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Message: Sep 30 AGM Notes - Detailed

Thanks to fouremm for the excellent summary of what transpired at the AGM that was posted on Sep 30th. Here are my notes which repeat/supplement fouremm’s points in many areas. Apologies for not catching everything, but my shorthand isn’t what it used to be. Any typos, omissions, translations and misquotes are my fault and should not be attributed to anyone presenting (Safe Harbor). Even though this info is about a week old, I hope you find it useful (and reassuring).

This is a lengthy one so grab a coffee or some other beverage if you want to get through this.

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I won’t bore you with the voting process, etc., which adopted the motions put forward. By my count, there were about 50 or so people there – probably ten of whom were with Resverlogix, including Don, Brad, Norm (came in later), Sarah and Ewelina.

Overall, I’m as excited as ever. This little company really does have something and if you can ride it out for a few years, there is a high likelihood you will be rewarded. Right now it’s a bit of a downer given the share price and trading activity, but I still believe that will change once more and more people (and institutions) learn the story, we'll be on our way.

I’m picking this up from the point that Don started the slide show. You’ll also have to imagine what slides are being talked to, but if you bring up some of the Yale club slides, they were fairly similar.

DM:

Alright, my favorite part. Eight minutes of reading, and then we get to the real stuff here.

Most of you probably got to sleep real early last night because we bored you with and hour and a half presentation on a webcast – but a lot of information in that and a lot of excitement about what’s going on in the company and where we’re headed. Let’s touch on some of that today.

-- talking to Agenda slide --

In the main agenda, we’ll review the problem – what are we addressing with our drug? The main problem is the unmet need in cardiovascular, but we’ve gone beyond that now and I’ll touch on that a little bit. The solution is our drug – RVX 208, as we’ve called it forever, but now it has an official name from a government agency. It’s called apabetalone, so when you think of statins such as Crestor and Lipitor, Zocor – they’re all statins. They’re called rosuvastatin, pravastatin, atorvastatin – so in the future, all drugs that try to copy us will end in “betalone”. So they’ll be something with a different prefix, then …betalone. That’s pretty interesting and it’s nice that we have an 8 year head start on anybody so they can follow us all they want. <grin>

Then we’ll talk a little about some of the clinical presentations and the data we have, phase III clinical trial design and timing – I’m sure you’re interested in that, the genetic mechanism of action and some of the market opportunities that have now opened to us in the last little while. We have some great potential.

The key attributes of the company really are that RVX 208 is moving into Phase 3 and it has a patent life til 2033. So first in class BET Bromodomain inhibitor, 8 years ahead. It’s mechanism- it allows multiple indications and we’ll talk about a few new ones today. Orphan indications are available – we’ve announced our first one and we’ll commence trials in early 2016. And we’re still proud to have a very strong safety profile. We’ve dosed almost a thousand patients – that’s a lot. Some of these drugs, like some of the ones for PNH already, they got approval for Phase 3 with under 100 patients dosed. So we’re pretty excited about where this is headed.

Now we’ll talk about the main problem in cardiovascular which we’ve talked about for a long time and it’s the 70% unmet need in cardiovascular management. So that 30% slice of the pie up there, it’s taken care of by statins and some other medications, but that leaves 70% unmanaged. The more you try to manage that 30%, you get diminishing returns. So new technologies are required to manage that 70%. Some of it, a small piece of the pie, will be handled by PCSK9’s which are a class of drugs which are monoclonal antibodies. They have been recently approved, they’ve been getting a lot of attention for two reasons – they are extremely expensive (14000/yr) and secondly, the payer groups have decided, in mass, they are not paying for it. They just want patients to stay on the cheaper small molecule drugs like statins and/or newer drugs – like ours. Our drug, as we go forward, we’ve met with agencies already regarding pricing, etc. – we’ll probably be in the 3000-4000 range – so very affordable for payers, very profitable for us.

The 70% unmet need goes far beyond cardiovascular. It goes into diabetes and CKD (Chronic Kidney Disease). The diabetes portion – that market’s huge. It’s attracting a lot of attention for us. That’s how we got our China deal done. Around 200M patients in that area (SE Asia) and the bad news for these patients is that no matter how well they control glucose levels, they will still die from cardiovascular disease at a rate of about 68%. That was confirmed recently in the ACCORD Study where they showed wonderful glucose management does not help the patient survive an extra day from cardiovascular disease.

The doctor who ran that trial (ACCORD) is from Columbia University – Henry Ginsburg in New York. He has joined our clinical steering committee and is one of our key opinion leaders that are supporting this program and moving it forward. We’ve attracted great people as you’ll hear throughout today’s presentation.

