Today, Worcester, MA-based RXi Pharmaceuticals (NASDAQ: RXII) announced that it will split into two publicly traded companies. The first, called Galena Biopharma, will focus on developing targeted cancer therapies and will be headquartered in Portland, OR. RXi will be spun off later this year and will continue to work on RNAi-based therapeutics—the company’s original mission when it was founded in 2003.
The split is not entirely surprising. RXi was founded around the work of Dr. Craig Mello, a professor of molecular medicine at the University of Massachusetts Medical School, and a Nobel Prize winner for his work in “RNA interference”—molecules that silence disease-causing genes. But RNAi therapeutics have been slow to realize their potential, and in an interview a few days before today’s announcement, RXi CEO Mark Ahn acknowledged that the company recognized a need to find a quicker path to revenues and profitability. “Shareholders were demanding progress in moving our company forward,” he says. “We knew how to deliver complex peptides to cells. We thought we could leverage that to go from just a research-platform company to a drug-development company.”
So Ahn and his team focused on transforming RXi into a developer of peptide immunotherapies—protein-based drugs that stimulate the immune system. RXi started that process in March, when it bought Apthera, a Scottsdale, AZ-based developer of a therapeutic cancer vaccine, E75 (NeuVax), which is being developed to treat breast cancer. Apthera completed a successful Phase 2 trial, but the time of the RXi acquisition, the FDA had a clinical hold on E75 because of manufacturing concerns, Ahn says. RXi completed additional work that the agency required, he says, and the clinical hold was lifted on Sept. 12. The company plans to start the pivotal Phase 3 study in the first half of 2012.
On September 26, RXi further boosted its pipeline of cancer vaccines by licensing a molecule from the University of Texas MD Anderson Cancer Center and Henry M. Jackson Foundation for the Advancement of Military Medicine. The vaccine targets Folate Binding Protein-E39 (FBP), which is over-produced in more than 90 percent of ovarian and endometrial tumors. “FBP is exciting for us because it’s a very well-validated target in cancer care,” Ahn says. “It’s heavily over-expressed in gynecological cancers, but not in normal tissues. That ratio makes it an ideal target.” The company plans to take the vaccine into Phase 1 studies by the end of this year.
Both cancer vaccines are now under the umbrella of Galena. As for RXi, it will continue to develop RXI-109, an RNAi-based drug to treat scarring and fibrosis. The company said in a statement about the spinoff that RXi will also study “the therapeutic potential of gene silencing more broadly,” perhaps by partnering with other parties interested in RNAi.
Investors will clearly take some convincing, though: RXi’s stock dropped 23 percent to 76 cents per share on the announcement.
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