What RXi Means To Galena Shareholders

| About: Galena Biopharma, (GALE)

As announced on Feb. 27th , Galena Biopharma (NASDAQ:GALE) will be spinning off RXi Pharmaceuticals (NASDAQ:RXII) in a 1-for-1 transaction. So what are Galena shareholders going to get out of the deal, aside from RXi shares?

RXi is currently looking to initiate FDA testing on a pharmaceutical compound called RXi-109. As Per RXi's website:

RXi Pharmaceuticals has initiated development of clinical candidate RXI-109, a self-delivering RNAi compound (sd-rxRNA) for the reduction of dermal scarring in planned surgeries. RXI-109 is designed to reduce the expression of CTGF (connective tissue growth factor), a critical regulator of several biological pathways involved in fibrosis, including scar formation in the skin. Development activities including manufacture of drug supply and IND-supporting toxicology studies are ongoing. Pending FDA review, the company intends to use an innovative clinical trial design to study safety and tolerability as well as initial efficacy in its first clinical trial targeted for 2012.

What will a successful RXI-109 FDA approval mean? It means that thousands of patients who have planned surgeries where scarring is an after-effect, now have the ability to reduce and possibly eliminate post-surgical dermal scarring. If used in the larger metro areas such as New York and Los Angeles, where individual image plays a major social role, patients may very well opt-in for such a compound, once it is successfully tested and receives approval.

Disclosure: I am long GALE.