Bullish on Resverlogix? You may want to consider warrants

If you're bullish on Resverlogix as an investment for the longer term, then share purchase warrants may be something you want to consider.  Resverlogix shares trade on the TSX under the symbol RVX, as do warrants under the symbol RVX.WT

I'm assuming most people reading this (all three of you) already know how warrants work.  But for those who don't, or for those who are a bit fuzzy I will explain.  Warrants are basically a futures contract, very much like calls.  They give the holder of the warrants the right to purchase shares at a fixed price up to a specific date. 

In the case of Resverlogix, their share purchase warrants give holders the option to buy shares at a price of $2.05 each and they expire in June of 2021, June 20th to be precise.  Obviously for the warrants to have any value the PPS for Resverlogix has to be trading above $2.05, otherwise there's not much point.  However because they don't expire for another three and a half years, there is the "time value of money" component which adds some value.  

I'm going to demonstrate how warrants can outperform shares using Resverlogix as an example.  The numbers I'm going to use come from the most recent day's trading, Monday December 11th 2017.

If you're going to buy warrants you should obviously be bullish on a company's longer term prospects.  In the case of Resverlogix's warrants, they've got a long way to go before expiry, over three years in fact.  In Monday's trading the PPS ranged between $2.07 and $2.47 so I'm going to pick the mid point, $2.27 and the warrants traded between $0.90 and $0.99 with a mid point of $0.945 so we'll call it 95 cents.

What makes more sense, buying shares for $2.27 or warrants for $0.95?  If you don't expect the PPS to do much, then shares would be the better option.  But if you read Dr. Kideckel's report for Beacon Securities and believe the 12 month price target of $8.55 is achievable, then the warrants are the better option.  Here's a link to StreetWiseReport's story on that analysis.

https://www.streetwisereports.com/article/2017/12/06/coverage-initiated-on-one-of-the-most-undervalued-biotech-companies-in-canada.html

Resverlogix doesn't even need for its share price to reach that $8.55 target for warrants to outperform shares.  Let's cut that number by more than half, and put it at $4.  

$10,000 invested in RVX shares @ $2.27 per would net 4,405 shares.  At $4 those same shares would be worth $17,620 for a gain of $7,620 or 76%.  Not bad.

$10,000 invested in RVX.WT warrants at 95 cents each would net 10,526 warrants.  At $4 those warrants would be trading "in the money" by $1.95, so they would be trading at least at that price plus a "time value of money" premium.  But to keep things simple we'll simply price them at $1.95 each.  10,526 warrants at $1.95 would net $19,500 for a gain of 95%.  

Who wouldn't want an extra 19% return?  And if Beacon's $8.55 price target is met, then the degree to which warrants outperform shares is even greater.  The shares would be up 277% using a buy at $2.27 as an example.  But the warrants would be up 584% because they'd be trading for at least $6.50, ($8.55 - the $2.05 exercise price).

Options trade just like shares, and just like shares you can either buy or sell them.  If a warrant holder chooses he/she can exercise their purchase option and convert the warrants into shares.  In the case of RVX hitting that $8.55 target price, the owner of 10,000 RVX.WT warrants would contact their broker and pay $20,500 plus fees which would then be forwarded to Resverlogix.  The company in turn would convert the warrants into shares. And those shares would be worth $85,500 at that $8.55 price.

Full disclosure, I own both RVX shares and RVX.WT warrants.  In the case of the warrants I expect I will simply trade them rather than convert if the PPS climbs as I'm expecting.  

For those wishing to do further reading and research, something I wholeheartedly encourage, here's a link to a story from Canada's Globe&Mail, it was first written in March of 2011 and last updated in March of 2017.

Warrants: An investing option that gets no respect

The China Connection - Pay attention to the details (RVX.TO / CREG / ACST)

Regardless of your opinions of U.S. President Donald Trump, his recent trip to China has coincided with some North American companies releasing news with a connection to the world's most populated country and fasted growing economy. 

I'm going to focus on three such companies: 

1. Acasti Pharma which trades on the Nasdaq with the symbol ACST.  
2. China Recycled Energy also on the Nasdaq with the symbol CREG. 
3. Resverlogix trades on Canada's TSX with the symbol RVX and as RVXCF in the U.S.

Acasti Pharma

They put out news on November 20th announcing a non-binding term sheet with a leading China based pharmaceutical company.  That news sparked a huge rally for ACST which previously had been trading around the $1.30 area on very thin volume, often less than 20,000 shares a day. 

After the news hit volumes exploded with over 20 million shares trading hands the day the news came out.  And the PPS exploded higher as well, reaching a peak of $3.36 inter-day.  Things have cooled off considerably since then however and the PPS has fallen all the way back to $1.64 with volumes having dropped to less than 1 million per day,  most recently falling below 200,000 trading.

While the news seems to have sparked a huge wave of excitement, in the days following I consider it probable that investors paid closer attention to the details.  This is a "non-binding" term sheet, which means it might not even come to fruition.  And the "leading" China "based" pharmaceutical company isn't even named.  

I'm always suspicious of the word "leading", because there are all manner of penny stock companies who refer to themselves as being a "leader" despite the fact that they're only able to stay in business by promoting their company and dumping freshly printed shares into the market.

In a nutshell they signed a deal that may not happen with a company that isn't even named.  I suspect that if the unnamed company hadn't been from China that the market probably would have yawned.

China Recycled Energy Corp

This one was absolutely crazy.  Their stock went from down around $1.20 to over $9 in a two day period that saw over 50 million shares trading.  The reason?  News was released on November 9th about China Energy Investment Corp signing an MOU to invest over $80 billion in projects in West Virginia.

In this case I believe investors got confused, and while thinking they were buying shares of China Energy Investment Corp, they instead bought shares in a completely different company with a similar name.  Think of it as one of those look alike doppelgangers who shows up at a Rock Concert and gets mobbed by people mistaking them for the real deal.  

