Resverlogix Corp. (RVX) Earnings Call Transcript & Summary

Thank you for joining the 2025 Annual Meeting of Resverlogix Corp. Shareholders. [Operator Instructions]

Good afternoon, and welcome to the Annual Meeting of Resverlogix Corp. The meeting will now come to order. My name is Brad Can, CFO of Resverlogix, and I will chair today's meeting. Upon conclusion of the formal part of the meeting, Don McCaffrey, Chairman, President and CEO of Resverlogix, will provide a report on the company's activities. In order to ensure that the meeting covers the required business in an efficient manner, we have prearranged with designated shareholders or proxy holders as the case may be, to move and second the motions of business. With your approval, I shall ask Lloyd McLellan of Borden Ladner Gervais LLP to act as Secretary of the meeting and Donald Santini of Computershare to act as scrutineer. Computershare has provided me with a declaration as to mailing indicating that shareholders of record on May 12, 2025, were mailed a copy of the notice of meeting and information circular together with the accompanying form of proxy or the notice and access form and form of proxy as the case may be, and I direct a copy of the declaration as to mailing to be kept by the secretary with the records of this meeting. The scrutineer has provided me with a report that shows that the shareholders present or represented by proxy at the meeting constitute a quorum for purposes of this meeting. I now declare the meeting regularly constituted for the transaction of business. With your approval, I recommend that the reading of the minutes from the prior Annual Meeting of Shareholders held on July 31, 2024, be dispensed with. If there are no objections, we will proceed. Anyone wishing to review these minutes should contact me, the company's Chief Financial Officer. The first item of business is to table the audited financial statements of the company for the year ended December 31, 2024, together with the report of the auditors. A copy of the December 31, 2024, audited financial statements and MD&A have been mailed to the registered shareholders and beneficial shareholders who responded to the mail list request form. The next item of business is to fix the number of directors to be elected at the meeting at 4 members. I will now ask someone to make a motion in this regard.

Mr. Chairman, I so move.

Mr. Chairman, I second the motion.

All those in favor, please signify by raising your hand. [Voting]

Opposed, if any? [Voting]

I declare the motion carried. The next item of business is the election of directors, and I declare that the meeting is open for nominations.

Mr. Chairman, I nominate Don McCaffrey, Kelly McNeill, Ken Zuerblis and Dicky To for election as directors of the company.

Are there any other nominations? Is anyone opposed to the close of nominations? [Voting]

If there are no further nominations, I declare the nominations closed.

Mr. Chairman, I move that the persons nominated as directors of the company be individually elected as directors for the ensuing year.

Mr. Chairman, I second the motion.

All those in favor of individually electing the nominees as directors of the company, as after said, please signify by raising your hands. [Voting]

I declare that Don McCaffrey, Kelly McNeill, Ken Zuerblis and Dicky To are the duly elected directors of the company, each to hold office until the next annual meeting or until their successor is elected or appointed, unless their office is earlier vacated in accordance with the company's bylaws. We will now proceed with the appointment of auditors. I will ask someone to move that RSM Canada LLP, Chartered Professional Accountants of Toronto, Ontario, be appointed as auditors of the company until the next Annual Meeting of Shareholders at such remuneration as may be fixed by the Board of Directors and that the directors be and are hereby authorized to fix such remuneration.

Mr. Chairman, I so move.

Mr. Chairman, I second the motion.

All those in favor, please signify by raising your hand. [Voting]

I declare the motion carried. If there is no other business, may I have a motion to terminate this meeting?

Mr. Chairman, I so move.

Mr. Chairman, I second the motion.

You've heard the motion. All those in favor, please signify by raising your hand. [Voting]

Opposed, if any? [Voting]

I declare the motion carried. This Annual Meeting of Shareholders of Resverlogix is terminated. Don will now proceed with the management presentation. Don?

