A pending breakthrough for Diabetes patients? Resverlogix Phase III trial progressing

Resverlogix (RVX.TO or RVXCF) is a Canadian biotech company based in Calgary that has developed a compound called Apabetalone that is currently in a Phase III trial for patients with Diabetes Mellitus.

Diabetes is being called an epidemic, and in our increasingly sedentary western world experts are projecting that it will get worse.  Like cancer pretty much everyone knows of someone who is diabetic.

According to the American Diabetes Association over 29 million people in the United States had the disease in 2012 (LINK).  And the International Diabetes Federation put the global number in 2015 at 415 million,  projected to climb to over 640 million (LINK).  In Canada 11 million people are living with Diabetes or Pre-Diabetes according to Diabetes Canada (LINK).  

Thankfully Diabetes is a treatable condition due to the discovery of Insulin by Canadian Dr. Frederick Banting and his team at the University of Toronto in 1922.  But while Insulin is a treatment, it is not a cure, and Diabetics have a number of health concerns to deal with while taking insulin to regulate the level of blood sugar.

One of the biggest concerns for Diabetics, if not the biggest, is Cardiovascular Disease (CVD), especially for older individuals. 

According to the American Heart Association at least 68% of Diabetics over the age of 65 die from some form of Heart Disease and 16% from Stroke, (LINK).  Even for those who are not seniors the risk is high, with the above linked AHA site noting that among adult diabetics the risk of CVD is two to four times higher. And that is regardless of how well diabetics control their blood sugar.

Obviously Cardiovascular disease is a major concern for those with Diabetes, especially those with Diabetes Mellitus which is simply the scientific term for those with full blown insulin dependent diabetes.  Most often its simply referred to as Diabetes.

While insulin is vital in controlling blood sugar levels, the incidence of cardiac events and strokes is a huge and as yet unresolved problem.    

The occurrence of Major Adverse Cardiac Events (MACE) is what Resverlogix is attempting to address with their lead compound, called Apabetalone or RVX-208.  Based on the results from earlier trials Apabetalone demonstrated a 55% "Relative Risk Reduction" (RRR) of  "Major Adverse Cardiac Events" (MACE) in patients suffering from Cardiovascular Disease.  And in patients with Diabetes Mellitus the RRR of MACE was 77%. (LINK)

How does Apabetalone work?  Resverlogix is involved in the relatively new field of Epigenetics.  For those who aren't linguists, the word "Epi" is Latin and it means above.  Thus Epigenetics means above the genetic level and it involves what are called Readers, Writers and Erasers.  If you think of it in terms of computers, genes are the hardware and epigenetics represents the software.  

Those wanting a detailed description of how Apabetalone works, I'll invite you to watch the following video which explains it in detail.

Based on results from earlier phase II trials Resverlogix is currently running a Phase III trail called BETonMACE.  The trial has been running for almost a full year and a half now and is:  Double Blind, Randomized, Placebo Controlled and is running in multiple centers.  A full description is available at ClinicalTrials.Gov (LINK).

The trial is being tracked by an independent Data Safety Monitoring Board which has given positive recommendations for the trial to continue without modifications on three separate occasions, the most recent coming on March 17th of this year (LINK).  Of note is that no safety or efficacy concerns were identified. The trial is event based and will be deemed completed once at least 250 Major Adverse Cardiac Events have occurred.  

Obviously a breakthrough of this nature, significantly reducing the risk of Major Adverse Cardiac Events for those with full blown Diabetes, in of itself this would be a major achievement.  However Apabetalone may have application for other disease indications as well.  

The company recently reported a positive meeting taking place with the FDA for the design of a proposed Phase 2a trial for patients with Chronic Kidney Disease, or CKD for short.  (LINK)  And third parties have found potential applications for Apabetalone for a rare form of Muscular Dystrophy and Neurodegenerative Eye Disease. (LINK)

There may also be applications with diseases like Alzheimers and Thrombosis and quite possibly more.  Most of the diseases either undergoing trials right now, or with the potential for application, they lean heavily toward older individuals and with our ageing population the market would be massive if they succeed in my view.

I don't think its overstating things to say that Apabetalone has "blockbuster" potential, and that's based simply on reducing the risks of Major Adverse Cardiac Events in patients with full blown Diabetes, its a huge unmet need.  And that's to say nothing of all the other indications that might bear out in clinical trials.

Given the potential I don't think it would be unreasonable to expect Resverlogix to have a Market Capitalization (MC) in excess of $1 Billion USD.  That isn't the reality however, the company has a MC of less than $250 million and that's in Canadian Dollars, with RVX.TO having its most recent close at $2.30.  In the US the stock trades OTC under the symbol RVXCF and sits at $1.72 USD with the market cap in American Dollars coming in around $185 million.

