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Regulus Shares Crumble As FDA Halts Testing of Hepatitis C Drug

Xconomy San Diego — 

A new wave of drugs has changed the way hepatitis C is treated. Regulus Therapeutics has not been part of that wave, but the company’s plans to join it took a big hit this afternoon.

La Jolla, CA-based Regulus (NASDAQ: RGLS) said that the FDA has suspended the clinical testing of  its lead drug, RG-101, because of safety problems.

Regulus reported that a second serious case of jaundice, or a yellowing of the skin and eyes, in a Phase 1 study of RG-101. The FDA, as a result, has ordered the suspension—what’s known as a clinical hold. Once it receives a formal letter from the FDA, Regulus says it will work with the agency to have the hold lifted.

Regulus said the hold won’t impact timelines for its three ongoing studies of RG-101, because it has already treated the patients in those trials—two Phase 2 studies and a single Phase 1 study.

Regulus said it would report the trial results at future scientific meetings, but investors don’t seem interested in waiting patiently. Shares plummeted almost 60 percent, to $2.15 apiece, in post-market trading on Monday.

RG-101 is Regulus’s most advanced drug prospect and is critical to its future. The company had $106 million in cash as of the end of March and took out a $30 million loan last week to support clinical development for the drug.

Regulus said the latest case of jaundice was in its Phase 1 study, in which RG-101 was given to patients with failed kidneys. The event was reported in a patient with hepatitis C and kidney failure roughly four months after the patient received a single dose of RG-101.

Regulus was formed in September 2007 as a joint venture between Cambridge, MA-based Alnylam Pharmaceuticals (NASDAQ: ALNY) and Carlsbad, CA-based Ionis Pharmaceuticals (NASDAQ: IONS). The company went public in 2012 at $4 per share, but closed as high as $22.08 in November 2014. Shares have been trending downward ever since, and Kleanthis Xanthopoulos, who had been the company’s CEO for seven years, abruptly resigned last June.

The company is developing drugs that block certain microRNAs, small strands of RNA that control networks of genes. It’s an unproven method of drug making, and RG-101 is Regulus’s most advanced bet. It blocks a strand of microRNA called mir122, which is in turn thought to stop the replication of the hepatitis C virus.

Regulus is a late comer to the hepatitis C race, however. FDA-approved pills from Gilead Sciences (NASDAQ: GILD), AbbVie (NYSE: ABBV), and Merck (NYSE: MRK) can wipe out various strains of hepatitis C in a matter of months. Regulus has been trying to show that a single long-lasting microRNA drug can shorten the needed time for a regimen of hepatitis C pills, which if proven, would impact the other major hepatitis C drug makers. In its two Phase 2 trials, for instance, RG-101 is either being administered before other experimental or approved hep C drugs (like Gilead’s sofosbuvir/ledipasvir (Harvoni)). Today’s news won’t help its case, however.

Regulus is hosting a conference call this afternoon to discuss the news.