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Disrupting Treatment of Cardiovascular Disease with Epigenetics: Resverlogix CEO Donald McCaffrey
Management Q&A

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Donald McCaffrey The evidence is mounting: Resverlogix Corp.'s first-in-class, epigenetics-based drug candidate has demonstrated its ability to significantly reduce major adverse cardiac events (MACE)—death, heart attacks, strokes and heart failure, particularly in diabetic patients—in three consecutive clinical trials. That, company President and CEO Donald McCaffrey tells The Life Sciences Report, is why RVX-208 will likely be a blockbuster.

The Life Sciences Report: Epigenetics is generally considered a hot new field in life sciences, even though the science has been in research labs for decades. What has brought it to the forefront today, and where do you see it heading in the next five to ten years?

Don McCaffrey: Two development waves have brought epigenetics to the forefront. There are three basic elements in epigenetics: readers, writers and erasers. The writers and erasers are the first development wave, which has recently matured. Writers and erasers involve chemical-to-chemical interactions, which basically add or subtract a chemical compound to or from the histone tail. Some of the writers and erasers—histone acetyltransferases (HATs), transmethylases and others—have recently been successful in controlling toxicology issues while showing some efficacy results. This is especially true in immunology and oncology, which is one of the reasons we are hearing more about epigenetics now.

The second and newest development in epigenetics involves readers. These are protein-to-protein interactions utilizing bromodomain inhibition. We are mainly hearing more about epigenetic mechanisms because of bromodomain inhibition —specifically, bromodomain 4 (BRD4). About three years ago Nobel laureate James Watson wrote his first solo paper since 1972. It focused on BRD4, which is our exact target. Watson called BRD4 the most important breakthrough in medical research since he, Francis Crick and others discovered the structure of deoxyribonucleic acid (DNA). That's pretty profound, and we agree with him.

When Watson wrote that article, he said he hoped to see BRD4 in human clinical trials within 18 months. At the time, we had been in the clinic for five years with RVX-208 (apabetalone). We discovered this compound in-house and had kept it very quiet until that article was published. After Watson's publication, we went public with RVX-208's mechanism of action.

TLSR: Does that mean Resverlogix Corp. (RVX:TSX) was one of the first companies to enter epigenetics?

DM: We were the first company in the area of bromodomain readers, using protein-to-protein interactions to inhibit BRD4.

RVX-208 is the most advanced BRD4 inhibitor clinical program in the world. We focus on cardiovascular and chronic indications for bromodomains, making this the only bromodomain, to our knowledge, that is in Phase 2 or 3 outside the field of oncology.

TLSR: Tell us about RVX-208. What sets it apart?

DM: We have been able to confirm the compound's specificity: RVX-208 is BRD4-BD2-specific. And, because this is a protein-to-protein interaction rather than a chemical-to-chemical interaction, there is significantly less likelihood of toxicity.

"RVX-208 is the most advanced BRD4 inhibitor clinical program in the world."

Most other first-generation compounds that target bromodomains are based on a single scaffold, benzodiazepine, a sleep aid and kind of a poster child for cardiovascular issues. Resverlogix, in contrast, developed at least six scaffolds that are not benzodiazepine. We are unique in that regard, as well as in terms of specificity. We have an advanced understanding of the biology because we have already been developing this class of compound in the clinic for eight years.

TLSR: What fundamental problems does your lead compound solve?

DM: Our past three clinical trials showed RVX-208 reduced the relative risk of major adverse cardiac events (MACE)—death, stroke, heart attack, revascularization and heart failure—by about 55% overall on top of standard-of-care products. Among diabetic patients, the relative risk of MACE was reduced by 77%. This was the first clinical trial to actually show MACE reduction in a diabetic patient population—we view it as a very major breakthrough and plan to commence our Phase 3 trial, called BETonMACE, this fall for further confirmation.

