Shares of RXi Pharmaceuticals Corporation (NASDAQ:RXII) closed Thursday at $2.30+0.21 (up 10.05%) and reached as high as $2.45 after noted the loud and credible chatter we're hearing involving a substantial deal with one of the the world’s largest drugmakers. According to our sources, this recognized leader in RNAi-based therapeutic discovery and development is close to announcing that they have reached an agreement with the pharmaceutical company which "has been pushing hard to get into the RNAi space."
The pharmaceutical industry has seen some $230 billion in M&A activity from the top 10 pharmaceutical companies alone since the beginning of 2007, but as we reported just days ago, the largest drug makers are likely to continue making acquisitions and signing pricey partnership deals after struggling to develop new "hit drugs" of their own.
The last time we heard this chatter about RXi, we immediately reported the rumors and the company later acknowledged during a presentation that they were actively exploring some key partnerships. RXII's stock price increased significantly (from $2+ to nearly $9) before trading was halted and RXII announced that it was selling a $16.2 million mix of stock and warrants. According to a source familiar with the negotiations, the potential partnership talks with the big pharma had stalled because management at RXII and its parent company CytRx (CYTR) felt that they were "negotiating from a position of weakness due to a lack of operating capital."
Just days ago, RXII announced that the Company's President and Chief Executive Officer, Noah D. Beerman, will present and webcast a corporate overview at the Rodman & Renshaw Global Investment conference on Monday, September 13, 2010 at 2:50 p.m. ET in New York City. Will an announcement be made there? Is history repeating itself?
Interestingly, two days ago, Silence Therapeutics plc noted after their recent share price movement that "it had received an approach which may or may not lead to an offer for their Company." As you may know, that company is also considered a global leader in the discovery, development and delivery of novel RNA interference (RNAi) therapeutics. Are these two leaders in the field both about to be snatched up by one (or two) of big pharma's biggest players? Will this mark a shift in how the entire RNA interference (RNAi) therapeutics field is viewed by science and the investment community?
Before Thursday's 10% jump, RXII's stock had been climbing very slowly and methodically during the last few sessions. There is no doubt that trading activity and volume are increasing after months of consolidation at the bottom. The relative strength index is climbing nicely and the MACD indicator has just moved into positive territory (see the live chart here: http://stockcharts.com/h-sc/ui?s=RXII&p=D&b=5&g=0&id=p70883623455).
We feel the stock is acting in a very bullish manner and as such, we are issuing this trade alert. In addition, we fully expect that shares will gap up Friday morning given the price action we observed after the market closed.
Disclosure: Long RXII