Phio Pharmaceuticals Corp. (filed as RXi Pharmaceuticals Corporation) — Form 10-Q summary
Reporting period: Quarter and nine months ended September 30, 2015. Financial statements are unaudited and amounts below are in U.S. dollars. The filing identifies the registrant as RXi Pharmaceuticals Corporation.
Business context
RXi was a development-stage biotechnology company focused on dermatology and ophthalmology, including self-delivering RNAi candidate RXI-109 for scarring and Samcyprone for several skin disorders. It reported no product revenue and relied primarily on research and development funding and capital raises.
Financial highlights
| Metric | Q3 2015 | Q3 2014 | Nine months 2015 | Nine months 2014 |
|---|---|---|---|---|
| Revenue | $0 | $16,000 | $34,000 | $57,000 |
| Research and development expense | $1.734 million | $1.459 million | $5.202 million | $4.118 million |
| General and administrative expense | $770,000 | $766,000 | $2.447 million | $2.459 million |
| Operating loss | $2.504 million | $2.209 million | $7.615 million | $6.520 million |
| Net loss | $2.496 million | $2.206 million | $7.607 million | $6.496 million |
| Net loss applicable to common stockholders | $2.496 million | $2.906 million | $7.816 million | $10.164 million |
| Basic and diluted loss per share | $0.04 | $0.17 | $0.18 | $0.69 |
Revenue was immaterial, so operating margins are not meaningful. R&D expense increased 19% in the quarter and 26% year to date, primarily reflecting RXI-109 manufacturing, clinical-trial costs, and Samcyprone preparation. Net loss attributable to common shareholders improved year over year largely because preferred-stock dividends were lower; all Series A and Series A-1 preferred shares had converted to common stock by May 27, 2015.
- Liquidity at September 30: Cash and cash equivalents of $4.035 million, short-term investments of $8.0 million, and restricted cash of $50,000. Cash, cash equivalents, and short-term investments totaled approximately $12.0 million.
- Cash flows, nine months: $5.735 million used in operations, $8.039 million used in investing (including $8.0 million to purchase short-term investments), and $9.313 million provided by financing.
- Capital and liabilities: Current liabilities were $1.665 million; no debt is reported on the balance sheet. Stockholders’ equity was $11.032 million. The company reported an accumulated deficit of $54.489 million.
- Financing and dilution: The June 2015 public offering of 26 million units generated approximately $9.2 million in net proceeds. Each unit included a common share, an overallotment purchase right, and a five-year warrant. Common shares outstanding were 64,949,121 at quarter-end and 65,349,121 as of November 6, 2015.
Outlook, risks, and notable events
- Management said existing cash, cash equivalents, and short-term investments were expected to fund operations for at least the next 12 months. The company nevertheless expected continued significant losses and said future operations would depend on additional financing, grants, or collaboration arrangements; availability and terms were not assured.
- RXI-109 was in Phase 2a studies for dermal scarring and hypertrophic scars/keloids. The company reported starting a Phase 1/2 trial for an ophthalmic indication in November 2015, after quarter-end. It expected to initiate a Samcyprone Phase 2a cutaneous-warts trial by year-end 2015. These are forward-looking statements, not assurances of success.
- In October 2015, the company selected RXI-185 and RXI-231 for cosmeceutical development and planned further functional, safety, and skin-penetration testing.
- After quarter-end, 400,000 overallotment purchase rights were exercised for $182,000 gross proceeds. On November 6, 2015, the company eliminated the Series A and Series A-1 preferred-stock designations.
- Nasdaq had notified the company of noncompliance with the $1.00 minimum bid-price requirement. An extension gave it until May 2, 2016 to regain compliance; failure could lead to delisting and impair liquidity and financing access.
- The filing cited clinical, regulatory, funding, development-cost, and competing-technology risks. It reported no legal proceedings, no off-balance-sheet arrangements, and effective disclosure controls; no material change in internal control over financial reporting was reported.
Important facts for investors to verify
- Whether the reported cash and investments and management’s 12-month runway assessment remain adequate relative to clinical and manufacturing spending.
- Clinical-trial progress, results, regulatory status, and actual timing for RXI-109 and Samcyprone programs.
- Potential dilution from outstanding warrants, purchase rights, and other equity awards; the filing lists 25,969,615 warrants outstanding at September 30.
- Nasdaq bid-price compliance status and any resulting effects on trading, capital raising, or listing.
- Financing needs and the terms and availability of future funding, partnerships, or other sources of capital.