Good afternoon, ladies and gentlemen and welcome to RXi Pharmaceuticals’ second quarter 2015 earnings conference call. Today's call is being recorded. At this time, I'd like to turn the call over to Ms. Tamara McGrillen, Head of Investor Relations for RXi. Ma’am, the floor is yours.

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 materially 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 good afternoon to everybody. Thank you all for joining the call today. Before turning it over to our management team, I will highlight some of the events that have taken place in the past months and then will explain seven key initiatives that we expect will create value for our company in the next 12 months and beyond. In the second quarter, we achieved a major milestone in our shareholder structure, with the elimination of the preferred shares and their associated dilutive quarterly dividend. The participation of several premium brand investment firms had new shareholders in our recently completed financing, provided RXi with a much broader and more solid shareholder base, eliminating the overhanging price volatility caused by those preferred shares, the conversion and sale of which caused our share price to decline. This financing provides us with at minimum an additional year of cash, allowing us to focus on rebuilding our share price through data generation and business development activities. In the past weeks, the Board and the Management of the Company have made a detailed assessment of the opportunities that we have internally to generate data and increase shareholder value in the next 12 months. I will now highlights seven key initiatives that we expect to become building blocks for renewed shareholder value creation. First of all, RXI-109 as a hypertrophic scar treatment. Our goal is to accumulate in the coming 12 months sufficient learning to design a key Phase 2b dose finding study. Our study RXI-109-1402, which is a dose finding exploration study has fully enrolled the first two cohorts of ten patients, each who have undergone scar revision surgery and are receiving six dose with our drug over a three-month period compared to a portion of the revised scar area in those…

Thank you, Geert. As we reported today, the company's net loss attributable to common stockholders for the three months ended June 30, 2015 was $2.2 million or $0.05 per share compared with $3.2 million for the three months ended June 30, 2014 or $0.23 per share. The decline was driven by a decrease in the fair value of dividend paid on both periods of the company's preferred stock. This was due in part by a decrease in the company's share price on the dividend payment date which is used to calculate the fair value of the dividend as well as by a decrease in the shares accruing dividend this quarter as compared with the same period in the prior quarter. Total operating expenses for the quarter ended June 30, 2015 were $2.2 million compared with $2 million for the quarter ended June 30, 2014. The increase in expense was primarily driven by subject and trial-related fees for the company's current clinical trials primarily for program costs for a second hypertrophic scar Phase 2a trial Study 1402 as the first Phase 2a trials in hypertrophic scars and keloids are coming to a close. Net cash used in operating activities was $1.8 million for the second of 2015 as compared with $2 million for the second quarter of 2014. While the company has seen an overall increase in expenses as compared to the prior year, we have been able to keep our cash burn at a consistent rate of approximately $2 million per quarter. Our net cash used in operating activities was primarily driven by research and development costs in our dermatology franchise for our three ongoing clinical trials in hypertrophic scars and keloids, namely Study 1402. Now turning to the balance sheet, the company had cash, cash equivalents and short-term investments…

Thank you, Caitlin. Hello, everyone. For the next few minutes, I will give you an overview of our research and development programs at RXi. I will start with an update on RXI-109 for both our dermal and ophthalmology programs, and then we’ll view our ongoing work with Samcyprone. First and foremost, at the end of July, we filed an IND for the use of RXI-109 for the treatment of the retinal scarring component of wet age-related macular degeneration or wet AMD. We are currently in the 30-day wait period with the FDA before we can initiate this trial. During this wait period, we are in the process of obtaining approval from the Institutional Review Board at Johns Hopkins’ Wilmer Eye Institute and working closely with Dr. Campochiaro and his team to be able to initiate the trial as soon as possible thereafter. Because we shared the proposal for the clinical protocol previously with the FDA and had a positive interaction at that time as part of the pre-IND documentation, we believe that the FDA will not have any further comment or questions at this time. Based on this, we are on track to initiate the clinical trial as it has been submitted to the FDA by early in the fourth quarter. The trial itself will be known as RXI-109 1501. Subjects in this trial will have advanced AMD, meaning that they have already had AMD for a while and likely have already been treated with the standard of care anti-VEGF medications. These drugs like Lucentis work to block vascular endothelial growth factor, VEGF, which is a cytokine that stimulates the neovascular component of AMD. Elevated VEGF levels cause aggressive blood vessel growth, leakage and disruption of the retina at the back of the eye, leading to vision loss and blindness.…

