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Jim Letourneau's Blog

Retired Life

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

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DYD - What I Learned About My MP

Do your diligence (DYD) is a common phrase used by investors in speculative public companies. It’s a more serious cousin to buyer beware.


Since we’re in the final stretch of an election campaign, I thought I’d check out the websites of my candidates. I was curious to find out that my MP, Lee Richardson, was “Chairman of the Board of STI Streetlight Alliance, a publicly-traded technology company” according to his website.

I love checking out public companies, so I immediately headed off to Stockwatch.com to check out what turned out to be Streetlight Intelligence Ltd. It has the stock symbol SLQ.V and it trades on the TSX Venture Exchange. He may be involved with STI Streetlight Alliance as well, but I couldn’t find out much about that organization. Alliance/Intelligence whatever, it has something to do with streetlights. Or it used to.


The chart above is not an uncommon sight for investors in TSX Venture listed companies. Of course being Chairman of the Board of public company while sitting as a Member of Parliament is a rare situation. Especially one that announced (in the middle of an election campaign!) that as of April 15, 2011 all employees of the Corporation were issued temporary layoff notices, and the operations of the Corporation were suspended. I thought this a newsworthy event, but I hadn’t heard a peep about it.


There has been past controversy associated with the company, as it received a Natural Resources Canada Grant for $185,000 in 2009. There is nothing wrong with public companies receiving government grants and this was quickly investigated by the Office of the Conflict of Interest and Ethics Commissioner and Richardson was cleared.

“Since I´ve been back in Parliament, I´m not that close to it. ... It´s a publicly traded company. I don´t get involved in the day-to-day stuff," said Richardson, noting he´s a backbench MP and not a government minister.

"I don´t think there´s any conflict of interest in any event." (source)

I believe that Lee Richardson is an ethical man but if I was a shareholder of Streetlight Intelligence I’d be pretty pissed given the share price performance. Especially once I looked up the definition of chairman of the board.

The chairman of the board presides over meetings of the board and generally exerts great influence on the management of the affairs of the corporation.

Naturally Richardson is distancing himself from the company but you can see from Bloomberg Businessweek that he's currently

  • Chairman of the Board

  • Chairman of Compensation Committee

  • Member of Disclosure Policy Committee

  • Member of Audit Committee

  • Member of Corporate Governance Committee


So while I’m relieved that my MP is ethical, I’m feeling the shareholder’s pain. I’ve had a few zeros in my investing career but I’ve NEVER heard a chairman of the board say he wasn’t that close to his company.

Speaking of shareholders, who lost money on this deal? Turns out that Streetlight Intelligence has been making news in Ottawa because Hydro Ottawa made an investment in the company.

In 2009 and 2010, Hydro Ottawa acquired two purchase options for $500,000 each. The purchase options include a put right whereby Hydro Ottawa may require Streetlight Intelligence to repurchase and cancel each option for $500,000 plus an amount equal to an inherent return on the investment of approximately 10% per annum. In order to provide Hydro Ottawa with security to support Streetlight Intelligence’s obligation to repurchase the options, Streetlight Intelligence granted Hydro Ottawa a first priority security interest over all of its present and future property, assets and undertaking, including all fixed assets, intellectual property and other intangibles. (source)

Their biggest shareholder is Enmax. Enmax owns 16.05% of the company or 15,232,500 shares. Common shares generally become worthless in a bankruptcty. Hydro Ottawa is at the top of the creditor food chain. Enmax is at the bottom.

Why would Hydro Ottawa comment on its investment and not Enmax?

Enmax Government Relations VP Ian Todd at Enmax is currently not at work, he’s spent the election on paid service to Harper. I wouldn’t expect any comments about their investment disaster until after the election. It is embarrassing to Enmax and it has direct ties to Lee Richardson, who would like to win Monday’s election.

Liberal candidate, Jennifer Pollock, would also like to win Monday’s election and she’s asking some important questions. "Investing in what looks like a very speculative venture makes you wonder about the risk that Enmax is taking." (see Tory hopeful's ties to faltering company questioned).

Richardson’s response this week was a familiar one.

“I do not have a day-to-day role with the company. The business relationship has been reviewed and accepted by the office of the conflict of interest and ethics commissioner of Canada. The company's dealings with a department of the Government of Canada have also been reviewed and deemed acceptably arms length by the ethics commissioner."

Groundhog Day anyone?

The bottom line is that Lee Richardson is the highest ranking executive in a company that turned into a sinkhole for the federal government, Hydro Ottawa, and Enmax.

Richardson is no stranger to stock promotion. He’s been involved in lots of deals over the years. I found over 15 on Stockwatch.com. Some were winners, some were sinners. My favorite was In-Flight Phone Canada which was a promotion from the mid 1990’s. Clearly an idea ahead of its time. A newsletter writer of the day pointed out that MCI and Sprint Canada own approximately 30% of the company. Later on the same writer was leary of another Richardson company called Goldtex because “In-Flight Phone of Canada collapsed in a single day because the company's plans failed to materialize.”

I see a pattern here. DYD.

Disclosure

I’m married to Julia Turnbull, a former Liberal Candidate in Calgary Centre. We have a big Jennifer Pollock Liberal sign on our front lawn.

Uranium Update - Game Misconduct

I spoke about 3 Big Picture Trends in Energy at the Calgary Resource Investment Conference this weekend. The trends I spoke about were in uranium, natural gas and decisions (in other words government policy). I didn't record my speech or use any slides but my notes on uranium were as follows...


The supply demand picture remains strong... but uranium is in the penalty box.

Right now its a major penalty - if Japan doesn’t tie up their issues shortly it could turn into a game misconduct. Most uranium stocks have gapped down... they could move lower still...




Watch Cameco (CCO.TO, CCJ) for signs of sentiment change.



I suggest watching Cameco because it is the industry leader and it is very rare for a junior uranium company to sustain an uptrend while Cameco is in a downtrend.




This is likely a reaction to news out of Japan that radiation levels are higher than first thought. If leaks continue they could eventually reach or exceed Chernobyl's emission levels. Cameco's chart says it all, a game misconduct. There is long term trendline support at $26, and other support levels exist all the way down to the 2008 low of $14.03.  If you jumped into uranium stocks after the first leg down, be mentally prepared to make an exit if Cameco's downtrend continues. The game misconduct could be accompanied buy a suspension.

6 Ways to Save Money

I ran across an interesting article while scanning my emails today. Consumer savings expert, Andrea Woroch, loves saving money and she shares 6 great tips on how to save. I use several these myself.

Spending money to save money doesn't seem like a logical concept, but if you know what you're doing then it can be a smart way to stretch your budget. The trick to this strategy is to only buy what you need and what you planned on purchasing anyway. Take toilet paper for example. Toilet paper doesn't spoil and often costs less when bought in bulk, so it's worth stocking up on to reap the savings overtime, as long as you have the storage space.

Read on for more ways you can spend money and save at the same time.

1. Purchase a Club Membership
While you have to pay for a membership fee to join clubs like Costco and Sam's Club, they do offer excellent prices on many items sold in bulk. Try not to buy on impulse, however, as you could find your pantry stocked with 20 years worth of canned beans.

