Regulus Therapeutics Inc. [RGLS] Filings

10-Q 1 rgls-20240630.htm 10-Q rgls-20240630

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549


			FORM			10-Q

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2024


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM TO

Commission file number: 001-35670


			Regulus Therapeutics Inc. (Exact name of registrant as specified in its charter)


Delaware						26-4738379
(State or Other Jurisdiction of Incorporation or Organization)						(I.R.S. Employer Identification No.)

4224 Campus Point Court, Suite 210						92121
San Diego
CA
(Address of Principal Executive Offices)						(Zip Code)

858-202-6300

(Registrant’s Telephone Number, Including Area Code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class

Trading Symbol(s)

Name of Each Exchange on Which Registered

Common Stock, par value $0.001 per share

RGLS

The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No ¨

Indicate by check mark whether registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☐

Accelerated filer

☐

Non-accelerated filer

☒

Smaller reporting company

☒

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of August 2, 2024, the registrant had 65,465,876 shares of Common Stock ($0.001 par value) outstanding.

REGULUS THERAPEUTICS INC.

TABLE OF CONTENTS



PART I. FINANCIAL INFORMATION
Item 1. Financial Statements			3
Condensed Balance Sheets as of June 30, 2024 (Unaudited) and December 31, 2023			3
Condensed Statements of Operations and Comprehensive Loss for the three and six months ended June 30, 2024 and 2023 (Unaudited)			5
Condensed Statements of Changes in Stockholders' Equity (Deficit) for the three and six months ended June 30, 2024 and 2023 (Unaudited)			6
Condensed Statements of Cash Flows for the six months ended June 30, 2024 and 2023 (Unaudited)			7
Notes to Condensed Financial Statements (Unaudited)			8
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			16
Item 3. Quantitative and Qualitative Disclosures about Market Risk			23
Item 4. Controls and Procedures			23
PART II. OTHER INFORMATION
Item 1. Legal Proceedings			24
Item 1A. Risk Factors			24
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			52
Item 3. Defaults Upon Senior Securities			52
Item 4. Mine Safety Disclosures			52
Item 5. Other Information			53
Item 6. Exhibits			54

RISK FACTOR SUMMARY

Below is a summary of the material factors that make an investment in our common stock speculative or risky. This summary does not address all of the risks that we face. Additional discussion of the risks summarized in this risk factor summary, and other risks that we face, can be found below under the heading “Risk Factors” under Part II, Item 1A of this Quarterly Report and should be carefully considered, together with other information in this Quarterly Report before making investment decisions regarding our common stock.

•The approach we are taking to discover and develop drugs is novel and may never lead to marketable products.

•We may not be successful in our efforts to identify or discover potential product candidates.

•Preclinical and clinical studies of our product candidates may not be successful. Success in preclinical studies may not be indicative of the results that may occur in clinical trials for our product candidates. If we are unable to generate successful results from our preclinical and clinical studies of our product candidates, or we experience significant delays in doing so, our business may be materially harmed.

•If clinical trials of our product candidates fail to demonstrate safety and efficacy to the satisfaction of regulatory authorities or do not otherwise produce positive results, we may incur additional costs or experience delays in completing, or ultimately be unable to complete, the development and commercialization of our product candidates.

•Any of our product candidates may cause adverse effects or have other properties that could delay or prevent their regulatory approval or limit the scope of any approved label or market acceptance.

•Even if we complete the necessary preclinical studies and clinical trials, we cannot predict whether or when we will obtain regulatory approval to commercialize a product candidate and we cannot, therefore, predict the timing of any revenue from a future product.

•We have never generated any revenue from product sales and may never be profitable.

•We will need to raise additional capital to develop our product candidates and implement our operating plans, and if we are unable to do so when needed, we will not be able to complete the development and commercialization of our product candidates.

•We have incurred significant losses since our inception and anticipate that we will continue to incur significant losses for the foreseeable future.

•We will depend upon collaborations for the development and eventual commercialization of certain microRNA product candidates. If these collaborations are unsuccessful or are terminated, we may be unable to commercialize certain product candidates and we may be unable to generate revenues from our development programs.

•We rely on limited sources of supply for the drug substance of product candidates and any disruption in the chain of supply may cause a delay in developing and commercializing these product candidates.

•Manufacturing issues may arise that could increase product and regulatory approval costs or delay commercialization.

•We rely on third parties to conduct, supervise and monitor our clinical trials, and if those third parties perform in an unsatisfactory manner, it may harm our business.

•If we are unable to obtain or protect intellectual property rights related to our future products and product candidates, we may not be able to compete effectively in our markets.

•We are subject to stringent and evolving laws, regulations, and rules, contractual obligations, industry standards, policies and other obligations related to data privacy and security. Actual or perceived failure by us or the third-parties with whom we work to comply with such obligations could lead to regulatory investigations or actions; litigation (including class actions); fines and penalties; disruptions of our business operations; reputational harm; loss of revenue or profits; and other adverse business consequences.

•We face significant competition from other biotechnology and pharmaceutical companies and our operating results will suffer if we fail to compete effectively.

•Our business could be adversely affected by the effects of health pandemics or epidemics in regions where we or third parties with whom we work have significant manufacturing facilities, concentrations of clinical trial sites or other business operations, or materially affect our operations globally, including at our headquarters in San Diego, and at our clinical trial sites, as well as the business or operations of our collaborators, manufacturers, contract research organizations ("CROs") or other third parties with whom we conduct business.

•The market price of our common stock may be highly volatile.

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Regulus Therapeutics Inc.

CONDENSED BALANCE SHEETS

(in thousands, except share and per share data)


	June 30, 2024		December 31, 2023
	(Unaudited)
Assets
Current assets:
Cash and cash equivalents	$	17,122	$	23,767
Short-term investments	77,338		—
Restricted cash	62		62

Prepaid materials, net	3,183		3,010
Prepaid expenses and other current assets	2,633		1,340
Total current assets	100,338		28,179
Long-term investments	1,469		—
Property and equipment, net	1,083		1,061
Intangibles, net	27		33
Right of use asset	1,181		1,477
Other assets	21		—
Total assets	$	104,119	$	30,750
Liabilities and stockholders’ equity (deficit)
Current liabilities:
Accounts payable	$	601	$	204
Accrued liabilities	923		691
Accrued research and development expenses	1,068		921
Accrued compensation	1,870		2,979
Term loan, less debt issuance costs	—		1,334


Other current liabilities	801		2,379
Total current liabilities	5,263		8,508



Lease liability, less current portion	675		1,055

Total liabilities	5,938		9,563
Commitments and Contingencies
Stockholders’ equity:
Class A-1 convertible preferred stock, $0.001 par value; 256,700 shares authorized, issued, and outstanding at June 30, 2024 (unaudited) and December 31, 2023	—		—
Class A-2 convertible preferred stock, $0.001 par value; 1,330,832 shares authorized, issued, and outstanding at June 30, 2024 (unaudited) and December 31, 2023	1		1
Class A-3 convertible preferred stock, $0.001 par value; 258,707 shares authorized, issued, and outstanding at June 30, 2024 (unaudited) and December 31, 2023	—		—
Class A-4 convertible preferred stock, $0.001 par value; 3,725,720 shares authorized, issued, and outstanding at June 30, 2024 (unaudited) and December 31, 2023	4		4
Class A-5 convertible preferred stock, $0.001 par value; 140,827 shares authorized, issued, and outstanding at June 30, 2024 (unaudited) and December 31, 2023	—		—
Class A-6 convertible preferred stock, $0.001 par value; 173,915 shares authorized, issued, and outstanding at June 30, 2024 (unaudited); 0 shares authorized, issued, and outstanding at December 31, 2023	—		—


Common stock, $0.001 par value; 300,000,000 shares authorized at June 30, 2024 and December 31, 2023; 65,465,876 and 20,222,672 shares issued and outstanding at June 30, 2024 (unaudited) and December 31, 2023, respectively	65		20
Additional paid-in capital	630,916		534,375
Accumulated other comprehensive loss	(87)		—
Accumulated deficit	(532,718)		(513,213)
Total stockholders’ equity	98,181		21,187
Total liabilities and stockholders’ equity	$	104,119	$	30,750

See accompanying notes to these condensed financial statements.

Regulus Therapeutics Inc.

CONDENSED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(In thousands, except share and per share data)


	Three months ended June 30,				Six months ended June 30,
	2024		2023		2024		2023
	(Unaudited)



Operating expenses:
Research and development	$	8,309	$	4,976	$	14,349	$	9,901
General and administrative	3,951		2,339		6,736		4,783
Total operating expenses	12,260		7,315		21,085		14,684
Loss from operations	(12,260)		(7,315)		(21,085)		(14,684)
Other income (expense):
Interest and other income	1,283		471		1,720		886
Interest and other expense	(58)		(168)		(139)		(353)

Loss before income taxes	(11,035)		(7,012)		(19,504)		(14,151)
Income tax expense	(1)		(1)		(1)		(1)
Net loss	$	(11,036)	$	(7,013)	$	(19,505)	$	(14,152)
Other comprehensive loss:
Unrealized loss on investments, net	(42)		—		(87)
Comprehensive loss	$	(11,078)	$	(7,013)	$	(19,592)	$	(14,152)
Net loss per share, basic and diluted	$	(0.17)	$	(0.37)	$	(0.41)	$	(0.79)
Weighted average shares used to compute basic and diluted net loss per share	64,465,185		19,101,969		47,105,993		17,979,343

See accompanying notes to these condensed financial statements.

Regulus Therapeutics Inc.

CONDENSED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)

(In thousands, except share data)


	Convertible preferred stock			Common stock			Additional paid-in capital		Accumulated other comprehensive income (loss)		Accumulated deficit		Total stockholders’ equity (deficit)
	Shares	Amount		Shares	Amount










































Balance at December 31, 2023	5,712,786	$	5	20,222,672	$	20	$	534,375	$	—	$	(513,213)	$	21,187
Issuance of common stock and preferred stock from private placement, net of offering costs	173,915	—		45,108,667	45		93,852		—		—		93,897
Issuance of common stock through upon vesting of restricted stock units	—	—		105,000	—		—		—		—		—
Issuance of common stock under Employee Stock Purchase Plan	—	—		27,612	—		31		—		—		31
Issuance of common stock upon exercise of common stock options	—	—		1,300	—		2		—		—		2
Stock-based compensation expense	—	—		—	—		985		—		—		985
Unrealized loss on investments	—	—		—	—		—		(45)		—		(45)
Net loss	—	—		—	—		—		—		(8,469)		(8,469)
Balance at March 31, 2024	5,886,701	$	5	65,465,251	$	65	$	629,245	$	(45)	$	(521,682)	$	107,588
Issuance of common stock and preferred stock from private placement, net of offering costs	—	—		—	—		(43)		—		—		(43)
Issuance of common stock through ATM	—	—		—	—		(152)		—		—		(152)
Issuance of common stock upon exercise of common stock options	—	—		625	—		1		—		—		1
Stock-based compensation expense	—	—		—	—		1,865		—		—		1,865
Unrealized loss on investments	—	—		—	—		—		(42)		—		(42)
Net loss	—	—		—	—		—		—		(11,036)		(11,036)
Balance at June 30, 2024	5,886,701	$	5	65,465,876	$	65	$	630,916	$	(87)	$	(532,718)	$	98,181

Balance at December 31, 2022	5,571,959	$	5	16,840,261	$	17	$	516,457	$	(12)	$	(483,176)	$	33,291





Issuance of common stock under Employee Stock Purchase Plan	—	—		19,472	—		21		—		—		21
Stock-based compensation expense	—	—		—	—		410		—		—		410
Gain on investments	—	—		—	—		—		12		—		12
Net loss	—	—		—	—		—		—		(7,139)		(7,139)








Balance at March 31, 2023	5,571,959	$	5	16,859,733	$	17	$	516,888	$	—	$	(490,315)	$	26,595
Issuance of common stock and preferred stock from private placement, net of offering costs	140,827	—		2,615,536	2		14,001		—		—		14,003
Stock-based compensation expense	—	—		—	—		382		—		—		382
Issuance of common stock through ATM	—	—		9,192	—		30		—		—		30
Net loss	—	—		—	—		—		—		(7,013)		(7,013)
Balance at June 30, 2023	5,712,786	$	5	19,484,461	$	19	$	531,301	$	—	$	(497,328)	$	33,997

See accompanying notes to these condensed financial statements.

Regulus Therapeutics Inc.

