ITEM 2.
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MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
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In this
document, we, our, ours, us, RXi and the Company refer to RXi Pharmaceuticals Corporation.
This managements discussion and analysis of financial condition as of June 30, 2014 and results of operations for the three and six months ended
June 30, 2014 and 2013 should be read in conjunction with the financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2013 which was filed with the SEC on March 28, 2014.
This report contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements can
be identified by words such as intend, believe, indicate, plan, expect, may, should, designed to, will and similar references. Such
statements include, but are not limited to, statements about: our ability to successfully develop RXI-109 and our other product candidates; the timing and future success of our clinical trials with RXI-109; our expectation that we will complete our
Phase 2 clinical trials for RXI-109 within anticipated time periods and budgets; our ability to implement cost-saving measures and statements about other future expectations. Forward-looking statements are neither historical facts nor assurances of
future performance. These statements are based only on our current beliefs, expectations and assumptions regarding the future of our business, future plans and strategies, projections, anticipated events and trends, the economy and other future
conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of our control. Our actual results and
financial condition may differ materially from those indicated in the forward-looking statements. Therefore, you should not rely on any of these forward-looking statements. Important factors that could cause our actual results and financial
condition to differ materially from those indicated in the forward-looking statements include, among others: the risk that our clinical trials with RXI-109 may not be successful in evaluating the safety and tolerability of RXI-109 or providing
preliminary evidence of the reduction of formation of surgical scars; the successful and timely completion of clinical trials; uncertainties regarding the regulatory process; the availability of funds and resources to pursue our research and
development projects, including our clinical trials with RXI-109; and those identified in our Annual Report on Form 10-K for the year ended December 31, 2013 under the heading Risk Factors, and in other filings the Company
periodically makes with the Securities and Exchange Commission. Forward-looking statements contained in this Quarterly Report on Form 10-Q speak as of the date hereof and the Company does not undertake to update any of these forward-looking
statements to reflect a change in its views or events or circumstances that occur after the date of this report.
Overview
We are a biotechnology company focused on discovering, developing and commercializing innovative therapies based on our proprietary,
next-generation RNAi platform. Therapeutics that use RNA interference, or RNAi, have great promise because of their ability to silence, or
12
down-regulate, the expression of a specific gene that may be over-expressed in a disease condition. The Companys first RNAi product candidate, RXI-109, commenced human clinical trials in
2012. RXI-109 targets connective tissue growth factor (
CTGF
), a key regulator of fibrosis and scar formation, and is initially being developed to reduce or inhibit scar formation in the skin following surgery. The Companys
pipeline includes a clinical program in anti-scarring, a pre-clinical program in ophthalmology and a discovery program to identify other potential sd-rxRNA
®
lead compounds and targets, as well
as those that target other key enzymes in dermatology and ophthalmology, from the RNAi-related assets acquired from OPKO Health, Inc. (
OPKO
).
By utilizing the expertise in RNAi and the comprehensive RNAi platform that we have established, we believe that we have discovered and will
be able to discover and develop lead compounds and progress them into and through clinical development for potential commercialization. Our proprietary therapeutic platform is comprised of novel RNAi compounds, referred to as rxRNA
®
compounds, that are distinct from, and we believe convey significant advantages over, conventional siRNA (conventionally-designed small interfering RNA compounds), and offer many of
the properties that we believe are important to the clinical development of RNAi-based drugs. We have developed a number of unique forms of rxRNA compounds, all of which have been shown to be highly potent both
in vitro
and in preclinical
in vivo
models. These RNAi compounds include rxRNAori
®
and sd-rxRNA, or self-delivering RNA. Based on our research, we believe that these different, novel siRNA
configurations have various potential advantages for therapeutic use. These potential advantages include high potency, increased resistance to nucleases and modifications to eliminate off-target effects, and, in the case of the sd-rxRNA compounds,
access to cells and tissues with no additional formulation required, and, hence, reduced toxicity, which is known to be an issue with unmodified siRNAs.
