It has been over a year since I've written anything here at Seeking Alpha. After profiling numerous companies on this blog that made massive gains I decided to publish my own blog, "Avoid The Bag".
That success continued, but I've decided to come back and publish an entry here about what I see as an incredible opportunity in the area of BET Inhibitors in general and about a small Canadian Biotech in particular which trades under the symbol (OTCPK:RVXCF).
Alright, I can just hear some readers saying...
"Yeah, sure you wrote about some stocks that made massive gains, prove it".
****GAINS GAINS GAINS - From Big to MASSIVE***
Back in August of 2015 I wrote about how investing in companies that cater to an aging population could prove lucrative, and boy was I right. Regal Lifestyles and Amica Mature Lifestyles were two retirement home companies that were bought out for huge premiums, both were mentioned along with Savaria Corp (SIS.TO), which was trading around $5 at the time. Now? Its over $17. Extendicare is another retirement home company (EXE.TO) that was included, it was trading around $7.50 and is now up around $9 while paying a monthly dividend of $0.04 cents each month for a very healthy yield.
Need more examples? Okay.....how about lithium stocks. I wrote about Lithium Americas and Nemaska (LAC.TO and NMX.TO) in April 2015 when those stocks were trading at 34 and 16 cents respectively. Today they're at $12+ and $1.77, not too shabby.
Not enough? How about Hampton Road Bankshares which I wrote about when it was trading under $2 in February of 2016.
After two mergers that play is up around 1,000% as of this writing.
Then there's Centric Health, trading around 38 cents when I wrote about it in April 2015, and now it is up around 65 after having reached as high as 90 cents earlier this year.
A lot of big winners, some that did better than 10 bagger gains. Now before my head swells to the point where I can't get through a door, there were a couple of bad calls, LED Medical and Sandridge were brutal. Both were highly speculative and with Sandridge I qualified my bullishness with the realization that global oil prices had to recover or it was sunk. LED Medical is a dental company that I long ago gave up hope on.
***LIFE IS GOOD***
Life is pretty damn amazing for this little guppy of a retail investor. I have two kids from a previous marriage and the eldest just started his University career with dreams of a law degree and hopes of becoming a professional player agent. His sister will start high school next year and she wants to be a sports broadcaster or a veternarian, it changes back and forth.
And I remarried in 2012, to a woman more than ten years my junior and we have a four year old who already has over $20,000 in trust divided 50/50 for education and his enjoyment when he's older.
Again....life is good. The house will be completely paid off soon thanks to accelerated mortgage payments and other than that, I'm debt free. I'm not a whale by any stretch of the imagination, but I think calling myself a guppy might not be accurate either. I'm more like a tuna.
And if I'm right again about the play I'm about to introduce, then life will be better than good, it could be mind blowing. With each of the aforementioned plays, when I took profits I have used some of the proceeds to build my position in a stock with, what I consider to be, explosive potential....
***Why it pays to get in early***
All those big gainers I profiled have a common element. When I wrote about them they were quiet and thinly traded. Call it "first mover" or "early adoption" advantage, or whatever you like. But getting in before the herd is essential for me.
When dealing with Biotech sectors can become incredibly hot. Think of the CAR-T space not too long ago. Companies like Juno Therapeutics (JUNO) and Kite Pharma attained multi-billion dollar valuations. In fact Kite was recently bought out by Gilead Sciences (GILD) for $12 Billion.
Even a late comer to the CAR-T party spiked big, Ziopharm (ZIOP) where early investors saw the PPS climb from around $3 in late 2014 to up near $15 in 2015. Although Ziopharm has since crashed hard, trading around $4 to $5 as of this writing.
The take away is really quite simple. Most investors don't have the fortitude and foresight to buy until there's excitment. Many prefer to wait for big volumes and a spiking share price. Some need to hear the talking heads making buy reccomendations. There are those who genuinely believe buying high is less risky than buying low.
I don't play that game, frankly it annoys me when pumpers start hyping a stock that has already doubled and tripled and even more. When StockTwits pumpers were screaming at me to buy $ZIOP during its run to $15 I wrote a post here on Seeking Alpha:
If you read that posting take note of the comments. ZIOP pumpers were all over me chiding my poor writing skills and obvious ignorance about this sure fire winner. Good try guys, but the name is Tucker and not Sucker.
