Sector News

Resverlogix gets a $116M China drug development deal, stokes buyout buzz

April 29, 2015
Life sciences
Resverlogix has struck a deal to trade development rights in China for its lead cardio drug in exchange for a $41.5 million equity stake in the biotech along with up to $75 million in sales milestones. And today the Canadian biotech’s CEO added a sweetener, telling Bloomberg that he’s in talks with unnamed suitors to sell the company.
 
In what is becoming an increasingly familiar framework for a biotech deal, Shenzhen Hepalink Pharmaceutical acquired rights to develop RVX-208 for China, Hong Kong, Taiwan and Macau. Hepalink, which is based in the Shenzhen High-Tech Park, is paying $29 million for 12.7% of the company while Eastern Capital is adding $12.5 million, boosting its stake in Resverlogix to 24%. Resverlogix’s statement concludes that if you add in a potential royalty stream, the company stands to earn more than $332 million in future revenue off the deal, if everything works as planned.  
 
The company’s shares surged a modest 6% today as news of the claimed sales talks spread.
 
“We are in discussions with multiple companies, not just one,” CEO Donald McCaffrey told Bloomberg, tossing his hat into a crowded ring of M&A speculation. Buyout deals have become all the rage in the industry, and a steady stream of prospective M&A deals and rumors has kept analysts buzzing.
 
Resverlogix has almost all of its eggs in the RVX-208 basket, aiming at a new treatment for atherosclerosis. It’s a small molecule that inhibits BET bromodomains by boosting levels of the ApoA-I protein, which in turn make high-density lipoprotein particles that can flush plaque.
 
Last summer the small biotech touted evidence of a reduction in major cardiovascular events among diabetes patients in two studies. That news came a year after Resverlogix’s Phase IIb trial for the drug ended in failure, wiping out most of its share value and forcing the company to go into survival mode.
 
By John Carroll
 

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