RVX.TO - Resverologix

[Josh4580]

I believe the market is misunderstanding how significant the results of Resverlogix's Phase IIb results were and are pricing the stock as if there is a 1% chance that their main drug RVX-208 will be a success.  I believe the odds are much higher and that RVX-208 has a real shot at becoming a game changer in the treatment of Cardiovascular disease. 

 

I am not going to post my full analysis as I am just trying to get the discussion started and hear everyone else's opinion.

 

Company Description: http://www.resverlogix.com/

Resverlogix Corp. (TSX: RVX) is a clinical stage cardiovascular company with an epigenetic platform technology that modulates protein production. Resverlogix is developing RVX-208, a first-in-class small molecule for the treatment of atherosclerosis. RVX-208 is the first BET bromodomain inhibitor in clinical trials. New compounds arising from Resverlogix's epigenetic drug development platform function by inhibiting BET bromodomains and have the potential to impact multiple diseases including neurodegenerative diseases and diabetes mellitus.

 

Bloomberg article after Phase IIb results: http://www.bloomberg.com/news/2013-06-27/resverlogix-plunges-93-after-drug-trial-fails.html

 

Key Important Follow Up Analysis:

 

http://www.resverlogix.com/media/press-release.html?id=492#.UzYbR_RDvuI

-"In patients with low HDL receiving RVX-208 and Rosuvastatin (Crestor®), plaque regression was twice as pronounced as compared to the pre-specified primary endpoint."

 

http://www.resverlogix.com/media/press-release.html?id=494#.UzYbQvRDvuI

-RVX-208 lowers Inflammation and MACE Events while Regressing Atheroma in High Risk CVD Patients"

 

http://www.resverlogix.com/media/press-release.html?id=497#.UzYbOvRDvuI

-RVX-208 treated patients have significant lower MACE events in high risk CVD patients"

 

Key Statistics:

Shares outstanding: 81,729,160

Diluted shares outstanding: 82,566,137

Current Price per share: $0.68

 

Mean Percent Atheroma Volume (PAV) decrease of ETC-216: -1.06%

Purchase price of Esperion Therapeutics: $1.3 billion by Pfizer

 

Mean Percent Atheroma Volume decrease of RVX-208 with Rosuvastatin: -1.43%

Diluted Market Cap of Resverlogix: $56 million

 

 

Background On Esperion Therapeutics

Esperion Therapeutics

In 2003, Pfizer purchased Esperion Therapeutics Inc for $1.3 billion.  Esperion’s only drug in development was ETC-216 (ApoA-1 Milano).  From the Baltimore Sun article:

 

“ETC-216, based on a natural compound identified in a small group of long-lived people in a remote village in northern Italy, mimics the effect of "good cholesterol," or high-density lipoproteins. Researchers say HDL probably works by removing cholesterol from the artery wall, where it can rupture and cause heart attacks.”

 

Pfizer purchased Esperion briefly after the results of ETC-216 study were released in JAMA (

Journal of the American Medical Association).  The results were as follows:

 

“ The mean (SD) percent atheroma volume decreased by −1.06% (3.17%) in the combined ETC-216 group (median, −0.81%; 95% confidence interval [CI], −1.53% to −0.34%; P = .02 compared with baseline). In the placebo group, mean (SD) percent atheroma volume increased by 0.14% (3.09%; median, 0.03%; 95% CI, −1.11% to 1.43%; P = .97 compared with baseline). The absolute reduction in atheroma volume in the combined treatment groups was −14.1 mm3 or a 4.2% decrease from baseline (P<.001).”

 

These results were measured using IVUS (intravascular ultrasound).  IVUS was pioneered by Steven Nissen of the Cleveland Clinic, who is one of the top cardiologists in the United States.  These results were amazing at the time as the results were achieved with only 5 weeks of injections of ETC-216.  However, Pfizer discontinued development of ETC-216 because of problems manufacturing enough of the compound to use in clinical trials.  They have since sold the rights to the compound to the Medicines Company (MDCO) and its now renamed to MDCO-216. 