Why so low?  There are a number of reasons in my opinion, the biggest being uncertainty.  It is said that nature detests a vacuum, well so does the market.  With stocks though its not a vacuum as such, but uncertainty.  Uncertainty that can create opportunity if successfully addressed. In my opinion there are two major reasons for the low valuation, and they both revolve around money.

The first reason is a loan with Citi-Bank for $68.8 million which is due this coming August. The company must satisfy this obligation in some manner in the next few months.  If they default the loan has been guaranteed by Resverlogix's biggest investor Eastern Capital which is the investment arm of billionaire Kenneth Dart.  The collateral provided to Eastern is the patents and intellectual property of the company.  The company's CEO Donald McCaffrey has said they are looking at several different avenues including a secondary offering, licensing/partnerships or a loan extension.

The second reason is closely tied to the first, and that is the need for money....not just to satisfy the loan but to further finance the company in order to complete the Phase III BETonMACE trial as well as clinical work on Chronic Kidney disease, and any other indications the company wishes to pursue.

If BETonMACE succeeds though its my opinion that money will no longer be a concern.

The lack of financing represents a material uncertainty, and in my opinion it is the major stumbling block to Resverlogix attaining a much higher market cap.  However it should be noted that despite these uncertainties RVX has been trending higher over the past year.  As recently as this past summer shares of RVX.TO could be bought for somewhere in and around $1.10 to $1.30 per share. Obviously those who've been buying and pushing the share price higher, they're buying in spite of the financial uncertainty.  Here is the 1 year chart which shows the stock trading close to its 52 week high.

I will end things here with a special note.  If this is the first you're learning about Resverlogix I would strongly advise against making any investment decisions based on anything written here, I wrote this blog piece for informational purposes only and as a shareholder any opinions expressed are obviously biased.  Anyone considering an investment in RVX or RVXCF, I advise verifying everything I have provided and to conduct further and extensive research. I strive to ensure that everything I provide is accurate however I can make no warranty that there are no errors.

Consulting with an investment professional is always the best course of action for those lacking the requisite knowledge and expertise.

Comments are welcome, however they are monitored and those including profanity will not be published.

Vuzix - Has this company become a religion?

I haven't written anything on Vuzix for a while, in fact its been over a month since I've written anything at all here.  I'm still active on sites like StockTwits (growacet) and SeekingAlpha (Joe_Retail), but I haven't been contributing to my own blog.

I currently have no position in Vuzix whatsoever, but I did open a position playing VUZI on the short side in September, however that was closed in January.  That hasn't stopped me from chiming in fairly frequently on StockTwits where Vuzix has a large following of over 4,300 watchers, and sometimes on SeekingAlpha as well.  

I am often accused of either being still short on VUZI myself, or of somehow being compensated for my efforts by those who are.  Again, I have no position, and I have never been compensated to write anything about any stock, and would refuse any overtures of that nature regardless.

So, some will quite reasonably ask....Why bother commenting at all if you have no skin in the game?

Its a perfectly reasonable question, and one I have posed myself when confronted with persistent negative posting of a stock I own.  PPHM was being trashed mercilessly on StockTwits not too long ago when it was trading around 30 cents, and even now after climbing to around 70 it still continues. Some may be short players, others may just not like the company....Who knows why?  There are probably several possible reasons.

I will give my reasons for continuing to post my opinions on Vuzix despite have no financial stake.  

Its really not hard to understand why someone would post opinions on a subject despite having no financial stake in the outcome, all you have to do is look at social media sites like Reddit, Facebook and Twitter to name just three.  Its all about two things really, ego engagement with a bit of OCD (Obsessive Compulsive Disorder) thrown in.

There are threads on social media sites about who the best Star Fleet Captain is:  Kirk, Picard or Janeway.  On Facebook I have an ongoing feud with a friend of mine over whether the Toronto Maple Leafs are a .500 hockey team or not.  I say "not" because they've lost four more games than they've won.  My friend Scott insists they are a .500 team because 15 of those losses came in overtime or in a shootout, and in those losses the losing team gets a point.  Ultimately the Leafs are over .500 based on points, and under .500 based on wins and losses.  But the sword play is fun, and Scott and I like the exchange.

Sports, politics, the best captain....ego's become engaged and everyone wants to get the last word in.

But, as I so often do, I am digressing.

