RXi Pharmaceuticals Reports Financial Results for the Second Quarter of 2012

RXi Pharmaceuticals Reports Financial Results for the Second Quarter of 2012

<0> RXi Pharmaceuticals CorporationTamara McGrillen, 508-929-3646 </0>

RXi Pharmaceuticals Corporation (OTC: RXII), a biotechnology company focused on discovering, developing and commercializing innovative therapies addressing major unmet medical needs using RNA-targeted and immunotherapy technologies, today reported its financial results for the quarter ended June 30, 2012.

"," said Dr. Geert Cauwenbergh, President and CEO of the company. He added that: "

As of June 30, 2012, RXi had cash and cash equivalents of approximately $7.6 million, compared with $0.6 million as of December 31, 2011. The increase in cash and cash equivalents from December 31, 2011 is primarily attributable to the net proceeds of approximately $8.1 million received from the issuance of the Company’s convertible preferred stock upon completion of the spin-off from the Company’s former parent company, Galena Biopharma, Inc. on April 27, 2012. The Company believes that the cash available at June 30, 2012 should be sufficient to fund RXi’s operations into the second quarter of 2013.

Net loss applicable to common stockholders for the three months ended June 30, 2012 was $17.2 million or $0.13 per basic and diluted share, compared with a net loss applicable to common stockholders of $1.9 million, or $0.05 per basic and diluted share, for the comparable period in 2011. RXi also reported a net loss applicable to common stockholders of $19.1 million, or $0.16 per basic and diluted share, for the six months ended June 30, 2012, compared with a net loss applicable to common stockholder of $5.7 million, or $0.19 per basic and diluted share for the comparable period in 2011. The increase in net loss applicable to common stockholders for the three and six months ended June 30, 2012 compared to the same periods in the prior year was primarily attributable to the non-cash dividend of $9.6 million relating to the beneficial conversion feature as a result of the issuance of convertible preferred stock on April 27, 2012 and non-cash expense of $6.2 million relating to the fair value of common stock issued in exchange for patent and technology rights.

Loss from operations increased to $7.7 million in the second quarter of 2012 from $2.8 million in the second quarter of 2011, and increased to $9.6 million for the six months ended June 30, 2012 compared to $8.1 million for the comparable period in 2011. This increase of $4.8 million, or 171%, in loss from operations for the quarter ended June 30, 2012 compared to the quarter ended June 30, 2011 was primarily due to $6.2 million related to the fair value of common stock issued in exchange for patent and technology rights. The increase of $1.5 million, or 18%, in loss from operations for the six months ended June 30, 2012 compared to six months ended June 30, 2011 was primarily the result of $6.2 million related to the fair value of common stock issued in exchange for patent and technology rights.

Research and development expenses were approximately $6.9 million for the three months ended June 30, 2012, compared with $1.8 million for the three months ended June 30, 2011. The increase of $5.1 million, or 283%, was primarily due to the fair value of common stock issued in exchange for patent and technology rights of $6.2 million and an increase of $0.05 million in non-employee non-cash stock based compensation primarily related to the changes in Black-Scholes assumptions offset by a decrease of $1.1 million in research and development expenses due to lower personnel costs and a decrease of $0.04 million in employee stock based compensation.

Research and development expenses were approximately $8.1 million for the six months ended June 30, 2012, compared with $3.9 million for the six months ended June 30, 2011. The increase of $4.2 million, or 108%, was primarily due to the fair value of common stock issued in exchange for patent and technology rights of $6.2 million and an increase of $0.2 million in non-employee non-cash stock based compensation primarily related to the changes in Black-Scholes assumptions offset by a decrease of $1.9 million in research and development expenses due to lower personnel costs and a decrease of $0.3 million in employee stock based compensation.

General and administrative expenses were approximately $0.7 million for the three months ended June 30, 2012, compared with $1.0 million for the three months ended June 30, 2011. The decrease of $0.3 million, or 30%, was primarily due to a decrease of $0.2 million in general and administrative expenses due to lower personnel related costs compared with the same period in the prior year and professional and outside services, a decrease of $0.1 million in employee stock based compensation offset by an increase of $0.01 million related to the fair value of common stock warrants issued in exchange for services.

General and administrative expenses were approximately $1.5 million for the six months ended June 30, 2012, compared with $4.2 million for the three months ended June 30, 2011. The decrease of $2.7 million, or 64%, was primarily due to a decrease of $1.5 million in general and administrative expenses due to lower personnel related costs compared with the same period in the prior year and professional and outside services, a decrease of $1.1 million in employee stock based compensation, a decrease of $0.02 million related to the fair value of our former Parent Company’s common stock issued for services, and a decrease of $0.08 million related to the fair value of common stock warrants issued in exchange for services.

The Company recorded $9.6 million in convertible preferred stock accretion and dividends in the three and six months ended June 30, 2012, which consists of $9.5 million related to the beneficial conversion feature of the convertible preferred stock that the Company has accreted to preferred dividends and $0.1 million in dividends payable on shares of our convertible preferred stock.

RXi Pharmaceuticals 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, will 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).

RXi Pharmaceuticals Corporation (OTC: RXII) is a biotechnology company focused on discovering, developing and commercializing innovative therapies based on its proprietary, next-generation RNAi platform. Therapeutics that use RNA interference, or “RNAi,” have great promise because of their ability to “silence,” or down-regulate, the expression of a specific gene that may be overexpressed in a disease condition. Building on the pioneering work of scientific founder and Nobel Laureate Dr. Craig Mello, RXi’s first RNAi product candidate, RXI-109, which targets CTGF (connective tissue growth factor), entered into a human clinical trial in June 2012 to evaluate its safety, tolerability and potential efficacy for scar prevention. For more information, please visit .

Virtual Clinical Trials Summit

Virtual Clinical Trials Summit: The Premier Educational Event Focused on Decentralized Clinical Trials

In this virtual environment, we will look at current and future trends for ongoing virtual trials, diving into the many ways companies can improve patient engagement and trial behavior to enhance retention with a focus on emerging technology and harmonized data access across the clinical trial system.