Resverlogix Corp. (RVX) Earnings Call Transcript & Summary

Okay. So today, we're going to go over a few items. Just a small review of Apabetalone, what the drug does in case there's any new people in the room. We're going to talk a little bit about the commercial potential. We haven't done that for several years, and it's really quite exciting. We're looking forward to reaching that stage. And we're going to talk about the current life science industry and the shape it's in. It's not in very good shape. And we have plans we're working on around that, that we believe are moving the company forward and looking forward to it. We'll talk a little bit about post-COVID condition or PCC as long COVID is now referred to in medical terms, and why we see this as an interesting potential to early revenues. And we'll talk a little bit about the BETonMACE planning. I'm going to spend a lot of time at the end discussing funding options and what we've been working on. And I think we're getting fairly close on some -- some avenues. So we are a very solid company as far as science goes. We have patent protection out until 2041. That's an enormous length of time for a drug like ours. We have all kinds of omics descriptions of how the drug works, mechanism of actions, et cetera. We have great publications. We have over 40 publications now just from the in-house staff. I guess that's one of the side effects of COVID being locked up in your house and not being able to work in the lab, they were able to really get out a lot of very detailed publications, which is very good for us. And those come in some pretty strong -- those come in some pretty strong journals, Cell, Nature, JAMA. So those are the top journals in the world. So we are getting the full respect of the academic world. Now there's another 120 publications out there that aren't ours and not one of these publications speak ill of our technology. It's all been very well accepted and moving forward. So we do appreciate that. We also have 4,200 man years of patient data, which has enabled us to get that very important breakthrough therapy designation from the FDA. And we have been working constantly with the FDA massaging that program to their current needs and likes until we can launch it with anticipated funding. You've seen these slides before. They're just very strong representation showing the white line is placebo, but it's not some sugar pill. It's the top standard of care. These patients are from 18 countries around the world and they're on high-dose statins, beta blockers, ACE inhibitors, glucose management. There was over 500 concomitant meds. So with the addition of just Apabetalone, you get the orange line which is a reduction in death, heart attack and congestive heart failure by 63% with a p-value of 0.0002. So for those of you who are not familiar with statistics, that means there's a 2 in 10,000 chance the data could not be repeated. So there's statistically very sound. And it wasn't just in cardiovascular. It was also in chronic kidney disease, where we saw a 50% reduction in hazard ratio. And this is in heart attack, death and congestive heart failure. So it's a very big market for us going forward. We have a ton of data and we know how this drug works. It works in a different location in the chain there than normal conventional drugs work on proteins on the bottom. Moderna works in the middle, and we're even up stage of that. We have a ton of data on the categories we work in, in the pathways we work in. Now Dr. Ewelina Kulikowski is here today. She won't be taking the stage, but she'll gladly stick around and ask -- or answer questions afterwards, talking about what we know, what we're working on and how excited we are because it's a pretty good program that we've been working up over the years. Now I showed this slide last year as well, and I just want to reiterate it because unfortunately, I have to show it again this year. We have very strong intellectual property. I just showed you the 40 publications, et cetera. the breakthrough therapy designation is a really important category to have. Commercialization potential with EVERSANA and North America and others around the world is in place and in building and financing is the weak spot. The industry decrease in M&A transactions and IPO activities, which I'll show you in a minute, has been rather extraordinary. Alternate non-equity options are what we have to focus on. There is no equities market in life sciences right now. It's nice to be a public company sometimes. But usually, you do that so you can go out and raise money. Not right now, it'd be pretty dilutive at $0.10. So we are continuing to work on licensing deals, partnering with major pharmaceuticals, a couple of very advanced programs are on the way there and high wealth individuals, et cetera. But I'm going to discuss at the end of today's meeting a new approach that we're using in the last few months. And I think it's going to be the success for all of us. So let's talk about the potential commercial applications here. These are just the top 8 and the numbers I'm about to show you are only two of these being the type 2 diabetes for BETonMACE2 and the post-COVID condition. We believe that's a very exciting program because it's actually a lead into what we're working on. It involves cardiovascular, pulmonary, renal, so it's the very patients we're already treating, and we do believe we have a very strong and solid drug for that program, and we hope to get into some bulk sales on that. The rest of these indications, I'll just