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Resverlogix is a cholesterol management company that has focused
on increasing HDL (the good cholesterol) as opposed just lowering LDL the bad cholesterol
Healthcare
Biotechnology
(RVX-TSX)
Resverlogix Corporation
202, 279 Midpark Way SE
Calgary, Alberta Canada, T2X 1M2
Phone: 403 254-9252
Donald J. McCaffrey
Co-Founder, Pres. And CEO
Interview conducted by:
Lynn Fosse, Senior Editor
CEOCFOinterviews.com
April 21, 2005
BIO:
Donald J. McCaffrey
Co-Founder, President and Chief Executive Officer
Mr. McCaffrey resides in Calgary, and is actively involved in day to day operations of
Resverlogix as its current President and Chief Executive Officer since February 2002.
Since 1999, Mr. McCaffrey has also acted as the President of the BioFuture Conference.
BioFuture was a national biotechnology event hosting biotechnology researchers, financiers
and industry speakers. Mr. McCaffrey also has twenty three years of experience in
international conference development and has been actively involved in the development of
over seventy various national and international conferences.
Company Profile:
Resverlogix Corporation Resverlogix Corporation is a publicly
traded biotechnology company (RVX:TSX) focused on groundbreaking research in the areas of
cardiovascular disease, cancer, and fibrotic diseases.
NEXVAS™ Technology: Resverlogix’s lead technology
program, NEXVAS™, focuses on the discovery and development of novel small molecules
to treat cardiovascular disease, the leading cause of death in industrialized countries.
Resverlogix is developing several classes of molecules that increase Apolipoprotein A1(Apo
A1), the major component of High Density Lipoprotein (HDL), the "good
cholesterol". HDL plays a critical role in preventing CVD progression and enhancing
CVD regression by increasing Reverse Cholesterol Transport (RCT), the mechanism through
which cholesterol is removed from the body. Published research indicates that the ability
to increase Apo A1 is a key element to improving abnormal lipid profiles, a major
modifiable factor in CVD. In addition the NEXVAS™ bioassay is a platform technology
used to screen compounds that regulate Apo A1. This technology has been instrumental in
the development of the CVD small molecule program.
TGF-Beta
Shield ™ Technology: The TGF-Beta Shield™ program is developing an
immunomodulating approach to antagonize Transforming Growth Factor-beta (TGF-b) to treat
cancers and fibrotic diseases. TGF-Beta Shield™ Oncology is developing a therapeutic
agent that enhances the body's ability to launch natural immune response against cancer.
Resverlogix's oncology program is completing animal model studies to prepare the
technology for clinical testing. In addition, Resverlogix is adapting the TGF-Beta Shield™
Oncology technology to treat fibrotic diseases. Resverlogix is moving this technology
platform through preclinical testing to produce effective novel therapies for the
prevention and reduction of fibrotic damage in organs such as the eye, heart, kidney, lung
and liver.
Resverlogix operates under a business model in which
it positions itself as a research and development enterprise focused on the development of
novel technologies for important medical markets with unmet need. Resverlogix is pursuing
licensing opportunities and alliance partners that are best suited to bring these
technology platforms to successful end stage market use.
CEOCFOinterviews:
Mr. McCaffrey, will you tell us about your background with the company?
Mr. McCaffrey: "My background is that I am one of the
Co-Founders of the company; we started Resverlogix early in 2001. Since that time, we did
a reverse take-over of a Capital Pool Corporation in April of 2003 and have been public
since then. We went on to the Toronto Stock Exchange this Monday January 17th,
2005."
CEOCFOinterviews:
Will you tell us a bit about the company?
Mr. McCaffrey: "The company itself is based mainly on
cholesterol management. We have focused for the last four years, in technology involved in
increasing HDL (the good cholesterol) as opposed to where technology has been in the past
dealing with lowering LDL the bad cholesterol. LDL is where compounds like statins,
Lipitor®, ZOCOR® and those various other medications work. Last year, an article that
was prominently featured, in the Journal of American Medical Association, showed for the
first time, that increasing HDL cholesterol was a way of reversing atherosclerosis. This
was the first time, in medical terms, that it could be shown that you could reverse
atherosclerosis , therefore showing it to be a much more effective means of cardiovascular
treatment than just dealing with the status-quo of LDL cholesterol in the blood
serum."
CEOCFOinterviews:
Will you explain your technology?
Mr. McCaffrey: "What we are doing is dealing with a
system in the body called the Reverse Cholesterol Transport (RCT) system. What RCT does is
deliver and creates LDL cholesterol, which is called the bad cholesterol; it actually got
a bad rap in its name. LDL is required by every cell and organ in the body. The problem is
that once the body starts to over produce LDL, and that happens when we get older, over
eat or don’t exercise; the excess of bad cholesterol builds up in the arteries and
starts to block them and plug them up, building up inside the arterial wall. The natural
way that atherosclerosis will come out, is through good cholesterol. It goes into the
arterial wall and sucks up the arterial plaque like a vacuum. It takes it out to the liver
and dumps it, and it leaves the body in the form of bile salts. What we are doing with our
technology is increasing the main component of HDL cholesterol, a protein called A1(Apo
A1). We have figured out how to get the body to turn on more A1(Apo A1) production
and it actually makes more HDL, thus cleaning out the arteries. It has proven quite
effective in the injection version done by a company in the U.S. and we are working on the
small molecule, simple pill version."
CEOCFOinterviews:
Where are you in the development process?
