Resverlogix - A Phase III clinical trial targeting Diabetes and Coronary Artery Disease

Full disclosure right up front, I have been invested in Resverlogix since early in 2014 and hold, what I consider to be, a fairly substantial position.  It trades in Canada on the big board TSX under the symbol RVX, while in the US it trades OTC Foreign with the symbol RVXCF.

This company came onto my radar when I was looking for companies engaged in research for the treatment of diabetes, a disease my late great father suffered from.  It represents a highly speculative investment for me and I would not recommend it to anyone.  In fact I've been hesitant to write about it on this blog because of the risks.  

So why did I finally decide to write about it here?

The answer is simple.  Ego.  Nothing more nothing less.  

While I fully acknowledge the risks, with risks come the possibility of rewards.   And if Resverlogix succeeds with their Phase III trial of lead compound RVX 208 known as Apabetalone, then I believe the rewards will be beyond spectacular. If it fails?  Then I expect the share price to absolutely crater.  

The reason I say ego is because if Resverlogix succeeds with their trial I don't want to appear like a 'Johnny come  Lately' touting what a great investment I made.  And if it fails, then I own that too.  Its my money at risk here.

Quite frankly, when it comes to speculative investments, I think there a lot of people who have what I'll call the "Homer Simpson Approach", thinking only of the rewards while totally ignoring the risks involved.

I'm a huge fan of 'The Simpsons' and here's a clip that illustrates the mentality of many retail investors risking money on highly speculative stocks in my opinion.

Okay, so what's this phase III trial all about?  

The trial is called BETonMACE.  BET refers to the fact that RVX 208 is a Bromodomain and Extra Terminal domain inhibitor.  And MACE stands for Major Adverse Cardiac Event.  So in a nutshell the purpose of the trial is to see if RVX 208 (or Apabetalone) can mitigate the occurrences of Major Adverse Cardiac Events in patients suffering from a type of Diabetes called Diabetes Mellitus along with Coronary Artery Disease (CAD).  MACE includes things like heart attack, stroke and obviously death.  

There is a lot of heavy science involved here, and as I have disclosed on this blog before, I have neither a medical nor a scientific background.  Yes I did take science courses in both High School and University, but this science is far too advanced for me to provide commentary beyond a general overview.  

Resverlogix is involved in a relatively new field called Epigenetics. Most people understand what Genetics is, DNA and all that.  Epi is Latin and means above.  What Epigenetics is about is something referred to as writers and erasers, basically above the genetic level, turning things off and on.  

The BETonMACE trial is double blind, randomised, parallel group and placebo controlled. What the company is trying to prove is that with RVX 208 the time to a Major Adverse Cardiac Event (MACE) will be longer and its what is called an Event Based trial.  What that means is that in the different arms they will be measuring the length of time to a MAC event.  Ideally those taking RVX 208 will be free of a MAC event longer than those in the other arms of the study, or maybe not suffer one at all. 

For those with the background and/or patience to understand and research the trial here is a link to the information on clinicaltrials.gov:

https://clinicaltrials.gov/ct2/show/NCT02586155

Rather than trying to explain my understanding of things I will direct you to a couple of resources. Those sufficiently intrigued and wishing to conduct further research can start with these links, but there are many other resources available beyond what I will provide.

The first is a corporate presentation which includes other fundamental data beyond the science like financing and information about share structure:

http://www.resverlogix.com/upload/media_element/229/01/rvx-bio-2016-presentation---final.pdf

The second is from an analyst engaged by the company to provide coverage:

http://www.stonegateinc.com/reports/RVX_March_2016.pdf

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Now onto more familiar terrain.  I am guessing there might just be one or two readers who are surprised to find that I am invested in a Biotech company given some previous posts I have done about Ziopharm.  

I have nothing against Ziopharm as a company and I sincerely hope they are able to develop a treatment or cure for the various forms of cancer they're targeting.  What I don't like is pump and promotion.  

Contrasting Ziopharm with Resverlogix I am willing to bet proverbial dollars against donuts that many Biotech players have never even heard of Resverlogix.  And likewise I would wager that most have come across something somewhere about Ziopharm, either on a message board, a CNBC mention, or even an email blast from an anonymous promotional outfit.

Go onto sites like Twitter, StockTwits, Yahoo Message Boards, InvestorVillage or any other multitude of stock social media sites and you're not going to see messages hyping RVX - RVXCF, You won't see posters telling people: "You gotta get in now, this is gonna explode soon"!!!  Why not?  I'll leave readers to answer that question for themselves, but I will suggest the fact that the company is well capitalised precludes the need for this type of activity.

Do note, Resverlogix has engaged in some IR type activity, hiring the aforementioned  StoneGate for example, to provide analyst type coverage.  With development stage companies it comes with the territory.  For small small and microcap companies to garner exposure its very common. For me its a matter of degree, and I use volume to gauge whether or not I think a company has gone too far.

Resverlogix has not grabbed the attention of the investment world, not judging by the volumes trading on a daily basis.  Over the past 3 months there have been many days with less than 10,000 shares trading hands, and only one day over that time frame with more than 100,000 in volume.  That was March 17th when just over 102,000 shares were bought and sold.  The trading is incredibly thin.

Look at some Biotechs that have shot up and seen massive gains.  Note the volumes before the PPS went up by hundreds of percentage points.  Those who bought in when things were quiet and the trading was light did very well.  Of course there's always the risk that things will remain quiet, that's the price of admission.

This is a risky investment, and given the volumes its not going to attract the attention of day traders looking for a quick flip.  Once again this isn't a recommendation to anyone....those risking money here, I hope they make huge profits, but I hope those risking $$$ here can also afford to lose it.

I'll leave it there, I do think the chart looks bullish right now but with the volumes being so low I view the chart as being less reliable.

I will add in one point on short interest, its almost entirely non-existent.  While many high flying biotechs have awoken the bears of the market, Resverlogix by contrast has just 1,500 shares shorted as of the most recent update to May 31st 2016.  That's not even 1/100th of a single percentage point of the roughly 105 million outstanding shares.  Short interest on RVX has never been high, you would have to go back almost two full years to find a time when it rose to even 1 full percentage point, back in July of 2013.

Cheers.