In a June 14 research report, John Vandermosten, an analyst with Zacks Small-Cap Research, reiterated his firm's price target for Resverlogix Corp. (RVX:TSX). "Based on our DCF model and a 15% discount rate, RVX is valued at approximately CAD$6.50 per share," Vandermosten wrote. Currently, Resverlogix shares are valued at ~CA$1.50.
The CA$6.50 target is based on the analyst's belief that shares are currently undervalued. In addition, "expansion into new geographies, the orphan disease program, and renal disease, could provide further upside to our valuation," Vandermosten stated.
Resverlogix is developing apabetalone (RVX-208) for treatment of major adverse cardiac events (MACE). The compound is currently in a Phase 3 trial, BETonMACE, treating diabetic patients with cardiovascular disease (CVD). The trial was initiated in 2015. "We believe the trial will take approximately 3 years to complete, targeting topline readout in 2018," Vandermosten wrote. "With a potential impact on multiple markers for CVD we are optimistic on a materially significant impact on MACE."
Vandermosten noted that "The CAD$10 million capital raise should be sufficient to provide the flexibility to negotiate a larger licensing or first right of refusal deal that will support clinical trials and operations until a new drug application can be submitted to the FDA, which we anticipate occurring in 2019."
Resverlogix closed its offering on June 20, and announced that it had issued "a total of $10 million of its equity units." Two companies, Eastern Capital Limited and Shenzhen Hepalink Pharmaceutical Co. Ltd., "purchased a total of 2,951,313 equity units at a price of $1.80 per unit for aggregate proceeds of $5.3 million pursuant to a non-brokered private placement," the company stated in a June 20 press release. "In addition, under the previously announced overnight marketed equity offering conducted by Bloom Burton Securities Inc., subscribers purchased an additional 2,552,489 equity units at a price of $1.80 per unit for aggregate proceeds of an additional $4.6 million."
The company will use the money raised to "fund research and development activities, including but not limited to, clinical trial activities related to the Phase 3 BETonMACE trial, the Phase 2a kidney dialysis trial and Fabry disease trial, general and administrative expenses, working capital needs and other general corporate purposes."
Apabetalone (RVX-208) is a bromodomain and extraterminal (BET) inhibitor, and is in development for a number of indications, including MACE, diabetes mellitus (DM), chronic kidney disease, Alzheimer's disease, Fabry disease and other orphan diseases, and peripheral artery disease.
"With [its] favorable safety profile, and initial data indicating substantial efficacy on MACE in high risk populations, we maintain our positive view on Resverlogix shares," Vandermosten wrote.
"We believe that a durable patent position and the forecasted pricing of apabetalone, combined with a management skill set surrounding CVD and diabetes as well as a novel approach to addressing the residual risk in high need CVD patients support our price target." Vandermosten concluded. "With the recent sell-off in RVX shares, the opportunity for upside has increased."
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