Mr. McCaffrey: "The development process is at a stage
where we have done quite a bit of animal testing already. We are just now entering work on
the first stage of the FDA trials; it is called IND. It is animal work leading to the
human work, which is Phase I. We will be starting our first administration to man of the
compound in December of this year. It is a very exciting time for us. The official IND
work will commence within two to three months."
CEOCFOinterviews:
Are there applications for this technology beyond the HDL and beyond the cholesterol?
Mr. McCaffrey: "There are some. We have included those
in our patent work. There are other possible indications. The main market is the
cholesterol and it is the largest market in the world as far as pharmaceutical drugs go.
Pfizer Inc. (NYSE: PFE) alone, is making $10 billion a year in sales on the Lipitor®
product; that is by far, the number-one drug in the world. All of the statins that I
mentioned earlier like the Lipitor® and ZOCOR®from Merck & Co. (NYSE: MRK) etc.,
their patents are coming to an end. The new technology has recently been proven to be
better; HDL, plus the LDL patents are coming to an end. It really is a very good time for
us."
CEOCFOinterviews:
I am reading about Resverlogix and you talk about the qualities of integration, integrity,
and sound business principles; what does that mean in reality?
Mr. McCaffrey: "We have always believed from the start
that we had a better way of discovering these compounds and our scientists were in the top
of their field. In bringing new people on, we always went for the best in the world and so
far, the people that we have shown our technology to, have joined the company in one way
or another. For us, that was quite a pat on the back from the research community that they
too, understand what we are doing and like what we are doing. One example of that is the
Co-Founder of Esperion Therapeutics, which was the big US HDL company that sold for 1.3
billion; their scientific Co-Founder has joined our company, so it is a real validation of
some of our technology. On the business side, we have always strived to make sure that the
investor was number-one in mind and make sure that their return is increased and risk is
reduced. In doing that, we set up a new business model for biotech where we did not want
to just become another company going through Phase trials and getting milestones as others
do. The investor really doesn’t make there pay-out until the drug is on the market.
We took a different approach where we are licensing the technology earlier to a major
pharmaceutical company. They can get it to the shelf a lot faster. We take a bit of a
haircut; about fifty percent by licensing it at the stage we are going to, but we also
shed between five to eight years of work. By reducing that risk for investors, we felt it
was a much smarter way to go. Since we set that business model, the industry has very much
followed suit where five years ago the majority of deals pharmaceutical companies did
where Phase III deals. Now it has completely switched around and the majority of the deals
that they do are pre-phase trials or IND deals. The market has switched to the way we had
planned our business model from the start."
CEOCFOinterviews:
Will you tell us about the financial condition of the company?
Mr. McCaffrey: "We are in good shape financially. In the
last twelve months, we have completed $15 million of financing. We are currently under a
development program with our IND program starting. We have approximately 36 months of burn
rate in the bank and we don’t anticipate seeing the burn rate increase from this
point. We are currently starting the IND, so that adds another million-dollar expense in
this year; the current burn rate is about $225 thousand a month. That will go up
proportionately but it has put us in very good shape."
CEOCFOinterviews:
Will you tell us about the move to the Toronto Exchange?
Mr. McCaffrey: "It is very helpful as far as recognition
goes. We did our financings on the Venture exchange so it was harder with a lot more
running around with presentations because several of the larger institutes and many of the
securities firms owned by Canadian banks really do not allow the investment in the Venture
exchange companies, just because of their own internal standards. That now exposes us to a
lot bigger buyers. Since our announcement of moving on to the exchange last Friday, we
jumped 13% in just one day and the volumes have been up considerably."
CEOCFOinterviews:
Is reaching potential investors a focus for you?
Mr. McCaffrey: "Yes it is! It is getting the word out.
We also have all kinds of new trips to the States, just kind of introducing it to that
market, so they understand what is going on. One of the approaches we have used is a
standstill agreement with these pharmaceutical companies. We have six major international
pharmaceutical companies that rank in the top eight in the world. The stage we are going
through with them now is showing them the technology, and letting them do more
due-diligence and then bidding on the right to be working with us exclusively for the next
eighteen months. That doesn’t give them the right to the technology, but it does give
them the right to make an offer for licensing or further."
CEOCFOinterviews:
In closing, what should potential investors know about Resverlongix that they may not
realize when they look at the company?
Mr. McCaffrey: "One thing I like to point out, and it
gets back to the quality of the science and the scientist; we look at the field that we
are in with Apolipoprotein and HDL cholesterol. There are about a dozen international
experts in that area and half of them are involved with our company in one way or another;
some are full-time employees and some are on the scientific advisory board. We are pleased
with the quality of the individuals standing behind the science. For a lay-person it is
very difficult to understand this level of science. For them to look at the scientific
advisory board and the scientists involved with the company and their track records, I
think that is a very important message for them to get because it shows confidence. It is
a difficult science to understand and when we are able to attract the level of people that
we have already, it is very reassuring for investors."
CEOCFOinterviews:
As a layperson, I would say that if you can increase the proportion of good and that would
wipe out the bad, then most people would want to jump onboard as opposed to controlling
what they eat.
Mr. McCaffrey: "The hard cold facts of it are that if we
all ate better, exercised better, etc., a good portion of the problem would not exist, but
unfortunately that is not the human way. Resverlogix is offering a small molecule that has
low toxicity and few side-effects; we feel that is probably the direction that most people
would prefer to go."
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