Resverlogix WebCast February 12, 2014

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Slide One

At this time, I would like to turn the conference over to Mr. Donald McCaffrey, President and Chief Executive Officer.Please go ahead sir.

DM

Good day. It’s a great pleasure to be here, and to update you today on Resverlogix’s recent progress, and our go-forward clinical and business planning.

Slide Two

Today I will review some of our recent clinical milestone results, as well as update you on our progress regarding next steps, including clinical design along with some business development options.

In addition, I will also disclose additional new positive data for the ASSURE trial.To date this new data is only validated in house, however shortly we believe we will have third party validation of this data, and we will publicly announce that when available.

In a departure from past webcasts, we will not be hosting a Q&A session today, as many questions would be related to business development option issues, and they could be implied as selective disclosure, and until such time as some of these options can be confirmed, we would like to refer from (refrain from? /defer?) discussing them.

Slide Three

So on slide number Three, let’s review the background information on RVX-208.It is a bromodomain inhibitor, and it did show strong trending with significance for plaque regression.And we found a high risk RVX-208 responder population in the previous trial; we’ll talk about that today.And we had very significant results in the major adverse cardiac events or MACE, which is very important as that would be the primary goal in the phase 3.And we had the very surprised but pleasant response of Rosuvastatin, or Crestor as it’s also known, has a very positive impact when in combination with RVX- 208.

Slide Four

So in Slide Four – Some of the recent papers that have been published are shown here. The top one highlights RVX-208 to be the first known selective BRD-4 inhibitor. That was produced by the structural genome consortium and a group from Harvard.

Slide Five

Slide Five is a transition slide, I will be talking about the atheroma results in the ASSURE trial.

Slide Six

So here on slide six, we have a very busy chart on which I’ve previously pointed out a few items.In the top title row, you’ll see that five columns titled “p-value” are marked in yellow.Below those headings are also many highlighted yellow boxes.These boxes are all the numbers on this chart that are statistically significant.Many of them are highly statistically significant to the 0.0001 level.There are sixty-five in total.There are only two green boxes on this chart.Those are the near-miss top-line data that was presented in June.Most of the data that I’ll break down for you in the next few slides is above and beyond this data, & clearly demonstrates that RVX-208 not only works, but it works very well.

Slide Seven

Now on Slide Seven, you can see that the low HDL population and the Rosuvastatin patients are very strong performers, with a statistically significant 1.43% atheroma volume plaque regression; whereas the Atorvastatin patients continue to progress in both low and high HDL categories. This is a very important finding that confirmed to us that we have significant plaque regression when administered with the right statin.

Slide Eight

On slide eight we re-confirmed this – the same finding - using a different measurement system, being the TAV or total atheroma volume.Once again, the low HDL Rosuvastatin patients far exceed the Atorvastatin patients.We were able to take advantage of this unexpected finding by filing patent protection for a future six dose combination involving RVX-208 and Rosuvastatin.

Slide Nine

On slide Nine, we break it down a little further in order to study the dose-effect.The green bar is the overall trial primary endpoint as reported on June 27th.The next two purple bars are high and low HDL levels combined with various doses of Rosuvastatin.And as you can see, both are highly statistically significant.The next three purple bars to the right are low HDL levels, as the trial was intended to be designed, and they are also varying doses of Rosuvastatin in combination with RVX-208. Again, all are statistically significant, and you do see a dose-dependence with the 20 mg dose of Rosuvastation and RVX-208 showing a significant regression of -2.04%.Our primary endpoint was -0.6%.

Slide Ten

So slide Ten allows us to show a very strong positioning versus other IVUS trials.Trials that are much longer and show lower or no response.The most notable would be the ASTEROID trial with Rosuvastatin.This is very informative because it shows that Crestor alone cannot produce the results that occurred in combination with RVX-208. Our doubling of regression occurs in a quarter of the time and on a quarter of the dose.

Slide Eleven

On slide Eleven.This particular graph provides you with much more detail of primary and secondary targets in the ASSURE trial.Both Rosuvastatin and Atorvastatin patients who took RVX-208.Clearly the low HDL patients on Rosuvastatin and RVX-208 combined had huge advantages.The most important HDL endpoint shown is the impressive 74% increase in large particles.

Slide Twelve

Now we will go on to the next slide, Slide Twelve and talk about MACE; and MACE is described on slide Thirteen.

Slide Thirteen

On slide thirteen, we can see the actual totals for each of the MACE events in the ASSURE trial, with 13.8% of the placebo patients having events, versus only 7.4% of the treated patients in this trial that were included in four categories for MACE.We included death, non-fatal MI, hospitalization for cardiac reasons and revascularization.Sometimes stroke is also added; however in this trial it was not.And it wouldn’t have made a difference anyway, as neither placebo nor RVX-208 dosed patients had strokes during this trial.

