Wells Fargo Reacts To Regulus News Of FDA Request For Info Regarding Clinical Hold

Wells Fargo maintained its Outperform rating on shares of Regulus Therapeutics, Inc. RGLS but lowered its valuation range following an announcement from the company that it has received communication from the FDA to solve the clinical hold on its hepatitis C virus drug, RG-101.

Wells Fargo's biotechnology analyst Jim Birchenough noted the FDA had placed clinical hold on the RG-101 in June after the occurrence of a second serious incident of jaundice. Wells Fargo noted the FDA required among other things detailed safety data analysis from pre-clinical and clinical studies and exploration of potential mechanisms of hepatoxicity in non-clinical models.

Regulus is expected to submit the information sought for by the FDA by early fourth quarter. The FDA in turn has to communicate its decision within 30 days of receipt of the complete response to the issues.

The firm noted that management update from Regulus suggests that data requested is available internally. The company also believes elevated bilirubin is unlikely to have been due to drug-induced liver injury. However, believing that the FDA may not see the benefits of a 4-week or shorter course of hepatitis virus treatment, the firm increased its risk adjustment for RG101 value.

Wells Fargo lowered its valuation range for the shares of the company to $6.75-$8 from $16-$21. The firm believes that at current valuation, Regulus offers a favorable risk-reward.