CONDENSED STATEMENTS OF CASH FLOWS

(In thousands)


	Six months ended June 30,
	2024		2023
	(Unaudited)
Operating activities
Net loss	$	(19,505)	$	(14,152)
Adjustments to reconcile net loss to net cash used in operating activities
Depreciation and amortization expense	170		95
Stock-based compensation	2,850		792
Amortization of premiums and accretion of discounts on investments, net	(579)		(56)


Other	42		81
Change in operating assets and liabilities:
Contracts and other receivables	—		(3)
Prepaid materials	(172)		—
Prepaid expenses and other assets	(1,314)		821

Accounts payable	396		188
Accrued liabilities	358		(371)
Accrued research and development expenses	147		(497)
Accrued compensation	(1,109)		(676)

Operating lease right-of-use assets and liabilities, net	(51)		(40)


Other liabilities	(1,612)		(548)
Net cash used in operating activities	(20,379)		(14,366)
Investing activities
Purchases of investments	(78,315)		—

Maturities of investments	—		15,000
Purchases of property and equipment	(312)		(1)


Net cash (used in) provided by investing activities	(78,627)		14,999
Financing activities


Proceeds from issuance of securities through private placement, net of issuance costs	93,854		14,003
Proceeds from issuance of common stock, net	(119)		51
Proceeds from exercise of common stock options	3		—
Payments on term loan	(1,377)		(1,652)



Net cash provided by financing activities	92,361		12,402
Net (decrease) increase in cash and cash equivalents	(6,645)		13,035
Cash and cash equivalents at beginning of period	23,829		24,290
Cash and cash equivalents at end of period	$	17,184	$	37,325
Reconciliation of cash, cash equivalents and restricted cash
Cash and cash equivalents	$	17,122	$	37,263
Restricted cash	62		62
Total cash, cash equivalents and restricted cash	$	17,184	$	37,325
Supplemental disclosure of cash flow information


Interest paid	$	(60)	$	(276)
Income taxes paid	$	(1)	$	(1)
Supplemental disclosure of non-cash investing and financing activities
Non-cash acquisition of property and equipment	$	—	$	33

See accompanying notes to these condensed financial statements.

Regulus Therapeutics Inc.

NOTES TO CONDENSED FINANCIAL STATEMENTS

(Unaudited)

1. Basis of Presentation and Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited condensed financial statements of Regulus Therapeutics Inc. (the “Company”, “we”, “our” or “us”) have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In management’s opinion, the accompanying financial statements reflect all adjustments, consisting of normal recurring adjustments, considered necessary for a fair presentation of the results for the interim periods presented.

Interim financial results are not necessarily indicative of results anticipated for the full year. These unaudited condensed financial statements should be read in conjunction with the audited financial statements and footnotes included in our Annual Report on Form 10-K for the year ended December 31, 2023, from which the balance sheet information herein was derived.

Liquidity

Through June 30, 2024, we have principally been financed through net proceeds received from the sale of our common stock and other equity securities, debt financings, up-front payments and milestones received from collaboration agreements, totaling $651.7 million. As of June 30, 2024, we had approximately $95.9 million of cash, cash equivalents and investments. Based on our operating plans, we believe our cash and cash equivalents will be sufficient to fund our planned operations for at least 12 months following the issuance of these financial statements.

We intend to seek additional capital through equity and/or debt financings, collaborative or other funding arrangements with partners or through other sources of financing. Should we seek additional financing from outside sources, we may not be able to raise such financing on terms acceptable to us or at all. If we are unable to raise additional capital when required or on acceptable terms, we may be required to scale back or discontinue the advancement of product candidates, reduce headcount, file for bankruptcy, reorganize, merge with another entity, or cease operations.

If we are unable to raise additional capital when needed, we may have to liquidate our assets, and in doing so might realize significantly less for those assets than the values at which they are carried on our financial statements. Stockholders may lose all or part of their investment in our common stock.

Use of Estimates

Our condensed financial statements are prepared in accordance with GAAP, which requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and the disclosure of contingent assets and liabilities in our financial statements and accompanying notes. An estimated loss contingency is accrued in our financial statements if it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated. Although these estimates are based on our knowledge of current events and actions we may undertake in the future, actual results may ultimately differ from these estimates and assumptions.

Stock-Based Compensation

We account for stock-based compensation expense related to stock options granted to employees and members of our board of directors by estimating the fair value of each stock option on the date of grant using the Black-Scholes option pricing model. We recognize stock-based compensation expense using the accelerated multiple-option approach. Under the accelerated multiple-option approach (also known as the graded-vesting method), we recognize compensation expense over the requisite service period for each separately vesting tranche of the award as though the award was in substance multiple awards, resulting in accelerated expense recognition over the vesting period. For performance-based awards granted to employees (i) the fair value of the award is determined on the grant date, (ii) we assess the probability of the individual milestones under the award being achieved and (iii) the fair value of the shares subject to the milestone is expensed over the implicit service period commencing once management believes the performance criteria is probable of being met.

We account for restricted stock units ("RSUs") by determining the fair value of each RSU based on the closing market price of our common stock on the date of grant. We recognize stock-based compensation expense using the accelerated multiple-option approach over the requisite service periods of the awards.

Clinical Trial and Preclinical Study Accruals

We make estimates of our accrued expenses for clinical trial and preclinical study activities as of each balance sheet date in our financial statements based on the facts and circumstances known to us at that time. These accruals are based upon estimates of costs incurred and fees that may be associated with services provided by clinical trial investigational sites, contract research organizations ("CROs") and contract manufacturing organizations ("CMOs") and for other clinical trial-related activities. Payments under certain contracts with such parties depend on factors such as successful enrollment of patients, site initiation and progression through the various stages of our clinical trials. In accruing for these services, we estimate the time period over which services will be performed and the level of effort to be expended in each period. If possible, we obtain information regarding unbilled services directly from these service providers. However, we may be required to estimate these services based on other information available to us. If we underestimate or overestimate the activities or fees associated with a study or service at a given point in time, adjustments to research and development expenses may be necessary in future periods. Historically, our estimated accrued liabilities have approximated actual expense incurred. Subsequent changes in estimates may result in a material change in our accruals.

Prepaid Materials

We capitalize the purchase of certain raw materials and related supplies for use in the manufacturing of drug product in our preclinical and clinical development programs, as we have determined that these materials have alternative future use. We can use these raw materials and related supplies in multiple clinical drug products, and therefore have future use independent of the development status of any particular program until it is utilized in the manufacturing process. We expense the cost of materials when used. We periodically review these capitalized materials for continued alternative future use and write down the asset to its net realizable value in the period in which an impairment is identified.

Recent Accounting Pronouncements

In March 2020, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2020-04, Reference Rate Reform (Topic 848), which provides guidance around reference rate reform initiatives to identify alternative reference rates that are more observable or transaction-based and less susceptible to manipulation in response to concerns about structural risks of interbank offered rates and the risk of cessation of the London Interbank Offered Rate ("LIBOR"). The amendments in the ASU provide option expedients and exceptions for applying GAAP to contracts, hedging relationships and other transactions affected by reference rate reform and apply only if such contracts, hedging relationships and other transactions that reference LIBOR or another reference rate are expected to be discontinued because of reference rate reform. On December 21, 2022, the FASB issued ASU No. 2022-06, Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848, which deferred the sunset date in Topic 848 from December 31, 2022 to December 31, 2024. The ASU became effective upon issuance. We adopted this guidance in June 2023, when we entered into the Rate Amendment (as defined below) to the Loan Agreement (as defined below) (see note 5).

2. Net Loss Per Share

Basic net loss per share is calculated by dividing net loss by the weighted average number of common shares outstanding for the period, without consideration for common stock equivalents. Diluted net loss per share is calculated by dividing net loss by the weighted-average number of common share equivalents outstanding for the period determined using the treasury stock method or if-converted method. Dilutive common stock equivalents are comprised of stock options, RSUs, warrants and convertible preferred stock outstanding. For all periods presented, there is no difference in the number of shares used to calculate basic and diluted net loss per share.

Potentially dilutive securities not included in the calculation of diluted net loss per common share, because to do so would be anti-dilutive, were (in common stock equivalent shares) 46,948,938 and 41,248,630 for the three and six months ended June 30, 2024, respectively, consisting of convertible preferred stock, warrants, stock options and RSUs. Potentially dilutive securities not included in the calculation of diluted net loss per common share, because to do so would be anti-dilutive, were (in common stock equivalent shares) 28,772,824 and 20,758,912, for the three and six months ended June 30, 2023, respectively, consisting of convertible preferred stock, warrants, stock options and RSUs.

3. Investments

Historically, we have invested our excess cash primarily in debt instruments of financial institutions, corporations, U.S. government-sponsored agencies and the U.S. Treasury. We generally hold our investments to maturity and do not sell our investments before we have recovered our amortized cost basis.











				Unrealized
	Maturity	Amortized cost		Gains		Losses		Estimated fair value
As of June 30, 2024


Short-Term
U.S. Treasury securities	Less than 1 year	$	77,422	$	—	$	(84)	$	77,338
Long-Term
U.S. Treasury securities	1 to 2 years	1,472		—		(3)		1,469

		$	78,894	$	—	$	(87)	$	78,807

As of December 31, 2023, our cash balance was comprised entirely of cash and cash equivalents (money market funds) and there was no unrealized gain or loss.

4. Fair Value Measurements

We have certain financial assets recorded at fair value which have been classified as Level 1, 2, or 3 within the fair value hierarchy as described in the accounting standards for fair value measurements.

Accounting standards define fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants as of the measurement date. Market participants are buyers and sellers in the principal market that are (i) independent, (ii) knowledgeable, (iii) able to transact, and (iv) willing to transact. The accounting standards provide an established hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs that market participants would use in valuing the asset or liability and are developed based on market data obtained from independent sources. Unobservable inputs are inputs that reflect our assumptions about the factors that market participants would use in valuing the asset or liability. The accounting standards prioritize the inputs used in measuring the fair value into the following hierarchy:

•Level 1 includes financial instruments for which quoted market prices for identical instruments are available in active markets.

•Level 2 includes financial instruments for which there are inputs other than quoted prices included within Level 1 that are observable for the instrument such as quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets with insufficient volume or infrequent transactions (less active markets) or model-driven valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.

•Level 3 includes financial instruments for which fair value is derived from valuation techniques in which one or more significant inputs are unobservable, including management’s own assumptions.

Financial Assets Measured at Fair Value

The following table presents our fair value hierarchy for assets measured at fair value on a recurring basis as of June 30, 2024 and December 31, 2023 (in thousands):


	Fair value as of June 30, 2024
	Total		Level 1		Level 2		Level 3
Cash equivalents and investments:
Money market funds	$	16,093	$	16,093	$	—	$	—



U.S. Treasury securities	78,807		78,807		—		—

	$	94,900	$	94,900	$	—	$	—


	Fair value as of December 31, 2023
	Total		Level 1		Level 2		Level 3
Cash equivalents and investments:
Money market funds	$	23,084	$	23,084	$	—	$	—





	$	23,084	$	23,084	$	—	$	—

We obtain pricing information from quoted market prices or quotes from brokers/dealers. We have historically determined the fair value of our investment securities using standard observable inputs, including reported trades, broker/dealer quotes, bids and/or offers.

5. Debt

Term Loan

On June 17, 2016, we entered into a loan and security agreement ("Loan Agreement") with Oxford Finance, LLC, (the “Lender”), pursuant to which we received $20.0 million in proceeds, net of debt issuance costs, on June 22, 2016 (the "Term Loan").

The outstanding Term Loan bore interest at a floating per annum rate equal to (i) 8.51% plus (ii) the greater of (a) the 30 day U.S. Dollar LIBOR rate reported in The Wall Street Journal on the last business day of the month that immediately precedes the month in which the interest will accrue and (b) 0.44%. In June 2023, we entered into an amendment to the Loan Agreement (the “Rate Amendment”) pursuant to which, effective July 1, 2023, the Term Loan bore interest at a floating per annum rate equal to the greater of (a) 8.95% and (b) the sum of (i) the 1-month CME Term Secured Overnight Financing Rate ("SOFR") reference rate on the last business day of the month that immediately preceded the month in which the interest accrued, (ii) 0.10% and (iii) 8.51%.

Under the original Loan Agreement, we were required to make interest-only payments through June 1, 2018, followed by 24 equal monthly payments of principal and unpaid accrued interest.

The Loan Agreement was amended ten times between October 2017 through August 2020. On December 31, 2021, we entered into an eleventh amendment to the Loan Agreement (the "Eleventh Amendment"). Under the terms of the Eleventh Amendment, the maturity date for the Term Loan was extended to May 1, 2024.

All amounts under the Term Loan were paid as of May 1, 2024.

6. Stockholders’ Equity

Common Stock

As of June 30, 2024, there were 65,465,876 shares of common stock outstanding. Each share of common stock is entitled to one vote. The holders of the common stock are also entitled to receive dividends whenever funds are legally available and when declared by the Company's board of directors.

2019 Equity Incentive Plan

On June 15, 2019, the Company's board of directors approved, and on August 1, 2019 the Company's stockholders approved, the Company's 2019 Equity Incentive Plan (as amended, the "2019 Plan"). The 2019 Plan is the successor to and continuation of the Company's 2012 Equity Incentive Plan. The number of shares authorized for issuance under the 2019 Plan may be increased by (a) the shares subject to outstanding stock awards granted under the Company’s 2009 Equity Incentive Plan (the “2009 Plan”) and the Company’s 2012 Equity Incentive Plan (together with the 2009 Plan, the “Prior Plans”) that on or after the effective date of the 2019 Plan (i) expire or terminate for any reason prior to exercise or settlement; (ii) are forfeited because of the failure to meet a contingency or condition required to vest such shares or otherwise return to the Company, or (iii) are reacquired, withheld (or not issued) to satisfy a tax withholding obligation in connection with an award or to satisfy the purchase price or exercise price of a stock award. No further grants will be made under the Prior Plans. In addition, on January 22, 2020, an additional 416,686 shares of common stock became available for issuance under the 2019 Plan pursuant to the second closing under our May 2019 securities purchase agreement. Further, on January 1st of each year, beginning on January 1, 2021 and ending on January 1, 2024, the number of shares authorized for issuance under the 2019 Plan was increased by 5.0% of the total number of shares of our capital stock outstanding on December 31 of the preceding calendar year or a lesser number of shares as may be determined by the Company's board of directors. Beginning on January 1, 2025, on

January 1st of each year through (and including) January 1, 2029 (the “Evergreen Mechanism”), the number of shares authorized for issuance under the 2019 Plan will be increased by 5.0% of the sum of (x) the total number of shares of common stock outstanding on December 31st of the preceding calendar year (without regard to any beneficial ownership limitations applicable thereto) plus (y) the total number of shares of common stock issuable upon conversion of shares of convertible preferred stock outstanding on December 31st of the preceding calendar year plus (z) the total number of shares of common stock issuable upon cash exercise of prefunded warrants outstanding on December 31st of the preceding calendar year (without regard to any beneficial ownership limitations applicable thereto). On June 13, 2023, our stockholders approved an amendment to the 2019 Plan, which authorized an additional 5,000,000 shares of common stock available for issuance thereunder. On May 16, 2024, our stockholders approved an amendment to the 2019 Plan, which authorized an additional 9,500,000 shares of common stock available for issuance thereunder and approved the Evergreen Mechanism.