Clinical Development Program
Our lead clinical product candidate is RXI-109, a self-delivering RNAi compound (sd-rxRNA) being developed for the reduction of dermal
scarring. RXI-109 is designed to reduce the expression of CTGF, a critical regulator of several biological pathways involved in scarring and fibrotic diseases. RXI-109 is being developed to prevent or reduce dermal scarring following surgery or
trauma, as well as for the management of hypertrophic scars and keloids.
In June 2012, we initiated our first clinical trial of RXI-109,
known as Study 1201. Study 1201 was designed to evaluate the safety and tolerability of several single-dose levels of RXI-109 in humans. Study 1201 enrolled fifteen subjects in a single-center, randomized, single-dose, double-blind, ascending dose,
within-subject controlled study of RXI-109 for the treatment of incision scars, during which single, intradermal injections of escalating doses were administered. Subjects received an injection of RXI-109 in two separate areas on the abdomen and
placebo injections in two other areas of the abdomen, followed by a small incision at each injection site. RXI-109 was well tolerated by intradermal injection. No serious local or systemic side effects were observed in the subjects at any of the
doses administered, and maximum systemic exposure after intradermal administration was assessed at approximately 5% of the total dose administered. In this study, RXI-109 showed excellent safety and tolerability with ascending single doses and
significantly reduced the expression of CTGF protein in the wounded area in a dose-dependent manner 84 days after a single dose, suggesting a potent and long lasting effect on this key biomarker for abnormal scarring.
In December 2012, we initiated a second Phase 1 clinical trial with RXI-109, known as Study 1202. Study 1202 was designed to evaluate the
safety and tolerability of multi-dose administration of RXI-109 in healthy volunteers, including an evaluation of surrogate end points of clinical efficacy. In total, Study 1202 enrolled fifteen subjects (5 cohorts of 3 subjects each) in a
single-center, randomized, multi-dose, double-blind, ascending dose, within-subject controlled study of RXI-109 for the treatment of incision scars. Eight small skin incisions were made in their abdomen and subjects received treatment with RXI-109
at the four incision sites on one side of the abdomen and placebo treatment at the four incision sites on the other side of the abdomen. Treatments were given by three intradermal injections over a 2-week period. Subjects were monitored for safety
and local and systemic effects over a total study period of 84 days. Multiple dermal injections were well tolerated at all dose levels. Treatment with RXI-109 demonstrated a trend for dose-dependent silencing of CTGF mRNA in the treated areas,
resulting in 43-50% reduction of CTGF mRNA levels compared to the placebo when measured three days after the last dose. In one of two highest-dose cohorts, the dosing period was delayed by two weeks after the incisions were made. No additional
benefit was seen on mRNA reduction.
Based on the safety profile shown in our two Phase 1 clinical trials, we initiated a Phase 2 clinical
trial for RXI-109 in November 2013 known as Study 1301. In this study, patients with a long hypertrophic scar in the lower abdominal area are eligible to receive scar revision surgery and subsequent treatment with RXI-109 in one of two treatment
regimens. Hypertrophic scars are abnormal scars that are raised above the normal skin surface and can be reddened or darker than the existing skin tone. These scars result in part from an increased level of collagen and are less elastic
than the surrounding skin. With this study, patients receive RXI-109 and placebo on a blinded basis at the distal ends of their revised scar, leaving a central untreated section of the scar. Each patients revised scar area will provide the
opportunity to compare the appearance of the revised areas after treatment with RXI-109 or placebo or when left untreated. This design allows for intra-subject comparison of the three revised scar segments, thereby increasing the power of the study.
The Company expects to get an early read-out, on the first two cohorts, of possible clinical effect of RXI-109 on a blinded basis before the end of 2014.