TLSR: Marcel Wijma, chief research analyst at Van Leeuwenhoeck Research, has said that RVX-208 represents a novel line of attack for high-risk cardiovascular disease patients. Can you talk a little more about its mechanism of action?

DM: RVX-208 zeros in on a single target with a multimodal, epigenetic mechanism of action. The compound affects various pathways, including reverse cholesterol transport to remove plaque from arteries. The additional pathways positively affected include vascular inflammation, metabolism and thrombosis.

The vascular inflammation pathway is particularly relevant to cardiovascular function, and multiple markers have shown positive response to RVX-208. The metabolic pathway actually improves the glucose levels among diabetics by lowering hemoglobin A1c. Our past two trials also illustrated the ability to affect thrombotic markers. Therefore, these mechanisms collectively have shown a significant reduction in MACE outcomes.

"We're working to partner and codevelop drugs right now, because we have multiple indications of interest and multiple compounds."

Together, these pathways have a very powerful effect. We believe they're the reason we've seen an overall 55% relative risk reduction in MACE events in past trials. To put this into context, Lipitor (atorvastatin; Pfizer Inc. [PFE:NYSE])—the most financially successful drug in history—has been shown to reduce relative risk by up to 37% in past trials. RVX-208, therefore, potentially will be a very effective drug. We're quite excited about beginning our Phase 3 trials.

TLSR: Will RVX-208 be used as a stand-alone drug or as an adjuvant therapy?

DM: RVX-208 will most likely be used in conjunction with statins. Statins, although effective, have only solved about 30% of cardiovascular disease (CVD) risk, leaving high residual risk in about 70% of cardiovascular patients with unmet medical needs. That's where we feel we can fill a significant niche.

Patients with heart conditions today are put on a statin automatically, so we've conducted all of our studies in combination with statins to determine which combinations are most effective, and then to develop a fixed-dose combination moving forward.

It wouldn't surprise me if, 20 years from now, RVX-208 becomes the first medication administered after a heart attack or cardiovascular event. As a new drug, however, RVX-208 will take time to become a market leader.

TLSR: What do you see as the market potential in general?

DM: The potential market is massive. We are targeting high-risk CVD patients with diabetes and chronic kidney disease (CKD) comorbidity, and who have low high-density lipoprotein (HDL; "good" cholesterol). Based on several epidemiological journal publications and the American Heart Association annual statistics report, there are approximately 18.8 million (18.8M) of these patients in the top seven markets worldwide. Lipitor, which only stops the build-up of plaque in the arteries, set the record as the highest-grossing drug in a year, generating peak revenue of $14 billion, with 12 competitors. Our drug, in contrast, removes the plaque, reduces inflammation, improves diabetes outcomes and has no competitor on the horizon for several years. We believe RVX-208 will have a huge potential market.

"RVX-208 affects various pathways, including reverse cholesterol transport to remove plaque from arteries."

We plan to first target renal and diabetic patients, and expand the market from there. For example, the cardiovascular market includes 114M patients in China alone who also have diabetes, and this drug has shown 77% reduction in risk of MACE among diabetics.

TLSR: How is Resverlogix Corp.'s compound portfolio expanding?

DM: Two years ago we split the company. Many of our compounds went into Zenith Epigenetics Corp., which spun out of Resverlogix to commercialize its epigenetic platform technology. Zenith started programs in oncology and autoimmune diseases. However, during the last few months we have brought some of those compounds back into Resverlogix because of our newer understanding of the mechanism of action. Consequently, we have thousands of compounds in Resverlogix right now, including two very solid follow-on compounds for cardiovascular and renal purposes.

TLSR: Are those two follow-on compounds similar to RVX-208?

DM: They're not analogs of RVX-208. They are specific bromodomains for BD2 compounds that allow us to develop them for chronic and/or orphan programs, rather than just an oncology program.

TLSR: How many other diseases can you target?

