Hello and welcome to the RXi Pharmaceuticals 2014 Fourth Quarter and Year End earning conference call. Today's call is being recorded. At this time, I'd like to turn the call to Tamara McGrillen of investor relations. Please go ahead.

Thank you, operator. Good afternoon and thank you for joining us today. We are joined today by our President and CEO, Dr. Geert Cauwenbergh; our Chief Development Officer, Dr. Pamela Pavco and by our Principal Accounting Officer, Ms. Caitlin Kontulis. Please be aware we may make forward-looking statements during this call. Although statements represent our best estimates and expectations, actual results could differ material from our estimates and expectations. For a detailed list of risk factors that may impact the company's estimates, please refer to the news releases and RXi Pharmaceuticals' SEC filings. Now, I'd like to turn the call over to Dr. Cauwenbergh.

Thank you, Tammy and also thank you to everybody who is on the call today. Having seen some intense activity in trading of our shares in the past several weeks, I thought that before reviewing the highlights for the past year, it might be helpful to everybody to provide a brief overview of how this company was formed. In Q3 of 2011, the former parent company of RXi, Galena Biopharma completed a formal agreement with two hedge funds to spin out its proprietary RNAi platform into a newly created public company to be called RXi Pharmaceuticals Corporation. These two investments funds contributed about $10 million in cash and in return received about 83% of the company in the form of preferred shares which were to receive an annual rate of 7% to be paid dividend rate of 7% to be paid quarterly in preferred shares. The transaction between Galena and the two hedge funds was completed in April 2012 and RXi Pharmaceuticals became a newly formed independent company with a new management team and a new Board of Directors. Shortly thereafter, in mid 2012 the company filed an IND for its first clinical development candidate, RXI-109 for prevention of return of hypertrophic scars and keloids after scar revision surgery. In March of 2013, the company completed a capital raise which achieved three things. Number one, we raised $16 million in new funding. Number two, we acquired substantially all of OPKO's RNAi assets and number three, we broadened our shareholder base with OPKO and Dr. Phillip Frost as well as several other high quality biotech investment funds. This allowed the company to move into Phase 2 testing with RXI-109 based on our Phase 1 studies. We had chosen significant volunteer studies at RXI-109 reduced messenger RNA for connective tissue growth factor…

Thank you, Geert. The company's Form 10-K was filed with the SEC today and includes detailed information on the company's financial performance in 2014. In the call today, we'll focus on the highlights. Research and development expenses for the fourth quarter of 2014 were $1.6 million and $5.7 million for the full year as compared with $1.4 million for the fourth quarter of 2013 and $17.7 million for the full year of 2013. Fourth quarter R&D expenses were consistent with those in the fourth quarter of the prior year. The decrease in R&D expenses year-over-year was due to the one-time charge of approximately $12.3 million in the first quarter of 2013 related to the acquisition of RNAi assets from OPKO Health in exchange for shares of common stock of the company. General and administrative expenses for the fourth quarter of 2014 were $0.8 million and $3.2 million for the full year of 2014 as compared with $1.1 million for the fourth quarter of 2013 and $3.7 million for the full year of 2013. The company's G&A expenses decreased in both periods due to a reduction in the number of transactions that required outside professional services in 2014 as compared to 2013, such as the company's completion of our reverse stock split and our announced adverse payment [ph] obligations as well as a decrease in the company's Delaware franchise tax as a result of the reduction of the company's authorized common shares which was approved by shareholders at the company's most recent annual meeting. Net loss attributable to common stockholders for the fourth quarter of 2014 was $2.8 million and $12.9 million for the full year as compared to $3.7 million for the fourth quarter of 2013 and $29.5 million for the full year of 2013. The decrease in net loss…

