San Diego Venture Group; Life Sciences Event May 23
Targeting the Pathways of Human DiseaseKleanthis G. Xanthopoulos, Ph.D.SD Venture Group PanelMay 22, 2013NASDAQ: RGLS RegulusRx.com
Targeting the Pathways of Human DiseaseSafe Harbor StatementStatements contained in this presentation regarding matters that are not historical facts are "forward-lookingstatements" within the meaning of the Private Securities Litigation Reform Act of 1995, including statementsassociated with financial estimates, the projected sufficiency of Regulus’ capital position in the future, theexpected ability of Regulus to undertake certain activities and accomplish certain goals, the projected timeline ofclinical development activities and regulatory approvals, expectations regarding future therapeutic andcommercial potential of Regulus’ business plans, technologies and intellectual property related to microRNAtherapeutics being discovered and developed by Regulus. Because such statements are subject to risks anduncertainties, actual results may differ materially from those expressed or implied by such forward-lookingstatements. Words such as “believes,” “anticipates,” “plans,” “expects,” “intends,” “will,” “goal,” “potential” andsimilar expressions are intended to identify forward-looking statements. These forward-looking statements arebased upon Regulus’ current expectations and involve assumptions that may never materialize or may prove to beincorrect. Actual results and the timing of events could differ materially from those anticipated in such forward-looking statements as a result of various risks and uncertainties, which include, without limitation, risks associatedwith the process of discovering, developing and commercializing drugs that are safe and effective for use ashuman therapeutics, and in the endeavor of building a business around such drugs. These and other risksconcerning Regulus’ programs are described in additional detail in Regulus’ SEC filings. All forward-lookingstatements contained in this presentation speak only as of the date on which they were made. Regulus undertakesno obligation to update such statements to reflect events that occur or circumstances that exist after the date onwhich they were made.
Targeting the Pathways of Human Disease3Experience with Introducing 2 InnovativeCompanies to the Public Markets• Innovative science in microRNAs• IPO in October 2012 - raised $80.9M• 1st San Diego life science IPO in 2012• 2nd preclinical IPO in last 5 years• 6 large strategic partners who arealso shareholders (no VCs)• Innovative anti-viral company• Discovered Best-in-Class HCV non-nuc• IPO in 2004 - raised $49M• Sold to Roche in 2011 for $230MNASDAQ: RGLSOctober 2012NASDAQ: ANDSMarch 2004(acquired by Roche)
Targeting the Pathways of Human Disease The life science IPO windows over the last 15 years have eachoffered different, unique characteristics: Duration of window Varying typical company profiles Different pricing terms Performance of deal Current IPO window has been “OPEN” for 45 months 2009 – Present, 46 IPOs have priced, raising $6.0B Backlog is moderate (currently 13 IPOs) JOBS has allowed for confidential filings4Recent Life Sciences IPO Windows –Broad PerspectiveSource: Lazard ECM Analytics and FactSet as of 05/17/13.Note: Excludes SPACs and transactions less than $10mm.
Targeting the Pathways of Human Disease5Source: ECM Analytics and FactSet as of 05/17/13.Note: Excludes SPACs and transactions less than $10mm.Key IPO Stats Similar Across 3 Recent Windows
Targeting the Pathways of Human Disease6Pricing Conditions Remain Challenging inCurrent “OPEN” WindowSource: ECM Analytics and FactSet as of 05/17/13.Note: Excludes SPACs and transactions less than $10mm.Median amount raised $58.0M/Median Pre-Money $126.4M
Targeting the Pathways of Human Disease7Insider Participation Approx. 70% forCurrent “OPEN” WindowIn the Current “Window” Median % ofProceeds from Insiders is 34.1%
Targeting the Pathways of Human Disease Current “open” window vs. prior two windows:1. Key difference is significant insider participation− Expected by public investors but also by Board and management teams2. Later-stage companies (meaning Phase II or later)− Approximately 90% in Phase II or later− Regulus is the exception to the rule in this trend3. Increase in filing/offer discount results in lower pre-money valuation− Median discount 28.1%/pre-money value $126M4. Deals remain club deals− Type of investor buying life sciences IPOs is same across windows− Increase in median number of institutional buyers: Median of 25 buyers in current window vs. 11 and 17 in prior two windows8Current Life Sciences IPO Window –4 Key TakeawaysSource: Lazard Analytics, VentureXpert and FactSet pricing as of 05/17/13Note: Excludes transactions less than $10mm
Targeting the Pathways of Human Disease IPO is the most difficult financing Get well prepared 12 months of preparation to draft your message Board and Governance Visit the key investors (about three dozen) more than twice prior tothe IPO Choose bankers wisely!− Don’t choose banks; choose individuals− Bulge bracket not always needed; no one will remember who took youpublic Have faith, prepare for a marathon!9Some Key Points to Consider
Targeting the Pathways of Human Disease10First-in-ClassMedicinesRegulus Going Public – Case Study Challenging Environment: RGLS is the exception to the rule− Pre-clinical vs. later stage− Unique capital structure – formed by 2 public companies (ISIS/ALNY), no VCfunding; over 70% insider participation in IPO deal− Only San Diego based life science companies to go public in 2012 Raised $80.9M in IPO and Related Transactions Significant insider participation AstraZeneca, Biogen Idec, Sanofi, GSK and Isis Pharmaceuticals Chose investment banks that fit Regulus’ needs Lazard, Cowen, BMO, Needham and WedBush Pre-IPO preparation was critical Conduct multiple meetings with public investors prior to IPO
Targeting the Pathways of Human Disease11Not Much Has Meaningfully Changed in last 15 YearsIn the IPO markets,the more thingschange, the more theystay the same…