Business context and reporting period
RXi Pharmaceuticals Corporation, a clinical-stage biotechnology company, reported results for the quarter and six months ended June 30, 2017. Its programs included RXI-109 for scarring, Samcyprone for common warts, and sd-rxRNA research in cell-based cancer immunotherapy and cosmetic applications. The filing identifies the registrant as RXi Pharmaceuticals Corporation.
Financial results and liquidity
Amounts below are in thousands of dollars, except per-share data.
| Metric | Three months ended June 30, 2017 | Six months ended June 30, 2017 |
|---|---|---|
| Revenue | $0 | $0 |
| Research and development expense | $1,329 | $2,676 |
| Acquired in-process R&D expense | $85 | $3,075 |
| General and administrative expense | $1,100 | $2,223 |
| Operating loss and net loss | $(2,514) | $(7,974) |
| Basic and diluted net loss per share | $(0.11) | $(0.37) |
Revenue was immaterial in the comparable 2016 periods: $9 for the quarter and $19 for the half-year. The company has no product revenue to date; margins are not meaningful given the absence of material revenue.
At June 30, cash and cash equivalents were $7,702, with an additional $50 of restricted cash, versus $12,906 and $50, respectively, at December 31, 2016. Total assets were $8,391 and current liabilities were $2,454; the balance sheet reported no debt. Stockholders’ equity was $5,937, down from $10,855. Six-month operating cash use was $5,116, investing cash use was $88, and financing cash flows were zero; cash, cash equivalents and restricted cash declined by $5,204.
Management said existing cash and potential proceeds under its equity facility should fund operations for at least the next 12 months. This depends in part on access to financing: the August 8, 2017 Lincoln Park agreement permits, subject to conditions and limitations, sales of up to $15 million of common stock over 30 months; it is not cash already raised.
Material changes versus the prior comparable period
- Six-month net loss increased from $4,443 in 2016 to $7,974 in 2017, principally reflecting the $3,075 MirImmune acquisition-related in-process R&D charge. The charge was noncash consideration-related expense.
- Quarterly R&D expense was nearly unchanged year over year; six-month R&D rose 1% to $2,676, driven by Samcyprone trial activity and the start of immunotherapy work, partly offset by lower stock compensation.
- Six-month G&A rose 21% to $2,223, mainly from added headcount associated with MirImmune and higher legal expenses.
- Cash used in operating activities rose from $4,785 to $5,116 for the six-month period. The filing attributes the increase in part to higher net loss, offset by noncash items, including the acquisition charge.
- Common shares outstanding increased from 13,003,179 at year-end to 23,246,218 at June 30. Series B preferred shares converted into common shares during Q1; MirImmune consideration and Series C preferred conversion also contributed to share issuance. At June 30, 14,077,779 warrants and 677,451 options were outstanding, excluded from diluted loss per share as anti-dilutive.
Outlook, commentary and risks
- Management expected a complete RXI-109 Study 1402 readout in the second half of 2017; RXI-109 Study 1501 participation was expected to conclude by year-end 2017, with top-line data anticipated in early 2018.
- Samcyprone Study 1502 was enrolling a second cohort, with enrollment expected to finish in the second half of 2017. Preliminary results previously reported by the company showed sensitization and wart-clearance responses in a subset of subjects; these were not final trial results.
- The company had initiated human testing of cosmetic candidate RXI-231 in June 2017. It selected RXI-762 and RXI-804 for preclinical development and said RXI-762 could enter clinical development as early as 2018.
- The MirImmune acquisition included early-stage assets requiring significant time and capital, with no assurance of successful development. If specified milestones are achieved within two years, the company may owe shares or cash equivalent; the filing describes a potential share amount beginning at 2,519,091 shares, with an additional warrant-related component.
- Management expects significant losses to continue and said future operations will depend on financing or other funding. It warned that unavailable or unacceptable financing could force it to scale back, terminate, merge or seek acquisition.
- Nasdaq had notified the company of a minimum-bid-price deficiency. An extension gave it until January 29, 2018, to regain compliance; failure could lead to delisting and reduced liquidity or financing flexibility.
- The filing reported no legal proceedings and no material change in internal control over financial reporting. Management concluded disclosure controls were effective. No formal financial forecast was provided.
Important facts for investors to verify
- Whether the cash runway and stated 12-month funding expectation remain valid, and how much the company actually draws from the LPC facility.
- Clinical-trial enrollment, safety, and final efficacy results for RXI-109 and Samcyprone, including whether anticipated data timelines were met.
- Progress and funding needs for MirImmune-derived immunotherapy programs, and whether milestone obligations become payable.
- Subsequent share issuance, warrant exercises, and resulting dilution; the filing reports 450,000 commitment-fee shares issued to LPC after quarter-end.
- Nasdaq bid-price compliance by the January 29, 2018 deadline and any resulting listing consequences.