2. Buy Gift Cards
Buying gift cards from discount sites like Gift Card Granny is a great way to save on everything from groceries to electronics, particularly since you can buy gift cards at these sites for up to half their face value.
3. Dive into Deal-of-the-Day Sites
I recently received an offer from Groupon to buy $40 worth of bedding plants for just $17. Since I planned on spending at least $50 on garden starts this year, that's a real deal. Make sure the group-buying deal is truly something you'll use. While a sky diving adventure may sound like a real kick, it's not worth the price if you're afraid of heights.

4. Stock Up to Increase Online Savings
Purchasing more may qualify your online order for a better value coupon or free shipping. For example, Amazon.com has free shipping on most orders over $25. If your cart reaches $22, throw in an extra item to reach that threshold and benefit from the delivery discount.

5. Stockpile with Multiple Coupons
Keep an eye out for coupons on non-perishable items you'll actually use and collect extra coupons for your next shopping trip by dumpster diving in recycling bins or ask neighbors for their newspaper circulars. Use all the coupons you've collected to bulk up on the offer and stockpile products for later while enjoying the immediate money-saving offer. Make sure you read the fine print, however, as some coupons can only be used for a maximum amount, say two or four packages of baby diapers.

6. Throw In A Little Lagniappe
Lagniappe is a term used in New Orleans referring to something extra you get for free, like a baker's dozen of donuts. Sometimes it pays to buy a little something extra you don't really need to make use of a coupon. For example, I had a $10 off grocery coupon that kicked in if I spent $50. My bill came to $49, so I tossed in a few gum packets to reach the $50 mark. Basically, the gum was free Lagniappe.

More on the Sell-Off

This post is part of 16 of 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 16

DM: We're more in it for the scientific reasons, but also we've got a lot of family friends and

investor groups in here as well.

DM: None of our insiders have sold over the years. Bill Cochrane was in this stock ten years
and never sold. Bought the whole time.

NW: We've been buying.
ure Geoscience Inc. - All Rights Reserved

DM: I think you're going to see a bit of a wave of buy back again too, because if you take the
November 17th and 18th type of selling, it was a lot of sell-off. Those who can use that for a
tax loss buy back 30 days later. That starts taking place in about a week.

JL: These guys can start buying back 30 days after.

DM: So they've got a buy back window with depressed stock prices. It's not such a bad thing
for them. But man, that volume was impressive.

NW: I've never seen it like that.

JL: Well, that's where I would question how many retail people would be
that reactive since they . . .

DM: You had a triple effect here, because you had that scare down from the pre-news,
whatever that was. But then it triggered the stop losses. The stop losses triggered the
margins. The margins triggered the tax loss selling. You get the boom, boom, boom. You
know what? To try not to overreact as management while all of that is going on, it's painful.
You get out. You do what I did. I did two webcasts. We got the news releases out there that
were pertinent. It's just not going to turn around over night. So you suck it up and deal with
it. You continue on with getting your good news out, and your market will rebuild itself. So
those who think we're here at low prices for two years, that's not going to happen.

DM: But you look at the volumes that were there. That had to have been a lot of the guys
who sold on the way down were probably the very ones buying on the way back up. Some
may be in a better position.

JL: It's unbelievable. Then, as soon as he got on the webcast . . .

DM: Yeah, I had the two lined up for the same day. People wanted it the week before. The
stock was dropping. The week before wasn't the right time. It was Thanksgiving in the U.S.
You don't have their attention. Sometimes it's painful to sit in this chair and to have to suck it
up. You get called all kinds of names and get all kinds of threats. We know what we're doing.
We've nursed this thing from the very start, and there are no two people who know more
about it than Norman and I.

Resverlogix is Expanding

This post is part of 15 of 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.

Part 15

  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 15

NW: Jim, we're not firing but we are hiring.

DM: Yeah, as a matter of fact, in 2008, we were one of the only Canadian biotech company
that did not let staff go. Not a single person.

NW: Not a single person.

DM: Right now, if you go to our website, we're hiring three Ph.D./M.D. level individuals. So
we are expanding right now.

NW: We're expanding.

DM: We're pretty bullish on the technologies that we have and what we can
do with them.

NW: Nobody's quit, and we're hiring.

Volatility of Resverlogix (RVX.TO)

This post is part of 14 of 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 14

DM: It's a bit of a roller coaster because some of these hedge funds and stuff they do

increases the volatility of a biotech stock. They can just play on whatever. They go up. They
go down. So we just have to be patient. Norm, have you ever sold a single share?

NW: Not one single. We've given away shares.

DM: I haven't either.

NW: Don and I have given away shares for charity. But we have not sold.

DM: Children's hospitals, stuff like that.

NW: Mount Royal University. We have not sold.

DM: No, we haven't sold shares. We're pretty committed to this.

NW: This is so new I have not even seen it.

DM: Haven't you?

NW: No, I haven't seen it. This is actually . . .

DM: That's the final tablet form.

NW: That's 208 in a tablet form.

JL: Okay.

NW: So it looks like a little bit of an aspirin except that . . .

DM: Yeah, those three pills have only cost about $120 million.

NW: Yeah, I know. I know.

DM: About $40 million a pill there.

JL: It's very nice to see this.

DM: It's a fascinating field to be in. It's frustrating at times when you have to try to work
around the market and it's playing you. But we do stick to the basics and that's the science.

JL: Well, I keep seeing it with . . . doesn't matter what it is in terms of technology or
biotechnology, the timelines are long.

DM: Yes, they are.

JL: The executive of the year and all of the sun shining on them, but it's like 15 years and it
just happened that the market went one way and whatever they were doing became . . .

NW: In the meanwhile, someone else is toiling away and probably deserves just as much
credit and attention for riding out a really dark time.

DM: Well, we've ridden out really dark times.

JL: Yeah, you've already had the dark times. The hard part for you, having the expectation
that it had, now we've got some results. That was a smack down. That's sad.

DM: Yeah. That was a smack down. But the bottom line is that the next study that we have
chosen to do, and the others have chosen to avoid or take so darn long that it will be trivial,
should answer almost all the questions. We are moving forward with the program that can
remove plaque in a safe manner. That makes you a multibillion dollar company. For us,
we're not that far off now. People look at time frames and there is a lot that is going to
happen between now and then. We heard this two years ago when we started these two
trials, 18 months ago. Nothing will happen until AHA or whatever. But look at everything that
happened in between. It's been pretty active.

Geologist Taury Smith Smeared

I don't know Taury Smith but I do know hundreds of working geologists with similar backgrounds. Dr. Smith has published papers on carbonate geology, he's supervised graduate students, he's consulted for a variety of oil and gas companies and he is currently employed by the New York State Museum as the Curator of Subsurface Geological Collections (I suspect this means drill core, well logs etc.).

