RXI Pharmaceuticals' (RXII) CEO Geert Cauwenbergh on Q4 2015 Results - Earnings Call Transcript

| About: RXI Pharmaceuticals (RXII)

RXI Pharmaceuticals Corporation (NASDAQ:RXII)

Q4 2015 Earnings Conference Call

March 30, 2016 16:30 P.M. ET

Executives

Tamara McGrillen - Head, Investor Relations

Geert Cauwenbergh - President & CEO

Caitlin Kontulis - Principal Accounting Officer

Pamela Pavco - Chief Development Officer

Analysts

Zachary Ajzenman - Griffin Securities

Mark Breidenbach - H.C. Wainwright & Company

Unidentified Analyst -

Operator

Good afternoon, ladies and gentlemen, and welcome to RXi Pharmaceuticals Fourth Quarter and Year-End 2015 Earnings Conference Call. Today’s call is being recorded. At this time, I’d like to turn the floor over to Ms. Tamara McGrillen, Head of Investor Relations for RXi. Ma’am, the floor is yours.

Tamara McGrillen

Thank you, operator. Good afternoon ladies and gentlemen. Thank you for participating on our call today. We are joined today by our President and CEO, Dr. Geert Cauwenbergh; our Chief Development Officer, Dr. Pamela Pavco; and Principal Accounting Officer, Ms. Caitlin Kontulis.

I would like to remind listeners that this call will contain certain statements concerning RXi’s future expectations, plans, and processes which constitute forward-looking statements for the purposes of the Safe Harbor provisions under the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those indicated by these forward-looking statements and as a result of various important factors including those discussed in our most recent Form 10-K filed today with the SEC.

In addition, any forward-looking statements represent our views only as of the date of this recording and should not be relied upon as representing our views as of any subsequent date. We specifically disclaim any obligations to update such statements. Now, I would like to turn the call over to our President and CEO, Dr. Cauwenbergh.

Geert Cauwenbergh

Thank you Tammie and good morning and good afternoon to everybody. Our team continued to work diligently in 2015 and once again successfully executed against its projected corporate goals. In the first half of 2015 our share price was continuously challenged with a conversion of preferred shares and selling of those converted equities in the open market. Despite the positive data generation that was produced by our R&D engine to work throughout the year.

The final thing that we completed in June of 2015 has provided our company with the necessary cash to continue our executional success for R&D into 2016. As a result of this in the second half of 2015 we successfully initiated two clinical studies and continued further treatment length testing in study, first of all a two cohort extension to study 1402.

After defining the right timing to start treatment with our anti-scaring compound RXI-109, that is two weeks after scar revision surgery, we have been able to confirm efficacy versus placebo in prevention of the returns of hypertrophic scars. And we have been able to identify our best dose moving forward, 5 milligrams per centimeter of incision length. And the two new cohorts that we added to the 1402 study, we are building them on the direction [ph] are exploring six month treatment regimens to evaluate if we are able to maintain a clinically significant difference between the treated portion of the revised scar and the controlled side of the scar in the same patient for a period of nine months after the scar surgery.

The study is enrolling well and we expect to provide updates on this study in the latter part of 2016. The second and third clinical study, the Phase 1/2 study has been initiated with RXI-109 in the eye for treatment of the scarring component that often occurs in patients with wet age-related macular degeneration who have been for many years on intraocular treatments with antibodies.

This Phase 1/2 study evaluates safety in the first place and we will look for possible signals of clinical activity of RXI-109 in the human eye as well as getting a first look at pharmacokinetic parameters after intraocular injections. We are working with one of the premier eye centers in United States and actually in the world, Dr. Peter Campochiaro of Johns Hopkins. Thus far our first patients have tolerated the intraocular injections well. We may also be able to compare the treated eye with the untreated control eye that has a similar degree of inter-retinal fibrosis at the start of treatment. Also for this study we expect to be able to provide preliminary safety readouts in the second half of 2016.

In the third clinical study we have also started a Phase 2 study with Samcyprone for the treatment of cutaneous warts in the fourth quarter of 2015. This includes 40 patients who first receive a sensitization dose at a concentration of 0.4% followed by 10 once weekly challenge doses of Samcyprone at a concentration of 0.4%. We expect this study to be fully enrolled by the end of the year with some preliminary data available towards the end of 2016.