Thank you, Pam. As you have heard from our team today, the company has been working diligently towards not only achieving the 2015 corporate goals outlined at the beginning of this year, but also looking at to future and value creation catalysts to increase shareholder value. These seven key initiatives were explained in the beginning of the call today, and we believe our rebuilding blocks that will rebuild our share price. As I mentioned this morning in our press release, the cash run rate that we now have due to the recent financing provides us with the ability to work on these initiatives as we aim to, number one, advance our preclinical and clinical pipeline. Number two, generate partnership deals and number three, deploy our self delivering sd-rxRNA technology platform in a portfolio approach akin to the way venture capital firms deploy their capital through establishing equity positions in young biotechnology companies to create value for our investors. Once again, thank you for taking the time to participate on the call today and I will now return the call back Mrs. McGrillen.

Thank you, Geert. That concludes the formal portion of our presentation today. Operator, at this time, we would like to poll for questions, if any.

[Operator Instructions] We do have a question in the queue. This one comes from Mark. Go ahead, Mark. You are live.

Hi, guys. Thanks for taking the questions. Congratulations on all the progress. I just want to ask, in previous calls, I think we’ve discussed some ongoing efforts to perform quantitative volume metric analysis of scars to provide firm measurement of treatment efficacy in conjunction with using a blinded panelist estimate. Are these efforts still ongoing?

Hi, this is Pam. Because we are taking 3D photographs of the scars along the way, we do intend to try to use a volumetric measurement. It turns out it’s a lot harder on scars than you may think, because the differences from previous scars that were revised to the scars that we see the SEMs may be easy to differentiate, but it’s a little bit harder to differentiate amongst scars that have been revised and don’t have very much volume, revised and treated and don’t have very much volume. So we are continuing to try to include that in our assessments. It may be more important than we are doing QAs [ph] which have a much – may have a much bigger volume. So, yes, we are trying to keep those in our assessments.

Okay, got it. And another question on the scarring program. Given all the flexibility that’s sort of built into the 1402 trial, your ability to add additional cohorts, can you clarify for me what would be different in a formal Phase 2b study? Why couldn’t we essentially get that information by adding additional cohorts to the 1402 trial?

The major difference is the way we do it now is sequential. And so we learn and we adjust based on what we see that’s a protocol design. When you want a formal dose finding study, it needs to be randomized, meaning that you cannot do it sequentially, you don’t -- once you lock yourself into a formal dose finding study it’s not an adaptive design anymore and that is the prelude to the annual Phase 3 program, so that’s the difference.

And also in the Phase 2as, we are doing relatively small cohorts because we want to get an idea of what’s going on and apply that to the next you know like to the next set of studies. So in Phase 2a there is fairly small and Phase 2b, we’d likely chose one or two dose regimens and then apply that to a broader patient base.

Okay got it, that makes perfect sense. Finally, one last question based on your collaboration with MirImmune, are we expecting to see any preclinical data coming out of that later this year or even early next year?

Since it’s MirImmune that has -- that’s taken the license, we are basically a 10% shareholder. We are not in control; we are not in control of how they work. We know that they have some work ongoing in collaboration with an academics vendor in Europe. And I certainly would hope that some data become available but we have little control over that, they’re in charge.

Okay, thanks. All right, thanks for taking the questions.

Thank you for those questions Mark. The next question comes from Keith. Go ahead Keith, you’re live.

Hi, thank you for taking my questions. I was wondering if you might be able to elaborate a little about the 1501 trial, for instance, what would be the timeline, secondary endpoints, number of dosages that you’re going to be testing, that sort of thing.