The Company initiated a second Phase 2 clinical trial for RXI-109 in April 2014 for treatment to prevent keloid recurrence in patients
undergoing keloidectomy (removal of a keloid). Keloids are raised and reddened or darkened scars resulting from increased collagen production, but keloids often spread beyond the original site of skin injury and may continue to grow in size. Keloids
can result from skin trauma as common as an ear piercing or vaccination and may grow to cover large areas. Keloids are sometimes removed by surgical revision, but recurrence rates are as high as 50-80%. In this study, known as Study
1401, patients with two keloids of similar size and location are selected for keloidectomy. After this procedure, the lesions are closed and one is treated with RXI-109, and the other is treated with placebo. This second Phase 2 study will follow
patients for six months to evaluate the clinical evolution of the lesions, which, in these patients, have a high risk for recurrence of keloids.
The Company further expanded its clinical program with the initiation of a third Phase 2 clinical trial with RXI-109 for the treatment of
hypertrophic scars in July 2014. This study, called Study 1402, will enroll patients with either one long hypertrophic scar, or two scars comparable in length, anatomical location and characteristics for scar revision surgery. For a single scar, a
portion of the revised scar segment will be treated with RXI-109 and a comparable sized length on the opposite end of the excised scar segment will be left untreated. If two scars are revised, a portion of one revised scar segment will be treated
with RXI-109 and one scar will be left untreated after revision surgery. Study 1402 will follow patients for nine months to evaluate the effectiveness of RXI-109 in preventing scar formation.
13
Ophthalmology Preclinical Programs
While focusing our efforts on our RXI-109 development program, we also intend to continue to advance our ophthalmology franchise both on our
own and through collaborations with academic and corporate third parties. The current areas of focus for the Company are retinal scarring and other ocular fibrosis disorders, neovascularization and retinoblastoma. For example, retinal scarring in
proliferative vitreoretinopathy (
PVR
) occurs in approximately 8-10% of patients as a complication of retinal detachment. In age-related macular degeneration (
AMD
), a leading cause of severe visual impairment in
people over age 50, blood vessels grow into the retina (neovascularization) and disrupt vision. Current available therapies for AMD rely on suppression of vascular endothelial growth factor (
VEGF
) to address the neovascularization
component of AMD, but not the subsequent retinal scarring that often occurs over time. Treatment with RXI-109 to reduce retinal scarring along with current standard of care options or our own VEGF sd-rxRNA could provide benefit to these patients.
Retinoblastoma is a childhood cancer that originates in the retina. If not detected early, retinoblastoma can lead to loss of the affected eye or death. Early intervention often involves the use of chemotherapy and can be successful in preserving
the eye. Development of an sd-rxRNA that could block the growth of the retinoblastoma tumor is underway and could potentially be of great benefit.
Current programs in the discovery and preclinical stages include:
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a Small Business Innovation Research grant to evaluate and develop sd-rxRNAs as potential therapeutics for the treatment of retinoblastoma; and
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a collaboration evaluating the potential to use a CTGF-targeting sd-rxRNA as a therapeutic to reduce or inhibit retinal scarring, which often occurs as a consequence of some retinal diseases and following retinal
detachment.
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We have preclinical data
in vivo
in retinal scarring and retinoblastoma and have completed a dose-range
finding ocular toxicity study for RXI-109 in non-human primates. In May 2014, we announced results from the assessment of CTGF protein levels following intravitreal injection of RXI-109 in the eyes of cynomolgus monkeys as part of a dose-range
finding study. Intravitreal administration of RXI-109 resulted in a reduction of CTGF protein levels in a dose-dependent manner in the retina, as well as in the cornea. The Companys projected next steps are to file an investigational new drug
application (
IND
) for the use of RXI-109 as an ocular therapy to reduce the formation of retinal scarring after we obtain the results of the upcoming ocular toxicity studies. The new IND will cross-reference the current RXI-109
anti-scarring IND.