And as probably should be expected CREG has cooled off considerably from that $9 peak and is currently trading around $3.  

Both ACST and CREG spiked big but pulled back. In both cases I believe a perceived connection to China helped spark a feeding frenzy.   But both cooled off, CREG because the news that sparked the interest was about a different company.  And Acasti because  a "maybe" deal with an unnamed company isn't exactly money in the bank.

Resverlogix

Resverlogix however is a different story.  They too announced a deal with a Chinese based pharmaceutical company, but it wasn't a "maybe" deal but rather one that was finalized.  Regulatory approval was given for an $87 million (CDN) investment in this small Calgary Biotech.  And it wasn't with an unnamed company, but with Shenzhen Hepalink, the world's largest producer of Herpain Sodium, a blood thinner.

As with ACST and CREG shares of RVX climbed sharply on the news.  But unlike those other two the gains didn't vanish, in fact the stock kept climbing right into Friday's closing bell.  The $2.20 closing price is the highest RVX's shares have been in the past 6 months.  And comparative volumes were much lighter, instead of 20+ million as seen with ACST and CREG, RVX by contrast didn't even reach 1 million on any single day.

Beacon Securities analyst David Kideckel's buy recommendation and 12 month price target of $8.55 from November 15 was repeated in a story put out by StreetWiseReports.  It highlighted how Dr. Kideckel referred to Resverlogix as one of Canada's most undervalued and impressive Biotechs.

http://www.thelifesciencesreport.com/article/2017/12/06/coverage-initiated-on-one-of-the-most-undervalued-biotech-companies-in-canada.html

Conclusion

The take away is fairly simple here.  Paying attention to the details often pays dividends down the road.  While its easy to get caught up in the excitement of a stock making unbelievable gains, its probably worth while to take the time to do the required research....to make sure the excitement is based on solid facts, and that you're sure of what the facts are.  

Full disclosure, I have no position in Acasti and no intention of opening one, long or short, anytime in the foreseeable future.  I do own some shares of CREG, however I sold off over two thirds of the shares I was holding before the PPS exploded and then pulled back.  

In Resverlogix I have what I consider to be a significant position and I added more share purchase warrants last week.  

Chinese investment driving Resverlogix's rise?

Shares of Resverlogix (RVX.TO and RVXCF) have been on the move, making a nice climb off recent lows.  After closing at $1.30 on October 31st 2017, it seems the Halloween ghosts and goblins scared the bears away and as of this writing shares are trading over $1.50 for a gain of more than 15% in just the past month.

What's behind it?

Investment from China may be driving some of the interest.  Shenzhen Hepalink is investing $87 million CDN into the company, which takes them to a 43% stake of this Calgary Biotech engaged in the exciting field of Epigenetics.and BET Inhibition.

Resverlogix's lead compound is Apabetalone, and it is currently in a Phase III clinical trial called BETonMACE which is aimed at proving that Apabetalone in combination with Statins will reduce the time to Major Adverse Cardiac Events versus treatment with Statins alone for treatment of patients with Diabetes Mellitus.

$87 million might sound like a lot, even in Canadian funds, but for the founders of Shenzhen Hepalink it probably isn't a huge sum.  Not after that company went public back in 2010, which made Li Li and Li Tan the richest couple in China at the time.  

http://www.chinabiotoday.com/articles/20100505_1

Shenzhen Hepalink is reported to be the world's largest producer of Heparin, a blood thinner.  

And Shenzhen Hepalink isn't the only big player with a stake in Resverlogix.  Eastern Capital, the investment arm of billionaire Kenneth Dart is also a major holder, along with NGN Capital and the company's CEO Donald McCaffrey.  

In Canada Resverlogix trades on the TSX with the symbol RVX.  In the United States shares trade OTC with the symbol RVXCF.  There may be a lot more upside for RVX yet.  In a recent report analyst David Kideckel of Beacon Securities set a 12 month target price of $8.55 CDN. 

Coverage Initiated on 'One of the Most Undervalued Biotech Companies in Canada

Disclosure, I am a shareholder so view my opinions in that light and verify all information.  Please read the disclaiming statement at the very bottom of this blog site.

Resverlogix - The importance of image and branding

I just had a conversation on Friday afternoon with Resverlogix's CEO Donald McCaffrey.  I was not seeking to garner any insight into future developments, rather our conversation focused primarily on events of the past seven to eight months.  I called to express my concern about the company's communications and about projecting a positive image to the market. 

My opinion on the prospects for lead compound Apabetalone are incredibly positive.  The company is more than two years into a phase III clinical trial called BETonMACE that is seeking to prove that Apabetalone administered along with Statins (Crestor/Lipitor) will positively impact the time to a Major Adverse Cardiac Event (MACE) for patients suffering from Diabetes Mellitus.  

The trial has already received five positive recommendations from the independent Data Safety Monitoring Board (DSMB) to continue with no modifications while noting no safety or efficacy concerns.

That is fantastic news, and in of itself is reason for me to be very bullish.  There are also trials planned for patients with both Chronic Kidney Disease (CKD) and Fabry's.  Apabetalone could also have application for people suffering from a wide array of conditions including Alzheimer's, Thrombosis and a number of other diseases with arterial components.  The potential here is mind blowing in my view. 

Suffice to say, I'm a bull, but not a happy bull. 

The reason for my unhappiness is a number of communication blunders over the past several months.  I'm not going to go over the issues, I already blogged about it back in October when the PPS had shown surprising strength in spite of those blunders.  For those who missed it here's the link to that post.

