Business context and reporting period
This is RXi Pharmaceuticals Corporation’s unaudited Form 10-Q for the quarter and six months ended June 30, 2015. The filing identifies the registrant as RXi Pharmaceuticals Corporation; it does not identify Phio Pharmaceuticals Corp. as the registrant.
RXi is a development-stage biotechnology company focused primarily on dermatology and ophthalmology. Its programs include RXI-109, an RNAi candidate being evaluated for scarring, and Samcyprone, acquired in February 2015 and being developed for conditions including warts and cutaneous melanoma metastases.
Financial results and liquidity
| Metric ($ in thousands, except per-share data) | Q2 2015 | Q2 2014 | Six months 2015 | Six months 2014 |
|---|---|---|---|---|
| Revenue | — | 12 | 34 | 41 |
| Research and development expense | 1,361 | 1,183 | 3,468 | 2,659 |
| General and administrative expense | 804 | 850 | 1,677 | 1,693 |
| Operating loss | (2,165) | (2,021) | (5,111) | (4,311) |
| Net loss | (2,166) | (2,006) | (5,111) | (4,290) |
| Net loss applicable to common stockholders | (2,190) | (3,219) | (5,320) | (7,258) |
| Loss per common share, basic and diluted | (0.05) | (0.23) | (0.16) | (0.54) |
- At June 30, cash and cash equivalents were $5.986 million and short-term investments were $8.0 million; combined, approximately $14.0 million. Restricted cash was $50,000.
- Current assets were $14.754 million versus current liabilities of $1.822 million. The balance sheet reports no debt. Accumulated deficit was $51.993 million.
- Six-month operating cash use was $3.772 million, compared with $4.397 million a year earlier. Investing activities used $8.039 million, mainly to purchase short-term investments; financing provided $9.301 million.
- RXi reported no meaningful operating margin information given minimal grant revenue and continuing operating losses.
Material changes versus prior comparable periods
- Q2 R&D expense increased 15% year over year, principally due to costs for ongoing clinical trials. Six-month R&D expense rose 30%, reflecting increased ocular toxicology and trial costs and a one-time $228,000 stock expense related to the Samcyprone license.
- Revenue fell to zero in Q2 and declined 17% for the first half, as work under an outstanding government grant was completed.
- Six-month common-stockholder loss improved from the prior year, mainly because preferred-stock dividends charged to common stockholders fell to $209,000 from $2.968 million. Net loss itself increased to $5.111 million from $4.290 million.
- In June, RXi completed a public offering of 26 million units at $0.40 each, receiving approximately $9.2 million net. Each unit included a common share, an overallotment purchase right, and a five-year warrant. Common shares outstanding increased to 64,949,121 from 21,984,272 at year-end 2014.
- No Series A or Series A-1 preferred shares remained outstanding at June 30, 2015, following conversions into common stock.
Outlook, risks and other disclosures
- Management said existing cash, cash equivalents and short-term investments should fund operations for at least the next 12 months. RXi expected continued significant losses and stated that future funding may require equity or debt issuance, grants, or collaboration payments; availability on acceptable terms was not assured.
- Management planned to begin an RXI-109 ophthalmology trial before the end of 2015, subject to the FDA review process, and expected to initiate a Samcyprone Phase 2a wart trial by year-end 2015. These are stated plans, not guaranteed outcomes.
- Key risks include clinical and regulatory uncertainty, ability to finance development, and execution of trials. RXi had received a Nasdaq notice for failing the $1.00 minimum bid-price requirement, with until November 3, 2015 to regain compliance; potential delisting could impair trading and fundraising.
- The filing reported no legal proceedings, no off-balance-sheet arrangements, and effective disclosure controls; no material change in internal control over financial reporting was reported. No formal financial guidance was provided.
Important facts for investors to verify
- Confirm the issuer and ticker: this filing is for RXi Pharmaceuticals Corporation, despite the request metadata naming Phio Pharmaceuticals Corp.
- Review subsequent filings for actual cash burn, financing needs, and whether the stated minimum 12-month runway remained supportable.
- Track clinical-trial progress and results for RXI-109 and Samcyprone, including regulatory milestones and any delays.
- Check Nasdaq bid-price compliance and the potential effects of the offering’s warrants and purchase rights on dilution.