Shares of Resverlogix (TSX:RVX) are sliding today after the company announced it will raise $12.6 million. The Calgary based biotech will sell seven million units at a price of $1.80, for proceeds of $12.6 million. Each unit will include one common share and a one-half of a common share purchase warrant.
At press time the company’s shares could be had for $1.67 which, if carried over to the close, would represent a new fifty-two week low. Prior to the financing Resverlogix had just over 52 million shares outstanding, today’s financing will increase this to over 60 million.
On the strength of excitement over RVX-208, a drug that is designed to promote the production of HDL, or good cholesterol, shares of Resverlogix hit on a high of $28.40 in February, 2007, but fell to current levels in 2008. This slide was interrupted April of in 2010, when the stock rallied to over $7.
Resverlogix’s name is derived from resveratrol. Resveratrol is an antioxidant that is commonly found in many plants. In 1997, researchers found that the substance may have cancer chemopreventive activity.
A March 2010 article in Bloomberg Businessweek put Resverlogix front and center in the resveratrol game, suggesting that ” Resverlogix Corp., without a marketed product, may accomplish what Pfizer Inc., the world’s biggest drugmaker, couldn’t: Creating a new medicine that fights heart disease by raising so-called good cholesterol. ”
But Resverlogix’s bounceback was interrupted on November 17th of last year, when company Resverlogix President and CEO Donald McCaffrey presented data from the company’s ASSURE trial at The American Medical Association conference in Chicago. In that study, just under three hundred patients with coronary artery disease took Resverlogix’s treatment, RVX-208. RVX-208 works by increasing serum levels of ApoA-l, a key cardioprotective protein that makes up 70 percent of HDL cholesterol
Shares of Resverlogix tumbled when reports from the conference suggested the company delivered less than stellar results. The “drug had modest efficacy, but it came with safety concerns,” said Simos Simeonidis, an analyst with Rodman & Renshaw. What was worse for Resverlogix was that Merck reported results with a competitive drug that showed what some referred to as “jaw dropping” results. Merck’s anacetrapib increased good HDL levels by 138 percent after 24 weeks of treatment, and lowered levels of bad LDL cholesterol by 40 percent in patients already taking LDL-lowering statins.
Resverlogix felt the negativity of the AMA meeting was an overreaction and an oversimplification of its science. As Donald MccCaffey told Cantech Letter at the time: “Big numbers by big pharma completely confused the media covering the event, media completely ignored the fact that Resverlogix science results surpassed expectations. ”
The cash raised will add to the $7.65 million the company reported it had in the bank on January 31st of this year. Resverlogix has trimmed its once heavy losses considerably. In the three months ended January 31st the company lost $4.5 million, or $.09 cents a share. In the same period last year, the company lost nearly double that, at $8.75 million.