RVX.TO climbs 24% in one week despite "Fear Uncertainty and Doubt" or FUD for short

I spoke to the company's VP of Investor Relations about those issues and I was confident that going forward they would be resolved.  It was my sincere hope that there would be no further missteps and that when the company engaged the market that it would be in a positive way that would enhance the brand, not tarnish it.

Then on November 23rd the company announced via their Twitter feed that they had launched their new website.  Obviously like other shareholders and prospective investors, I checked it out. 

https://www.resverlogix.com/

To be perfectly clear, I personally would never base an investment decision on a corporate website.  I expect a company to have a website of course, but beyond that I don't care.  With that being said I did like the new look, I see it as much cleaner and easier to navigate than their old site which I considered "too busy". 

But my head just about exploded when I saw that in the upper right hand corner they had a link to a Facebook page for the company, a link that has thankfully been removed.  Why was it removed?  This is the page on FaceBook that was linked up to the new website:

https://www.facebook.com/pages/Resverlogix/1413266938896371

When I saw that I almost immediately sent an email to the company's IR represenatives, and I didn't pull any punches.  Here is an edited version of what I wrote: 

 I noticed the new website and wanted to let you know I think it looks very clean, sharp and professional....well done.

One suggestion however, (I am a pain, I know).  

Up in the right hand corner there's a link to the company's Facebook page.  But as you're probably aware, nobody is updating the Facebook page, I've seen home businesses with nice Facebook pages, while Resverlogix...it looks like you don't give a rat's posterior about it.  

And if that's the case, no worries.  But if you're going to go the time, energy and expense of sprucing up the corporate website, then why have a link to a Facebook page that makes the company look like its out of business?  

Then again, if your goal is to appear less than professional in the social media sphere, then I would have to say....mission accomplished.

I was not a happy camper obviously, and I subsequently asked when it would be possible to speak with the CEO.   That call, as I noted at the start, took place yesterday (Friday Dec 1st 2017) in the afternoon.  

Mr. McCaffrey assured me that he shares my concerns and that he will be addressing them.  He is aware that Facebook reportedly has over 2 billion active users.  I conveyed to him the view that some prospective investors, in researching the company, they may want to look into how the company presents itself on social media.

I realize I'm not providing much in the way of detail with respect to our  20 minute conversation.  There really isn't much worth sharing, aside from the fact that the CEO asserts that he is both aware of the problems and that he is not happy with the way the company has been communicating in the marketplace.

As a public company Resverlogix, like any other, has a brand and an image.  The company needs its corporate communication strategy and execution to match that of their leading edge science.  I equate it to a race car with an incredible engine that blows the competition away.  On the race track it doesn't matter if the car's paint job isn't the nicest, or if there is a chip in the windshield, what matter is performance on the oval.  

But the public markets aren't a NASCAR track.  And if a company doesn't present itself in a positive and professional manner, then they might not be able to raise the money needed to put gas in the tank and compete.  

The conversation ended with me wishing him a good weekend, with an exhortation to put his boot up the VP of IR's rear end, and I didn't use the words 'rear end' but the shorter three letter version.  

BET Inhibitors - The next big thing in Biotech? (RVX.TO / RVXCF)

Why it pays to get in early

In investing circles its sometimes called the "first mover" or "early adoption" advantage.  Being ahead of the curve can pay off big.  Its worked for me a few times, I wrote about some lithium miners both here and on Seeking Alpha years ago.  And I've had success in the energy storage market space as well.

In Biotech CAR-T was all the rage for a time with companies like Kite Pharmceutical and Juno Theraputics attaining multi billion dollar valuations.  Kite was bought out for $12 Billion by Gilead Sciences just recently.  Even Ziopharm, a late comer to the CAR-T party spiked big.  Early buyers watched ZIOP's share price climb from down around $3 in late 2014 to up around $15 in early 2015, although it has crashed hard and is back in the $4 to $5 area now.

The take away is really quite simple.  Most investors don't have the fortitude and foresight to buy until there's excitment.  Many prefer to wait for big volumes and a spiking share price.  Some need to hear the talking heads making buy reccomendations.  There are those who genuinely believe buying high is less risky than buying low.  

And once the party starts the herd is more than happy to come in and pay inflated prices, convinced they've caught lightening in a bottle.  Lots of retail players don't care if they're buying into a stock or a sector that has already seen huge gains. They buy when industry "experts" say a a stock is a "MUST HAVE". 

Of course getting in late can be costly, think of the poor Ziopharm investors who paid nearly $15 per share back in 2015.  Those who have held tight need the PPS to go up around 300% just to break even.

Will BET Inhibitors be hot hot hot?

Do BET Inhibitors and the companies developing them have that kind of potential?  Could firms in this space see the same multi-billion dollar valuations that some CAR-T developers saw?

I believe so.  In fact I think it could be even bigger than the CAR-T space.  And as the only company with a compound in a Phase III trial I believe Resverlogix (RVX.TO / RVXCF) could have blockbuster potential in a variety of indications.

Okay....I hear some saying.  What the frick is a BET Inhibitor???

Firstly the B in BET stands for Bromodomain.  Everyone knows what "domain" means, well Bromodomain refers to an approximately 110 protein "domain" that recognizes acetylated lysine residues.  I can almost picture the confused looks on some reader's faces.  "The acetylated lysine residues"???  For many it probably makes as much sense as "Mersey Dotes and Doesy Dotes and Little Lambsy Divey".

What we're talking about here is Epigenetics which is much easier to understand.

Everyone knows what their Genes are, X and Y chromosones and all that stuff.  Think of it in terms of a computer, Genetics (the DNA) represent the hardware of the computer.  Epi-Genetics represents the software, basically turning things off and on.  Epi is Latin and it means above, so Epi-Genetics is above the Genetic level and involves what are called:  Readers, Writers and Erasers.

Now picture being able to read genes and then to modify their properties so as to eliminate disease causing conditions.  If you can wrap your head around that concept then you have a layman's understanding of EpiGenetics and BET Inhibitors.  