Discovery Program
In March 2013, the Company entered into an asset purchase agreement with OPKO pursuant to which we acquired substantially all of OPKOs
RNAi-related assets, including patents, licenses, clinical and preclinical data and other related assets. The assets purchased from OPKO are at an early stage of development and the Company has established a program to identify potential sd-rxRNA
lead compounds and targets from the assets acquired, as well as those that target other key enzymes in dermatology and ophthalmology, with a focus on Bevasiranib. Development of Bevasiranib, a VEGF-targeting siRNA for the treatment of wet
age-related macular degeneration, was halted by OPKO in Phase 3. Wet age-related macular degeneration is a late form of age-related macular degeneration and is the leading cause of severe visual impairment in people over age 50. We are working to
improve Bevasiranib by converting it to our proprietary sd-rxRNA format which would allow effective cellular uptake and activity in the retina. Reduction of VEGF in the retina of the eye is known to reduce the neovascularization in wet age-related
macular degeneration. We also intend to pursue evaluation of other targets and compounds in the acquired OPKO portfolio.
Future
Potential Applications of RXI-109
Overexpression of CTGF is implicated in dermal scarring and fibrotic disease, and because of this,
we believe that RXI-109 or other CTGF-targeting RNAi compounds may be able to treat other fibrotic indications, including pulmonary fibrosis, liver fibrosis, acute spinal injury, ocular scarring, joint fibrosis and vascular restenosis. If the
current clinical trials of RXI-109 produce successful results in dermal anti-scarring, we may explore opportunities in these additional indications, as well as other possible dermatology applications (e.g., cutaneous scleroderma).
Market Opportunity
There
are currently no FDA-approved therapeutics in the United States for the treatment and prevention of scars in the skin. However, there are over 42 million procedures in the United States each year that could potentially benefit from a
therapeutic treatment that could successfully reduce or prevent scarring; thus, the market potential is quite large. According to the American Society for Plastic Surgery, there were 177,000 scar revision surgeries alone in 2013
1
. In addition to cosmetic and reconstructive surgeries, medical interventions which could incorporate an anti-scarring agent include scarring that results from trauma, surgery or burns (especially
relating to raised or hypertrophic scarring or contracture scarring), surgical revision of existing unsatisfactory scars, and in the treatment, removal and inhibition of keloids (scars which extend beyond the original skin injury).
In November 2013, we signed a distribution agreement with Ethicor Ltd. (
Ethicor
), a UK-based unlicensed medicinal products
(
Specials
) pharmaceutical company. The agreement provides Ethicor with the distribution rights to RXI-109 in the European Union, with the possibility to negotiate in the future to extend such rights to other regions of the world,
excluding the United States, Canada and Mexico. If approved for commercialization, Ethicor will pay us a double-digit percentage of any gross profits from its sales of RXI-109. Ethicors distribution rights continue until the agreement is
terminated; provided, however, that should we obtain marketing authorization for RXI-109 in any of the countries covered by the agreement, we have the option to terminate the agreement with respect to each such country in which marketing
authorization has been obtained. Under the European medicines legislation (Directive 2001/83/EC, Article 5(1)), we expect that Ethicor will be able to supply, prior to regulatory approval, RXI-109 as a Special drug. A Special
drug may be requested by an authorized
14
health-care professional to meet the special needs of an individual patient under their direct responsibility. The collaboration is important for health-care professionals and patients who can
get safe controlled early access to a development drug and is a significant milestone for the Company, not only in possible early revenue, but as increased exposure to RXI-109 may be key in accelerating the development of our drug. The Company has
not yet generated product revenue and expects minimal revenue during the early stages of the distribution agreement with Ethicor.
Research and
Development
To date, our research programs have focused on identifying product candidates and optimizing the delivery technology
necessary to make RNAi compounds available by local administration for diseases for which we intend to develop an RNAi therapeutic. Since we commenced operations, research and development has comprised a significant proportion of our total operating
expenses and is expected to comprise the majority of our spending for the foreseeable future.