So, kidneys. Kidney disease is really an extension of diabetes which is an extension of cardiovascular disease. About 15% of people with diabetes will end up with CKD. It’s a progressive disease ending in death. Once you get to stage 4, or into nth stage renal disease, you don’t have a lot of time left. There’s not a lot out there, other than kidney transplants, that you can work with. Having data from our last trial – 40% of our patients were diabetic, 15% had CKD (48 people) from last two trials.

We’ve attracted an incredibly talented nephrologist – he actually won an award last year as the top nephrologist in the world. He’s from UCLA and he was one of the speakers in NY on Friday. Kam Kalantar-Zadeh. He is very excited about our data. He is very much helping us along with our orphan programs and our kidney program. He is focused on something we talked about a year ago, then went a bit quiet on – alkaline phosphatase (ALPs). It is an important part of kidney disease control. There’s really nothing out there that can reduce ALPs – except us.

Now you want to hear about excitement, listen to Kam on that slide deck and listen how excited he is about the data he has seen because now alkaline phosphatase has been moved from just a biomarker of interest that shows what’s going on to an actual target and that was confirmed by our “friends” at the Cleveland Clinic (snickering in audience). We like that.

This is some of that data. It’s showing in the various quartiles of our studies, we see a very nice does range dependent reduction in ALP, and I might add, that’s in correlation to MACE events. This is a really interesting tie in that we can now use as a marker moving forward in predicting MACE – very important to the regulatory bodies.

We’ve talked about apabetalone. It’s been tested in around 1000 patients in 11 countries around the world and we’re about to add at least another 13 countries – will show those in a minute.

Our big success in moving forward was in figuring out our own data. You design your clinical trials believing your approach is one way and we found out that didn’t work – our reverse cholesterol transport. There was multi modal action taking place that we didn’t understand at first. The data indicated that we had to figure out the genetics that were going on. We saw a 55% RRR in MACE events (heart attack, death, stroke and in this case, revascularization). In our next trial, it will just be the big 3.

One of the best drugs in the world for RRR has been Lipitor (37% RRR), so our 55% was a bit of an eye popper. But when we looked at the diabetic population it was 77%. Having the smart clinicians that we do, we’ve designed the next trial to be in this group – patients with low HDL who are diabetic. We have a pretty good shot at getting an approved drug from Phase 3

Some of the other data we came across during the trials was related to CKD. This data was positive and even statistically significant given the low numbers (48 patients overall– 35 on drug, 13 on placebo). The placebos continued to decline. GFR (Glomerular filtration rate) explanation about how the kidney filters blood. Imagine a kidney that’s been around the block a few times (laugh from audience) – you’ve got a lot of build up of cholesterol, calcium, dead cells – plugging that kidney.

We’ve been able to do, and why Kam is so excited, we can clear that kidney – statistically significant. That’s huge! That means no dialysis. For us, that’s big time medical savings and the payer groups will love it.

And we are designing some trials with Kam on that. I’ll touch a little bit on that today.

But first, I’m going to touch on the BETonMACE trial. So, the million dollar question – when does the trial start? We are going to announce this trial in full detail on Oct 21st on clinicaltrials.gov. We’re doing that because some of the countries we’re working in need to have the clinicaltrials.gov up and running prior to enrollment. The first two countries we’ll be enrolling in are Israel and Hungary – so stay tuned for that date.

Focus will be on patients with low HDL that have diabetes – very sick patients.. We’re looking for events. I can’t tell you exactly how much it will cost and exactly how many patients will be in there, but I can tell you that this trial will run until we have over 250 events (death, heart attacks, strokes) and we really want to see most events in the placebo group. If the statistics hold true to what we’ve seen in the last three consecutive trials, we should do very well. We’re not looking for 70% RRR – we’re looking for 25-30%. Some of these patients will be brought to us from China – 250 of them as part of our Chinese deal. There may be some additional deals like that, that will bring additional patients to the trial.

This is running in Europe and the main reason is they were the fastest. In the US right now, the FDA is a mess. Congress knows it, the Senate knows it and they are actively involved in it. So instead of our messing around with FDA issues and taking another 2 yrs for FDA approval just because things are so disorganized, we are not doing that. There’s a new bill in the House that was approved 344-77 and now going to the Senate.

It’s called the 21st Century Cures Act (see notes at the end of my transcript for further details).