Thank you, Caitlin. For the next few minutes I will give you an overview of our research and development programs at RXi. As you may know, the focus of the Phase 2a trial is the determined dose treatment and duration. To this end we have initiated three Phase 2a trials in which we are evaluating the effect of RXI-109 treatment on scar formation or keloid recurrence following revision surgery. The number of doses and dose levels that you can use in your initial clinical trials are based on the safety parameters determined for your drug gathered in your IND supporting toxicity studies. For the first two Phase 2 studies we limited the number of doses to the number tested in our original GLP toxicology studies. As we have now gained more safety experience with RXI-109 in human by the intradermal route, we have been able to increase number of doses given. As I will explain later, this allows us to dose for a longer duration during which scar or keloid formation is known to occur and may result in a more lasting or robust effect. We have completed enrollment in our first Phase 2a study 1301 and have already reported on the early learnings from these preliminary data. Study 1301 was designed such that each subject had revision surgery to remove a hypertrophic scar and following the surgery one side of the revised area was treated with RXI-109, one side was treated with placebo and the central region was left untreated. Three treatments with RXI-109 were given over two weeks either starting on the day of the revision surgery or two weeks later. Opinions from a panel of reviewers comparing photographs of the revised areas were collected and then summarized as to whether one side or the other looks better…

Thank you, Pam. I would like to take a few moments to recap a few highlights about our clinical trials program with RXI-109. In phase one in 2013 we gathered safety data and learned about efficacy based on biomarkers improving the RNAi mechanism of action of our RXI-109 in humans. In our initial Phase 2 trials it is important to note that the dosing regimen was limited to three or four doses over a very short period of time two to four weeks. Those significant side effects or toxicity have been observed in the clinic providing us with the information to prolong dosing in those two indications and the duration in an adequately justified manner. In Phase 2 we learned that it is better to initiate dosing two weeks post surgery for hypertrophic scar revisions and we also learned that we need to treat longer into the proliferation phase of wound healing in order to block the continued production of collagen. In the keloid study, longer dosing is required to achieve long-term clinical benefits as well. In summary, we believe we are well positioned for a successful 2015. The overhang from the preferred shares have been substantial reduced and as a result obtained a broadening and diversification of our shareholder base. We have shown that our lead drug RXI-109 works in the target population and we are on track for continued clinical development in dermatology and ophthalmology with this compound. We expanded our clinical pipeline with an additional Phase 2 agent [ph] Samcyprone, which is today not a drug, although it has been used a lot, but which would become a first time approval with the associated exclusivity. And we have out licensed our sd technology for development for cell-base cancer immunotherapy a potential step towards personalized medicine. Thank you all for your time and I would like to return the call now to Ms. McGrillen.

Thank you, Geert. This concludes the formal presentation. Operator, may we please poll for questions.

Certainly. The floor is now open for questions. [Operator Instructions] Okay, and our first question comes from Keith Markey of Griffin Securities.

Hi, thank you for taking my question. I was wondering if you maybe could tell us whether you expect further selling by the major investor that you have remaining this year?

So what we expect the major investor to do?

Yes.

Well, of course, we are part of this run, so it’s sort of difficult to say, but I would basically today the major investor has about 6 to 7.3 million shares left. And so what we expect them to do is possibly stay with this amount, yes, and not to give any indications what you would, so would do, it could be that he continues to sell which is in reality not a major issue. It seems it would only probably would continue to put pressure on our share price, but it would further reduce his position and in the medium term I mean in a few months I would expect that our share price is going to react to the fact that there is a major overhang that has been and that is gone. We are actually coming to the point that we are really a publically traded company.

I would imagine that his current holding would be something that he would want to stay with. Thank you. And I was just wondering, Pam mentioned that there was topical delivery system being investigated for the tyrosinase and collagenase drugs and possibly for the ophthalmic indication, but I was wondering is it possible to develop one for the RXI-109 for dermatological scaring, not necessarily obviously well not to be applied during the surgical procedure, but afterwards by the patient even?

Hi, Keith. Yes, it is likely that whatever formulation will be developed for either tyrosinase or collagenase could be adapted to use for the RXI-109 for scaring. You are right in that we may want to do intradermal injections as the initial part of the treatment and then potentially to some sort of delivery later that would be more patient friendly and maybe even allow the patient to do their own treatments at home, but that’s obviously a long-term goal.