In 2014 we’ve had positive progress with delivery of our sd-rxRNA drops in the eye, including in the corneal parameters after intraocular injections. This has resulted in research projects in 2015 independently and in collaboration with other companies evaluating different topical delivery formulations of our compounds in the cornea. Early data in the corneal root model had given us good hope that we may be able to be successful in a relatively short-term to achieve the goal of having topical delivery of RXI-109 to prevent corneal scaring post eye surgery.

Additional in vivo work, this ongoing building on these first positive observations. Last but not least we have continued development of two sd-rxRNA compounds that have been selected against through protein targets that are very relevant for the cosmetic industry. Indeed collagenase and tyrosinase are two enzymes that close the issues that have many consumers unhappy with the appearance of their skin such as sagging skin or wrinkles and uneven pigmentation. Based on our in vitro work with these compounds in the course of 2015 we have been able to show that our very important compounds significantly lower the level of these two enzymes and that this reduction in enzymes levels results in noticeable [ph] changes that suggest that these compounds could be useful to improve the appearance of wrinkled skin and of skin with uneven pigmentation.

We are aiming to move one of those compounds into human testing before the end of 2016. If that humans testing is successful in confirming our current observations there is a potential that a first of these cosmetic candidates could be out licensed and come to market in 2019. In order to achieve that goal we are continuing our development efforts with in-vitro skin test that are run in parallel to evaluate which formulations provide the best penetration into the epidermis and to the dermal epidermal junction in the skin as that is where most of the positive benefits should be occurring.

So let’s now move to our general corporate strategy going forward in 2016. Overall the stock price performance in the first quarter of 2016 has been one of the worst quarters in recent history for not only small cap biotech companies but for the broader buyer technology market as well. This terrible market has caused investors to rethink their investment strategies both short and long-term and the result have become more adverse which impacts micro gap early stage biotechnology companies like RXi.

Compared to last year and to volatility in the stock market our share price has been somewhat stable but has certainly not appreciated in value. As a result we are carefully evaluated our options in relations to our NASDAQ listing in the coming months. It is for that reason that we have taken the initiative to request from our shareholders the permission to affect a reverse split when necessary in order to reestablish the minimum share price requirement to remain on NASDAQ that is $1 a share.

The Board has evaluated the situation in-depth and we feel that maintaining our NASDAQ listing provides the highest likelihood to generate value for our shareholders once the malice in the biotech world subsides and when our company continues to provide a positive news flow. Also the Board feels that our NASDAQ listing continues to be a positive tool when RXi would entertain business and corporate development transactions in the coming months or years.

Along those lines from an executional point of view in 2016 we will concentrate our focus in three major areas. Number one, with our earlier mentioned clinical trials on track we expect safety and preliminary clinical readouts in the second half of 2016. Number two, we will diligently continue our research activity to arrive at development opportunities for topical delivery to the cornea of the eye and delivery of our potent sd-rxRNA compounds in the skin. This should allow us to move at least one of our two cosmetic compounds into volunteers/consumer testing.

Number three, we will continue our business development efforts and that includes R&D collaborations, geographical out licensing opportunities, [indiscernible] to large pharma and biotech and continuing to build our ownership in startup biotechs that want to access our unique IP platform in exchange for equity in those companies with some degree of anti dilution protection.

I would like to take this opportunity to discuss RXi's available cash on hand and current financial run rate. From the very beginning, nearly four years ago, we have managed our business with careful and thoughtful spending. Year-over-year we have been able to maintain an average burn rate of $2 million to $2.5 million per quarter. We are mindful of global, political, and industry influences that can impact the company's ability to secure additional funding. The Board of Directors along with the management team are evaluating several business and corporate development options that the company could pursue to strengthen and extend our financial position.

As we understand our shareholders like ourselves are sensitive to the need for value creation. We will communicate our progress on these initiatives in the coming months. And now I am happy to hand the call over to Ms. Kontulis for the financial discussion. Caitlin.

Caitlin Kontulis

Thank you, Geert and good afternoon everyone. The company's annual report on Form 10-K was filed with the SEC and includes detailed information on the company's financial performance in 2015. During the call today I will focus on selected financial highlights.

