Regulus, Leading Developer of MicroRNA Drugs, Prepares to Get Independence from Alnylam and Isis

1/21/09Follow @xconomy

Regulus Therapeutics has shown it can crawl, now it’s ready to walk. The fledgling Carlsbad, CA-based company is taking steps to raise a large round of private investment capital, and become a more independent company developing a new breed of microRNA-based drugs.

Regulus plans to raise “a very respectable amount” of capital from private investors, which will allow it to reorganize as an independent corporation, says Regulus CEO Kleanthis Xanthopoulos. The company currently operates as a joint venture formed by Carlsbad, CA-based Isis Pharmaceuticals and Cambridge, MA-based Alnylam Pharmaceuticals. Xanthopoulos discussed the plan after a series of meetings with investors and potential partners at the JP Morgan Healthcare Conference last week in San Francisco.

The company, founded less than 18 months ago, made waves in the scientific community in late November. That’s when it published results in Nature from a series of experiments that showed for the first time that blocking microRNA targets in mice was an effective way to prevent and treat congestive heart failure. MicroRNAs are tiny substances first discovered in humans in 2001. They are thought to have big potential as drugs, because they can affect not just one gene or protein in isolation, but rather full networks of genes. That might be useful in treating complex diseases like diabetes or heart failure, where multiple genes are thought to be out of whack.

The company has been able to benefit from getting intellectual property, office space, and staff support from its corporate parents, but apparently the offspring yearns for an ability to raise its own cash.

“I’m not in a position to issue equity now because I don’t have structure to do it since I’m in a joint venture,” Xanthopoulos says. Once Regulus re-organizes with new bylaws as a Delaware corporation, then Xanthopoulos can issue new equity shares, and dole out stock options to employees, instead of offering them stakes in Alnylam or Isis, he says.

The new form of Regulus will have to go through a “branding exercise,” Xanthopoulos says. Isis Pharmaceuticals CEO Stanley Crooke called Regulus a “satellite company” during his presentation, while Alnylam’s John Maraganore calls it a “joint venture.” Both said they were pleased with the model of setting up an independent entity to focus exclusively on a promising field like microRNA, rather than trying to keep it in-house as part of a bigger portfolio, where presumably, … Next Page »

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