leave for now but when I show you -- when a CEO shows you a number that says you have an $83 billion lifetime potential for this drug, you got to kind of put your tongue and your cheek a little bit there and wonder how true that number is. That true is -- that number is actually extremely low. We can run numbers even with just 2 or 3 indications and show you where it could actually go over $300 billion lifetime. Now this chart looks a little funny because this one stands out here as early revenue. That's post-COVID condition. Should that program work, this chart's is indicating that we would look at bulk sales. Just like the Canadian government is always buying all these drugs that are never used in bulk sales from liberal writings, amazing. And the $83 billion is made up of this kind of data here. Lipitor, a statin class drug peaked out at $13 billion a year in sales. We're showing only $8 billion in this chart and they had 6 major competitors when they did that. We have 0. They also had a MACE reduction of only 30% and we're at 63% on top of Lipitor and Crestor. So the potential here is very strong. And it's this kind of commercial data and analyzing that has been getting a lot of attention from the pharmaceutical companies now. You'll see why in a couple of slides as well. There's a lot of change in the industry happening right now. For a change, it's in our favor. Usually, it goes in the wrong way. Cardiovascular has been very difficult to work in for the last 2 decades, but there hasn't been any new medications in the last 2 decades and these guys have to find them for their own protection now. So current life conditions, it's brutal. I think I titled this -- the subtitle, the good, the bad and the ugly. So this is the bad. M&A activity in 2022 was down 41% and combined value down 30% over the previous year. That's a pretty big drop. And this year, this is the ugly. We're looking here at only 7 IPOs so far this year. Now I'm going to preference that a little bit. There's actually what would be called an eighth one but it was J&J is spinning out their own company for $3.8 billion, so kind of would skew the number there, and they're the 100% owner of the company. So is that really an IPO? I say not but we're down under $1 billion so far. The good news is, even though we're only at 7 right now, there were 7 new ones announced last week that are heading into IPO. So hopefully, this drought is over. And next year, we can talk about the wonderful increases. So in 2022, there was only 21 IPOs for $2.2 billion. Previous year in 2021, there's 104. That's a heck of a drop down to 7. So what happened to those 104? Not good. Of those 104, 9 of them are off between 50% and 59%, 8 of them 60% to 69%, over 70% to 79% 14 companies, a whopping 23 are off by 80% to 89%. And 14 of them are off over 90%. One of them is off 98%. So this is exactly why we don't have an equities market in life science right now. I do believe it will come back. This would strongly indicate that valuations in 2021 were grossly overvalued but not 80% and 90%. This is an overdone market, and it will bounce back. But in the interim, we have to get creative and figure out different things to do. So this is actually the good of the good, the bad and the ugly. It's good for us, not so good for pharma because they have a patent cliff coming involving $200 billion in sales. And these are the particular drugs, their companies, their current sales and when their patents expire. They have to replace these drugs. There's like 600 drugs in development for oncology and it's a little competitive, very few in development for a handful in development for cardiovascular. Cardiovascular involves tens of billions of dollars of revenues. That's like I showed you on that one slide, that we anticipate on the low end being able to do $8 billion in revenues. That's going to help some of these companies in their replacement values. Now everyone that just went pink or blue, I guess, you can't see the blue all that much. The blue is oncology drugs. So that would have a positive impact on Zenith. Now normally, I keep the discussion of Zenith and Resverlogix very separate. This is a lead into a little more of that discussion we're going to have today. The purple are all drugs that Resverlogix could help replace or fully replace. So there's 12 in each category. So out of all these 30-some oddings, 37 drugs headed for the cliff here, our epigenetic technology is getting noticed as replacement for some of these programs. Sometimes they don't really care about a new technology. They're making so much money that new technology means nothing to them until like Humira here, $17 billion in sales a year in the patent ends this year, that will get their attention. So now various companies like AbbVie, Merck, Pfizer, they are all paying attention. And with those companies, we're actually dealing with every one of those companies through Zenith epigenetics and teaching them about epigenetics, which is very helpful for Resverlogix. Now post COVID, I just want to touch on this a couple of slides. I've been saying this for 2 years, and it's still true, attacking COVID with an antiviral as a pill isn't going to do anything because you don't know you have COVID until -- now, nobody even tests anymore. They just -- no, it's just a cold. You don't even know you have it until day 8. Day 10, the virus is dead on its own anyway. So trying to kill it with a -- your damage has already happened. Damage happens about day 5, if you're one of the unfortunate ones that has the inflammatory