Total operating expenses increased during the fourth quarter of 2015 and for the year-ended 2015 as compared with the same periods in the prior year mainly due to increases in research and development expense. Research and development expense for the quarter-ended December 31, 2015 was $1.7 million as compared with $1.6 million for the quarter-ended December 31, 2014. Research and development expense for the year-ended December 31, 2015 was $6.9 million as compared with $5.7 million for the year ended December 31, 2014.

The increase in research and development expense quarter-over-quarter and year-over-year was primarily due to manufacturing expense for RXI-109 and Samcyprone drug product for use in the company's clinical trials. Additionally research and development expense increased due to a modest increase in headcount and for lab supplies and materials used as the company moves forward in the development of our cosmetic targets and topical delivery applications.

General and administrative expense for the quarter ended December 31, 2015 was $0.9 million as compared with $0.8 million for the quarter ended December 31, 2014. General and administrative expense for the year-ended December 31, 2015 was $3.3 million as compared with $3.2 million for the year-ended December 31, 2014. The increase in general and administrative expense quarter-over-quarter and year-over-year was primarily due to an increase in compensation expense as well as an increase in professional services expense due to the company's continued and increased focus on business development activities as one of our key corporate initiatives that we announced last year. These increases led to both an increase in the company's net loss for the quarter and year-ended 2015 as compared with the prior year.

The company's net loss applicable to common stockholders includes the company's net loss plus the fair value of the dividends paid on the Series A and A1 preferred stock. Net loss applicable to common stockholders for the quarter-ended December 31, 2015 was $2.6 million compared with $2.8 million for the same quarter in 2014. Net loss applicable to common stockholders for the year-ended December 31, 2015 was $10.4 million compared with $12.9 million for the year-ended December 31, 2014.

Our net loss applicable to common stockholders decreased quarter-over-quarter and year-over-year due to a decrease of $0.5 million and $3.9 million for the quarterly and the fair value of the company’s preferred stock dividends offset by an increase in operating expenses as just discussed. The decrease in preferred stock dividends compared to the prior year periods was due to the full conversion of all outstanding shares of both series preferred stock in the second quarter of 2015. As a result of the full conversion of the preferred stock series there was no further accumulation of future payment of dividend.

Turning to the company’s cash flows for the year, in 2015 the company had positive cash inflows from net proceeds of $9.5 million were used from our public offering in June and from subsequent warrant exercises issued in connection with that offering. This was offset by cash used in operating activities of $7.3 million primarily driven by personnel cost and research and development expenses as the company amends its preclinical and clinical programs with RXI-109 and Samcyprone.

The company maintained its quarterly cash burn of about $2 million per quarter in 2015 ending December 31, 2015 with $10.6 million in cash, cash equivalents, and short-term investments as compared with $8.5 million in cash and cash equivalents at December 31, 2014. We believe that our existing cash, cash equivalents, and short-term investments will fund the company’s operations for at least one year.

In our previous quarterly update calls we communicated that we had received a noncompliance letter from the NASDAQ stock market as we are no longer in compliance with the minimum closing bid share price of our common stock of $1. The company has until May 2, 2016 to regain compliance in order to remain listed on NASDAQ. If we do not regain compliance, NASDAQ may begin the delisting proceedings and our common stock will trade if at all on the over the counter market such as the OTC Bulletin Board.

After a careful consideration of all available options, we along with our Board of Directors believe our best option at this time to meet the minimum price requirement is through a reverse split to increase the per share trading of our common stock. Many institutional investors are limited from trading in companies with share prices under $1 and analysts that many brokerage firms do not provide coverage for lower priced stock. Further we believe that a higher share price could help us to retract and establish business development relationships with other companies. We believe that maintaining our NASDAQ listing provides the company with the greatest opportunity to retract interest from the investing public, financial community, and business development partners.

