Zenith Epigenetics AGM Jan 7th, 2016

Hi Masila. Thanks you so much for your incredible efforts. I truly appreciate your hard work. I certainly trust your notes but also will listen to the presentation when posted.

So this is just a collection of my thoughts...nothing new...but I have presented my opinions.

The first observation I made is that both Dr Wong and Don seem to be quite wealthy having made a joint $5,000,000 donation to the Roderick Mah Centre for Continuous Learning back around 2008. This suggests they are community minded, generous and they have the wealth to make such donations…good characteristics.

Zenith has raised $19.5 million over the past year with a burn rate of $1.6 million per quarter, which will increase with the trial…so basically the finances are in good shape for a year or so given the nature of the cost of the prostate cancer trial (12 patients).

The overall tone of the presentation seemed very positive and the scientific developments seem remarkable particularly after the loss of Dr. Cherrington and also the lead compound at the time. Great progress under what seemed to be stressful circumstances.

ZCC is structured so that even if RVX or ZEL or parts thereof are sold ZCC will still retain the royalty streams (or negotiate them into the sale). Sure looks good.

The Science

Competitors, particularly those working with the benzodiazepine scaffold, are having problems in the hematology area and Zenith feels it has a lead although Zenith has turned to solid tumors.

One statement that stands out is “with us being able to inhibit BRD4, it is a huge breakthrough in oncology”. If it is a huge breakthrough I can hardly wait for the proof.

They seem to believe that Zenith compounds work well with existing prostate drugs and enhance them. Don indicated that Zenith has been in touch with the companies that own these drugs (possible partners, customers or buy out opportunities????).

Received FDA approval (almost) IND for ZEN3694 for any indication they choose. Trial of 12 patients starts in Q1 2016 and hoping to see results by summer which if positive will lead to further work through 2017. IMHO the results will have to be extremely positive and dramatic to judge this trial and there may be a high risk of failure simply due to the small trial…but I’m not an expert. Zenith is still in very early stages. Keep in mind the impact of this trial failing.

My thought is that FDA approval for ZEN3694 could be leveraged by Russo to provide credibility to rvx-208.

Zenith has two top prostate investigators on board – great signal that there may be potential for ZEN3694.

Business

In deep discussions with partner(s) in China and others.

Seem to be somewhat scattered or lacking focus talking about animal health, although this could be huge, easier and very profitable if it impact agricultural profitability.

Don indicates they are talking to many potential partners. That’s good IMHO because it could generate one or many deals but it does not seem focused. I guess the strategy is to cast a wide net. Hope they have the resources to do this.

Share Liquidity

Don has done a 180-degree turn regarding a TSX listing. At least Don admitted his 180 AND at least he is considering a listing.

He is also suggesting a back door NASDAQ listing via a take over of one of the ailing resource companies that already has a NASDAQ listing. (come on?????...really). If so, I sure hope he has some specific targets in mind and that this is not just fantasy. It could be very interesting if it works.

In Summary

1. It appears that Don feels there is very promising science in the learning about Zenith compounds over the past couple of years and the FDA approval, to some extent, is a vote of confidence that at least it should get a try on very ill patients. Approvals in oncology move quickly vs. cardiovascular disease.
2. The owners of the 2 lead drugs in metastatic prostate cancer may have a vested interest in the synergy of ZEN3694 with their drugs since their drugs lose effectiveness after a couple of years.
3. The name change to ZCC (a.k.a. restructuring) could at some point provide royalties from both ZEL and RVX.
4. We know that the BETonMACE trial will continue into 2019 and there will be a couple more years until rvx-208 can go to market. Hence, there will be no royalties flowing from RVX to ZCC probably until about 2022. The rvx-208 patents last to 2029 so there is at least 7 years of protected sales to generate strong margins if BETonMACE is successful (and that still is an IF).
5. My impression is that the plan is very hopeful, but scattered and unfocused.
6. Regarding liquidity there does not seem to be a clear commitment. I find this extremely disappointing and I really thought Don would deliver!

So if I was to grade Zenith at this stage it would be as follows:

• Science – A+ given the stage they are in.
• Business – D – scattered and no clear timelines. I do understand there are many balls being juggled and with the science gaining credibility it could make opportunities easier.
• Investment – F – no concrete commitment to liquidity.

I still believe that for investors that hang in until 2022 and beyond there could be incredible gains and rewards.

On Jan 9th, chicagoest did a summary of the potential events that could dramatically impact the value of RVX and ZCC. Any one of these could have a significant impact on the value of these companies before 2022 when revenue starts to flow.

Anyway, I needed to get my thoughts and opinions on paper.

I’ve always viewed RVX through “rose coloured glasses” and now I’m taking those glasses off. I’m going to review Don’s presentation and then I might call a “spade a spade” on SH because I want to be very honest about my feelings and experiences.

Thanks again masila for your efforts.

GLTA. It is going to be a very long journey IMHO but probably a pot of gold at the end.

Regards

Toinv

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