Slide Fourteen

On slide fourteen, we look at the same information in comparison to low HDL intended population taking Rosuvastatin and RVX-208. And we do see a huge difference with a highly significant p value of 0.006.So it’s two to one on the overall, and it’s over ten to one on Rosuvastatin. So that’s very very solid positive numbers.

Slide Fifteen

On side fifteen you see yet another favorable comparison that we witnessed when you add both of the last two trials.So that’s the ASSURE trial and the SUSTAIN trial.And with the combination between the two, we’re dealing with 499 patients.And we see a relative risk reduction difference at a staggering 55%, and highly statistically significant.

Slide Sixteen

On slide Sixteen, we looked at a large subgroup, with the CRP inflammation marker, and found even better results, with a highly statistically significant relative risk reduction of 69%.The p value is 0.007

Slide Seventeen

Now, we’ll move on to Seventeen, the virtual histology is what we’ll talk about next on Eighteen.

Slide Eighteen

We next look at the virtual histology.And this helps us to describe one of the techniques that was employed in the ASSURE trial.Some of the IVUS catheters were equipped with volcano technology.These catheters include a radio frequency component that allowed us to view the composition of the plaque both before and after the clinical trial dosing.

Slide Nineteen

On slide nineteen, this shows the types of review we did with this data.We used both the VH2 method and the VH4 method to analyze these results.What we wanted to see was a reduction in the types of vulnerable plaque and an increase in the stable plaque.

Slide Twenty

This slide shows that in a Wilcoxin signed-ranked test with the VH2 approach, we showed a 23% decrease in placque vulnerability.

Slide Twenty One

On slide Twenty One we show a 17% decrease in vulnerability when using the VH4 analysis.So in both cases we did exactly what we had hoped to do.

Slide Twenty Two

Now we’ll move on to safety, slide Twenty Two , and slide Twenty Three

Slide Twenty Three

Slide Twenty Three shows the strong safety profile that we’ve previously shown, with very few reactions and 97.9% of all patients completing the trial, with no Hy’s Law and no negative liver results that we’re aware of.

Slide Twenty Four

And on slide Twenty Four, this shows again the frequency of the ALTs that we’ve seen in the past, where they come between usually weeks six and twelve, they’re benign, they go away. And there’s no signs of any liver results at all.And beyond week twelve, as in previous trials, we see nothing at all.So it’s an early marker but it goes away quite fast. Now we’re not concerned about it, and we’ll show that in slide Twenty Five.

Slide Twenty Five

This slide compares RVX to other ALT related drugs, and it confirms our safety belief.This slide depicts marketed and approved drugs that show ALT recovery times that are five to seven times longer than RVX-208, again confirming a very benign ALT effect.

Slide Twenty Six

And we’re on slide Twenty Six which is introducing inflammation markers.

Slide Twenty Seven

On Twenty Seven we show some of our results from the study, showing the inflammation marker CRP.We studied this as a means to determine if our bromodomain inhibition mechanism was having the expected results, as we know that BET inhibitors have a positive impact on inflammatory markers like IL-6 and IL-17.So the answer was definitely yes.In patients who started the trial with CRP levels over 2, we showed an incredible 60% drop in CRP.That is a very good performance.

Slide Twenty Eight

Now in slide Twenty Eight, this shows how this compares to an alternate cardiovascular approach such as the CETP inhibition.And the results are overwhelmingly in our favor. We not only show a nice dose dependency, but we also show as much as 60% decrease, while all of the CETP inhibitors show increases, some by as much as 50%.If the arterial plaque is the irritant in the artery that causes the inflammation, and hence the CRP marker, then the removal of such plaque should show what we showed, a strong decrease and not an increase.

Slide Twenty Nine

So on slide Twenty Nine, analyzing the percent atheroma volume, we once again see a statistically significant difference between Rosuvastatin and Atorvastatin, especially in the high CRP grouping.

Slide Thirty

On slide Thirty, analyzing the TAV or total atheroma volume, we can see the clear superiority of RVX-208 in combination with Rosuvastatin, especially in the CRP above 2 category.

Slide Thirty One

So now, once again for the first time, let’s talk again about some new data from the ASSURE trial.As I mentioned before, this data has recently been detailed in-house, and we believe it will soon be confirmed by third party reviewers.So this is dealing with HDL particles.

