[PART I. FINANCIAL INFORMATION](index=6&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements](index=6&type=section&id=Item%201.%20Financial%20Statements) Regulus Therapeutics reported a $9.6 million net loss for Q1 2025, with $65.4 million in cash and investments, raising going concern doubts despite a pending Novartis acquisition Condensed Balance Sheet Data (in thousands) | Account | March 31, 2025 (Unaudited, in thousands) | December 31, 2024 (in thousands) | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $49,460 | $38,528 | | Short-term investments | $15,908 | $37,249 | | Total current assets | $71,694 | $82,345 | | Total assets | $74,826 | $84,181 | | **Liabilities & Equity** | | | | Total current liabilities | $4,397 | $7,499 | | Total liabilities | $5,798 | $7,773 | | Total stockholders' equity | $69,028 | $76,408 | Condensed Statement of Operations (in thousands, except per share data) | Metric | Three months ended March 31, 2025 (in thousands) | Three months ended March 31, 2024 (in thousands) | | :--- | :--- | :--- | | Research and development | $6,819 | $6,040 | | General and administrative | $3,719 | $2,786 | | Loss from operations | $(10,538) | $(8,826) | | Net loss | $(9,634) | $(8,469) | | Net loss per share, basic and diluted | $(0.15) | $(0.29) | Condensed Statement of Cash Flows (in thousands) | Activity | Three months ended March 31, 2025 (in thousands) | Three months ended March 31, 2024 (in thousands) | | :--- | :--- | :--- | | Net cash used in operating activities | $(10,613) | $(8,742) | | Net cash provided by (used in) investing activities | $21,500 | $(78,544) | | Net cash provided by financing activities | $45 | $93,105 | | Net increase in cash, cash equivalents and restricted cash | $10,932 | $5,819 | - The company's financial statements are prepared on a going concern basis, but **current liquidity, recurring losses, and negative cash flows raise substantial doubt** about its ability to continue operations for one year[27](index=27&type=chunk) - Regulus entered a merger agreement with Novartis AG on April 29, 2025, for a cash tender offer of **$7.00 per share plus a $7.00 CVR per share** upon milestone achievement[82](index=82&type=chunk)[83](index=83&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=24&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses microRNA therapeutics, positive farabursen Phase 1b results, a **$9.6 million net loss** for Q1 2025, and going concern doubts without the Novartis acquisition - The company is a clinical-stage biopharmaceutical firm focused on developing microRNA-targeting drugs, with lead candidate **farabursen in Phase 1b clinical development** for ADPKD[98](index=98&type=chunk) - Positive topline results from the farabursen Phase 1b study's fourth cohort showed a **mean halting of height-adjusted total kidney volume (htTKV) growth** over four months[118](index=118&type=chunk) Comparison of Operating Expenses (in thousands) | Expense Category | Q1 2025 (in thousands) | Q1 2024 (in thousands) | Change ($ in thousands) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Research and development | $6,819 | $6,040 | $779 | 13% | | General and administrative | $3,719 | $2,786 | $933 | 33.5% | - Increased R&D expenses were primarily due to **ADPKD program clinical advancement costs** and higher non-cash stock-based compensation, which also drove the increase in G&A expenses[131](index=131&type=chunk)[132](index=132&type=chunk) - As of March 31, 2025, the company held approximately **$65.4 million in cash and investments**, sufficient to fund operations only through Q1 2026, raising substantial doubt about its going concern ability if the Novartis merger is not completed[135](index=135&type=chunk)[136](index=136&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=31&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) Market risk primarily stems from interest rate fluctuations on short-term cash and investments, with a **10% interest rate change** not expected to materially affect asset fair value - Excess cash is invested in **money market funds and U.S. Treasury securities** to ensure liquidity and preserve principal[147](index=147&type=chunk) - Due to the short-term nature of investments, a hypothetical **10% change in interest rates** would not materially impact the portfolio's realized value[148](index=148&type=chunk) [Item 4. Controls and Procedures](index=31&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls and procedures were effective as of March 31, 2025, with no material changes to internal control over financial reporting during the quarter - Disclosure controls and procedures, evaluated by the CEO and CFO, were concluded to be **effective at a reasonable assurance level** as of March 31, 2025[150](index=150&type=chunk) - No material changes to internal control over financial reporting were identified during the last fiscal quarter[151](index=151&type=chunk) [PART II. OTHER INFORMATION](index=31&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=31&type=section&id=Item%201.%20Legal%20Proceedings) The company is not currently a party to any material legal proceedings - As of the report date, Regulus Therapeutics is **not a party to any material legal proceedings**[152](index=152&type=chunk) [Item 1A. Risk Factors](index=32&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant risks including the uncertainty of the Novartis acquisition, a history of losses, the unproven nature of microRNA therapeutics, potential clinical trial failures, reliance on third parties, and intellectual property and data security concerns - A primary risk is the potential failure to complete the pending Novartis acquisition, which could adversely affect the business and stock price, and may require a **$27.3 million termination fee**[154](index=154&type=chunk)[155](index=155&type=chunk)[156](index=156&type=chunk) - The company has a history of significant losses, with a **$569.2 million accumulated deficit** as of March 31, 2025, and current cash sufficient only through Q1 2026, raising substantial doubt about its going concern ability without the Novartis merger or additional capital[210](index=210&type=chunk)[217](index=217&type=chunk) - The company's novel microRNA technology drug discovery approach may not lead to marketable products, as **no microRNA-targeting therapeutic has yet received regulatory approval**[166](index=166&type=chunk) - Clinical trials for product candidates like farabursen may fail to demonstrate safety and efficacy, with no guarantee of successful final results or regulatory approval despite positive interim data[172](index=172&type=chunk)[188](index=188&type=chunk) - Reliance on third-party manufacturers with limited supply sources for clinical product candidates poses risks of **significant delays and increased costs** due to manufacturing or supply chain disruptions[232](index=232&type=chunk)[233](index=233&type=chunk) - The company faces risks of data security breaches and cyberattacks, with failure to protect sensitive data potentially leading to **regulatory actions, litigation, and reputational harm**[289](index=289&type=chunk)[297](index=297&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=66&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No unregistered sales of equity securities occurred during the period - No unregistered sales of equity securities occurred[342](index=342&type=chunk) [Item 3. Defaults Upon Senior Securities](index=66&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) No defaults upon senior securities occurred during the period - No defaults upon senior securities occurred[343](index=343&type=chunk) [Item 4. Mine Safety Disclosures](index=66&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - This item is not applicable to the company[346](index=346&type=chunk) [Item 5. Other Information](index=67&type=section&id=Item%205.%20Other%20Information) No other information is reported for the period - No other information is reported for the period[347](index=347&type=chunk) [Item 6. Exhibits](index=68&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including the Merger Agreement with Novartis, charter documents, and officer certifications - Key exhibits filed include the **Merger Agreement with Novartis AG**, various certificates of incorporation, and officer certifications[348](index=348&type=chunk)[349](index=349&type=chunk)

