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


David Kideckel, an analyst with Beacon Securities Ltd., explained the investment thesis for this clinical-stage life sciences firm.

In a Nov. 15, 2017, research report, Beacon Securities Ltd. analyst David Kideckel described Resverlogix Corp. (RVX:TSX) as a company with "a game-changing medical technology platform and drug development platform," and "a deeply talented senior management team." He stated, "We believe that Resverlogix is one of the most undervalued and most impressive biotechnology companies listed on the Toronto Stock Exchange. . .[it] has flown under the radar of 'healthcare and biotechnology-focused' investment banks, which is unfortunate (or fortunate for future investors), given the company's blockbuster market potential."

Beacon initiated coverage on Resverlogix with a Buy rating and a CA$8.55 target price derived from the risk-adjusted net present value of its two initial target indications, cardiovascular disease and chronic kidney disease, Kideckel explained. The stock is currently trading at around $1.62.

Resverlogix's epigenetics drug development platform is based on targeting bromodomain and extra-terminal (BET) proteins, and its lead drug candidate, apabetalone (RVX-208), is one such inhibitor. With its platform, the company is addressing epigenetics and BET inhibition, which, wrote Kideckel, "are among the hottest fields in the global biotechnology sector with significant upside potential."

Three clinical trials are underway involving apabetalone. The first is a Phase 3 study (BETonMACE) for the secondary prevention of major adverse cardiovascular events (MACE) in high-risk patients with diabetes. The second is a Phase 2 study in chronic kidney disease, and the third is a Phase 2 trial in Fabry Disease (a rare disease).

What really excites Kideckel about Resverlogix is its recent R&D program in Complement biology. Resverlogix recently published data indicating that the Complement system is the top downregulated pathway in Apabetalone-treated (its lead drug candidate) human liver cells. Kideckel told Streetwise Reports, "Complement is one of the hottest areas in global biotech. The leading Complement company in the world, US-based Alexion Pharmaceuticals (ALXN.O), generated USD$2.8b in 2016 annual sales alone with its blockbuster drug, SOLIRIS®, a Complement-inhibitor."

Beacon estimated Resverlogix may need up to ~CA$60M over the next 18 to 24 months to advance its clinical and research and development programs. It "may also form a partnership with another big pharma company to license its proprietary technology," suggested Kideckel.

The analyst indicated, too, that Resverlogix is a prime takeout target. It is furthest ahead with its platform, among the firms pursuing BET inhibition, he said. It is the only company globally that is actively pursuing BET in cardiovascular and chronic kidney diseases and that has "potential numerous other applications in various disease states," Kideckel added. To date, no BET inhibitor has been approved for use anywhere in the world.

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1) Doresa Banning 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 the article: None. She or members of her household are paid by the following companies mentioned in this article: None.
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