Shares in RXi Pharmaceuticals (RXII) got a big boost on Friday following news that a treatment for retinal scarring developed using the company’s RNAi technology was effective in reducing the connective tissue growth factor (CTGF) protein levels in the eyes of cynomolgus monkeys.
The company’s stock was on the rise as a result of the news, gapping up almost 25 percent to $3.95 a share at the opening bell and, after a brief downturn in the opening minutes, built on those gains to reach an intraday high of $4.30 a share in the first ten minutes of trading.
Initial enthusiasm for the stock clearly started to give way to more measured optimism as the day wore on, and the stock settled into gains over 15 percent at about $3.65 a share by noon. Volume, though, was extremely high. Nearly 2 million shares traded hands by 12:30 pm ET, more than ten times the daily average of just under 125,000 shares.
RXi’s RNAi technology targets the RNA of cells to potentially inhibit gene expression through the destruction of specific mRNA molecules, potentially affecting disease genes or preventing a negative response to certain stimuli. From the company’s website:
“RNAi is a naturally occurring phenomenon by which short double-stranded RNAs interfere with the expression of targeted genes. The development of therapeutics based on RNAi technology takes advantage of this phenomenon and potentially allows us to reduce the expression of particular genes within living cells.”
In the case of the trial conducted with cynomolgus monkeys, the goal was to reduce retinal scarring by inhibiting the production of CTGF proteins that create scarring. This involved the injection of RX-109, RXi’s opthamology treatment, and showed results among the treated monkeys.
"These remarkable results constitute a major boost to the value of our newly formed ophthalmology franchise," said President and CEO Dr. Geert Cauwenbergh. "Not only do these data confirm that RXI‑109 lowers CTGF protein levels in a dose dependent manner in the retina of non-human primates, but it also demonstrates that, with an intravitreal injection of RXI‑109, sufficient compound migrates to the cornea to lower CTGF protein levels in that eye tissue as well. This finding opens up an avenue to possibly develop topical forms of RXI‑109 to combat corneal scarring which often occurs secondary to trauma or infection and can lead to visual impairment, including blindness."
The success of this treatment in non-human primate trials could help provide a boost to RXi, which has experienced heavy volatility since it was first listed on the Nasdaq Comp. on February 11. The stock shot up over 135 percent from the start of the year to its 52-week high, reached on February 24. However, while surging to $6 a share on March 19, the stock then began a steep decline to where it landed at the close of trading on Thursday, losing over 45 percent during that period.
However, this sort of volatility is to be expected for a micro-cap like RXi, which still features a market cap below $50 million and a total float of under 13.5 million shares. That said, the company has a “strong buy” rating from Rodman & Renshaw, the only firm with coverage initiated on RXi, and institutional buying is up over 85 percent in the last three months.
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