Special Report


Biotech with Transformative RNAi Delivery System Set for Multiple Catalysts by Year-End

With data from multiple studies due out this quarter, this biotech's RNA interference delivery platform has the potential to transform treatments for indications from cancer to ophthalmology, says Dr. Geert Cauwenbergh, President and CEO of RXi Pharmaceuticals, Dr. Gerrit Dispersyn, RXi's Chief Development Officer, and Dr. Karen Bulock, Vice President of Research at RXi.

Management Q&A: View From the Top

The Life Sciences Report: How far has RXi Pharmaceuticals Corp. (RXII:NASDAQ) come in the last 10 years?

Geert Cauwenbergh: Since the codiscovery of RNAi by Dr. Craig Mello, the field has had to overcome many development hurdles. In the beginning, the main issue was efficient delivery of RNAi compounds to tissues and cells. RXi took the time to examine the delivery aspect and developed a technology platform where delivery and therapeutic properties are built directly into the compound. This development is a major breakthrough in the field and we have broadly protected the intellectual property (IP) around it, which laid the foundation for development as a company.

We began operations about five years ago and the company decided to explore a skin indication as the first clinical development program, because you can see and feel skin. We initiated a clinical program in dermatology with our lead compound, RXI-109.

Approximately one year later, with additional capital added to the balance sheet, we expanded our clinical development to ophthalmic indications. Because our compounds are delivered locally, they avoid delivery challenges of systemic RNA-based drugs. Local administration to the eye is one of the many therapeutic areas where our sd-rxRNA technology can serve large unmet needs.

At the beginning of 2017, RXi acquired a small company called MirImmune Inc., which had out-licensed our technology platform to modify cells ex vivo in the immuno-oncology cell therapy space. The results of MirImmune's studies demonstrated that our sd-rxRNA is the best RNAi technology for enhancement of cell-based therapeutics, which is the basis of RXi's newly launched immune-oncology program.

Over the course of the last few years, we have shown that our technology platform is proven safe and well tolerated in a clinical setting in both our dermatology and ophthalmology trials. With the acquisition of MirImmune completed, we are excited to be rapidly expanding into the immuno-oncology cell therapy area.

TLSR: Right now, there isn't an approved therapy that involves RNAi, correct? Is that the next inflection point?

GC: The first approval will, of course, be a major inflection point for the RNAi space. When you look at self-delivering RNAi, being able to transfect therapeutic immune cells and improve their efficacy as a result of the treatment that we give to those cells may be another inflection point—its capability to extend survival for cancer patients.

But the big market inflection point is going to be the first approval. Considering Alnylam Pharmaceuticals Inc. (ALNY:NASDAQ) and Quark Pharmaceuticals Inc. are both in late-stage Phase 3 clinical trials, and in light of Alnylam's recent results from its APOLLO Phase 3 trial, approval of an RNAi compound in the near future appears likely.

Karen Bulock: Because we are working in the immunotropic and oncology areas and we are using this RNAi platform as a unique improvement for cell therapies, it's important to mention the recent approval that was actually a very major inflection point, the first approval of cell therapy, the CD-19 chimeric antigen receptor (CAR) coming from Novartis AG (NVS:NYSE), and the probably soon-to-happen approval of the Kite Pharma (KITE:NASDAQ) therapy.

TLSR: How far away do you think you are from a drug approval in the RNAi field?

GC: When it comes to using our drugs for dermatology and ophthalmology indications, the first approval is probably three, four years away from the market.

If we were to look at cell therapy, however, it could be a more streamlined path because cells today are being used already as therapy. Manipulating stem cells is certainly something we can do with our compounds now, so it could become part of a cell therapy treatment.

As Karen just pointed out, there are now approved CAR T-cells from Novartis, so us improving those CAR T-cells in their therapeutic yields by adding our compounds could also go faster, because it would be an addition to an approved protocol.

Gerrit Dispersyn: The time to market really depends on what indication you're looking at. If you're looking at immuno-oncology, there are several opportunities for accelerated regulatory pathways with the FDA and other regulatory bodies.

As Geert has mentioned, the inflection point from our technology is, especially on the immuno-oncology side, at the right time because of the recent approvals of cell-based immuno-oncology products and the compatibility of our technology. We have a self-delivering technology, and delivery was one of the key roadblocks for RNAi technology.