Before placing my bet on the short side with VUZI back in September I did my research and took out my position based on what I discovered.  The continual dilution coupled with an ever mounting accumulated deficit.  The huge 1:75 reverse split and the speed with which they burned through the $25 million Intel tossed their way.  On top of that of course there was all the paid hype and promotion, which is something I consider to be of vital importance when looking for stocks to avoid as long term holds.  Some promotion is to be expected, but when it is reported to be by as many as 21 different outfits.....Holy Pumpity Pump Batman.  

In the posts I've done on Vuzix I was also careful to underline that these were my opinions, and they could very well turn out to be wrong, especially when it comes to the PPS.  Ultimately a stock doesn't trade on fundamental performance, but rather on supply and demand.  Manipulation does play a role in my view, but it works both ways....stocks can be manipulated both higher and lower in my opinion.  

If fundamentals were the holy grail some claim then a garbage stock like CYNK would never have gone from one nickel to over $20.  I would argue that CYNK Communications also had a fair bit of manipulation involved in pumping it up to those levels, but no matter.....even though the company was fundamentally worthless that didn't stop some people from paying $20+ per share and getting creamed when the chickens came home to roost.

Of course for a lot of players, all that matters is the PPS.  If a stock goes up, no matter whether its just hype or solid financial results....Who cares?  I expressed my bearish opinion on a company that traded under the symbol ABRW back in June of 2016 just after its PPS had gone from under 50 cents to up around $2.  Subsequent to that posting the company changed its symbol to NBEV, was uplisted from the OTC Market to the Nasdaq and in November the PPS shot up to near $6.  

Strictly based on the PPS, and ultimately that's what stocks are all about no matter the reason.....I was wrong on ABRW/NBEV.  Its still trading over $4 as of last week's trading.  No question the higher share price has been a boon to the company given the recent capital raise they had.  In February they pulled in somewhere around $17 million through a public offering of over 4 million shares.  I'll leave any possible further comments about New Age for another day, and will wait until they have audited financial statements as their last 10Q came out when it was still an OTC stock without that requirement.  Suffice to say that up until Sept of 2016 the company still was not profitable with an accumulated deficit in excess of $5 million.  

But again, I'm digressing.  Time to get to the subject line of this post, asking if Vuzix has become a religion.

For those who aren't religious, the most important part of religion in my opinion is FAITH. Christians cannot prove that Jesus was crucified, died and resurrected, its something taken on as a matter of faith.  Muslims cannot prove that Mohammed was a prophet and Jews cannot provide definitive evidence that Moses led the Hebrews out of Egypt.  

With Vuzix, longs cannot prove that the company's new product offerings will do something that no previous products have done.  That is to make the company money.  But there are posters all over social media who seem to present it as fact, the same way some televangelists promise salvation, as a matter of faith.  And those like myself who are not convinced are attacked almost as heretics casting stones at the chosen one.  Puh-lease.  

I also believe there are likely some shareholders who have been convinced that the negative posting, be it by myself or others, that this is some form of PROOF that shares of VUZI must be a highly prized commodity and that its only because of manipulation that shares aren't worth at least the $9 they were back in September, if not much much more.  

I do get my back up when I see those promoting VUZI on sites like StockTwits presenting outright falsehoods in attempt to attract buyers.  Here's an example that just went up March 25th 2017:  

joodles33

judy buckey

$VUZI New money and present institutions adding shares. Reassuring.

It would be reassuring if it was a verifiable fact, but its not.  Adding is a 'present participle' denoting a continuing action in the present.  We can verify from filings available on Nasdaq's site that institutions WERE adding up to December 31st 2016 when the PPS was trading in and around the $7 mark.  But there are as yet no filings to tell us what institutions have been doing in January, February or March of 2017.  Have they been buying?  Selling?  Standing pat?  Nobody knows.

It could be that institutions have been dumping so far this year, which might explain why the share price is down from where it started the year.

If anyone has information about institutional activity since the calendar rolled over from 2016 to 2017 please share, otherwise I'll wait for the updated info to come out sometime in the month of June when we'll get to see the activity for the first 3 months of this year.

I know some were excited when Toshiba threw a little over $1 million at Vuzix, but I also remember all the posts about how Intel had given them $25 million and that wasn't even enough to forestall further dilution.  And now Intel has announced their intention to bail out.  

I'll wrap things up here by just noting again that I have no position, and to strongly advise anyone considering an investment in VUZI or any stock for that matter.....take message board and social media posting with a huge grain of salt.  Bashers are not always right, but likewise they are not always wrong.

Comments of course are welcome, with the usual caveat, no profanity.