Special Report

TICKERS: RXII

RXi-MirImmune Merger Aims to Unlock Value Through Groundbreaking Technology

RXi Pharmaceuticals' proprietary self-delivering RNAi (sd-rxRNA) platform offers efficient delivery to cells ex vivo, an application with tremendous potential in immuno-oncology. It's no surprise then that RXi has acquired MirImmune, a company that has been focusing on the next generation of immunotherapies for the treatment of cancer. In this interview with The Life Sciences Report, Geert Cauwenbergh, RXi's President and CEO; Alexey Eliseev, Chief Business Officer; and Pam Pavco, Chief Development Officer, discuss their technologies, the merger and why they believe that in 10 years pure chemotherapy could be relegated to the treatment of last resort.

Management Q&A: View From the Top

The Life Sciences Report: Thank you for joining us today. Would you tell us about RXi Pharmaceuticals Corp.'s (RXII:NASDAQ) RNAi therapeutic platform and sd-rxRNA compounds, what they are and how they are differentiated from your competitors?

Pam Pavco: RXi has developed a proprietary self-delivering RNAi platform, termed sd-rxRNA, in which we've altered and improved upon the modifications and the structure of the standard RNAi compound. This novel class of compounds has improved drug-like properties that are potent, stable and specific with built-in delivery properties and therefore do not require a delivery vehicle for local therapeutic applications.

These improvements allow our compounds to be very efficiently taken up by cells. That is the one major differentiation between sd-rxRNA and RNAi compounds being used by other companies.

The fact that sd-rxRNA is effectively taken up by cells means that sd-rxRNA is very amenable to use for disease areas where you can do local delivery. That has led to our selection of initial therapeutic areas, such as looking at the reduction of scarring in the skin and also the reduction of scarring in the eye, because you can deliver by direct application to both the skin and the eye.

It also makes it perfect for the new area that we're now going into, cell-based immuno-oncology, because for cell therapy we will be delivering sd-rxRNA directly to cells ex vivo, that is, outside of the body. So it's a perfect way to deliver RNAi to the immune cells for these types of therapies.

TLSR: Before we delve into immuno-oncology, would you update us on the RXI-109 clinical trials for dermal scarring?

PP: We just dosed the last patient in the ongoing trial to prevent recurrence of hypertrophic scars on the skin; that sets our timeline in motion. The last dose for these cohorts is at the six-month time point, and the study observations continue for three additional months. After that, we have to clean and lock the database and analyze the data. This will be complete by Q4/17.

We have talked about the data that we saw at six months for the early cohort that was dosed over a three-month time period, to describe that we were seeing a benefit of treatment with RXI-109. A blinded panel of non-clinicians was asked which scar looked better—and without knowing which was which, almost 70% of the time they picked the one that was treated with RXI-109.

The interesting part was that this was not only the case at three months after completion of dosing, it was also the case at six months after the last dose, when still approximately 65% of the panel selected RXI-109 treated scars as "better." So we are seeing a persistent benefit for at least six months after the last dose.

The cohorts that just finished dosing actually got doses over the course of six months; so we're expecting to see a prolonged benefit there as well, and we'll be able to do some comparisons when we get all those data in, to determine if six months of dosing is better than three months.

TLSR: You just completed an acquisition of MirImmune Inc. Can you tell us about this acquisition and how you see the synergies?

Alexey Eliseev: I will give you the MirImmune perspective because we were the acquired party. The potential application of this very broad self-delivering RNAi platform in immuno-oncology—what we saw as the biggest promise when we started MirImmune—was the ability to modulate immune checkpoints in cell-based systems using an RNAi approach. This is something that relatively few companies and academic groups have contemplated so far. And this is where this technology really shines because, unlike other RNAi technologies, it allows for highly efficient and very safe cell transfection ex vivo.

The idea was that we can start with therapeutic cells that are already being treated ex vivo, such as chimeric antigen receptor T-cells, tumor-infiltrating lymphocytes, T-cell receptor engineered T-cells, natural killer cells and other kinds of cell therapies. And then we add one simple step—the transfection with self-deliverable RNAi compounds—to the already established protocol of ex vivo treatment, to silence immune checkpoint genes in these therapeutic cells.

The modulation of immune checkpoints by RNAi may find a unique niche among competing approaches to immuno-oncology. Unlike monoclonal antibodies, RNAi compounds may be used to target multiple immune checkpoints in a single therapeutic treatment. Unlike gene editing of cells, which many companies are starting to do now, we are not introducing permanent modifications in the genome, so we are not creating potential long-term issues. This is where we see a major competitive advantage of this technology.

With the expertise that RXi has in this technology development and with the funding of the previous round, we hope to bring the company to an inflection point where we can attract major partners in the cell therapy area.

Geert Cauwenbergh: In 2015, MirImmune had requested a license to use our technology in its approach to cell therapy and immuno-oncology. In exchange for a license, MirImmune agreed that RXi would receive a percentage of their company in equity.