 

ASSURE Phase 2b Results

Resverlogix announced on June 27th, 2013 that the top-line results did not meet its primary endpoint of a -0.6% change in PAV, with results coming in at a -0.4% change in PAV.  The stock was immediately crushed from $3.00 to $0.19 for a loss of 94%.  Interestingly enough, the patient group receiving active treatment met the secondary endpoints of regression of total (coronary) atheroma volume (TAV) and increases in Apolipoprotein A-I (ApoA-I) and HDL cholesterol.

 

The full data set was released on September 3rd, 2013 which had the blockbuster findings.  . Those patients taking Rosuvastatin (Crestor®) and RVX-208 had a highly statistically significant Percent Atheroma Volume (PAV) plaque regression of -1.43% with probability value of p<0.002, v.s. baseline.  Those patients taking Atorvastatin (Lipitor®) together with RVX-208 had a PAV plaque progression of +0.19% with a non-significant probability value v.s. baseline.  RVX-208 was clearly synergistic with Crestor and not with Lipitor. 

 

Latest Presentation

http://services.choruscall.ca/links/resverlogix140213.html

-Good information summarizing new Phase IIb post hoc analysis

-Good information on financing opportunities for Phase IIc study (cost is around $25 million)

-Good information on market size (8 million plus in United States alone)

 

American College of Cardiology Presentation on Monday March 31st

http://www.abstractsonline.com/pp8/#!/3392/presentation/28366

Participants

Rishi Puri, Yu Kataoka, Kathy Wolski, Allan Gordon, Jan Johansson, Norman Wong, Steven Nissen, Stephen Nicholls, Cleveland Clinic, Cleveland, OH, USA, South Australian Health & Medical Research Institute, Adelaide, Australia

http://en.wikipedia.org/wiki/Steven_Nissen

 

Results: Increases in apoA-I by 12.8% (P<0.001) and HDL-C by 11.1% (P<0.001) compared with baseline were observed in the RVX-208 group. RVX-208 was associated with a reduction in percent atheroma volume (PAV) and total atheroma volume (TAV) in patients with CRP ≥ 2mg/dL. Such benefits were not observed with RVX-208 in patients with CRP <2mg/dL. A lower MACE rate was observed in RVX-208-treated patients (6.9 vs. 18.9%, P=0.02) in patients with CRP ≥2mg/dL (Table).

 

-This presentation focuses solely on stratifying results based on patients with high and low inflammation.  I believe the better way to stratify would be Crestor vs Lipitor use as these results are easier to understand and are much more significant. 

 

This is my top pick for 2014.  The downside here is -100% while the upside is enormous. 

 

Any thoughts?

[Josh4580]

Cleveland Clinic Presents RVX-208 Data at American College of Cardiology (ACC) Conference in Washington DC March 31, 2014

 

"RVX-208 decreases Major Adverse Cardiac Events (MACE) in patients with systemic inflammation"

 

http://finance.yahoo.com/news/cleveland-clinic-presents-rvx-208-170000221.html

[Josh4580]

http://finance.yahoo.com/news/resverlogix-secures-additional-30-million-232100821.html

 

Resverlogix Secures an Additional $30 million from Citibank Loan

 

The loan will be secured by an irrevocable $68.8 million Standby Letter of Credit (the "Letter of Credit") arranged by Eastern Capital Limited ("Eastern") which will be maintained until maturity of the loan.

 

-Resverlogix is now fully funded for the next Phase 2 trial called RE-MACE.

 

 

 

[Josh4580]

http://www.theglobeandmail.com/globe-investor/investment-ideas/scientist-invests-in-biotech-stocks/article19978394/?cmpid=rss1

 

"Scientist invests in biotech stocks"

 

There is “a compelling case for the science behind Resverlogix and their lead compound, RVX-208,” Mr. Christensen believes. Post-hoc analysis of data from past clinical trials at Resverlogix indicates that the compound can inhibit bromo and extra terminal (BET) proteins. This is encouraging to him because there is a “growing body of scientific evidence” that BET-protein inhibitors protect against heart disease.

 

In the spring, insiders purchased $2-million worth of Resverlogix shares. Also, the company announced in July that it had obtained a $30-million loan to conduct new trials. Yet, it remains “grossly overlooked.”

[west]

"Grossly overlooked," just like this thread.  Pharmaceuticals are typically way outside my area of expertise, but I'm guessing I can learn enough to get comfortable with an idea like this.

