Resverlogix: Pivot Trials And Partnerships Could Be Next

Resverlogix (RVX.TO) offers investors a potentially geared return based on the outcome – due in Q2 next year – of its ASSURE Phase IIb trial of RVX-208. This study is designed to show regression of atherosclerosis in high-risk cardiovascular disease (CVD), a US$90bn global market. The study result represents a catalyst, magnified by the fact Resverlogix’s valuation has recovered little since the steep fall in 2010 on the narrow miss on significance in the ASSERT Phase II trial for the same indication. Edison will take up formal coverage of Resverlogix in 2013.

ASSURE to determine functional CVD risk measures
Recruitment has now completed in the 324-patient placebo controlled Phase IIb trial and data are due in Q213. The primary endpoint is change at 26 weeks in vascular plaque volume as measured by IVUS (ultrasound). This should be an effective surrogate for CVD risk (typically measured by MACE or major adverse cardiac events) and differs from the endpoint used in ASSERT (change in ApoA-I levels at 12 weeks). The Phase III trial would use MACE as the primary endpoint.

Up-regulation of nascent HDL could be key differentiator
RVX-208 acts via an epigenetic mechanism that leads to enhanced activity of the ApoA-I gene resulting in increased production of the protein, ApoA-I. This in turn produces new and unoccupied HDL particles that are potentially capable of removing atherosclerotic plaque. Its approach differs from recent failed HDL-raising strategies (such as torcetrapib and dalcetrapib) that seek to delay HDL breakdown.

Pivotal trials and partnerships could be next
RVX-208 is unpartnered and Resverlogix will need to sign a deal for Phase III trials. This will potenitally focus on patients with high risk coronary artery disease, low baseline HDL and one or more risk factors (diabetes, smoking or high blood pressure). Resverlogix is also seeking to partner its epigenetics platform in autoimmune/ oncology indications over the coming months.

Valuation: EV of ~C$135m, still below pre-ASSERT levels
Given a recent C$25m loan, Resverlogix is currently funded beyond the ASSURE readout but with cash burn of C$28m/year, it will still have to move fast to secure partnerships. Recently reported SUSTAIN Phase IIb results showing a significant increase in HDL-C (p=0.001) and increases in levels of ApoA-I (p=0.002) and large HDL particles (p=0.02) at 24 weeks bode well for the ASSURE trial. A positive result would, in our view, prompt a significant revaluation and allow the company to explore both financing and business development options.

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