As of June 30, 2024, 3,138,465 shares of common stock were available for new equity award grants under the 2019 Plan and 13,463,927 shares of common stock were reserved for issuance pursuant to equity awards outstanding under the 2019 Plan as of June 30, 2024.

2021 Inducement Plan

On November 23, 2021, the Company's board of directors adopted the 2021 Inducement Plan (the “Inducement Plan”), which became effective immediately. Stockholder approval of the Inducement Plan was not required pursuant to Rule 5635(c)(4) of the Nasdaq Listing Rules. The Inducement Plan initially reserved 200,000 shares of common stock and provides for the grant of non-qualified stock options that was used exclusively for grants to individuals that were not previously employees or directors of the Company, as an inducement material to the individual’s entry into employment with the Company. The authorized number of shares available for grant under the Inducement Plan was subsequently increased in October 2022 to 540,000 shares in the aggregate, and subsequently increased again in December 2023 to 1,030,000 shares in the aggregate.

Under the Inducement Plan, options are granted with varying vesting terms, but typically vested over four years, with 25% of the total grant vesting on the first anniversary of the effective date of the option grant and the remaining grant vesting monthly thereafter over the following 36 months.

As of June 30, 2024, 500,000 shares of common stock were reserved for future issuance under the Inducement Plan and 530,000 shares of common stock were reserved for future issuance pursuant to equity awards outstanding under the Inducement Plan.

2022 Employee Stock Purchase Plan

In June 2022, our stockholders approved and we adopted the 2022 Employee Stock Purchase Plan (the “2022 Purchase Plan”), which enables participants to contribute up to 15% of such participant’s eligible compensation during a defined rolling six-month periods to purchase our common stock. The purchase price of common stock under the 2022 Purchase Plan will be the lesser of: (i) 85% of the fair market value of our common stock at the inception of the enrollment period or (ii) 85% of the fair market value of our common stock at the applicable purchase date. The 2022 Purchase Plan supersedes the 2012 Employee Stock Purchase Plan, and no further offerings will be made under the 2012 Employee Stock Purchase Plan. As of June 30, 2024, a maximum of 159,812 shares of our common stock were reserved for future issuance and have been authorized for purchase under the 2022 Purchase Plan.

2024 Private Placement of Common Stock and Non-Voting Preferred Stock

On March 11, 2024, we entered into a Securities Purchase Agreement (the “March 2024 SPA”) with certain institutional and other accredited investors (the “2024 Purchasers”), pursuant to which we agreed to sell and issue shares of our common stock and shares of our newly designated non-voting Class A-6 convertible preferred stock in a private placement transaction (the "2024 PIPE").

At the closing under the March 2024 SPA that occurred on March 14, 2024 (the “2024 Closing”), we sold and issued to the 2024 Purchasers (i) 45,108,667 shares of common stock at a purchase price of $1.60 per share, and (ii) 173,915 shares of non-voting Class A-6 convertible preferred stock, in lieu of shares of common stock, at a price of $160.00 per share. The Company received net proceeds of approximately $93.9 million in the 2024 PIPE after deducting placement agent and financial advisor fees and other expenses. Each share of non-voting Class A-6 convertible preferred stock is convertible into 100 shares of common stock, subject to certain beneficial ownership conversion limitations.

Stelios Papadopoulos, Ph.D., Chairman of the Company's board of directors, was a 2024 Purchaser under the March 2024 SPA and purchased 250,000 shares of common stock for $0.4 million.

We evaluated the non-voting Class A-6 convertible preferred stock sold in the 2024 PIPE under Accounting Standards Codification ("ASC") 480, Distinguishing Liabilities from Equity, and ASC 815, Derivatives and Hedging, and determined permanent equity treatment was appropriate for these freestanding financial instruments and there were no embedded features that required bifurcation.

2023 Private Placement of Common Stock and Non-Voting Preferred Stock

On April 13, 2023, we entered into a Securities Purchase Agreement (the “April 2023 SPA”) with certain institutional and other accredited investors (the “2023 Purchasers”), pursuant to which we agreed to sell and issue shares of our common stock and shares of our newly designated non-voting Class A-5 convertible preferred stock in a private placement transaction (the "2023 PIPE").

At the closing under the April 2023 SPA that occurred on April 13, 2023 (the “2023 Closing”), we sold and issued to the 2023 Purchasers (i) 2,615,536 shares of common stock at a purchase price of $0.9001 per share, and (ii) 140,827 shares of non-voting Class A-5 convertible preferred stock, in lieu of shares of common stock, at a price of $90.01 per share. Total gross proceeds from the 2023 Closing were approximately $15.0 million. Each share of non-voting Class A-5 convertible preferred stock is convertible into 100 shares of common stock, subject to certain beneficial ownership conversion limitations.

Stelios Papadopoulos, Ph.D., Chairman of the Company's board of directors, was a 2023 Purchaser under the April 2023 SPA and purchased 222,198 shares of common stock for $0.2 million.

We evaluated the non-voting Class A-5 convertible preferred stock sold in the 2023 PIPE under ASC 480, Distinguishing Liabilities from Equity, and ASC 815, Derivatives and Hedging, and determined permanent equity treatment was appropriate for these freestanding financial instruments and there were no embedded features that required bifurcation.

Additional Outstanding Non-Voting Preferred Stock and Warrants

On May 7, 2019, we sold and issued (i) 973,045 shares of common stock (ii) 415,898 shares of non-voting Class A-1 convertible preferred stock and (iii) accompanying warrants to purchase an aggregate of 1,388,943 shares of common stock. Each share of non-voting Class A-1 convertible preferred stock is convertible into one share of common stock, subject to certain beneficial ownership conversion limitations. The warrants were exercisable for a period of five years following the date of issuance and had an exercise price of $10.80 per share, subject to proportional adjustments in the event of stock splits or combinations or similar events. The warrants were also exercisable on a net exercise "cashless" basis. The warrants expired on May 7, 2024.

On December 24, 2019, we sold and issued 3,288,390 shares of non-voting Class A-2 convertible preferred stock and accompanying warrants to purchase an aggregate of 3,288,390 shares of common stock. Each share of non-voting Class A-2 convertible preferred stock is convertible into one share of common stock, subject to certain beneficial ownership conversion limitations. The warrants are exercisable for a period of five years following the date of issuance and have an exercise price of $6.66 per share, subject to proportional adjustments in the event of stock splits or combinations or similar events. The warrants are also exercisable on a net exercise “cashless” basis.

On December 4, 2020, we sold and issued (i) 2,434,152 shares of common stock (ii) 272,970 shares of non-voting Class A-3 convertible preferred stock and (iii) accompanying warrants to purchase an aggregate of 2,030,341 shares of common stock. Each share of non-voting Class A-3 convertible preferred stock is convertible into one share of common stock, subject to certain beneficial ownership conversion limitations. The warrants are exercisable for a period of five years following the date of issuance and have an exercise price of $7.46 per share, subject to proportional adjustments in the event of stock splits or combinations or similar events. The warrants are also exercisable on a net exercise "cashless" basis.

On November 30, 2021, we sold and issued (i) 5,892,335 shares of common stock and (ii) 3,725,720 shares of non-voting Class A-4 convertible preferred stock. Each share of non-voting Class A-4 convertible preferred stock is convertible into one share of common stock, subject to certain beneficial ownership conversion limitations.

ATM Offering

On December 12, 2018, we entered into a Common Stock Sales Agreement (the “Stock Sales Agreement”) with H.C. Wainwright & Co., LLC (“HCW”), pursuant to which we may sell and issue shares of our common stock from time to time through HCW, as our sales agent (the “ATM Offering”). We have no obligation to sell any shares of common stock in the ATM Offering, and may, at any time, suspend offers under the Stock Sales Agreement or terminate the Stock Sales Agreement. Subject to the terms and conditions of the Stock Sales Agreement, HCW will use its commercially reasonable efforts to sell shares of our common stock from time to time based upon our instructions (including any price, time or size limits or other parameters or conditions that we may impose, subject to certain restrictions). We pay HCW a commission of 3.0% of the gross sales price of any shares sold under the Stock Sales Agreement.

No shares were sold under the ATM Offering during the three and six months ended June 30, 2024. A total of 9,192 shares were sold and settled for proceeds of less than $0.1 million under the ATM Offering during the three and six months ended June 30, 2023.

Shares Reserved for Future Issuance

The following shares of common stock were reserved for future issuance as of June 30, 2024 (in thousands):


Class A-1 convertible preferred stock outstanding (as-converted)			257
Class A-2 convertible preferred stock outstanding (as-converted)			1,331
Class A-3 convertible preferred stock outstanding (as-converted)			259
Class A-4 convertible preferred stock outstanding (as-converted)			3,726
Class A-5 convertible preferred stock outstanding (as-converted)			14,083
Class A-6 convertible preferred stock outstanding (as-converted)			17,392
Warrants to purchase Common Stock			4,909


Common stock options outstanding			14,006
RSUs outstanding			1,428
Common stock available for future grant under the 2019 Equity Incentive Plan			3,138


Common stock available for future grant under the 2021 Inducement Plan			500
2022 Employee Stock Purchase Plan			160
Total common shares reserved for future issuance			61,189

The following table summarizes our stock option, performance stock award and RSU (together, "Stock Awards") activity under all equity incentive plans for the six months ended June 30, 2024 (shares in thousands):


	Number of options	Weighted average exercise price		Number of RSUs	Weighted average grant date fair value
Stock Awards outstanding at December 31, 2023	6,188	$	2.58	1,161	$	1.38
Granted	7,848	$	1.92	372	$	1.30
Exercised (options) or Vested (RSUs)	(2)	$	1.40	(105)	$	1.48
Canceled/forfeited/expired	(27)	$	4.68	—	$	—
Stock Awards outstanding at June 30, 2024	14,007	$	2.21	1,428	$	1.35

Stock-Based Compensation

The following table summarizes the weighted average assumptions used to estimate the fair value of stock options and performance stock awards granted to employees under the 2019 Plan, the Inducement Plan and the shares purchasable under the 2022 Purchase Plans during the periods presented:


	Three months ended June 30,				Six months ended June 30,
	2024		2023		2023		2022
Stock options
Risk-free interest rate	4.5	%	4.1	%	4.4	%	3.8	%
Volatility	96.3	%	96.7	%	96.2	%	96.6	%
Dividend yield	—		—		—		—
Expected term (years)	6.0		6.1		6.0		6.1
Performance stock options
Risk-free interest rate	4.5	%	—		4.5	%	—
Volatility	96.3	%	—		96.3	%	—
Dividend yield	—		—		—		—
Expected term (years)	6.3		0		6.3		0
Employee stock purchase plan shares
Risk-free interest rate	5.3	%	4.9	%	5.4	%	4.5	%
Volatility	96.7	%	71.8	%	97.5	%	88.1	%
Dividend yield	—		—		—		—
Expected term (years)	0.5		0.5		0.5		0.5

The following table summarizes the allocation of our stock-based compensation expense for all Stock Awards during the periods presented (in thousands):


	Three months ended June 30,				Six months ended June 30,
	2024		2023		2024		2023
Research and development	$	680	$	154	$	1,090	$	327

General and administrative	1,185		228		1,760		465

Total	$	1,865	$	382	$	2,850	$	792

7. Collaborations

Sanofi

In February 2014, we and Sanofi entered into a second amended and restated collaboration and license agreement (the “Sanofi Agreement”) to discover, develop and commercialize microRNA therapeutics to focus on specific orphan disease and oncology targets. Under the terms of the Sanofi Agreement, Sanofi had opt-in rights to our clinical fibrosis program targeting miR-21 for the treatment of Alport syndrome (which rights were relinquished by Sanofi in November 2018), our preclinical program targeting miR-21 for oncology indications, and our preclinical program targeting miR-221/222 for HCC. We were responsible for developing each of these programs to proof-of-concept, at which time Sanofi had an exclusive option on each program. We were eligible to receive royalties on microRNA therapeutic products commercialized by Sanofi and would have had have the right to co-promote these products relating to our preclinical program targeting miR-221/222.