There are risks in any new field of drug
discovery that preclude certainty regarding the successful development of a product. We cannot reasonably estimate or know the nature, timing and costs of the efforts necessary to complete the development of, or the period in which material net cash
inflows are expected to commence from, any product candidate. Our inability to make these estimates results from the uncertainty of numerous factors, including but not limited to:
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Our ability to advance product candidates into preclinical research and clinical trials;
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The scope and rate of progress of our preclinical program and other research and development activities;
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The scope, rate of progress and cost of any clinical trials we commence;
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The cost of filing, prosecuting, defending and enforcing patent claims and other intellectual property rights;
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Clinical trial results;
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The terms and timing of any collaborative, licensing and other arrangements that we may establish;
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The cost and timing of regulatory approvals;
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The cost of establishing clinical and commercial supplies of our product candidates and any products that we may develop;
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The cost and timing of establishing sales, marketing and distribution capabilities;
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The effect of competing technological and market developments; and
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The effect of government regulation and insurance industry efforts to control healthcare costs through reimbursement policy and other cost management strategies.
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Failure to complete any stage of the development of our product candidates in a timely manner could have a material adverse effect on our
operations, financial position and liquidity.
Critical Accounting Policies and Estimates
There have been no significant changes to our critical accounting policies since the beginning of this fiscal year. Our critical accounting
policies are described in the Managements Discussion and Analysis of Financial Condition and Results of Operations section of our Annual Report on Form 10-K for the year ended December 31, 2013, which we filed with the SEC on
March 28, 2014.
Results of Operations
The following data summarizes the results of our operations for the periods indicated, in thousands:
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Three Months Ended
June 30,
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Six Months Ended
June 30,
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2014
|
|
|
2013
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|
2014
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|
|
2013
|
|
Revenues
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|
$
|
12
|
|
|
$
|
225
|
|
|
$
|
41
|
|
|
$
|
278
|
|
Research and development expenses
|
|
|
(1,183
|
)
|
|
|
(1,213
|
)
|
|
|
(2,659
|
)
|
|
|
(14,985
|
)
|
General and administrative expenses
|
|
|
(850
|
)
|
|
|
(977
|
)
|
|
|
(1,693
|
)
|
|
|
(1,652
|
)
|
Operating loss
|
|
|
(2,021
|
)
|
|
|
(1,965
|
)
|
|
|
(4,311
|
)
|
|
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(16,359
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)
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Net loss
|
|
|
(2,006
|
)
|
|
|
(1,961
|
)
|
|
|
(4,290
|
)
|
|
|
(16,358
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)
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Net loss applicable to common stockholders
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$
|
(3,219
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)
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$
|
(4,360
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)
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$
|
(7,258
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)
|
|
$
|
(22,304
|
)
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1
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American Society of Plastic Surgeons Reports 15.1 Million Cosmetic Procedures in 2013; Marks Fourth Consecutive Year of Growth, American Society of Plastic Surgeons press release, February 26, 2014 on
the American Society of Plastic Surgeons Website, http://www.plasticsurgery.org/news/plastic-surgery-procedures-continue-steady-growth-in-us.html.
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15
Comparison of the Three and Six Months Ended June 30, 2014 and 2013
Revenues
To date, we have
generated revenues through government grants. The following table summarizes our total revenues from government grants, for the periods indicated, in thousands:
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Three Months Ended
June 30,
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Six Months Ended
June 30,
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|
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2014
|
|
|
2013
|
|
|
2014
|
|
|
2013
|
|
Grant revenues
|
|
$
|
12
|
|
|
$
|
225
|
|
|
$
|
41
|
|
|
$
|
278
|
|
|
|
|
|
|
|
|
|
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|
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Total revenues were approximately $12,000 for the three months ended June 30, 2014, compared with
$225,000 for the three months ended June 30, 2013. The decrease of $213,000, or 95%, was due to the number of the Companys outstanding government grants and a reduction of work related to the grants during the three months ended
June 30, 2014 as compared with the same period in the prior year.
Total revenues were approximately $41,000 for the six months ended
June 30, 2014, compared with $278,000 for the six months ended June 30, 2013. The decrease of $237,000, or 85%, was due to the number of the Companys outstanding government grants and a reduction of work related to the grants during
the six months ended June 30, 2014 as compared with the same period in the prior year.
