TICKERS: RVX

With Completion of Offer, Analyst Says This Biotech Stock Could Triple

Source:

A Canadian company with its lead drug candidate in a Phase 3 trial recently closed an offering that raised CA$10 million for future research, which has one analyst contemplating the potential for "3x upside."

In a June 14 research report, John Vandermosten, an analyst with Zacks Small-Cap Research, reiterated his firm's price target for Resverlogix Corp. (RVX:TSX). "Based on our DCF model and a 15% discount rate, RVX is valued at approximately CAD$6.50 per share," Vandermosten wrote. Currently, Resverlogix shares are valued at ~CA$1.50.

The CA$6.50 target is based on the analyst's belief that shares are currently undervalued. In addition, "expansion into new geographies, the orphan disease program, and renal disease, could provide further upside to our valuation," Vandermosten stated.

Resverlogix is developing apabetalone (RVX-208) for treatment of major adverse cardiac events (MACE). The compound is currently in a Phase 3 trial, BETonMACE, treating diabetic patients with cardiovascular disease (CVD). The trial was initiated in 2015. "We believe the trial will take approximately 3 years to complete, targeting topline readout in 2018," Vandermosten wrote. "With a potential impact on multiple markers for CVD we are optimistic on a materially significant impact on MACE."

Vandermosten noted that "The CAD$10 million capital raise should be sufficient to provide the flexibility to negotiate a larger licensing or first right of refusal deal that will support clinical trials and operations until a new drug application can be submitted to the FDA, which we anticipate occurring in 2019."

Resverlogix closed its offering on June 20, and announced that it had issued "a total of $10 million of its equity units." Two companies, Eastern Capital Limited and Shenzhen Hepalink Pharmaceutical Co. Ltd., "purchased a total of 2,951,313 equity units at a price of $1.80 per unit for aggregate proceeds of $5.3 million pursuant to a non-brokered private placement," the company stated in a June 20 press release. "In addition, under the previously announced overnight marketed equity offering conducted by Bloom Burton Securities Inc., subscribers purchased an additional 2,552,489 equity units at a price of $1.80 per unit for aggregate proceeds of an additional $4.6 million."

The company will use the money raised to "fund research and development activities, including but not limited to, clinical trial activities related to the Phase 3 BETonMACE trial, the Phase 2a kidney dialysis trial and Fabry disease trial, general and administrative expenses, working capital needs and other general corporate purposes."

Apabetalone (RVX-208) is a bromodomain and extraterminal (BET) inhibitor, and is in development for a number of indications, including MACE, diabetes mellitus (DM), chronic kidney disease, Alzheimer's disease, Fabry disease and other orphan diseases, and peripheral artery disease.

"With [its] favorable safety profile, and initial data indicating substantial efficacy on MACE in high risk populations, we maintain our positive view on Resverlogix shares," Vandermosten wrote.

"We believe that a durable patent position and the forecasted pricing of apabetalone, combined with a management skill set surrounding CVD and diabetes as well as a novel approach to addressing the residual risk in high need CVD patients support our price target." Vandermosten concluded. "With the recent sell-off in RVX shares, the opportunity for upside has increased."

Want to read more Life Sciences Report articles like this? Sign up for our free e-newsletter, and you'll learn when new interviews and articles have been published. To see recent articles and interviews with industry analysts and commentators, visit our Streetwise Interviews page.

Disclosure:
1) Tracy Salcedo compiled this article for Streetwise Reports LLC and provides services to Streetwise Reports as an independent contractor. She or members of her household own securities of the following companies mentioned in this article: None. She or members of her household are paid by the following companies mentioned in this article: None.
2) The following company mentioned in this article is a billboard sponsor of Streetwise Reports: Resverlogix Corp. Streetwise Reports does not accept stock in exchange for its services. Click here for important disclosures about sponsor fees. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.
3) Comments and opinions expressed are those of the specific experts and not of Streetwise Reports or its officers.
4) The article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports' terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.
5) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the interview or the decision to write an article, until one week after the publication of the interview or article.




Register For New Orleans 2017

Get Our Streetwise Reports Newsletter Free

A valid email address is required to subscribe