[Executive Summary & Key Highlights](index=1&type=section&id=Executive%20Summary%20%26%20Key%20Highlights) Regulus Therapeutics reported significant strategic and clinical progress in the first quarter of 2025, including a definitive acquisition agreement with Novartis for up to $1.7 billion and positive Phase 1b data for farabursen in ADPKD, leading to a planned Phase 3 trial in Q3 2025 - Regulus entered into an agreement to be acquired by Novartis for an initial **$7.00 per share** in cash, with a potential additional **$7.00 per share** through a Contingent Value Right (CVR), valuing the deal at up to approximately **$1.7 billion**[2](index=2&type=chunk)[8](index=8&type=chunk) - Positive topline data from the fourth cohort of the Phase 1b study of farabursen showed a mechanistic dose response and suggested a halt in kidney volume growth, supporting the initiation of a Phase 3 trial in **Q3 2025**[2](index=2&type=chunk)[4](index=4&type=chunk)[5](index=5&type=chunk) - The acquisition by Novartis is expected to be completed in the **second half of 2025**, subject to customary closing conditions[2](index=2&type=chunk)[9](index=9&type=chunk) [Program Updates](index=1&type=section&id=Program%20Updates) The company's lead program, farabursen for Autosomal Dominant Polycystic Kidney Disease (ADPKD), showed positive results in its Phase 1b Multiple-Ascending Dose (MAD) study. The data confirmed the appropriateness of a 300 mg fixed dose for the upcoming Phase 3 trial, for which the company has aligned with the FDA on key design elements [Farabursen for ADPKD](index=1&type=section&id=Farabursen%20for%20ADPKD) - In the completed fourth cohort of the Phase 1b MAD study (26 subjects), a fixed dose of **300 mg** of farabursen every other week for three months demonstrated a favorable safety profile[5](index=5&type=chunk) - Efficacy data from the fourth cohort showed a mechanistic response based on urinary polycystins 1 and 2 (PC1 and PC2) levels and a mean halting of height-adjusted total kidney volume (htTKV) growth over the study period[5](index=5&type=chunk) - Regulus has confirmed alignment with the FDA on the design of a single, pivotal Phase 3 study, planned for initiation in **Q3 2025**. The trial will use a **12-month htTKV endpoint** for potential Accelerated Approval and a **24-month eGFR endpoint** for Full Approval[7](index=7&type=chunk) [Corporate Developments](index=2&type=section&id=Corporate%20Developments) The primary corporate highlight is the definitive merger agreement with Novartis. The transaction, unanimously approved by both boards, is structured with an upfront cash payment and a contingent value right (CVR) tied to a regulatory milestone for farabursen [Acquisition by Novartis](index=2&type=section&id=Acquisition%20by%20Novartis) Novartis Acquisition Terms | Metric | Value | | :--- | :--- | | **Upfront Payment per Share** | $7.00 in cash | | **Contingent Value Right (CVR) per Share** | $7.00 in cash | | **Upfront Consideration** | $0.8 billion | | **Total Potential Consideration (including CVR)** | Approx. $1.7 billion | | **Expected Closing** | Second half of 2025 | - The CVR payment is contingent upon achieving a specific regulatory approval milestone for farabursen[8](index=8&type=chunk) - Completion is subject to customary closing conditions, including the tender of a majority of Regulus' outstanding shares and receipt of regulatory approvals[9](index=9&type=chunk) [Financial Results](index=2&type=section&id=Financial%20Results) For the first quarter ended March 31, 2025, Regulus reported a net loss of $9.6 million. The company's cash, cash equivalents, and short-term investments stood at $65.4 million, which is expected to fund operations into early 2026. Both R&D and G&A expenses increased compared to the same period in the prior year [Q1 2025 Financial Performance](index=2&type=section&id=Q1%2025%20Financial%20Performance) - As of March 31, 2025, the