In a Dec. 20 research note, Vandermosten notes that Resverlogix Corp. (RVX:TSX) reported zero revenue and a net loss of $0.10 per share in the quarter ended Oct. 31, 2017, which was in line with Zacks' estimates.
The biotech's Q2 FY18 total operational expenses were up year-over-year, to $9.6 million from $7.6 million. Research and development (R&D) expenses also rose, by 33%, since the same time in 2017, to $8.4 million from $6.4 million. In contrast, general and administrative (G&A) expenses dropped 9%, to $1.1 million from $1.3 million in Q2 FY17.
About expenses overall, Vandermosten concluded, "For the first half of FY18, expenses have largely been in line with our estimates with the predominant focus on obtaining additional financing." In upcoming quarters, Resverlogix's R&D and G&A expenses will likely go up, he added, "reflecting increased investigational site costs and inflation."
At Q2 FY18's end, Resverlogix had $0.7 million in cash and $53.3 million in debt. Zacks anticipates that Resverlogix will need to raise further capital in the near term to complete its BETonMACE trial. "We believe that the consistently positive data and news flow from internal and external apabetalone research generate support for financing," Vandermosten wrote. "We note that the company has an active letter of intent from an unidentified entity seeking a regional licensing agreement or equity investment."
Vandermosten noted that during 2017 Resverlogix successfully obtained financing and paid down debt. To date, Dec. 20, 2017, various placements and share issuances yielded about US$80M, which allowed the company to repay its US$54M loan and provided operating monies. "The funding has lifted a substantial burden from Resverlogix, removing the debt and interest overhang from the company," he said.
However, due to the conversion of debt into equity and resulting share dilution, Zacks lowered its target price on the biotech to CA$5 per share from CA$6.50 per share.
Looking forward, a topline data readout is expected in mid- to late 2018 from Resverlogix's Phase 3 BETonMACE trial, for which it "continues to be on track," reported Vandermosten. However, interim findings after 125 major adverse cardiac events (MACE) will "provide a first look." As of early December, about 88% of the total 2,400 patients had been enrolled in the study.
At the current stock price, around CA$1.96, Resverlogix shares are "undervalued and in a position to provide long-term upside potential," Vandermosten stated. "We see additional upside from the realization of expansion into new geographies, the orphan disease program and renal disease."
Read what other experts are saying about:
Want to read more Life Sciences Report articles like this? Sign up for our free e-newsletter, and you'll learn when new articles have been published. To see recent articles and interviews with industry analysts and commentators, visit our Streetwise Interviews page.
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.
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.
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.
Disclosures from Zacks Small-Cap Research, RXII Pharmaceuticals Inc., Dec. 17, 2017
Zacks SCR Analysts hereby certify that the view expressed in this research report or blog article accurately reflect the personal views of the analyst about the subject securities and issuers. Zacks SCR also certifies that no part of any analysts’ compensation was, is, or will be, directly or indirectly, related to the recommendations or views expressed in this research report or blog article. Zacks SCR believes the information used for the creation of this report or blog article has been obtained from sources considered to be reliable, but we can neither guarantee nor represent the completeness or accuracy of the information herewith. Such information and the opinions expressed are subject to change without notice. The Zacks SCR Twitter is covered herein by this disclosure.
INVESTMENT BANKING AND FEES FOR SERVICES
Zacks SCR does not provide investment banking services nor has it received compensation for investment banking services from the issuers of the securities covered in this report or article.
Zacks SCR has received compensation from the issuer directly or from an investor relations consulting firm engaged by the issuer for providing non-investment banking services to this issuer and expects to receive additional compensation for such non-investment banking services provided to this issuer. The non-investment banking services provided to the issuer includes the preparation of this report, investor relations services, investment software, financial database analysis, organization of non-deal road shows, and attendance fees for conferences sponsored or co-sponsored by Zacks SCR. Each issuer has entered into an agreement with Zacks to provide continuous independent research for a period of no less than one year in consideration of quarterly payments totaling a maximum fee of $30,000 annually.
SCR Analysts are restricted from holding or trading securities in the issuers that they cover. ZIR and Zacks SCR do not make a market in any security followed by SCR nor do they act as dealers in these securities. Each Zacks SCR Analyst has full discretion over the Valuation of the issuer included in this report based on his or her own due diligence. SCR Analysts are paid based on the number of companies they cover.
SCR Analyst compensation is not, was not, nor will be, directly or indirectly, related to the specific valuations or views expressed in any report or article.