Thank you very much, Brad. All right. So we have a forward-looking statement here, and I'll just jump forward to the next slide. Introduction of Resverlogix. Most people are very well aware of who we are and what we do. But it is important to mentioned it once in a while for new shareholders. We've been around since 2001, and the main focus is cardiometabolic. Leadership is, Brad is the CFO, and I am the CEO. And to date, we've raised over $500 million in capital for this project. We continue to try to do so. These markets are brutal bad. Last year at the AGM, I went through 4 or 5 slides showing how bad the market is, and it's not just us. This year, there's no need. The market is worse than it was last year. We're starting to recover. However, Donald Trump took care of that real quick. So it's been pretty flat, trying to wait around for the market to recover, the equities market that is, is not the way to go for us. We're penny stock now, and we have $100 million projects that need to be completed to move forward. Therefore, we have focused on taking apabetalone forward by getting it financed in creative manners. And the main approach there is actually what we've been talking about for just a little over a year now in dealing with a pharmaceutical partner and/or that's expanded a little bit. Two weeks ago when I was in Boston, turning my wing here, I actually had meetings with private firms that are quite capable of stepping in and filling that round as well. So we are dealing both with private firms for this potential and major pharmaceutical companies. They're not in a hurry. The market is in their favor right now. It's like the buyers and sellers market for real estate. So for us, the goal is to sell Zenith Epigenetics. Zenith Capital Corporation has a strong reason to do that because they own 12% royalty on apabetalone. That is worth nothing until the final trial is financed. So there's some very strong incentive. We have priced that arrangement quite favorably to the buyers. We have announced to the buyers exactly what that amount is. So nobody is falsely thinking we want to hang out for billions of dollars and squeeze every last nickel out of the beaver. Not going to happen. We are determined to make this happen, slow going, but it will happen. So with that money going to Capital Corporation and the ownership of Zenith Epigenetics transferring to a third-party entity, Zenith can then fund the Phase III trial for apabenalone. It's about $100 million. So you can imagine at a penny stock, how dilutive that is. That's dilution suicide. That's something we won't do. We, like everybody else in the industry, just have to wait it out. But we have a key asset that can be sold and can be sold in order to finance this moving it forward. Will it happen this year? I hope so. We have some really good discussions ongoing. And part of how we're financing everything right now is the same route. Zenith Capital Corporation is helping keep Resverlogix on its feet so that we have an active company ready to go when the funds arrive. So we're pretty excited about that. That structure has made it very attractive for investors in that they can invest in Zenith Capital Corporation. As soon as this M&A transaction takes place, presumably within a year, they will have all of their principal back and about a 60% uptick on interest just in year 1. Year 2 and 3, there won't be any dividends. It will be development time for Resverlogix. And from then on, all the way to 2041, there's a large dividend potential for the shareholders. So it's made it attractive in that they're not betting on the long term until 2041. They're bidding on good return in under a year. So it's made a big difference out there on our ability to get money in here when every biotech company out there is trying to raise funds under favorable conditions. So that really is the crux of what we're doing. And this is Zenith's main platform. The entire company pricing has been set on the first item here, Phase 2. Now normally, you never go out and give your price first. This isn't that market. This market needs to let these people know there's a deal on the table, take it. Here's what it is. It's great for them. It's great for us. And us being Resverlogix because it's our source of getting this trial paid for. We are all set and ready to go in 18 countries around the world. The only country we cut out was Russia. We are keeping an eye on Israel. Israel is one that I would prefer to keep involved under most conditions, [ that ] nuclear me because they were our #1 performer. They had 20 sites in the last trial, and they were good, organized professional work. So the other markets that make this intriguing for the Zenith asset and why it's sellable now is the Phase II metastatic castrate-resistant prostate cancer