He was recently interviewed by James Odato of the Albany Times Union where he gave his informed views on shale gas fracturing which included The worst spin on the worst incidents are treated as if it's going to be the norm here, and an optimistic view of what abundant natural gas resources provide, This could really help us fight climate change; this is a huge gift, this shale. He also commented on some of the recent media stories about shale gas, Those are exaggerated problems; each incident wasn't the result of hydro-fracking. There were incidents of groundwater contamination near frack sites, but they were unrelated.

Subsequent to Odato's article, Dr. Smith was smeared by several environmental groups. They didn't rebut his comments with any facts, they immediately went for the jugular by attacking his character. They accused him of being on the payroll of oil companies and having a biased opinion.

Here's what Dr. Burns Cheadle (Associate Professor & Bill Bell Chair in Petroleum Geology at The University of Western Ontario), who recently met Dr. Smith has to say about him:

The notion that Taury Smith is in anyone's "pocket" is absurd. I had the pleasure of meeting Taury not long ago, and he is one of the most sincere and thoughtful public servants I have had the pleasure of speaking with.

Fortunately Odato followed up on his original story this week (read A controversy for state's geologist) and  the Times Union subsequently ran an op/ed piece (A Bad Lesson in Censorship). Today, Reason's hit & run blog picked up the story. I was encouraged by the solid reporting on this story - I know the New York Times won't be providing any.

While discourse amongst scientists is not always pleasant, it rarely degrades into instantaneous personal attacks. Real scientists lose credibility when they resort to storytelling and slander to push their views, unfortunately their critics are not held to the same standards.

Investment Biases - 10 Ways to Lose Money

I just ran across a post on Jeremy Dean's PsyBlog - Why We Buy: How to Avoid 10 Costly Cognitive Biases. "Cognitive bias" is a fancy term for the biggest barrier to investment success.

I believe that uncontrolled basic emotions are the true and deadly enemy of the speculator; that hope, fear, and greed are always present, sitting on the edge of the psyche, waiting on the sidelines, waiting to jump into the action, plow into the game.

Jesse Livermore


Jesse Livermore was a great speculator, accumulating great wealth from humble beginnings. As a person he struggled with lifelong depression and eventually committed suicide. Despite his troubled life, Livermore's study and application of psychology  to trading provide timeless lessons for modern speculators.


I'll be working through these biases personally and writing about them in future posts.




  1. Status quo bias

  2. Post-purchase rationalisation

  3. Relativity trap

  4. Ownership effect

  5. Present bias

  6. Fear of losses

  7. Familiarity bias

  8. Rosy retrospection

  9. Free!

  10. Restraint Bias


Try reading  Why We Buy: How to Avoid 10 Costly Cognitive Biases while thinking about about your own investments.

Alzheimer's Therapy Potential

This post is part of 12 of 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.

Part 12

This post is part of 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 near the end of March, 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 12

JL: How about on the Alzheimer's side, what . . .

DM: I shouldn't say too much about it, because we are planning . . .

JL: But the mechanism . . .

DM: Well, the mechanism is simple. It's the same drug. And Alzheimer's plaque, albeit it's
a little different than the artery plaque, it's a plaque called beta amyloid 40. And it's a 40
amino acid chain. There's a lot of dissension in the research field. . . the smartest Alzheimer's
researchers can't agree on what beta amyloid 40 is. Good, bad or indifferent. Does it have
anything to do with it? The only way you can confirm a true Alzheimer's patient is a pathology
report. So there is no live patient test. A lot of the patients people think have Alzheimer's
don't even have Alzheimer's. They have some other disease.

JL: There's another company, called BiOasis, and they've got a marker, p97, that they think
they can have a pretty good chance of . . . it must tie in. It crosses the blood-brain barrier.

DM: Yeah. There's going to be a few of those. Amorfix is one of them. There's a few of them
trying to determine live tests. And there's a group out of the University of Texas now, Sid
O'Brien. Dr. O'Brien, who's doing a combination of gene studies and
protein . . .

JL: Oh, really expensive. Yeah.

DM: It is expensive. But one of the problems in an Alzheimer's clinical trial is how do you even
know if the placebo patient has Alzheimer's or not? And how do you know if your Alzheimer's
patient has Alzheimer's or Parkinson's or something else? You don't know. Some other form
of dementia? So, it's a lot better now. You can get pretty accurate on it. The scientific
community around Boston and Harvard are really hard core believers in beta amyloid
40 having something to do with Alzheimer’s.

JL: That's what causes the problems?

DM: Yes it may be. And the research community in New York really thinks it's a bunch of
bunk, in general. I'm sure there's crossovers and differences. But the beta amyloid 40 has
had a lot of news coming out on it in the last while. Much like ours and cardio, you always
get the news at a certain time of year. Cardio news always comes out in November and April,
because the American Heart Association and the American College of Cardiology take place
at those times. And the media go and write articles at that period of time.

JL: If you could do it over again, would you still present at that conference?

DM: No. No, I would not. Knowing what I know now, no, I would definitely not. But the
Alzheimer's conference is in July. So in July, there was a whole ton of new Alzheimer's data
coming out, and this week there was even more. But in July, beta amyloid was believed to be
the cause. So it's a plaque protein, 40 amino acids long, and its closest known entity is the
sticky side of the barnacle. You know how hard those things are to pull off rocks. So this stuff
is sticky. In patients who have died and autopsies done, they have an enormous amount of
beta amyloid. That's why some people believe beta amyloid is the problem.

So Alzheimer's programs, these $300 million market cap companies in the U.S., have gone
in trying to break down beta amyloid and cut it into smaller chains of 20 amino acids and to
try to destroy it. These trials haven't been going very well, and some research that came out
in July from Harvard show that beta amyloid appears to have a very important brain function.
It's part of the brain's internal immune system. Getting rid of it, stopping production of it, or
breaking it up may not be a good idea.

So this plaque, although a different type of plaque, has the same biological problem. The
plaque that is in us, in coronary arteries, is a result of too much LDL. Well, LDL, the
bad cholesterol, has a bad rap in its name, because it is cell food, organ food. Every cell and
every organ need those lipids.

JL: Just not too much of it.

DM: Just not too much. So the problem really is the excess. Same with beta amyloid 40. You
have the excess of too much, and this is where you have this sticky mass, and it's kind of
a nesting area for misfolded aggregated proteins that build up, and that's believed to be the
cause of Alzheimer's. Well, there's a new theory now. Because of the possible importance,
you don't want to destroy the beta amyloid 40, because you may be killing the brain's
immune system. Well, how about you just pull out the excess? What's our drug designed
to do? Pull out the excess of plaque, and we already showed in the Phase One study that
on treated versus non- treated, beta amyloid in the blood plasma was 14% higher. And that
means we're pulling the extra beta amyloid across the blood-brain barrier. And if a next trial
can show in a small group of patients . . . and you will actually go in, do spinal fluid tap, so
you will know those patients actually have Alzheimer's. It's a little barbaric, but people are
dying so . . .

NW: It hurts a little.