Right, right, okay. And then I was just wondering if you might elaborate a little bit on the MirImmune deal, I understand that it involves checkpoint inhibitors and I just wondered if you could give us a little bit more information about them and also what sort of timing here you are thinking of in terms of the collaboration moving forward to pre-clinical development anyway?

Well, first of all let me clarify that we ourselves are not going to be involved in cell based treatment, so we stick to the conventional way of administering drugs. It is totally different set-up. It would be a totally different approach. It is some approach we are absolutely endorsed because our sd-rxRNA platform and that’s also been mentioned by the MirImmune team after they looked at a number of platforms clearly comes up as the most desirable for cell-therapy because you can pretty much harvest the cells from the patients. So with all the cells you can put them in a culture medium and you just add sd-rxRNA saline not in fancy vehicles that may actually cause some damage and cell loss. Our saline just gets sucked up by the cells and we would love to see that progress. They are eager to get started as quickly as possible. I know that they work on a contract basis with a lab. We also know we are enough to do some of the work, I have been told that they have prepared some of their work to get started and I am sure that we will be stay updated on what they are doing. But we think it is an exciting development for our technology platform. We think that it is possibly going to result in major value appreciation of the company because over time we are allowed to get double-digit equity per position that is perfect against solution into that company as they become successful and that is for basically a normal fee of $1, so that’s definitely a good deal.

Yes, it sounds like a great one, especially in the field of house, of immunotherapies, thank you very much. I will step out for now.

Thank you, Keith.

Thank you, Keith. Operator, we may, the next call, is there is another one in the queue.

Yes, we do have a question from Reni Benjamin of H.C. Wainwright & Co.

Hi, good afternoon guys, thanks for taking the questions. I guess just a couple may be starting off with RXI-109, can you talk a little bit about how we should be looking at this product as compared to Pfizer’s Excaliard product, you know is the dosing that you have now learned from 109 is that comparable to Excaliard’s dosing as well, or is there you know some sort of difference there? And I guess related to that, from the data that we do know both in Excaliard’s and Pfizer's product as well as 109 is there any differentiating aspects between the two molecules that we should be aware off?

Yeah, okay. Of course, we don’t know what Pfizer is doing or has been doing with the Excaliard product. What we do know is that the protocols that they were using was a very strict rigid protocol looking at primary endpoint one year after the surgery for each patient that is why the study took about three years I think to readout. We have tried to avoid that by basically going into Phase 2 with doses and the treatments legs that we could afford with the toxicology data that we have and hence we have seen these doses were well tolerated we have been able to then gradually develop protocols that will take us as longer. They have treated up to three months and up to three months from the pictures we have seen because I have already seen what most of the public has seen that product works fine at three months. The fact that they didn’t reach their primary endpoint at one year makes me think that the significance there at three months may not have held up properly, but that is pure speculation of course on our side, but that is when we have decided and talking to our investigators some of them who have been working with the Excaliard product as well that we should treat longer into the proliferation phase to get much more sustainable clinical effect even at later stages by treating longer. And I can maybe hand it over to Pam to explain or mention what we are doing in the current protocols to achieve that.

So, I would just add that we built into our protocols the ability to look at the early readouts so that we could learn very early information about how to optimize dosing and dose level, timing and dose level for a next study. So because of that that is really helped us learn from our first study 1301 to be able to design our second study in hypertrophic scars with additional dosing and in particular also waiting until two weeks after the initial surgery. So, we were able to learn very quickly how to move forward rather than waiting to the end of the study. So, I think by being doing smaller adapted studies we have been able to address some of the issues that might have come up and we will obviously continue to do that as we move forward. The information we learned in hypertrophic scar studies so that we could move into the second one we are combining that also with what we are learning in the keloid study to design better and more optimal dosing regimen for keloids and that’s another study that will be moving forward with as well. So, I think that’s primarily why we did the smaller more adaptive studies to start.