On January 6, 2023, Sanofi delivered to us a written notice of Sanofi's election to terminate, in its entirety, the Sanofi Agreement. Previously, on July 12, 2022, we received notification from Sanofi of its decision to terminate the Phase 2 clinical study of lademirsen for the treatment of Alport syndrome for failure to meet Sanofi’s pre-defined futility criteria. In accordance with the Sanofi Agreement, the termination became effective on February 5, 2023, which was 30 days following the date of delivery of the notice by Sanofi. As of the effective date of the termination of the Sanofi Agreement, we are no longer eligible to receive any option exercise fees, royalties, or development, clinical, regulatory or commercial milestones from Sanofi.

8. Leases

On February 11, 2021, we entered into a lease agreement (the "Campus Point Lease") with ARE-SD Region No. 61, LLC (as successor in interest to ARE-SD Region No. 58, LLC) ("Campus Point Landlord"), for the lease of approximately 13,438 square feet of rentable area located at 4224 Campus Point Court, Suite 210, San Diego, California, 92121 (the "Campus Point Premises"). The commencement date of the Campus Point Lease was April 15, 2021. However, for accounting purposes the lease commencement date was February 11, 2021. We are using the Campus Point Premises as our principal executive offices and as a laboratory for research and development. The term of the Campus Point Lease (“Campus Point Initial Term”) is 60 months, ending April 30, 2026. The aggregate base rent due over the initial term of the Campus Point Lease is approximately $3.8 million. We are also responsible for the payment of additional amounts to cover our share of the annual operating expenses of the building, the annual tax expenses of the building and the utilities costs for the building. Under the Campus Point Lease, we are required to maintain a deposit of $61,591 in a specially designated bank account, which we recorded as restricted cash on our balance sheet at June 30, 2024 and December 31, 2023.

Our future lease payments under operating leases at June 30, 2024 are as follows (in thousands):


	Operating Leases






Remaining 2024	404
2025	824
2026	277
Total operating lease payments	$	1,505
Less: amount representing interest	(83)
Present value of obligations under operating leases	1,422
Less: current portion	(747)
Long-term operating lease obligations	$	675

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The interim unaudited condensed financial statements and this Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the financial statements and notes thereto for the year ended December 31, 2023 and the related Management’s Discussion and Analysis of Financial Condition and Results of Operations, both of which are contained in our Annual Report on Form 10-K for the year ended December 31, 2023, ("Annual Report"), filed with the Securities and Exchange Commission on March 21, 2024. Past operating results are not necessarily indicative of results that may occur in future periods.

FORWARD-LOOKING STATEMENTS

This quarterly report on Form 10-Q may contain “forward-looking statements” within the meaning of the federal securities laws made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth below under Part II, Item 1A, “Risk Factors” in this quarterly report on Form 10-Q. Except as required by law, we assume no obligation to update these forward-looking statements, whether as a result of new information, future events or otherwise. These statements, which represent our current expectations or beliefs concerning various future events, may contain words such as “may,” “will,” “expect,” “anticipate,” “intend,” “plan,” “believe,” “estimate” or other words indicating future results, though not all forward-looking statements necessarily contain these identifying words. Such statements may include, but are not limited to, statements concerning the following:

•the initiation, cost, timing, progress and results of, and our expected ability to undertake certain activities and accomplish certain goals with respect to our research and development activities, preclinical studies and clinical trials;

•our ability to obtain and maintain regulatory approval of our product candidates, and any related restrictions, limitations, and/or warnings in the label of an approved product candidate;

•our ability to obtain funding for our operations;

•our plans to research, develop and commercialize our product candidates;

•our ability to attract collaborators with relevant development, regulatory and commercialization expertise;

•future activities to be undertaken by any third parties with whom we collaborate or otherwise contract;

•our ability to obtain and maintain intellectual property protection for our product candidates;

•the size and growth potential of the markets for our product candidates, and our ability to serve those markets;

•our ability to successfully commercialize, and our expectations regarding future therapeutic and commercial potential with respect to our product candidates;

•the rate and degree of market acceptance of our product candidates;

•our ability to develop sales and marketing capabilities, whether alone or with potential future collaborators;

•regulatory developments in the United States and foreign countries;

•the performance of our third-party suppliers and manufacturers;

•the success of competing therapies that are or may become available;

•the loss of key scientific or management personnel;

•our ability to successfully secure and deploy capital;

•the accuracy of our estimates regarding future expenses, future revenues, capital requirements and need for additional financing; and

•the risks and other forward-looking statements described under the caption “Risk Factors” under Part II, Item 1A of this quarterly report on Form 10-Q.

In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this report, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and investors are cautioned not to unduly rely upon these statements.

OVERVIEW

We are a clinical-stage biopharmaceutical company focused on discovering and developing first-in-class drugs targeting microRNAs to treat diseases with significant unmet medical need. We were formed in 2007 when Alnylam Pharmaceuticals, Inc. ("Alnylam") and Ionis Pharmaceuticals, Inc. ("Ionis") contributed significant intellectual property, know-how and financial and human capital to pursue the development of drugs targeting microRNAs pursuant to a license and collaboration agreement. We are currently focused on orphan kidney diseases where microRNA genetic drivers are implicated and there are clear unmet medical needs. Our product candidate, RGLS8429, an anti-miR oligonucleotide targeting miR-17 for the treatment of autosomal dominant polycystic kidney disease ("ADPKD"), is in Phase 1b clinical development. In June 2022, the U.S. Food and Drug Administration ("FDA") granted orphan drug designation to RGLS8429 for the treatment of ADPKD.

In addition to this program, we continue to advance and expand our internal discovery pipeline to identify potential product candidates.

microRNAs are naturally occurring ribonucleic acid ("RNA") molecules that play a critical role in regulating key biological pathways. Scientific research has shown that an imbalance, or dysregulation, of microRNAs is directly linked to many diseases. Furthermore, many different infectious pathogens interact and bind to host microRNA to survive. To date, over 500 microRNAs have been identified in humans, each of which can bind to multiple messenger RNAs that control key aspects of cell biology. Since many diseases are multi-factorial, involving multiple targets and pathways, the ability to modulate multiple pathways by targeting a single microRNA provides a new therapeutic approach for treating complex diseases.

RNA plays an essential role in the process used by cells to encode and translate genetic information from deoxyribonucleic acid ("DNA") to proteins. RNA is comprised of subunits called nucleotides and is synthesized from a DNA template by a process known as transcription. Transcription generates different types of RNA, including messenger RNAs that carry the information for proteins in the sequence of their nucleotides. In contrast, microRNAs are RNAs that do not code for proteins but rather are responsible for regulating gene expression by modulating the translation and decay of target messenger RNAs. By interacting with many messenger RNAs, a single microRNA can regulate the expression of multiple genes involved in the normal function of a biological pathway. Many pathogens, including viruses, bacteria and parasites, also use host microRNAs to regulate the cellular environment for survival. In some instances, the host microRNAs are essential for the replication and/or survival of the pathogen.

We believe that microRNA therapeutics have the potential to become a new and major class of drugs with broad therapeutic application for the following reasons:

•microRNAs play a critical role in regulating biological pathways by controlling the translation of many target genes;

•microRNA therapeutics regulate disease pathways which may result in more effective treatment of complex multi-factorial diseases;

•many human pathogens, including viruses, bacteria and parasites, use microRNAs (host and pathogen encoded) to enable their replication and suppression of host immune responses; and

•microRNA therapeutics may be synergistic with other therapies because of their different mechanism of action.

We have assembled significant expertise in the microRNA field, including expertise in microRNA biology and oligonucleotide chemistry, a broad intellectual property estate, relationships with key opinion leaders and a disciplined drug discovery and development process. We are using our microRNA expertise to develop chemically modified, single-stranded oligonucleotides that we call anti-miRs to modulate microRNAs and address underlying disease. We believe microRNAs may play a critical role in complex disease and that targeting them with anti-miRs may become a source of a new and major class of drugs with broad therapeutic application, much like small molecules, biologics and monoclonal antibodies.

Since our inception through June 30, 2024, we have received $530.1 million from the sale of our equity and convertible debt securities, $101.8 million from collaborations, principally from upfront payments, research funding and preclinical and clinical milestones, and $19.8 million in net proceeds from the Term Loan. As of June 30, 2024, we had cash, cash equivalents and investments of $95.9 million. On May 1, 2024, the Term Loan matured and we paid an aggregate of $1.6 million in remaining principal, accrued interest and loan amendment fees.

Product Candidate

RGLS8429: For Autosomal Dominant Polycystic Kidney Disease

ADPKD is among the most common human monogenic disorders and a leading cause of end-stage renal disease. It is caused by mutations in the PKD1 or PKD2 genes, that leads to reduced levels of their encoded-proteins polycystin-1 ("PC1") and/or polycystin-2 ("PC2") causing formation of multiple fluid filled cysts primarily in the kidneys, and to a lesser extent in the liver and other organs. Typical symptoms include flank pain, hematuria, proteinuria, renal colic, urinary tract infection, hypertension, and intracranial aneurysms. Excessive kidney cyst cell proliferation, a central pathological feature, ultimately leads to end-stage renal disease in approximately 50% of ADPKD patients by age 60. Approximately 160,000 individuals are diagnosed with the disease in the United States alone, with an estimated global prevalence of 4 to 7 million.

RGLS8429 is a novel, next generation oligonucleotide for the treatment of ADPKD designed to inhibit miR-17 and to preferentially target the kidney. Administration of RGLS8429 has shown clear improvements in kidney function, size, and other measures of disease severity in preclinical models.

In May 2022, the FDA accepted our Investigational New Drug Application ("IND") for RGLS8429 for the treatment of ADPKD. In September 2022, we announced completion of the Phase 1 single-ascending dose ("SAD") study in healthy volunteers to assess safety, tolerability and PK of RGLS8429. The Phase 1 SAD study demonstrated that RGLS8429 has a favorable pharmacokinetics ("PK") profile. RGLS8429 was well-tolerated with no serious adverse events reported and plasma exposure was approximately linear across the four doses tested.

In November 2022, we initiated enrollment in a Phase 1b, double-blind, placebo-controlled, multiple-ascending dose ("MAD") study evaluating the safety, tolerability, PK and pharmacodynamics ("PD") of RGLS8429 in adult patients with ADPKD. The study is evaluating RGLS8429 treatment across three different weight-based dose levels and one fixed dose level, including measuring changes in urinary PC1 and PC2, height-adjusted total kidney volume ("htTKV"), cyst architecture, and overall kidney function. PC1 and PC2 are the protein products of the PKD1 and PKD2 genes and have been shown to inversely correlate with disease severity.

The first cohort was dosed at 1 mg/kg of RGLS8429 or placebo every other week for three months. In September 2023, we announced positive top-line data from the first cohort of RGLS8429-treated ADPKD patients. RGLS8429 was well tolerated by all nine subjects receiving active drug with no safety findings.

In March 2024, we announced positive topline results from the second cohort of RGLS8429-treated patients. In the second cohort, 14 patients were randomized 3:1 to receive either 2 mg/kg of RGLS8429 or placebo every other week for three months.

RGLS8429 was well tolerated with no safety concerns. Greater biological activity of RGLS8429 was observed at 2mg/kg based on urinary polycystin levels compared to 1mg/kg and placebo, which was most evident after 3 months of dosing.

In June 2024, we announced positive topline results from the third cohort of RGLS8429-treated patients. In the third cohort, 16 subjects were randomized 3:1 to receive either 3 mg/kg of RGLS8429 or placebo every other week for three months. RGLS8429 was well tolerated with no safety concerns. Continued evidence of a mechanistic dose response was observed following completion of the 3mg/kg dose level based on urinary PC1 and PC2. The 3 mg/kg dose demonstrated more consistent increases in PC1 and PC2 across patients compared to earlier cohorts.

We have completed weight-based dosing in the Phase 1b study and we have commenced enrollment in the fourth cohort, which will include up to 30 patients. Patients will receive an open-label fixed-dose of 300 mg of RGLS8429 every other week for three months, which will provide higher exposure in a larger number of patients based on anticipated body weight. We anticipate reporting topline data in early 2025 on a substantial number of subjects who will have completed the study. In addition to PC1 and PC2 and safety, imaging biomarkers will also be evaluated.

In December 2023, we held a Type D meeting with the FDA to discuss the accelerated approval pathway. The meeting was constructive and confirmed the potential for an accelerated approval pathway based on a single pivotal Phase 2 study of RGLS8429 for the treatment of ADPKD.

Preclinical Pipeline

A major focus of our preclinical research has historically targeted dysregulated microRNAs implicated in diseases of high unmet medical need where we know we can effectively deliver to the target tissue or organ, such as the liver, kidney and central nervous system ("CNS"). Furthermore, we are investigating the potential for target organ-selective delivery strategies.

FINANCIAL OPERATIONS OVERVIEW

Research and development expenses

Research and development expenses consist of costs associated with our research activities, including our drug discovery efforts and the development of our therapeutic programs. Our research and development expenses include:

•employee-related expenses, including salaries, benefits, travel and stock-based compensation;

•external research and development expenses incurred under arrangements with third parties, such as CROs, CMOs, other clinical trial related vendors, consultants and our scientific advisors;

•license fees; and

•facilities, depreciation and other allocated expenses, which include direct and allocated expenses for rent and maintenance of facilities, amortization of leasehold improvements and equipment, and laboratory and other supplies.

