Please Note: Blog posts are not selected, edited or screened by Seeking Alpha editors.

RXi Pharmaceuticals' Valuation Moves From Product To Platform

|Includes: ALNY, OPKO Health, Inc. (OPK), RXII

The RNAi space has been experiencing a robust recovery from its early failures as recent clinical trials have demonstrated its viability. For instance, Alnylam Pharmaceuticals Inc. (NASDAQ: ALNY) shares have soared more than 195% since January after the company reported favorable data for its ALN-TTRsc. This data led investors to value the stock based on its platform potential rather than its single-indication potential.

In this article, we will take a look at RXi Pharmaceuticals Inc. (OTCQX: RXII) and how its RXI-109 clinical trial could lead investors to do the same for its stock.

RXI-109 Provides Proof of Concept

RXi Pharmaceuticals' first clinical candidate, RXI-109, is a self-delivering RNAi compound being developed to reduce dermal scarring following planned surgeries.

Leveraging RNAi's ability to "shut off" the expression of certain genes, RXI-109 works by reducing the expression of Connective Tissue Growth Factor ("CTGF"), an extracellular protein that play a key role in tissue regeneration. Elevated levels of CTGF-dependent signaling can prolong the tissue repair process and lead to pathological scarring and fibrosis There is also strong evidence that silencing CTGF locally significantly reduces scar formation.

In two Phase I clinical trials, RXI-109 did not cause any significant side-effects or toxicities, and significantly reduced the expression of CTGF in a dose-dependent manner. These effects were also observed 84 days after a single dose in its Phase Ia clinical trial, suggesting a potent and long-lasting effect on the key biomarker for abnormal scarring. With a 43% knockdown rate, the treatment silences CTGF enough to reduce scarring without inhibiting wound healing.

President and CEO, Dr. Geert Cauwenbergh commented on the results, saying, "The work done in the last year has confirmed that our proprietary self-delivering RNAi technology (sd-rxRNA) reduces CTGF mRNA in humans in line with its mechanism of action. Indeed, results from this second study demonstrate that mRNA for CTGF in the incisions is reduced in a dose-dependent manner by RXI 109 as compared to placebo. Our first Phase 1 study had already shown that a single dose of the drug lowered the actual protein content for CTGF also in a dose-dependent manner. With this exciting outcome, we are ready to embark on Phase 2 development in patients with hypertrophic scars and keloids."

RXI-109 has the blockbuster potential to become a first-in-class treatment for the reduction of dermal scarring. With over 35 million surgical procedures in the U.S. each year and an aging population, there is a large and growing market for treatments to reduce dermal scarring.

Valuing the sd-rxRNA Deliver Platform

RXi Pharmaceuticals' RXI-109 is the first treatment developed using its proprietary sd-rxRNA delivery platform. By building drug-like properties into the RNAi compound, the approach enables spontaneous cellular uptake without the need for a delivery vehicle.

The company's scientists have shown in vitro and in vivo that sd-rxRNA's built-in drug-like properties enable systemic delivery in any tissue that's reachable. Using hybrid oligonucleotide compounds, the platform combines the best aspects of traditional RNAi and single-stranded antisense RNA approaches to provide high potency, target specificity, serum stability, reduced immune response activation, and efficient cellular uptake.

These properties suggest that the delivery platform could become the basis for a pipeline of clinical programs spanning a wide range of diseases and conditions. In fact, the platform is already being leveraged in the company's ophthalmology franchise that it acquired from OPKO Health Inc. (NYSE: OPK) that is targeting vascular endothelial growth factor ("VEGF"). Other clinical targets include liver fibrosis ("RXI-209") and CNS diseases like ALS.

The sd-rxRNA platform is protected by a wide body of intellectual property, including 11 patent families covering rxRNA compounds and technologies. With the acquisition of OPKO's assets in March of 2013, the company added rights to 97 patents and 62 patent applications, primarily in the ophthalmology space. These patents both protect the firm's existing technologies and set the stage for future potential licensing opportunities as RNAi becomes more established.

Potential Investment Opportunity

RXi Pharmaceuticals' real potential lies in licensing opportunities stemming from its potential clinical pipeline built atop the sd-rxRNA platform. With RXI-109 Phase II clinical trials starting soon, the company will have the opportunity to prove that it's sd-rxRNA platform works as-advertised. Success in these trials could transform the company from a single-product to a platform play by opening up its licensing potential in numerous other markets.

Investors in the RNAi space may want to take a closer look at the company as it progresses towards Phase II clinical trials for RXI-109 and pursues licensing opportunities in the space.

More Information

  1. Company Website

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Additional disclosure: TDM Financial is a marketing and consulting firm that specializes in creating ongoing communications strategies for public and private companies. For full disclosure please visit: