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On Thursday, Leerink Partners revised their stance on Regulus (NASDAQ:RGLS) Therapeutics stock, downgrading it to Market Perform from Outperform, while simultaneously increasing the price target to $7.00 from $6.00. The adjustment in rating and target follows the announcement of Regulus’s acquisition by pharmaceutical giant Novartis (SIX:NOVN) for approximately $0.8 billion. According to InvestingPro data, the stock has delivered an impressive 435% return over the past six months, with technical indicators suggesting overbought conditions.
Regulus Therapeutics had entered into an agreement to be acquired by Novartis for $7 per share in cash at closing. This acquisition price is notably higher than Regulus’s recent stock performance, offering a 274% premium over the 60-day volume-weighted average stock price and a 108% premium over the closing price on April 29, 2025. With a current market capitalization of $528.62 million and a strong current ratio of 10.98, InvestingPro analysis shows the company maintains robust liquidity position. Discover 14 additional key insights about RGLS with an InvestingPro subscription.
The offer from Novartis also represents a significant premium over the average investment of the top 15 institutional shareholders in Regulus. In addition to the cash payment, Regulus shareholders are poised to receive a contingent value right (CVR) of $7 per share, which is dependent on the US approval of Regulus’s lead asset, farabursen, for the treatment of autosomal dominant polycystic kidney disease (ADPKD) by December 31, 2034.
The acquisition by Novartis underscores the value of Regulus’s pipeline, with farabursen being a key driver in the deal. The CVR component of the deal ties the future payout to the success of this lead asset, reflecting the potential Novartis sees in the treatment’s approval and commercialization.
The market’s reaction to the acquisition and the subsequent rating downgrade reflects the near-term completion of the acquisition process, as Regulus transitions from an independent entity to part of the Novartis portfolio.
In other recent news, Regulus Therapeutics has announced a significant acquisition agreement with Novartis, which could amount to $1.7 billion. The deal includes an initial cash payment of $0.8 billion and a contingent value right (CVR) that could add another $0.9 billion, contingent on regulatory approval of Regulus’ lead product candidate, farabursen. This acquisition is expected to be completed in the second half of 2025, pending customary closing conditions and regulatory approvals. Meanwhile, Regulus has reported promising results from its Phase 1b clinical trial of farabursen, showing potential efficacy in treating autosomal dominant polycystic kidney disease (ADPKD).
Analyst activity has been notable, with Wells Fargo (NYSE:WFC) upgrading Regulus from Equal Weight to Overweight and raising the price target from $3.00 to $6.00, reflecting confidence in the company’s clinical progress. Furthermore, H.C. Wainwright has maintained a Buy rating with a $10 price target, citing positive interim results from the farabursen study. Regulus also reported a net loss per share of $0.20 for the fourth quarter, slightly better than analyst estimates.
The company has a cash position of $75.8 million, which is expected to fund operations into early 2026. Investors are closely watching Regulus as it prepares to advance farabursen into a pivotal Phase 3 trial later this year. The anticipated trial will focus on the drug’s impact on kidney volume and filtration rate, key metrics for potential accelerated and full approval.
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