RXi Pharmaceuticals Reports Fourth Quarter and Year End 2016 Financial Results and Recent Corporate Highlights

RXi Pharmaceuticals Reports Fourth Quarter and Year End 2016 Financial Results and Recent Corporate

MARLBOROUGH, Mass., March 30, 2017 /PRNewswire/ RXi Pharmaceuticals Corporation (NASDAQ: RXII), a clinical-stage RNAi

company developing innovative therapeutics that address significant unmet medical needs, today reported its financial results for the fourth quarter and year ended December 31, 2016, and provided a business update.

We believe RXi is well positioned for a strong business and development performance in 2017 due to the acquisition of MirImmune Inc. and the

strengthening of our balance sheet through a financing at the end of 2016. As a result, the Company has already initiated programs in the immuno-oncology and cell therapy space, an exciting therapeutic area in health care today, said

Dr. Geert Cauwenbergh, President and CEO of RXi Pharmaceuticals. He further added that, The capital that we received from our shareholders allows us to put a strong focus on these immuno-oncology programs while completing and reporting

our ongoing clinical trials in dermatology and ophthalmology in the second half of 2017.

The Company will host a conference call today at 4:30 p.m.

EDT to discuss financial results and provide an update on the Company. The webcast link will be available under the Investors Event Calendar section of the Company s website, www.rxipharma.com. The event may also be

accessed by dialing toll-free in the United States and Canada: +1 888-669-0684. International participants may access the event by dialing: +1 862-225-5361. An archive of the webcast will be available on the Company s website approximately two hours after the presentation.

Select Fourth Quarter and Fiscal 2016 Financial Highlights

On December 21, 2016, the

Company closed an underwritten public offering of (i) 2,131,111 Class A Units, at a public offering price of $0.90 per unit, consisting of one share of the Company s common stock, and a five-year warrant to purchase one share of common

stock at an exercise price of $0.90 per share and (ii) 8,082 Class B Units, at a public offering price of $1,000 per unit, consisting of one share of Series B convertible preferred stock, which is

convertible into 1,111.11 shares of common stock, and 1,111.11 warrants. The offering included an over-allotment option for the underwriters to purchase an additional 1,666,666 Class A

Units, which the underwriters fully exercised. The total net proceeds of the offering, including the exercise of the over-allotment option, was $10.1 million after deducting underwriting discounts and commissions and offering expenses paid by

At December 31, 2016, the Company had cash of $12.9 million, compared with cash, cash equivalents and short-term investments of

$10.6 million at December 31, 2015. The Company believes that its existing cash should be sufficient to fund operations for at least the next twelve months.

Research and Development Expenses

development expense for the quarter ended December 31, 2016 was $1.3 million, which included less than $0.1 million of non-cash stock-based compensation expense, as compared with

$1.7 million for the quarter ended December 31, 2015, which included $0.1 million of non-cash stock-based compensation expense.

Research and development expense for the year ended December 31, 2016 was $5.4 million, which included $0.2 million of non-cash stock-based compensation expense, as compared with $6.9 million for the year ended December 31, 2015, which included $0.6 million of non-cash

stock-based compensation expense.

The decrease in research and development expense quarter over quarter and year over year was primarily due to cash and

equity fees payable to Hapten Pharmaceuticals, LLC upon the close of the Samcyprone licensing agreement and manufacturing expenses for the RXI-109 drug product, both of which occurred in 2015.

Additionally, the Company saw a decrease in stock-based compensation expense due to the full vesting of stock options in 2016 from stock options that had been granted in 2012.

General and Administrative Expenses

administrative expense for the quarter ended December 31, 2016 was $1.0 million, which included $0.1 million of non-cash stock-based compensation expense, as compared with $0.9 million for

the quarter ended December 31, 2015, which included $0.2 million of non-cash stock-based compensation expense.