This type of corporate action requires approval from our shareholders and we have taken the necessary steps to hold a special shareholder meeting on April 14th at the company’s corporate offices for our shareholders to vote on a proposal to affect a reverse stock split at a ratio of not less than 1 for 2 and not greater than 1 for 40 to be determined by our Board of Directors. Shareholders of record as of February 24th are entitled to vote at the special meeting and the related proxy materials were mailed out at the beginning of this month. Please reach out to your brokerage firm if you have not yet received these materials. Because of those reasons mentioned previously and those further discussed in our related proxy statement filed with the SEC, our Board of Directors along with Management recommends that you vote for this proposal. Thank you

With that I will turn the call over to Dr. Pavco who will discuss the company’s R&D activities.

Pamela Pavco

Thank you Caitlin and hello everyone. As Geert has already mentioned, our research and development groups have been quite busy. Today I’ll summarize this work for you starting with a little information about each of the trials that we initiated in the fourth quarter of 2015 and end with a discussion of our research efforts, cosmetic product development, and the directions that we are taking there.

As you know our lead sd-rxRNA program is evaluating RXI-101 to prevent post surgical dermal scaring by reducing connected tissue growth factor or CTGF. In this series of trials we have been continually building our knowledge of the therapeutic action of RXI-109 as we successively and systematically alter the dose and dosing regimen to optimize therapy. In the previous study studies 1301 we have learnt that initiating treatment at two weeks after scar revision surgery seemed more effective than beginning the dosing regimen on the day of surgery.

In the first two cohorts of the current study, study 1402, we compared two dose levels 5 milligrams and 10 milligrams per centimetre of incision length using a dosing regimen starting at two weeks after the scar revision surgery and continuing with a total six doses over the course of three months. In this study, one or two hypertrophic scars are revised and part of the resulting incision is treated with RXI-109 and another part is left untreated.

As reported in our November 2015 earnings call, based on the three month photographic and scar assessment data we learned that regardless of dose level of RXI-109, the treated scar was selected as the better appearing scar approximately 65% of the time and an additional 19% of the time there was no difference between treated and untreated. In addition safety assessments for the 5 milligram and the 10 milligram per centimetre dose were the same and in fact the higher dose did not result in better clinical appearance. These data are very encouraging for a relatively short treatment period especially when you remember that this study is in people who have already had a hypertrophic scar and thus are predisposed to poor scarring.

As indicated that a three month dosing period is relatively short because hypertrophic scars may continue to develop for many months as the wound continues to heal during what is known as the proliferation phase. In hypertrophic scars this phase can be nine months or more before the normal course of skin remodelling occurs. So, considering all of this information together, an extension to this study was approved by our IRB in which we increased the dosing regimen to six months to better cover this proliferation phase of scar formation of wound healing.

The subjects from the two additional cohorts will receive either eight or nine doses. In cohort three, subjects will receive nine doses, weekly for four doses starting at two weeks after scar revision, then monthly starting at month two to month six. In cohort four, the subjects instead receive three doses on a two week schedule, then continuing on the same monthly dosing regimen of month two through month six. Because of proliferation phase of wound healing is long, especially in a person prone to hypertrophic scars, our intent is to find the minimum dose and dosing regimens because we freshened up the process over the whole time period.

You can imagine that a visit to your doctor's office every two weeks at the start of the treatment instead of just weekly would be preferable, before switching to a monthly maintenance dose to keep their scar at bay. We believe that extending the dosing regimen will support a more sustained response because we are now treating the ongoing issue of elevated CTGF in these subjects for a longer time.

As Geert mentioned, we expect to enroll these two new cohorts by the end of the year, therefore the nine month end of the study should occur in third quarter 2017. However, we are seeing good enrolment and believe that we may be able to close enrolment earlier. With subjects in cohorts three and four reach their seven month time of point, that is one month after the dosing is completed we plan to conduct a preliminary analysis to help determine our next step. At that point we would conduct a photographic review with blinded observers as well as collect the results of scar assessments conducted by the investigator.

A very important end point is to compare the final ended studies far assessment at nine months of cohorts one and two who received six doses in the first three months, to cohorts three and four who have received eight or nine doses over a six month period. Our expectation that extended dosing will result in improved scar repair over the course of this study. This expectation is in line with the mechanism in hypertrophic scar proliferation that people with scar -- that people who scar poorly have an elevated level of CTGF for a longer period of time. And that by blocking this growth factor from continually stimulating the production of collagen we will beneficial.

