Rxi Pharmaceuticals (NASDAQ:RXII) announced on November 18th that it had signed a partnership with A European "Specials"(distribution of unlicensed medicinal products) biotech company known as Ethicor Ltd. In this agreement Rxi Pharmaceuticals gave rights to Ethicor to start distributing RXI-109 (anti scarring drug in development) to patients in Europe, and the possibility to extend the drug to other territories besides United States, Canada, and Mexico.
Patients Will Start to Receive RXI-109
Rxi Pharmaceuticals' drug RXI-109 is an RNAi drug being developed to treat scars in patients (unmet medical need). The company has been able to pass previous problems with RNAi, like delivery problems. Rxi has found a way to create its oligonucleotide as a "self delivery" drug, that combines both conventional antisense technologies together with RNAi antisense. This combination is known as the sd-rxRNA platform, which can be used to develop a whole pipeline of drugs. Matter of fact the company has also already started to branch out its ophthalmology platform targeting macular degeneration, PVR, Retinoblastoma (eye cancer in children).
According to the European medicines legislation (Directive 2001/83/EC, Article 5(1)), Eithicor will be able to supply RXI-109 to healthcare professionals in Europe before any type of regulatory approval. This is known as a "Special" designation that Europe allows to help treat patients with an unmet medical need, who have no other treatment options. The good part about this deal is that upon regulatory approval Rxi Pharmaceuticals will receive back all rights to market RXI-109. It seems RXi chose Ethicor, because they already deal with a lot of "Special" drugs in Europe for many pharmaceutical companies. As an example Ethicor had also recently signed a deal with Ligand Pharmaceuticals (NASDAQ:LGND) to distribute Lasofoxifene to treat patients with osteoporosis.
Phase 2 RXI-109 and Beyond
Recently Rxi Pharmaceuticals had announced that it began a phase 2 trial for RXI-109 in patients with hypertrophic scars in the lower abdomen. That marks one of the three trials that are set to begin. The other two trials in keloids, and breast scar revision surgery patients are set to start either by the end of 2013, or dip into 1st quarter of 2014. Also on deck the company is set to report phase 1b multi dose data that it has, for an updated two additional cohorts. In this updated study Rxi had decided to test higher doses for RXI-109, and spread out the doses to an extended period of time. Those results are set to be released soon in the 4th quarter of 2013.
The reasoning for getting this drug out there is that the phase 1 trial went good as there were a lot of patients that benefited from the reduction of scars. Matter in fact RXI-109 achieved a 43% gene knockdown of CTGF (connective Tissue Growth Factor) which reduced scarring significantly. Now don't be confused by this low gene knockdown with the likes of Alnylam (NASDAQ:ALNY). Alnylam had gotten a 93% gene knockdown for TTR-mediated Amyloidosis which is good. Although Rxi doesn't want that because it could actually have a negative effect on wound healing, causing the scar to not heal at all. So they are two completely different diseases, and can't be compared as the same.
Revenue for RXI-109
Despite not being approved yet by any regulators Rxi Pharmaceuticals, and Ethicor will receive revenue from RXI-109 as a "Special" drug in Europe and other possible territories. This was a good deal for Rxi, because it currently has enough cash until Q2 2015. So if all goes well with RXI-109 in the Europe region, then Rxi should see some potential revenue come in for its lead drug candidate. This revenue should give it an influx of cash to develop other products in the pipeline without the need for dilution. The other good part in doing this partnership is they can test out RXI-109 (which has proven to be safe in patients) in many more patients than a small sample size. This will allow Rxi to see how well a big population reacts to the efficacy of the drug.
One of the risks is that revenue won't be known for quite some time. Also under the European Medicines legislation the drug can't be directly marketed to health care professionals. So how well Rxi-109 does in terms of revenue remains to be seen, because of this handicap. Also it is being distributed to a larger population with different types of scars, so its efficacy may not be that substantially good.
Rxi Pharmaceuticals is very undervalued at the moment sitting with a market cap of only $39 million. The fact that it has the ability to generate $5 billion dollars upon approval or RXI-109, means there could be potentially huge upside in the near future. As more patients are treated with RXI-109 in Europe, and other territories then Rxi Pharmaceuticals will gain more exposure for their RNAi sd-rxRNA "self delivery" platform. Also more results in the clinic could also create huge upside in the stock price. This could lead to potential partners in other parts of the pipeline like ophthalmology. If all goes well in the clinical trials along with patients in Europe, then RXI-109 has huge potential to become a blockbuster drug.
Disclosure: I am long RXII.
Additional disclosure: I have no position on the other stocks mentioned