RXi
Pharmaceuticals Corporation RXII
RXi Pharmaceuticals Corporation
(NASDAQ:RXII) is a publically traded pharmaceutical company that focuses on
developing and exploring innovative solutions for unmet medical needs,
especially in the areas of dermatology and ophthalmology. RXi's robust product
line as well as extensive patent portfolio offers business development
opportunities across a diverse spectrum.
The company's primary therapeutic product
is RXI-109 that helps reduce dermal scarring in planned surgeries. The company
was established on September 8, 2011 with headquarter located in Westborough,
MA.
Financial Performance
RXI Pharmaceutical stock share prices have
been on a continuous decline since March this year. The share prices of the
biotechnology company have decreased by 80% this year with a few rallies. The
companies Q3 reports showed a net loss of $2.2 million or $0.17 per share. The
actual earning of the company, which actually beat investors estimate by $0.05
per share, does not matter much as the company is in the expansionary stage.
RXI's earnings growth last year stayed in
the green zone and increased by 72.57%. This year also the earnings of the
Pharmaceutical company had increased with a gain of around 72.78%.
The company's price/revenue in fact is a
healthy 507.42. Market cap of the company is 32.47 million while the
outstanding shares amount to 64.95 million. Considering that the company is in
the growth stage with heavy investments, its EPS is not that bad, and at
present stands at -0.45.
The company spent $1.5 million dollar this
quarter as compared to $1.2 million in research and development. Most of the
spending has gone towards pre-clinical ophthalmology studies for research in
new drug application. General and administrative expenses of the company have
declined this quarter from $0.8 million from $0.9 million a year ago. The
average to high cash burn estimate was $2.5 million a quarter, which shows that
the company has sufficient cash to last them through Q4 this year. The burn
rate of $2.5 million per quarter total $14.8 million in cash at hand and
another 27.4 million if all the warrants are exercised.
Upcoming Catalysts
There are several upcoming potential
catalysts that could increase the share price of the company. The company is
going to be filing an IND for RXI-109, a drug that prevents retinal scarring
due to macular degeneration. At the present, there are many biotech companies
that are working on the same drug, but none of them are effective in combating
scarring that occurs due to the disease.
For instance, the Regeneron
Pharmaceuticals' (NASDAQ:REGN)'s Eylea is macular degeneration drug that uses
anti-VEGF compound to slow macular degeneration and amount of vision loss.
However, anti-VEGF drugs are not effective against scarring of the blood
vessels that occurs due to the disease.
Moreover, another catalyst for the company
could be partnership CNS (Central Nervous System) partnership mentioned by the
CEO of the company. A partnership in this field will boost revenues of the
company by validating the sd-rxRNA platform. The potential of the partnership
is similar to the Mirimmune deal RXi had made back in March this year.
The final catalyst that would boost
revenues of the company include results from the phase 2a scar trials. At the
moment two phase 2a scar trials and one phase 2a keloid trial is in the
process. The results of the trials have the potential to offer superior scar
treatment due to macular degeneration.
Recently the company had announced
exclusive global licensing agreement with Hapten
Pharmaceuticals LLC to acquire
its product Samcyprone. Under the license agreement, the company will assign to
RXi patent rights relating to the drug that is used as a topical treatment of
dermatological diseases. It had also announced completion of the RXI-109-1301
study, as well as positive results of RXI-109 at three months post scar
treatment surgery. These moves are expected to greatly boost revenues of the
company.
Final Remarks!
RXI PHARMACEUTICALS CORP (RXII) is an undervalued
biotech company that keeps building its pipeline for future growth. Although,
the stock prices have generally shown a downward trend since March, this year,
we think that this particular stock will rise from the ashes and go beyond (or
at least retain) its former price point.
I maintain that the stock price of the
company this year could reach $3.5, and that it will remain an attractive
option as long as the share price is under $1.5. The conclusion is based on
favorable investment measures that will drive up its revenues, profits that
will have a positive impact on its stock prices.
Salman Aziz