After 18 months, MirImmune came to us to show its data, and what it had done was very impressive. I was not totally surprised that it had excellent uptake because the team here had already shown this in a number of different cell types.

But the initial animal data was the most impressive. Working with SRI Biosciences in California, MirImmune had demonstrated positive evidence that the addition of an ex vivo sd-rxRNA treatment to mesothelin-specific CAR T-cells to reduce the PD-1 checkpoint resulted in significantly reduced tumor growth in a mouse model of human ovarian cancer. Additional validation of the platform came from a collaboration with researchers at the Karolinska Institutet in Stockholm.

AE: In the course of the early studies, we noted nearly 100% transfection of ex vivo cells with little to no loss of viability. In addition, in one study we transfected tumor infiltrating lymphocytes isolated from a melanoma patient with the same anti-PD-1 sd-rxRNA, and saw dramatic improvement of the tumor cell killing ability of these transfected tumor infiltrating lymphocytes (TILs) in vitro.

GC: Consequently, it was very logical, when both companies needed to raise money, that MirImmune could become part of RXi and, hence, we agreed to raise money together. The whole exercise was a friendly, swift and clean process.

TLSR: Have you targeted specific cancers?

AE: We are looking into several cancer indications, but at this somewhat early preclinical stage it is mostly important to obtain our principal proof of concept for the technology applied to immuno-oncology in general. Currently, we are looking at models of melanoma, ovarian and pancreatic cancer.

Our self-delivering technology is applicable to the treatment of a broad variety of therapeutic cells. We believe that if we are successful in the initial proof-of-concept data, it will be applied to a variety of different cancers.

TLSR: Does the acquisition change RXi's direction? Do you now see the two streams working in parallel?

GC: RXi has developed a novel therapeutic platform that has potential in many therapeutic areas. We have an extensive intellectual property estate for our self-delivering RNAi platform through 2029. We began our clinical development work in dermatology and ophthalmology, two areas where local delivery is straightforward; and those programs, which we mentioned earlier, are in Phase 2 clinical studies. We have the possibility for other protein targets in dermatology and in ophthalmology that we can work on as well.

However, the MirImmune acquisition provided us with a new therapeutic area, which is fairly novel for us but which also is a major attraction for academia, the U.S. Food and Drug Administration and the industry. We felt that this is a place where we can really demonstrate the value of our technology, and invest and focus on treatments that can change the lives of people and, in this case, possibly extend the lives of people.

Right now, RXi is aggressively advancing efforts in in vitro and ex vivo animal work in the immuno-oncology space, while continuing our clinical programs in dermatology and ophthalmology. In addition, we are actively pursuing non-dilutive funding to continue doing all three in parallel, with probably a bit more emphasis on immuno-oncology because that is a much larger therapeutic area than dermatology or ophthalmology.

As the year progresses, and our programs and business evolves, we will evaluate the best direction forward for the company and our shareholders since we may have to make a decision based on cash burn and the potential for partnering, as well as other business development opportunities. That will obviously be an important strategic discussion at Board level, along with the members of our Scientific Advisory Board, to see how we are going to manage that diversity. There are numerous possibilities that may be considered such as: spin out a therapeutic area in a NewCo; out-license a product; sell a portion of the company, to name a few. In the case where we would be able to generate sufficient non-dilutive money, we may be able to continue working in all three therapeutic areas. In any case, I am pleased to know that our current pipeline and therapeutic platform provides us with several options which we will be select based on the evolution of the company in the coming months.

TLSR: Have you made structural changes in the wake of the acquisition?

GC: Alexey came on board as Chief Business Officer, but for the rest we have not made major structural changes. We already have a small but uniquely suited team on board. We can do a lot of the in vitro work ourselves. There is an animal facility nearby that we are able to use for animal work. We have great contacts, thanks to Alexey, with a number of oncology centers, not just in the U.S. but internationally, that will help us also to get important research and exploratory clinical work done by academic centers with our technology. In this light, we have expanded our Scientific Advisory Board to include expertise in the cell-based immune-oncology field.

TLSR: What does Alexey, the founder of MirImmune, bring to the company?

GC: Alexey has a great background in medicinal chemistry. He also has been running the international activities of a venture fund, so he knows the money part of the business very well. He has a great network as a result of that. And he has good ties with the oncology side of the industry that can help us as we seek other Board members or Scientific Advisory Board members and partnerships.

AE: I see this program of immuno-oncology at RXi as a somewhat early but potentially very high value program. You can look at it as a great entrepreneurial opportunity for our company, a continuation of what we started at MirImmune. I have been active in biotech entrepreneurship for the last 17 years, started two successful biotech companies and also, as Geert mentioned, worked in a venture fund for many years. So I hope to be able to bring this project to high value creation in a short time.