The important part for us is that if a drug is approved by the EMA in Europe, the FDA must automatically expedite a review for approval in the US. The agencies in Europe have been very excited and positive about our plan and our data. So, we get registered in Europe first and then we go back to the FDA to request review (assuming this bill is passed through the Senate). I know a couple of the Senators personally and will actually be back there next week to lobby a couple of others before they go to the vote.

(15 minutes into the presentation) Around the world, agencies have really tightened up on their description of MACE because of previous abuse by some pharmas. For example, 8 point MACE (I coughed and it’s regarded as a severe event). Now it’s 3 points only – Death, Heart Attack, Stroke. We’re looking for 250 of those. We’ve put in parameters that we believe will lead to higher number of events – this is a really sick population and they will have higher events. Our estimate is that over an average period of 18 months on dosing, we should see 12-15% severe adverse events. That works out to about 2½ years.

That seems like a long trial waiting for data and that’s another reason why we’ve gone with these orphan programs that will give us tons of inflection points.

We’ll be working in these new countries (showing slide). I show Taiwan because they can start immediately. In mainland China, it might be 1.5 years. China will accept the data from Taiwan (they think they own them anyway (chuckles) and that will work on expediting the Chinese approval as well. Overall that will take us to 18 countries.

(Timing Slide) – BETonMACE will likely go to the middle of 2018. If we have a 20% event rate, it will be a lot shorter and a lot cheaper, but if it takes longer, we’ll just ride it out. During that time, the orphan programs will be conducted. They’re fast and they’re cheap. The first one (PNH) will likely be under $1M in cost and by this time next year, we can be in Phase 3 and in 2 years might even have the drug on the market for this indication. We’re excited to see just how fast that can go. That part is where I should remind you about the Safe Harbor statements and looking forward assumptions.

(Epigenetics slide) Epigenetics has been phenomenal for us. We have a huge advantage. We’ve got the only blood blank in the world. We have groups from Harvard and Oxford and the structural genome consortium publishing and writing about how we have the world lead in this field. That feels pretty good.

Over a year ago, some of the staff were really eager to delve into some of the samples. Some of them who are here today have done a great job and the data that’s come out is phenomenal. We really learned a lot and increased our intellectual property enormously out of this. Ove the past decade it has been painful to be a cardiovascular company. Everyone moved into oncology because they could do trials faster and cheaper. They could get five drugs to market by the time we got through the FDA for one cardiovascular registration. That has all changed and we’re excited.

This complement program that we’re going after makes a big difference in what we can do, how fast we can do it and how much it will cost. We started with RCT – we were right. We’re doing a good job on RCT but that’s not why we’re getting a 77% RRR. We can tell that just by the numbers. We went back in and found there’s a lot going on (besides RCT). Vascular inflammation, which is huge, allows us to go into all kinds of auto-immune diseases. Metabolic – we reduce glucose, and we have a GFR improvement for kidneys. We have calcification reductions. These are all individual items that can be huge selling drugs. We have very positive thrombosis data as well. So this epigenetic mechanism is really quite interesting. If you went to pharma 20 years ago that had a multi-modal mechanism of action, they’d run for the hills. They didn’t want to have anything to do with it. In the old approach, when you weren’t operating through epigenetics turning genes on and off, you probably had as many toxicology issues. That’s not how epigenetics works. The epigenetics toxicology have already been shown in our drug because we’ve had almost 1000 patients dosed through..

So we’re really excited and so is pharma. We are having a lot more fun these days, I can tell you that.

Our main market that we’re working on is still huge. It’s still 18.8 million even when you restrict it to low HDL and diabetic patients. Can you imagine that number times $3000/yr? I like it!

We continue to develop this in creative ways. The China deal was actually the largest deal done in China for a biotech company so we’re pretty proud of that. Not just cardiovascular – any company. So that put $50M into our coffers at $2.67 which is a price we haven’t seen for a long time.

The orphan indication will be faster to market. We can do that with 208 in Phase 2B. We also have all kinds of new drugs, so we are not just RVX-208 anymore. We have at least 10 in a followup program that all have exciting properties, so we can develop them out through other new orphan indications, starting with a Phase1. We can be selling off portions of the technology without affecting RVX-208 while we continue on through our Phase 3.

On the licensing and regional side, we will continue to do more regional deals in non-core markets, so we won’t the affect the 7 major core markets that pharma companies want to keep together as one basket.