response. Not a single person on this planet died from the viral response. Every one of them who died, died from the inflammatory response. Our drug works on both. Our drug was published in the top publication in the world as stronger antiviral than what was being used here in Canada, remdesivir and in the United States. That's the drug that Trump took. Now it worked for Trump. He's lucky because he seemed to have had a very bad case but Trump was getting tested every single day. It's pretty obvious that guy was going to get COVID with all his campaigning, stumping and stuff like that. So early COVID test, great. But you can't test everybody every single day, that's just physically not possible. So we do believe that the strength here is not in the detection of the virus early and thanks to Joe Biden, it's also not in the therapeutic because when he approved Pfizer's drug, he wiped out emergency use authorization. As most of you know, we were doing a program in COVID and we stopped because we could no longer run it. One of the main reasons is we could no longer run it under emergency use authorization. We were running a 1,000-person trial that was only going to cost about $2 million to $3 million. By Joe Biden wiping out emergency use in favor of Pfizer, he wiped out hundreds of billions of dollars of COVID research. I'm surprised the media hasn't chewed on his tail a little more about that. In our case, it now meant we would have to do 2 Phase III trials, 47,000 patients each at a cost exceeding $700 million. There goes that program. So what are we doing? Why am I still talking about post-COVID because Apabetalone is very effective COVID and post-COVID because it was designed as a cardiovascular drug. The COVID's first touch on a human body is bromodomain 4. That's our exact target. We got 20 years of research on that target. So we know what we're doing. We know how to stop COVID. We get no government support. So we're going to the Middle East with this one. And I've already made arrangements with Morocco, Egypt, United Arab Emirates, Saudi Arabia, as far as being able to run a program there under emergency use authorization, speed, cost effective. So once we get our financing, excuse me, I do need some water. Once we get our financing in place, that's where we go because a quick 1-year program, and we can start doing some of the bulk sales. That's why the potential revenue chart showed such a spike right at the beginning. It's the Moderna approach. It's something that was used here in Canada with [ Avsola ] from Vancouver that received a huge order from the Canadian government, which is sitting in a warehouse in Ottawa, it was never used and it ended up not being very effective. So in political circles. What did they do next? Well, last month, they gave another $200 million to build the plant. It certainly seems to have a little smell to it to me. Now this -- this approach should be very good for us, but it's something easily turned on or off if it's not working, and we use the resources of the drug, et cetera, for our main program BETonMACE2. Now, reason COVID is so dangerous is because it continues to go on a long time. If you've had COVID, your risk of a heart attack is 50% to 70% higher A lot of people still getting COVID. I know -- I won't point it anybody, but I know somebody in this room who has recently, not now, no worries. But you have to really be concerned about something like that. And if Apabetalone is the drug, we should be getting a fair shake. Once we get the data we want out of the Middle East, we will be taking it back into the United States and Canada and trying to get their approvals and move this forward. So all kinds of journal publications showing what's going on and the negative effects. All kinds of people are very much backing our approach here. These people aren't just with great universities like Johns Hopkins or Emory or UCLA, Georgetown, Barnes-Jewish, Albert Einstein, they're the head of the infectious disease departments. And they've teamed up with us to help design this program and see if we can get it going. They don't like what's happened. They don't like seeing all that research disappear and good drugs like that. We apparently as species on this planet, didn't learn a hell of a lot from this pandemic. And when the next variant comes along or the next pandemic comes along, we're going to be right back in the same boat. It's scary. But we're going to keep working on it because we see it as a huge commercial potential here for us. And -- the BETonMACE2 clinical program is -- as I said, it's fully designed, ready to go, and we think we're getting pretty close, and I'll explain that to you shortly here. Now the accelerated programs that we have in both of these, whether it be through the Middle East health agencies or through the FDA with BETonMACE2, being able to get that program going and have it under breakthrough therapy designation, fast track with an interim analysis means about 18 months from the start of that trial. We could be approved. And that can only happen with fast track and breakthrough therapy designation, which we have. So we're excited about that. And we're very excited about our partners that we're working, developing in North America, EVERSANA. First time I ever showed our audience a slide deck on EVERSANA. There were 3,000 persons strong then they were 5,000, now they're 7,000. They've been gobbling up the industry and doing very well, expanding. They're in 25 locations. They're working in 80 countries around the world now. They're