Regulus Reports Second Quarter 2013 Financial Results and Recent Highlights

 Regulus Reports Second Quarter 2013 Financial Results and Recent Highlights

-'Road to the Clinic' Strategy On Track; Preparing for Clinical Development of
RG-101 for HCV; Second microRNA Clinical Candidate to be Nominated by Year End
-

- Entered into Option Agreement with Sanofi -

- Strengthened Financial Position with Successful Public Offering of Common
Stock; Maintained Strong Balance Sheet with Pro forma Cash Position of
Approximately $129 Million; YE Cash Guidance Updated to End 2013 with
Approximately $110 Million in Cash -

PR Newswire

LA JOLLA, Calif., Aug. 13, 2013

LA JOLLA, Calif., Aug. 13, 2013 /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 June 30, 2013 and provided a summary
of recent corporate highlights.

"The second quarter was a period of significant progress for Regulus. We
continued to execute on our 'Road to the Clinic' strategy and are preparing
for clinical development of RG-101, a GalNAc-conjugated anti-miR which targets
miR-122 for HCV. We also made great progress across the pipeline, advancing
additional proprietary and partnered programs and identifying attractive new
opportunities to broaden our microRNA platform," said Kleanthis G.
Xanthopoulos, Ph.D., President and CEO of Regulus. "On the business front, we
had a very productive quarter and recent period. We are pleased to have
entered into an exclusive option agreement with Sanofi to negotiate the terms
of a potential new relationship. Additionally, we strengthened our balance
sheet with a successful public offering which will enable us to accelerate our
'Road to the Clinic' goals, expand our microRNA therapeutic pipeline and
increase our cash runway to fund our operations into 2017."

"These recent accomplishments have positioned us for an exciting period
focused on scientific execution," said Neil W. Gibson, Ph.D., Chief Scientific
Officer of Regulus. "We look forward to entering the clinic with RG-101,
nominating a second candidate for clinical development by the end of the year,
and continuing to build a meaningful clinical pipeline based on microRNAs." 

Recent Corporate Highlights

  oSecured Rights to Proprietary Process for Manufacturing GalNAc Conjugates
    from Alnylam. Regulus entered into an amendment to its Amended and
    Restated Collaboration Agreement with its founding companies, Isis
    Pharmaceuticals, Inc. and Alnylam Pharmaceuticals, Inc., to provide
    Regulus access to Alnylam's proprietary process for manufacturing GalNAc
    conjugates, a carbohydrate-based chemistry approach for asialoglycoprotein
    receptor-mediated delivery of oligonucleotides to hepatocyte cells of the
    liver.
    The GalNAc conjugate chemistry has been utilized in the development of
    Regulus' lead program, RG-101, which targets miR-122 for the treatment of
    chronic hepatitis C virus, or HCV, infection. miR-122 is the most
    abundant microRNA in hepatocytes and the HCV virus co-opts miR-122 for its
    own replication and function. Utilizing the GalNAc conjugate chemistry has
    significantly improved the potency of the active oligonucleotide of RG-101
    by achieving targeted delivery of the oligonucleotide to the infected
    hepatocytes. Regulus believes that GalNAc conjugate delivery is a
    critical component to its clinical development strategy for RG-101 and the
    Company expects to explore its potential applicability to additional
    microRNA programs.
  oCompleted Successful Public Offering of Common Stock; Updated Year-End
    Cash Guidance Based on Strengthened Balance Sheet. Regulus completed an
    underwritten public offering of 5,175,000 shares of common stock resulting
    in $45.9 million of aggregate net proceeds, after deducting underwriting
    discounts and commissions and estimated offering expenses payable by
    Regulus. Primarily as a result of the successful offering, Regulus
    revised its prior year-end cash guidance of ending 2013 with at least $60
    million in cash, cash equivalents and short-term investments to ending
    2013 with approximately $110 million in cash, cash equivalents and
    short-term investments.