We expense research and development costs as incurred. We account for nonrefundable advance payments for goods and services that will be used in future research and development activities as expenses when the service has been performed or when the goods have been received. Certain of the raw materials used in the process of manufacturing drug product are capitalized upon their acquisition and expensed upon usage, as we have determined these materials have alternative future use.

To date, we have conducted research on many different microRNAs with the goal of understanding how they function and identifying those that might be targets for therapeutic modulation. At any given time we are working on multiple targets, primarily within our therapeutic areas of focus. Our organization is structured to allow the rapid deployment and shifting of resources to focus on the most promising targets based on our ongoing research. As a result, in the early phase of our development programs, our research and development costs are not tied to any specific target. However, we are currently spending the vast majority of our research and development resources on our ADPKD program.

Since our inception, we have incurred a total of approximately $445.1 million in research and development expenses through June 30, 2024.

The process of conducting clinical trials and preclinical studies necessary to obtain regulatory approval is costly and time consuming. We, or any future strategic collaboration partners, may never succeed in achieving marketing approval for any of our product candidates. The probability of success for each product candidate may be affected by numerous factors, including preclinical data, clinical data, regulatory developments, competition, manufacturing capability and commercial viability.

Successful development of future product candidates is highly uncertain and may not result in approved products. Completion dates and completion costs can vary significantly for each future product candidate and are difficult to predict. We anticipate we will make determinations as to which programs to pursue and how much funding to direct to each program on an ongoing basis in response to our ability to maintain or enter into new collaborations with respect to each program or potential product candidate, the scientific and clinical success of each future product candidate, as well as ongoing assessments as to each future product candidate’s commercial potential. We will need to raise additional capital and may seek additional collaborations in the future in order to advance our various programs.

General and administrative expenses

General and administrative expenses consist primarily of salaries and related benefits, including stock-based compensation, related to our executive, finance, legal, business development and support functions. Other general and administrative expenses include allocated facility-related costs not otherwise included in research and development expenses and professional fees for auditing, tax, intellectual property, legal services and director and officer insurance programs and investor relations costs, some of which are incurred as a result of being a publicly traded company.

Other income (expense), net

Other income (expense) consists primarily of interest income and expense and various income or expense items of a non-recurring nature. We earn interest income from interest-bearing accounts and money market funds. Interest expense has historically been primarily attributable to interest charges associated with borrowings under the Term Loan, which matured and was fully paid on May 1, 2024.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

There have been no significant changes to our critical accounting policies since December 31, 2023. For a description of critical accounting policies that affect our significant judgments and estimates used in the preparation of our financial statements, refer to Item 7 in Management’s Discussion and Analysis of Financial Condition and Results of Operations and Note 1 to our financial statements contained in our Annual Report and Note 1 to our condensed financial statements contained in this quarterly report on Form 10-Q.

RESULTS OF OPERATIONS

Comparison of the three and six months ended June 30, 2024 and 2023

The following table summarizes our results of operations for the three and six months ended June 30, 2024 and 2023 (in thousands):


	Three months ended June 30,		Six months ended June 30,
	2024	2023	2024	2023

Research and development expenses	8,309	4,976	14,349	9,901
General and administrative expenses	3,951	2,339	6,736	4,783
Interest and other income, net	1,225	303	1,581	533

Research and development expenses

The following tables summarize the components of our research and development expenses for the periods indicated, together with year-over-year changes (dollars in thousands):


									Increase (decrease)
	Three months ended June 30, 2024		% of total		Three months ended June 30, 2023		% of total		$		%
Research and development
Personnel and internal expenses	$	2,602	31	%	$	2,093	42	%	$	509	24	%
Third-party and outsourced expenses	4,958		60	%	2,702		54	%	2,256		83	%
Non-cash stock-based compensation	680		8	%	154		3	%	526		342	%
Depreciation	69		1	%	27		1	%	42		156	%
Total research and development expenses	$	8,309	100	%	$	4,976	100	%	$	3,333	67	%


									Increase (decrease)
	Six months ended June 30, 2024		% of total		Six months ended June 30, 2023		% of total		$		%
Research and development
Personnel and internal expenses	$	5,005	35	%	$	4,268	43	%	$	737	17	%
Third-party and outsourced expenses	8,125		56	%	5,253		53	%	2,872		55	%
Non-cash stock-based compensation	1,090		8	%	327		3	%	763		233	%
Depreciation	129		1	%	53		1	%	76		143	%
Total research and development expenses	$	14,349	100	%	$	9,901	100	%	$	4,448	45	%

Research and development expenses were $8.3 million and $14.3 million for the three and six months ended June 30, 2024, respectively, compared to $5.0 million and $9.9 million for the three and six months ended June 30, 2023, respectively. These amounts reflect the internal and external costs associated with advancing our clinical and preclinical pipeline. The aggregate increases for the three and six months ended June 30, 2024, as compared to the three and six months ended June 30, 2023, were primarily attributable to internal and external costs associated with the continued clinical advancement of our ADPKD program and an increase in non-cash stock-based compensation.

General and administrative expenses

General and administrative expenses were $4.0 million and $6.7 million for the three and six months ended June 30, 2024, respectively, compared to $2.3 million and $4.8 million for the three and six months ended June 30, 2023, respectively. The increase for the three and six months ended June 30, 2024, as compared to the three and six months ended June 30, 2023, was primarily attributable to non-cash stock-based compensation.

Interest and other income (expenses), net

Net interest and other income was $1.2 million and $1.6 million for the three and six months ended June 30, 2024, respectively, compared to $0.3 million and $0.5 million for the three and six months ended June 30, 2023, respectively. These amounts primarily consisted of interest earned on our cash equivalents and investments, partially offset by interest charges associated with the Term Loan which matured on May 1, 2024.

LIQUIDITY AND CAPITAL RESOURCES

As of June 30, 2024, we had cash, cash equivalents and investments of $95.9 million. In March 2024, we raised approximately $93.9 million in net proceeds from the sale of our common stock and non-voting convertible preferred stock in the 2024 PIPE.

If we are unable to maintain sufficient financial resources, our business, financial condition and results of operations will be materially and adversely affected. To fund our operations in both the short term and long term (beyond 12 months), we may seek to raise additional capital through equity and/or debt financings. There can be no assurance that we will be able to obtain the needed financing on acceptable terms or at all. Additionally, equity or debt financings may have a dilutive effect on the holdings of our existing stockholders. We believe our existing resources will fund our planned operations and expenditures for at least the next 12 months.

Our future capital requirements are difficult to forecast and will depend on many factors, including:

•the initiation, progress, timing and completion of preclinical studies and clinical trials for our development programs and product candidates, and associated costs;

•the number and characteristics of product candidates that we pursue;

•the terms and timing of any strategic collaboration, licensing and other arrangements that we may establish;

•the outcome, timing and cost of regulatory approvals;

•delays that may be caused by changing regulatory requirements;

•the cost and timing of hiring new employees to support our continued growth;

•the costs involved in filing and prosecuting patent applications and enforcing and defending patent claims;

•the costs and timing of procuring clinical and commercial supplies of our product candidates;

•the costs and timing of establishing sales, marketing and distribution capabilities, and the pricing and reimbursement for any products for which we may receive regulatory approval; and

•the extent to which we acquire or invest in businesses, products or technologies.

To date, we have funded our operations primarily through the sale of equity, and to a lesser extent, through convertible debt, up-front payments, research funding and milestone payments under collaborative arrangements. Since inception, we have primarily devoted our resources to funding research and development, including discovery research, and preclinical and clinical development activities. To fund future operations, we will likely need to raise additional capital. We anticipate that we will seek to fund our operations through public or private equity or debt financings or other sources, such as potential collaboration agreements. We cannot make assurances that anticipated additional financing will be available to us on favorable terms, or at all. Although we have previously been successful in obtaining financing through our equity securities offerings, there can be no assurance that we will be able to do so in the future. There can be no assurance that deterioration in credit and financial markets and confidence in economic conditions will not occur in the future. If equity and credit markets deteriorate, it may make any necessary debt or equity financing more difficult to obtain, more costly and/or more dilutive.

On December 12, 2018, we entered into the Sales Agreement with HCW, pursuant to which we may from time to time offer and sell our shares of common stock in at the market offerings, with HCW acting as placement agent.

The following table shows a summary of our cash flows for the six months ended June 30, 2024 and 2023 (in thousands):


	Six months ended June 30,
	2024		2023
	(unaudited)
Net cash (used in) provided by:
Operating activities	$	(20,379)	$	(14,366)
Investing activities	(78,627)		14,999
Financing activities	92,361		12,402
Total	$	(6,645)	$	13,035

Operating activities

Net cash used in operating activities was $20.4 million for the six months ended June 30, 2024, compared to $14.4 million for the six months ended June 30, 2023. The increase in net cash used in operating activities was primarily attributable to a $5.4 million increase in net loss for the six months ended June 30, 2024.

Investing activities

Net cash used in investing activities was $78.6 million for the six months ended June 30, 2024, compared to net cash provided by investing activities of $15.0 million for the six months ended June 30, 2023. The net cash used in investing activities for the six months ended June 30, 2024 was primarily attributable to purchases of $78.3 million of investments. The net cash provided by investing activities for the six months ended June 30, 2023 was attributable to the sales of $15.0 million of investments. The investments purchased and sold in the six months ended June 30, 2024 and 2023 were all U.S. Treasury securities.

Financing activities

Net cash provided by financing activities was $92.4 million for the six months ended June 30, 2024, compared to net cash provided by financing activities of $12.4 million for the six months ended June 30, 2023. Net cash provided by financing activities for the six months ended June 30, 2024 was primarily attributable to total net proceeds received from the 2024 PIPE of $93.9 million, partially offset by principal payments made on the Term Loan. Net cash provided by financing activities for the six months ended June 30, 2023 was primarily attributable to total net proceeds received from our 2023 PIPE of $14.0 million, partially offset by principal payments made on the Term Loan. The Term Loan fully matured on May 1, 2024.

MATERIAL CASH REQUIREMENTS

As of June 30, 2024, there have been no material changes, outside of the ordinary course of business, in our outstanding contractual obligations or in our material cash requirements from those disclosed under the subheading Material Cash Requirements in our Annual Report.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Some of the securities that we invest in have market risk where a change in prevailing interest rates may cause the principal amount of investments to fluctuate. Financial instruments that potentially subject us to significant concentrations of credit risk consist primarily of cash, cash equivalents and investments. We invest our excess cash primarily in money market funds and U.S. Treasury securities. The primary objectives of our investment activities are to ensure liquidity and to preserve principal while at the same time maximizing the interest income we receive from our investments without significantly increasing risk. We have established guidelines regarding approved investments and maturities of investments, which are designed to maintain safety and liquidity.

Because of the short-term maturities of our cash equivalents and investments, we do not believe that an increase in market rates would have any significant impact on the realized value of our cash equivalents and investments. If a 10% change in interest rates were to have occurred on June 30, 2024, this change would not have had a material effect on the fair value of our cash equivalents as of that date.

We also had interest rate exposure as a result of the Term Loan, which matured on May 1, 2024.

The Term Loan bore interest at a floating per annum rate equal to the greater of (a) 8.95% and (b) the sum of (i) the 1-month CME Term SOFR reference rate on the last business day of the month that immediately preceded the month in which the interest accrued, (ii) 0.10% and (iii) 8.51%.

If a 10% change in interest rates were to have occurred on June 30, 2024, this change would not have had a material effect on our interest expense as of that date.

ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to provide reasonable assurance that information required to be disclosed in our periodic and current reports that we file with the Securities and Exchange Commission ("SEC") is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and our principal financial officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable and not absolute assurance of achieving the desired control objectives. In reaching a reasonable level of assurance, management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. In addition, the design of any system of controls also is based, in part, upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

As of June 30, 2024, we carried out an evaluation, under the supervision and with the participation of our management, including our principal executive officer and our principal financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended. Based on this evaluation, our principal executive officer and our principal financial officer concluded that our disclosure controls and procedures were effective at a reasonable assurance level as of June 30, 2024.

Changes in Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting as such term is defined in Rule 13a-15(f) of the Exchange Act. An evaluation was also performed under the supervision and with the participation of our management, including our principal executive officer and our principal financial officer, of any change in our internal control over financial reporting that occurred during our last fiscal quarter and that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. That evaluation did not identify any change in our internal control over financial reporting that occurred during our latest fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

We currently are not a party to, and none of our property is the subject of, any material legal proceedings within the meaning of Item 103 of Regulation S-K promulgated under the Securities Act of 1933, as amended.

ITEM 1A. RISK FACTORS

You should carefully consider the following risk factors, as well as the other information in this report, before deciding whether to purchase, hold or sell shares of our common stock. The occurrence of any of the following risks could harm our business, financial condition, results of operations and/or growth prospects or cause our actual results to differ materially from those contained in forward-looking statements we have made in this report and those we may make from time to time. You should consider all the factors described when evaluating our business. The risk factors set forth below that are marked with an asterisk (*) were not included as a separate risk factor in, or contain changes to the similarly titled risk factors included in, Item 1A of our Annual Report. If any of the following risks actually occurs, our business, financial condition, results of operations and future growth prospects would likely be materially and adversely affected. In these circumstances, the market price of our common stock would likely decline.

RISKS RELATED TO THE DISCOVERY AND DEVELOPMENT OF PRODUCT CANDIDATES

The approach we are taking to discover and develop drugs is novel and may never lead to marketable products.