So let’s talk about our second indication that we announced – PNH. (Don tries to pronounce full name Paroxysmal nocturnal hemoglobinuria). Wait til you see some of the other names – I’m going to have to practice for a month. (Dr Wong enters at this point – audience laughs)

(---From this point onward, I’m going to skip a few of the finer details, because I’m getting tired of typing and you’re probably getting tired of reading ---)

Some talk about description of what an orphan diseases are, and how they are classified by different regulatory agencies. We fit the category in many different areas. Gives advantages such as preferential and expedited reviews at the FDA. FDA now hands out “fast forward” coupons in certain situations. Encourages companies like us to spend money on orphan programs in pediatrics.

PNH is such an orphan program in pediatrics. Pharmas can buy a coupon from a biotech (eg Knight Pharmaceuticals) and they can get their major drugs expedited by 4 months. These coupons have sold for $115M, $210M and $350M to get this expedited review. Why? Advantages by being first to market. E.g. PCSK9 – five companies racing each other, so first to market has a huge advantage. HepC is another area – the drugs can cure it, so there’ll be a huge spike in sales for a few years, but it tapers off quickly.

We’ll be going for one or two programs that will allow us to obtain these coupons, which we might monetize as has been done in 4-5 places already.

Discussions around what PNH is and how it affects red-blood cells – doesn’t have a protective layer. We looked at this because our data in complement is so striking. The main target that Alexion (soliris) goes after is C5. It blocks everything below that (C6-C9) and that can cause problems with infection.

We have a very different approach because it’s epigenetic. We actually “cool down” the whole complement system (C1-C9) and it really has the attention of the key opinion leaders in the field around the world. The competitors drug is $700K (CAD) per year, RVX-208 will be around $3K once approved for cardiovascular. Alberta Health has approved this drug for 23 people in Alberta at a cost of $20M per year. We will price higher (than $3K) before the cardiovascular drug comes out, but we will not be gouging the government. We can make a very profitable company without having to go down that road.

Other ODD – a lot are complement related. Ewelina does a great job of describing these on the Yale club webcast and her excitement shows.

Milestones – progressing very well

More presentations coming - wait until you see what comes out over the next few months, not just cardiovascular. We have a major presentation in SanDiego at the International Nephrology conference related to MACE data being presented by Dr Kalantar

Management Team – Dr Sweeney among others.

That’s it for presentation, now QA

(At about the 30 minute mark right now)

Q - I have about 15 million questions, but will start with one. Canada is not involved in trial? Why?

A - There is a lot of activity. Many support groups are “ticked” at the price of Soliris (Ireland, Holland, New Zealand). We are in discussions about funding for some of these trials and if we can get it, we will.

Q You mentioned subsequent drugs. Are they in Zenith or Resverlogix

A They are in Resverlogix. Zenith has its own program. Resverlogix has about 2500 drugs of its own. Now that we have this knowledge bank about complement and some of the other markers, we’re able to rerun some of our old drugs through a screening program. Before we were looking at “does this drug raise APO A1” to a certain. We’ll be able to do some good licensing and co-development deals with candidates other than RVX-208.

Q Around how long FDA will take to approve drug

A Once OK’d by EMA, at least three years from now. Bill will likely be approved in Jan 2016. Obama may be against it because he wants it as part of sequester process – bad idea because funding of ongoing programs would have to stop whenever sequester takes place. Last time 2 years of work was lost.

Q Describe the Chinese deal

A 5 different companies were negotiating with us. Went with Hepalink because they moved very fast and secondly because they’re a global company, not a fly by night outfit. They make 70% of the world’s heparin. They make it for Sanofi and Novartis, but in China, they are their own distributors. They have a very good network because of the way things work in China. 6% royalty. Also put in sales milestones – 50% of the deal. They remain with Resverlogix. The royalties flow through to Zenith. Over 15 years, we expect over $400M. May be double that. It will be a very good deal. 15 years from first commercial sale in China. Also, Hepalink provides at their expense 250 patients for the trial, saving us $3-4M in costs. Also they agreed to pay for all development, regulatory, move forward filing costs (could be +$10M). Very exciting deal.

Q Do you know how using 3 point MACE might affect results?

A Looking at our other two trials, we get to really low numbers. There is about a 50% RRR in 18 patients, but that is not statistically significant. Need about 250 events to show this. We believe it will be the same.

Q $125M shelf prospectus filed in September. What would that be used for

A Cover my raise (chuckles from audience). That’s just general good business. You want to have this in place at all times to take advantage of market conditions when they present themselves. Are we going to use it right now? If we could get it at $20/share I would, but no, it’s just general housekeeping

Q You’ve talked about NASDAQ from time to time. Are there further developments?