I'm not going to get into heavy duty science because its beyond my realm, I understand it like I understood CAR-T....the basics.  But I didn't understand much about mining either when I was buying Nemaska Lithium at 15 cents.  

Are there Big Pharma Players involved?

What I see with BET Inhibitors is massive potential, and I'm not the only one.  Those like myself with only an undergraduate or high school education in science might not entirely grasp the full picture.  But others like researchers at Big Pharma companies such as Roche, GlaxoSmithKline (GSK) and Bristol-Myers Squibb (BMY) do.  BET Inhibitors are catching on big.    

GSK is conducting a Phase I clinical trial for I-BET762

https://www.ncbi.nlm.nih.gov/pubmed/24107192

Roche has RO6870810 also in Phase I:

https://clinicaltrials.gov/ct2/show/NCT03068351

I'll leave readers interested in doing further research on where Big Pharma players are at in developing their BET Inhibitor pipelines to their own devices.  There is simply too much out there to cover.  But what you will find is that the major players are in the early stages, pre-clinical and Phase one.  

Is Resverlogix ahead of the pack?

As is often the case, its a smaller more nimble development stage company that has the lead.  That would be Resverlogix, based in Calgary Alberta Canada and San Francisco.  Resverlogix is developing RVX-208 which is the first BET Inhibitor to be named, its called Apabetalone.  Apabetalone isn't just in Phase I or II, it is in phase III with a clincal trail called BETonMACE.  

https://clinicaltrials.gov/ct2/show/NCT02586155?term=apabetalone&rank=5

This is an event based trial that has been running for two years and is seeking to demonstrate that Apabetalone administered with Statins will reduce the incidence of Major Adverse Cardiac Events, referred to as MACE, versus treatment with Statins alone.  

Already the trial has received 5 positives reccomendations from its independent Data Safety Monitoring Board (DSMB).  The most recent coming on November 1, 2017.  

https://globenewswire.com/news-release/2017/11/01/1172169/0/en/Resverlogix-Announces-Fifth-Positive-Recommendation-From-Data-Safety-Monitoring-Board-For-Phase-3-Study-of-Apabetalone.html

That PR notes that the DSMB, after reviewing the data, noted no safety or efficacy concerns. 

This trial is being conducted on individuals suffering from Diabetes Mellitus with a subset of patients also suffering from Chronic Kidney Disease or CKD for short.  Those familiar with Diabetes and CKD know that the risk of  Major Adverse Cardiac Events, like heart attacks and strokes, is incredibly high.

But there is more.  I said that Apabetalone has blockbuster potential in a variety of indications, and that means more than just Diabetes and CKD.  There's a trial planned for patients with Fabry disease, an orphan indication.  

https://clinicaltrials.gov/ct2/show/NCT03228940?term=apabetalone&rank=2

Even Pfizer has taken note of Apabetalone's potential to treat a rare disease called Friedreich's Ataxia which causes progressive damage to the nervous system:  

https://friedreichsataxianews.com/2017/05/25/pfizer-seeks-patent-covering-friedreichs-ataxia-therapy-resverlogixs-has-already-developed/

On top of all that there's potential for Alzheimers, Thrombosis, and other orphan indications.  I don't think "blockbuster potential" is overstating things at all.  In fact if Apabetalone is successful in treating all the indications that show promise, then the term miracle drug might be more fitting.

Are there any near term catalysts to look forward to?

As of this writing Resverlogix is trading at (in this writer's opinion) the incredibly low Market Capitalization of just over $155 million CDN, that's less than $125 million USD.  And there are a number of near term developments which could have a hugely positive impact in raising that valuation.  

The biggest near term potential catalyst in my view would be finalization of an $87 million CDN investment by Chinese based Pharmaceutical company Shenzhen Hepalink.  That deal was announced on October 13th, and requires regulatory approval.  

China is hot again.  Biotech watchers probably saw the explosion of Acasti Pharma this week when they announced a non-binding term sheet with an unnamed Chinese Pharaceutical company.   Cynics might view a non binding agreement with an unnamed company and roll their eyes.  But after that news came out the PPS for ACST jumped from $1.25 the previous day to $3.10 by the closing bell.  

If a stock like ACST can jump like that on a deal that might not even come to fruition, with a company that isn't even named, I can only imagine what could happen with news of Shenzhen Hepalink's investment in Resverlogix being finalized.

Then there's is the Futility Analysis (FA) for the BETonMACE trial which could come out any time now.  A positive FA could attract serious attention, not just from investors, but possibly from major Pharmaceutical companies as well.

There are risks involed

I will point out the fact that there are obviously risk factors here, and I will encourage readers to go over the disclaimer infomation at the bottom of this site.  I am a shareholder and my opinions should be viewed in that light, I eat my own cooking in other words.

Obviously if there were no risks and Resverlogix was 100% assured to have success with Apabetalone, then the market cap wouldn't be sitting where it is.  Shares of RVX.TO have been trading around the $1.30 since June of this year with a couple of short lived spikes thrown in.  

I do believe the PPS could be on the cusp of another move, one that is bigger than anything previously seen.  Independent investment dealer Beacon Securities, which caters to institutional clients, just published a report on Resverlogix with a 12 month PPS target of $8.55 CDN, a report that discloses no payment from the company.  

Comments are always welcome, I do appreciate feedback.  I only ask that comments not include any profanity or attacks, any that do will not be posted.

Resverlogix - Lots happenng but not with the PPS (RVX.TO - RVXCF)

Its been almost a month since I've written about Resverlogix, which represents a significant holding in my portfolio and is my single largest highly speculative investment.  I think that should cover off disclosure, obviously my opinions and thoughts should be considered in that light.  

