Regulus(RGLS) - 2025 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Financial Statements 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] - 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][83] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses microRNA therapeutics, positive farabursen Phase 1b results, a $9.6 million net loss for Q1 2025, and going concern doubts without the Novartis acquisition - The company is a clinical-stage biopharmaceutical firm focused on developing microRNA-targeting drugs, with lead candidate farabursen in Phase 1b clinical development for ADPKD[98] - Positive topline results from the farabursen Phase 1b study's fourth cohort showed a mean halting of height-adjusted total kidney volume (htTKV) growth over four months[118] Comparison of Operating Expenses (in thousands) | Expense Category | Q1 2025 (in thousands) | Q1 2024 (in thousands) | Change ($ 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][132] - 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][136] Item 3. Quantitative and Qualitative Disclosures about Market Risk 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] - 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] Item 4. Controls and Procedures 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] - No material changes to internal control over financial reporting were identified during the last fiscal quarter[151] PART II. OTHER INFORMATION Item 1. Legal Proceedings 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] Item 1A. Risk Factors 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][155][156] - 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][217] - 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] - 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][188] - 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][233] - 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][297] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds No unregistered sales of equity securities occurred during the period - No unregistered sales of equity securities occurred[342] Item 3. Defaults Upon Senior Securities No defaults upon senior securities occurred during the period - No defaults upon senior securities occurred[343] Item 4. Mine Safety Disclosures This item is not applicable to the company - This item is not applicable to the company[346] Item 5. Other Information No other information is reported for the period - No other information is reported for the period[347] Item 6. Exhibits 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][349]