RXI Pharma (RXII) CEO Cauwenbergh Issues Shareholder Update

RXI Pharma (NASDAQ: RXII) issued the following open letter to shareholders from President & CEO, Geert Cauwenbergh, Dr. Med. Sc.

Dear RXi Shareholders,

In the past few days a number of inaccurate statements posted on certain social media sites seem to have caused harm to our Company and its shareholders. These inaccurate statements followed on Friday, December 19th after our announcement of our entry into an agreement to acquire rights to a second Phase 2 asset. These third party statements have caused concerns with our shareholders and have seemingly negatively affected our share price that day. We wish to dispel these rumors and address the misleading remarks head-on by re-emphasizing how our recent activities are expected to contribute to the future growth of our Corporation.

1. RXI-109 for hypertrophic scars and keloids post scar revision surgery.

The Company's ongoing clinical trials with RXI-109 continue to be on track. We issued a press release on December 17, 2014 announcing the completion of enrollment in our first Phase 2a study, RXI-109-1301, and confirmed that the preliminary results from the 3-month observations confirmed the 1-month findings that were reported in September of this year. The findings from these 1- and 3-month observations provide preliminary evidence that RXI-109 may show clinical effect in the target population (patients with hypertrophic scars), and have provided clear guidance that it is best to start with RXI-109 treatment 2-weeks after the revision surgery, which is after the acute inflammation phase that occurs as a result of the surgery. Our other Phase 2a studies will implement this learning in an aim to determine the optimal dose schedule and treatment length. This type of approach, where studies subsequent to the initial evidence of clinical effect attempt to define the optimal treatment schedule is a standard approach in all drug development.

2. Samcyprone™, our 2nd product in the clinical pipeline:

In addition, we announced on December 19, 2014 an exclusive global license for Samcyprone™, a second Phase 2 clinical compound. Samcyprone™ is a proprietary gel formulation of diphenylcyclopropenone (DPCP), an immunomodulator that works by initiating a T-cell response. We have several reasons for adding this product to our clinical pipeline, which include the following:

a. Many world class academic dermatology centers use DPCP topically as an unregulated experimental tool in alopecia areata, warts and cutaneous metastases of malignant melanoma. This experience supports the efficacy of DPCP as active ingredient and we expect has the potential to significantly increase the likelihood of successful clinical development of Samcyprone™ as a drug product. The target diseases of Samcyprone™ complement the therapeutic areas in which RXI-109 would become commercially available (dermatology), if approved.

b. DPCP is a new chemical entity under an investigational new drug application filed with the FDA in the United States. Samcyprone™, the proprietary formulation of DPCP, is expected to provide a favorable safety profile while providing a consistent cGMP formulation.

c. Multiple synergies exist between RXi's sd-rxRNA® platform and Samcyprone™. The mechanism of action of Samcyprone™ is linked to DPCP's ability to alter the expression of multiple genes and miRNAs involved in the immune response. These gene targets may be modulated by an RNAi approach, utilizing sd-rxRNAs, to further enhance Samcyprone's™ efficacy and response rates. Additionally, this approach may result in the discovery and development of sd-rxRNA or other drugs that are more potent and selective for treatment of alopecia areata, warts or cutaneous metastases of malignant melanoma. Such developments, if successful, would be expected to bolster our intellectual property portfolio as a result of those new targets. Adding this new clinical-stage product candidate to our clinical development effort is not an exit from our core RNAi platform with sd-rxRNA. On the contrary, apart from possibly being a nice commercial asset in the years to come, it could also become an interesting research tool to enhance the value of the sd-rxRNA platform through identification of new protein targets for our RNAi compounds.

3. Misleading statements about stagnation in our technology platform:

Contrary to allegations made in social media last week, our recent announcement, as well as our earlier reports on our ophthalmology franchise, with an ophthalmology IND to be submitted for RXI-109 planned for Q2 2015, and the synthesis of potent sd-rxRNA compounds against VEGF, collectively demonstrate that the progress with our technology platform is far from stagnant. Add to that our recent patent submissions on newly synthesized sd-rxRNA compounds against collagenase and tyrosinase, and we feel that the Company has made and continues to make a strong statement about the value of the platform for the future of RXi Pharmaceuticals.

We can only hope that investors and shareholders who read blogs, tweets and postings from third parties purporting to have an informed view on our business will also do an in depth evaluation of the background of those who write such "reports", their past contributions to the actual progress in the RNAi space, and their possible associations to competitors and other firms working in a similar space. Notwithstanding these ill-informed criticisms, we remain optimistic about the prospects of the Company and our core technology.

Thank you for being an RXi Shareholder. We look forward to continuing our progress and ongoing efforts to increase shareholder value.

With kind regards,Geert Cauwenbergh, Dr. Med. Sc.President and CEORXi Pharmaceuticals Corporation

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