The capital markets are tough, and I will admit to having a very jaded view. A lot of my contrarian outlook stems from the fact that I don't expect industry players to provide exposure to a company unless they have some skin in the game.
Too often I see analysts and similar types talking up speculative and risky investments when they're either being compensated to do so, or when their firms are engaged in activities like underwriting secondary offerings. That information is typically disclosed, although too often its on another page or written in extremely small font at the bottom.
I try to state my position up front, so that readers will be aware of my bias. With Resverlogix I've put it out there many times, I am very long (its my largest position) and have been a shareholder continually since January of 2014.
So all my loyal readers (both of them) can perhaps understand my surprise to find out that American based Roth Capital LLC had initiated coverage of Resverlogix. As far as I'm aware there is currently no disclosed relationship between Roth Capital and the company.
The analyst is one Jotin Marango, and I came about this news from an investor forum where the following link was provided:
The news item from TipRanks notes this analyst has a 1 star rating site (1 out of 5 with 1 being the lowest) and is ranked 4,509th out of 4,873 analysts tracked by TipRanks. According to Tipranks over the past 12 months Mr. Marango's success rate is just 28% with an average return of (-8.2)%. Do note that these numbers will change as TipRanks measures results for the past 12 months. Here's the link with the ranking and numbers:
Does this analyst's ranking and track record of the past year concern me? Quite honestly, not one bit. 16 of his 57 recommendations were reportedly successful over the past year, not zero. Had the number been zero I probably would be more than a bit worried. After all, I don't think my beloved Toronto Blue Jays had a single regular who batted as high as .280 this past season, so its not "that" brutal a number.
What I do find interesting is that, scrolling through some of Mr. Marango's recommendations, is that with all the stocks I checked...each had recent secondary offerings. Kalvista Pharma for example is up 57% since being rated a buy by Roth's analyst in July and August and the company just announced an underwritten secondary offering in early September.
I will leave those readers sufficiently intrigued to verify the number of stocks rated a buy by this Roth analyst that subsequently engaged in secondary offerings. One thing does jump out however, of all the stocks showing on TipRanks' page for this analyst, Resverlogix is the only one listed exclusively in Canada. Because there is no U.S. listing the company's shares trade OTC in the States under the symbol (OTCPK:RVXCF).
This is where things get intriguing for this writer and shareholder.
Back on July 31st Resverlogix announced that it had engaged Rothschild & Co to assist the company in securing a U.S. listing. You can read that news here:
I consider it more than curious that a US based firm like Roth Capital LLC is now offering a rating and opinion on an obscure Canadian based biotech. I consider it as possibly coincidental, but perhaps very convenient as well.
Resverlogix's lead compound Apabetalone has what I consider to be blockbuster potential. A drug that uses an Epigenetic method of action to zero in on a specific part of a person's genetic code and to recruit proteins to potentially turn a gene in a diseased state back to healthy. The potential for Apabetalone to target so many diseases like Diabetes, Kidney, Fabry's, Alzheimer's, Thrombosis and goodness knows how many more by way of the complement cascade.
Take note of the word "potential".
Their Phase III BETonMACE trial, projected to be completed late this year or early in 2019, is attempting to demonstrate Apabetalone's ability to reduce the incidence of Major Adverse Cardiac Events (MACE for short) in patients with Diabetes Mellitus at extreme risk of MACE. There are also sub groups of patients being tracked for Apabetalone's impact on Kidney and Alzheimer's diseases.
Sounds wonderful doesn't it? I mean if the trial succeeds obviously. And therein lies the problem, if BETonMACE succeeds the company will need money, lots of money. Its one thing to have a race car capable of winning the Indy 500, but its not much good if you can't afford to get that car to the Brickyard with a full tank of gas or money to buy the tires you're going to need and more fuel during pit stops.
Hence the rationale behind a US listing. By trading on the Nasdaq Resverlogix would have greater exposure to US investors and capital, and a secondary offering in tandem with a listing makes a lot of sense to me.
I will not be surprised at all if a Naz listing is announced before the end of this year. And if that does happen maybe Roth will up its rating from moderate buy to strong buy. A higher price target than $10 CDN would be nice too, although $10 would still be enough to get me jumping for joy.
Thanks for reading.
Finally, I wrote this blog posting myself and received no compensation for it whatsoever. These are my thoughts and opinions and as such they could very well turn out to be wrong. As mentioned I am long RVX.TO (OTCPK:RVXCF) so my opinions should be viewed as having bias.
Long or short, Put or Call Options...investing comports significant risk. Input from a registered investment advisor is strongly suggested for anyone considering an investment in any stock. Please view this blog post as being for entertainment purposes only.
Disclosure: I am/we are long RVX.to.
Additional disclosure: You can find me in numerous forums where I use the names DrY (yahoo) growacet (stocktwits) ledrog (stockhouse), and avoidthebag on twitter