Slide Thirty Two

So we’re on slide Thirty Two now, and time for some new data. In recent years we’ve all heard conflicting reports about the reliability of the once impenetrable belief in HDL, the good cholesterol.Although Resverlogix has always been based on Apo-A1 production, we are closely related to HDL, as Apo-A1 makes up 70% of all HDL. So current and some soon-to-be-released future studies are further questioning the reliability of HDL-C as a biomarker. HDL-C is basically a broad overview of all HDL components. Many new researchers and some pharmaceutical companies have recently focused on a new paradigm of HDL, being HDL-P, or better described as particle size, and sometimes amount. And yes, that exact same description is what Resverlogix has been using for over five years.Based on Pharma’s new interest in this area, we have re-analyzed our data and found that dosed versus placebo showed a nearly doubling effect in the increase in particle size.This is exactly what you would want to see.

Slide Thirty Three

On slide Thirty Three, we once again clearly show the effects are not Rosuvastatin alone, but far enhanced in combination with RVX-208.More than two to one.The purple bar is Rosuvastatin alone, and the blue bar is the combination.

Slide Thirty Four

So on slide Thirty Four just a brief summary about the ASSURE trial. It’s post-hoc analysis in high CRP, low HDL population treated with RVX-208 and Rosuvastatin, not Atorvastatin, showed unprecedented effects on coronary atherosclerosis regression in only six months time. ALT signal is isolated, benign, and quickly reverts back to normal upon treatment suspension. RVX-208 is positioned specifically for high risk CVD patients characterized by low HDL and high CRP with Rosuvastatin as a co-medication of choice.

Slide Thirty Five

Now let’s touch on some next steps, some clinical and business options.

Slide Thirty Six

OK on Thirty Six now, let’s start with the clinical Phase II trial comparisons before launching on to the next step.So how is Resverlogix doing.How does our program stack up against the big guys?We appear to be doing very well. We know stakeholders would prefer to see an instant success with the very first Phase II trial proving all the data that we’ve proven now.However this is an exploratory learning process, and it does take time.We know exactly how to best benefit from our learnings as we move forward.And as you can see, we have three Phase II clinicals, where Dalcetrapib and Roche and others have had as many as eight.So we believe we’ve got all the data we need to move forward at this point.

Slide Thirty Seven

On slide Thirty Seven, the highlights and I’ll describe some of the points that we have used to determine a proper patient population for our next trial.Low HDL, two or more risk factors.We don’t need or want a trial that makes a primary endpoint simply, but is based on some lipid marker or some expensive re-confirmation of our existing IVUS data. We need a trial that will be beyond a shadow of a doubt; that will show that RVX-208 reduces risk of mortality.That’s what an FDA or a Pharma really wants to see.So the key points, we’ve learned from past trials, that the sicker the patient population the better for us because you’ll see more separation from placebo.And for us that means patients with low HDL or Apo-A1, patients with high CRP inflammation markers at the beginning of the trial, age groups usually over sixty,two or more common risk factors such as diabetes, a smoker, obesity, previous heart attack, unstable angina, coronary intervention, low Apo-A1 or HDL, peripheral arterial disease, chronic kidney disease or stroke. So these sick patient populations will allow for a higher number of severe adverse events, which means we need a lower number of patients for being able to establish relative risk reduction between those patients and placebo.

Slide Thirty Eight

Now on Slide Thirty Eight, this does not, these risk factors do not diminish the size of the market potential. Here you’ll see about eight million potential patients in the U.S. alone.That’s double that in the top eight markets.Even with low market penetration, it could have an annual sales value exceeding Lipitor’s high of fourteen billion dollars per year.

Slide Thirty Nine

Now on slide Thirty Nine we can discuss some of the key factors that will comprise our next trial. No one wants to see another lipid study, HDL, Apo-A1 or even IVUS.Those types of clinical trials regardless of results will not move our program forward in the eyes of Pharma or the FDA.MACE will.Therefore, we are going to re-prove our MACE results in a trial appropriately named RE-MACE.The basic but still flexible design is as follows:It will be a 52 week trial, for the active treatment period; Double blinded; placebo controlled, it’s a 1:1 ratio.Once again it will be RVX-208 with 200 mg a day, and in patients with high CVD risk; and high, above 2, CRP at baseline; and low HDL, at below 40. So there will be approximately 80 centers.The number of patients will be around 1,000.The indication is secondary prevention of CVD events in coronary artery disease patients with low HDL-C and high CRP.The power calculation will be 80% powered to detect a 25% relative risk reductionin the primary endpoint composite of MACE and MACE risk.So the location likely will be Canada, plus maybe one other potential country.

Slide Forty

Now on slide Forty, this is a very interesting slide, the primary endpoint is a composite; much like a more common practice in oncology trials. The primary endpoint will be a composite of the reduction of CVD events: cardiovascular deaths; myocardial infarction or heart attack; stroke; hospitalization for unstable angina or revascularization; and negative markings or SAE for those that did not reach say a 10% sustained increase in HDL-P(verbal was HDL-P, slide said HDL-C) , orat least a 30% decrease in CRP. A patient will be registered with a severe adverse event with any one of these primary criteria, and only one event per person will be registered.This system will clearly allow us to see the MACE category differences between placebo and treated without running an enormous trial. This data will be very meaningful.