Second Quarter 2013 Highlights

  oPrepared for Clinical Development of RG-101 for the Treatment of HCV.
    Regulus nominated its first microRNA candidate for clinical development,
    RG-101 for the treatment of patients with HCV. Regulus is developing
    RG-101 independently of its strategic alliance with GlaxoSmithKline (GSK),
    and as such, the companies amended the Product Development and
    Commercialization Agreement to clarify that RG-101 is fully owned by
    Regulus.
    Currently, Regulus is conducting GLP toxicology studies with RG-101
    designed to support clinical studies in man and expects to submit an
    application with regulatory authorities in the first half of 2014. For
    more information on RG-101, please visit
    http://www.regulusrx.com/therapeutic-areas/rg-101/.
  oExpanded and Advanced Therapeutic Pipeline. Regulus  expanded its
    microRNA therapeutic pipeline with the selection of microRNA-221 (miR-221)
    as an attractive target for potential clinical evaluation in patients with
    hepatocellular carcinoma (HCC). Regulus continued to pursue several
    additional programs, both independently and with its strategic alliance
    partners, targeting miR-21 for the treatment of HCC and kidney fibrosis,
    targeting miR-10b for the treatment of glioblastoma, and targeting miR-33
    for atherosclerosis. Additionally, Regulus advanced its exploratory
    efforts with the identification of several attractive microRNA targets,
    namely for oncology indications. In the second half of 2013, Regulus
    expects to nominate a second microRNA candidate for clinical development.
  oEntered into Option Agreement with Sanofi; Received Payment of $2.5
    Million. In June 2013, the original term of the research and development
    phase of the Amended and Restated Collaboration and License Agreement with
    Sanofi expired, upon which the companies entered into an Option Agreement
    to enable exclusive negotiation of a potential new co-development and
    commercialization agreement, with such option period expiring on December
    31, 2013, subject to an extension under specified circumstances. In July,
    Regulus received a $2.5 million payment for such exclusivity, of which
    $1.25 million is creditable against future amounts payable by Sanofi to
    Regulus under any future agreement we enter into pursuant to the Option
    Agreement.
    Specifically, Sanofi has the exclusive right to negotiate with the Company
    to enter into a development and license agreement for the co-development
    and commercialization of certain unencumbered microRNA targets and
    microRNA biomarkers. Regulus has the exclusive right to negotiate with
    Sanofi to enter into a co-development and commercialization agreement for
    certain miR-21 antimiRs in oncology and in Alport Syndrome, a genetic
    disorder characterized by end-stage renal disease and hearing loss.
  oRevised Terms of Biomarker Agreement with Biogen Idec. Regulus  and Biogen
    Idec MA Inc. (Biogen Idec) entered into an amendment to the Collaboration
    and License Agreement to revise the terms with respect to phase 1 of the
    research plan and to reflect revised payment provisions relating to the
    phase 1 milestones. Regulus continues to explore microRNA biomarkers for
    multiple sclerosis and is eligible to receive milestone payments of up to
    $1.3 million.
  oNamed New Chairman of the Board. Regulus named Stelios Papadopoulos, Ph.D.
    as Chairman of its Board of Directors. He assumed the role from John
    Maraganore, Ph.D., who remains a member of the Board. Dr. Papadopoulos,
    who has been a member of the Board since 2008, has more than 30 years of
    experience in the biotechnology and pharmaceutical industries as an
    investment banker, board member, company founder and investor. Dr.
    Papadopoulos is a board member of several companies including Biogen Idec,
    Inc. and Exelixis, Inc., where he is Chairman.

Second Quarter 2013 Financial Results & Highlights

Regulus reported a net loss of $7.3 million and $14.6 million for the three
and six months ended June 30, 2013, respectively, compared to a net loss of
$2.6 million and $4.8 million for the same periods in 2012. Net loss in the
three and six months ended June 30, 2013 included $2.7 million and $4.5
million in non-cash charges, respectively, from the change in value of the
amended and restated convertible promissory note originally issued to GSK in
2010, with such change in value attributable to increases in value of the
common stock of Regulus since December 31, 2012. Basic and diluted net loss
per share was $0.20 and $0.41 for the three and six months ended June 30,
2013, respectively, compared to net loss per share of $10.78 and $23.46 for
the same periods in 2012. The comparability of net loss per share for the
periods presented is impacted by our initial public offering and concurrent
common stock issuances in October 2012.

Regulus recognized revenue of $4.8 million and $8.0 million for the three and
six months ended June 30, 2013, respectively, compared to $3.3 million and
$6.7 million for the same periods in 2012. Revenue during these periods
consisted primarily of amortization of upfront payments received from our
strategic alliances and collaborations, which is recognized over the estimated
period of performance. The increase in revenue was primarily a result of the
amendment to the Product Development and Commercialization Agreement with GSK
in June 2013, upon which we and GSK agreed that we will develop RG-101 for HCV
independently of the strategic alliance. As a result of this amendment, the
remaining unamortized $1.1 million associated with the upfront payment for the
expansion into HCV was recognized due to an acceleration of our estimated
period of performance.

Research and development expenses were $7.7 million and $14.6 million for the
three and six months ended June 30, 2013, respectively, compared to $4.9
million and $9.5 million for the same periods in 2012. The increase is
attributable to expansion of our research and development personnel and
increase in IND-enabling activities for RG-101 in the first half of 2013,
compared to the same period in 2012.