company held **$65.4 million** in cash, cash equivalents, and short-term investments, with an expected cash runway into **early 2026**[10](index=10&type=chunk) Q1 2025 vs Q1 2024 Financials (in millions) | Metric | Q1 2025 | Q1 2024 | Change | | :--- | :--- | :--- | :--- | | **R&D Expenses** | $6.8 | $6.0 | +$0.8 | | **G&A Expenses** | $3.7 | $2.8 | +$0.9 | | **Net Loss** | $9.6 | $8.5 | +$1.1 | | **Net Loss per Share** | $0.15 | $0.29 | - | [Condensed Financial Statements](index=6&type=section&id=Condensed%20Financial%20Statements) Selected Financial Information (In thousands, except per share data) | | **Three months ended March 31,** | | **As of** | | :--- | :--- | :--- | :--- | | | **2025** | **2024** | | | **Operating Expenses:** | | | | | Research and development | $6,819 | $6,040 | | | General and administrative | $3,719 | $2,786 | | | **Total operating expenses** | **$10,538** | **$8,826** | | | **Loss from operations** | **$(10,538)** | **$(8,826)** | | | Other income, net | $904 | $357 | | | **Net loss** | **$(9,634)** | **$(8,469)** | | | **Net loss per share, basic and diluted** | **$(0.15)** | **$(0.29)** | | | | | | **March 31, 2025** | **Dec 31, 2024** | | **Cash, cash equivalents and short-term investments** | | | $65,368 | $75,777 | | **Total assets** | | | $74,826 | $84,181 | | **Stockholders' equity** | | | $69,028 | $76,408 | [Company & Disease Background](index=3&type=section&id=Company%20%26%20Disease%20Background) This section provides context on Autosomal Dominant Polycystic Kidney Disease (ADPKD), a common genetic disorder with significant unmet medical need, detailing the mechanism of action for farabursen and Regulus Therapeutics' focus on microRNA-targeting medicines [About ADPKD](index=3&type=section&id=About%20ADPKD) - ADPKD is a common monogenic disorder caused by PKD1 or PKD2 gene mutations, leading to kidney cysts and end-stage renal disease in about **50% of patients by age 60**. It affects approximately **160,000 people** in the U.S.[13](index=13&type=chunk) [About Farabursen (RGLS8429)](index=3&type=section&id=About%20Farabursen%20%28RGLS8429%29) - Farabursen is a next-generation oligonucleotide designed to treat ADPKD by inhibiting miR-17, with a preferential targeting of the kidney. Clinical data to date shows it is well-tolerated and has a positive impact on disease biomarkers and kidney volume[14](index=14&type=chunk) [About Regulus Therapeutics](index=3&type=section&id=About%20Regulus%20Therapeutics) - Regulus Therapeutics is a San Diego-based biopharmaceutical company that focuses on discovering and developing innovative medicines that target microRNAs[15](index=15&type=chunk) [Legal Disclosures](index=3&type=section&id=Legal%20Disclosures) This section contains important legal information for investors, outlining the status of the tender offer by Novartis and including a standard forward-looking statements disclaimer detailing risks and uncertainties [Important Information About the Tender Offer](index=3&type=section&id=Important%20Information%20About%20the%20Tender%20Offer) - The tender offer has not yet commenced. Investors are strongly advised to read the tender offer statement on Schedule TO and the solicitation/recommendation statement on Schedule 14D-9, once they are filed with the SEC, as they will contain important information[16](index=16&type=chunk)[17](index=17&type=chunk) [Forward-Looking Statements](index=4&type=section&id=Forward-Looking%20Statements) - The press release contains forward-looking statements regarding the Novartis transaction, the potential of farabursen, and clinical trial plans. These statements are subject to significant risks and uncertainties[18](index=18&type=chunk) - Key risks include uncertainties in closing the transaction, failure to meet the CVR milestone, disruption to business operations, and potential for clinical development setbacks or regulatory hurdles[18](index=18&type=chunk)