In the last quarter of 2015 we also initiated a Phase 1/2 trial evaluating the use of RXI-109 to just diminish scar formation in the eye. Just as in the skin, a higher level of CTGF is implicated in sub retinal fibrosis or retinal scarring that occurs in many people who are suffering from a variety of retinal diseases. Most predominantly people who have wet or neo-vascular form of age related vascular degeneration often end up with retinal damage as a consequence and the result is lost vision. While current anti-VEGF treatments have been quite successful in washing the damage that comes from the leaking of an overgrowth of blood vessels characteristic of this disease. Ultimately damage occurs to the retina and it leads to irreversible scaring.

In fact over half of the patients who received anti-VEGF therapy developed retinal scaring within two years of initiating treatment. It is our belief that using RXI-109 to help lock this retinal scaring could be the next step in the therapy of these patients and that early use may change the progression of the disease and result in a sustained vision for a longer period of time. There are currently no approved drugs addressing the scaring component of these various ocular diseases.

Now I will tell you a little bit about the study itself. Study 1501 is the Phase 1/2 multi-dose escalation study conducted in subjects with wet AMD. RXI-109 is administered by intravitreal injection in one eye only. Each subject will receive a total of four doses of RXI-109 at one month -- patient to access ocular health and to determine whether the subject should continue in the study and receive the additional three doses. The total dosing period is three months followed by a four month observation period.

The safety and tolerability of RXI-109 as well as the potential for clinical activity will be evaluated over the course of the study using numerous assessments to monitor the health in the retina and to assess visual acuity. As this is a dose escalation study, three dose levels will be evaluated in a small number of patients in order to establish safety information and to help to determine a dosing regimen for future trials. To-date two subjects have been dosed in this study and there have been no safety issues. Both subjects have continued dosing based on a clean safety evaluation after their first dose.

One subject has received all four doses and the other has received the third dose. Once the third subject in this cohort enrolled reaches 14 days we can review the safety data and if the safety profile remains clean we can open the next prior dosing cohort. We have two subjects lined up to screen for the spot in early April so we hope to close enrolment in the first cohort and potentially open the second cohort in the coming weeks.

We have fairly stringent criteria on enrolment that are expected to make study 1501 something -- somewhat difficult to enroll. These same criteria will also allow potential effects on the retinal scar growth to be assessed. Obviously one of these requirements is that the subject must already have some level of retinal scaring in the treated eye. This criterion allows us to follow the size of the scar over the course of the trial both during and after RXI-109 treatment. This evaluation of scar growth and rate of scar growth may allow us to determine if treatment with 109 had any effect on this rate of the growth of an existing scar. If the subject has scaring in an untreated eye, we will also be able to follow the growth of the scar in that eye as a direct control without any RXI-109 treatment within the same person.

The last trial I will tell you about is 1502, a Phase II study in which we are evaluating Samcyprone for the clearance of the calcified warts. This study was also initiated in the end of last year. Samcyprone is an ointment formulation of diphenylcyclopropenone or DPCP, that we licensed in into 2015 and it was the only non-RNAi therapy that we are pursuing at this time. DPCP is an active ingredient that has long been used to treat warts and it has also been used for several dissimilar indications such as to stimulate hair regrowth in alopecia areata and to clear subcutaneous metastases of melanoma.

What ties these indications together is that DPCP is an immunomodulator that can be used to cause an immune response at the site of application. If applied on a wart, the body’s reaction will be to attack that site and the result will be destruction of the wart. In alopecia areata, the immune response will be on the scalp and will be to stimulate the hair follicles to reboot so to speak and they will then begin producing hair.

Study 1502 is under way and we intend to complete enrolment of 40 subjects before the end of 2016. This protocol includes the sensitization phase and which is found on the subject's arm and one wart are treated with the higher dose of Samcyprone. When sensitized, the wart awards to be treated will be treated with Samcyprone once weekly for ten weeks with a tenfold lower concentration of the Samcyprone ointment.

If the subject's wart is only partially clear during the time they will begin the option to extend the treatment. During the trial the warts will be scored and photographed and measured to monitor the level of clearing. Our goal is complete eradication of the wart award so that the area returns to its normal skin appearance.