General and administrative expenses were $1.7 million and $3.6 million for the
three and six months ended June 30, 2013, respectively, compared to $1.0
million and $1.9 million for the same periods in 2012. The increase is
primarily attributable to an increase in headcount and additional incremental
operating costs associated with being a public company.

As of June 30, 2013, Regulus had $82.7 million in cash, cash equivalents and
short-term investments, debt with a principal balance of $5.4 million and
approximately 36 million shares of common stock outstanding.

Conference Call & Webcast Information

Regulus will host a conference call and webcast at 5:00 p.m. Eastern Daylight
Time today to discuss its second quarter 2013 financial results and recent
corporate highlights. A live webcast of the call will be available online at
www.regulusrx.com. To access the call, please dial (877) 257-8599 (domestic)
or (970) 315-0459 (international) and refer to conference ID 24265676. To
access the telephone replay of the call, dial (855) 859-2056 (domestic) or
(404) 537-3406 (international), passcode 24265676. The webcast and telephone
replay will be archived on the company's website following the call.

About the 'Road to the Clinic' Strategy in 2013

Launched in February 2013, the 'Road to the Clinic' Strategy outlines certain
corporate goals that seek to advance our microRNA therapeutic pipeline toward
the clinic this year. Specifically, Regulus set the goal of nominating two
microRNA candidates for clinical development in 2013. In May, Regulus
nominated its first microRNA candidate for clinical development, RG-101, a
GalNAc-conjugated microRNA antagonist or anti-miR, which targets miR-122 for
the treatment of HCV. Regulus also expects to file its first applications with
regulatory authorities in 2014, with the first being for RG-101 in the first
half of 2014. Regulus believes its strong financial position supports these
stated goals and expects to end 2013 with approximately $110 million in cash,
cash equivalents and short-term investments.

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 and
Isis Pharmaceuticals. Regulus is developing RG-101 for the treatment of HCV
and is advancing other microRNA therapeutics toward clinical development in
several areas, including oncology, fibrosis 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 (including Regulus' projected cash at the
end of 2013), the projected sufficiency of Regulus' capital position for
future periods, the future negotiation and execution of a co-development
agreement with Sanofi, the expected ability of Regulus to undertake certain
activities and accomplish certain goals (including with respect to development
and other activities related to RG-101 and Alnylam's proprietary process for
manufacturing GalNAc conjugates and with respect to the nomination of a second
microRNA candidate for clinical development), the projected timeline of
clinical development activities, 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'
financial position and 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 share and per share data)
                             Three months ended       Six months ended

                             June 30,                 June 30,
                             2013          2012       2013          2012
                             (Unaudited)
Revenues:
Revenue under strategic      $ 4,759       $ 3,309    $ 7,997       $ 6,653
alliances and collaborations
Total revenues               4,759         3,309      7,997         6,653
Operating expenses:
Research and development     7,722         4,883      14,604        9,487
General and administrative   1,723         984        3,628         1,905
Total operating expenses     9,445         5,867      18,232        11,392
Loss from operations         (4,686)       (2,558)    (10,235)      (4,739)
Other income (expense), net  (2,652)       (63)       (4,341)       (130)
Loss before income taxes     (7,338)       (2,621)    (14,576)      (4,869)
Income tax (benefit) expense   10            (22)     1             (22)
Net loss                     $ (7,348)     $ (2,599)  $ (14,577)    $  (4,847)
Basic and diluted net loss   $ (0.20)      $ (10.78)  $ (0.41)      $  (23.46)
per share
Shares used to compute basic
and diluted net loss per       35,994,642    241,223    35,933,961     206,610
share



Regulus Therapeutics Inc.

Condensed Balance Sheets

(In thousands)
                                                   June 30,  December 31,

                                                   2013      2012
                                                   (Unaudited)
Assets
Cash, cash equivalents and short-term investments  $ 82,715  $   98,100
Other current assets                               4,158     829
Non-current assets                                 5,644     4,589
 Total assets                                   $ 92,517  $   103,518
Liabilities and stockholders' equity
Current liabilities                                $ 4,129   $   2,317
Current portion of deferred revenue                14,876    10,451
Convertible notes payable, at fair value           14,592    10,134
Other long-term liabilities                        1,765     767
Deferred revenue, less current portion             7,834     17,756
Stockholders' equity                               49,321    62,093
 Total liabilities and stockholders' equity     $ 92,517  $   103,518

SOURCE Regulus Therapeutics Inc.

Website: http://www.regulusrx.com
Contact: Amy Conrad, Director, Investor Relations and Corporate
Communications, Regulus Therapeutics Inc., 858-202-6321,
aconrad@regulusrx.com, or Media, David Schull, Russo Partners LLC,
212-845-4271, david.schull@russopartnersllc.com
 
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