trial. It's a much bigger market than the carcinoma one, and it's going well. We have now transferred all of the new recruitment for the final. I don't recall the exact numbers, but I think we've recruited 150 of 200 patients. Let's give or take, a handful here or there. And they're all being done in the United States now. We did continuously have, call it, cultural issues with the Chinese population. So we've switched it all over, cost us a little bit more, but I think in the end run, it would be the wise move. So that's coming along, but we don't want to wait to sell the company until that's done. That's 2 years. This is a tough market. We can sell the company and maintain an 8% royalty going forward on prostate on all of the other conditions, I think that's a very healthy proposition for us. So one that's come along that's really quite interesting is myelofibrosis. It's a hematological cancer or a blood cancer, and we had left that one along because it had a very solid competitor in there, constellation. Their drug is not as good as ours. There's toxicity issues. And however, all of the other BrD bromodomains had focused in hematology blood cancers. So Zenith intentionally went forward with solid tumors. Now Constellation was sold to MorphoSys for $1.7 billion. They were entering a final Phase III, which they got the news. Two weeks later, Novartis bought MorphoSys for $2.8 billion. Two weeks later, they found out that cancer drug causes cancer, bad side effect for a cancer drug. So we know through our studies, we don't have the same mechanisms of action and that we do not cause that problem. So it leaves a market that was approved by the FDA wide open. Nobody else is even close to it, except us. So a new owner could finance it and pick up a very good market, $2.4 billion a year in that particular market. So that's enticing a couple of majors. We don't have the work to say it works in that, but the other bromo domain constellations had some very, very solid work. And the safety issues, we don't have. Our drug was always cleaner than any of the others. And it was our goal to go back and look at hematology after we had registered something in solid tumor because then it's a pretty sure thing that we can do that. And we're the only ones that had a drug that didn't need a dosing holiday, meaning you could dose continuously every day. So on top of that, there are 11 other indications that 3694 is in clinic on. Those are all being paid for major -- by major pharmaceutical companies, Pfizer, Merck, BMS, AstraZeneca, on and on. So for us, that's a pretty good effort. We would never be doing 11 trials if we had to pay for them all ourselves. Now that also adds value. And it doesn't overburden potential buyer with thinking, "oh, we got to fund 11 trials." They don't -- not all 11 of those will actually work. Maybe half of them, a little less will work. But even one of them extra working, and it makes the offer we're making very worthwhile. And all of that is being said just to show that Zenith will be sold. It is too attractive of a deal right now. During the last 3 years, while this recession has been going on in life sciences, and I would call it a depression now, not a recession. This program has been slowly moving ahead. And I say slowly because it's government run. And believe me, they don't work as fast as we do, but they're paying the bills. So we have now moved one of those, the carcinoma program into full development inside the company. So again, that one is being partnered with Harvard, their Cancer Institute, and the drug comes free from Eli Lilly. So there is some really good advancements as to why this should take place in the near future. We had hoped to have it done by now, obviously. One of the private groups was pretty compelling. It came down to a Committee member vote. We got 2 and needed 3. So on to the next one. The fact that a company that big was even looking at us, it's very encouraging. So keep that on the table. Now back to Resverlogix's lead candidate, apabetalone. We all know lots about it. The data is extremely compelling. Intellectual property to 2041, FDA breakthrough therapy designation, that's incredible. And all of this stuff and back to Zenith for just a bit, that CRADA program with the 11 programs all paid for, all made the cut through Donald Trump's assassination of their science work down there. They're still funded. So he didn't get the note. Hopefully, he doesn't. Anyway, we're very excited about these continuing forward. Resverlogix doesn't rely on that type of funding. And we do have that breakthrough therapy designation. We have 40 publications in the top journals. So when people are looking at this, it's very exciting to them. And what we've done with the major pharma is if they come in and buy Zenith, that company is