 

Thanks for posting.

[crackspread]

lol. biotechs. good luck.

[west]

crackspread, I recommend looking into Josh's history with these types of companies.  And asking yourself whether they're truly unanalyzable...

 

[Josh4580]

lol. biotechs. good luck.

 

Crackspread.  These type of special situations in the biotech space don't come around often and they aren't appropriate for most value investors.  I am prepared to lose 100% of my investment in Resverlogix. 

 

I've been following RVX since 2007 when it hit $29 a share and only bought earlier this year at around the current market price.  The same thing happened with ITMN which I started following in 2010 at $45 and bought earlier this year at $11.50.  Sometimes the market only reads the top-line news and reacts without understanding the complete situation. 

[LC]

Well, my thoughts are...

 

I have no idea about 99% of what I read in the original post. So already I am at a huge disadvantage here because I am no doctor.

 

My naive, rudimentary and probably incorrect understanding of the situation is this:

 

1. They make a drug that inhibits some proteins? which are bad for the heart. That is good.

2. The way they measure the amount of proteins inhibited is something called PAV. Lower is better.

3. RVX had some tests done, which they needed to hit -.06 PAV, but they only hit -.04. Bad news.

4. Full results offer a silver lining: apparently RVX's drug plus Crestor made the PAV -1.43%!! That is good.

 

So what's left is a drug which is apparently (key word: apparently...) really good when combined with Crestor.

 

So is the end game here that RVX get's acquired or does some awesome licensing deal with Astra Zeneca? Crestor is a blockbuster drug so...the runway is huge.

 

The risk I guess, is that word apparently. I know nothing of the medical world other than I have to go to the doctor every year. What are the chances that this awesome result of RVX + Crestor is just an aberration? I have no idea how to discount that.

 

For me, with my layman's brain, this is a lotto ticket with the payoff seemingly skewed to the upside.

 

Am I even close to understanding the situation correctly?

[west]

LC, I recommend doing research on your own for this.  Try to find out about how the drug approval process works in the US.  Find out about the pre-existing drug that exists, what its market is like, and why that market exists (or doesn't).  Why is this drug needed?  Try to find out everything you can while keeping in mind the Pareto principle, that 90% of what's important with this investment will be explained with just 10% of the information that exists about it.  Also, keep in mind expected value.  There's a chance this could go to zero, no matter what the odds are today.

 

I don't think anyone explain the investment well enough to justify you taking a position in just one post.  I know I can't!  (Not at this point.)

 

If you can't understand everything that's going on, it's probably just best to put this in the "too hard" pile.  But I'm guessing you can do it if you try.

[kilroy04]

Epigenetics - making your genes perform better  (like diet and exercise can improve your health).  This is improving your cardiovascular risk with a drug acting to increase good cholesterol.  Melting away plaque (or decreasing it and stablising it) would be a big deal. 

 

Crestor - loses it's patent in 2016.  Already a court battle with the generics

Astra Zeneca - 25B in sales (of which 5-6B potentially is Crestor)  Report core profit of 8B

    Sales were 33B 2 years ago

    Likely looking for a means of patent extension (two drugs combined is a strategy for that)

 

Crestor is approved for use to decrease cholesterol with elevated CRP (inflammatory marker associated with cardiac disease)

RVX-208 is more effective with CRP>2 and when combined with Crestor

    patient study numbers are very small though (n abt 50 for CRP >2 and 25 CRP<2)

    MACE (major adverse cardiovascular events) were also notably less with RVX  (again the numbers are small meaning it not certain)

 

Potential adverse effects - both Crestor and RVX - 208 can cause liver enzyme problems.  Crestor can exacerbate diabetes....RVX may be a form of therapy

 

Don't know if there are other similar molecules out there being developed  (i.e. is it like type II diabetes with multiple competing drug variations)

 

Most of the recent 2m buy by insiders was from a BOD director with expertise in drug development from the business side

 

Definitely an interesting scenario - special situation.  Don't think it is a zero any time soon given the 30m raise and the time required for another phase II study.  Lot's to look at including warrants optionality and whether the next phase II study design is public.  This company has repeatedly been able to raise capital - probably a good sign. 