We have concentrated our therapeutic product research and development efforts on microRNA technology, and our future success depends on the successful development of this technology and products based on our microRNA product platform. Neither we, nor any other company, has received regulatory approval to market therapeutics targeting microRNAs. The scientific discoveries that form the basis for our efforts to discover and develop product candidates are relatively new. The scientific evidence to support the feasibility of developing product candidates based on these discoveries is both preliminary and limited. If we do not successfully develop and commercialize product candidates based upon our technological approach, we may not become profitable and the value of our common stock may decline.

Further, our focus solely on microRNA technology for developing drugs as opposed to multiple, more proven technologies for drug development increases the risks associated with the ownership of our common stock. If we are not successful in developing any product candidates using microRNA technology, we may be required to change the scope and direction of our product development activities. In that case, we may not be able to identify and implement successfully an alternative product development strategy.

We may not be successful in our efforts to identify or discover potential product candidates.

The success of our business depends primarily upon our ability to identify, develop and commercialize microRNA therapeutics. Our research programs may initially show promise in identifying potential product candidates, yet fail to yield product candidates for clinical development for a number of reasons, including:

•our research methodology or that of any future collaboration partner may be unsuccessful in identifying potential product candidates;

•potential product candidates may be shown to have harmful side effects or may have other characteristics that may make the products unmarketable or unlikely to receive marketing approval; or

•any future collaboration partners may change their development profiles for potential product candidates or abandon a therapeutic area.

If any of these events occur, we may be forced to abandon our development efforts for a program or programs, which would have a material adverse effect on our business and could potentially cause us to cease operations. Research programs to identify new product candidates require substantial technical, financial and human resources. We may focus our efforts and resources on potential programs or product candidates that ultimately prove to be unsuccessful.

Preclinical and clinical studies of our product candidates may not be successful. If we are unable to generate successful results from our preclinical and clinical studies of our product candidates, or experience significant delays in doing so, our business may be materially harmed.

We have invested a significant portion of our efforts and financial resources in the identification and development of product candidates that target microRNAs. Our ability to generate product revenues, which we do not expect will occur for many years, if ever, will depend heavily on the successful development and eventual commercialization of our product candidates.

The success of our product candidates will depend on several factors, including the following:

•successfully designing preclinical studies which may be predictive of clinical outcomes;

•successful results from preclinical and clinical studies;

•receipt of marketing approvals from applicable regulatory authorities;

•obtaining and maintaining patent and trade secret protection for future product candidates;

•establishing and maintaining manufacturing relationships with third parties or establishing our own manufacturing capability; and

•successfully commercializing our products, if and when approved, whether alone or in collaboration with others.

If we do not, or any future collaboration partners do not, achieve one or more of these factors in a timely manner or at all, we or any future collaboration partners could experience significant delays or an inability to successfully complete the development of, or commercialize, our product candidates, which would materially harm our business. For example, in July 2022, we received notification from Sanofi of its decision to terminate the HERA trial of RG-012 for failure to meet Sanofi’s pre-defined futility criteria. In January 2023, we received notification from Sanofi of its decision to terminate the collaboration in its entirety. Preclinical studies, even if successful, may not lead to successful clinical trials and results in early-stage clinical trials may not be predictive of successful results in later stage clinical trials.

If clinical trials of our product candidates fail to demonstrate safety and efficacy to the satisfaction of regulatory authorities or do not otherwise produce positive results, we may incur additional costs or experience delays in completing, or ultimately be unable to complete, the development and commercialization of our product candidates.*

Before obtaining marketing approval from regulatory authorities for the sale of product candidates, we or a collaboration partner must conduct extensive clinical trials to demonstrate the safety and efficacy of the product candidates in humans. Clinical trials are expensive, difficult to design and implement, can take many years to complete and is uncertain as to outcome. A failure of one or more clinical trials can occur at any stage of testing. The outcome of preclinical studies and early clinical trials may not be predictive of the success of later clinical trials, and interim results of a clinical trial do not necessarily predict final results. Moreover, preclinical and clinical data are often susceptible to varying interpretations and analyses, and many companies that have believed their product candidates performed satisfactorily in preclinical studies and clinical trials have nonetheless failed to obtain marketing approval for their products.

Events which may result in a delay or unsuccessful completion of clinical development include:

•delays in reaching an agreement with the FDA or other regulatory authorities on final trial design;

•imposition of a clinical hold of our clinical trial operations or trial sites by the FDA or other regulatory authorities;

•delays in reaching agreement on acceptable terms with prospective CROs and clinical trial sites;

•our inability to adhere to clinical trial requirements directly or with third parties such as CROs;

•delays in obtaining required institutional review board approval at each clinical trial site;

•delays in recruiting suitable patients to participate in a trial;

•delays in the testing, validation, manufacturing and delivery of the product candidates to the clinical sites;

•delays in having patients complete participation in a trial or return for post-treatment follow-up;

•delays caused by patients dropping out of a trial due to protocol procedures or requirements, product side effects or disease progression;

•clinical sites dropping out of a trial to the detriment of enrollment;

•time required to add new clinical sites; or

•delays by our contract manufacturers to produce and deliver sufficient supply of clinical trial materials.

For example, in July 2018, we voluntarily paused our Phase 1 MAD clinical trial for RGLS4326 due to unexpected observations in our 27-week mouse chronic toxicity study, which was designed to support the Phase 2 proof-of-concept clinical trial in ADPKD previously planned to start in mid-2019. The observations in the mouse chronic toxicity study were unexpected, given the favorable safety profile of RGLS4326 in previous non-good laboratory practices ("GLP") and GLP toxicity studies at the same or similar doses supporting the IND and Phase 1 clinical trial. In July 2019, the FDA notified us of additional nonclinical data requirements and placed the IND on a partial clinical hold, formalizing the specific requirements to initiate the MAD study and further proceed into chronic dosing. In October 2021, we announced we would discontinue development of RGLS4326 and would instead prioritize RGLS8429, targeting miR-17.

Additionally, in July 2022, we received notification from Sanofi of its decision to terminate the HERA trial of RG-012 for failure to meet Sanofi’s pre-defined futility criteria. In January 2023, we received notification from Sanofi of its decision to terminate the collaboration in its entirety.

In addition, enrollment and retention of patients in clinical trials could be disrupted by man-made or natural disasters, public health pandemics or epidemics or other business interruptions.

If we or any future collaboration partners are required to conduct additional clinical trials or other testing of any product candidates beyond those that are originally contemplated, are unable to successfully complete clinical trials of any such product candidates or other testing, or if the results of these trials or tests are not positive or are only moderately positive or if there are safety concerns, we or any future collaboration partners may:

•be delayed in obtaining marketing approval for our product candidates;

•not obtain marketing approval at all;

•obtain approval for indications or patient populations that are not as broad as originally intended or desired;

•obtain approval with labeling that includes significant use or distribution restrictions or safety warnings;

•be subject to additional post-marketing testing requirements; or

•have the product removed from the market after obtaining marketing approval.

For example, although we have discussed with FDA the potential for an accelerated approval pathway based on a single pivotal Phase 2 study of RGLS8429 for the treatment of ADPKD, there is no assurance that FDA will ultimately agree that the conditions for accelerated approval have been satisfied, even if such trial is successful.

Our product development costs will also increase if we experience delays in testing or marketing approvals. We do not know whether any clinical trials will begin as planned, will need to be restructured or will be completed on schedule, or at all. Significant clinical trial delays also could shorten any periods during which we may have the exclusive right to commercialize our product candidates or allow our competitors to bring products to market before we do, which would impair our ability to successfully commercialize our product candidates and may harm our business and results of operations. Any inability to successfully complete preclinical and clinical development, whether independently or with a collaboration partner, could result in additional costs to us or impair our ability to generate revenues from product sales, regulatory and commercialization milestones and royalties.

Any of our product candidates may cause adverse effects ("AEs") or have other properties that could delay or prevent their regulatory approval or limit the scope of any approved label or market acceptance.

AEs caused by our product candidates could cause us, other reviewing entities, clinical trial sites or regulatory authorities to interrupt, delay or halt clinical trials and could result in the denial of regulatory approval. Certain oligonucleotide therapeutics have shown injection site reactions and pro-inflammatory effects and may also lead to impairment of kidney or liver function. There is a risk that our future product candidates may induce similar AEs.

If AEs are observed in any clinical trials of our product candidates, including those that a future collaboration partner may develop under an agreement with us, our or any future collaboration partners’ ability to obtain regulatory approval for product candidates may be negatively impacted.

Further, if any of our future products, if and when approved for commercial sale, cause serious or unexpected side effects, a number of potentially significant negative consequences could result, including:

•regulatory authorities may withdraw their approval of the product or impose restrictions on its distribution in the form of a modified risk evaluation and mitigation strategy;

•regulatory authorities may require the addition of labeling statements, such as warnings or contraindications;

•we may be required to change the way the product is administered or conduct additional clinical trials;

•we could be sued and held liable for harm caused to patients; or

•our reputation may suffer.

Any of these events could prevent us or any future collaboration partners from achieving or maintaining market acceptance of the affected product and could substantially increase the costs of commercializing our future products and impair our ability to generate revenues from the commercialization of these products either on our own or with a collaboration partner.

Even if we complete the necessary preclinical studies and clinical trials, we cannot predict whether or when we will obtain regulatory approval to commercialize a product candidate and we cannot, therefore, predict the timing of any revenue from a future product.

Neither we nor any collaboration partner can commercialize a product until the appropriate regulatory authorities, such as the FDA, have reviewed and approved the product candidate. The regulatory agencies may not complete their review processes in a timely manner, or we may not be able to obtain regulatory approval. Additional delays may result if an FDA Advisory Committee recommends restrictions on approval or recommends non-approval. In addition, we or a collaboration partner may experience delays or rejections based upon additional government regulation from future legislation or administrative action, or changes in regulatory agency policy during the period of product development, clinical trials and the review process.

Even if we obtain regulatory approval for a product candidate, we will still face extensive regulatory requirements and our products may face future development and regulatory difficulties.*

Even if we obtain regulatory approval in the United States, the FDA may still impose significant restrictions on the indicated uses or marketing of our product candidates, or impose ongoing requirements for potentially costly post-approval studies or post-market surveillance. The holder of an approved New Drug Application ("NDA") is obligated to monitor and report AEs and any failure of a product to meet the specifications in the NDA. The holder of an approved NDA must also submit new or supplemental applications and obtain FDA approval for certain changes to the approved product, product labeling or manufacturing process. Advertising and promotional materials must comply with FDA rules and are subject to FDA review, in addition to other potentially applicable federal and state laws.

In addition, drug product manufacturers and their facilities are subject to payment of user fees and continual review and periodic inspections by the FDA and other regulatory authorities for compliance with current good manufacturing practices ("GMP") and adherence to commitments made in the NDA. If we or a regulatory agency discovers previously unknown problems with a product such as AEs of unanticipated severity or frequency, or problems with the facility where the product is manufactured, a regulatory agency may impose restrictions relative to that product or the manufacturing facility, including requiring recall or withdrawal of the product from the market or suspension of manufacturing.

If we or a future collaboration partner fails to comply with applicable regulatory requirements following approval of any of our product candidates, a regulatory agency may:

•issue a warning letter asserting that we are in violation of the law;

•seek an injunction or impose civil or criminal penalties or monetary fines;

•suspend or withdraw regulatory approval;

•suspend any ongoing clinical trials;

•refuse to approve a pending NDA or supplements to an NDA submitted by us;

•seize product; or

•refuse to allow us to enter into supply contracts, including government contracts.

Moreover, the FDA closely regulates the marketing, labeling, advertising and promotion of pharmaceutical products. A company can make only those claims relating to safety and efficacy, purity and potency that are approved by the FDA and in accordance with the provisions of the approved label. Companies may also share truthful and not misleading information that is otherwise consistent with the labeling. The FDA and other agencies actively enforce the laws and regulations prohibiting the promotion of off-label uses. Failure to comply with these requirements can result in significant civil, criminal and administrative penalties. Physicians may prescribe legally available products for uses that are not described in the product’s labeling and that differ from those tested by us and approved by the FDA made in the physician’s independent medical judgement. Such off-label uses are common across medical specialties. Physicians may believe that such off-label uses are the best treatment for many patients in varied circumstances. The FDA does not regulate the behavior of physicians in their choice of treatments. The FDA does, however, restrict manufacturer’s communications on the subject of off-label use of their products.

Any government investigation of alleged violations of law could require us to expend significant time and resources in response and could generate negative publicity. The occurrence of any event or penalty described above may inhibit our ability to commercialize our future products and generate revenues.

We may not be successful in obtaining or maintaining necessary rights to microRNA targets, drug compounds and processes for our development pipeline through acquisitions and in-licenses.

Presently, we have rights to the intellectual property, through licenses from third parties and under patents that we own, to modulate only a subset of the known microRNA targets. Because our programs may involve a range of microRNA targets, including targets that require the use of proprietary rights held by third parties, the growth of our business will likely depend in part on our ability to acquire, in-license or use these proprietary rights. In addition, our product candidates may require specific formulations to work effectively and efficiently and these rights may be held by others. We may be unable to acquire or in-license any compositions, methods of use, processes or other third-party intellectual property rights from third parties that we identify. The licensing and acquisition of third-party intellectual property rights is a competitive area, and a number of more established companies are also pursuing strategies to license or acquire third-party intellectual property rights that we may consider attractive. These established companies may have a competitive advantage over us due to their size, cash resources and greater clinical development and commercialization capabilities.