going to have the first right of refusal to buy Resverlogix. Now there's some bells and whistles we can add to that, that make it even more attractive. But the real interest here isn't the pharmas looking at ZEN-3694. It's can they get their hands on a fully financed and funded apabetalone program. That's worth a lot of money. And the answer is, yes, I think they're moving in the right direction. So our safety is also very strong, 4,200 man years of data. So we know it's safe. We know where the glitches are and the FDA is fine with what we have. So -- and we also have proteomics and transcriptomics that show we can expand this program with the right owner of the company, properly funded, this can be one heck of a big program. So next slide. This is the economics of it. And the reason we're going this approach is with ZEN-3694, 2 or 3 programs, we can probably do $1.5 billion, maybe $2 billion a year in sales over the next few years, which is pretty good. This one, even with slim numbers, can do at least $16 billion. And if we expand into other markets and do a lot more than that. So if we're going to sell one of them, cannibalize some of the assets, move forward. It's sell Zenith move forward with apabetalone. And these numbers, as I say, they are conservative. When we go through them with pharma and the different people that we put them together with, there are always [ ash-ash ] in the back of the room kind of talk like, "well, they don't realize how valuable it is." We know how valuable it is. But putting up numbers twice the size on here when we're a penny stock doesn't look realistic. It is realistic, but we're taking it every step as it goes, trying to add the value. And we can't do that during equity fundraises at penny stock. It doesn't work. So just a little refresher here on the COVID-19 program. Everybody out there thinks it's dead. Well, not everybody. Knowledgeable people know it's not dead, still circulating. And in the future, it's going to be a big, bad ugly issue again. We're going to be ready for it this time. Nobody was last time. But we've gone through all this in the past, the early infections, the pulmonary phase, the hyperinflammatory phase, which is the killer and then the post-COVID condition. Because of the last U.S. government's problems, they wiped out all kinds of research here by putting through existing treatment options for COVID and post-COVID condition that were highly inferior. It literally wiped out trillions of dollars worth of research. We decided to keep going on post-COVID in the Middle East, and we've been very quiet about it because the market doesn't want to hear about this. It's not a big market for us. We aren't dreaming we're the next Moderna. It's a really good market for proving our strengths, cardiovascular, pulmonary and other issues. So we are still focused on post-COVID, and I'll give you what I think is our first update here shortly. And that coughing with a broken rib really hurts. So this is the increased burden of cardiovascular events. Some of this was in publications specifically about our drug. So MACE conditions, way higher in post-COVID patients. Heart attack, almost double, stroke, higher. Heart failure, almost double. So by showing that we work in the smaller, cheaper market that we can afford to do trials in, not $100 million trial, but a $2 million trial, it's been pretty advantageous for us. And it will continue to be so as we launch BETonMACE2 because a lot of these facilities will rely on this data, and it will help speed up enrollment. So here we have a bit of an update on where we are. We're in 4 countries around the world, all of them in the Middle East, Jordan, Bahrain, United Arab Emirates and the Kingdom of Saudi Arabia. We have 8 sites in total. We've been enrolling for a while now, but the slower sites have all kicked in and everything is going full tilt that we now know we will be fully enrolled by this fall, and we will have our last patients in first month or 2 in 2026. So this data is coming fast. And we see data. We're pleased with this trial, and we're moving it forward as fast as we can. This data will be helpful in getting Zenith sold because of the first right of refusal. So altogether, may seem brutally slow at times, but the science has been moving along successfully all along. So as soon as we can click this structure here and get Zenith sold, we have the money we need more than the money we need to move this program forward, and it'll move forward fast at that point in time. The main markets will be just as stalled as they are now. So we will stand out. And that's basically the update. I can't go into any more detail on some of the unannounced stuff here yet. But there'll be some announcements over the next few months about what's going on and what we expect to see.