DM: So you go in, and you get a very good relationship as to who does and who doesn't
have it. If you can treat the sick ones and pull that beta amyloid plaque out, presumably
you're going to have a very profound effect on the further development of Alzheimer's in that
particular patient. There may be only one drug now that can do that. That would be RVX-208.
So we will get some additional material out on this. We've already shown we can do it. We've
already publicly announced we can do it. And we hope to go and show a reconfirm or not. We
hope to get that data out soon.

JL: So is that just by seeing in the blood more?

DM: Yes, that's correct.

JL: Okay. You haven't got monkey brains.

DM: No.

JL: You haven't done that yet.

DM: No. Animal models for Alzheimer's disease are just next to impossible.

JL: Oh, you can't do it, or it's not . . .

DM: It's a totally different disease.

NW: How do you assess the memory of a monkey or a rat? It's tough.

DM: Yeah. And the monkeys lie and the rats cheat. We already have a drug with Phase One
safety approval, so we can go right to a Phase Two human trial. There's none of this six
year build up for the drug like we've had with RVX-208. It is RVX-208. We can go right to
an Alzheimer's Phase Two trial. And we're talking trials that are way shorter and way fewer
people. So we're talking $1 million or $2 million for a trial, not $15 million to $20 million. So
for us, if we can show that we're removing beta amyloid plaque, that has some significant
value to the pharmaceutical companies, and it should eventually to the market as well.

JL: So, are you anticipating getting some board members, because it seems all of your board
members are really strong, world leading cardiovascular guys, but what about Alzheimer's
guys?

DM: Already being put together, clinical board members that is.

NW: That's right. There's one person, and we won't mention names, that has both.

JL: If I knew this field, I'd know the name, but I don't.

DM: We will follow the same routine, because I strongly believe in that approach, that we
show it to the best in the field.

JL: Yeah. Why waste your time?

DM: If they say that doesn't look good, then I'm not going to waste my time, like I said. If
they're on board and excited about it, I'm on board and excited about it. So that's what we're
doing. We do believe whether one side is right or not on the beta amyloid, whether people
are right that it's highly involved or not involved at all, it doesn't matter. Nobody has a tool
to study whether it is or not. A paper came out this week confirming that the beta amyloid
excess in the brain, excess production, is not the problem. It's the lack of excretion that's the
problem. So there was a paper that came out, CNN published about it, showing that if a drug
like RVX-208 can pull that excessive beta amyloid plaque out of the brain we would either
prove or disprove one or the other side of this theory, because if we're pulling it out and
these patients don't end up with Alzheimer's, that's pretty good. If we pull it out and nothing
happens and they continue on their course of dementia, well then it's not beta amyloid 40.

But nobody but us seem to have a tool that can do that.

JL: So at the worst case, it's pretty interesting science.

DM: You want to look at your age level and your buildup of Alzheimer's, your rate of
Alzheimer's. It's called the doubling rule. Basically, at 60, 1% of the population will have
Alzheimer's. At 65, 2%. 70, 4%. 75, 8%. And then it gets ugly. Doubles every five years. So
guess what also happens from 60 to those later years. Exact opposite curve. Your body starts
producing less and less apolipoprotein A-1. So there's a direct correlation between the drop
in ApoA-1 and the increase in Alzheimer's.

JL: Wow.

DM: So, we're increasing ApoA-1 and we're seeing this plaque coming out.

NW: Coincidence? No.

DM: You have to market RVX 208 to one company. Otherwise, you end up with a
cannibalization issue. So that's basically how our whole option concept came forward with
potential double digit royalty hopes. If a second indication comes along for RVX 208, the
buyer would take over, but we would get the royalty off of it. So it could work very
well. It would avoid a very big problem. Johnson & Johnson and Amgen have been in a
20-year lawsuit over EPO, which is a growth hormone. They each have a very different
indication, but doctors in the U.S., a doctor can give you a Alzheimer's drug for a heart
problem. So they have all of the rights for one indication, but Amgen selling for a different
indication. But that doesn't help JJ if they're not getting all of the revenues from patients
truly using the drug for their indicated use. Not Amgen’s fault but very problematic for both
groups.

JL: Exactly.

DM: So this potential structure was designed to avoid that problem, because that's a big
problem for pharma.

JL: Yeah, absolutely.

NW: You have to understand a little bit, Jim, about what Don has said, saying there are two
sorts of fundamental hypotheses about 208. The one is that the Alzheimer's disease in which
the beta amyloid 40 will come out of the brain. The second is the ApoA-1 effects on HDL
and reversing heart disease. That hypothesis has been around for three decades. We're the
only ones brave enough to go into answering that question. CETP won't. CETP, you're going
to block the synthesis or block the removal of these big particles. That doesn't increase the
production. We're increasing production. That really is exciting.

DM: Yeah. Another thing is, over the years, all of these different pharma studies that we've
done, there's one question that they've always asked us that we didn't have an answer for
because we were busy. We don't have all of the deep pockets that they have. I'm trying to
find a particular slide back here. That question was let's see your animal model that shows
plaque regression.

Well, we went straight from monkeys with great numbers to humans, because our clinical
advisors told us to do that because the data was so good. These animal regression studies
studies cost millions of dollars. So for us, it didn't seem to make sense to keep working on
animals. But over the last year, we've gone back and done these studies.

JL: So you went back to do those studies . . .
DM: Over the last year.

JL: . . . at the behest of big pharma?

DM: Yeah, and also our own comfort level. So what this is, is a regression study. You fatten
up two groups of mice. The ApoE knockout mice, specially genetically modified so that they
get fat really quick. You fatten them up. You do that for about ten weeks. Then, for the next
several weeks you give one RVX-208. Now remember, we're trying to reduce plaque in
humans by 1% or 2%. That could make us a $20 billion a year drug. Well, Norman's mouse
model presentation shows 41% plaque regression. So does our drug work? Does our drug
reduce plaque? Well, apparently yes, and apparently very well. Now, you can't equate that
41% to any percentage in humans. You can't say 41% equals 10% in humans or 1%. You
can't. But you can say, "Does this drug, in a living biological system, reduce plaque?" The
answer is yes, and very, very well.

So are we comfortable going forward? Hell yes. Is safety an issue? Hell no. I would way rather
have our safety profile than this one, than Anacetrapib. I mean it's a scary drug actually.

NW: They stopped 142 patients out of . . . what was the number they had? I've forgotten.

DM: Eight hundred and something.

NW: Yeah. So that's quite a bit. That's like 20 some odd percent.

DM: 17.6%.

NW: Yeah.

DM: That's a pretty big number and then to list it as not a safety issue.

DM: . . . does RVX-208 work? Is it safe? This is exactly what we continued to prove all along.
Then if you show those numbers where you've got 1 versus 85 in the ASSURE population, we
shouldn’t even see the safety issue going forward. Later we can try to prove that those guys
have so much plaque going through the liver that the liver is just turning on its signal saying,
"Wow, what is this?"

JL: Well, it seems a lot of the comments were made kind of on the spot, on the fly.

DM: Yeah. Many didn’t understand the data.

JL: They probably didn't . . .

DM: Media comments were made before our data was presented.

NW: Before 11:00. How could they know what we were going to present?

