Why Shares of Regulus Therapeutics Inc. Crashed

By George BudwellFool.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.

What: Shares of Regulus Therapeutics broke down today, falling by over 10% after the company released disappointing news for its closely watched hep C treatment RG-101. Specifically, Regulus noted that only 64% of patients receiving a single 4 mg/kg subcutaneous dose of the experimental treatment (9 out of 14 total) were effectively clear of the virus after about 8 weeks or 57 days.

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Although these patients will need to be followed until the standard 12-week benchmark is reached, this low effective cure rate so far doesn't appear to bode well for the drug.

So what: What's important to understand is that the currently available treatments from AbbVie and Gilead Sciences tend to show functional cures of between 90% to 99%, depending on the patient population. So 64% simply won't cut it.

Topping it off, Achillion Pharmaceuticals announced stellar resultsforits experimental hep C drug, ACH-3102, this morning, with the compound helping to produce 100% cure rates after a mere 6-weeks of treatment. In short, Regulus appears to be way behind the proverbial eight ball when it comes to developing a next-generation hep C treatment at this point.

Now what: Although management tried to sound optimistic about today's top-line data release, they did admit to a change in their developmental plans for RG-101 moving forward. Namely, future studies will center on combining RG-101 with other next-gen treatments in order to generate sustained responses, as well as upping the number of injections. Put simply, RG-101 probably won't see the light of day as a monotherapy anytime soon.

Given that Regulus is unlikely to beat out the long-line of competitors gunning to develop hep C therapies with shorter treatment times, RG-101's value proposition looks significantly diminished following this data release. So today's drop does appear to be justified -- and I'm not too confident in the stock's prospects here.

The article Why Shares of Regulus Therapeutics Inc. Crashed originally appeared on Fool.com.

George Budwell owns shares of AbbVie and Gilead Sciences. The Motley Fool recommends Gilead Sciences. The Motley Fool owns shares of Gilead Sciences. 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.

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