RXi Pharmaceuticals Corporation — Q3 2017 Form 10-Q
Reporting period: Quarter ended September 30, 2017; financial statements are unaudited. The filing is by RXi Pharmaceuticals Corporation, a clinical-stage biotechnology company developing self-delivering RNAi therapeutics and Samcyprone. It reports no product revenue.
Financial performance and position
| Metric | Q3 2017 | Q3 2016 | Nine months 2017 | Nine months 2016 |
|---|---|---|---|---|
| Revenue | $0 | $0 | $0 | $19,000 |
| Research and development expense | $1.490 million | $1.464 million | $4.166 million | $4.108 million |
| Acquired in-process R&D expense | $0 | $0 | $3.075 million | $0 |
| General and administrative expense | $986,000 | $752,000 | $3.209 million | $2.587 million |
| Net loss | $2.476 million | $2.212 million | $10.450 million | $6.655 million |
| Net loss per share | $0.11 | $0.34 | $0.47 | $1.02 |
At September 30, cash and cash equivalents were $5.416 million, restricted cash $50,000, total current assets $5.737 million, total assets $6.033 million, and current liabilities $2.603 million. Stockholders’ equity was $3.430 million. The balance sheet reports no debt. Nine-month operating cash use was $7.313 million, investing cash use $103,000, and financing cash use $74,000; cash, cash equivalents and restricted cash declined by $7.490 million to $5.466 million. No operating margin is meaningful because revenue was zero.
Changes and notable items
- Year-to-date net loss increased by $3.795 million, chiefly reflecting the $3.075 million noncash acquired in-process R&D charge for the MirImmune asset acquisition, alongside higher G&A.
- Q3 operating expenses rose 12% year over year; G&A rose 31%, mainly due to payroll and severance-related costs and increased headcount. R&D was broadly stable.
- Cash declined from $12.906 million at December 31, 2016. Common shares outstanding increased from 13.0 million to 23.7 million, including shares issued in connection with MirImmune and conversion of preferred stock.
- The August 2017 Lincoln Park agreement permits up to $15 million of common-stock sales over 30 months, subject to limitations and conditions. No shares had been sold under it by September 30; 450,000 commitment shares were issued.
Business outlook, risks and contingencies
- Management concluded that substantial doubt exists about the company’s ability to continue as a going concern for at least one year, citing limited cash, expected ongoing losses, and financing constraints. Additional financing is needed; if unavailable, the company may need to scale back, terminate operations, or seek a merger or acquisition.
- Clinical updates: RXI-109 Study 1402 (dermal scarring) was expected to have a full readout by year-end 2017; Study 1501 (retinal scarring) was fully enrolled, with completion expected by year-end and top-line data anticipated in early 2018. Samcyprone Study 1502’s second cohort completed enrollment in September 2017, with early readouts anticipated by year-end.
- RXI-231 human testing had begun; the third study on UV-induced pigmentation was ongoing, with full reports expected before year-end. The company selected RXI-762 and RXI-804 for preclinical immunotherapy development and said RXI-762 could enter clinical development as early as 2018. These are expectations, not assured outcomes.
- Clinical, regulatory, funding, and development risks remain. MirImmune’s acquired programs were early-stage and require significant time and capital; no acquisition milestones had been achieved by September 30. If achieved within two years, milestone consideration could require shares or cash.
- Nasdaq had notified the company of noncompliance with its $1.00 minimum bid-price requirement. The extended deadline to regain compliance was January 29, 2018; failure could lead to delisting proceedings. The filing reports no legal proceedings.
Most important facts for investors to verify
- Whether the company raised sufficient capital after quarter-end and how long available funds support operations; the filing does not provide a clear cash-runway estimate.
- Subsequent clinical results and whether the stated trial and development timelines were met.
- Compliance with Nasdaq’s minimum bid-price requirement by the stated deadline.
- Potential dilution from the LPC facility, outstanding warrants (14.1 million shares underlying at September 30), options, and possible MirImmune milestone consideration.
- That the reported $10.450 million nine-month loss includes the $3.075 million acquired in-process R&D charge and that revenue remained zero in 2017.