My last posting on Resverlogix was Oct 7th 2017, after RVX.TO had climbed about 24% in one week.  At the end of that post I did take note of how the chart indicated an overbought technical situation that, barring some positive news, could very well lead to the stock either stalling or pulling back.

Well, RVX pulled back and is now sitting at $1.30, a support level it was at as far back as June.  So far that support is holding, and I am hopeful that the PPS will rebound higher.  That however is a hope and far from a prediction.  Resverlogix as an investment comports a lot, and I do mean A LOT....a lot of risk.

In reading over my last entry, I have to say I was pretty brutal in my depiction of the company, in particular over corporate communications.  I lamented a number of simple and, in my view, incredibly stupid mistakes.  I mused about whether they were the result of incompetence or the company being in utter disarray.  Or possibly even both.  

Here's the link: http://www.avoidthebag.com/2017/10/rvxto-climbs-24-in-one-week-despite.html

I have to wonder whether that simple blog post actually had an effect on the company.  I had noted that the company had skipped out on two investor presentations, first in Paris and then in NYC.  The company gave no notification because, according to my conversation with the VP of IR, the fact that they were posted to the company's website did not constitute "wide dissemination".  

How, in this day and age, one could consider that something posted to the World Wide Web is not being widely disseminated is beyond my comprehension.  However it seems that  the company may have come to that same conclusion as well finally.  

They are no longer posting upcoming events on the website, but rather are notifying shareholders and anyone else with News Releases.  I don't want to take credit for this change, but I think it would be naive to discount the possibility that this blog might have had an impact.  

But enough digressing.  The subject line of this entry says there's lots happening, and there is.  

On October 13th the company announced an $87 million Private Placement with their second largest shareholder, Chinese Pharmaceutical company Shenzhen Hepalink.  Hepalink is probably best known for the sale of  Heparin Sodium API both in China and internationally, a blood thinner that is used to prevent blood clots in the veins, arteries and lungs.  

https://www.resverlogix.com/media/news-releases.html?article=583#.Wf6pjmhSzIU

This is significant because the company says they plan to use the lions share of the proceeds to retire an outstanding loan that is coming due before the end of the year.  If that loan were to be defaulted on it would be disastrous in my opinion because the loan is secured by a standby letter of credit with the company's largest shareholder Eastern Capital.  That stand by letter of credit is in turn collateralized by pretty much all the company's intellectual property.  In other words, default on the loan and in my view...the company might as well close up shop.

However the loan has yet to receive regulatory approval.  In order to be exempt from a requirement for minority shareholder approval the company has requested an exemption based on financial hardship.  Whether that exemption will be be granted is something that still represents an unknown. 

The next bit of news came out just 11 days later, announcing that Shenzhen Hepalink subsidiary Hepalink U.S.A had paid $8 million for a right of first refusal agreement with respect to the right to manufacture, develop and commercialize products containing Apabetalone until April 15, 2019.

https://www.resverlogix.com/media/news-releases.html?article=584#.Wf6sUmhSzIU

This is significant because, well quite simply the company is, (in my opinion and based on all the publicly available info I can find) in desperate need of capital.  They have after all asked for a regulatory exemption based on financial hardship.  According to various slide presentations they're burning somewhere between $3 and $4 million each month.  $8 million is only enough for two or three months, but it might bridge a gap to a more significant financing deal.  As I said almost right off the bat here, Resverlogix has a lot of significant risk factors and I don't like to sugar coat things.

It hasn't even been a month and yet there is still more news.  On November 1st, just this past Wednesday, the company announced they had received a 5th positive recommendation from the Data Safety Monitoring Board for their Phase III clinical trial of Apabetalone called BETonMACE.  

https://www.resverlogix.com/media/news-releases.html?article=585#.Wf6u4mhSzIU

I view this news as being highly significant.  And were it not for the financial constraints and risks, I think this news might otherwise have resulted in a sizable increase in the PPS.  Data Safety Monitoring Boards can recommend halting a clinical trial, due to reasons of safety, efficacy or both.  That happened with Pfizer's CETP inhibitor Torcetrapib back in 2006:  

https://www.forbes.com/sites/johnlamattina/2017/10/17/the-blockbuster-that-wasnt-a-cetp-inhibitor-post-mortem/#26f3ceb5672f

And finally, the last bit of news that came out this past Thursday November 2nd.  The company announced upcoming conferences they are scheduled to attend:  

https://www.resverlogix.com/media/news-releases.html?article=586#.Wf68LWhSzIU

In other words, lots is happening....just not with the share price.  Ironically when things were quieter with lots of reason for Fear Uncertainty and Doubt, the PPS was climbing.  Now with much more news to chew on, and especially with the 5th positive recommendation from the DSMB, now the PPS is languishing.  

As a final note, while that last blog post coincided with the technical picture being overbought and signalling a potential pull back (which did in fact happen), this time around the technical picture is decidedly oversold and signalling a potential climb for the PPS.

Comments welcome.

RVX.TO climbs 24% in one week despite "Fear Uncertainty and Doubt" or FUD for short

Shares of Resverlogix climbed 23.9% last week on the TSX where the stock trades under the symbol RVX.  On the U.S. side where shares trade OTC with the symbol RVXCF the gain was 21.8%  However take note of the fact that most of the trading takes place on Canada's big board exchange.  OTC volumes have averaged roughly 7,500 per day over the past 3 months, while in Canada RVX trades ten times that number.  (Numbers as per Yahoo Finance)

Here's the chart showing RVX.TO from Friday Sept 29th's close of $1.46 to this Friday Oct 6th's close of $1.81

So what caused the sudden jump?   Quite frankly I have no earthy idea.  