[lschmidt]

Investing in biotechs is a difficult, difficult business. Disclosure: I'm a doctor who has never invested in one. I prefer the simpler pastures of financials ;)

 

I very briefly looked over this product. It is definitely a very novel chemical in search of an indication. It is, indeed, problematic that the phase 2b study did not meet its endpoint. They are scrambling to do a post-hoc analysis which might salvage utility in the cardiovascular domain. Post-hoc analysis is generally considered of low clinical and statistical validity, though there's some chance it may come up with an inkling of information about what trial to do next. Another difficulty is that we don't know the ultimate relevance of the measure used (PAV - plaque [atheroma] volume). We really want drugs to reduce death and sickness. This is a surrogate marker far removed from that and not one of the commonly used ones leading to FDA approval. It has been turning out lately that these surrogate markers (like HDL) have been less correlated with sickness and death than we thought. For example, drugs that raise HDL were recently shown not to decrease death rates (like niacin and fibrates). There's an increasing push to use more relevant predictors, and the FDA will be jumping on this trend.

Bottom line:

Post-hoc analyses make most scientists cringe and don't result in useful/replicable data that often

The endpoint is of loose clinical relevance, and it's unclear what the FDA would ultimately mandate for Phase III

There is an increasing history of drugs that improve cardiovascular markers (like HDL) but don't decrease (over increase) death

Showing that something is synergistic with Crestor but not Lipitor is of questionable scientific validity (because they're similar and probably interchangeable chemicals)

Showing a true cardiovascular benefit will require a large, long trial that will require money that the company doesn't have (probably over 50-100 million)

 

But:

the drug is novel and may have a multitude of uses (particularly cancer). A larger company may certainly want to partner or buy it, pouring the money into a proper cardiovascular or cancer trial.

This is certainly a gamble.

 

[Vish_ram]

Ph 3 are much larger trials with huge number of patients across continents. If Ph 2 requires 25-30MM, Ph 3 may require several hundred millions. With such a tiny market cap, if they don't have a partner for ph3, the dilutions will be enormous. If they sign a partner, it remains to be seen who gets the upside.

 

To give you an example, MNKD spent 2.3B of their own money (without a partner) and after approval signed up with Sanofi. They got a pittance as upfront payment and only 35% of profit (+ they would bear 35% of costs). What they got was peanuts. They diluted the share count to 400+Mil shares.

 

Even if you like this story, don't take a full position. You would have so many opportunities to buy in next 2-3 yrs before FDA approves it.

 

Also FDA sets the bar very very high if there are already several approved drugs that provide adequate efficacy. Their focus shifts to safety in these circumstances.

 

[kilroy04]

Secondary analysis on very small numbers - definitely a problem.  That said, setting a primary endpoint when in early small phase II trials can be a challenge.  The scientific team sits around and tries to come up with something that would be powerful and reasonable to achieve. It's really a best estimate hypothesis.  Phase III is where you can come in with a more certain primary endpoint because you have stronger phase II data (hopefully) to work with.  My guess - their primary endpoint and study design today would be different than what they did.  From what I can gather - it sounds like another phase II trial of 800-1200 patients is in the offing.  That will take some time. Also, finding the risk profiles for whom it is beneficial and not harmful is a discovery process i.e. the more 'personalized' medicine approach.

 

Another question - if the drug is what they say it is, why hasn't one of the big pharma companies already picked it up?  My guess,  the numbers are still too small i.e. the data isn't strong enough.  For Astra Zeneca - less than 2 yrs left on their patent is not much time.....I suspect they are watching with interest.

 

Certainly interesting - but agree no certainty here.

[kilroy04]

One way to look at this is as a 75c option with a 2 year expiry date.  The optionality could easily be a 3-10x. Their history of doing a phase II trial suggests it takes about 2 yrs.  They have 30m in financing which should carry them for this particular phase II trial and ongoing administrative expenses for that duration.  If you don't like the decay rate in a year, progress on the trial etc, you have time to get out.  In the mean time, a buy out at an attractive multiple is conceivable.  If one were to take this on (and a director has in the millions) you would certainly want to size it so a 50-100% loss is factored in to the range of outcomes.

