Why Regulus Therapeutics Inc. Shares Soared Higher Today

By Markets Fool.com

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

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What: Shares in Regulus Therapeutics vaulted higher by more than 15% earlier today after the company announced that collaboration partner AstraZeneca Plc is advancing Regulus' RG-125 into human clinical trials.

So What: RG-125 is the first compound from Regulus and AstraZeneca's collaboration to make its way into clinical trials.

The drug is a potential therapy for nonalcoholic steatohepatitis, or NASH, in type 2 diabetics.NASH is an increasingly common disease that has become a common cause of liver transplant.

NASH is characterized by a buildup of fat in the liver, inflammation, and liver scarring. According to the National Institute of Diabetes and Digestive and Kidney Diseases, NASH affects between 2% and 5% of Americans. Overall, roughly 10% of NASH patients will see their disease progress to a point where a transplant may be necessary.

Now What: AstraZeneca's decision means that it will take over developing RG-125 and hand over a $2.5 million milestone payment to Regulus. It also adds validity to Regulus' therapeutic approach of targeting micro RNA responsible for the regulation of gene expression.

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Since RG-125 is only now moving into human clinical trials, it's difficult for me to get too excited about this announcement. Over 90% of drugs entering phase 1 trials never make it to market, and although RNA research is incredibly intriguing, it's still a bit early in development to say that Regulus could have a commercial success on its hands with RG-125.

I have little doubt that NASH is an increasingly important disease that will affect millions more people globally as obesity rates climb, soI'll be rooting for RG-125 to succeed, butuntil we get some human trial results to digest, I don't think this one is worth chasing higher -- at least not on this news.

The article Why Regulus Therapeutics Inc. Shares Soared Higher Today originally appeared on Fool.com.

Todd Campbell has no position in any stocks mentioned. Todd owns E.B. Capital Markets, LLC. E.B. Capital's clients may or may not have positions in the companies mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.