Regulus Reports Third Quarter 2012 Financial Results and Recent Highlights

  Regulus Reports Third Quarter 2012 Financial Results and Recent Highlights

-Formed Multiple Strategic Relationships to Support our microRNA-based
Therapeutics and Biomarker Platforms-

- Raised $80.9M in Total Gross Proceeds from IPO and Other Recent Financial
Transactions -

PR Newswire

LA JOLLA, Calif., Nov. 19, 2012

LA JOLLA, Calif., Nov. 19, 2012 /PRNewswire/ -- Regulus Therapeutics Inc.
(NASDAQ:RGLS), a biopharmaceutical company leading the discovery and
development of innovative medicines targeting microRNAs, today reported
financial results for the quarter ended September 30, 2012 and provided a
summary of recent corporate highlights.

"The third quarter and subsequent period were the most successful to date for
Regulus as measured by the achievement of significant financial and strategic
goals," said Kleanthis G. Xanthopoulos, Ph.D., President and CEO of Regulus.
"Regulus is now focused on the execution of our research and development plans
that include selection of clinical candidates in all of our microRNA
therapeutic programs, which we believe will enable us to file at least two
INDs by 2014."

"We expect that the capital raised in the last several months will provide
sufficient funding for operations through at least the end of 2015," said
Garry E. Menzel, Ph.D., Chief Operating Officer and Executive Vice President
of Finance. "We believe our disciplined financial strategy will enable us to
advance multiple programs toward the clinic without the need for additional
equity financing."

Third Quarter 2012 and Recent Corporate Highlights

  oCompleted Initial Public Offering ("IPO"). In October 2012, Regulus
    completed its IPO, raising $50.9 million in gross proceeds, inclusive of
    the over-allotment option exercised by the underwriters and insider
    participation by Isis Pharmaceuticals, Inc., one of its founding
    companies, and two of its strategic partners, Sanofi SA ("Sanofi") and
    GlaxoSmithKline plc ("GSK"). Regulus' common stock began trading on the
    NASDAQ Global Market on October 4, 2012 under the symbol "RGLS."
  oEstablished Significant Strategic Alliance Focused Primarily on Metabolic
    Diseases. In August 2012, Regulus entered into a strategic alliance with
    AstraZeneca AB ("AZ") to discover, develop, and commercialize microRNA
    therapeutics for three exclusive targets focused on cardiovascular and
    metabolic diseases and oncology. AZ made an upfront payment of $3.0
    million and purchased $25.0 million of Regulus' common stock in a private
    placement that closed concurrently with the IPO. In addition, Regulus is
    eligible to receive preclinical, clinical and commercialization milestone
    payments of up to $509.0 million, as well as royalties.
  oEstablished Research Collaboration to Explore microRNA Biomarkers for
    Multiple Sclerosis. In August 2012, Regulus formed a collaboration with
    Biogen Idec Inc. ("Biogen Idec") to explore microRNA biomarkers for
    multiple sclerosis. Regulus received an upfront payment of $750,000 and
    is eligible to receive milestone payments of up to $1.3 million. Regulus
    also received $5.0 million from the sale of a convertible note to Biogen
    Idec which converted into shares of Regulus' common stock at the closing
    of the IPO.
  oRe-Aligned Board of Directors. In November 2012, Douglas E. Williams,
    Ph.D., Executive Vice President of Research and Development at Biogen
    Idec, joined Regulus' Board of Directors. Concurrently, Stanley T.
    Crooke, M.D., Ph.D., Chairman of the Board and CEO of Isis
    Pharmaceuticals, Inc., and Barry E. Greene, President and Chief Operating
    Officer of Alnylam Pharmaceuticals, Inc., stepped down from the Board and
    their respective Board committees.

Third Quarter 2012 Financial Results & Highlights

As of September 30, 2012, Regulus had cash, cash equivalents and short-term
investments of $30.9 million compared to $38.1 million at December 31, 2011.
The decrease in cash, cash equivalents and short-term investments was the
result of approximately $17.7 million used to fund the Company during the
first nine months of 2012, offset by $5.0 million in R&D funding from Sanofi
received in July 2012, and $5.8 million from Biogen Idec related to a $5.0
million convertible note and a $750,000 upfront payment received in August
2012.

