Wednesday, August 15, 2012

The $28M AstraZeneca-Regulus MicroRNA Therapeutics Deal

Yesterday, it was announced that AstraZeneca is paying microRNA Therapeutics company Regulus $28M for three preclinical-stage microRNA targets.  This is certainly good news not only for the field of microRNA Therapeutics, but also oligonucleotide therapeutics in general which is well on the day to be the third major drug development engine after small molecules and monoclonal antibodies.  

After GSK and Sanofi-Aventis, it is the third of its kind for Regulus and there were similar ones between Miragen and Servier late last year and Santaris and GSK before that.  The number of such deals, each usually involving a number of microRNAs, illustrates how far the field of microRNA biology has come in just 10 years from the discovery of microRNAs in humans to yield promising therapeutic targets that number in the dozens.  In fact, microRNA Therapeutics has been more successful than the more straight-forward RNAi Therapeutics approach in attracting the partnering interests of Big Pharma lately.

On the other hand, it’s been now five years since the founding of Regulus Therapeutics, and still no program has made it into the clinic.  Such a performance is certainly not good enough to support an IPO these days for which the company, based on job postings, appears to have had ambitions for for some time now.  With remaining ~25M in cash and an annual burn rate of around that, the revenues recognized from the AZ deal may well be the substitute for a public offering.  

As it was not disclosed how much of the $28M was for equity in Regulus, other than the cash added to Regulus’ balance sheet it is really difficult to tell whether the dealmakers at Regulus will be all smiles about it.  What’s more, the miR-33 atherosclerosis program which had yielded exciting data (including in non-human primates) in enhancing reverse cholesterol transport with a subsequent reduction in plaque size seems to be spoken for already at this early stage (before the magical phase II value-inflection point).

It is unclear what is causing the apparent delay of Regulus progressing programs into the clinic.  Is it the complexity of microRNA biology where each microRNAs often has dozens of targets, or has it something to do with the concern that the 2'-fluoro modification initially favored by the company may be genotoxic?

AstraZeneca’s Return to ‘Proper’ RNA Therapeutics

When AstraZeneca, in its farewell to Silence Therapeutics in January, said that the Silence effort was part of its overallstrategy to explore this important therapeutic approach [i.e. RNA Therapeutics], I took it to mean that the Silence projects may not be their top priority in this regard and that it already had other oligonucleotide technologies and companies in mind.  

Confusingly, half a year before that AstraZeneca entered into a ‘small molecule RNA Therapeutics’alliance with PTC.  Beware of companies, particularly prevalent in the (cancer) stem cell field it seems, which claim to be pursuing new platforms and treatment paradigms, when the innovation actually rests on just tying pre-existing molecules to new biological rationalizations.  

Classic Big Pharma I thought then: advertising innovation, but really sticking to its old, rusty guns; and if AstraZeneca is widely thought to have the industry’s worst productivity, you have to look no further for its causes.

Yesterday’s news was therefore quite encouraging in that AstraZeneca has not given up on developing ‘proper’ RNA Therapeutics by which I mean that nucleic acids are the therapeutic agents.  Whether the stream of positive clinical results in oligonucleotide therapeutics (and vaccines) have provided AZ encouragement to go down this path is unclear, but they certainly did not hurt.  Maybe it will even make AZ re-energize its RNAi Therapeutics efforts (e.g. for oncology or respiratory disease).

Want to learn more about microRNAs?  Register for the 2012 Janssen Award Symposium in New York.

Next post: Tekmira's very busy quarter.


@BioDueDiligence said...

Agree - Regulus IPO is not imminent. Very curious to see whether the valuation continued to grow at its torrid pace with these latest investments by AZN and BIIB. Will be interesting - now Regulus is a biotech owned by five biopharma companies and zero VC investors. Who makes that exit happen?

Anonymous said...

Its difficult to judge what the depth of AZ's commitment to the oligonucleotide space may be.
They are flailing in the foam.

Anonymous said...

Dirk,have you any idea of the pre money value Regulus will look for in the IPO?

Dirk Haussecker said...

I would guess in the 70-90M range.

Anonymous said...

What kind of market cap. would this carry at a guess?

Anonymous said...

If the IPO is successful it should have a good effect on the price of RXi since their single stranded IP is designed for mRNA.

Giles said...

The Regulus valuation is possibly 3x what you thought on 20th August and more money to be raised.Does this surprise you?Does it augur well for any other listed RNAi plays other than Tekmira?

Dirk Haussecker said...

Indeed, Giles, I stand corrected. It's difficult to pin down the absolute value of developmental-stage biotech companies, but in a relative sense the $200-250M market cap Regulus aims for makes a mockery of Tekmira's $40M market cap and possibly that of other RNAi Therapeutics companies, too.

Anonymous said...

It is rather curious that AZ does not seem to have done their due diligence concerning miR-33. Mass General has very strong miR-33 IP, which was actually sought after by Regulus. One wonders what might happen if Mass General decides to challenge the NYU/Regulus miR-33 patents at the USPTO...

Anonymous said...

Tekmira's and Benitec's market caps of $40M & $16M respectively are well undervalued compared to other RNAi players

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