The Company had $78,000 of deferred revenue
at June 30, 2014, which consists of receipt of grant awards from the government, but which we have not yet recognized, pursuant to our revenue recognition policies, as the work has not been completed.
For the foreseeable future, we expect our revenue to continue to be derived primarily from government grants and we expect the amount of our
grant revenue to fluctuate period to period.
Operating Expenses
The following table summarizes our total operating expenses, for the periods indicated, in thousands:
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Three Months Ended
June 30,
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Six Months Ended
June 30,
|
|
|
|
2014
|
|
|
2013
|
|
|
2014
|
|
|
2013
|
|
Research and development expenses
|
|
$
|
1,183
|
|
|
$
|
1,213
|
|
|
$
|
2,659
|
|
|
$
|
14,985
|
|
General and administrative expenses
|
|
|
850
|
|
|
|
977
|
|
|
|
1,693
|
|
|
|
1,652
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|
|
|
|
|
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|
|
|
|
|
|
|
|
|
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Total operating expenses
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|
$
|
2,033
|
|
|
$
|
2,190
|
|
|
$
|
4,352
|
|
|
$
|
16,637
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|
|
|
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Research and Development Expenses
Research and development expenses consist of compensation-related costs for our employees dedicated to research and development activities,
fees related to our Scientific Advisory Board members, expenses related to our ongoing research and development efforts primarily related to our clinical trials, drug manufacturing, outside contract services, licensing and patent fees and laboratory
supplies and services for our research programs. We expect research and development expenses to increase as we expand our clinical, development and discovery activities.
Total research and development expenses were approximately $1,183,000 for the three months ended June 30, 2014, compared with $1,213,000
for the three months ended June 30, 2013. The decrease of $30,000, or 2%, was due to a decrease of $100,000 related to research and development expenses primarily due to costs for the manufacture of RXI-109 incurred during this period in 2013
offset by an increases of $18,000 in non-employee stock-based compensation expense related to the change in the fair value of options and $52,000 in employee stock-based compensation expense.
Total research and development expenses were approximately $2,659,000 for the six months ended June 30, 2014, compared with $14,985,000
for the six months ended June 30, 2013. The decrease of $12,326,000, or 82%, was primarily due to a decrease of $12,250,000 related to the one-time charge for the fair value of common stock issued in exchange for patent and technology rights
acquired from OPKO in March 2013, a decrease of $138,000 in employee stock-based compensation expense and a decrease of $7,000 in non-employee stock-based compensation related to the change in the fair value of options offset by an increase of
$69,000 in research and development expense primarily due to a one-time milestone payment to Advirna, LLC upon the issuance of our first patent on March 4, 2014.
General and Administrative Expenses
General and administrative expenses consist primarily of compensation-related costs for our employees dedicated to general and administrative
activities, legal fees, audit and tax fees, consultants, professional services and general corporate expenses.
General and administrative
expenses were approximately $850,000 for the three months ended June 30, 2014, compared with $977,000 for the three months ended June 30, 2013. The decrease of $127,000, or 13%, was primarily due to decreases of $85,000 in general and
administrative expenses due to decreases in legal and consulting fees as compared with the same period in the prior year and $42,000 in employee stock-based compensation expense.
General and administrative expenses were approximately $1,693,000 for the six months ended June 30, 2014, compared with $1,652,000 for
the six months ended June 30, 2013. The increase of $41,000, or 2%, was primarily due to an increase in employee stock-based compensation expense.