I can say a little bit but since we’ve just submitted that to the FDA and we haven’t actually been confirmed that we can go forward, I hate to say too much. We will be doing multiple doses; they’ll be on a similar you know if we’re approved for what we have in -- have submitted to the FDA, we’ll do multiple doses on a schedule much like Lucentis or the current anti-VEF drugs are given for monthly. And the intent there is to do the first dose and follow that by a very comprehensive safety assessment before we would move on in those same patients to dose -- to continue dosing. So the initial dose will be followed by all the normal exams you get when you go the eye doctor but we’ll also include a number of more detailed assessments like fluorescein angiography, OCT which is a way to look at the back of the eye and non-invasive way to look at the back of the eye and look at the health of the retina and things like that. So that’s sort of a general overall plan but the study will be under -- each patient’s involvement will be under a year.

Okay, great thank you. Will the patients till be treated with Avastin during the study or are these patients who have [indiscernible] taking the Avastin?

If these patients -- if their doctor is prescribing Lucentis or Avastin or whatever anti-VEGF treatments that they’re on, they will be allowed to continue. Some of these patients, well we don’t know yet, it depends on who becomes enrolled but some of these patients, the VEGF treatment has not -- has stopped working essentially, so they may not be getting a VEGF treatment at this time but either way, they would be allowed to enter into the trial. The most important part is that they have advanced disease and that gives us a chance to look at -- to potentially see some scars and see that maybe the chances that we could slowdown the grow of the scars that are already there.

Would you expect or do you think it’s possible that some scars would be in -- to certain extent reduced in size?

Our drug does not reduce scars, it really only reduces the formation of scaring. So just -- I believe that the scars that are already there would just not be -- our goal would be to prevent their progression.

Okay. Thank you.

Part of why this is an important drug is that if it were to be able to prevent progression and you’re able to give this to patients earlier in their course of disease, you would be able to prevent the formation of the scars that naturally comes, even though the stations are on anti-VEGF treatment. And so that could preserve their vision for a longer time.

Right. And then I was wondering, one of the things you did at least it seems like in evaluating your MMT1 siRNA, was to look from biological activity by monitoring mobility of the cells and I was wondering those were cancer cells. Is there any interest or has there been any interest expressed from outside parties to take this particular siRNA in to the clinic for development or cancer treatment.

Not specifically for cancer treatment at this moment, but as I alluded to, we have been talking to some players through some companies in this space to work with us – collaborate with us on tyrosinase or the Collagenase program, but I agree with you Keith that the observation on all the cancer cells could be of interest. I would probably like to see more work done internally, so that we have stronger database to make a bigger splash.

Do you think that you will retain at least some of the rights to these compounds and maybe give your partner a few – working in Tyrosinase or Collagenase initially so that you can, do you think you can give them an option to acquire the drugs, upon further investigation that you would be doing or do you think you’re just moving off to the other parties to development?

Right now, specifically Collagenase, Tyrosinase, there are several possibilities. As I pointed out, we have a very good candidates about to get Tyrosinase and then other candidates getting Collagenase. We are selecting, one, to put more on an consumer cosmetic skin care track and the other to put on a therapeutic skin care track and it is certainly possible that we up the marketing rights for this separately. The intent in general from business development point of view is that for our own market, the US, we would like to keep rights even if it is semi exclusive together with a larger partner, but the rest of the world pretty much is something we are quite willing to basically license out. That’s also the reason why I mentioned in one of our building blocks for business development that our target is certainly the regional partners or the regional players that are trying to break out of their own geographic territory and become builder.

Thank you very much.

Thank you, Keith. The next question comes from Hobart. Go ahead. You’re live.

Thank you for taking my question. First of all, you filed the IND for macular degeneration. Can you tell us the exact date that it was filed?

As we have announced, we filed it a few weeks ago and as I’m sure you know, there is a 30 day waiting period. It is unlikely that we will immediately start with a clinical study on day 31, because that 30 day period is basically by law. The -- still the IRB, well we are interacting with the IRB. So we are not providing, so what’s the key date is not when you file the IND, the key date is really when you are able to get started with the study.

