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Rxi Pharmaceutical's RXI-109 Does The Impossible Once Again!

|Includes:REGN, RXI Pharmaceuticals Corporation (RXII)

On Friday May 2nd 2014 Rxi Pharmaceuticals (NASDAQ:RXII) announced results from a preclinical study involving studies of the eye in monkeys. Rxi pharmaceuticals is using RNAi to down regulate the expression of CTGF -- connective Tissue Growth Factor. RXI-109 is currently being used by Rxi Pharmaceuticals for anti-scarring against hypertrophic scars and keloids. There are zero FDA approved drugs for scarring and the possible market value for RXI-109 in scarring alone could yield $3 to $5.5 billion dollars.

The results showed that the eyes of these monkeys were shown to reduce CTFG mRNA in a dose dependent manner in the Retina. That means that as the dosing was increased the subjects saw a greater gene knockdown of protein in the eye. These test subjects received an injection and the results were shown to be remarkable 7 days afterwards. What was most impressive was the fact that the company was only attempting this study as a dose range finding study, but instead noticed that RXI-109 was able to knock down the CTGF of the cornea as well. That's what made this press release spike Rxi Pharmaceutical's stock so high at 25%, because the company only expected to improve the retina but also improved the cornea as well. There was a selloff at the end of the day but it doesn't matter because these results bode well for the future of Rxi and its sd-rxRNA platform.

We believe this selloff was due to investors being on the wrong end of the spectrum. These pre-clinical results that saw a huge surprise along with positive phase 1 multidose results in patients with scarring just validated the RXI-109 compound and sd-rxRNA platform even more. The company even claims in a quote from the CEO that the company can now possibly make a topical cream form of RXI-109 to improve retinal and cornea scarring of the eye seen here:

"This finding opens up an avenue to possibly develop topical forms of RXI-109 to combat corneal scarring which often occurs secondary to trauma or infection and can lead to visual impairment including blindness"

The best part about this study was the validation for RXI-109 because now Rxi Pharmaceuticals can move on to target other eye indications like PVR -- retinal detachment scarring of eye, Retinoblastoma -- eye cancer in children under the age of 15, macular degeneration -- vision loss in elderly, and any other possible eye candidate. As mentioned above RXI-109 is also being used for hypertrophic scars and keloids but may also show remarkable use in a big area many pharmaceutical companies want to target which is liver fibrosis. Yes RXI-109 can even be used for liver fibrosis which in itself can be a $1 to $2 billion dollar market.

What validates Rxi's ophthalmology pipeline even more is the deal the company was able to achieve with Lincoln Park Capital. The deal called for LPC to purchase an aggregate of $20 million dollars worth or Rxi's common stock over a 30 month period. This purchase agreement was built to help fund Rxi's pre-clinical ophthalmology pipeline. LPC immediately purchased 500,000 shares of Rxi's common stock at $4.00 per share. Also when ever RXi reaches the ability to file an IND application for each ophthalmologic product LPC expects to purchase $1 million dollars worth of Rxi stock at prevailing market prices. For example that means if the share price at that later point is up in the $10 per share range or higher LPC has to purchase stock at that price. This huge capital flux is just another validation for the company and its ability to revolutionize the ophthalmology space and other unmet medical needs. With the eye indications along Rxi Pharmaceuticals could be looking to become the next Regeneron Pharmacetucals (NASDAQ:REGN) or even better as the company is also targeting liver fibrosis and scarring.

Rxi Pharmaceuticals is expected release initial results from its phase 2a study of hypertrophic scars in the middle of 2014 which means it could come anytime now. A huge boost of RXI-109 over placebo with pictures would mean a game changing RNAi sd-rxRNA technology that could yield greater value and more licensing deals/partnerships. This Friday was the first time the company traded such high volume in one day coming in at 2.7 million shares traded for the day and with continuation of positive results we see greater share price appreciation in the coming days/months.

Look out for this next week as tomorrow May 4th and May 8th will see Presentations at ARVO from Rxi Pharmaceuticals on their opthalmology pipeline. More importantly on Thursday May 8th will be a presentation on Retinoblastoma -- eye cancer in children under the age of 15 -- in which the presenter will announce what gene is being targeted for the disease in question. Rxi Pharmaceuticals is only getting started and we think the current share price at $3.39 per share severely undervalues the company for its massive potential. But we believe the phase 2 validation results in hypertrophic scars will greatly change that for sure!

Disclosure: I am long RXII.

Stocks: RXII, REGN