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Jim Letourneau's Blog

Investing, Technology, Travel, Geology, Music, Golf. I think that covers it.

The Next 2 Years

This post is part of 10 a 16 part series of posts taken from the transcript of an interview I (JL) conducted with Resverlogix (RVX.TO) co-founders Dr. Norman Wong (NW) and Donald McCaffrey (DM).

What follows is a lengthy and candid interview about the history of Resverlogix, recent events at the American Heart Association meetings, and future plans for the company.

I’ll be publishing two interview segments a day so not all of the links may be active if you are viewing this during March 28-April 5, 2011.

  1. Background of Dr. Norman Wong

  2. Early History of Resverlogix

  3. HDL Biology

  4. American Heart Association Meeting – 2010

  5. CETP History

  6. Importance of HDL Type

  7. AHA ASSERT Trial Response

  8. ALTs

  9. Investor Reaction

  10. The Next 2 Years

  11. David vs. Goliath

  12. Alzheimer’s Therapy Potential

  13. Upcoming Assure Trial

  14. Volatility of Resverlogix

  15. Resverlogix is Expanding

  16. More on the sell-off


Part 10

JL: Now, because a lot of biotech analysts are saying no rush. Two years until the next results

are out. What's going to happen over the next two years?

DM: I think they'll figure out fairly quickly that they have miscalculated that. We will be
releasing additional information about this trial, and we continue on in our business direction.
So I think that concept of no rush might be a little premature.

JL: Okay. And in terms of financing and funding the next trial?

DM: I get this question every six months for ten years now. Even during the lowest of the
depression, we brought $25 million in, right at the peak of the drop of the whole global
economy. And that was more than the entire Canadian biotech industry to date for that year
combined. So it's a non-issue. We've got around $10 million in cash right now and a $25
million equity line. We've got a burn rate of only $1.2 million a month right now.

JL: Will that go up?

DM: It'll go up a little bit in mid next year. So draw on the equity or do another financing
and don't draw on the equity. We've got lots of options. The equity availability out there
for us is quite high, especially with any investor group that has Ph.D. or M.D. level analysts
who look at this stuff, because there is not a stitch of bad news in that clinical trial release.
It was actually a very successful trial as far as us proving what we went out to prove and
us learning what we wanted to learn. Which was how do we best design the ASSURE trial?
If we'd run them concurrently, we would have run it wrong. So for us, cranking it up and
showing it the best way possible is exactly what we have going forward. And we've also
moved it into countries that enroll patients a lot faster, so the time frames of a six month trial
will probably be no longer than the time frames of the three month trial.

JL: Okay. But it's still a year and a half to two years.

DM: Yes.

JL: Probably two.

DM: Now let's look at what could happen then assuming trial success. We're not a $200
million market cap then. We could be over a $1 billion market cap. That's not a bad
investment.

JL: Yeah. Over a couple years, that's . . .

DM: That's not bad. So when these guys say it's on hold for two years, that's such garbage.
The further out we go, the more science we do, the more . . . it's not like nothing happens
at Resverlogix between now and 24 months. There's all kinds of experiments in humans and
animals that we'll be doing that shows this works.

There will be an enormous amount of data flow over those two years, both in cardiovascular,
Alzheimer's as well. Plus beyond that, we have other programs. We have our autoimmune
program. Some of the testing for that will come out. So our market cap value is solely on the
cardiovascular side. Right now, any Phase II Alzheimer's company in the United States, their
market caps are around $300 million just with a Phase II Alzheimer's program. Hopefully
we're are about to add a Phase II Alzheimer's program. So for us, what does that do? I don't
think that means we're going to sit at a sub-$3 stock price for two years. I think we've done
plenty of work over the last 18 months that now starts to unfold. This work is already done
and paid for. So for us, time to get value add for it.