Now the questions are, what is the most interesting indication, and where is there a perfect synergy between development, unmet clinical needs and our technology? I think immuno-oncology would be quicker than more traditional indications, such as dermatology and ophthalmology, and that is one of the reasons we're saying that we want to jump on the bandwagon of the immuno-oncology space as it develops and accelerates. We feel we may benefit from that acceleration as well.

With our other targeted indications, the development timeline is expected to be longer. This is because these indications would not fit the criteria for an expedited regulatory review, such as a "fast track" designation. We would expect to have more "traditional" development going through all of the phases, whereas in immuno-oncology, as you can see from information from the public domain on the Novartis approval, you could potentially get an approval with very limited preclinical and clinical data. In essence, the first CAR-T therapeutic got approved without the need for an extensive Phase 3 study. Instead, the decision was based on Phase 2 data.

TLSR: If your dermatology trials don't read out as planned, what's your next step?

GC: We do not expect the readout to be dramatically different from what we have already seen. If trials don't read out as planned, we already know that we've shown that the safety is there with chronic use. We already have shown differences between treated and untreated scars. We will have to wait for the final analysis of the complete dataset to know what it means in terms of statistical significances, but I cannot imagine that the final readout would contradict what we have already seen.

The ophthalmology trial is a Phase 1/2 trial. This means we are primarily looking at safety and tolerability. Because all patients have been enrolled and have had the injections, we already know that the patients have tolerated the treatment well. We will be able to report on some secondary parameters for efficacy as well at the end of the study. But based on the information to date, RXI-109 is safe and well tolerated in this indication as well.

Those studies are going to help us make the case with potential partners, which can help us in continuing development in those indications. But these studies also help us establish direct safety in humans, which supports development of the platform in additional areas. We've shown, in our cell therapy studies, that we have pretty much 100% transfectability, but also 100% cell survival at the concentrations we are using. Those are concentrations that hit the biological endpoints we are looking for in the cells—checkpoint inhibition, etc.—and we have proven that with higher doses in humans, the compounds are safe.

Whatever the outcome is of the studies, it's not going to impact the future of the self-delivering RNAi technology.

TLSR: Does that safety extend to the immuno-oncology side of things? Can you extrapolate what you're seeing in ophthalmology and in dermatology to cell therapy in terms of safety? Is that why MirImmune and you have developed this partnership?

KB: This is an important question. There are two parts to the safety of cell-based treatments. One has to do with using RNAi compounds as part of the cell therapy. From that perspective, it's important to know what happens with them in vivo—in the body—and it's also very important that we have demonstrated before, with the ophthalmology and dermatology studies, that this class of compounds is safe in humans—and, as Geert said, safe at much higher doses. This is important information that supports the idea that we are going into humans with safe compounds.

The other part is that by treating cells ex vivo with RNAi compounds, we are introducing certain changes in the cells—for example, we're suppressing certain proteins. How that affects the safety of the cell therapy still needs to be checked, so this is part of our preclinical development.

TLSR: How will a positive or negative readout affect your plans in immuno-oncology?

KB: If it happens that the readouts in the dermatology studies are not as expected, I would say that it has little, if any, effect on the immuno-oncology plans.

GD: Whenever you get a question around a negative or a positive readout, people have typically the mindset to only talk about efficacy. Even if you talk about efficacy, you cannot forget about the safety side. So I agree with Geert that regardless of the efficacy outcomes of our ongoing studies, preclinical and clinical data collected so far is indicating a very favorable safety and tolerability profile.

On the efficacy side, the most important thing that we're looking at this stage of development is a proof of concept, really looking at whether our compounds can indeed trigger a change of behavior of cells and tissues. That is what we're seeing. The interim data that were already reported by the company show that that is absolutely a fact. And it is very important to show that the concept of our compounds to change the expression level of one protein can trigger significant local effects.

To the level that that local effect is considered enough or not enough, the beauty is a little bit in the eye of the beholder. Again, the bar for what is enough is probably different for a life-threatening disease than for a disease that's not life-threatening. In immuno-oncology, if you can extend the life of patients by a few months or half a year, that would be very well accepted. If you are changing a very benign cosmetic indication to certain levels, people's expectations are likely different.

Overall, I would say that study readouts are never as binary as black and white. With data collected so far on our technology platform, we have a lot of information collected that allows us to move with confidence in different areas, whether that's immuno-oncology or building further on ophthalmology or dermatology. All those options remain open.

TLSR: Researchers at New York University's Tandon School of Engineering have developed engineered genetic material designed to neutralize gene-conferring resistance to the chemotherapy drug. They used a lipid container to support the cargo past the cell membrane. How does this compare with what you're developing?

