Replies to post #31714 on RespireRx Pharmaceuticals Inc (RSPI)

[gfp927z]

Neuro, Yes, but there is a way to get to the ADHD results even if the RD deal only yields $3 mil in upfronts (as long as Cortex still has CX-1739).

Using CX-1739, I estimate they would need approx $8-10 mil to get to the ADHD Phase 2b results, if they focus on that and nothing else thru 2010. How to raise $8-10 mil?


$3 mil - Upfronts from the RD deal.

$5 mil - Proceeds from financing(s) using the 100 mil new shares available. Even considering a big discount and warrants, you could raise at least $5 mil with 100 mil shares. Shareholders get the shaft, but it doesn't hurt Varney, and the company continues on.


So that gives Cortex a total of $8 mil in 2010, and there are other potential sources -


?? mil - Reverse split followed by another financing. After the 205 mil share limit is used up, you do a 10:1 or 20:1 reverse split, getting the pps back up over a dollar again, and reducing the share count back down to 10-20 mil. Then you can start all over again doing financings as needed. You could raise a lot this way, though shareholders get the shaft from the reverse split.


$2-4 (?) mil - partner the high impacts.


?? - Proceeds from the RD partner on an SA option they choose to exercise if the SA results turn out favorably. Or alternately, some other SA related deal following good SA results.


?? - Warrant proceeds from earlier the 2009 financings (BAM and R+R have warrants between .26 -.36), or from the 2010 financings (warrants for these should be very low, thus more likely to be exercised).


So there are numerous way to raise $8-10 mil to get to the ADHD results, as long as Cortex keeps CX-1739. The financings and/or reverse split will devastate existing shareholders with mega-dilution, and Varney risks losing control of the company to the financiers, BUT -- it could be done.

As opposed to the shareholders, from Varney's perspective does the mega dilution hurt him? No, he keeps getting his salary, and with more low priced stock options later in 2010, plus the 588,000 options from 2009 priced at .20 cents, Varney once more has his chance at a big personal payday once the ADHD results come in.

The mega dilution and reverse split will kill regular shareholders, but from Varney's perspective everything comes out rosy. Even if he loses control of the company in the process, so what, he still gets his big profits from the stock options, plus his salary and of course the severance payments and retention bonus if the financiers force a buyout in 2011.

[food4thought]

Neuro,
Reading between the lines, the sale of the company didn't seem likely. I think the slogging will continue to the very end. I can't say I feel very good about that thought. I would prefer the outright sale giving shareholders some remaining value and closure.

[gfp927z]

Neuro, For RD, I still think pharmas see problems designing the pivotal trials. That could explain some of the lack of partnering interest.

Since the FDA will presumably require the pivotal trial to be conducted in a regular hospital setting, on post-surgical or chronic pain patients (as opposed to our CO2 rebreathing setup), the trial would take forever, since RD doesn't occur that often. You'd have to be monitoring tens of thousands of patients in hundreds of hospitals to eventually get enough RD events to complete a Phase 3.

In addition to this 'infrequency of RD' problem, there are other obstacles in designing a pivotal trial. In opiate induced RD, Ampakine could be used as -


1) A preventive measure, given in combination with the opiate. But as you have pointed out, combo approaches are not generally well received by the FDA for approval.


2) An RD reversal agent, used instead of Narcan/naloxone. But the problem here is that if the patient is an RD crisis, the doctor won't be able to easily 'try out something new'. He's going to have to use Narcan immediately to save the patient's life.


In Propofol induced RD however, while there would still be the same problem as in #1 above for RD prevention (combo approach), as a reversal agent, a pivotal trial would be much easier, since there is no other current way to reverse propofol induced RD (no 'Narcan' available for the indication). You would still have the infrequency problem (RD being an infrequent event), but reversing propofol induced RD might be doable approach for a large pivotal trial. It would still take a long time, but might look more palatable to pharma partners than the prospects for opioid RD trials.

Unfortunately we don't have any human data demonstrating POC with Propofol, only the promising animal data from Greer. But that might ultimately be the way to go -- reversal of Propofol induced RD. And with no current treatment for Propofol induced RD, it might sail through the FDA relatively easily as a Fast Track indication, and require a smaller than usual Phase 3.