For example, we may collaborate with U.S. and foreign academic institutions to accelerate our preclinical research or development under written agreements with these institutions. Typically, these institutions provide us with an option to negotiate a license to any of the institution’s rights in technology resulting from the collaboration. Regardless of such right of first negotiation for intellectual property, we may be unable to negotiate a license within the specified time frame or under terms that are acceptable to us. If we are unable to do so, the institution may offer the intellectual property rights to other parties, potentially blocking our ability to pursue our program.

In addition, companies that perceive us to be a competitor may be unwilling to assign or license rights to us. We also may be unable to license or acquire third-party intellectual property rights on terms that would allow us to make an appropriate return on our investment. If we are unable to successfully obtain rights to required third-party intellectual property rights, our business, financial condition and prospects for growth could suffer.

We may use our financial and human resources to pursue a particular research program or product candidate and fail to capitalize on programs or product candidates that may be more profitable or for which there is a greater likelihood of success.

Because we have limited financial and human resources, we may have to pursue collaboration agreements for the development and commercialization of our programs and potential product candidates in indications with potentially large

commercial markets, while focusing our internal development resources and any internal sales and marketing organization that we may establish on research programs and product candidates for selected smaller markets, such as orphan diseases. As a result, we may forego or delay pursuit of opportunities with other programs or product candidates or for other indications that later prove to have greater commercial potential. Our resource allocation decisions may cause us to fail to capitalize on viable commercial products or profitable market opportunities. Our spending on research and development programs and product candidates for specific indications may not yield any commercially viable products. If we do not accurately evaluate the commercial potential or target market for a particular product candidate, we may relinquish valuable rights to that product candidate through collaboration, licensing or other royalty arrangements in cases in which it would have been more advantageous for us to retain sole development and commercialization rights to such product candidate, or we may allocate internal resources to a product candidate in a therapeutic area in which it would have been more advantageous to enter into a partnering arrangement.

If we fail to comply with environmental, health and safety laws and regulations, we could become subject to fines or penalties or incur costs that could have a material adverse effect on the success of our business.

We are subject to numerous environmental, health and safety laws and regulations, including those governing laboratory procedures and the handling, use, storage, treatment and disposal of hazardous materials and wastes. Our operations involve the use of hazardous and flammable materials, including chemicals and biological materials. Our operations also produce hazardous waste products. We generally contract with third parties for the disposal of these materials and wastes. We cannot eliminate the risk of contamination or injury from these materials. In the event of contamination or injury resulting from our use of hazardous materials, we could be held liable for any resulting damages, and any liability could exceed our resources. We also could incur significant costs associated with civil or criminal fines and penalties.

Although we maintain workers’ compensation insurance to cover us for costs and expenses we may incur due to injuries to our employees resulting from the use of hazardous materials or other work-related injuries, this insurance may not provide adequate coverage against potential liabilities. In addition, we may incur substantial costs in order to comply with current or future environmental, health and safety laws and regulations. These current or future laws and regulations may impair our research, development or production efforts. Failure to comply with these laws and regulations also may result in substantial fines, penalties or other sanctions.

RISKS RELATED TO OUR FINANCIAL CONDITION AND NEED FOR ADDITIONAL CAPITAL

We will need to raise additional capital to develop our product candidates and implement our operating plans, and if we are unable to do so when needed, we will not be able to complete the development and commercialization of our product candidates.*

As of June 30, 2024, we had approximately $95.9 million of cash, cash equivalents and investments. We believe our existing resources will be sufficient to fund our planned operations and expenditures for at least the next 12 months. We will need to raise additional capital in the future to fund our operations, and if we are unable to raise additional capital when needed, we will not be able to continue as a going concern.

Developing pharmaceutical products, including conducting preclinical studies and clinical trials, is expensive. We expect our research and development expenses to substantially increase in connection with our ongoing activities, particularly as we advance our product candidates towards or through clinical trials. We will need to raise additional capital to fund our operations and such funding may not be available to us on acceptable terms, or at all.

For the foreseeable future, we expect to rely primarily on equity and/or debt financings to fund our operations. If there is volatility in the equity markets, it may create additional challenges to raising sufficient additional capital through an equity or equity-linked financing. Raising additional capital through the sale of securities could cause significant dilution to our stockholders. If we raise capital through future debt financings, the debt instruments governing such indebtedness may contain provisions that require us to comply with various covenants such as requiring us to maintain certain minimum cash balances or restricting our ability to dispose of assets, complete a merger or acquisition, incur indebtedness, encumber our assets, pay dividends or make other distributions to our stockholders, make specified investments and engage in transactions with our affiliates. In addition, if such indebtedness is secured against our assets, if we are unable to repay, refinance or restructure our indebtedness when payment is due, the lenders could proceed against the collateral or force us into bankruptcy or liquidation.

Any additional fundraising efforts may divert our management from their day-to-day activities, which may adversely affect our ability to develop and commercialize our product candidates. Our ability to raise additional funds will depend, in part, on the success of our preclinical studies and clinical trials and other product development activities, regulatory events, our

ability to identify and enter into licensing or other strategic arrangements, and other events or conditions that may affect our value or prospects, as well as factors related to financial, economic and market conditions, many of which are beyond our control. There can be no assurances that sufficient funds will be available to us when required or on acceptable terms, if at all.

If we are unable to raise additional capital when required or on acceptable terms, we may be required to:

•significantly delay, scale back or discontinue the development or commercialization of any future product candidates;

•seek collaborations, or amend existing collaborations, for research and development programs at an earlier stage than otherwise would be desirable or for the development of programs that we otherwise would have sought to develop independently, or on terms that are less favorable than might otherwise be available;

•dispose of technology assets, or relinquish or license on unfavorable terms, our rights to technologies or any future product candidates that we otherwise would seek to develop or commercialize ourselves;

•pursue the sale of our company to a third party at a price that may result in a loss on investment for our stockholders; or

•file for bankruptcy or cease operations altogether.

Any of these events could have a material adverse effect on our business, operating results and prospects.

We have incurred significant losses since our inception and anticipate that we will continue to incur significant losses for the foreseeable future.*

Since inception, our operations have been primarily limited to acquiring and in-licensing intellectual property rights, developing our microRNA product platform, undertaking basic research around microRNA targets and conducting preclinical and clinical studies for our initial programs. We have not yet obtained regulatory approval for any product candidates. Consequently, any predictions about our future success or viability, or any evaluation of our business and prospects, may not be accurate.

We have incurred losses in each year since our inception in September 2007. Our net loss was $11.0 million and $19.5 million for the three and six months ended June 30, 2024, respectively, and $7.0 and $14.2 for the three and six months ended June 30, 2023, respectively. As of June 30, 2024, we had an accumulated deficit of $532.7 million.

We have devoted most of our financial resources to research and development, including our preclinical and clinical development activities. To date, we have financed our operations primarily through the sale of equity securities and convertible debt, through the Term Loan and from revenue received from our former collaboration partners.

The size of our future net losses will depend, in part, on the rate of future expenditures and our ability to obtain funding through equity or debt financings, collaborations or grants. We initiated clinical development of RGLS8429 in the second quarter of 2022. Even if we or a future collaboration partner successfully obtains regulatory approval to market a product candidate, our revenues will also depend upon the size of any markets in which our product candidates have received market approval, and our ability to achieve sufficient market acceptance and adequate market share for our products.

We expect to continue to incur significant expenses and increasing operating losses for the foreseeable future. The net losses we incur may fluctuate significantly from quarter to quarter. We anticipate that our expenses will increase substantially if and as we: continue our research and preclinical and clinical development of our product candidates, both independently and under any future collaboration agreements; seek to identify additional microRNA targets and product candidates; acquire or in-license other products and technologies; continue with clinical development of our product candidates; seek marketing approvals for our product candidates that successfully complete clinical trials; ultimately establish a sales, marketing and distribution infrastructure to commercialize any products for which we may obtain marketing approval; maintain, expand and protect our intellectual property portfolio; hire additional clinical, regulatory, research and administrative personnel; and create additional infrastructure to support our operations and our product development and planned future commercialization efforts.

We have never generated any revenue from product sales and may never be profitable.

Our ability to generate revenue and achieve profitability depends on our ability, alone or with collaboration partners, to successfully complete the development of, obtain the necessary regulatory approvals for and commercialize product candidates. We do not anticipate generating revenues from sales of products for the foreseeable future, if ever. Our ability to generate future revenues from product sales depends heavily on our success in:

•identifying and validating new microRNAs as therapeutic targets;

•completing our research and preclinical development of product candidates;

•initiating and completing clinical trials for product candidates;

•seeking and obtaining marketing approvals for product candidates that successfully complete clinical trials;

•establishing and maintaining supply and manufacturing relationships with third parties;

•launching and commercializing product candidates for which we obtain marketing approval, with a collaboration partner or, if launched independently, successfully establishing a sales force, marketing and distribution infrastructure;

•maintaining, protecting and expanding our intellectual property portfolio; and

•attracting, hiring and retaining qualified personnel.

Because of the numerous risks and uncertainties associated with pharmaceutical product development, we are unable to predict the timing or amount of increased expenses and when we will be able to achieve or maintain profitability, if ever. In addition, our expenses could increase beyond expectations if we are required by the FDA or foreign regulatory agencies to perform studies and trials in addition to those that we currently anticipate.

Even if one or more of the product candidates that we independently develop is approved for commercial sale, we anticipate incurring significant costs associated with commercializing any approved product. Even if we are able to generate revenues from the sale of any approved products, we may not become profitable and may need to obtain additional funding to continue operations.

RISKS RELATED TO OUR RELIANCE ON THIRD PARTIES

We may depend upon collaborations for the development and eventual commercialization of certain microRNA product candidates. If these collaborations are unsuccessful or are terminated, we may be unable to commercialize certain product candidates and we may be unable to generate revenues from our development programs.

We may depend upon third party collaboration partners for financial and scientific resources for the clinical development and commercialization of certain of our microRNA product candidates. These collaborations will likely provide us with limited control over the course of development of a microRNA product candidate, especially once a candidate has reached the stage of clinical development.

Our ability to recognize revenues from successful collaborations may be impaired by several factors including:

•a collaboration partner may shift its priorities and resources away from our programs due to a change in business strategies, or a merger, acquisition, sale or downsizing of its company or business unit;

•a collaboration partner may cease development in therapeutic areas which are the subject of the collaboration;

•a collaboration partner may change the success criteria for a particular program or potential product candidate thereby delaying or ceasing development of such program or candidate;

•a significant delay in initiation of certain development activities by a collaboration partner will also delay payment of milestones tied to such activities, thereby impacting our ability to fund our own activities;

•a collaboration partner could develop a product that competes, either directly or indirectly, with a collaboration product;

•a collaboration partner with commercialization obligations may not commit sufficient financial or human resources to the marketing, distribution or sale of a product;

•a collaboration partner with manufacturing responsibilities may encounter regulatory, resource or quality issues and be unable to meet demand requirements;

•a collaboration partner may exercise its rights under the agreement to terminate the collaboration;

•a dispute may arise between us and a collaboration partner concerning the research, development or commercialization of a program or product candidate resulting in a delay in milestones, royalty payments or termination of a program and possibly resulting in costly litigation or arbitration which may divert management attention and resources; and

•a collaboration partner may use our proprietary information or intellectual property in such a way as to invite litigation from a third party or fail to maintain or prosecute intellectual property rights such that our rights in such property are jeopardized.

We rely on third parties to conduct some aspects of our compound formulation, research and preclinical studies, and those third parties may not perform satisfactorily, including failing to meet deadlines for the completion of such formulation, research or testing.

We do not expect to independently conduct all aspects of our drug discovery activities, compound formulation research or preclinical studies of product candidates. We currently rely and expect to continue to rely on third parties to conduct some aspects of our preclinical studies and formulation development.

Any of these third parties may terminate their engagements with us at any time. If we need to enter into alternative arrangements, it would delay our product development activities. Our reliance on these third parties for research and development activities will reduce our control over these activities but will not relieve us of our responsibilities. For example, for product candidates that we develop and commercialize on our own, we will remain responsible for ensuring that each of our IND-enabling studies and clinical trials are conducted in accordance with the study plan and protocols for the trial.

If these third parties do not successfully carry out their contractual duties, meet expected deadlines or conduct our studies in accordance with regulatory requirements or our stated study plans and protocols, we will not be able to complete, or may be delayed in completing, the necessary preclinical studies to enable us or any future collaboration partners to select viable product candidates for IND submissions and will not be able to, or may be delayed in our efforts to, successfully develop and commercialize such product candidates.