Net Loss

The net loss for the three and nine months ended September 30, 2012 was $5.7
million and $10.5 million, respectively, compared to $1.0 million and $5.6
million for the same periods in 2011. The increase in our 2012 net losses was
the result of $1.0 million less in revenue recognized on our upfront payments
from GSK, the result of amending our strategic alliance agreement with GSK in
June 2012, and an increase of $1.6 million and $2.0 million in operating
expenses for the three and nine months ended September 30, 2012, respectively.
Included as a component of net loss was a non-cash charge of $1.7 million
resulting from a loss on extinguishment of debt associated with the
modification of the $5.0 million convertible promissory note we issued to GSK
in 2010. The change in the fair value of the convertible promissory note is
primarily attributable to the change in the value of our common stock price
during the period. Our net loss also included non-cash stock-based
compensation expenses of $414,000 and $732,000 for the three and nine months
ended September 30, 2012, respectively, and $196,000 and $609,000 for the same
periods in 2011. Basic and diluted net loss per share for the three and nine
months ended September 30, 2012 was $15.98 per share and $41.03 per share,
respectively,compared to $11.68 per share and $76.97 per share for the same
period in 2011.

Revenue

We recognized revenue of $2.8 million and $9.5 million in the three and nine
months ended September 30, 2012, respectively, and $3.8 million and $10.4
million for the same periods in 2011. Our revenue during these periods
consisted primarily of amortization of upfront payments received from GSK and
Sanofi which we amortize monthly on a straight-line basis over our period of
performance. The total amortization attributable to payments from Sanofi was
$2.5 million and $7.5 million for each of the three and nine months ended
September 30, 2012 and 2011, respectively. The total amortization
attributable to upfront payments from GSK was $186,000 and $1.3 million for
the three months ended September 30, 2012 and 2011, respectively, and $1.8
million and $2.9 million for the nine months ended September 30, 2012 and
2011, respectively. The decrease in the amount amortized for GSK in 2012
compared to 2011 is the result of our June 2012 amendment to the collaboration
agreement which extended our period of performance.

Research and Development Expenses

Research and development expenses were $5.2 million and $14.7 million for the
three and nine months ended September 30, 2012, respectively, compared to $3.9
million and $12.8 million for the same periods in 2011. The increase of $1.4
million and $1.9 million for the three and nine month periods ended September
30, 2012 was primarily related to increases in payroll and related benefits,
laboratory supplies and external services to advance our preclinical programs.

General and Administrative Expenses

General and administrative expenses were $1.1 million and $3.0 million for the
three and nine months ended September 30, 2012, respectively, compared to
$907,000 and $2.9 million for the same periods in 2011. The increases
primarily represent legal services related to our transactions with AZ and
Biogen Idec completed in August 2012.

Conference Call & Webcast Information

Regulus will host a conference call and webcast at 5:00 pm Eastern Standard
Time today to discuss its third quarter 2012 financial results and highlights.
A live webcast of the call will be available online at www.regulusrx.com. A
replay will also be available approximately one hour after completion of the
call. To access the replay, dial (855) 859-2056 (domestic) or (404) 537-3406
(international), passcode 52577487. The webcast and replay will be will be
archived on the company's website for two weeks following the call.

About Regulus

Regulus Therapeutics Inc. (NASDAQ:RGLS) is a biopharmaceutical company leading
the discovery and development of innovative medicines targeting microRNAs.
Regulus is leveraging a mature therapeutic platform based on technology that
has been developed over 20 years. Regulus works with a broad network of
academic collaborators and leverages the oligonucleotide drug discovery and
development expertise of its founding companies, Alnylam Pharmaceuticals
(NASDAQ:ALNY) and Isis Pharmaceuticals (NASDAQ:ISIS). Regulus is advancing
microRNA therapeutics toward clinical development in several areas, including
oncology, fibrosis, hepatitis C and metabolic diseases. Regulus has formed
strategic alliances with AstraZeneca, GlaxoSmithKline and Sanofi and a
research collaboration with Biogen Idec.