GC: Well, from the 30,000-foot view, it doesn't compare at all because we are not using any vehicles to deliver. We use a compound that gets into the cell that is appreciated by the cell membranes.

The problem in general with lipidic-type containers in contact with living cells and cell membranes is that lipids in the formulation can disturb cellular membranes. The cargo gets delivered, but at the same time, the interaction between the lipids and the cell membranes results in cellular toxicity.

When we look at other delivery systems for RNAi compounds that use lipids, cell viability usually is lower. Some of the toxicity associated with that kind of compounds is derived from the lipidic vehicle, not from the RNAi, which usually is highly specific and should have very few side effects on its own.

GD: It's always interesting to see that other people are thinking about similar application areas for RNAi technology. The fact that these researchers were targeting oncology is endorsing our thoughts around the use of RNAi technology in oncology as definitely a good application area with a lot of potential.

I want to reemphasize that the beauty of our technology is that we do not need a lipid delivery complex. What these researchers were trying to do was combine an RNAi construct together with chemotherapeutics. I think they showed some nice uptake in vitro. Interestingly, if you're going to load a lipid vehicle with chemotherapy drugs, it's going to be interesting how that's going to behave in vivo, where the uptake and chemotherapeutic delivery may be aspecific. The question is whether it's going to be taken up by healthy tissues as much as by cancer tissues.

When we are talking about our RNAi technology, which is self-delivering, we can target any protein and not just those proteins that may have to do with chemotherapeutic resistance, as these researchers were trying to achieve. Cancer cells have many escape mechanisms, and resistance of chemotherapeutics is just one of them.

We can easily do combinations of RNAi targets, some of them addressing checkpoint inhibitors. Others can be addressing certain local tissue effects that are happening in the tumor microenvironment, etc. We can easily, by combining some of our sd-rxRNAs in one product, target multiple genes. In addition, we can be very specific to certain tissues or cells by targeting those proteins that are expressed only on certain cells to trigger and elicit the right behavior.

Other than also including an RNAi construct in their technology, the similarities end between their research and our technology. And I agree with Geert in that it's a major benefit not having to rely on a lipid complex for delivery.

TLSR: Would you tell us about the human clinical programs you're currently running, and when you expect to receive topline data or any catalytic data as well?

GD: In dermatology, the phase 2 study of RXI-109-1402 is ongoing, which is a study looking at the use of RXI-109 in the management of hypertrophic scars after scar revision surgery. We have completed patient participation in the study. We recently announced that we've collected all the site-specific data and locked the study database, and that the study analysis is ongoing.

Of our current clinical studies, this will be the first one that we'll be able to report out. Based upon the amount of data and additional activities that are ongoing, such as image collection and analysis, we are expecting that we'll announce the study results early Q4.

In ophthalmology, our study is named RXI-109-1501. That's a Phase 1/2 study looking at the safety and tolerability of intraocular injections of RXI-109 in patients with advanced wet age-related macular degeneration, and associated retinal scarring. It's primarily a safety study, but we're also evaluating some exploratory endpoints related to efficacy, such as impact on visual acuity and the scar size over time.

In that study, we've finished the patient enrollment in the last cohort. That has a long study follow-up time so the last patient's last visit is projected very late this year. We've announced that, given the timing of that visit, we're looking at early 2018 for study results to become available.

Another study that is less visible is with a compound referred to as RXI-231, which is based upon our sd-rxRNA technology. The compound is a cosmetic ingredient that targets the enzyme tyrosinase, which is involved in skin pigmentation. We have a consumer functional testing program ongoing with that compound, including three studies. Two of them are safety/tolerability studies, and the third is a study looking at skin appearance and whether or not this compound can improve skin appearance related to pigmentation after ultraviolet dosing. That study was submitted a few weeks ago to the Institutional Review Board (IRB). We received IRB approval, and this last study will start soon. Considering the design of the study—it's is expected to go relatively quickly—we are confident that we can report the results of the three studies in the consumer testing program before the end of this year.

TLSR: Can you talk about in vitro and animal studies that are ongoing and when you expect to receive reportable results?

GD: If you look at our press releases and our announcements and the data that we presented, what we're doing with in vitro and animal studies is supporting the development in immuno-oncology. That's our key focus right now, where we do the work internally as well as with external partners.

The key elements of such work are what you typically find in early-stage drug development phases. We do in-house screening of compounds for certain targets. We recently announced the selection of two of new targets in a press release in the area of immuno-oncology, targeting specific immune checkpoints. These compounds are moving into formal development as checkpoint inhibition therapy for oncology.