General and administrative expense for the year ended December 31, 2016 was $3.6 million, which included $0.5 million of non-cash stock-based compensation expense, as compared with $3.3 million for the year ended December 31, 2015, which included $0.9 million of non-cash

stock-based compensation expense.

The increase in general and administrative expense quarter over quarter and year over year was primarily due to

the Company s focus on business development activities and an increase in legal expenses due to the Company s acquisition of MirImmune Inc. These increases in general and administrative expense were offset by a decrease in stock-based

compensation expense due to the full vesting of stock options in 2016 from stock options that had been granted in 2012.

Convertible Preferred Stock

Accretion of convertible preferred stock and dividends were $2.1 million for the quarter ended December 31, 2016. There was no such

expense for the quarter ended December 31, 2015.

Accretion of convertible preferred stock and dividends were $2.1 million for the year ended

December 31, 2016, compared with $0.2 million for the year ended December 31, 2015.

The increase quarter over quarter and year over year

was due to the one-time charge related to the beneficial conversion feature of the Series B convertible preferred stock issued in connection with the completion of the Company s December 2016 underwritten

public offering offset by a decrease related to the fair value of dividends on the Company s Series A and Series A-1 convertible preferred stock. The Company no longer had any Series A or Series A-1 convertible preferred stock authorized, issued or outstanding as of December 31, 2016 and 2015.

Applicable to Common Stockholders

Net loss applicable to common stockholders for the quarter ended December 31, 2016 was $4.4 million,

compared with $2.6 million for the quarter ended December 31, 2015.

Net loss applicable to common stockholders for the year ended

December 31, 2016 was $11.1 million, compared with $10.4 million for the year ended December 31, 2015.

The increase in net loss

applicable to common stockholders for the quarter and year ended December 31, 2016 as compared to the same prior year periods was due to the one-time charge related to the beneficial conversion feature of

the Company s Series B convertible preferred stock offset by a decrease in operating expenses, as described above.

Select Fourth Quarter 2016

and Recent Corporate Highlights

Select Business and Corporate Highlights

Building on the pioneering discovery of RNAi by RXi founder and Nobel Laureate, Dr. Craig Mello, scientists at RXi have harnessed the naturally occurring

RNAi process which has the ability to silence or down-regulate the expression of a specific gene that may be overexpressed in a disease condition. RXi developed a robust RNAi therapeutic platform, including self-delivering RNA (sd-rxRNA ) compounds, that have the ability to highly selectively block the expression of any target in the genome, thus providing applicability to many

In March 2015, MirImmune Inc., a privately-held company focused on the development of next generation immunotherapies for the treatment of cancer, entered into

an exclusive license agreement for use of RXi s sd-rxRNA technology in developing innovative cell-based cancer immunotherapies. MirImmune s progress in cell therapy using RXi s technology

formed a strong foundation for therapeutic development in the immuno-oncology space. As a result, RXi entered into an agreement to acquire MirImmune which was completed earlier this year. The Company s goal, through internal research and

external partnerships, is to develop more effective treatments resulting in better quality of life and extended survival for patients.

initiated a program developing cell-based immunotherapies to treat cancer based on its proprietary sd-rxRNA therapeutic compounds. To date, the unique applicability of

sd-rxRNA for immune checkpoint modulation in cellular immuno-oncology therapies has been demonstrated, including:

ongoing initiative, Alexey Eliseev, PhD has been appointed as RXi s Chief Business Officer. 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. In addition, RXi has appointed two leading oncology experts to its Scientific Advisory Board. RXi s new SAB members are Dr. Rolf Kiessling, Professor in Experimental Oncology at Karolinska

Institutet and Senior Chief Physician of Radiumhemmet at Karolinska Hospital as well as medical oncology expert Dr. James D. Griffin, Chairman, Department of Medical Oncology, Dana-Farber Cancer Institute. Dr. Griffin also serves as

Professor, Medicine, Harvard Medical School and Director, Medical Oncology, Brigham and Women s Hospital.