Core Viewpoint - Regulus Therapeutics has entered into an acquisition agreement with Novartis, with an initial cash payment of $7.00 per share and potential additional cash through a contingent value right, totaling up to approximately $1.7 billion, expected to close in the second half of 2025 [1][8][9] Company Updates - The company reported positive topline data from the fourth cohort of patients in the Phase 1b multiple-ascending dose study of farabursen for treating autosomal dominant polycystic kidney disease (ADPKD), indicating a mechanistic dose response and halting of kidney volume growth [3][4] - A pivotal Phase 3 trial is set to begin in the third quarter of 2025, with alignment confirmed with the FDA on trial design and endpoints [6][14] Financial Results - As of March 31, 2025, the company had $65.4 million in cash, cash equivalents, and short-term investments, with a cash runway expected to extend into early 2026 [10] - Research and development expenses for Q1 2025 were $6.8 million, up from $6.0 million in Q1 2024, while general and administrative expenses increased to $3.7 million from $2.8 million in the same period [11][12] - The net loss for Q1 2025 was $9.6 million, or $0.15 per share, compared to a net loss of $8.5 million, or $0.29 per share, in Q1 2024 [12][22]

Group 1 - Monteverde & Associates PC has recovered millions for shareholders and is recognized as a Top 50 Firm in the 2024 ISS Securities Class Action Services Report [1] - The firm is investigating Regulus Therapeutics Inc. regarding its proposed merger with Novartis AG, which includes an initial payment of $7.00 per share and a non-tradeable CVR of $7.00 per share contingent on regulatory approval [1] Group 2 - The firm operates from the Empire State Building in New York City and has a successful track record in trial and appellate courts, including the U.S. Supreme Court [2] - Monteverde & Associates PC emphasizes that no company, director, or officer is above the law, and offers free information to shareholders concerned about their investments [3]

Group 1 - Novartis has reached an agreement to acquire Regulus Therapeutics for up to $1.7 billion, with an upfront payment of $800 million in cash at $7 per share [1] - Regulus shareholders will receive a contingent value right (CVR) that could provide an additional $900 million if the drug farabursen is approved for treating autosomal dominant polycystic kidney disease (ADPKD) [1] - Novartis is actively seeking acquisition opportunities to enhance sales post-2025, amid a downward trend in biotechnology company valuations [1] Group 2 - Following the acquisition announcement, Regulus Therapeutics' stock surged by 134% in pre-market trading [2] - Novartis' stock remained stable in the Swiss market, with a nearly 6% increase over the past 12 months [2] - The acquisition has been approved by both companies' boards and is expected to be completed in the second half of 2025 [2]

Core Viewpoint - Novartis has announced an agreement to acquire the biotechnology company Regulus Therapeutics for up to $1.7 billion, which includes an $800 million upfront payment and potential additional payments of up to $900 million upon achieving future regulatory milestones [1] Group 1: Acquisition Details - The total potential value of the acquisition is $1.7 billion, consisting of an $800 million upfront payment and up to $900 million contingent on regulatory milestones [1] - The transaction is expected to be completed in the second half of this year [1] Group 2: Company Focus - Regulus Therapeutics is focused on developing microRNA therapies, particularly targeting autosomal dominant polycystic kidney disease (ADPKD) [1]