The only news item was on Monday October 2nd announcing the company's AGM is to be held on December 12th 2017.  But even there it noted that the company had to receive an extension with respect to the meeting from the Toronto Stock Exchange.  That's hardly surprising given that in a news release of August 28th just passed it was stated that the company was relying on a financial hardship exemption and that the board of directors had unanimously determined that the company is in: "serious financial difficulty".  Here's that PR from the company's own website:  

https://www.resverlogix.com/media/news-releases.html?article=134245#.WdkaTltSy70

Now to be clear, full disclosure and all that...I am a shareholder in Resverlogix.  However I will do my best to avoid falling into the trap of trying to put lipstick on a pig.  I am very bullish, but that is simply because I have an upside down way of looking at things.  Contrarians by definition will at times see bad news as good and good news as bad.

So how bad do things look in the straight up non-contrarian world?  Pretty damn bad if you ask me.  If the company's own communications are any indication, then Resverlogix looks like a company in complete and utter disarray.  

In baseball they talk about making the simple plays.  Well Resverlogix of late can't even get the simple things right.  On September 26th 2017 their Sr VP of Business & Corporate Development gave a presentation at Biopharm America in Boston.  The only problem?  When the company published the information to their own website they got the date wrong, having Mr. Lebioda presenting on the 27th instead of the 26th.  Ugh

Small potatoes?  It would be if this kind of mistake wasn't becoming almost a regular event. After publishing that the company would be presenting at the Rodman and Renshaw event on September 11th 2017 the decision was made to skip it.  Did the company notify shareholders of the decision to miss this opportunity?  Nope.  The only explanation from the VP of IR came after the fact when I was told via email that the cancellation was due to a scheduling conflict.  

In a later phone conversation that same Investor Relations VP actually claimed the company was under no obligation to disclose the cancellation because the company's attendance at the event had not been "widely disclosed".  That is laughable considering the event was published to the company's website.   How much more widely can something be distributed than by publishing it on the World Wide Web???

And it wasn't the first time the company had skipped out on investor presentation, having done the exact same thing in May of this year in Paris at BioEquity Europe.  I could go on with the Power Point slide presentations with wrong information or slides completely missing.  Disarray?  Incompetence?  That's for each individual to decide.

So against this back drop of a company that proclaims itself to be "in serious financial difficulty", that can't get even the most simple things right in terms of corporate communications.  Against this ugly back drop we see the PPS climb over 20% in just one week on higher than average but still very tepid volume.

Why???

The most simple conclusion is that in spite of all the Fear Uncertainty and Doubt....that there were still more than enough buyers looking to acquire shares than were looking to unload.  Its a reasonable conclusion in my opinion, but I don't know what the rationale of those buying is.  In fairness I have been continuing to add share purchase warrants myself, but I haven't added any shares since RVX was trading in and around $1.35.  

Maybe the company's phase III trial will get a thumbs up on the anticipated Futility Analysis due any time now.  Perhaps they'll soon be able to announce that they've secured sufficient financing to lift the cloud that has them disclosing being "in serious financial difficulty".  Maybe they've got interest from a big player for some type of licensing deal or partnership.  

Lots of perhaps, ifs and maybes.  But last week, buyers didn't seem to care.  Do your own DD of course and comments are always welcome.  

One last note, from a technical perspective the chart is looking overbought in the near term, so barring some positive news I would not be surprised to see the move higher stall or pull back at least some.  

Resverlogix to attend BioPharm America 2017 Sept 26 and 27 in Boston

Resverlogix has posted to its website, on the Media Events page, that the company will be attending Biopharm America in Boston on September 26th and 27th of this year, just over a week from now. Look under "Current Events" about half way down the page:

https://www.resverlogix.com/media/events.html#.Wb32pMiGPIU

Biopharm America is in its 10th year and is described as unique partnering event which brings together hundreds of executives from: Venture Capital, Major Pharma, Academia and all manner of Biotech Firms from start ups to developed companies with drugs on the market.

Biopharm America uses "PartneringOne" a software platform that allows participants to tailor one on one meetings specific to their needs.  The two day conference features leaders and executives from across the spectrum of Life Sciences.  Some big players slated to be in attendance include AstraZeneca, Bayer, Genentech, Merck, Pfizer and many more. 

As a Resverlogix shareholder who's very hopeful for the success of Apabetalone, the company's lead compound currently in Phase III trial, it is certainly encouraging to see the company busy and getting out to an event such as this one.  

BUT PLEASE TAKE NOTE, THERE IS A VERY REAL POSSIBILITY THE COMPANY MAY SKIP THE EVENT WITHOUT GIVING SHAREHOLDERS ANY NOTIFICATION!!!

I realize that might come as a shock to some, that a public company would publish on the world wide web its attendance at a major conference, and then not show up without prior notification.  But it is something that has already happened twice this year, most recently at the Rodman & Renshaw Investor Conference in New York City on September 11th.  The other time was in May at BioEquity Europe in Paris.  

In both cases the company published on their website attendance but then cancelled without providing any notification to shareholders ahead of the fact.  In the most recent case I communicated with IR at Resverlogix and was informed via email that the Rodman & Renshaw cancellation was due to a scheduling conflict, but no details were provided as to the nature of the conflict.  

I am pointing this out because if the company skips out again without prior notification I don't want my readers to accuse me of knowingly putting out false information.  I prefer to be proactive rather than reactive, and knowing the company's history of skipping investor conferences and such without notification I feel it behooves me to at least warn readers that it is a possibility.  

I am hopeful however that if, (for any reason) the company does decide to skip BioPharm America, that now they will notify stakeholders before the fact and not after.  I will be checking their media page frequently to see if the event is still listed and will leave a comment on this blog posting if I notice that it suddenly disappears.  

But to reiterate, I am hopeful the company will be proactive going forward.  I base that hope on a conversation I had with Resverlogix's VP of Investor Relations this past Friday. During that conversation I went through something of a laundry list of items where the company's communications were severely lacking in my view, some of it very basic stuff.  

