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Resverlogix Announces $87 Million Private Placement with Shenzhen Hepalink

/EIN News/ -- CALGARY, Alberta, Oct. 13, 2017 (GLOBE NEWSWIRE) -- Resverlogix Corp. ("Resverlogix" or the "Company") (TSX:RVX) announced a private placement of 60,416,667 equity units to Shenzhen Hepalink Pharmaceutical Co. Ltd. (“Hepalink”) at a price of $1.44 per unit for gross proceeds of $87 million. Each unit will be comprised of one common share and 0.082759 of a common share purchase warrant. Each full warrant will be exercisable at a price of $1.64 per share for a period of four years from the closing of the offering. The units will be subject to a four-month hold period. The private placement is subject to execution of definitive transaction documents, customary closing conditions and receipt of all necessary regulatory and stock exchange approvals.

Prior to completion of the private placement, Hepalink held 14,603,333 common shares and 2,333,333 common share purchase warrants of Resverlogix which represented 12.74 percent of common shares outstanding before giving effect to any outstanding warrants and 14.48 percent of the outstanding common shares assuming the exercise by Hepalink of its warrants. After giving effect to the private placement, the Company will have a total of 175,040,756 common shares issued and outstanding. Hepalink will hold 75,020,000 common shares and 7,333,333 common share purchase warrants which represents 42.86 percent of the common shares outstanding before giving effect to any outstanding warrants and 45.16 percent of the outstanding common shares assuming the exercise by Hepalink of its warrants. After giving effect to the private placement to Hepalink, the equity interest of Eastern Capital Limited, which is not participating in the private placement, will be reduced from 19.35 percent to 12.67 percent of the outstanding common shares and the equity interest of the remainder of shareholders of the Company will be reduced from 67.91 percent to 44.47 percent of the outstanding common shares.

The net proceeds of the offering will primarily be used to repay the Company’s $68.8 million secured loan which matures on December 26, 2017 (the “Loan”). The balance of the net proceeds will be used to fund research and development activities, including but not limited to, clinical trial activities related to the Phase 3 BETonMACE trial, general and administrative expenses, working capital needs and other general corporate purposes.

Financial Hardship Exemption Application

The private placement requires disinterested shareholder approval pursuant to requirements of the Toronto Stock Exchange (“TSX”), unless an exemption is obtained, due to the increase in Hepalink’s ownership interest affecting control of the Company and as the private placement will involve the issuance of more than 25 percent of the outstanding common shares of the Company and the issuance of more than 10 percent of the outstanding shares to an insider. The private placement is also a “related party transaction” within the meaning of Multilateral Instrument 61-101 - Protection of Minority Security Holders in Special Transactions (“MI 61-101”) as Hepalink is an insider of the Company, such that minority shareholder approval would also be required pursuant to MI 61-101, unless an exemption is available.

The Company has applied to TSX for an exemption from the requirement to obtain shareholder approval for the private placement based on the “financial hardship” exemption in Section 604(e) of the TSX Company Manual, and the Company plans to rely on a similar exemption from the requirements of MI 61-101, based on the board of directors of the Company having determined that the Company is in serious financial difficulty, the private placement is designed to improve the financial position of the Company and the terms of the private placement are reasonable in the circumstances of the Company. All of the directors approved the private placement, other than Mr. Shawn Lu, who declared his interest in the private placement as a representative of Hepalink and, accordingly, abstained from approving the private placement. There is no assurance that the TSX will grant the exemption.

The Company applied for an exemption from the shareholder approval requirement on the basis of financial hardship, given that the immediacy of the Company’s need to address its financial difficulties through the private placement does not afford it sufficient time to hold a meeting of shareholders. The Company currently has accounts payable in excess of cash of approximately US$12 million and the outstanding Loan in the principal amount of $68.8 million which is accruing interest at a rate of 4.6046 percent per annum and additional fees at a rate of 12 percent per annum. In addition, the Company requires cash of approximately US$3 million per month to sustain operating activities. Resverlogix’s management and board of directors expects the private placement to address the Company’s financial difficulties by providing sufficient funds to repay the Loan and to satisfy the Company’s short term cash requirements. Given the Company's current financial situation, in the absence of completion of the private placement, its ability to continue operating as a going concern and to meet its obligations as they come due cannot be assured.

The Company anticipates filing a material change report less than 21 days prior to the closing of the private placement as closing must occur expeditiously in order to fund the Company’s short-term capital requirements including the repayment of the Loan.

Remedial Delisting Review

As a consequence of relying upon the financial hardship exemption under Section 604(e) of the TSX Company Manual, the Company expects that the TSX will commence a remedial delisting review, which is normal practice when a listed issuer seeks to rely on this exemption. Although the Company believes that it will be in compliance with all of the TSX listing requirements following completion of the offering, no assurance can be provided as to the outcome of such review and, therefore, the Company’s continued qualification for listing on the TSX.

About Resverlogix

Resverlogix is developing apabetalone (RVX-208), a first-in-class, small molecule that is a selective BET (bromodomain and extra-terminal) inhibitor. BET bromodomain inhibition is an epigenetic mechanism that can regulate disease-causing genes. Apabetalone is the first and only BET inhibitor selective for the second bromodomain (BD2) within the BET protein called BRD4. This selective inhibition of apabetalone on BD2 produces a specific set of biological effects with potentially important benefits for patients with high-risk cardiovascular disease (CVD), diabetes mellitus (DM), chronic kidney disease, end-stage renal disease treated with hemodialysis, neurodegenerative disease, Fabry disease, peripheral artery disease and other orphan diseases, while maintaining a well described safety profile. Apabetalone is the only selective BET bromodomain inhibitor in human clinical trials. Apabetalone is currently being studied in a Phase 3 trial, BETonMACE, in high-risk CVD patients with type 2 DM and low high-density lipoprotein (HDL), and is expected to be initiated in a Phase 2a kidney dialysis trial designed to evaluate biomarker changes and safety parameters in up to 30 patients with end-stage renal disease treated with hemodialysis.

Resverlogix common shares trade on the Toronto Stock Exchange (TSX:RVX).

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Investor Relations
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This news release may contain certain forward-looking information as defined under applicable Canadian securities legislation, that are not based on historical fact, including without limitation statements containing the words "believes", "anticipates", "plans", "intends", "will", "should", "expects", "continue", "estimate", "forecasts" and other similar expressions. In particular, this news release includes forward looking information relating to a private placement of equity units and the use of proceeds therefrom, and the potential role of apabetalone in the treatment of CVD, DM, chronic kidney disease, end-stage renal disease treated with hemodialysis, neurodegenerative disease, Fabry disease, peripheral artery disease and other orphan diseases. Our actual results, events or developments could be materially different from those expressed or implied by these forward-looking statements. We can give no assurance that any of the events or expectations will occur or be realized. By their nature, forward-looking statements are subject to numerous assumptions and risk factors including those discussed in our Annual Information Form and most recent MD&A which are incorporated herein by reference and are available through SEDAR at The forward-looking statements contained in this news release are expressly qualified by this cautionary statement and are made as of the date hereof. The Company disclaims any intention and has no obligation or responsibility, except as required by law, to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.


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