For more information, please visit http://www.regulusrx.com.

Forward-Looking Statements

Statements contained in this press release regarding matters that are not
historical facts are "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995, including statements
associated with financial estimates, the projected sufficiency of Regulus'
capital position for future periods, the expected ability of Regulus to
undertake certain activities and accomplish certain goals, the projected
timeline of clinical development activities and regulatory approval, and
expectations regarding future therapeutic and commercial potential of Regulus'
business plans, technologies and intellectual property related to microRNA
therapeutics being discovered and developed by Regulus. Because such
statements are subject to risks and uncertainties, actual results may differ
materially from those expressed or implied by such forward-looking statements.
Words such as "believes," "anticipates," "plans," "expects," "intends,"
"will," "goal," "potential" and similar expressions are intended to identify
forward-looking statements. These forward-looking statements are based upon
Regulus' current expectations and involve assumptions that may never
materialize or may prove to be incorrect. Actual results and the timing of
events could differ materially from those anticipated in such forward-looking
statements as a result of various risks and uncertainties, which include,
without limitation, risks associated with the process of discovering,
developing and commercializing drugs that are safe and effective for use as
human therapeutics, and in the endeavor of building a business around such
drugs. These and other risks concerning Regulus' programs are described in
additional detail in Regulus' SEC filings. All forward-looking statements
contained in this press release speak only as of the date on which they were
made. Regulus undertakes no obligation to update such statements to reflect
events that occur or circumstances that exist after the date on which they
were made.





Regulus Therapeutics Inc.

Selected Financial Information

Condensed Statement of Operations

(In thousands, except per share data)


                                         Three months ended    Nine months ended

                                         September 30,         September 30,
                                         2012       2011       2012        2011
                                         (Unaudited)
Revenues:
Revenue under strategic                  $ 2,809    $ 3,809    $ 9,462     $ 10,426
alliances
Total revenues                           2,809      3,809      9,462       10,426
Operating expenses:
Research and development                 5,248      3,875      14,735      12,823
General and administrative               1,093      907        2,998       2,864
Total operating expenses                 6,341      4,782      17,733      15,687
Loss from operations                     (3,532)    (973)      (8,271)     (5,261)
Other income (expense), net              (2,159)    (68)       (2,289)     (195)
Loss before income taxes                 (5,691)    (1,041)    (10,560)    (5,456)
Income tax (benefit) expense               (6)        4        (28)        131
Net loss                                 $ (5,685)  $ (1,045)  $ (10,532)  $  (5,587)
Basic and diluted net loss per share     $ (15.98)  $ (11.68)  $ (41.03)   $  (76.97)
Shares used to compute basic and           355,735    89,438     256,682      72,588
diluted net loss per share



Regulus Therapeutics Inc.

Condensed Balance Sheet

(In thousands)
                                                   September 30,  December31,
                                                   2012           2011
                                                   (Unaudited)
Assets
Cash, cash equivalents and short-term investments  $    30,893    $   38,144
Other current assets                               3,466          522
Noncurrent assets                                  6,364          4,215
 Total assets                                    $    40,723    $   42,881
Liabilities and stockholders' deficit
Current liabilities                                $    2,814     $   2,115
Deferred revenue                                   10,593         10,735
Convertible notes payable                          10,000         ─
Convertible notes payable, at fair value           7,069          ─
Other long-term obligations, less current portion  875            11,847
Deferred revenue, less current portion             16,602         16,987
Convertible preferred stock                        42,691         42,691
Stockholders' deficit                              (51,148)       (41,494)
 Total liabilities and stockholders' deficit     $    40,723    $   42,881



SOURCE Regulus Therapeutics Inc.

Website: http://www.regulusrx.com
Contact: Amy Conrad, Director, Investor Relations and Corporate
Communications, Regulus Therapeutics Inc., +1-858-202-6300,
aconrad@regulusrx.com; or Media, David Schull, Russo Partners LLC,
+1-212-845-4271, david.schull@russopartnersllc.com
 
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