Now you may be wondering if common warts are really that big of a problem. And normally they are not and they usually disappear on their own. However, certain warts are recalcitive to treatment and continued to reoccur and single warts can become large clusters of warts as they spread. The prevalence of warts is extremely high in children for example as high as 12% in the UK for four to eight years old and can rise during the teenage years as exposure to the causative agent, the human papyloma virus or HPV is increased. By adulthood, the prevalence has reduced to 1% or so in the U.S. but is an occupational risk for certain profession. For example butchers and meat handlers where the percentage can be over 30%.

Standard treatments such as erasing the wart liquid nitrogen or otherwise attempting to destroy it with a chemical treatment are not always effective especially on our recalcitive wart. Because of this immunotherapy agents such as DPCP have been used to stimulate the body's own immune system to attack the foreign HPV invader. In current use by a dermatologist, DPCP must be formulated at a compounding pharmacy for patient use. There is no standard concentration or dosing regimen and the formulation is generally in acetone which is hard for the patient to use. Ultimately we intended our ointment formulation known as Samcyprone will take the guess work out of all of this.

Once approved the dermatologist can prescribe a standard treatment regimen with Samcyprone that is readily available at the pharmacy. Samcyprone ointment will make it easier to apply than a runny liquid formulation making it less likely to accidentally sensitize family members. Also because the concentration of DPCP in Samcyprone formulations for both sensitization and treatment will be lower, potential side effects including over sensitization will be less likely. All of these advantages will be appreciated by the doctor who has long been in need of a consistent and straight forward way to use DPCP.

But I am getting a little bit ahead of myself. We are on track to enroll the study in 2016 which means that all subject business will be completed in the first half of 2017. Early safety and preliminary results will be shared before the end of this year.

Now I would like to give you a brief update on our research areas and how they are supporting our research efforts in the cosmetic product development area. Our overall strategy is to develop a topical delivery that can be used for various dermatology and ophthalmology indications. For topical delivery to skin we are pursuing a number of potential methods, including formulation and mechanical aides to help our sd-rxRNAs penetrate to the appropriate dermal layer. It is possible that for the skin the delivery technology that we end up with will be a combination of both. The skin has evolved at an incredibly competent barrier and it is for good reason that it is hard to get compounds to go across that epidermal barrier.

We are having some success delivering to the epidermal layer but consistent penetration into the dermis, a deeper layer is more challenging. One combination method we are evaluating includes micro needling to create a pattern of tiny holes that extend to the dermal layer and given in road for our sd-rxRNA compounds to penetrate there. Micro needling is very wide spread in dermatology as it is thought that it alone can enhance collagen growth to smooth out the texture of the skin and reduce wrinkle depth.

The micro needles create tiny injuries that the body heals by producing collagen and elastin and the result is improved skin firmness, elasticity, and texture. For our potential cosmetic products this would be a perfect synergy for delivery method. We have already introduced our two cosmetic candidates RXI-185 and RXI-231. RXI-185 targets and reduces collagenase. Collagenase is the key enzyme involved in the breakdown of collagen in the skin and is in part responsible for acne scars when we are younger and wrinkles and poor skin texture as we age.

When evaluating the cell culture RXI-185 reduces the level of collagenase thereby reducing the collagen destruction caused by collagenase itself, and this results in an elevated level of collagen. We are currently evaluating RXI-185 in a 3D mark of human skin or collagenase is up regulated by exposure to ultraviolet light and will be providing an update on this work at the annual meeting of the society of investigated dermatology in May.

RXI-185 reduction of collagenase in combination with micro needling for collagen production in the skin is being stimulated by pinpoint mechanical damage. Could synergistically enhance the overall improvement in skin appearance. This combined therapy could result in more collagen as a result of micro needling and a more prolonged affect since the destruction of collagen will be reduced by RXI-185's action to reduce the enzyme collagenase that breaks it down.

Our other cosmetic candidate RXI-231 targets tyrosinase, an enzyme in part responsible for the production of melanin. Melanin gives the dark color to your skin, hair, and eye. It is also the culprit in certain hyper pigmentation disorders of the skin such as age spots and Melasma. We are currently working on a topical formulation that with or without mechanical disruption of the top epidermal layer of the skin would allow RXI-231 to be used as a cosmetic. For RXI-231 delivery into the epidermal layer and the epidermal junction maybe sufficient. So it may not need to get into the dermis like RXI-185 does and an update on this would also be presented in the May Society for Investigated Dermatology.

