synergize well with conjugate-RNAi approaches, both in their simple (--> Alnylam GalNAc-type) and more refined form (--> Arrowhead DPC-type).  Even without further modification, RXi-type self-delivering RNAi has shown surprising knockdown efficacy in models of pre-eclampsia as shown by respected UMass scientists Melissa Moore and Anastasia Khvorova (formerly of RXi Pharmaceuticals).  

If RXi can get the backing from serious biotech investors and eventually a new management fit to lead a modern biotechnology company, the current $16M market valuation (for RXI-109 in the clinic for dermal scarring and soon in the eye; self-delivering platform potential; stake in MirImmune) of the company could make it an irresistible investment opportunity.  If management, however, continues to dig in their heels and refuses to listen to outside advice chances are that the financial death spiral will continue. 
   
Suspicious shorting into financing

It used to be common biotech practice that investors-in-the-know were allowed to short into financing resting assured that the offering will allow them to cover at a lower share price.  It is therefore remarkable that in the days and weeks before the financing, the short interest has sky-rocketed from virtually none to around 10% of the float and possibly much more by now due to the delays in reporting short interest.

9 comments:

Anonymous said...

Don't you think RXi Pharmaceuticals is already fucked up. From $6 to .40c. Really attractive stock value ??

Anonymous said...

Look if this was just a dilution purely on the public only I would be worried. It will add more RXII shares to the float as many have pointed out many times. But why is nobody looking at the positive?

"We will enter into securities purchase agreements directly with certain institutional investors which will purchase not less than $100,000 of units in this offering. We will not enter into any securities purchase agreement with investors which will purchase less than $100,000 of units in this offering and such investors which purchase less than $100,000 shall rely solely on this prospectus in connection with the purchase of securities in this offering. The Placement Agent may retain one or more sub-agents or selected dealers in connection with the offering."

That says it all these big institutions are buying huge stakes of RXII that establishes a few things:

1. Big institutions hold shares long term that means all 25 mil shares just released will be held long term

2. After the offering it is more likely than not we will see who the big institutions are that bought shares, and if they are big that itself will move the share price higher depending who they are.

3. Money problem is now solved for two years till the end of 2017 and Tang Capital has converted all preferred shares that mean a rebound is in order.

4. We have the IND filing for retinal scarring of macular degeneration mid 2015. That should take place by June/July 2015

5. Other pre-clinical programs are ongoing we may see pre-clinical results in macular degeneration, Tyrosinase, and collagenese.

6. They may reveal what indications they chose for Tyrosinase and collagenase

7. Samcyprone results may come in 2015

8. Any other potential catalyst as well

Anonymous said...

RXi were one of the original me too copy cats of BLT's ddRNAi. If there is to be value in RXi then there is value in BLT. For some reason, which I have never understood, the prior CEO based himself in Wellington, New Zealand. Why would a CEO of a little known and much maligned RNAi company wish to be domiciled in the capital of some far flung little country like NZ?

Anonymous said...

No opinion on PRAN for Alzheimers Dirk?

Anonymous said...

What's the big deal on ISIS going for AD? You've already stated recognized RNAi leaders are about to be surpassed. Witness BLUE for eg. I could rattle off half a dozen companies which are probably further ahead of ISIS in this disease. Where's the proof they are able to cross the BBB?

PfizerSloth said...

Where is the oncology breakthrough coming from? So far, little guidance from ASCO this weekend with regards to a line in the sand being crossed.

Surprised to see Dirk not giving ASCO even a passing comment when the talk is about Pfizer taking out GSK.

Anonymous said...

No opinion on PRAN for Alzheimers Dirk?

Up 39% in a day in Australia. But still no opinion. Instead buy ISIS the must hold, never sell, next bigger than Apple thing because now they're doing AD.

Anonymous said...

I would expect Latebloomer to comment before Dirk. She has been quite vociferous on PRAN in recent times on Yahoo and Hotcopper. Strangely quiet though. Prefers to pump it up on ARWR/IV.

Anonymous said...

Alnylam is a comparably decent investment opportunity as they've been well into RNA therapy and have good results so far.

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