RXi Pharma (RXII) to Split into Two Public Companies

September 26, 2011 6:56 AM EDT
RXi Pharmaceuticals Corporation (Nasdaq: RXII), reports it will separate its programs into two publicly traded companies: Galena Biopharma will focus on the development of targeted cancer therapies; and RXi Pharmaceuticals will focus on the development of RNAi-based therapeutics. The RNAi programs have been contributed to the new RXi, which is expected to be spun off later this year. In connection with these transactions, the Company has changed its name to Galena Biopharma, but will continue to trade under the ticker symbol "RXII" until the completion of the spin-off.

As part of these transactions, institutional investors have agreed to invest $9.5 million in RXi preferred stock and $2.5 million in Galena common stock, for a total of $12 million. The RXi preferred stock will be convertible into 83% of the equity of RXi as of the completion of the spin-off. The investment in Galena common stock will be priced "at market" based on a volume-weighted average trading price. No warrants will be issued in the transaction.

It is expected that approximately 8 percent of the equity in RXi will be distributed on a share-for-share basis so that a holder of one share of Galena common stock prior to the distribution will hold one share of RXi and one share of Galena after the spin-off. Galena will retain a 4 percent equity position in RXi, and Advirna, LLC, a private company and key licensor of RXi, will acquire 5 percent of the equity. The completion of the spin-off and the related transactions, including the financing of RXi, are subject to certain conditions, including registration of the spin-off distribution with the Securities and Exchange Commission.

Management: "Mark Ahn, Ph.D., the President and Chief Executive Officer of Galena Biopharma, will serve on the board of RXi. Anastasia Khvorova, Ph.D., will serve as RXi's Senior Vice President and Chief Scientific Officer, and Pamela Pavco, Ph.D., will serve as RXi's Senior Vice President of Pharmaceutical Development. A search for RXi's Chief Executive Officer is underway."

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