Micro needling is not the only method we are pursuing as an adjust to our formulations but since it is widespread in dermatology practice it certainly is a top option. In the weeks amongst the time we will continue to optimize the delivery methods with our goal in mind of initiating human testing of one of our cosmetic sd-rxRNA by the end of the year.

For the eye we are working towards non-invasive delivery formulation so that we can extend the use of RXI-109 to the front of the eye. CTGF is implied as a positive agent in corneal scaring that can occur after eye injury or after certain infections. Scarring of the cornea can impact the transparency of the cornea and thus have a negative impact on vision. Our collaboration with Jade Therapeutics resulted in some very nice delivery data that showed that the sd-rxRNA could be formulated in hydro gel film. We recently conducted work in an in vivo model where we are treating a corneal wound with eye drop formulated at RXi where results of this will also be presented in May but at the Annual Meeting of the Association for Research in vision and Ophthalmology known as ARVO.

In addition to presenting at the society for investigative dermatology and ARVO is mentioned above we have numerous other scientific presentations coming up in the next few months at which we will make updates on our ongoing R&D efforts. RXI will also be presenting at the summer meeting of the Academy of Dermatology, the Oligonucleotide Therapeutics and Delivery Meeting which is next week, and the 18th Annual Oligonucleotide and Peptide Therapeutics Conference.

With that I will now turn the call back over to Dr. Cauwenbergh, thank you.

Geert Cauwenbergh

Okay, thank you Pam. At this time I would like to thank you for your interest in and continued support of RXi Pharmaceuticals. Our team remains dedicated to continuing the positive momentum we have generated in our clinical and research development programs and we look forward to building up on those successes during 2016 working towards the development of novel therapeutics to improve patient’s lives and now back to Ms. McGrillen

Tamara McGrillen

Thank you Geert. This now concludes the formal presentation for today. Operator we would like to now poll for questions at this time please.

Question-and-Answer Session

Operator

[Operator Instructions]. And the first question comes from Keith Markey. Keith, please state your question.

Zachary Ajzenman

Hi, thanks good evening this is Zack Ajzenman in for Keith, can you maybe provide us with the status of your business development efforts?

Geert Cauwenbergh

Yes, well we have seen I think recently an increased trend towards actually away from IPOs and reach out to public companies by private companies to reacquire it become public. Because of the deplorable state of the IPO market for biotech companies the Wall Street Journal of November 30, 2015 mentioned something like forget IPOs if you want to get – and that seems to become a reality and that can open the door to interesting deal making for public companies like RXi that have exciting pipeline in technology platform with an excellent IP protection.

So we are exploring a number of opportunities there. We are hopeful that we can communicate additional information on these in the coming months but it was currently not in the interest of the company or the potential partners we are talking to who will provide additional information. But trust me that we are actively working very hard to achieve the best possible solution for our shareholders.

Zachary Ajzenman

Thanks that’s all for us.

Operator

And our next question comes from Mark Breidenbach. Please state your comment.

Mark Breidenbach

It was pretty close, Breidenbach is the last name. Hi guys, congrats on the fourth clinical progress on multiple fronts and just a couple of questions this afternoon. With respect to RXI-109 in dermal scarring, if I heard correctly we have two new cohorts that should be fully enrolled by the end of this year, maybe perhaps even a little sooner than that and we might see a readout on those cohorts in early 2017. How confident are you that the six month extended dose schedule will kind of achieve, is really going to be fully optimized. I guess the question is, are there any specific signals you are looking on the data to declare the dosing schedule fully optimized?

Pamela Pavco

That’s a really good question because the course of scar formation can be so long. What I think we believe now is that six months will give a great basis for tamping down the scar formation over the primary part of that proliferation phase when the collagen is being laid down. And it is possible that the whole course of treatment may also include maintenance doses where a person comes back to the doctor over the course of a longer period of time after the six months even. If the scar begins to show or their wound area begins to show signs of continuing their scar formation. And if you’ve ever had a scar, when it’s forming it is sort of itchy and there could be some signs that bring the person back to the doctor to continue treatment.

