Clinical Hold For Regulus' RG101 Sparks A Downgrade At Wells Fargo

Regulus Therapeutics Inc RGLS saw one of its worst trading days after investors came down hard on the company following its announcement of continuation of clinical hold on RG101 for hepatitis C.

Wells Fargo didn’t spare the stock, as it downgraded shares to Market Perform and slashed its valuation range to $1 to $2 from $6.75 to $8, following the recent negative development and warned of a cash crunch at the company.

The company submitted a complete response to FDA late last year in response to the initial clinical hold of RG-101 due to two cases of serious adverse event, or SAE, of jaundice.

Regulus noted the FDA has since requested the final safety and efficacy data from ongoing RG-101 clinical and preclinical studies, which aren't available until fourth quarter of 2017. The FDA also requested additional expert review of liver safety data.

“With timelines extended to YE17 and with limited progress to date we are not optimistic that FDA concerns will be addressed,” analyst Jim Birchenough wrote in a note.

Birchenough also warned that Regulus may face liquidity shortages.

“While experience would suggest potential opportunity on buying into lead program disappointments, on broader pipeline opportunity, we believe that RGLS may have challenges getting to next meaningful pipeline events given limited cash runway to early 2018,” Birchenough highlighted.

Though the analyst sees value for Regulus anti-miR’s targeting microRNA’s, he believes that complexity of microRNA effects could make clinical development challenging if financial resources are limited.

At last check, shares of Regulus plunged 47.78 percent to $1.17 on a volume of 6.01 million versus its three-month average of 583.65 thousand shares. The stock, which set a new 52-week low of $1.05, is trading 87 percent below its 52-week high of $8.90.