A Yes, we have board approval to proceed to go ahead and we’d really like to. Have met with NASDAQ and we’re almost there. They are encouraging Canadian companies to list. Need to be over $2 USD for 90 days or $3 for 5 days. Once some of the information is further disseminated, I’m assuming we can achieve this (remember the safe harbor statement).

Q Can you talk about relationship between Resverlogix and Zenith. Where do you see it going? Is there cross pollination

A Zenith owns a royalty stream from Resverlogix. We operate in the same facilities but black and white lines that the lawyers and KPMG have helped us delineate.

Q Was presentation in NY covered by analysts and what about Canadian Analysts?

A Two Canadian analysts are very aware of the company and intrigued by new mechanism and approach. We used to be a one trick pony in only cardiovascular. There are now three new analysts who are writing up reports that should be out in 60 days. Current analysts are also reviewing information and targets. We have followups from Pharma, Industry Groups, Analysts who all expressed renewed interest

Q Doug Lowe (?) coverage)

A Meeting with him next month

Q Trial in Israel – are we talking to TEVA?

A They're not really in this area.

Q AGM for Zenith?

A Most likely Dec 21st

Q Trial Management. What will be done to have more control?

A Cleveland Clinic did drop ball last time, but we also should have been more on top of it. Mike Sweeney will be guiding things this time and he is a world class clinician. Pfizer, etc. Computerized system through our new CRO. Another firm has been hired to audit the auditors to avoid repeat of previous. Most trials that fail are due to trial design and management. We’ve stepped up our game.

Q How much of the 18.8M market do you expect to get?

A That’s just in the 7 major markets. We run our modelling at 30%. Hard to nail down a number at this stage.

Q So at 30% you’d be above Pfizer’s top sales

A That is correct.

Q Orphan on Alzheimer’s? Where is that?

A Tried to get NIH funding. We were focused on APO A1 effects, but recent conference seemed to be pointing to effects of complement system on Alzheimer’s. May have an ODD for this. Still alive and well and Resverlogix.

Q Relationship between using RVX for cardiovascular, CKD and ODD indications? Is it the same or different formulation?

A May be related to size of dose (200mg vs 300mg). May be different formulations. But going forward, if same, then pricing may be same.

Q Trading volume is very low. What can be done?

A Mostly related to being a Canadian company – not a lot of respect for Canadian life science companies. That’s why we want to be on NASDAQ. Getting info to analysts is key, but they’re not going to act immediately. We’re getting bombarded with requests. They’re working on it which is a very good sign. A few retailers move our stock up and down, but once you get institutional buying, all of a sudden the volume will increase significantly. They know our bank account is full, so the only way to acquire shares is on the open market, so we hope to see another surge shortly.

Q Will Phase 3 data be available early?

A No, it’s double blinded so we won’t know

Q Does current market condition change your selling price for Resverlogix?

A No, not at all. We’re hanging in there. For example, Esperion is not doing well (from $120 to around $20 because of problems they’re having with FDA)

Q FDA – what area are you dealing with?

A We’re not sure. There is no Epigenetics section, no Genetics section. We were put in Endocrin and Metabolic section, then they suggested we transfer to cardiovascular and renal. Now they don’t know. I’m assuming CV and renal.

Thank you very much. Appreciate everyone coming out today. I’ll stick around for a few more questions on the side. Thanks very much for hanging in there for another year.

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I did not take any notes from the scrum session that followed, but there was certainly excitement about what Zenith is doing. One comment was related to “if they offered me $8 Billion”, I would listen.

I personally believe we’ll hear more about Zenith in the not too distant future.

Cheers

masila

Citations and highlights of the 21st Century Cures Act

( http://www.nejm.org/doi/full/10.1056/NEJMp1506964 ).

—Reauthorize the National Institutes of Health and including an extra $1.9 billion a year for a new “innovation” fund focused on precision medicine and young scientists

—Requiring FDA to make new tools and concepts—such as biomarkers, new clinical trial designs, and surrogate endpoints—easier for drug makers to incorporate into their product development.

—Speed up the regulatory pathway to approve biomedical products, including antibiotics to treat drug-resistant bacterial infections.

—Extend the patent protection for drugs that treat rare diseases by six months and extend through 2018 the priority review voucher program that grants companies a sped-up drug review as a reward for bringing to market a treatment for a rare pediatric disease.

—Establishment of a public-private oversight committee, dubbed the Council for 21st Century Cures, that would bring together the heads of the NIH, FDA, and other government agencies with patient advocates, industry representatives, and health care providers.

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