Revenues for the quarter ended September 30, 2012 were $0.1 million as compared with no revenues for the same period in the prior year. Revenues during the quarter related to the recognition of work completed on the Company’s government grants.
Research and Development Expense
Research and development expenses for the third quarter of 2012 were $1.2 million, compared with $1.1 million for the third quarter of 2011. The increase of $0.1 million as compared to the prior year period was primarily due to an increase of $0.05 million in research and development expenses to run the clinical trial for the Company’s RXI-109 program and an increase of $0.06 million in employee stock based compensation expense.
General and Administrative Expenses
General and administrative expenses for the third quarter of 2012 were $0.5 million, compared with $1.0 million for the third quarter of 2011. The decrease of $0.5 million was primarily due to a decrease of $0.3 million in general and administrative expenses due to lower personnel related costs, board fees and expenses, and professional outside services and a decrease of $0.2 million in employee stock based compensation.
Preferred Stock Accretion and Dividends
Accretion of Series A Preferred Stock and dividends was $1.3 million for the third quarter of 2012 compared with no accretion of Series A Preferred Stock and dividends for the third quarter of 2011. The $1.3 million relates to the fair value of the dividends paid to preferred shareholders during the third quarter of 2012.
- Receipt of a Small Business Innovation Research (SBIR) grant from the National Cancer Institute (NCI) of the National Institutes of Health (NIH): The grant provides approximately $300,000 in funding for a project enabling the discovery and preclinical development of sd-rxRNAs® as potential therapy for retinoblastoma, a pediatric ocular malignancy. The project will be completed in collaboration with Dr. David Cobrinik and colleagues at the Memorial Sloan-Kettering Cancer Center.
- Appointment of Scientific Advisory Board Members and re-appointment of Craig Mello, Ph.D., Nobel Laureate for the discovery of the RNAi mechanism, to the Company’s Scientific Advisory Board: RXi appointed Dr. Jeannette Graf and Dr. Leroy Young to the Company’s Scientific Advisory Board and re-appointed Craig Mello, Ph.D. to the Company’s Scientific Advisory Board. The addition of these two highly esteemed clinicians provides RXi with invaluable experience and clinical research expertise that are key to the ongoing development of the Company’s RXI-109 program.
- Completion of dosing in Phase 1 Trial for RXI-109 Program: Dosing with the Company’s first product candidate, in its first Phase 1 study, was completed during September 2012. 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. Fifteen subjects were enrolled in a double-blind dose, escalation study during which single intradermal injections were administered in a dose dependent manner to 5 cohorts of 3 subjects each. Subjects received an injection of RXI-109 in 2 separate areas on the abdomen and placebo injections in two other areas of the abdomen. Data on safety and tolerance were collected and evaluated for each cohort before moving to the next cohort with a higher dose level. 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.
RXi Pharmaceutical’s first clinical program centers around RXI-109, a self-delivering RNAi compound (sd-rxRNA®) developed by RXi for the reduction of dermal scarring in planned surgeries. RXI-109 is designed to reduce the expression of CTGF (connective tissue growth factor), a critical regulator of several biological pathways involved in fibrosis, including scar formation in the skin. The first clinical trial of RXI-109, initiated in June 2012, has been designed to evaluate the safety and tolerability of several dose levels of RXI-109 in humans and may provide preliminary evidence of surgical scar reduction. As there are currently no FDA-approved drugs to prevent scar formation, a therapeutic of this type could have great benefit for trauma and surgical patients (especially relating to raised or hypertrophic scarring), as a treatment during the surgical revision of existing unsatisfactory scars, and in the treatment, removal and inhibition of keloids (scars which extend beyond the original skin injury).