DM: That Bloomberg article came out three hours before our presentation.

David vs. Goliath

This post is part of 11 of 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.

Part 11

NW: It's like David versus Goliath. We were trying to fight against things that we didn't have

control over.

DM: We have time and science.

NW: Yeah, I know.

DM: The science proves itself one way or the other. The CETP program’s like this one, they
can't do anything with it. They refuse to target plaque regression as an end point. Good
luck. There is one CETP program that's doing a plaque regression program just to be fair,
and that's Dalcetrapib, which is Roche's CEPT program, and that's a Phase III program.
That's a four year study. They're putting their patients on a drug for two years to see if
they can see any plaque regression. And the study's already behind. It started in January.
There's 102 sites. Fourteen of them have been initiated. Four of them have terminated
already. Something's gone wrong. And 84 of them have not even initiated the site, are not
even recruiting yet. So they've been working on that for a year already. And then the patient
has to take drug for two years. So that data won't be out until maybe 2015. Our data may be
out in 2012-13. So for us, if Dalcetrapib works, I'd be surprised. But if it does, at least they
have the initiative to try and show a plaque regression. So far Merck won't.

NW: So that's the only one that is willing to go into the field that we've gone into, which is
showing plaque regression, which is a totally new concept.

DM: They're three years behind us.

NW: They're three years behind us.

DM: So for us, it's all about plaque regression. I could continue to show you all the beautiful
numbers you want to see, just like Merck did. We did show very good numbers, but they're
still just numbers. Unless you can go in with that IVUS and you can show you're removing the
plaque, you don't have anything.

NW: That's the thing that the media forgot about, Don. They only focused on numbers.

DM: Media don't care. They just report.

NW: I know, but they focus on that ApoA-1, and we missed it by .01. The secondary
endpoints, the HDLs, we hit them all.

JL: They were significant.

DM: And who chooses the endpoint? We did. We could have chosen any of the other ones.

NW: We could have chosen them.

DM: If we had chosen a different endpoint, we would have been sitting there smiling. . . but
I think we still would have gotten thumped by the media because of that 138 number. They
don't spend enough time to look at it to understand that that's not the goal. . . you're not
comparing the same thing here.

NW: I know.

DM: So, it was a little awkward, but we can't change the world. All we can do is stick to hard
core science and proving it up.

NW: Keep doing what we're doing.

DM: We're the ones who can show plaque regression. Let's see anybody else do that.

NW: And with the world leaders, like Phil Barter, John Kastelein, Steve Nicholls, Nissen . . .

DM: Ballantyne.

NW: Christie Ballantyne. These are the guys that . . . no one company has all five. We've got
all five, all of them, in our house.

DM: They all work for different companies as well. They all work on different Pharmaceutical
company programs.

NW: Yeah, but not all five are working in one company except RVX.

DM: Not all five of them are all in one.

JL: They're gravitating maybe.

DM: Well, it's pretty fascinating, because they're looking at what we're doing and saying,
"Wow. We didn't think this was possible." But here we are.

DM: But for us, we're sticking to core business, which is science, and proving it up. Financing
for it? Yeah, there will be more financings in the future. We're a biotech company. We have
no revenues. There has to be. But bottom line is this thing's working, and it's working very
well. So as soon as we can show the next set of data, I feel then we can name our deal
with any pharmaceutical company. We can pick and choose at that point in time. So it is
interesting.

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.

Investor Reaction

This post is part of 9 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 near the end of 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 9

JL: I have to assume that your investors knew a lot about, and probably should have been

able to interpret these results, right?

DM: Depends. If you're talking a retail investor, no. They don't really understand it, because
there are so many numbers and figures and high end science. If you're talking institutional
investors with analysts that are Ph.D.s, MDs, oh yeah. And when the stock dropped, there's
a reason 35 million shares sold over a two-week period, because institutions were very eager
and glad to be buying these shares. It's an unfortunate scenario, but the guys who have the
scientists on board at their beck and call looked at this opportunity like, "Holy smokes guys
it’s a great buying opportunity". I'll equate it to a saying that Warren Buffett has used, that
the stock market is an interesting store. It's the only place he knows of that when there's a
sale on, everybody runs from the building screaming.

JL: What about, because there was some selling the day before your results came out, did
the TSX investigate that?

DM: Issues regarding investigations on either side of the border I can't comment on. I would
say, "Hoorah. About time." I would also be confident that the selling was none of my guys,
because we're sitting there with a embargoed draft news release from Cleveland Clinic in
hand, one with a great and accurate title. We were expecting the stock to shoot through the
roof. Then Bloomberg puts out an inaccurate article prior to our session, and the stock goes
the other way. Well, who knew what and when? That's an interesting question that I hope we
all get an answer to.

JL: The good news is it's getting easier and easier to trace that stuff because they'll know
who made the trades, and they can track it.

DM: I would assume that someone's in some big trouble over that.

NW: The rationale for our excitement is when you do a clinical trial of this nature, you do it
to learn. As Don has said, we looked for specific things, and we found a lot.

DM: It's exciting what we learned.

NW: We learned tons.

DM: But we got our nose rubbed in it as if this new knowledge was supposed to be bad, but
it was actually very good.

NW: So what we learned ASSERT to help us in the ASSURE trial design is that we should
target low and intermediate dose statin population. We will also target those with low levels
of HDL. And by doing so, we will pick the population in which our drug will be probably
the most beneficial. And secondly, we always avoid all of those things that the press were
concerned about, the ALT signals. Even though it's not due to our drug.

DM: We're golden when we show that. We're not concerned. It works well with the statins.
It works well on its own. It's reducing plaque. Statins can only stop plaque from building up
further. Ours actually removes the plaque. A $35 billion market was built on just maintaining
and we can now remove plaque. It's interesting that certain big pharmas seem to be really
going out of their way to try to stifle us. I mean, they must be a little nervous.

JL: Yeah. They didn't have to for sure. I was surprised, because I don't follow biotech news
that closely, but some of the quotes that I saw, it was like, wow! Because I did have
some knowledge from previous conversations and I thought "These are the numbers . . ."
Everything seemed to be in place.

DM: It is.

JL: I was quite bewildered.

NW: We were, too.

ALTs

This post is part of 8 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 near the end of 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 8

Now, this chart is where these panel guys got all huffy about these ALTs. What an ALT is,

is not liver damage, as they stated on a stage. What these ALTs are, are signals. An ALT is
an enzyme in the liver, kind of a marker. If something different is going on in your liver,
ALT’s kind of wake up, turn on a little bit. That's how doctors measure it. Can it be a sign of
something bad? Yes, definitely, especially in conjunction with something called bilirubin. ALT
means change is going on. Bilirubin means death, cell death is going on. So what changed in
those livers? Well, you just flushed a whole load of plaque through the liver, and this is what
is showing. This is showing that increase in plaque out of the arteries, and it goes to the liver
and flushes it. So you've just flushed an enormous amount of plaque through the liver. That
is normal. That is 100% normal. That is what is supposed to happen if our drug is working.
So they point to this as a safety issue for us – a total of three, eight, and seven – 18 and then
the AHA panel totally ignore 142 patients in the Merck study. Also, three of these actually
had nothing to do with our drug. They had to do with surgeries they had and other things
that were known.