On top of the two investor conferences that were skipped the company had published a Power Point with missing agenda items, and another with the wrong debt figure and share totals.  Then most recently on September 13th just passed the company put out a PR which said the company's most recent quarterly statements and MD&A were available on the company's website....they were not. Thankfully late on the afternoon of Friday September 16th, (after my conversation with IR) they were finally posted to the site.  Better late than never. 

IR acknowledged the importance of projecting a positive corporate image and of professionalism in the company's communications.  After all Resverlogix has a value statement on their website that says they're committed to "timely and transparent communications".  

Going forward I expect nothing less.  

Short attack on Resverlogix (RVX.TO - RVXCF) But did they overplay their hand?

Shareholders and watchers of RVX and RVXCF have seen the stock tumble precipitiously in the wake of a financing deal first disclosed after the bell on Thursday June 8th.  The following day the company announced financing of up to $10 million dollars CDN through the issue of units consisting of one share and one warrant with the price being $1.80 and with the warrants priced at $2.05

Details here: https://ca.finance.yahoo.com/news/resverlogix-raise-10-million-135000624.html

Prior to that news coming out the PPS had closed at $2.05 CDN on Thursday June 9th.  Then the slide in the PPS began, by the time Friday's trading had closed RVX had closed at $1.64 on the TSX. More alarming was the volume, in spite of trading typically coming in around 30,000 per day that Friday saw over 1 million shares trading hands.

A casual observer might think that shareholders had bailed out on the financing news en masse, but that would be a mistake.  And that wasn't the end either, the PPS has continued falling ever since settling at a close of just $1.33 CDN on Tuesday June 20th for a drop of 35% from before the financing was announced.  

So what caused the fall?  A look at the just updated short interest gives the answer.  Short sales which had totaled 229,700 up to May 30th 2017 exploded higher to 841,500 current up to June 15th, that's an increase of 611,800 between May 30th and June 15th.  Obviously borrowing over 600K shares from investors and then dumping them back into the market, that's going to have an incredibly negative impact on the PPS, especially in a thinly traded and tightly held stock like RVX.

Now I have a lot of respect for those with the willingness and capacity to short a stock trading for a piddly $2.00 or so Canadian.  This is not an activity engaged in by individuals trading from a laptop and risking their child's college fund.  To short a stock like RVX in these numbers requires a significant bankroll.

But perhaps, just maybe....it could be that players on the short side of RVX have overplayed their hand in my opinion.

Why?

The company just attended the Bio International Convention in San Diego on June 19th.  They did a presentation, and the PDF of the Power Point slide show was made available just afterwards. Investor website Seeking Alpha picked up the slide show and published it on their site, you can see it here.

https://seekingalpha.com/article/4082752-resverlogix-rvxcf-presents-bio-international-conference-2017-slideshow?auth_param=eu09k:1ckj4s5:b13d93e3c0b94713711ac454bdbeaf27&uprof=46&utoken=6a477500ce9e1f7eb73a9eb082babcbb

Take note of the debt figure on page 5 of the slide presentation.  Investors and followers of the company should already have been aware of the company's debt, pegged at $68.8 million CDN and owed to CitiBank.  The loan is collateralized by a standby letter of credit from Eastern Capital Ltd which is the investment arm of billionaire Kenneth Dart, a well known and successful BioTech investor and heir to the Dart Container fortune.  

The stand by letter of credit though has a catch, if Resverlogix were to default on the loan, then Eastern would get pretty much all the company's intellectual property, including the patents on their lead compound Apabetalone currently in a Phase III trial called BETonMACE.  And the loan comes due this coming August, which isn't far off.

It has long been my opinion that this loan has been an albatross around the company's neck, and a significant factor in depressing the share price of RVX, preventing the company from attaining a substantially higher PPS, that is my point of view.

But back to the PowerPoint published by SeekingAlpha.  The debt figure increased, instead of $68.8 million the new figure is $117.6 million CDN, a difference of almost $50 million.  

This sent my wheels spinning obviously.  The most logical conclusion from my perspective was that the company had either extended the CitiBank loan or replaced it.  I considered it possible that they had raised enough to retire the $68.8 million CitiBank loan, and to tap into and additional $48.8 million which is sorely needed by the company to finance trials and continue operations.  

Well, those thoughts were quickly replaced by bewilderment when the company changed the Slide Presentation available on their own website and put the debt figure back to $68.8 million CDN on the updated link.  You can see the newer version here: 

http://www.resverlogix.com/upload/media_element/281/02/bio-international-2017-v2.pdf

I sent an email to the company's IR seeking clarification.  It wasn't just the debt level that changed, but also the MC and the number of shares outstanding, both issued and fully diluted.  The answer I got back was even more confusing with the head of their IR department claiming it was the result of a typo.  

A typo???  Cambridge Dictionary defines a typo as a "small mistake in a text when it is typed or printed".  That's something everyone has done, typing there when using the possessive form instead of their, or your instead of you're.  But calling a difference of almost $50 million dollars and differences in the number of shares outstanding a "typo", that doesn't add up.  That's like calling Mount Everest a little hill.  

I don't know what happened, but I am more than a little bit skeptical of the "typo" story.  I think its possible that the $117.6 million debt figure is based on something tangible but not yet final.  That is a suspicion on my part, and something I do not expect confirmation of at this point.  If however the company announces a new loan agreement that comes anywhere close to that new figure, then I'll be almost certain of it.

And finally, if that weren't enough we have the NYTimes reporting on the Trump Administration's new draft order which seeks to ease restrictions on Drug and Biotech companies.  Adam Feuerstein of TheStreet.com just tweeted this saying:

Biotech and drugs stocks are going to triple in price tomorrow.

