Business context and reporting period
Filing identity: The supplied 10-Q is for RXi Pharmaceuticals Corporation, not Phio Pharmaceuticals Corp.; confirm that this is the intended filing. It covers the quarter and six months ended June 30, 2018, and was signed August 14, 2018.
RXi is a development-stage biotechnology company focused on self-delivering RNAi immuno-oncology treatments for adoptive cell transfer. In January 2018, it shifted its strategy to focus solely on immuno-oncology and said it would seek partners or licensees for its dermatology and ophthalmology programs. Its leading disclosed programs, RXI-762 (PD-1) and RXI-804 (TIGIT), were in preclinical development. The company expected to advance RXI-762 into clinical development within 12–18 months, subject to development progress and resources.
Financial performance and condition
Amounts below are in thousands of dollars except per-share data. The filing presents no meaningful operating-margin comparison for this development-stage business.
| Metric | Q2 2018 | Q2 2017 | Six months 2018 | Six months 2017 |
|---|---|---|---|---|
| Revenue | $58 | $0 | $81 | $0 |
| Research and development | $1,183 | $1,329 | $2,544 | $2,676 |
| Total operating expenses | $1,957 | $2,514 | $4,219 | $9,595 |
| Operating loss | $(1,899) | $(2,514) | $(4,138) | $(9,595) |
| Net loss | $(1,901) | $(2,514) | $(4,140) | $(7,974) |
| Basic and diluted loss per share | $(0.46) | $(1.12) | $(1.25) | $(3.71) |
Revenue in 2018 came from work under a government grant to collaborator BioAxone for a spinal-cord-injury research program, not from product sales. Six-month operating cash use was $3,767, versus $5,116 a year earlier; investing cash flow was zero, and financing provided $5,501, primarily from equity sales. Cash and cash equivalents were $5,315 at June 30, 2018, plus $50 of restricted cash. Current assets were $5,824 and current liabilities $2,759. Stockholders’ equity was $3,272. The balance sheet reports no debt.
Material changes and financing
- Q2 operating expenses fell $557 year over year; six-month expenses fell $5,376. The six-month comparison is substantially affected by $4,696 of acquired in-process research and development expense recorded in 2017 for the MirImmune asset acquisition, with none in 2018.
- Management attributed lower R&D spending mainly to completed clinical-trial subject participation and lower RXI-109/Samcyprone trial and manufacturing costs, partly offset by higher immuno-oncology lab and manufacturing costs. Lower G&A reflected reduced legal/professional fees and payroll-related costs.
- The 2017 six-month net loss included a $1,621 income-tax benefit related to the MirImmune acquisition; there was no tax benefit in 2018. Thus, the smaller 2018 net loss does not solely reflect lower operating costs.
- In April 2018, RXi raised approximately $4,210 net in a registered direct offering and concurrent warrant placement. It also sold 420,000 shares to Lincoln Park Capital during the first half for approximately $1,291 net. The company reported 4,360,566 common shares outstanding at June 30; warrants covering 2,616,283 shares were outstanding, in addition to 53,180 options. A 1-for-10 reverse split took effect in January 2018.
Outlook, risks and unusual items
RXi reported recurring operating losses and expected negative operating cash flows for the foreseeable future. Although management said the Lincoln Park purchase agreement should provide funds for at least the next 12 months, ownership limits prevent reliance on all of its capacity for going-concern purposes. The company concluded that substantial doubt remained about its ability to continue as a going concern for at least the next 12 months. It warned that failure to obtain funding could require it to reduce or terminate operations or seek a merger or acquisition. No specific financial guidance was provided.
- Nasdaq listing: RXi disclosed noncompliance with Nasdaq’s $2.5 million stockholders’ equity requirement. Nasdaq required evidence of compliance by September 25, 2018; delisting could impair trading liquidity and access to capital.
- Controls: Management concluded disclosure controls were not effective because of a previously reported material weakness in income-tax accounting controls. Remediation was underway, with management expecting effective remediation by year-end 2018; it was not yet considered remediated.
- Clinical and partnering uncertainty: The immuno-oncology programs remained early-stage, and advancing them depended on development results, financing, and potential collaborations. The filing described positive results from completed RXI-109 and Samcyprone studies and plans to seek partners, but gave no assurance of licensing transactions.
- Contingencies: The company disclosed customary intellectual-property and other indemnification obligations but had recorded no related liability and reported no material costs to date. No legal proceedings were reported.
Important facts for investors to verify
- Confirm that RXi Pharmaceuticals Corporation’s filing—not a Phio Pharmaceuticals filing—is the intended document and determine any relevant corporate-name or successor relationship from authoritative records.
- Check subsequent filings for cash runway, actual use and remaining availability of the Lincoln Park facility, and any additional financing.
- Verify the outcome of the September 25, 2018 Nasdaq compliance deadline and any subsequent listing status.
- Review subsequent disclosures on clinical-development timing, research collaborations, and any licensing or partnering of the dermatology and ophthalmology assets.
- Assess potential dilution from outstanding warrants and options, including exercise terms, and whether the income-tax control weakness was remediated.