RNAi Firm Regulus Cuts Price, Boosts Shares in $45M IPO
By Marie Powers
In a potential sign the initial public offering (IPO) waters may become more treacherous for biotechs during this year's presidential election season, Regulus Therapeutics Inc. slashed the price of its IPO to $4 per share – less than half of the proposed price range of $10 to $12 – while more than doubling the number of shares, from a proposed 4.5 million to 11.3 million.
The adjustments resulted in only a minor change in expected proceeds from the time the company set terms last month, falling from $49.5 million at the midpoint of the initial pricing scheme to $45 million under the reduced share price cited in the company's form S-1/A, filed Thursday with the SEC.
Still, the expected cash influx has been whittled considerably since August, when Regulus filed its original S-1, seeking to raise $57.5 million. (See BioWorld Today, Aug. 21, 2012.)
The San Diego-based biotech granted underwriters a 30-day option to purchase up to an additional 1.7 million shares to cover overallotments, potentially generating another $6.8 million.
Regulus is among a growing number of biotechs that have filed IPOs this year as emerging growth companies, as defined in the Jumpstart Our Business Startups Act of 2012. Others include GlobeImmune Inc., Intercept Pharmaceuticals Inc. and Paratek Pharmaceuticals Inc. (See BioWorld Today, March 29, 2012, Sept. 6, 2012, and Oct. 1, 2012.)
Regulus' common stock began trading Thursday on Nasdaq under the symbol "RGLS." Shares opened at $4 and spiked to $5.48 before closing at $4.20, a 5 percent gain on the day.
In the initial filing, Regulus officials indicated Sanofi SA, of Paris, had spoken for up to $10 million in common stock from the public offering, Isis Pharmaceuticals Inc., of Carlsbad, Calif., sought to acquire $3 million in shares and GlaxoSmithKline (GSK) plc, of London, was interested in purchasing $2 million in shares. Those commitments were nonbinding, however. The company is in a quiet period and could not comment about the amount of stock actually purchased by the companies.
The IPO also factored in a deal Regulus inked in August with AstraZeneca plc, of London. The pharma paid $28 million up front for Regulus to develop three microRNA targets, including Regulus' lead product microRNA-33 for cardiovascular and metabolic disease. The pharma agreed to purchase an additional $25 million of common stock in a separate private placement concurrent with the completion of the offering, at a price equal to the IPO price. (See BioWorld Today, Aug. 16, 2012.)
The S-1/A indicated the AstraZeneca transaction translated into 6.3 million shares. Regulus reported 34.1 million shares of common stock outstanding following the offering and private placement.
The company said proceeds will be used for the preclinical and clinical development of its initial microRNA development candidates, for the identification and validation of additional microRNA targets and for other corporate purposes.
Regulus has not lacked for pharma partners. In 2010, the company landed a potential $750 million deal with Sanofi aimed at discovering microRNA-based drugs against four fibrosis targets. Regulus received $25 million up front and a $10 million equity investment, with Sanofi also providing research funding for three years and taking options to extend the work for two additional years. (See BioWorld Today, June 23, 2010.)
The same year, Regulus nailed down a deal with GSK to develop an miR-122 antagonist in hepatitis C virus in a $150 million-plus partnership that cast a spotlight on intellectual property rights relating to the liver-specific microRNA target. The agreement included undisclosed up-front investments plus a convertible note that converts into equity at Regulus' discretion. All told, the agreement is expected to generate more than $150 million, according to the company. (See BioWorld Today, Feb. 26, 2010.)
And that deal represented a follow-on for GSK, which inked a $600 million collaboration with Regulus in 2008. The companies are working together to develop up to four microRNA-targeted drugs against inflammatory disease indications. (See BioWorld Today, April 18, 2008.)
Regulus was founded in 2007 as a joint venture by Isis and Alnylam Pharmaceuticals Inc., of Cambridge, Mass., which made an initial investment of $10 million. Both companies have made equity investments in Regulus.
In its S-1/A, the company reported cash and equivalents of $27 million as of June 30, prior to the stock offering and private placement, and accumulated deficits of $47.9 million.
Lazard Capital Markets LLC, Cowen and Co. LLC and BMO Capital Markets acted as joint book-running managers for the offering, with Needham & Co. and Wedbush PacGrow Life Sciences acting as co-managers.
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