Monday, July 13, 2009

RXi PHARMACEUTICALS CORPORATION

RedChip Weekly Update

22 June 2009

RXi Pharmaceuticals Corporation (NasdaqCM: RXII), a discovery-stage biopharmaceutical company, is currently pursuing the development and commercialization of proprietary therapeutics based on RNA interference (RNAi) for the treatment of human diseases. RXi was founded by world-leading researchers in the field of RNAi and began operations in January of 2007. The company began trading on the NASDAQ in March of 2008. It is one of two public pure-plays in RNAi.

Credit for co-discovery of RNAi goes to Dr. Craig Mello, who won the Nobel Prize for Medicine in 2006 for his part in the discovery of this natural process. Dr. Mello is also a co-founder of RXi Pharmaceuticals and a Professor of Molecular Medicine at the University of Massachusetts Medical School in Worcester, Massachusetts.

RNAi, regarded as a revolutionary breakthrough in medicine, has many important clinical and research possibilities. Using RNAi, researchers can specifically suppress or “silence” the expression of certain genes in a cell. The therapeutic possibilities using RNA interference are exciting. As RNAi is a naturally occurring mechanism for the regulation of gene expression and is present in anything that has DNA, including plants, animals and humans, it has the potential to selectively inhibit the activity of any gene. As a result, RNAi may potentially treat human diseases by “turning-off” genes and blocking the production of disease causing proteins before they are made. For example, certain “parasitic” genes, such as viruses, can be suppressed within the gene strand, and it is being studied as a treatment for infections such as the AIDS and hepatitis viruses and for other conditions, including heart disease and cancer.

RXi’s pipeline is currently focused on the treatment of inflammatory diseases and metabolic disorders using its comprehensive RNAi platform that includes both RNAi compounds and delivery methods. One novel, drug-delivery method is RXII’s proprietary self-delivery technology — Self-Delivering-rxRNA (sdRNA). RXi believes this new self-delivering rxRNA should support direct application or subcutaneous administration, opening the door for many clinical areas of RNAi therapeutic development.

RXII has also reported progress with the Glucan Encapsulated RNAi Particles (GeRP) technology — a method that delivers RNAi compounds directly to macrophages to help reduce inflammation. Positive data from pre-clinical studies has led RXII to believe that delivery of RNAi compounds to macrophages using GeRP technology may eventually be effective for the treatment of numerous inflammatory diseases, including rheumatoid arthritis, psoriasis, inflammatory bowel disease such as Crohn’s disease and ulcerative colitis as well as other diseases such as atherosclerosis and diabetes.

There is every indication that RXi is undervalued. Industry comparable, Sirna, a company named and based on short-interfering RNA, which is part of the RNAi pathway, was acquired by Merck for $1.1 billion; and another, Alnylam, is trading at over a $1 billion market cap. RXi is currently trading at a market cap of $120 million; under these conditions, RXi is primed for growth in the immediate and foreseeable future.

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