Back to top

Image: Bigstock

Regulus Stock Plunges on Cash Concerns Despite Restructuring

Read MoreHide Full Article

Regulus Therapeutics Inc.’s (RGLS - Free Report) shares plunged 52% on Jul 6 following the announcement of drastic restructuring initiatives to extend its cash runway. Although the plans announced are expected to save $20 million annually and support the company’s operations till mid-2019, investors remain skeptical about the company’s cash position and are wary of its pipeline progress.

The company announced that it has stopped recruitment of patients in a phase II study of its lead candidate, RG-012, which is being evaluated for Alport Syndrome. Preliminary data from first patient evaluated in the RG-012 study showed encouraging results.

Although the results were positive, the company probably stopped recruiting due to lack of funds. Moreover, a failed discussion with Sanofi (SNY - Free Report) will significantly impact Regulus’ financing options and will require the latter to look for new financing options.

It also paused a phase I study on another pipeline candidate, RGLS4326, following unfavorable results.

Shares of Regulus have declined 66.3% so far this year against the industry’s gain of 5.2%.

In order to preserve cash for a longer period, in addition to pausing recruitment activities in all clinical studies on RG-012 in Alport syndrome, Regulus is currently in discussion with Sanofi to restructure their partnership. The company also said it will reduce its workforce by 60% to focus on its pre-clinical research efforts on Hepatitis B virus (“HBV”) programs. The company is looking for partners for the rest of its pre-clinical research programs.

Investors are also skeptical about Sanofi’s willingness to continue the partnership. In March, Sanofi declined to opt into development of Alnylam Pharmaceuticals’ (ALNY - Free Report) RNAi candidate, lumasiran, in spite of its clear efficacy and Breakthrough status.

Meanwhile, the voluntary stalling of the early-stage multiple ascending dose study for RGLS4326, evaluating it in autosomal dominant polycystic kidney disease along with RG-012 study, has effectively left Regulus with active pre-clinical candidates only.

Investors will remain focused on discussion updates with Sanofi and data from investigative studies on RGLS4326 initiated after consultation with the FDA.

Zacks Rank & Stock to Consider

Regulus currently carries a Zacks Rank #3 (Hold). Ionis Pharmaceuticals, Inc. (IONS - Free Report) is a better-ranked stock in the same space, sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Ionis’ loss estimates have narrowed from 13 cents to 4 cents for 2018 while earnings estimates for 2019 increased from 5 cents to 35 cents in the past 60 days. The company delivered positive earnings surprise in two of the trailing four quarters with an average beat of 16.48%.

Looking for Stocks with Skyrocketing Upside?

Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.

Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.

See the pot trades we're targeting>>

Published in