Other ongoing internal work is the further selection and optimization of compounds. The in vitro development is focused on applying those compounds in different cell types and different cancer cell lines. In terms of in vivo studies, the animal studies we are selecting mimic the types of cancer we believe our compounds may impact directly, or in combination with cell therapy.

Considering the flexibility of our platform, we can work with different types of immune effector cells. Some of our external collaborations are focusing on that as well—how can we apply our technology, not just with CAR T-cells, but how can it also be developed for other forms of cell-based immunotherapies, such as hematopoietic stem cells for blood cancers or tumor-infiltrating lymphocytes and other immune effector cells for solid tumors.

Further results on our in vivo studies are expected to become available in Q4.

TLSR: You recently entered into a purchase agreement with Lincoln Park Capital Fund to sell up to $15 million in shares of common stock over the next 30 months. Will this be sufficient to fund your capital needs?

GC: It's an exercise in mathematics. We're on track to spend about $10 million this year, $2.5 million a quarter. At the end of Q2, we had $7.7 million in the bank. If we can access the $15 million, altogether that means that we have about $23 million. If we stay at a spend rate of $10 million a year, that would be enough for a little over two years. Over a 30-month period, that would not be enough, just purely using math, which means that we will have to find other ways of capital that can be nondilutive.

The team is doing a lot of outreach on the business development side in order to come to deals. Deals mostly can provide nondilutive capital. Deals in the immuno-oncology space could be a little bit more rewarding than in the non-immuno-oncology space because of the going price tags in that area. But that is pure speculation. If partners would come on board for dermatology or ophthalmology, that could come with some upfront payments, which would also offset some of that expense.

TLSR: Do you have the capital to fund the studies that you're looking to release data on over the next year or so?

GC: Yes, those studies have been covered.

TLSR: You recently reported your Q2/17 financial results. Would you review those for us?

GC: As I mentioned, we had $7.7 million in cash at the end of Q2. Our cash burn this year is about $2.5 million. Historically, our spend has averaged about $2 million per quarter. With the addition of immuno-oncology to our pipeline, we've seen our burn rate, on a quarterly basis, increase slightly to $2.5 million. We have 23 million common shares outstanding. Through warrants and options, there's potential for $28 million in cash inflows to the company. On a fully diluted basis, we have 38 million shares outstanding. We have no debt. That's always nice to be able to say. And also, unfortunately, no revenue, but that's not surprising in the biotech space.

TLSR: NASDAQ has granted you a six-month extension to regain listing compliance for the dollar bid price requirement. Do you want to address that situation?

GC: We are trying to address it by getting to a dollar. And I'm not even talking about deals, though, of course, I would welcome a deal in the coming few months. But we have a significant line-up of news items in our news flow. With some luck, that could elevate our share price to above a dollar, at which point it becomes a moot point. That is certainly what we are aiming at.

TLSR: Is there anything else that you would like for our readers to be aware of?

GC: Number one, follow the space, even if it's not just RXi and self-delivering RNAi. I am almost guaranteeing people that whenever there is a first approval in this space, you will see an increase in valuation of the companies, whether it's in RXi or Alnylam or Arrowhead Pharmaceuticals Inc. (ARWR:NASDAQ) or Dicerna Pharmaceuticals Inc. (DRNA:NASDAQ). They will all benefit from it. Keep an eye on it, and it will grow sooner rather than later. Not this year, but I wouldn't be surprised if it happens in 2018.

Specifically, with regard to self-delivering RNAi, our technology platform, because it is so amenable to the transfection of any cell type, it puts us in a unique situation where we can compete directly with antibodies, for instance. Antibodies are also used to target proteins, but they come after the fact—that is, only after a protein is there can you make use an antibody against it. With our platform, if we select a protein to target, we can make an RNAi against it—a self-delivering RNAi—and we can actually prevent that protein from being made. In addition, we can work to down-regulate intracellular proteins, which antibodies cannot do.

Antibodies are expensive. Today, the manufacturing industry has not even taken a decent crack at lowering the price of oligonucleotides. Oligonucleotides are not cheap, but compared to the manufacturing price of antibodies, they are substantially lower.

Last but not least, you talk about pricing. You can see that Novartis—in my opinion, rightly so—will charge $475,000 for a treatment with its CAR T-cells. The nice thing—and I hope it forces the industry to follow—is that if patients don't react to the treatment after one month, they actually don't pay for the treatment. So, if it doesn't work, you don't pay. That is something never seen today in the pharmaceutical industry. I applaud Novartis for doing it, and I trust that other companies will have to follow it.