I understand. And so I am happy to hear that you are concerned about the stock price, because market cap is king. Without it, you are in a very difficult situation. And I worry about 12 months, six months, that in this time period you will be attacked by short sellers who will view you as a target. And when you say generate partnerships where are you in that process? You need team members, who are you – how are you going to bring people, other companies, larger companies into the fold to protect your side of the field?

So there is various ways we can do it. First of all, certainly trust me, I understand that market cap is a very important piece. I also and I don’t want to dwell on the past. Look, the company got originally financed by Galena and the hedge fund people, the way it was, we had to work through that. We are highly committed as I hope to be very clear to rebuilding the share price. And I feel confident that we can do that. One of the items or the aspects and I cannot go into the details of with whom we are talking, but one of the aspects that comes up when we are doing, talking something like that is that there is commitments from a partner, for instance, from a strategic partner with a sign up to work with us on a regional license or what have you. But they would be buying stock in the open market. And that is basically one of the things that I can definitely put on our wish list, a list of things to -- and we are actually looking this for reference, although reference of course we are asking for it, but the shareholder value to us is very primary in terms of a concern. So we see that such partners would agree to buy shares in the open market, that is in my opinion a reasonable way to try to increase the shareholder value.

I am glad to hear that. And it’s good to hear that management is paying attention to the market dynamics. And I would say, I am also happy to see the cosmeceuticals, is this a new focus, because obviously the FDA is difficult to – it has many hurdles to jump through, but is this cosmetic focus now gaining more priority?

So, first of all, if you would look at my background, I come from Johnson & Johnson where I was in-charge of development of the skin care franchise both beauty and cosmetic consumer. So Retinol, for instance, which is a cosmeceutical. That way I want to make it clear immediately cosmeceuticals are not official legal category in this country. In this country you have only cosmetics, or skin care, consumer skin care products and drugs, OTC or Rx. In other countries like in Japan and also in China, you have something called quasi drugs, which is the same thing. It’s cosmeceutical, but it’s called quasi drug. So it’s a new focus for RXi, but it is certainly not that the people that are working within RXi are experienced in this space. This is very important from the doctor, from the moment and that’s why we separate the compounds. We have two candidates for collagenase, anti- collagenase where we have two compounds, anti-Tyrosinase. One is going to go on a consumer cosmetic development which is totally different. For instance, you are not allowed to do animal studies if you want to get in the European market with cosmetic products. So, it’s a totally different thing and you have to separate it completely but we are very conscious about it, we know how it has to be done. As I said, I’ve done it before. It is not an unbeaten path, it’s a beaten path.

Great. Thank you for taking the questions.

Thank you.

Thank you.

Up next, we have Jeffrey. Go ahead Jeffrey, you’re live.

Yes. I’m a regular guy, investor in this Company, and I make 500 bucks a week. I’m your regular dude investing in the Company for the long-term and I have a lot of faith in you guys. I’ve heard a lot about you and I own some shares in this thing and what I was going to ask is a forward-looking statement answer. Do you potentially think that your Company could have a cure for something like baldness?

That’s an interesting question. Baldness is caused by a number of things. For instance, if I go to [indiscernible], okay, that’s a small molecule but you are attracted by, of course, because it was a Phase 2 asset and also because alopecia areata is a formal baldness. So, if you consider that type of baldness, we actually already have a cure for that type of baldness. There are other types of baldness that have to do with microcirculation, that have to do with protein BTL2, which is [indiscernible] that is down-regulated in baldness so that apoptosis occurs more quickly and so, your hair cycle gets shortened. So, cure against baldness, in general, the answer is no. Against substantial baldness, yes, if we get the right target we can do that.

That’s excellent, and I just want to say that my stepmother was born Marlboro, Massachusetts and I’m from Massachusetts as well. Now, I live in Phoenix, Arizona and I appreciate all your information and I appreciate what you guys are doing and I’m going to keep investing. Thank you.

Thank you for being an investor.

Thank you.

Thank you. Operator, I believe unless there are any other questions, we might have time for one more, otherwise --

There are no further questions.

All right. At this time, we like to thank everybody for participating in the call and have a great day.

A good evening.

Thank you. This does conclude today’s teleconference. We thank you for your participation. You may disconnect your lines at this time and have a great day.