JL: Were you expecting to see that?

NW: We wanted to see that. In designing a clinical trial, which is an experiment with humans,
we needed to know the boundaries.

DM: Yeah. So I'll tell you one thing. In all the due diligence we continue to do with all these
pharmas, about a year ago in some of our studies, one of the pharmas said, "Are you seeing
ALT increases without bilirubin?" We said, "Yes." And they said, "Good, because if you're not
seeing them, nothing is happening."

NW: You're not working if ALT signals were absent.

JL: Okay.

DM: So then the AHA panel turns this into some big negative for us. That is total garbage.
Any liver expert out there . . . we had a board meeting last week, and I brought in such a liver
expert. I brought a liver expert who used to work for Merck and worked on their simvastatin
drug. I brought him in to talk to the board about his opinion of what was going on in our
livers. And he had zero concern. Totally normal. The board seemed thrilled with that, by
the way.

NW: I mean, even if you look at it, what is the most common cause of ALT increases? Statins.
Guess what our patients were on. Everybody was on a statin. So why are we looking at 208?
The answer is right in front of us. They were on statins.

DM: Out of the 15 ALTs that were related, every one of them was on high dose or old statin.
Every one of them.

NM: Every one of them.

DM: This is good news, not bad news for us.

DM: Also two of those three extra’s were on high dose Tylenol. Tylenol is a bad drug for high
ALT’s. So they don't want to see ALTs of over eight by the FDA. We set our limit at three. So
we started counting them at three. We leave patients on drug until eight. We only had five of
those. We set our own low limit because we're new, and we're trying to prove how safe it is.
Tylenol, if you take Tylenol two days in a row, you'll be at 11, 11 times over the normal.

NW: With alcohol, you'd be even higher.

DM: So, let's now do the same thing we did with the other chart. Let's break down these
patients. Where are these patients? So if you take your low to mid dose statins, only one
of those 18 ALT patients are even in there. One. We're just not going to use high dose in
the next trial. We will in the future, because we feel it's not a problem. We feel it's a sign of
efficacy, not negative. But to make the scientific community happier, we can show that we
can limit ALT’s. Look at the difference.

You look at the ASSERT sub population analysis of the low, mid dose statin and the low
HDL population that we're planning to enroll for our next trial, ASSURE. This would total 85
patients, not a small group. That's how many ALTs you would have had versus what we saw
in ASSERT, one. And this was blown up as a problem? Give me a break. Especially when
they were sitting on this information of their own. It was incredible. And all those good news
reports on Merck came out before the journalists had even read the accompanying Journal
article. It's just ridiculous.

So let's look at this yet another way. Here's the increases of HDL, and all those problem
patients with ALTs over three times, look at their HDL increase. This is the large HDL that's
taking the plaque out. They're not a problem. They're hyper responders. These guys had so
much plaque going through the liver, the ALT is just turning on and saying, "Hey, what's all
this? I haven't seen this in a while." Then they calm down, and we've already showed they
calm down. They drop right down afterwards. While this is the chart showing that the Apo-AI
and HDL increases are still going up at some significant rates.

JL: So your trial was 90 days?

DM: This was 90 days.

JL: And if you did 120 days, you'd probably be . . .

DM: Sure. If we had done 91 days, we would have been statistically significant. It takes a
while to get going, about eight weeks.

JL: So at eight weeks, you don't see anything hardly.

DM: Sure. But if you ran a statin trial for only 12 weeks, you'd see nothing, because it takes
16 weeks for statins to start working. So you'd see a flat line, and then you'd see a slight
increase. 16-20 weeks before they start working. Niacin takes eight to nine months before it
starts working.

JL: Really?

DM: Yeah. Your body's been designed a certain way. The chemistry inside of us has been set
that way for a million years. And now you're putting a drug in and saying change. Sometimes

the change is slow. You've got to get it the right way. If you crank it up too fast, well then,
eight to nine months out, it could be toxic. So you have to do it slowly and get there safely.

We couldn't have done a study longer than 12 weeks anyway, because we only had animal
safety testing for 12 weeks. Now, our animal safety testing is out a year, which allows us to
do anything. We can do two and three years off of that. So we have our full animal toxicity
work complete now, and all the monkeys have been . . .

JL: The monkeys are doing well.

DM: No.

NW: No. They're dead now.

DM: The monkeys aren't doing very well.

NW: We sacrificed them per government protocol.

JL: Oh really?

DM: You have to do liver biopsies, brain biopsies, cardiovascular biopsies. So the monkeys
did very well. But they're not doing so well right now.

AHA ASSERT Trial Results Reaction

This post is part of 7 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 near the end of 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 7

Read more: /#ixzz1ICn4u9sI

NW: We were given an unfair shake in the AHA panels analysis of our ASSERT data. If you
look at the ASSERT data, when we design a clinical trial, before you come in, we look at
what we think we will see. There are two things that we designed the trial to look at. One
was ApoA-1 increases, and the second one was HDL increases. Those were the two things
that we designed. So if you look at the graph that Don's showing up there, this tells us that
there's asignificant dose dependent increase in ApoA-1, that as you give more of the drug, which
tells us that it's dependent on the drug, we get higher levels of the ApoA-1. If you look
at the trend, meaning that overall three groups, the p-value is statistically significant. We
missed that primary endpoint and that yellow bar by the smallest margin possible. .06 versus
.05.

DM: Some of the reasoning behind that is because ApoA-1 is very hard to measure and
analyze. HDL is easy. ApoA-1 is very hard. So even one fluctuation and that makes a
difference. But unfortunately in the placebo group, we had three guys in there that all went
over 30% increases in their ApoA-1. So clearly they started exercising and new diets or
something. It's too bad they weren't taking the pill, too. If the placebo increase wasn't at
1%, even if it was .8%, we would have been significant all the way through. So the placebo
guys changed it somewhat as well. It was just an unfortunate scenario.

JL: You want a lethargic placebo group.

NW: If you look at it, just the smallest margin possible, that's how we missed. If we had
missed it by .2 that would be different.

DM: But also, this was a trial that took in everybody, 299 patients. And if they were already
really healthy, it didn't matter. So that's what the trial was designed to do. We wanted at
least half of them to be the sick patient population that eventually will get this drug, and half
of them not. We need to understand what's going to happen with this drug in humans, so you
give it to everybody. The Merck trial, they had already done their screening, and they did a
lot of screening to . . .

JL: To optimize.

NW: Oh yeah. They knew what they were going after.

DM: So now if you take the population that's actually going to get this drug, this is the result
we presented. These are the guys who are actually going to get this drug. A patient who's got
low HDL, then you see a 13% increase in ApoA-1. Not 5.6, 13 in our true patient population.
Here in the HDL, over 20% versus 5% or 6% in the overall trial. So we'll do some publications
on this important information over the next couple months and put this stuff out in a full
scientific data set. So here, even though we did have a really good HDL at 21%, this is the
large particles. This is the one that if you have one milligram per deciliter more than me, you
have 26% less chance of cardiovascular disease. Well, that's where we were the most
successful. And in our patient population, we're at 32% increase, not 21. So are we working?
You bet we're working.