DM: We can target quite a few diseases. Resverlogix's other advantage is that we have had the only repository of blood from long-term, bromodomain-treated patients. That means we have analyzed the blood and plasma samples of these patients in great detail and have applied these findings to other indications. We plan to expand into renal and Alzheimer's disease projects next year. Early this fall, we plan to announce a project targeting a pediatric orphan indication.

TLSR: How do pediatric orphan diseases fit into your strategy?

DM: The FDA may issue expedited coupons to companies pursuing pediatric programs in orphan indications to speed clinical trials and FDA reviews. These coupons are marketable and have sold for between $70M and $160M. We probably would monetize it, if we get one.

TLSR: Can you describe your collaborative strategy and development plans?

DM: We're working to partner and codevelop drugs right now, because we have multiple indications of interest and multiple compounds. For example, we just announced a very large deal in China with Shenzhen Hepalink Pharmaceutical Co. Ltd. (002399.SZ), manufacturer of 70% of all the heparin used in the world. Hepalink took a 12% stake in our company, paying CA$2.67 per share, 40% more per share than the public price at the time. We expect to receive in excess of $400M in milestones and royalty fees throughout the life of the agreement.

We are currently in discussions with several pharmaceutical companies regarding possible partnering and codevelopment arrangements, but we are not interested in being acquired. We would not sell the company at this point because we believe Resverlogix is significantly undervalued.

TLSR: Why do you say Resverlogix is undervalued?

DM: Resverlogix is a Canadian company. Canadian companies usually are undervalued; historically, Canadian companies being acquired have earned premiums of 500–800%, while for U.S. counterparts premiums are more often at 30–40%. The Canadian market is tough. We are investigating switching to the NASDAQ to gain more accurate valuations, but will only do so under the proper conditions.

TLSR: What is your next milestone?

DM: Our next milestone is to launch an estimated 3,000-patient Phase 3 trial of RVX-208 this fall, which we'll run in Europe. Two hundred and fifty of these patients will be based in China, funded by Hepalink. We expect it will take about two-and-a-half years to collect the data.

"It wouldn't surprise me if, 20 years from now, RVX-208 becomes the first medication administered after a heart attack or cardiovascular event."

Unlike many trials, which define MACE broadly as heart attack, death, stroke, devascularization or re-hospitalization for cardiovascular reasons, etc., this trial will adhere to very strict standards for MACE. Specifically, we will define MACE as death, heart attack or stroke. Using that strict definition, we believe we can lower MACE events by at least 30% in this trial. That would make RVX-208 a major blockbuster.

TLSR: What do you need financially to meet that milestone?

DM: We're fully financed now, thanks to our venture with Hepalink. We have, by far, the most funding we've ever had, with about $65M in the bank. Our burn rate is currently only about $1M per month, so our funding will last a long time, even accounting for higher expenses during clinical operations. We also have opportunities to generate early revenue, based on the orphan indication we plan to announce this fall.

TLSR: Are there any particular strengths in the management team that will help you meet your next milestone?

DM: We have a very strong board of directors and management team that includes developers of billion-dollar companies. For example, current or former board members have included the chairman and CEO of Bayer AG (BAYRY:OTCMKTS; BAYN:XETRA), the former president of Abbott Laboratories (ABT:NYSE), the former head of business development for Roche Holding AG (RHHBY:OTCQX), the division head of corporate development for Boehringer Ingelheim (private) and the former CFO for a Carl Icahn-owned company. That's a very strong team.

TLSR: How have you attracted such a strong team?

DM: The potential of this particular drug is what attracts such experienced people. The cardiovascular area has experienced one of the slowest innovation rates in biotech, so the potential for this drug is enormous. The science is so cutting edge that it attracts outstanding scientists and leaders.

TLSR: Is there anything else you would like investors to know about Resverlogix?

DM: The existing data sets are very positive for us going forward, for both scientific and financial reasons. Scientifically, we have conducted the first trial that has ever shown MACE reduction in a diabetic patient population. Virtually all companies addressing diabetes are glucose-centric. While attention to glucose is good, it doesn't address the 68% of diabetic patients who will die from cardiovascular disease. Developing a compound that we believe resolves a large part of that issue is very gratifying.