But Ziopharm's huge run in early 2015 does serve to illustrate a very important lesson. Once the party starts the herd is more than happy to come in and pay inflated prices, convinced they've caught lightening in a bottle. Lots of retail players don't care if they're buying into a stock or a sector that has already seen huge gains. They buy when industry "experts" say a a stock is a "MUST HAVE".
Of course getting in late can be costly, think of the poor Ziopharm investors who paid nearly $15 per share back in 2015. Those who have held tight need the PPS to go up around 300% just to break even.
***Will BET Inhibitors be hot Hot HOT?***
Okay...that's a lot of preamble. So what about these BET Inhibitors?
Do BET Inhibitors and the companies developing them have that kind of potential? Could firms in this space see the same multi-billion dollar valuations that some CAR-T developers saw?
I believe so. In fact I think it could be even bigger than the CAR-T space. And as the only company with a compound in a clinical Phase III trial I believe Resverlogix (OTCPK:RVXCF) could have blockbuster potential in a variety of indications.
Okay....I hear some saying. What the frick is a BET Inhibitor???
Firstly the B in BET stands for Bromodomain. Everyone knows what "domain" means, well Bromodomain refers to an approximately 110 protein "domain" that recognizes acetylated lysine residues. The E and T stand for Extra-Terminal.
Okay okay okay, don't fall asleep here. I realize that his is heavy duty science. I make no pretensions to being a Genetic Engineer or anything like that. My education in sciences is limited to what I learned in high school and some undergraduate courses, and I never studied Genetics specifically at any level.
But I do understand it at a basic level and I think I can break it down in easy to understand language.
When talking about BET Inhibitors we're dealing with something called Epigenetics, you have probably come across that word. Everyone understands what their genes are, DNA and all that stuff. Epi is Latin and it means above. So Epigentics is dealing with the level "above" the genetic level, and it involves what are called: Readers, Writers and Erasers, basically turning things off and on.
Still with me? Good.
Think of a simple electrical panel in your home. In that panel are a bunch of circuit breakers, and when one is tripped the power to that part of the house is shut off, maybe in the kitchen when you're running the toaster, coffee maker and blender all at the same time on the same circuit. In Epigenetic terms you would go to the panel, READ which circuit breaker has been tripped, and then you would simply flip the switch to restore normal power to the affected part of your house. Problem solved.
I'm not going to go into further detail because, quite frankly, its not my realm. I understand BET Inhibitors like I understood CAR-T, that is to say the basics. But then I didn't understand much about mining and geology either when I was buying Nemaska Lithium at 15 cents.
For those more scientifically inclinced who are motivated to understand BET Inhibition and Apabetalone in a more in depth manner I will direct you to read articles published on here by Bjarke Krysel Christensen. He's a scientist who has had his profile published in Canada's Globe & Mail newspaper.
His most recent article on Resverlogix was selected as an "Editor's pick" here on Seeking Alpha:
Are there Big Pharma players involved with BET Inhibitors?
What I see with BET Inhibitors is massive potential, and I'm not the only one. Those like myself with only an undergraduate or high school education in science might not entirely grasp the full picture. But others like researchers at Big Pharma companies such as Roche, GlaxoSmithKline (GSK) and Bristol-Myers Squibb (BMY) do. BET Inhibitors are catching on big.
GSK is conducting a Phase I clinical trial for I-BET762
Roche has RO6870810 also in Phase I:
I'll leave readers interested in doing further research on where Big Pharma players are at in developing their BET Inhibitor pipelines to their own devices. There is simply too much out there to cover. But what you will find is that the major players are in the early stages, pre-clinical and Phase one.
Is Resverlogix ahead of the pack?
As is often the case, its a smaller more nimble development stage company that has the lead. That would be Resverlogix, based in Calgary Alberta Canada and San Francisco. Resverlogix is developing RVX-208 which is the first BET Inhibitor to be named, its called Apabetalone. Apabetalone isn't just in Phase I or II, it is in phase III with a clincal trail called BETonMACE.
This is an event based trial that has been running for two years and is seeking to demonstrate that Apabetalone administered with Statins will reduce the incidence of Major Adverse Cardiac Events, referred to as MACE, versus treatment with Statins alone.
Already the trial has received 5 positives reccomendations from its independent Data Safety Monitoring Board (DSMB). The most recent coming on November 1, 2017.
