1390478--3/31/2010--RXI_PHARMACEUTICALS

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Risks Relating to RXi s Business and Industry The approach we are taking to discover and develop novel therapeutics using RNAi is unproven and may never lead to marketable products. We will be subject to competition and may not be able to compete successfully. We may not be able to establish or maintain the third party relationships that are necessary to develop or potentially commercialize some or all of our product candidates. We are dependent on technologies we license, and if we lose the right to license such technologies or we fail to license new technologies in the future, our ability to develop new products would be harmed. We will rely upon third parties for the manufacture of our clinical product candidates. Any drug candidates we develop may fail in development or be delayed or may not be commercially viable. The FDA approval process may be delayed for any drugs we develop that require the use of specialized drug delivery devices or vehicles. If we are not successful in developing pre-clinical product candidates, we will not be able to commence clinical trials in humans or obtain approval for our product candidates. Even if we obtain regulatory approvals, our marketed drugs will be subject to ongoing regulatory review. If we fail to comply with continuing U.S. and foreign regulations, we could lose our approvals to market drugs and our business would be materially adversely affected. Even if we receive regulatory approval to market our product candidates, our product candidates may not be accepted commercially, which may prevent us from becoming profitable. We may be unable to protect our intellectual property rights licensed from others parties, our intellectual property rights may be inadequate to prevent third parties from using our technologies or developing competing products, and we may need to license additional intellectual property from others. Our success depends upon our ability to obtain and maintain intellectual property protection for our products and technologies. We are subject to potential liabilities from clinical testing and future product liability claims. Any drugs we develop may become subject to unfavorable pricing regulations, third-party reimbursement practices or healthcare reform initiatives, which could have a material adverse effect on our business. If we fail to attract, hire and retain qualified personnel, we may not be able to design, develop, market or sell our products or successfully manage our business. We use biological and hazardous materials and if we do not comply with laws regulating the protection of the environment and health and human safety, our business could be adversely affected. Risks Relating Our Financial Position and Capital Requirements We may not be able to obtain sufficient financing, and may not be able to develop our product candidates. We expect to continue to incur significant research and development expenses, which may make it difficult for us to attain profitability, and may lead to uncertainty about or as to our ability to continue as a going concern. Future financing may be obtained through, and future development efforts may be paid for by, the issuance of debt or equity, which may have an adverse effect on our stockholders or may otherwise adversely affect our business. You may have difficulty evaluating our business, because we have limited history and our historical financial information may not be representative of our future results. We have limited operating experience and may not be able to effectively operate. The obligations associated with being an independent public company require significant resources and management attention. Risks Related to Ownership of Our Common Stock The market price and trading volume of our common stock may be volatile Sales of our shares by CytRx could adversely affect our stock price. We have granted CytRx preemptive rights to acquire shares that we may sell in the future, which may impair our ability to raise funds. CytRx s ownership of our common stock could delay or prevent a change in corporate control. CytRx could unilaterally effect a change of control of our company by selling or disposing of our shares owned by it. Anti-takeover provisions of our certificate of incorporation and by-laws and provisions of Delaware law could delay or prevent a change of control that you may favor.

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1390478--3/31/2010--RXI_PHARMACEUTICALS_CORP