Regulus Therapeutics Inks Acquisition with Novartis in Deal Worth $1.7 billion.
The Swiss pharmaceutical company aims to bring to more patients a kidney-disease treatment developed by Regulus
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San Diego-based Regulus Therapeutics, a publicly-traded biotech firm founded nearly two decades ago has been acquired by Novartis AG in a deal valued at up to $1.7 billion.
Regulus Therapeutics shareholders will also receive a '“contingent value right,” which entitles them to a further $900 million if regulatory approval is secured for farabursen, which seeks to treat patients living with ADPKD, the most common genetic cause of renal failure.
The deal is expected to bolster the company’s lineup of kidney disease drugs in development, and will also provide access to Regulus' platform to develop treatments targeting a type of genetic material called microRNAs.
“The team at Regulus has done meaningful foundational work with farabusen and we look forward to investigating its potential further as we aim to bring a better treatment option to patients in need,” Shreeram Aradhye, the chief medical officer at Novartis, said in a statement.
Founding Story
Regulus Therapeutics was founded in 2007 as a joint venture between Cambridge-based Alnylam Pharmaceuticals and Carlsbad-based Ionis Pharmaceuticals.
Kleanthis Xanthopoulos, served as the former President and CEO of Regulus Therapeutics from 2007 to 2015. During his tenure, he grew the public biotech from a $1 billion valued company at the height of 2014. Mr. Xanthopoulos, is now the Chairman of the Board and CEO of Shoreline Biosciences, which was founded in 2020 and has raised $300 million, to date.
Jay Hagan is the President and CEO of Regulus in 2016 and has been with the firm for nearly a decade. He previously worked as the CFO at Orexigen Therapeutics (acquired by Nalpropion Pharmaceuticals for $75 million in 2018).
Investors in Regulus Therapeutics include Alnylam, Ionis, Adage Capital Partners L.P., Deep Track Capital, and New Enterprise Associates (NEA).
"I am proud of the work that our team at Regulus has achieved in advancing this important new therapy and would like to thank all of the patients, investigators, and the ADPKD community in moving our program forward to this important milestone,” said Jay Hagan, CEO of Regulus Therapeutics.
Novartis' established global development and commercial capabilities will enable this important new medicine to reach patients if approved, he said.
What’s to Expect Next
Shares in Regulus Therapeutics surged as much as 167 percent in pre-market trading in New York on Wednesday. Novartis stock was largely flat in trading in Switzerland on Wednesday but is up nearly 6 percent in the last 12 months.
The proposed deal has been approved by both boards and should complete in the second half of 2025. Evercore is serving as exclusive financial advisor, and Latham & Watkins LLP is serving as legal counsel to Regulus.
Once the offer is complete, a subsidiary of Novartis will be merged with Regulus and any remaining Regulus shares will be cancelled and converted into the right to receive the same merger consideration per share payable in the tender offer.
Novartis is hunting for deals that could boost its sales beyond 2025, said Harry Kirsch, Chief Financial Officer of Novartis, who sees prices dropping in biotech.
The agreement comes just weeks after Novartis, in a separate announcement, disclosed plans to build a $1.1 billion research hub in San Diego.
The Fortune 500 company did not give details on the center’s size, location or workforce numbers but said it would be a “state-of-the-art research facility” focused on developing future medicines and expected to open the hub between 2028 and 2029.