San Fran

I always operate under the assumption that the potential reward is proportionate to the amount of risk assumed. In the case of Zenith the risk is very high. As I pointed out in my previous post on 9/21, Zenith had a negative book value of $5 mil US at 4/30/15 with almost no cash. After the subsequent private equity placements the company's cash is not sufficient to fund operations over the next year and the Company will have to raise additional capital. Management's estimate of the fair value of the company was .21 per share at 4/30/15. I am not sure if the fair value estimate includes the potential income from the Royalty Preferred Shares, but I know that the Royalty Preferred Shares were not booked on Zenith's financial statements at 4/30/15.

So what does Zenith have to offer. The company licensed or acquired intellectual property from RVX and has developed intellectual property, conducts research related to Epigenetics, autoimmune deseases and cancer. Zenith is targeting the second half of 2015 to file an IND for hematological malignancies and solid tumors. The company also has RVX Royalty Preferred Shares which have an estimated revenue stream of $400mil. The revenue will commence in 2021-2023. The probability of receiving those future revenues per RVX 7/31/15 financials was 35% which results in a discount rate of 24.1% so today's net present value of those future revenues is $35mil as determined by RVX, but that value will increase exponentially as RVX gets closer to market. Zenith may also have a huge potential revenue stream from its developing products.

Zenith needs continued cash infusion to get it thru the next 5-6 years - not sure what their burn rate is now, but they burned 16mil in 2014 and 9mil in FYE 4/30/15 on operations. This will result in continued dilution - at least another 50-60mil plus the cost of any trials.

If you do invest make sure that your Private Placement Shares have anti-dilution rights. If you read note 17 of the Xenith 2015 report, some of the issued shares also have transaction rights and additional rights as described.

I would think that the big boys have some inside information on the development activities of Zenith and potential compounds and treatments that they may bring to market. RVX Royalty Preferred Shares will fund Zenith's future activities. If RVX does get acquired, Zenith has a revenue stream plus the future.

I wish you the best

Chicagoest