Importance of HDL Type

This post is part of 6 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 near the end of 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 6

So the alpha-1 HDL particle is the one that's now grown into the fully matured

plaque accepting particle. So for every one milligram per deciliter that you have of alpha-1
more than me, you have 26% less chance of cardiovascular disease.

Well, the AHA panel also neglected to note the fact that we have increased these important
particles by 4.2, not 1, 4.2 milligrams per deciliter. So 21% in the last trial is very successful
data for scientists who understand this process. For media, they don't get it, they're looking
at a numbers game. Their view is “what do you mean this low number versus that higher
number, and the little number's better? How does that work? They don't get it yet. They're
looking for quick snap headlines. We at RVX just have to keep pushing through, because
this drug works very well, and it's working on the right end of the HDL equation. Somebody
should snap this company up someday, because good data keeps pouring out.

CETP History

This post is part 5 of 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).

Topics discussed include 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 in the March 28-April 5, 2011 time frame (I currently own RVX.TO)

  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 5

NW: You've got to take a little step back and look at the history of this sort of thing. In 2007,

as Don has said, Torcetrapib bit the dust. It bit the dust because it killed more people than it
helped in their Phase Three clinical trial. It killed like . . . I can't remember how many.

DM: 61%.

NW: Yeah. More deaths . . .

JL: Which seems . . . kind of parallels . . .

DM: 27.5%.

NW: So since then, the HDL field has sort of wondered around and is now trying to recover.
And then the AHA hit. HDL people were looking for good news. They were looking for
something. They were looking for a revival of the HDL field, which it did. But they did it at
our expense. We never gave up after Torcetrapib. RVX continued and we said we're different
from CETP inhibitors. We actually make good particles of HDL. We don't raise it by a hundred
. . . Torcetrapib increased it by 61%, Anacetrapib, 138%.

DM: Dalcetrapib only does 30%.

NW: Yeah, that's right. And I asked these guys, I said, "Look. There's 30%. There's 138%.
Who's right?" And they're both the same types of compounds. They're CETP inhibitors.

DM: See what happens here is once this large filled HDL goes to the liver and dumps, most
of it exits through the liver, as I told you. Some of it cycles back to become LDL cholesterol,
and that's an important part of the Reverse Cholesterol Transport system. So stopping that
is stopping the formation of new LDL. They've interrupted the system. You've got your LDL
dropping in a short period of time in this study, to a point where 142 patients have to drop
out of the trial for risk of fatally low LDLs. 17.6%. If you run a two or three year trial, what's
that number going to be? And if somebody doesn't get off of it, where are they going to be?
They're going to be in the drain.

NW: They won't be left in the trial.

DM: So for us, what we have to do is we have our data show plaque regression before these
CETP trials fail, because these trials will fail. And if we've already shown HDL ApoA-1 does
work if you do it the right way, these CETP trials could fail all at once. We don't care. I'm glad
they didn't fail this week, because it would have been like three years ago with Torcetrapib
where it was nuclear winter for us for two or three years, because nobody was interested
in HDL anymore. HDL ApoA-1 is one hell of a good program if you're working in the right
category, and that's raising ApoA-1 and creating the production of new empty HDLs. Not
down here where you just have HDL numbers go up. We call this constipated HDL and
dysfunctional HDL. So for us, we know the science differences. We know what they're doing.

We know Anacetrapib is just playing the game of saying, "Oh, it's 138%. Isn't that great?"
No. It's not great. Yes, they got media off of it. Yes, their stock went up $3 billion. Is that
drug ever going to make it to the market? In my opinion this paper would strongly suggest
no and if it does it will not be used for plaque regression.

NW: We want to make sure that the audience and investors understand that we're different
from what CETP inhibitors do. I realize that our numbers are not 138%, but we're raising the
right particles of HDL. Biologically it makes sense. It's not the number . . . let's look at the
prime example, Torcetrapib.

DM: Quality versus quantity.

NW: Exactly. You look back at the Torcetrapib study. Phil Barter, who's on our clinical board,
did the post-hoc trial analysis which was to see if Torcetrapib worked or not, regardless of
the death issue. He divided it into quintiles of how high the HDL raised, and then he looked
at what that impact had on atherosclerosis.

In the first four quintiles, there was nothing. Nothing happened until that very, very end
quintile, which is like 100 and some odd percent more than the normal individual. They got
this little, little impact. So that's what CETP has to do. Ours? No. We can impact upon plaque
regression with even a small amount of the right particles of HDL, and that's what we do.
That's what we're going after. But it's what we call surgeon mentality. If your surgeon says
one gram of antibiotics is going to work, he's going to give you five, because that's the
surgeon mentality. Sprinkle more on it.

DM: When in doubt, cut it out.

NW: Give it more. Give it more and then it will work.

JL: Keep your life simple.

NW: Give one gram. One gram is enough.

DM: This chart kind of shows that. So in the old data, old meaning only 15 years. This is a
new field. HDL got its name the good cholesterol because of the Framingham study. So it
showed that if your HDL was one milligram per deciliter higher than mine, you have a 2%
or 3% less chance of cardiovascular disease. So that's what all the big pharmas based their
earlier programs off of. So let's just get bigger HDL numbers and we've won the game.

So 138% 10 years ago would have gotten them a multibillion dollar selling drug until they
figured out it maybe killing people. But then, the new studies here, the Framingham offspring
studies analyzed sub particles, because the technology is there now to do so. We now
understand there are different types of HDL.

Upcoming Assure Trial

This post is part 13 of 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 near the end of 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 13

DM: But I am really proud of that data because it surpassed every marker that we had hoped to, especially when you break it down into the ASSURE sub population. It just smashes the numbers we were trying to show. So will we see that in ASSURE? Well, almost certainly. Well, 94% chance. So I think we're doing well.

NW: We continue to focus. We continue to be excited.

DM: It's really hard to follow a biotech company.

JL: Well, it's patience. Right?

DM: Yeah.

JL: It takes a long time . . .

American Heart Association Meeting - 2010

This post is part 4 of 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 near the end of 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 4

I (JL) interviewed Resverlogix (RVX.TO) co-founders Dr. Norman Wong (NW) and Donald McCaffrey (DM) in early December. 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.

The transcript is quite lengthy so I'll be dribbling the content into a couple of posts/day over the next 8 days.

  1. Background of Dr. Norman Wong

  2. Early History of Resverlogix

  3. HDL Biology

  4. American Heart Association Meeting - 2010


So at the American Heart Association, where Merck was bragging about their 138% increase
in HDL, the media just gobbled it up. Great numbers. That 138% increase of filled HDL is
equivalent to collecting your garbage bags and leaving them in the house. You want new
garbage bags to take this garbage out. We have a 21% increase in production of new HDL
versus their 138% in previously filled HDL that is now forced by CETP inhibition to remain in
the system. That's not good for them.