Core Viewpoint - Novartis has announced an agreement to acquire Regulus Therapeutics, focusing on developing microRNA therapeutics for autosomal dominant polycystic kidney disease (ADPKD) with the lead asset farabursen, which is positioned as a potential first-in-class treatment [1][2]. Transaction Details - The acquisition involves a tender offer for all outstanding shares of Regulus common stock at USD 7 per share, with an additional contingent value right (CVR) of up to USD 7 per share based on regulatory milestones [3][8]. - The transaction is expected to close in the second half of 2025, pending customary closing conditions and regulatory approvals [5][8]. Clinical Development - Farabursen is an investigational microRNA inhibitor targeting miR-17, designed to reduce cyst growth and kidney size while delaying disease progression in ADPKD [2][8]. - Regulus recently completed a Phase 1b clinical trial for farabursen, showing promising efficacy and safety results, including impacts on urinary polycystin and height-adjusted total kidney volume [2][8]. Novartis' Commitment to Renal Health - Novartis has a long-standing commitment to renal health, with recent FDA approvals for treatments addressing significant unmet needs in kidney diseases, including IgA nephropathy and C3 glomerulopathy [6].

Core Insights - Regulus Therapeutics Inc. (RGLS) has reached a significant support level, indicating a potential investment opportunity from a technical perspective [1] - The recent breakout of RGLS's 50-day simple moving average above its 200-day moving average signifies a "golden cross," which is a bullish indicator [1] - RGLS has experienced a substantial price increase of 97.7% over the last four weeks, suggesting strong upward momentum [3] Technical Analysis - A golden cross event consists of three stages: the stock price bottoms out, the shorter moving average crosses above the longer moving average, and the stock maintains upward momentum [2] - The occurrence of a golden cross is contrasted with a death cross, which indicates potential bearish price movement [2] Earnings Expectations - RGLS's earnings expectations have shown positive changes, with two upward revisions and no downward revisions in the last 60 days, enhancing the bullish outlook [3] - The Zacks Consensus Estimate for RGLS has also moved upward, further supporting the positive sentiment around the stock [3] Investment Consideration - Given the technical indicators and positive earnings estimate movements, RGLS is recommended for investors to consider adding to their watchlist [5]

Core Viewpoint - Regulus Therapeutics Inc. is actively participating in the 2025 Oppenheimer Innovation on the Island Biotech Summit, highlighting its focus on innovative medicines targeting microRNAs [1]. Company Overview - Regulus Therapeutics Inc. is a biopharmaceutical company listed on Nasdaq (RGLS) that specializes in the discovery and development of medicines aimed at microRNAs [3]. - The company has developed a robust pipeline supported by a strong intellectual property portfolio in the microRNA sector [3]. - Regulus is headquartered in San Diego, California [3]. Event Participation - Jay Hagan, the CEO of Regulus, will present at the summit on April 9th, 2025, at 11:32 a.m. ET [1]. - The live event and its replay will be accessible through the investor relations section of the company's website for 90 days post-presentation [2].

Core Insights - Regulus Therapeutics announced positive topline results from the fourth cohort of its Phase 1b MAD study of farabursen for treating Autosomal Dominant Polycystic Kidney Disease (ADPKD) [2][4] - The study demonstrated a significant halting of kidney volume growth in patients receiving a 300 mg fixed dose of farabursen over four months [1][4] - The company is on track to initiate a Phase 3 pivotal trial in Q3 2025, with a focus on a 12-month endpoint for kidney volume change [2][6] Study Details - The Phase 1b MAD study was a double-blind, placebo-controlled trial assessing the safety, tolerability, pharmacokinetics, and pharmacodynamics of farabursen in adult ADPKD patients [3] - The study included three weight-based dose levels and one fixed dose level, with primary endpoints focused on urinary PC1 and PC2 changes, and an exploratory examination of htTKV growth rate [3][4] - In the fourth cohort, 26 subjects received 300 mg of farabursen bi-weekly for three months, showing consistent mechanistic responses and halting htTKV growth [4][5] Efficacy and Safety - Patients treated with farabursen showed a mean htTKV growth rate of 0.05%, compared to 2.58% in placebo subjects, indicating a significant reduction in kidney volume growth [5] - Urinary levels of PC1 and PC2 increased significantly, correlating with the observed effects on kidney volume [5] - Farabursen demonstrated a favorable safety and tolerability profile, consistent with earlier cohorts, with no serious adverse events reported [5][9] Future Plans - The company has confirmed alignment with the FDA regarding the Phase 3 trial design, which includes a 12-month htTKV endpoint for Accelerated Approval and a 24-month eGFR endpoint for Full Approval [6][9] - Regulus aims to advance farabursen as a potential treatment option for ADPKD, addressing a significant unmet medical need [6][10] Background on ADPKD - ADPKD is a common genetic disorder characterized by the development of multiple cysts in the kidneys, leading to end-stage renal disease in approximately 50% of patients by age 60 [8] - The disease affects around 160,000 individuals in the U.S., with a global prevalence estimated between 4 to 7 million [8]