The Company s ongoing Phase 2 clinical trial, RXI-109-1402, is being

conducted to evaluate its first clinical candidate RXI-109, an sd-rxRNA compound targeting connective tissue growth factor (CTGF) to reduce scar formation in the skin

following scar revision surgery. This study is now fully enrolled and the Company will provide full read-out, for Cohorts 3 and 4, H2-2017.

Samcyprone , the Company s second clinical candidate, is a topical immunotherapy currently being

evaluated in a Phase 2a clinical trial. RXI-SCP-1502 is a multi-center, multi-dose trial conducted in subjects with at least one cutaneous, plantar or periungual

wart. The Company expects to share early read-outs H2 2017.

Consumer Health Program

RXi s consumer health compound RXI-231 targets tyrosinase, a key player in the production of melanin. A

formulation has been developed at RXi that allows delivery of the compound into the epidermis. We are in the process of finalizing the first two protocols for testing in volunteers. To support these initial studies,

RXI-231 was manufactured and is being formulated for topical use.

As in dermal scarring, CTGF is known to play a role in retinal scarring. Reduction of CTGF in the eye by RXI-109

treatment may reduce the formation of retinal fibrosis that often accompanies late stage AMD and contributes to permanent vision loss. Enrollment in the first two cohorts in the Company s Phase 1/2 trial, RXI-109-1501, is complete. RXI-109 has been well-tolerated in the eye to date; enrollment into the third cohort at the next higher dose level is ongoing.

About RXi Pharmaceuticals Corporation

Pharmaceuticals Corporation (NASDAQ: RXII) is a clinical-stage company developing innovative therapeutics that address significant unmet medical needs. Building on the pioneering discovery of RNAi, scientists at RXi have harnessed the naturally

occurring RNAi process which has the ability to silence or down-regulate the expression of a specific gene that may be overexpressed in a disease condition. RXi developed a robust RNAi therapeutic platform including self-delivering

RNA (sd-rxRNA ) compounds, that have the ability to selectively block the expression of any target in the genome, thus providing applicability to many

therapeutic areas. Our current programs include dermatology, ophthalmology and cell-based immunotherapy. RXi s extensive patent portfolio provides for multiple product and business development opportunities across a broad spectrum of

therapeutic areas and we actively pursue research collaborations, partnering and out-licensing opportunities with academia and pharmaceutical companies. Additional information may be found on the

Company s website, www.rxipharma.com.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include, but

are not limited to, statements about: our ability to successfully develop RXI-109, Samcyprone and our other product candidates (collectively our product candidates ); the future success of our

clinical trials with our product candidates; the timing for the commencement and completion of clinical trials; our ability to enter into strategic partnerships and the future success of these strategic partnerships; and our ability to deploy our sd-rxRNA technology through partnerships, as well as the prospects of these partnerships to provide positive returns. Forward-looking statements about

expectations and development plans of RXi s product candidates and partnerships involve significant risks and uncertainties, including the following: risks that we may not be able to successfully develop and commercialize our product

candidates; risks that product development and clinical studies may be delayed, not proceed as planned and/or be subject to significant cost over-runs; risks related to the development and commercialization of products by competitors; risks related

to our ability to control the timing and terms of collaborations with third parties; and risks that other companies or organizations may assert patent rights preventing us from developing or commercializing our product candidates. Additional risks

are detailed in our most recent Annual Report on Form 10-K and subsequent Quarterly Reports on Form 10-Q under the caption Risk Factors. Readers are

urged to review these risk factors and to not act in reliance on any forward-looking statements, as actual results may differ from those contemplated by our forward-looking statements. RXi does not undertake to update forward-looking statements to

reflect a change in its views, events or circumstances that occur after the date of this release.

RXi Pharmaceuticals Corporation

RXi PHARMACEUTICALS CORPORATION

CONDENSED STATEMENTS OF OPERATIONS

thousands, except share and per share data)