JL: Do they measure that by mass, or by number of particles?

NW: You just measure by ELISA assays. The HDLs are pretty simple.

DM: It's pretty standard. HDLs . . . ApoA-1, which was our main endpoint, is way harder
to measure. And even in a key endpoint, we were P=.06. That means 94 times out of 100,
you're going to prove the same thing. Which we did prove successfully. 95 times out of 100
is considered very successful in science. That's the difference we faced last week.

JL: I'm not a statistician, but I know it's like, come on.

DM: Exactly. And the other thing is without those increases . . .

JL: How many decimal places . . .

DM: 0.01. Without the confirmed increase of ApoA-1, the domino effect could not have
happened. We couldn't have had a 21% increase in the alpha-1 particle if we didn't have
successful ApoA-1. So we knew our data was very good. It surpassed everything we told the
market it was going to do. Then Merck came out with this 138% HDL number, which HDL
wasn't even their endpoint. LDL was. And they just blew the market away. It was ridiculous.
The Merck 138% number was old information, three years old.

JL: When you saw the press come out so quickly and a lot of them were saying that RVX was
trying to lower numbers instead of raise numbers. They were really . . .

DM: They were awful.

NW: If you looked at the timing of the press release, they did not have the information when
it was written. They released at 9:01 in the morning. Our presentation wasn't until 11:14. So
they never looked at the data. All they saw was a press release of the American Heart
summary..

DM: Here's the one you're referring to. Cardiology Today. It's titled "Novel Drug Did Not
Significantly Reduce ApoA-1 Levels." That's the title of it.

NW: Yeah. So they had mistakes all over the place.

DM: Significantly reduced. (Wrong direction)

JL: Yeah. That's how they started in the morning, and then a couple hours
later . . .

DM: This is the news release from the top cardio clinic in the United States, 16 straight
years, verses this second title which was the title of the first media new release. “Cleveland
Clinicresearchers find that new drug may clear plaque from arteries. The drug enhances
ApoA-1, a protein found in good cholesterol.” Here's what Bloomberg wrote before our data
was even presented …

“Resverlogix Cholesterol Pill Fails to Boost De-Clogging Protein in Trial”

JL: Unreal.

DM: And so, asked to retract it, Bloomberg retracts by going,

"Resverlogix stock falls on news."

JL: There's no winning.

NW: It was media driven. . .

DM: So then the AHA panel presented the late breaking clinical trials. Dr Nicholls presents
our data and the American Heart Association designated a respondent. The AHA designated
respondent was the author of the Merck paper. That's like having me as the respondent for
the Merck paper. Then a Merck representative on the panel, the guy who presented Merck’ s
data, started in on this safety stuff, which by the way does not exist. We have a very safe
drug. Then he publicly states , "Oh, I wouldn't take that drug."

JL: Yeah, I remember that quote. It was nasty.

DM: And we're sitting there going, wow. I mean, unbelievable. And they're quoting that their
drug was extremely safe, and how should I word it here. Here it is. In their paper, New
England Journal, "There was no appreciable difference between the Anacetrapib group and
the placebo group in the percentage of patients with adverse events that were thought to be
related to study drug."

That's how they presented it. The previous page read, "Cholesterol levels of . . ." Let's
see. "As specified by the protocol, the study drug was discontinued in patients who had
an LDL cholesterol level of less than 25 milligrams per deciliter." So that's pretty low. Your
brain uses the most cholesterol of your body, about 20%. You get too low of LDL, the
bad cholesterol, and you're dead. So, it's brain food, it's cell food. Too much of it is not
good. Too little of it is fatal. So of less than 25% milligram per deciliter at two consecutive
measurements. This occurred in 142 patients in the Anacetrapib group, 17.6% of the trial
patients had to discontinue drug use. No adverse events?

NW: They never told the audience about that at AHA.

DM: No adverse events? And in placebo, one patient.

JL: That's just by designing the trial so that these people . . .

DM: Sure.

JL: Crafty. Very crafty.

NW: They actually put them in, but when they dropped below that, they kicked them all out.
So that's a very biased view of the data.

JL: Was that in the initial trial design, or did they change that?

DM: It was in the initial trial design.

NW: It was the initial trial design.

JL: It's just crafty . . .

DM: And it may be headed in a fatal direction? Okay. They listed any differences in deaths as
insignificant. The difference in death with Torcetrapib vs placebo was a significant 25% and
it was pulled from trials. Anacetrapib was insignificant but was 27.5% higher than placebo.

JL: Really?

DM: But the numbers did not show statistical significance, so they ignored it at AHA.
Of direct cardiovascular deaths, four on Anacetrapib, one on placebo. And they were
equal numbers treated. Not statistically significant. So will their drug go anywhere? It was
portrayed in the media that this is the next big drug, and actually I think it's now the next
big drug failure.

JL: Why would they go and push it that far?

DM: Pharma’s have done this before, they've been doing it for decades, and some of the older
dinosaur ones still believe they can push drugs through. The FDA's not going to be fooled.
Their announcement of their next trial was based on a four-year long trial with an endpoint
being revascularization, which is not an endpoint of the FDA's.

NW: That's not going to fly.

DM: Will they go in and do an intravascular ultrasound program to show plaque regression?
No. They refuse to. Why? Because it doesn't work for plaque regression. So why are we
compared to them?? They're going to be out there for a few years spending money and trying
to run trials, but I feel the bottom line is it's not going to go anywhere. In 18 to 24 months,
we'll be done. We will have our data that shows plaque regression. This article here in the
New England Journal shows that you can play these statistical games, and if you're a big
pharma, you can play the media. You cannot get that drug approved the way they're trying
to do it. And if it's not removing the plaque, so what if they did? But nonetheless, we are
going the clean, straight way. Do we get beat up on the way because we're the little guy?
Hell yes. But bottom line, we have the drug that removes the plaque.

HDL Biology

This post is part of 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 near the end of 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 3

So the Pharma’s do have smart people, but they don't have the concentrated brain trust that

we have in this one small company. In a Pharma, it's logical to respond in a fashion like…
"We must find drugs that raise HDL 138%. We need to find the biggest number." The HDL
biology does not work that way. It is based on quality, not quantity. So in a lot of respects,
these firms, that worked on earlier programs, were looking for the wrong thing.

First of all, they were looking for the wrong mechanism of action. They may have had
some wonderful compounds but they did these high-throughput screenings, and anything
that doesn't raise the bar tenfold…well that's no good. Well, in our system, that was not the
case. So the others did find some drugs, like CETP inhibitors, which is something that stops
the breakdown of filled HDL. When it gets filled and gets very large, it then goes to the liver
and it dumps. And the plaque that's collected goes through the liver and comes out in fecal
matter as bile salts and such. So the approach was, we need big HDL numbers, so let's see
what happens if we stop the HDL from leaving in the liver. Well, guess what? You do blood
tests, and you have big HDL numbers.

Interview with the co-founders of Resverlogix (RVX.TO)

This post is part of 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 near the end of 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