In 1998, American scientists Andrew Fire and Craig Mello published their discovery of a mechanism that can degrade mRNA from a specific gene - essentially silencing the gene. The discovery was so profound that the two won the 2006 Nobel Prize in Medicine and companies like Alnylam Pharmaceuticals (NASDAQ: ALNY) and ISIS Pharmaceuticals, Inc. (NASDAQ: ISIS) sprung up to capitalize on the ground-breaking mechanism.
Investors may be surprised to learn that Nobel Prize winner Dr. Craig Mello also founded his own public company focused on the RNAi space called RXi Pharmaceuticals, Corp. (OTCQX: RXII). Since it's traded over-the-counter, the company has flown under the radar of many stock analysts and institutional investors. But, the company's recent application to up-list to the NASDAQ should help increase exposure and unlock the value of its pipeline.
In this article, we'll take a look at the company's promising RXI-109 and other drug candidates within its clinical pipeline that investors should consider ahead of this up listing.
Near-term Potential from RXI-109
RXi Pharma's flagship clinical candidate is RXI-109 for the treatment of dermal scarring following planned surgeries. As a self-delivering RNAi compound based on its sd-rxRNA® platform, the treatment reduces the expression of CTGF, a critical regulator of several biological pathways involved in fibrosis, including scar formation in the skin. Leading scientists in the field of scarring believe that reducing these levels early on will result in a reduced level of scarring.
On July 12, 2013, the company announced positive results from its second placebo-controlled Phase I study where patients received small skin incisions in their abdomen and were treated with three intradermal doses of RXI-109 over a 2-week period. The treatment was well-tolerated at all doses and resulted in dose-dependent silencing of CTGF mRNA in the treated areas, suggesting strong efficacy results may be more likely than not in Phase II clinical trials.
According to a report by Griffin Securities, the total addressable market for RXI-109 consists of about 12.8 million procedures with some $2.5 billion to $5.1 billion in valuation potential.
Long-term Potential in Its Pipeline
RXI-109 may be a significant near-term catalyst for RXi Pharmaceuticals, but long-term value will ultimately be coming from its robust clinical pipeline. With six additional clinical programs in various stages of development, investors benefit from a diverse focus on ophthalmology conditions, liver disease/fibrosis, and ALS. Additional indications may also be developed down the road that branch into related clinical fields that could benefit from RNAi treatments.
These clinical programs are based on the company's core sd-rxRNA® therapeutic platform, which provides stable, specific and potent RNAi compounds and the ability to deliver those compounds to the tissues of choice. Unlike conventional methods like lipid encapsulation, sd-rxRNA® builds drug-like properties into the RNAi compound itself, which results in spontaneous cellular uptake without the need for a delivery vehicle.
In total, the company's pipeline targets several multi-billion dollar indications with a platform that could revolutionize the way patients are treated. The commercial potential of the ophthalmology market is measured in the millions of individuals, while hematology and ALS represent significant markets in great need of treatment options. And, partnerships in these areas could also unlock nearer-term value in the company's clinical pipeline.
Potential Investment Opportunity
RXi Pharmaceuticals is approaching a key milestone in its corporate history with its upcoming listing on the NASDAQ stock exchange. Despite being founded by one of the Nobel Prize winners for RNAi, the company has flown under the radar since its spin-off and remains significantly undervalued if it is successful in bringing even just RXI-109 to market. Investors may want to take a closer look at the stock during this key transition given its low market capitalization and potential upside.
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Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
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