[Josh4580]

http://edge.media-server.com/m/p/5wz2z9gn

 

http://www.resverlogix.com/media/press-release.html?id=512#.VLqJKIrF-Dg

 

Resverlogix announced their Phase 3 trial design (BETonMACE trial) at the 2015 Biotech Showcase for RVX-208.  This should pave the way for a partnership with Big Pharma. 

[phil_Buffett]

nice presentation  :)

[Josh4580]

http://finance.yahoo.com/q?s=RVXCF

 

Resverlogix up 28% today on decent volume.  Finally back over my initial post price of $0.68.

 

This is my favorite risk/reward for 2015.

 

The next best would be Fannie/Freddie preferreds

[Josh4580]

http://finance.yahoo.com/q?s=rvxcf&fr=uh3_finance_web&uhb=uhb2

 

RVXCF is now up 100% since I first posted about it last year at $0.68.

 

There was a great research report put out today by this research analyst Marcel Wijma.  I have attached the report to this post. 

 

As seen below, his DCF analysis gets to a value of CAD 5.85 or $4.61 USD. 

 

"We value RVX-208, and thereby Resverlogix as a whole at CAD 500 million or

CAD 5.85 per share. This is based on a risk-adjusted net present value analysis of

income from RVX-208. RVX-208 clearly has blockbuster potential. We choose not

to value the company’s total technology platform and potential additional

indications for RVX-208 and therefore only to make a valuation of the current

clinical pipeline of RVX-208. We feel that potential value of its platform and

additional indications offers an additional upside potential. With the start of a large

Phase III clinical trial we estimate a probability of success of 54%. This is based on

an independent survey executed by BioMedTracker and BIO in 20121. "

 

I continue to believe this is a great risk/reward at $1.36 per share. 

Leeuwenhoeck_RVX_Initiating_Coverage_$5.85_PT.pdf

[phil_Buffett]

http://finance.yahoo.com/q?s=rvxcf&fr=uh3_finance_web&uhb=uhb2

 

RVXCF is now up 100% since I first posted about it last year at $0.68.

 

There was a great research report put out today by this research analyst Marcel Wijma.  I have attached the report to this post. 

 

As seen below, his DCF analysis gets to a value of CAD 5.85 or $4.61 USD. 

 

"We value RVX-208, and thereby Resverlogix as a whole at CAD 500 million or

CAD 5.85 per share. This is based on a risk-adjusted net present value analysis of

income from RVX-208. RVX-208 clearly has blockbuster potential. We choose not

to value the companys total technology platform and potential additional

indications for RVX-208 and therefore only to make a valuation of the current

clinical pipeline of RVX-208. We feel that potential value of its platform and

additional indications offers an additional upside potential. With the start of a large

Phase III clinical trial we estimate a probability of success of 54%. This is based on

an independent survey executed by BioMedTracker and BIO in 20121. "

 

I continue to believe this is a great risk/reward at $1.36 per share. 

 

 

i believe it as well. thanks josh for the Report!!!  :)  8)

[Josh4580]

RVXCF now up 240% to $2.31 per share from original $0.68 write up price.

 

They signed a licensing and equity deal with Shenzhen Hepalink

 

"The deal structure involves CAD$50 million in equity investments, and future China sales milestones and licensing royalties that could represent in excess of US$400 million"

http://finance.yahoo.com/news/resverlogix-china-based-shenzhen-hepalink-110000218.html

 

Company is in talks to sell itself to a large pharma company:

 

Resverlogix CEO Says Company in Discussions to Be Bought

http://www.bloomberg.com/news/articles/2015-04-28/resverlogix-ceo-says-company-in-discussions-to-be-bought

 

“We are in discussions with multiple companies, not just one,” Donald McCaffrey, CEO of Calgary-based Resverlogix, said in a phone interview

 

“We see ourselves as a potential acquisition target,” McCaffrey said. “We are tightly controlled, so we wouldn’t let it go at anywhere near the rates we’re at right now.”

 

I still think this one has lots of upside to go.

 

 

[ItsAValueTrap]

A stock promotion website states that Resverologix is a client.  I'd be careful.

[phil_Buffett]

http://www.resverlogix.com/upload/media_element/218/01/donald-mccaffrey-lsr-interview-8-26-15.pdf

 

interview with the ceo