Slide Forty One

Now let’s talk about the obvious discussion. How do we pay for this trial?This trial will soon be priced out; however it should come in below twenty five million dollars. For discussion purposes, we’ll skip right past the first line item, being equity marketing finane, as that would be the last option unless the current market condition changes dramatically. It would be way too dilutive for our current pricing.

Slide Forty Two

So on slide Forty Two, the Pharma options.Now the current market conditions and pharmaceutical company appetites do leave open the potential for several options here.An M&A is possible, but our currently falsely low market cap make it highly unlikely.Partnership or co-development are very possible in the today’s economic climate; especially with our emerging new data sets. It’s very impressive and has been well received in the pharmaceutical community.Selling the rights of first refusal or regional rights sales are also good possibilities. Most of these options are currently being investigated, but no results can be guaranteed from these.

Slide Forty Three

Now on slide Forty Three, let’s discuss an alternative approach that has come to our attention.This CVR or contingent value right plan is an approach that was successfully used in Celgene’s acquisition of Abraxia as well as more recently in Sanofi’s acquisition of Genzyme. And here’s how it might work. A group, a private or pharma group related, would basically buy the company now. They would pay an amount up front, fund the trial, and pay more later only should future revenues confirm success of RVX-208.So a group would offer x dollars per share now, for a majority of the RVX shares, presumably at market price or greater.Shareholders would also receive a continue value rights coupon worth x amount more.This coupon would be redeemable in the future should RVX prove financially successful.Now the new group would also fund and run the RE-MACE trial, and should RVX-208 result in future revenues from any source, and that could be an M&A, it could be licensing, regional deals, it could be off of the Alzheimer’s program or the diabetes program.That group would then first pay off the existing Resverlogix debt, second they would recoup their investment, and then third the additional revenue under the CVR would kick in at set maximum dollars.This would be a pre-negotiated amount and shareholder vote approved. So, once existing shareholders had received all of their CVR value, the group owners would then benefit from the remaining. So this is a possibility.It’s interesting. Of all the approaches that we have currently studied this approach is of the most interest to me, because it appears to have the highest upside for the shareholders. Should RVX-208 result in reasonable revenues from any type of business development or various indication potentials. It also presents the lowest risk for those on the other side of the negotiating table. But I would like to make it abundantly clear, that all of these options are currently hypothetical illustrations, and that various interested parties may prefer other structures.We will be pleased to listen to shareholders views on these and other potential structures in the coming months as we finalize our efforts and move the RVX-208 drug further into clinical trials.

Slide Forty Four

So on that note, we are on slide Forty Four.I’ll talk just a little bit about expanded indications. Update.

Slide Forty Five

Now on slide Forty Five, as everyone’s aware we’re doing the diabetes trial.It’s fully enrolled, and going very well from what we’ve heard. And we expect a data readout on that sometime in mid year. And what we’re trying to accomplish here is exploratory, so there’s not really an endpoint. But we’re trying to find out the impact of our ability to raise functional new HDL, and how that may or may not help the islet cells in pre-diabetic patients.So that should be a very interesting read-out as it continues.

Slide Forty Six

Now on Slide Forty Six, we’re also still planning an Alzheimer’s trial of about sixty patients. Lots of good reasons to believe in this one.We have applied for some financial grants on this and so far still in the hunt. We will know sometime around mid-year if that has been successful.If so we will proceed with this program as well.

Slide Forty Seven

Now on Slide Forty Seven, we’ve talked a little bit before about some of the people helping us with this, and on this slide alone you see four of the top people in the world in Alzheimer’s research who are backing this approach of having Apo-A1 be a key component in reducing the damage of Alzheimer’s.

Slide Forty Eight

And on the final slide, number Forty Eight, just a quick summary.RVX-208 is well positioned as a specialty drug for high risk CVD patients characterized by low HDL and high CRP with Rosuvastatin as the co-medication of choice.RVX-208 and BET-inhibition is a new treatment paradigm comprising Apo-A1 induction and anti-inflammatory treatment. And then we also mentioned we’re doing the clinical trial targeting low HDL and high CRP on Rosuvastatin.And we will continue these business developments.Once we have more concrete data we will gladly news release it, and we can talk about that over the next weeks as far as shareholders’ interests in our various options.So thank you very much for your participation today, and look forward to speaking with you soon.Thank you.

This concludes today’s conference call.You may now disconnect your lines.Thank you for participating and have a pleasant day.