Regulus, the MicroRNA Child of Isis and Alnylam, Strikes Potential $150M Deal with Glaxo

2/25/10Follow @xconomy

Two years have passed since GlaxoSmithKline anointed a startup called Regulus Therapeutics as a leader in the bleeding-edge world of microRNA drugs, and now the pharma giant has made clear it likes what it sees so far.

Regulus, a Carlsbad, CA-based spinoff from neighboring Isis Pharmaceuticals and Cambridge, MA-based Alnylam Pharmaceuticals, is announcing today it has clinched a second collaboration with Glaxo to develop a microRNA drug for hepatitis C. The new deal provides undisclosed upfront cash, milestone payments potentially worth $150 million, and escalating royalties worth a double-digit percentage of worldwide sales if the drug reaches the market. Glaxo’s upfront payment reimburses Regulus for its R&D work to date, and the big company will assume the expenses of clinical trials.

This is the second time Glaxo has pulled out its checkbook for Regulus, after it agreed to pay as much as $600 million in April 2008 to develop drugs against four microRNA targets for inflammatory diseases. It was a strong statement for the field of microRNA therapies, which are thought to have broad potential as a new class of treatment because they can affect not just one gene or protein in isolation, but full networks of genes—which might be useful in treating complex diseases like diabetes or cancer. Regulus hasn’t yet advanced any of these drugs that work this way into a clinical trial. But this new deal will allow it to move its lead candidate, a blocker of microRNA-122, into its first clinical trial as a hepatitis C therapy in the second half of 2011, according to CEO Kleanthis Xanthopoulos.

“GSK really made a bold and visionary move in the fledgling field of microRNA a couple of years ago, and by selecting us as the lead company,” Xanthopoulos says.

Kleanthis Xanthopoulos

Kleanthis Xanthopoulos

Xanthopoulos picked Glaxo as the partner on this lead program partly because it shows the big company is happy with Regulus’ progress, the terms were good for a single drug program, and he personally knows Glaxo’s senior vice president of anti-infectives, Zhi Hong, has the right expertise to move ahead with the miR-122 blocker.

Regulus and Glaxo are moving ahead fast with this program partly because of the work done by a competitor, Denmark-based Santaris Pharma, Xanthopoulos says. Santaris published a big paper in Science in December that said its own miR-122 blocker produced a powerful effect against the hepatitis C virus in chimpanzees—an animal model that is thought to be highly predictive of what will happen next in humans. That study confirmed what Regulus was seeing in its own animal experiments, and helped accelerate its program by providing some more clarity on the appropriate dosing, Xanthopoulos says.

The unhappy result of the Santaris paper is that it potentially puts the companies on a collision course over who owns the relevant intellectual property. Regulus contends it has exclusive rights to miR-122 blockers and their use against hepatitis C in the U.S., Europe, and Japan, based on a number of patents and applications which it is citing in a statement today. Xanthopoulos didn’t mince words when he talked who he thinks has the controlling IP.

“GlaxoSmithKline had the benefit of seeing their good preclinical data, but they saw that Regulus completely dominates this intellectual property space, so they decided to go with Regulus,” Xanthopoulos says. “Santaris did a great favor to us by doing that experiment and helping accelerate our work. They played their card, but they played it badly by violating our IP. They are basically dead in the water. We have all the IP. We need nothing from them, and they need everything from us.”

Regulus hasn’t brought any litigation against Santaris to force it to pay for a miR-122 blocker license. But, “they have been put on notice,” Xanthopoulos says.

Art Levin, the president of Santaris’ U.S. operations in San Diego, has a different view of who owns what. “Santaris Pharma believes that it has freedom to operate with its miR-122 targeting compound SPC 3649 for the treatment of hepatitis C,” Levin said in an e-mail.

It’s clear why both companies see a miR-122 blocker as a promising candidate for hepatitis C. The whole field has been rejuvenated in recent years, partly because of the success Cambridge, MA-based Vertex Pharmaceuticals (NASDAQ: VRTX) has seen by increasing cure rates of patients with this chronic liver infection with a protease inhibitor drug. The market for this compound, telaprevir, could exceed $2 billion in U.S. sales after just a couple years on the market, analysts say, and the global opportunity is vast with an estimated 170 million people infected. Researchers are keen on creating cocktails of different classes of antivirals, as a way to get rid of the standard regimen of pegylated interferon alpha and ribavirin, which isn’t terribly effective, and causes flu-like symptoms that make patients miserable for months at a time.

One of the weaknesses of telaprevir and other drugs currently in clinical trials is that it only works for a segment of patients with what’s known as genotype 1 infections. A miR-122 blocker ought to work against all the various genotypes of the virus, Xanthopoulos says.

But since microRNA is still a field in its infancy, it’s especially hard to predict how this program will play out. The same target, miR-122, is also thought to have potential as a target for cholesterol-lowering drugs, based on data Regulus recently presented from experiments in monkeys, mice, and rats. Scientists don’t know why it’s able to reduce cholesterol by as much as 40 percent in the bloodstream, although it might work by prevent its transport, according to research presented at a Keystone symposium last month.

Regulus prefers to develop miR-122 as a hepatitis C drug initially, Xanthopoulos says, because it has potential as a differentiated product, it could arrive on the market sooner, and the competitive landscape is less daunting—even though hepatitis C is crowded with a lot of pharmaceuticals currently in the industry pipeline. Xanthopoulos is also deeply familiar with the hepatitis C field, as a former CEO of San Diego-based Anadys Pharmaceuticals (NASDAQ: ANDS), the developer of a different type of hepatitis C therapy.

Regulus has a number of programs running simultaneously, and I didn’t really have enough time on the phone to cover them all. It has 40 employees at the moment, and expects to grow to 50 by the end of the year, Xanthopoulos says. Some of them are still working on a miR-21 blocker that scientists have said holds potential as a treatment for congestive heart failure. That program is still going, and Xanthopoulos dropped a hint that other partners may soon belly up to the bar for that or other programs in the pipeline.

“The year is still young,” he says.

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