16
Series A and Series A-1 Preferred Stock Dividends
The following table summarizes our Series A and Series A-1 Preferred Stock dividends for the periods indicated, in thousands:
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Three Months Ended
June 30,
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Six Months Ended
June 30,
|
|
|
|
2014
|
|
|
2013
|
|
|
2014
|
|
|
2013
|
|
Series A and Series A-1 Preferred Stock dividends
|
|
$
|
1,213
|
|
|
$
|
2,399
|
|
|
$
|
2,968
|
|
|
$
|
5,946
|
|
|
|
|
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Series A and Series A-1 Preferred Stock dividends were approximately $1,213,000 for the three months ended
June 30, 2014, compared with $2,399,000 for the three months ended June 30, 2013. The decrease of $1,186,000, or 49%, was due to changes in the Companys closing common stock price on the dividend payment dates and the number of
preferred shares earning dividends each quarter.
Series A and Series A-1 Preferred Stock dividends were approximately $2,968,000 for the
six months ended June 30, 2014, compared with $5,946,000 for the six months ended June 30, 2013. The decrease of $2,978,000, or 50%, was due to changes in the Companys closing common stock price on the dividend payment dates and the
number of preferred shares earning dividends each quarter.
The rights and preferences of the Series A and Series A-1 Preferred Stock and
the calculation of the dividend payable, are described further in Notes 4 and 5 of the financial statements.
Liquidity and Capital Resources
We expect to incur significant operating losses as we advance our product candidates through the drug development and regulatory process. We
have generated significant losses to date, have not generated any product revenue to date and may not generate significant product revenue in the foreseeable future, if ever. In the future, we will be dependent on obtaining funding from third
parties, such as proceeds from the issuance of debt, sale of equity, funded research and development programs and payments under partnership and collaborative agreements, in order to maintain our operations and meet our obligations to licensors.
There is no guarantee that debt, additional equity or other funding will be available to the Company on acceptable terms, or at all. If we fail to obtain additional funding when needed, we may be forced to scale back or terminate operations or to
seek to merge with or to be acquired by another company.
We had cash and cash equivalents of approximately $11.9 million as of
June 30, 2014, compared with approximately $14.4 million in cash, cash equivalents and short-term investments as of December 31, 2013.
On April 22, 2014, the Company entered into a purchase agreement with Lincoln Park Capital Fund, LLC (
LPC
), pursuant
to which the Company has the right to sell to LPC up to $20 million in shares of our common stock over the 30-month term of the agreement. Under the agreement, LPC purchased $2,000,000 in shares of our common stock on April 22, 2014 at $4.00
per share.
The Company believes that its existing cash and cash equivalents will be sufficient to fund the Companys operations,
including the current and the planned Phase 2 programs for RXI-109, into fiscal 2015.
Net Cash Flow from Operating Activities
Net cash used in operating activities was approximately $4,397,000 for the six months ended June 30, 2014 and was primarily due to the
Companys net loss and a decrease in accrued expenses and other current liabilities. Net cash used in operating activities was approximately $3,184,000 for the six months ended June 30, 2013 and was primarily due to the Companys net
loss as adjusted for non-cash expense for the fair value of common stock issued in exchange for technology rights. In addition, net cash used in operating activities is adjusted for other non-cash items to reconcile net loss to net cash used in
operating activities. These other non-cash adjustments consist primarily of share-based compensation and depreciation and amortization.
Net Cash
Flow from Investing Activities
For the six months ended June 30, 2014, net cash of $2,941,000 provided by investing
activities was primarily due to the maturity of $3,000,000 of the Companys short-term investments. Net cash used in vesting activities of $9,002,000 for the six months ended June 30, 2013 was primarily due to the purchase of $9,000,000 in
short-term investments.
Net Cash Flow from Financing Activities
Net cash provided by financing activities was approximately $1,977,000 for the six months ended June 30, 2014 and was
primarily due to net proceeds of $1,947,000 for the issuance of 600,000 shares of our common stock to LPC. For the six months ended June 30, 2013, net cash provided by financing activities was approximately $15,646,000 and was primarily due to
net proceeds of $15,651,000 received from the issuance of approximately 3.8 million shares of our common stock in a private offering during the prior year period.
Off-Balance Sheet Arrangements
We do not
have any off-balance sheet arrangements or relationships.
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