TLSR: Will MirImmune's Scientific Advisory Board work with RXi?

GC: The head of experimental oncology in Karolinska, Rolf Kiessling, just joined our Scientific Advisory Board, as did James Griffin, the head of the Dana Farber Cancer Center in Boston. We will aim to add more top level oncologists and immuno-oncologists to our Scientific Advisory Board, so keep your eyes and ears open for announcements.

TLSR: Your stock has gone down lately. Can you explain why you think that is?

GC: We did a financing. Usually when you do financing, it negatively affects your share price.

In the first three years of the company, we hit an all-time high in share price, but when a hedge fund that owned more than 80% of the company converted its preferred shares and sold them in the market, it created a major drag on our share price. During that period, our share price went from a peak of $100 to about $4. Since that time we had to do financings in mid-2015 and at the end of 2016.

In terms of R&D, the company has achieved all of its projected milestones since we began operations in 2012. With the expected news flow for this year, including our entry into the immuno-oncology space, I would assume that from a share price point of view, our current valuation offers an interesting opportunity for people to become shareholders of our company. I hope that in a few months, we will be able to say that the stock price is more in line with what we and the analysts are expecting.

TLSR: Where do you see the company going from here?

GC: This question links back to the change in RXi's direction. In the coming year we will focus on generating as much data as possible in vitro and in animals in immuno-oncology so that we bring the immuno-oncology portion of our activities as close as possible to being able to start clinical studies, which hopefully will be in 2018.

The dermatology and ophthalmology work will also continue to evolve in that same timeframe. If we need to focus our financial resources more on immuno-oncology, we may look for non-dilutive funding coming from the dermatology and ophthalmology side. If we can make early deals through Alexey's network on the oncology side, we may be able to continue in all three therapeutic areas.

So this year is a year of generating data and making critical strategic decisions.

TLSR: Any parting thoughts for our readers?

PP: Bringing this new area into the company is really exciting for us because we have a great technology to use for it. I think it will really make a big difference, and we'll end up with something that we can use for multiple types of solid tumors and also blood cancers. So we're really motivated to be able to work in this area.

GC: The one thought I want to add is that for the first time, thanks to cell therapy and antibodies, we are seeing major changes in Kaplan-Meier curves, survival curves in the oncology space. Previously, most of the Kaplan-Meier curves end in nobody's still alive. I'm exaggerating a little bit but not much.

But I think we can, with our RNAi technology in the immuno-oncology space, substantially contribute to improving those Kaplan-Meier curves even further because in the end that is what I would like to see, that people can basically die of old age rather than of cancer. And I hope that 10 years from now, because of all of the innovation that has come about in the oncology space, we will be able to say that the current chemotherapies included as standard of care are not the first resort anymore but a last treatment resort in the fight against cancer. That would be a tremendous success.

TLSR: Thank you for your insights.

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. Alexey Eliseev was appointed Chief Business Officer of RXi Pharmaceuticals in January 2017 to spearhead the business development initiatives for the company's immunotherapy program. Dr. Eliseev is a highly accomplished leader with over 20 years of experience in academia, biotechnology industry and venture capital and most recently was the founder and CEO of MirImmune Inc. He also co-founded Therascope, later Alantos Pharmaceuticals, with a number of prominent founders including French Nobel Laureate Jean-Marie Lehn, where he later became CTO of the company and president of its U.S. division. Over recent years, he has worked with Maxwell Biotech Venture Fund as its managing director and ran the investment activity of the fund in the United States. Dr. Eliseev earned his Ph.D. in Bioorganic Chemistry from Moscow State University and MBA from the MIT Sloan School of Management. Following postdoctoral research in Germany and in the U.S., he joined the faculty at SUNY Buffalo in 1995 where he was awarded tenure in 2000.

Dr. Pamela Pavco currently serves as Chief Development Officer for RXi Pharmaceuticals Corp. She joined RXi Pharmaceuticals in March of 2007 and most recently served as the senior vice president of Pharmaceutical Development until April 2012. Dr. Pavco has over 25 years of research and development experience in oligonucleotides and was senior director, research and development project management at Sirna Therapeutics from 2002 until 2006. Dr. Pavco has authored numerous scientific articles and contributed to approximately 58 patents and patent applications in the oligonucleotide therapeutics field. Dr. Pavco received a Ph.D. in Biochemistry from Virginia Commonwealth University in 1983 and did her post-doctoral work at Duke University.

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Disclosure:
1) Patrice Fusillo conducted this interview for Streetwise Reports LLC and provides services to Streetwise Reports as an employee. She owns, or her family owns, shares of the following companies mentioned in this interview: None.
2) RXi Pharmaceuticals Corp. is a 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, Alexey Eliseev and Pam Pavco 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) Alexey Eliseev: 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) Pam Pavco: 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.
7) Discussions are edited for clarity. Streetwise Reports does not make editorial comments or change experts' statements without their consent.
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