And I guess just relating to the new dosing protocol that’s been selected you know how do you guys come up with let’s say the four weekly doses and then switching to monthly, was that more decided for patients comfort and compliance or did you somehow have some insight that you after four weeks you no longer have to maintain a weekly injection?

That’s a really good question. We do know that RXI-109 is maintained in the skin in animals anyway for at least a week or so. And so we wanted to make sure that we initially got enough drug onboard in order to stop that first, I don’t want to call it ex-financial but that first burst to CTGF. And then because and then move to more maintenance dose that would be more palatable to the patient. Because we are able to look at small groups of patients with this type of dosing we may been learned that we can either spread the dosing out more or you know there is a variety of different ways we can go. We haven’t settled on what we are going to do for the keloid trial and one option we are considering there, because that’s an more aggressive the scar is to do weekly dosing at first and then switch to bi-weekly, or every other week or something like that. So, obviously we are still in the planning stages for that trial based on what we learned with our advisors and by having them review some pictures, but those types of options are being discussed.

Okay, and just relating to the advisors and sort of the qualitative data you guys have been able to provide with the physician remarks, is there any way to make that those qualitative remarks more quantitative going forward as data comes to us?

Yes, yes, as a matter of fact there is, so we’ve look only at very initial subjects that are in the trial and obviously they are moving through the trial and we need to get to it to the total of 20 before we have all of the data collected. However, because we are taking photographs along the way we will be able to do some measurements from those photographs. We in particular are using 3D imaging so that we should be able to not just get a length and width, but also a volume of the keloid. And that will be very important to be able to tell the difference between for example a keloid that is growing very slow versus one that is growing very fast. And I think that that data are going to be very telling, but obviously we can’t do that until we really get further into the study and get to the end of the study, but that we put a number on it, not just an objective, yeah, I think this is doing better than that one.

Got it. And just, I guess related to that, upcoming data presentations, do you have any coming up at, I'll say some dermatology conferences or anything in the next six to 12 months?

We are presenting at the World Congress of Dermatology in June and that will just be an update on all of the three trials that we have going on right now.

Okay, do you think we might have some of that volume measurements by that time?

I do not think we will have them by June, because we want to make sure we get enough, actually I prefer to go and have all the subjects reach a particular point before we do a round of measurements, so that we are not just looking at part of the data for that.

Got it, okay.

We also have a couple of presentations at the Society for Investigative Dermatology which is coming up in, when is that?

May.

May, in May.

And these are all 109, correct?

Yes, that’s all 109.

And for Samcyprone.

And Samcyprone, okay, great. And just related to just switching gears to the MirImmune partnership, can you just tells us these cell therapies, I guess what exactly, how we should be thinking about this platform? Is it cell therapies to induce an immunological response, is it more, you know kind of T-cell engineered cell therapies, you know where you will be using the sRNA to knockout genes within those cells, how should we be thinking about the programs?

So, again first, and again they are doing the work we have been asking them what they were going to do. They are interested in checkpoint inhibitors in the sense that checkpoint inhibitors boundary are approaching that are regulated and grows resistance to chemotherapy. And they would be looking for self-delivering RNAs at to actually lower dose resistance levels true cellular therapy, so basically treat the immune cells but not the natural grow the cells, inject them back into the patient and see if they can beneficially affect chemotherapy.

And do you know when they might be entering the clinic?

Entering the clinic, I understand that entering the clinic is lot faster in cell therapy than in conventional therapy. But they have not laid out their plans yet. I am sure that we will learn more about it that actually progress. I may not be able to talk about it, actually I know I will observe to see them. They may not be prepared to just have me talk about it without them for us being able to talk about it themselves.

Fair enough, fair enough, just one last question from me. The burn rate for 2015, how should we be thinking about it as these clinical trials begin and new ones are initiated?

So, in the past year our burn rate was consistently in the $2 million to the $2.5 million range per quarter. And as we move forward with our current trials and our planned trials we expect this to move closer to the $2.5 million to $3 million range per quarter.

Thanks, very much. Good luck in 2015.

Thank you.

