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

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 $12.5 million, boosting its stake in Resverlogix to 24%. Resverlogix's ($RVX) 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.

- here's the release
- here's the story from Bloomberg

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