But one of the things that can help is if there is more competition on the manufacturing side of oligonucleotides, so that people with their creativity find other ways of improving an already automated synthesis system. And then the supply in the world market increases. That will have a dramatically beneficial effect on pricing, and will bring the price down and in reach of many more people. And that is, in the end, why we are in business—to make sure that we bring innovation, not to the select few but to everybody.

TLSR: Thanks for your time.

Dr. Geert Cauwenbergh is president and CEO of RXi Pharmaceuticals. Prior to joining RXi, Dr. Cauwenbergh served as chairman and CEO of Barrier Therapeutics, Inc., a publicly traded biopharmaceutical company he founded in 2001 that focused on dermatology drug development. Prior to founding Barrier, Dr. Cauwenbergh held a number of ascending senior management positions at Johnson & Johnson, where he was employed for 23 years. In 2005, Dr. Cauwenbergh was inducted into the New Jersey High-Tech Hall of Fame, and, from 2009 to 2010, he served as chairman of the Board of Trustees of BioNJ. He has authored more than 100 publications and has been a guest editor for a number of books in mycology and infectious diseases.

Dr. Gerrit Dispersyn was appointed chief development officer in April 2017. Dr. Dispersyn is an accomplished leader in clinical, product and business development. He most recently served as the Vice President, Global Head of Clinical Affairs at Integra LifeSciences Corporation. In this role, Dispersyn was responsible for Integra's global strategy and execution of clinical development, clinical operations and medical affairs projects and a member of Integra's Senior Management Leadership team, and several of the company’s core teams for M&A projects. Prior to his tenure at Integra, he was the Vice President, Product Development & Portfolio Management for Barrier Therapeutics Inc., a pharmaceutical company focused on the development and commercialization of products in the field of dermatology. The company was a spin-out of Johnson & Johnson, and currently part of GlaxoSmithKline. Dr. Dispersyn holds a Dr. Med. Sc. (Ph.D. in Medical Sciences), from the Faculty of Medicine, Maastricht University, the Netherlands, a post-graduate degree in Biomedical Imaging, and a M.Sc. in Biochemistry, both from the University of Antwerp, Belgium.

Dr. Karen Bulock has served as vice president research for RXi Pharmaceuticals since April 2012. Dr. Bulock has over 20 years of experience in discovery and preclinical project management. Since joining RXi in 2011, Dr. Bulock has been responsible for strategy and execution of RXi's discovery and preclinical research projects including RXI-109, RXi's first clinical candidate. Prior to joining RXi, Dr. Bulock served as the associate director of research at Galena Biopharma. Prior to Galena, she spent several years leading discovery-stage projects to support small molecule therapeutic programs in the fields of metabolic disease and anti-infectives at CytRx Corp. and Essential Therapeutics Inc. Dr. Bulock received a Ph.D. in Pharmacology from Yale University. Dr. Bulock has authored numerous scientific articles and is a co-inventor on many patent applications.

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1) Tracy Salcedo conducted this interview for Streetwise Reports LLC and provides services to Streetwise Reports as an independent contractor. She owns, or her family owns, securities of the following companies mentioned in this interview: None. She is, or members of her immediate household or family are, paid by the following companies mentioned in this article: None.
2) RXi Pharmaceuticals Corp. is a billboard sponsor of Streetwise Reports. Streetwise Reports does not accept stock in exchange for its services. Click here for important disclaimers. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.
3) Geert Cauwenbergh, Karen Bulock and Gerrit Dispersyn had final approval of the content and are wholly responsible for the validity of the statements. Opinions expressed are the opinions of interviewees and not of Streetwise Reports or its officers.
4) Geert Cauwenbergh: I was not paid by Streetwise Reports to participate in this management interview. I had the opportunity to review this for accuracy and am responsible for the content. I or my family own shares of the following companies mentioned in this discussion: RXi Pharmaceuticals Corp.
5) Karen Bulock: I was not paid by Streetwise Reports to participate in this management interview. I had the opportunity to review this for accuracy and am responsible for the content. I or my family own shares of the following companies mentioned in this discussion: RXi Pharmaceuticals Corp.
6) Gerrit Dispersyn: I was not paid by Streetwise Reports to participate in this management interview. I had the opportunity to review this for accuracy and am responsible for the content. I or my family own shares of the following companies mentioned in this discussion: RXi Pharmaceuticals Corp.
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