Regulus Therapeutics, Spinoff of Isis and Alnylam, Forms $750M MicroRNA Deal With Sanofi

Xconomy San Diego — 

Regulus Therapeutics has found its second big ally from Big Pharma. The Carlsbad, CA-based company has forged what it calls its most lucrative partnership yet to discover, develop, and someday co-market microRNA drugs with Paris-based pharma giant Sanofi-Aventis (NYSE: SNY).

Regulus, formed in 2008 by Cambridge, MA-based Alnylam Pharmaceuticals (NASDAQ: ALNY]) and Carlsbad’s Isis Pharmaceuticals (NASDAQ: ISIS), will receive a $25 million upfront payment from Sanofi, a $10 million future equity investment, and support for R&D expenses over the next three years with an option to add two more years. Regulus stands to collect as much as $750 million in milestone payments over time if it reaches all the goals of the alliance, making the deal potentially bigger than the roughly $600 million one Regulus struck with GlaxoSmithKline in April 2008.

“This new alliance is indicative of the interest at pharmaceutical companies in new approaches for innovative medicines that have the potential to transform disease,” said Alnylam CEO John Maraganore, in a conference call this morning.

“We believe the future of Regulus is very bright,” said Isis CEO Stanley Crooke.

MicroRNA was only discovered in humans about a decade ago, but has emerged as one of the hottest concepts in biology. The idea behind Regulus and other microRNA-based efforts is to create drugs that can inhibit these specific stretches of RNA, which regulate how entire networks of proteins are expressed. By hitting switches that control protein networks, scientists hope to have success against complex diseases like diabetes, cancer, and inflammation that involve a symphony of multiple genes and proteins. Hitting these networks may have more power against these complex conditions than more traditional approaches that tend to rely on specifically inhibiting a single gene or protein, scientists say.

Exciting as it has all been for scientists, Regulus hasn’t yet brought any drug candidates into clinical trials. Regulus has said it hopes to start its first clinical trial in the second half of 2011. Regulus is racing against a number of competitors have also sprouted up to take advantage of the concept, including Denmark-based Santaris Pharma, Seattle-based Mirina, Boulder, CO-based Miragen Therapeutics, and Austin, TX-based Mirna Therapeutics.

But at this point, Regulus appears to have secured the broadest support from Big Pharma partners. GlaxoSmithKline has actually formed two partnerships with Regulus, the second of which came back in February. The second deal calls for the companies to work together on a microRNA-blocking drug for hepatitis C, while the original deal called for Regulus to work on four inflammatory disease candidates.

The new deal with Sanofi will originally focus on four different targets for fibrosis, including Regulus’ lead program against microRNA-21. Sanofi is also getting an option to expand its use of the technology, which could generate another $50 million to Regulus if it’s exercised. Regulus stands to collect royalties on sales if any of the drug candidates become products, while Sanofi is responsible for 100 percent of the development and commercialization costs of the drugs, Regulus said in a statement.

Regulus has secured about $60 million in cash through its various partnerships and financings, which is enough to operate its business for several years, Regulus CEO Kleanthis Xanthopoulos said on the conference call.

Both Isis and Alnylam will receive $1.8 million payments from Regulus, or about a 7.5 percent cut of Regulus’ $25 million upfront payment. The parent companies, in a separate statement, said they are entitled to a similar percentage on future milestone payments that Regulus could earn from the Sanofi deal.

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