All of them.

https://twitter.com/adamfeuerstein/status/877335651825270786

Exciting times, exciting times.  But I won't be watching the market tomorrow, I'll be visiting the Zoo on what promises to be a spectacular day.  Please note, I'm just a retail schmo...albeit one with some industry experience to go by, but still just a retail investor.  And I am a shareholder in Resverlogix so my opinions are obviously biased.   Please read the full disclaimer at the bottom of this site.

Resverlogix - Plenty of smoke but is there fire?

After writing about a dividend paying retirement home with my last post I will now return to more familiar ground, writing about a speculative stock.  

Resverlogix is a company I've opined on several times here at ATB going back to June of 2016, and over the past year it has certainly performed.  

Here's a link to that first post:  

http://www.avoidthebag.com/2016/06/resverlogix-phase-iii-clinical-trial.html

And here's the 1 year chart:

That's a jump from the $1.20 to $1.30 area to its current price in and around $2 for a gain in the neighbourhood of 60%.  However I must admit to being very greedy on this one because of what I consider to be the "mind blowingly" blockbuster potential of the company's lead compound Apabetalone.  

You know you're in love with a stock when you start inventing words to describe it like "blowingly".  

Those who've followed this blog or the company already know the story.  Apabetalone has shown itself to be an inhibitor of Bromodomain and Extraterminal Domain, (BET for short) proteins.  The biggest promise seems to rest in the area of Cardio Vascular Disease or CVD for short.  CVD affects many people, especially those with conditions like Diabetes and Chronic Kidney Disease (CKD).  

I'm not going to go over old ground except to list some of the potential applications that Apabetalone could have.  Beyond the aforementioned Diabetes and CKD there's also Alzheimer's, at least one form of Muscular Dystrophy, Degenerative Retinal Disease, Thrombosis and more.  

So what's new with Resverlogix that compelled me to write another blog post?  What's this smoke referred to in the subject line?  Relax I'm getting there, but I'm getting older and I like to take my time.  

There are a couple of expressions about smoke that contradict each other.  One says:  'Where there's smoke, there's fire'.  But another is used about someone who talks out of his nether regions, where the bromide goes something like:  'He's just blowing smoke'.  So the question with Resverlogix begs: Is there really a fire cooking up something big, or is it nothing more than the company blowing smoke?

Bottom line answer, I don't know.  I hope the fire is burning hot and cooking up an absolute feast, but I can't say that with any certainty whatsoever.  That's what makes the market game so compelling, it is anything but easy.  If there were no risk and Apabetalone was assured to fulfil its billion dollar potential, then shares wouldn't be trading for Canadian Toonies.  

Okay....so what is this smoke I'm referring to?

The first is FDA approval for the company to proceed with a 2a clinical trial for patients with Chronic Kidney Disease who are undergoing dialysis.  This is on top of the on-going Phase III trial for patients with Diabetes called BETonMACE.  The news about the CKD trial came out on May 15th just passed, here's the link:  

https://ca.finance.yahoo.com/news/resverlogix-receives-approval-fda-cardiovascular-141100850.html

The second "puff of smoke" came out on May 23rd and is much more intriguing for me because it involves mention of Pfizer and the fact that they have applied for a patent for the treatment of a rare disease called Friedreich's Ataxia with BET-family bromodomain inhibitors including Apabetalone. The patent application specifically cites Apabetalone as a compound developed by Resverlogix.  

Here's the link to that news item:

https://ca.finance.yahoo.com/news/recent-publication-patent-application-referencing-110000770.html

And more intriguing (for me) still is that this news was picked up two days later by a portal for Friedreich's Ataxia news stories that had a very interesting take on Pfizer's patent application.  Here's the link:

https://friedreichsataxianews.com/2017/05/25/pfizer-seeks-patent-covering-friedreichs-ataxia-therapy-resverlogixs-has-already-developed/

And here's the intriguing part:

• Resverlogix, which is based in Calgary, Canada, responded to news of the patent application in an understated way. Instead of indicating it would challenge the patent request, the company’s president and chief executive officer, Donald McCaffrey, said that “we welcome the attention drawn to Resverlogix and apabetalone from significant industry groups such as Nature Reviews Nephrology and Pfizer.”

Could there be something brewing between Resverlogix and Pfizer?  Again I don't know, but I do think its a possibility.  Obviously deals of this nature, if they do come together....its not something whipped up on the spur of the moment.  

Still reading?  Good.

Because adding to the smoke was the recent Bio Equity Europe event in Paris where the company was scheduled to present on Monday May 22nd, but didn't attend. That fact was confirmed to me by email from the company's IR department.  No explanation was given as to why Resverlogix decided to forgo this opportunity to present itself to investors.  

All this is happening at a crucial time, because a look at the company's financial disclosures reveals them to be, if not broke, very close.  As of January 31st of 2017 they reported having just under $5 million CDN left in cash with a burn rate of between $2 and $3 million per month.  You don't need to be Stephen Hawking to do the math.

On top of that they have a loan with Citi-Bank that is coming due in August for a little under $70 million CDN.  That loan is guaranteed by one Kenneth Dart who's investment arm Eastern Capital is a major shareholder.  The loan is collateralised by the company's intellectual property, including Apabetalone...default on the loan and Eastern gets pretty much everything.  

All this makes for anxious investors....I can see it it going both ways.  Either we open the kitchen door to find a huge feast laid out, with the possibility of Chef Ramsey being represented as Pfizer stepping in to satisfy the appetite of Resverlogix shareholders.  That or its just smoke coming from the kitchen stove for an overdone pot of Mac&Cheese.

The clock is ticking.  Standard boiler plate disclaimer, please see the very bottom of this blog.  I'm a shareholder, that is to say I eat my own cooking.  I'm hopeful that its prime rib I smell and if it is that its isn't over cooked but instead is juicy and reddish pink.  

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.