In an Oct. 29 research note, analyst Jotin Marango reported ROTH Capital Partners has initiated coverage on Resverlogix Corp. (RVX:TSX) with a Buy rating and a CA$10 per share price target. The stock is currently trading at CA$3.22 per share.
The investment banking firm likes Resverlogix for its lead epigenetic candidate, apabetalone (RVX-208), which is an inhibitor of bromodomain proteins (BET).
A primary advantage of apabetalone is that it is being developed for non-acute indications that need chronic treatment versus relapsed/refractory oncology indications. Currently, in the BETonMACE trial, it is being evaluated in patients with type 2 diabetes patients who have low high-density lipoprotein and are at risk for cardiovascular disease. Next year, Resverlogix intends to advance apabetalone into a Phase 2 trial in end-stage renal disease and into other studies, for indications including Fabry disease, vascular dementia and pulmonary arterial hypertension.
Among other epigenetic candidates, apabetalone stands out and is furthest along in the clinic, noted Marango. Now in Phase 3 with BETonMACE, it "drives a positive risk/reward." The data readout for this study, expected in Q1/19, would be "pivotal" for Resverlogix and epigenetics at large.
The analyst indicated apabetalone's primary differentiators. First is its molecular selectivity among BET inhibitors. It is a "BD2-selective BRD4 inhibitor, which we believe underlies its differentiated transcriptional and biologic profiles," Marango explained.
Second, apabetalone has a superior safety profile. It has not demonstrated any of the usual toxicities of other BET inhibitors or epigenetic agents. This has allowed Resverlogix to continue advancing the drug clinically.
Third, apabetalone is positioned in a market with huge potential, specifically high-risk diabetes, followed by chronic kidney disease, as opposed to an orphan indication or oncology. "We project peak sales of $1 billion-plus in a target population. . .although we see good likelihood of label extension into adjacent indications and compounded value thereafter," wrote Marango.
He added that apabetalone shows similarities to "the recent coup of Amarin's Vascepa, including novel/fringe mechanism, ambitious end market and pivotal win-triggered mergers and acquisitions theses."[NLINSERT]
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Disclosures from ROTH Capital Partners, Resverlogix Corp., Company Note, October 29, 2018
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