All right. So we'll now move into Q&A. For everyone to hear your questions, you'll need to use our microphones. If you're attending the meeting in person and you have a question, please come up to the microphone at the front of the room to ask your question. Please mention your name before asking your question so that we all know who is speaking. If you're attending the meeting virtually, please enter your questions into the question box on your screen, and they will be into the microphone for us to answer.

I'll start with a virtual question here. There's a few questions here regarding the long road for Resverlogix and our current value on the market. Can you talk a little bit about why the market is currently valuing Resverlogix where it is? Do you have any insight to that?

Market is valuing all biotechs where they are. 474 nonrevenue-generating biotechs in North America. The average is off 96% over the last 3 years. So please consider it not Resverlogix. It's a market industry, and we have no control over that. It's a tough economy and nonrevenue-generating businesses are definitely not in favor right now.

Thank you, Don. There's a few questions here also about the leadership team, and I'll just summarize them by asking, do you feel that you have the leadership team in place necessary to accomplish the goals and the objectives that you talked about in the presentation today?

Absolutely. And as you know, in the past, we've strengthened those with deals like EVERSANA and Cencora, getting some very strong industry support behind us to validate our numbers and our potential market. Also, if you look at the core of the management team, we have exceptionally low turnover even during the last 4 or 5 years. So people involved are very excited about what we have. They understand what we have. And eventually, one of these structures will kick in and we'll be moving pretty fast.

Thank you. There's another question here from John about acquisitions by pharma. He's asking, given the situation with the capital markets, but the continued activity in M&A, is there any consideration to selling Resverlogix as opposed to trying to move the program forward?

Absolutely none. The market capitalization of Resverlogix is so brutally low right now. It would be a fool's move to enter the market with that and try to sell it. Absolutely no reason to. We have a very strong group of insiders and major shareholders that represent about 70% of the company. There's no interest in that, not even in a discussion.

Thank you. There's a question from Dale regarding the impact of the Zenith sale on dividends for shareholders. There's a concern in his question about whether or not that would impact Zenith's ability to get share -- Zenith shareholders' ability to receive dividends from the sale.

Of course, it would. This would. We have priced it such that we know how much it will take to get Resverlogix over the line, leaving a very large cushion and there's still plenty to attain the goals that we've been discussing publicly.

There's a question from Tony about the neck carcinoma trial. He wants to know what the status of that trial is and if there are any updates on that front?

There's 2 trials -- actually 3 trials in neck carcinoma. One is a stand-alone where we don't even use synergistic drug for benefit. The reason we can do that is because neck carcinoma is a mutation of the bromodomain proteins. So it's directly involved in the cancer. However, we find that when we use some of the [ CD4/6 inhibitors ] like the one we're using with Eli Lilly that we see synergistic benefits, longer response times, and that's going quite well. We have a trial ongoing with Dana-Farber Cancer Institute at Harvard. And that particular one only has 6 or 7 new more patients required. And we have recently filed our application for breakthrough therapy designation with the FDA. We should have a response back on that within 60 days. We're assuming it should be positive. The reason being is current death rate for neck carcinoma is pretty much 100% within 6 months. So with our early work, we've seen numbers as high as 50% objective response rate. 10% or 20% would be welcome in that indication is that vicious. The bad news is half of those are children. So again, unfortunately, that pediatric coupon is still on hold. That is not a Donald Trump mistake. That was a Joe Biden mistake. So both sides of the aisle there have done some very non-favorable issues for biotech in general in the last year.

Thank you. There's a question here about the timing of the Zenith sale. I know you spoke a little bit about that earlier, but do you have anything to add on that, what the timing might be for the Zenith sale?

No. A, I don't know. B, I wouldn't be able to say if I did know.

And then one last question here online. There's -- you talked about the trial that's ongoing right now in the Middle East, but there's a question about funding from the Middle East that was mentioned previously and whether or not there's still an opportunity for that.

Yes, there's 2 opportunities still. Both of them involve Middle East only. One is high wealth group and one is the potential of regional rights. And they're slow moving, but they are still active.

That's all the questions that we have.

Do we have any in the room? You can always ask me after we wrap up. If I'm coughing, I'm not contagious.

All right. Any closing remarks or...

No, I just thank everybody. It is frustrating, waiting and waiting and waiting. We feel it too. But we are moving this forward as fast as we can. The Zenith approach is really starting to look like it was the right way to go. Getting all that free funding, we estimate around $85 million has been very helpful. And we just couldn't be doing that on our own in this economy. There's not a chance. So now we know we have proof of concept, which is huge when you're trying to sell the company and moving the program forward through the FDA at higher and higher levels, very helpful. So we're slowly getting there, a government and academic base, unfortunately, but this is moving.

Thank you. Operator?

Thank you. This concludes our live stream of the 2025 Annual Meeting of Resverlogix Corp. Shareholders. Thank you for joining us today. A replay of the event will soon be available on resverlogix.com under the Presentations and Events section. Have a good day.