Additionally, the multimodal action of our epigenetics-based BRD4 compound effectively addresses multiple pathways. The compound offers us many shots on goal, not just in cardiovascular disease but also in autoimmune and inflammatory diseases, and Alzheimer's disease.

This compound also has the potential to significantly help reduce healthcare costs. As a small molecule drug, RVX-208 is affordable. In contrast, much of the attention today is on biologics like the cholesterol-lowering PCSK9 inhibitor Praluent (alirocumab; codeveloped by Regeneron Pharmaceuticals Inc. [REGN:NASDAQ] and Sanofi SA [SYN:NYSE]), which is so expensive that drug benefits plan managers such as CVS Health Corp. (CVS:NYSE) and Prime Therapeutics (private) have announced they will not add the drug category to their formularies except under very restricted conditions. I personally predict such expensive drugs will have a rough road. The FDA may approve them, but approval doesn't mean easy reimbursement and payer acceptance.

TLSR: Can you put cost for RVX-208 in perspective, or is it too early to project costs?

DM: Praluent has a list price of nearly $15,000 per year. Novartis AG's (NVS:NYSE) latest heart drug, Entresto (sacubitril + valsartan), just received a pricing approval of around $4,500, whereas Lipitor peaked at only about $1,400. For payers, these escalating prices just don't work.

In addition to price, however, payers also analyze what's called "the numbers needed to treat." This is an effectiveness metric that measures lives saved against patients treated. The lower the number, the better the score.

With statins, the "number to treat" is usually in the 80 to 90 range. The new monoclonal antibodies, like the PCSK9 inhibitors, currently range from 80 to 90. The numbers we have observed for our two most recent trials of RVX-208 are in the 22–25 range, in only six months. This early data is showing a potentially very strong impact with a very low number to treat. That number is a mainstay in a payer's decision to approve a drug for its formulary.

This is a complex industry. People often focus on getting FDA approval and fail to consider reimbursement. With new drugs costing as much as half-a-million dollars per year, a single drug could bankrupt our healthcare system. Such high pricing brings attention back to small molecules and effective programs, like ours.

TLSR: Thank you very much.

Donald McCaffrey is cofounder, president and CEO of Resverlogix Corp. He has more than 35 years of business experience, including 15 years of drug discovery and development. McCaffrey has led Resverlogix through significant changes and achievements from its initial days as a private company to becoming a TSX-listed company. He has personally raised more than $300M for research and clinical development in the areas of cardiovascular disease, diabetes mellitus, Alzheimer's disease and other serious indications. McCaffrey has also directed the company in partnering discussions with global pharmaceutical companies while expanding new therapeutic markets for its key technology platform. His expertise in corporate operations has attracted an international team of experts in research, development and corporate affairs. Under his guidance, Resverlogix was honored with multiple awards, the most prestigious being the 2008 World Economic Forum Technology Pioneer award. In addition, McCaffrey spearheaded the development and spinout of subsidiary RVX Therapeutics Inc. to Zenith Epigenetics Corp. He is also currently chairman of the board of directors for Zenith Epigenetics Corp. Additionally, McCaffrey has been nominated for Ernst & Young Entrepreneur of the Year three times, and has also arranged support for several nonprofit organizations.

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1) Gail Dutton conducted this interview for Streetwise Reports LLC, publisher of The Gold Report, The Energy Report and The Life Sciences Report, and provides services to Streetwise Reports as an independent contractor. She, or her family, own shares of the following companies mentioned in this interview: None.
2) The following companies mentioned in the interview are sponsors of Streetwise Reports: Resverlogix Corp.
3) Donald McCaffrey had final approval of the content and is wholly responsible for the validity of the statements. Opinions expressed are the opinions of Donald McCaffrey and not of Streetwise Reports or its officers.
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