Thanks, Reni.

Thank you, Ren. Operator, we are ready to take one final question.

[Operator Instructions] Okay, we do have a question, it’s from Andrew (ph) [indiscernible].

Hi, everyone, how are you today.

Fine, thank you.

How are you?

Good. Just the question I would have is, is there an expectation for a date for six months photos as well as just more consistent communication overtime given the fact that over the past 13 months we have obviously been punished as stockholders and just trying to counteract may be some of the social media impact which you've addressed before?

So, I can answer that a bit, in most cases you wait to the end of the study for companies to report out at all, that happens quite often. Because we do the adaptive protocols we were able to show one and three months data after such as short dosing period. And in essence we saw what we, we sort of reached our goal and that was to determine whether we have the optimal dosing regimen or whether we needed to make some changes. So by seeing that early on, we did see that we needed to dose longer and we don't expect to see a big difference between treated and placebo as time goes on because we only treated for a very short period of time. So we're still for 1301 we're completing that trial and the final trial results will include six and nine months photos and any comparisons that we do. The last subject in that trial will reach nine months in the late Q3 and then we want to do a full comparison of data and final report and the all parts will go into a data base before we report out on that. However, if we do have key findings before then, we would plan on presenting those.

May be I can add a little bit to that in the sense that when we look at some of the six months for those already, there is actually in the number of patients we can still notice a difference between the treated and the placebo treated side. But it is clear that the difference is becoming smaller and smaller and that is actually one of the things that we're going to try to work on with those volumetric the 3 dimensional measurements because it might give us an indication of how long we will have to treat in order to be able to add one year after the revision surgery, still a significant difference between active and placebo which is the primary endpoint one year after revision surgery from a regulatory point of view at this stage.

It is more of the disaster recovery over the past 13 months that I was looking for more information on just if we see the slip more and more, is there going to be a time where there could be some sort of reassurance go out to the masses that are there on site or at least going on the right track?

Oh, it is a fair question, but I assume you talk about the disaster recovery in terms of the share price because there is no need for disaster recovery with RXI-109. Contrary to what some people seem to believe, we are very much convinced that and our investigators tell us, that this drug works, that is just a matter of declassifying it as a miracle drug that would do it with injections and use it as a normal drug. And as far as the share price is concerned, I can only imagine that selling by all that we purchased which many people have not put into the equation although it was from the get-go in all the documents that have been filed with the SEC. When the dividend, level of dividend that we have to give in preferred shares goes down with the overhang of the preferred shares disappearing and those shares being picked up by other funds as common shares so that they can participate and you've seen the effect on the volume of the training volume everyday that we will come back to normal. There is fundamentally nothing wrong with company. On the contrary, we have been doing pretty well moving along and I am not talking about share price. I am talking about our evolution it is a matter of time for the hangover to the end of the, the overhang not a hangover, the overhand to disappear and the share prices have to recover. If I compare our market value on a fully diluted basis with our peers, others and our company that are in the similar stages that we are or actually one of them is still earlier than we are and I look at our market GAAP pricing there is substantial potential for upside value here.

And doctor, we agree it is more for the masses that do agree with you that fundamentally the business is strong. It is the share price like what you had said that's really taken a beating over the past 13 months. When is time going to be done selling off what they are going to sell off and when can we feel comfortable that they are done doing what they are doing and we can really see the light at the end of the tunnel?

Well, I can only say that I have no control over [indiscernible] capital I could spend at least I take linearly what he has done in the first three months them as he continues them three from now we will be out of preferred shares because he sold $9 million in the first quarter and he only had $7.3 left as far as I can count. But if the past is any indication in terms of how management states they usually tend to keep some portion of their investment on for a long term basis. I just don’t know how much that portion is and still I cannot speculate. I think I've seen the end of the tunnel already and by the way I continue buying because guarantee of course in a blackout, but I continue buying and look, I know the ins and the outs of the company and we are doing perfectly okay today except for the share price.

Okay, thank you.

Thank you for being a shareholder.

And at this time we have no further questions.