But since the hypertrophic scar nine months is kind of -- by then it is starting to wind down. It can go on longer but that is sort of typical. We do think that six months ought to be a really good basis for this trial to determine if we can just hold off the scar formation. We’ll look at nine months after the six months of treatment and we may be able to determine if it has held steady or if it is beginning to come back and that could help gauge whether we need to continue treatment as well.

Mark Breidenbach

Okay, understood and my final question really goes back to some interesting data you presented in the fourth quarter using sd-rxRNA to modulate link RNAs and I don’t think we heard much about it on the call today. But can you offer me thoughts on which indications or indication areas that you see as most amenable to address by targeting link RNAs?

Geert Cauwenbergh

Well, the alumnus [ph] quoting RNAs are a totally different observation that was done last quarter I think of last year. It was done in collaboration with a group in Belgium and we are exploring or they are exploring further what can be done with them. Many of those long known coding RNAs are more responsible for phenotypic changes that can occur during diseases processes. So it provides for potential opportunities going forward to explore their role and how we can affect phenotypic expressions in certain diseases. But it is still early day today in terms of making any projections even going into clinical studies or something like that. It is just a fascinating space that has actually quadrupled whenever staff gets that weekend addressed with our typical and proprietary sales delivering rxRNAs.

Mark Breidenbach

Okay, fair enough. Thanks for taking the questions and good luck.

Geert Cauwenbergh

Thank you.

Operator

And our next question comes from Catherine Janice [ph]. Please state your question.

Unidentified Analyst

Yes, good afternoon everybody and thanks so much [Technical Difficulty] RXI-231 and RXI-185, I am wondering if you could just walk us through the accelerated development plan hitting on a couple of the key milestones as you work towards your potential launch at the end of the decade and also when you speak of a market potential of 200 billion, it is a very large number. I am just wondering if it is possible to narrow that market down a little bit from there for us? Thanks.

Geert Cauwenbergh

Right, so maybe I’ll start with the market potential because if you hear a number of $200 billion as a cosmetic potential. You are really talking about the global potential of the use of cosmetic product. It is a huge market just go to department stores, etc. and then you’ll find out. However if you drill it down to the level where we are with the anti-collagenase, anti-tyrosinase that is only a fraction of the $200 billion market. So the $200 billion gives you an idea of what you could do in the cosmetic space if you were really focused on all the different targets that could be potentially targeted.

For two pharmaceuticals we have currently preclinical development, actually pre-consumer testing that is probably more -- it’s a smaller market than the 200 billion. It is probably closer to a few billion dollars only and again that it will be competing with retinals and he NTE pigmentation products that currently are on the market.

But it in terms of the faster path to markets, well, once you have established and there is a set of test that needs to be done in vitro you are not allowed to do animal testing with cosmetic ingredients. Actually you are not getting access to certain key markets like the European market or the Californian market when you have done animal testing with cosmetic. You brought its all ingredients. So the regulatory agencies have identified the number of vitro test that can be so that you can make decent projections that topical application of certain compounds based on those individual test are not going to add negative toxicity effects on patients or on consumers.

Meaning that you can make the jump from preclinical to consumer testing which is more acceptability testing irritation testing on consumers. But also testing against the claims that could be made like for instance improves the appearance of wrinkles or improves the appearance of multi hyper pigmentation. And that allows us to move faster into human testing and once you have human testing on those compounds it is a lot easier to move them down into the business development arena where a number of large companies would be significant takers of those new products.

Of course an interesting side effect of this is that when we do -- because many projects for development therefore cosmetic use improved over the periods. We automatically also get a glimpse of what other molecules, other compounds to get to safe target could do when we put them on a drug development track which would be longer, more expensive but would likely also command higher presence. Is this the answer to your question Catherine.

Unidentified Analyst

Yes, it does. Thank you very much.

Operator

And that is all the questions we have in the queue at this time.

Tamara McGrillen

Ladies and gentlemen once again thank you for participating in our call today. At this time I will turn the call back to the operator to close up the session.

Operator

Thank you, this does conclude today's conference. We thank you for your participating, you may disconnect your lines at this time and have a good night.

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