backed by some pretty deep pockets. So even in these tough times, and their business model has been hit hard as well because their business model is commercializing Phase III companies. We're a Phase III company with no access to equities capital, neither are a lot of theirs. So a good thing to have deep pockets. But that part seems to be changing to the better. And there's all kinds of new publications, ours and others that are coming out very actively promoting what we're doing, the treatment for chronic disease, BET inhibition in general, Apabetalone in specific. Now I mentioned earlier, we're going to talk a little bit at the end here before the Q&A about one of the approaches that we have adopted recently. And we didn't adopt it before because it wasn't available. It is available now and it seems to have drawn a hell of a lot of attention, especially in the last 3 months. It's been pretty busy around our office, and it involves Zenith epigenetics. Normally, I never mix the 2 discussions here. But today, there's a good reason to do that because Zenith is going to finance Apabetalone. Are are we going to do that? Well, Zenith spun out from Resverlogix 10 years ago, received a 6% to 12% royalty at the time, still owns it. That royalty is worth nothing until BETonMACE2 is financed. BETonMACE2 has a profound impact on the future of Zenith epigenetics. One thing we can do is we can sell half of that royalty to a royalty pharma house, to various individual groups that trade in the royalties and the royalties here, you're talking 3% to 6%. It seems like a small amount. Humira, the drug that loses patent this year was originally designed in a hospital in the Boston area. And that hospital had a 3.5% royalty and they wanted to build another $100 million wing on their hospital. So they went to a gentleman named Pablo Legorreta, who used to be with Goldman Sachs. He tried to get Goldman to do a royalty arm. And they thought, "No, we're interested in only the big deals. We don't want the chump change". So Pablo formed his own company, which has since 3 years ago, gone public, at a mere $38 billion right now. And he formed it mainly starting with this particular approach. Pablo now owns 7 royalties on 7 of the top 30 selling drugs in the world. It's a lot. And this particular -- or Humira, I should say, he paid $100 million for Humira. He's been making $100 million a month on Humira. So a pretty good investment. And there is a lot of interest. Unfortunately, it's a busy field right now because there is no equities market. I showed you why and so a lot of people are looking at the royalty approach. So are we the only ones looking at that? Is it going fast? The answer is no and no. But it is a good approach for us. And we are working also talking to pharma companies and talking to other partnership areas about that royalty approach because if I go in and say I license this to the Middle East, okay? What's the Middle East going to do with a drug development program? They don't have the companies to run it, to distribute it, to organize their profit source. But if they own half of the royalty globally, and just their main issue now is cashing their check, it's a different story. So that has opened up some approaches. Another approach that we are looking at is Zenith Capital Corporation, which is the parent company owns a wholly owned subsidiary, the oncology division and that's where things have changed. A year ago, we didn't have enough data to get anybody interested in buying or partnering or licensing or every time we walked in the door, it was that looks great. We just need a little more data. We now have that data, and I'm going to show you that. So either one of these could far exceed the amount of money that Resverlogix wants to put in play and Zenith has a very good reason to do it, turning this from a 0 value into short-term cash flow. So I think we have our solution here if one of the other deals comes first, take whatever comes first. But this one is getting a lot of attention. I was in Boston at Bio last week, I guess it was 2 weeks ago now, and it went very well. Lots of meetings, lots of activity and a lot of strength with that program going forward. So that is a key difference over last year. And now let me show you why? This is a cancer that you never want to hear these words come from your doctor's mouth. It's NUT midline carcinoma or more recently, they just referred to it as NUT carcinoma and you're looking here at 3 different PET scans, one last October, one 2 months after that in December and one this March. So in October, this individual in Australia had a 7-centimeter tumor between his heart and his lung. And that's -- usually the death rate here is within 6 months. and the fatality rate is 100%. And the sad part is half the patients are children. So we're pretty stoked about this. Yes, I'll explain. So this particular was the start and it was in a tough to treat area. So you can't do radiation therapy up against the heart like that. In this case, it doesn't really matter much anyway. Two months later, that tumor was 4x the size. It had also spread to his liver, and it had also spread to the bone down his right leg. By March, this gentleman should have been dead. And I've been joking with the staff because this guys in Australia that this blow goes out a beer. But here he is in March, completely cleared up. Now we don't know yet if it will come back or not, but we do know this is the first patient to ever have it reversed. He's been joined. Here's 2 more. So these are not full