We rely on third-party manufacturers to produce our preclinical and clinical product candidates, and we intend to rely on third parties to produce future clinical supplies of product candidates that we advance into clinical trials and commercial supplies of any approved product candidates.*

Reliance on third-party manufacturers entails risks, including risks that we would not be subject to if we manufactured the product candidates ourselves, including:

•the inability to meet any product specifications and quality requirements consistently;

•a delay or inability to procure or expand sufficient manufacturing capacity;

•manufacturing and product quality issues related to scale-up of manufacturing;

•costs and validation of new equipment and facilities required for scale-up;

•a failure to comply with GMP and similar foreign standards;

•the inability to negotiate manufacturing or supply agreements with third parties under commercially reasonable terms;

•termination or nonrenewal of manufacturing agreements with third parties in a manner or at a time that is costly or damaging to us;

•the reliance on a limited number of sources, and in some cases, single sources for raw materials, such that if we are unable to secure a sufficient supply of these product components, we will be unable to manufacture and sell future product candidates in a timely fashion, in sufficient quantities or under acceptable terms;

•the lack of qualified backup suppliers for any raw materials that are currently purchased from a single source supplier;

•operations of our third-party manufacturers or suppliers could be disrupted by conditions unrelated to our business or operations, including the bankruptcy of the manufacturer or supplier;

•carrier disruptions or increased costs that are beyond our control;

•disruptions caused by man-made or natural disasters or public health pandemics or epidemics or other business interruptions; and

•the failure to deliver products under specified storage conditions and in a timely manner.

Any of these events could lead to clinical study delays or failure to obtain regulatory approval, or impact our ability to successfully commercialize future products. Some of these events could be the basis for FDA action, including injunction, recall, seizure or total or partial suspension of production.

We rely on limited sources of supply for the drug substance of product candidates and any disruption in the chain of supply may cause a delay in developing and commercializing these product candidates.

We have established manufacturing relationships with a limited number of suppliers to manufacture raw materials and the drug substance of any product candidate for which we are responsible for preclinical or clinical development. Each supplier may require licenses to manufacture such components if such processes are not owned by the supplier or in the public domain. As part of any marketing approval, a manufacturer and its processes are required to be qualified by the FDA prior to commercialization. If supply from the approved vendor is interrupted, there could be a significant disruption in commercial supply. An alternative vendor would need to be qualified through an NDA supplement which could result in further delay. The FDA or other regulatory agencies outside of the United States may also require additional studies if a new supplier is relied upon for commercial production. Switching vendors may involve substantial costs and is likely to result in a delay in our desired clinical and commercial timelines.

In addition, if any future collaboration partners elect to pursue the development and commercialization of certain programs, we will lose control over the manufacturing of the product candidate subject to the agreement.

These factors could cause the delay of clinical trials, regulatory submissions, required approvals or commercialization of our product candidates, delay milestone payments owed to us or cause us to incur higher costs and prevent us from commercializing our products successfully. Furthermore, if our suppliers fail to deliver the required commercial quantities of active pharmaceutical ingredients on a timely basis and at commercially reasonable prices, and we are unable to secure one or more replacement suppliers capable of production in a timely manner at a substantially equivalent cost, our clinical trials may be delayed or we could lose potential revenue.

Manufacturing issues may arise that could increase product and regulatory approval costs or delay commercialization.

As we scale-up manufacturing of product candidates and conduct required stability testing, product, packaging, equipment and process-related issues may require refinement or resolution in order to proceed with any clinical trials and obtain regulatory approval for commercial marketing. We may identify significant impurities, which could result in increased scrutiny by the regulatory agencies, delays in clinical programs and regulatory approval, increases in our operating expenses, or failure to obtain or maintain approval for product candidates or any approved products.

We rely on third parties to conduct, supervise and monitor our clinical trials, and if those third parties perform in an unsatisfactory manner, it may harm our business.

We rely, and any future collaboration partners may rely, on CROs and clinical trial sites to ensure the proper and timely conduct of our clinical trials. While we will have agreements governing their activities, we have limited influence over their actual performance. We control only certain aspects of our CROs’ activities. Nevertheless, we are responsible for ensuring that each of our clinical trials are conducted in accordance with the applicable protocol, legal, regulatory and scientific standards and our reliance on the CROs does not relieve us of our regulatory responsibilities.

We, any future collaboration partners and our CROs are required to comply with the FDA’s or other regulatory agency’s current good clinical practices ("GCPs") for conducting, recording and reporting the results of IND-enabling studies and clinical trials to assure that data and reported results are credible and accurate and that the rights, integrity and confidentiality of clinical trial participants are protected. The FDA and non-U.S. regulatory agencies enforce these GCPs through periodic inspections of trial sponsors, principal investigators and clinical trial sites. If we or our CROs fail to comply with applicable GCPs, the clinical data generated in our clinical trials may be deemed unreliable and the FDA or applicable non-U.S. regulatory agency may require us to perform additional clinical trials before approving any marketing applications for the relevant jurisdiction. Upon inspection, the FDA or applicable non-U.S. regulatory agency may determine that our clinical trials did not comply with GCPs. In addition, our clinical trials will require a sufficiently large number of test subjects to evaluate the safety and effectiveness of a potential drug product. Accordingly, if our CROs fail to comply with these regulations or fail to recruit a sufficient number of patients, we may be required to repeat such clinical trials, which would delay the regulatory approval process.

Our CROs will not be our employees, and we will not be able to control whether or not they devote sufficient time and resources to our clinical and nonclinical programs. These CROs may also have relationships with other commercial entities, including our competitors, for whom they may also be conducting clinical trials, or other drug development activities which could harm our competitive position. If our CROs do not successfully carry out their contractual duties or obligations, fail to meet expected deadlines, or if the quality or accuracy of the clinical data they obtain is compromised due to the failure to adhere to our clinical protocols or regulatory requirements, or for any other reasons, our clinical trials may be extended, delayed or terminated, and we may not be able to obtain regulatory approval for, or successfully commercialize our product candidates. As

a result, our financial results and the commercial prospects for such products and any product candidates that we develop would be harmed, our costs could increase, and our ability to generate revenues could be delayed.

We also rely on other third parties to store and distribute drug products for any clinical trials that we may conduct. Any performance failure on the part of our distributors could delay clinical development or marketing approval of our product candidates or commercialization of our products, if approved, producing additional losses and depriving us of potential product revenue.

RISKS RELATED TO OUR INTELLECTUAL PROPERTY

If we are unable to obtain or protect intellectual property rights related to our future products and product candidates, we may not be able to compete effectively in our markets.

We rely upon a combination of patents, trade secret protection and confidentiality agreements to protect the intellectual property related to our future products and product candidates. The strength of patents in the biotechnology and pharmaceutical field involves complex legal and scientific questions and can be uncertain. The patent applications that we own or in-license may fail to result in patents with claims that cover the products in the United States or in other countries. There is no assurance that all of the potentially relevant prior art relating to our patents and patent applications has been found; such prior art can invalidate a patent or prevent a patent from issuing based on a pending patent application. Even if patents do successfully issue, third parties may challenge their validity, enforceability or scope, which may result in such patents being narrowed or invalidated. Furthermore, even if they are unchallenged, our patents and patent applications may not adequately protect our intellectual property or prevent others from designing around our claims.

If the patent applications we hold or have in-licensed with respect to our programs or product candidates fail to issue or if their breadth or strength of protection is threatened, it could dissuade companies from collaborating with us to develop product candidates, and threaten our ability to commercialize, future products. We cannot offer any assurances about which, if any, patents will issue or whether any issued patents will be found invalid and unenforceable or will be threatened by third parties. A patent may be challenged through one or more of several administrative proceedings including post-grant challenges, re-examination or opposition before the U.S. Patent and Trademark Office or foreign patent offices. Any successful challenge of patents or any other patents owned by or licensed to us could deprive us of rights necessary for the successful commercialization of any product candidates that we or any future collaboration partners may develop.

Since patent applications in the United States and most other countries are confidential for a period of time after filing, and some remain so until issued, we cannot be certain that we were the first to file any patent application related to a product candidate. Furthermore, in certain situations, if we and one or more third parties have filed patent applications in the United States and claiming the same subject matter, an administrative proceeding, known as an interference, can be initiated to determine which applicant is entitled to the patent on that subject matter. Such an interference proceeding provoked by third parties or brought by us may be necessary to determine the priority of inventions with respect to our patents or patent applications, or those of licensors or any future collaboration partners. An unfavorable outcome could require us to cease using the related technology or to attempt to license rights to it from the prevailing party. Our business could be harmed if the prevailing party does not offer us a license on commercially reasonable terms. Our defense of a patent or patent application in such a proceeding may not be successful and, even if successful, may result in substantial costs and distract our management and other employees.

In addition, patents have a limited lifespan. In the United States, the natural expiration of a patent is generally 20 years after it is filed. Various extensions may be available however the life of a patent, and the protection it affords, is limited. Once the patent life has expired for a product, we may be open to competition from generic medications. Further, if we encounter delays in regulatory approvals, the period of time during which we could market a product candidate under patent protection could be reduced.

In addition to the protection afforded by patents, we rely on trade secret protection and confidentiality agreements to protect proprietary know-how that is not patentable, processes for which patents are difficult to enforce and any other elements of our drug discovery and development processes that involve proprietary know-how, information or technology that is not covered by patents. Although each of our employees agrees to assign their inventions to us through an employee inventions agreement, and all of our employees, consultants, advisors and any third parties who have access to our proprietary know-how, information or technology to enter into confidentiality agreements, we cannot provide any assurances that all such agreements have been duly executed or that our trade secrets and other confidential proprietary information will not be disclosed or that competitors will not otherwise gain access to our trade secrets or independently develop substantially equivalent information and techniques. In addition, others may independently discover our trade secrets and proprietary information.

Further, the laws of some foreign countries do not protect proprietary rights to the same extent or in the same manner as the laws of the United States. As a result, we may encounter significant problems in protecting and defending our intellectual property both in the United States and abroad. If we are unable to prevent material disclosure of the non-patented intellectual property related to our technologies to third parties, and there is no guarantee that we will have any such enforceable trade secret protection, we may not be able to establish or maintain a competitive advantage in our market, which could materially adversely affect our business, results of operations and financial condition.

Third-party claims of intellectual property infringement may prevent or delay our development and commercialization efforts.

Our commercial success depends in part on our avoiding infringement of the patents and proprietary rights of third parties. There is a substantial amount of litigation, both within and outside the United States, involving patent and other intellectual property rights in the biotechnology and pharmaceutical industries, including patent infringement lawsuits. Numerous U.S. and foreign issued patents and pending patent applications, which are owned by third parties, exist in the fields in which we are pursuing development candidates. As the biotechnology and pharmaceutical industries expand and more patents are issued, the risk increases that our product candidates may be subject to claims of infringement of the patent rights of third parties.

Third parties may assert that we are employing their proprietary technology without authorization. There may be third-party patents or patent applications with claims to materials, formulations, methods of manufacture or methods for treatment related to the use or manufacture of our product candidates. Because patent applications can take many years to issue, there may be currently pending patent applications which may later result in patents that our product candidates may infringe. In addition, third parties may obtain patents in the future and claim that use of our technologies infringes upon these patents. If any third-party patents were held by a court of competent jurisdiction to cover the manufacturing process of any of our product candidates, any molecules formed during the manufacturing process or any final product itself, the holders of any such patents may be able to block our ability to commercialize such product candidate unless we obtained a license under the applicable patents, or until such patents expire. Similarly, if any third-party patents were held by a court of competent jurisdiction to cover aspects of our formulations, processes for manufacture or methods of use, including combination therapy, the holders of any such patents may be able to block our ability to develop and commercialize the applicable product candidate unless we obtained a license or until such patent expires. In either case, such a license may not be available on commercially reasonable terms or at all.

Parties making claims against us may obtain injunctive or other equitable relief, which could effectively block our ability to further develop and commercialize one or more of our product candidates. Defense of these claims, regardless of their merit, would involve substantial litigation expense and would be a substantial diversion of employee resources from our business. In the event of a successful claim of infringement against us, we may have to pay substantial damages, including treble damages and attorneys’ fees for willful infringement, p

Regulus Therapeutics Inc. [RGLS] Filings
10-Q	[2024-08-08]
10-Q	[2024-05-09]
10-K	[2024-03-21]
10-Q	[2023-11-09]
10-Q	[2023-08-08]
10-Q	[2023-05-11]
10-K	[2023-03-23]
10-Q	[2022-11-14]
10-Q	[2022-08-11]
10-Q	[2022-05-13]
10-K	[2022-03-11]
S-1	[2021-12-02]
10-Q	[2021-11-12]
10-Q	[2021-08-10]
10-Q	[2021-05-14]
10-K	[2021-03-09]
10-Q	[2020-11-05]
10-Q	[2020-08-13]
10-Q	[2020-05-14]
10-K	[2020-03-12]
10-Q	[2019-11-12]
10-Q	[2019-08-08]
10-Q	[2019-05-10]
10-K	[2019-03-18]
10-Q	[2018-11-09]
10-Q	[2018-08-09]
10-Q	[2018-05-10]
10-K	[2018-03-08]
10-Q	[2017-11-08]
10-Q	[2017-08-02]
10-Q	[2017-05-05]
10-K	[2017-03-03]
10-Q	[2016-11-02]
10-Q	[2016-08-03]
10-Q	[2016-05-03]
10-K	[2016-02-23]
10-Q	[2015-11-06]
10-Q	[2015-08-05]
10-Q	[2015-05-08]
10-K	[2015-02-19]
10-Q	[2014-11-06]
10-Q	[2014-08-07]
10-Q	[2014-05-09]
10-K	[2014-02-28]
10-Q	[2013-11-14]
10-Q	[2013-08-14]
S-1	[2013-06-26]
10-Q	[2013-05-15]
10-K	[2013-02-19]
10-Q	[2012-11-19]
S-1	[2012-08-17]