That PR notes that the DSMB, after reviewing the data, noted no safety or efficacy concerns.
This trial is being conducted on individuals suffering from Diabetes Mellitus with a subset of patients also suffering from Chronic Kidney Disease or CKD for short. Those familiar with Diabetes and CKD know that the risk of Major Adverse Cardiac Events, like heart attacks and strokes, is incredibly high.
But there is more. I said that Apabetalone has blockbuster potential in a variety of indications, and that means more than just Diabetes and CKD. There's a trial planned for patients with Fabry disease, an orphan indication.
Even Pfizer (PFE) has taken note of Apabetalone's potential to treat a rare disease called Friedreich's Ataxia which causes progressive damage to the nervous system:
On top of all that there's potential for Alzheimers, Thrombosis, and other orphan indications. I don't think "blockbuster potential" is overstating things at all. In fact if Apabetalone is successful in treating all the indications that show promise, then the term miracle drug might be more fitting.
Pan Inhibitors versus Selective Inhibitors
There is one other area of extreme importance when considering how Resverlogix's lead compound Apabetalone is differentiated from other BET Inhibitors. Apabetalone is the only "selective" BET Inhibitor in clinical trials, others like those referenced earlier, are Pan Inhibitors.
Apabetalone selectively binds to the second bromodomain....
Falling asleep again? I see. Okay....back to the electrical panel.
The difference between selective versus pan inhibition can be understood with the earlier example of a tripped circuit breaker in that electrical panel. Pan Inhibition would be somewhat like taking a sledge hammer to the entire panel, because after all, that's where the problem is. Selective inhibition zeros in on the specific circuit breaker and, after reading that its in the off position, simply turns it on.
Another example might be with a rose bush. Selective inhibition would be like using pruning clips to shape and control the plant. Pan inibition would be more like taking a weed wacker to the bush.
Are there any near term catalysts to look forward to?
Still reading? Wow, you have some stamina.
As of this writing Resverlogix is trading an incredibly low Market Capitalization of just over $155 million CDN, that's less than $125 million USD. And there are a number of near term developments which could have a hugely positive impact in raising that valuation.
The biggest near term potential catalyst in my view would be finalization of an $87 million CDN investment by Chinese based Pharmaceutical company Shenzhen Hepalink. That deal was announced on October 13th, and requires regulatory approval.
China is hot again. Biotech watchers probably saw the explosion of Acasti Pharma (ACST) this week when they announced a non-binding term sheet with an unnamed Chinese Pharaceutical company. Cynics might view a non binding agreement with an unnamed company and roll their eyes. But after that news came out the PPS for ACST jumped from $1.25 the previous day to $3.10 by the closing bell.
If a stock like ACST can jump like that on a deal that might not even come to fruition, with a company that isn't even named, I can only imagine what could happen with news of Shenzhen Hepalink's investment in Resverlogix being finalized.
Then there's is the Futility Analysis (FA) for the BETonMACE trial which could come out any time now. A positive FA could attract serious attention, not just from investors, but possibly from major Pharmaceutical companies as well.
There are risks involed
I will point out the fact that there are obviously risk factors here, and I will encourage readers to go over the disclaimer at the end. I am a shareholder and my opinions should be viewed in that light, I eat my own cooking in other words.
Obviously if there were no risks and Resverlogix was 100% assured to have success with Apabetalone, then the market cap wouldn't be sitting where it is. Shares of RVX.TO have been trading around the $1.30 area since June of this year with a couple of short lived spikes thrown in.
I do believe the PPS could be on the cusp of another move, one that is bigger than anything previously seen. Independent investment dealer Beacon Securities, which caters to institutional clients, just published a report on Resverlogix with a 12 month PPS target of $8.55 CDN, a report that discloses no payment from the company.
Further disclosure. This is strictly an opinion piece, and my opinion could very well turn out to be wrong. This instablog post is intended strictly for informational and entertainment purposes and should not be used as a basis for any investment decisions. Investing in stocks or options involves significant risks. For investment advice you should seek the input of a professional investment advisor.
Disclosure: I am/we are long rVXCF EXE.TO.
Additional disclosure: You can find me in numerous forums where I use the names krill66 and DrY (yahoo) growacet (stocktwits) and ledrog (stockhouse)