complete remissions like the other one. They're in the lung and they're in the abdomen. And the reason we're talking cancer in a cardiovascular company because remember, this is how we're going to finance Resverlogix or this is one of the good shots we have at financing Resverlogix with large dollars. So these guys have now been bumped up. They're stronger doses. They're taking it twice a day instead of once a day. And this is big news. It is an orphan indication, so there's not millions of patients. In Resverlogix's case it's just our first 2 indications, we're looking at 18 million patients. This is only 5,000 but these drugs sell for quite a bit, usually in the hundreds of thousands of dollars. I don't think I would want to price out there. But even lower than that, the amount of money that people are paying for an orphan indication drug is huge. Now there's a second part to that as well for the company, is that when it involves pediatrics, you get a coupon from -- fast-forward coupon from the FDA. Many people like Gilead bought a Canadian companies once and they won the race for hepatitis C, ended up generating $80 billion in sales over the next 3 years off of hepatitis C. So the fast-forward coupons are selling for $200 million to $300 million each. So that adds some benefit to Zenith epigenetics. And it's not just this carcinoma that we're dealing with or that Zenith is dealing with. Triple-negative breast cancer is a very difficult disease and metastasis. In this case, it was to the lung, we reduced at 73%. In this case, to the liver, we reduced it 92% in only 17 weeks. Now I don't want to mislead anybody. This triple-negative breast cancer is probably not an area we're going to go after. Drug named Trodelvy got there a year ago. They're doing very well. Their ORR, which is objective response rate is about 2% better than ours. Our safety, I would say, is better than theirs but they're an established drug selling in a market and they have a brand name. We have numerous other things we can go after. So I don't want to show you some fancy slides and then pop the bubble later. It's very good in prostate cancer. This one we are going after. We have an active trial, Zenith has an active trial of 200 patients, 120 of those in China, 80 of them in the United States and it's going very well. And here's a patient who had his metastasis went to the bone and the bone is the hardest one to get rid of. We completely got rid of it. And so we're seeing great results there. And we're seeing them in an area that's rather unique or Zenith is, the triple combination. So this is with a Pfizer drug and the top selling cancer drug in the world, which is Merck's KEYTRUDA. Merck has tried to break into the prostate cancer field with 4 major Phase III trials. They failed all 4. This particular one recently published that the combination of just Merck and Pfizer's drug was tried, and they showed 11% reduction in PSA scores. You add just Zen-3694, 41%. 33% is considered a pretty good low-end target. So we're showing Merck that their drug does work. It just needs a little assist. So there's a lot of people that we can work with going forward here. Now it's not just these 2 or 3 indications. Zenith has been very fortunate. Zenith has 13 indications, and every one of them is paid for by the partners. All Zenith supplies is CMC, which is the drug itself and G&A costs for running the company. So it's a pretty good program. It's easier to sell a company like this when other people are paying the bill. If I'm trying to sell a program and then the acquirer has to figure out how they're going to continue funding 13 clinical trials, that's a big ticket item, not a problem here. So we're -- we're getting a lot of discussions, not just with major pharmas and not just with the people listed here, but a lot of major biotechs I've been talking with as well. I can think of or thought of half a dozen who had their science programs fail. And yet they were fully funded companies. They're sitting there with $800 million, $900 million in the bank and no science. So there's a lot of discussions ongoing. I think we've sped them up after the Bio meeting. It was actually really nice to get back to one of those in person because I'm a firm believer, if you're not in the room, you're not in the deal trying to get a major transaction done on a Zoom call, it's pretty difficult. That's part of the reason why the M&A activity is so low over the last 2 years. But as you can see here, partners include Merck, Bristol Myers Squibb, GSK, Merck Serono, Eli Lilly, Yale, Simdax, Pfizer, Pfizer, Merck again, Dana-Farber, and Dana-Farber is actually an interesting one because this program here, I don't know if you know where Dana-Farber Cancer Institute is, but it's Harvard. And we announced -- or Zenith announced this last week, that they had successful results in this and that their go-forward program is with Harvard. So it's exciting to see. And I do believe that this is going to be the route to finally get Resverlogix kick started because I can guarantee you it won't be the equities market. That would be dilution suicide. We've done a little bit of dilution over the year to keep the doors open and all kinds of cutbacks, et cetera, in case anybody has a question later about what my income is, it's 0, and it has been since last year. So we've taken the sacrifice that's required to make this company. And I'm not the only senior manager who's done that. Others have voluntarily. So it's a good group to be working with. And basically, that's the presentation.