Regulus Therapeutics is Yet Another Biotech Value Play

Written by GSCR Staff   
Wednesday, 23 March 2016 06:38

In Monday’s Guide we addressed our winning formula of earnings plus window dressing equals opportunity and the fact that being a ‘half glass full’ trader/investor is the proper attitude to have right now. This commentary is in no way an effort to belittle what happened in Europe yesterday with another terrorist attack, but the fact that the U.S. markets traded essentially flat is yet another sign of positive trends. Our hearts are with the families and friends of the victims.

Also in the Guide we profiled a healthcare stock. Today, for the Market Monitor we will follow suit and go to our ‘go to’ with biotechnology. Below is the one year chart for Regulus Therapeutics, Inc. (NASDAQ – RGLS - $6.84) which illustrates the stock is on a solid momentum run since the middle of February and is approaching the 50-day EMA, in red.

RGLS 1-Year, 50-Day EMA

(Source: www.otcmarkets.com)

MM.03.23.16.RGLS-1yr-50dayema

Regulus focuses on the discovery and development of drugs that target RNAs to treat a range of diseases in the United States. The Company uses its microRNA product platform to develop anti-miRs, which are chemically modified and single-stranded oligonucleotides. RNA is short for ribonucleic acid, a nucleic acid present in all living cells. Its principal role is to act as a messenger carrying instructions from DNA for controlling the synthesis of proteins, although in some viruses RNA rather than DNA carries the genetic information.

The medical jargon may or may not be familiar to you, which is understandable. However, hepatitis C should be in your vocabulary. An estimated 170 million people are infected with hepatitis C worldwide, including 3 million people in the United States, and 9 million people in Europe. The disease can ultimately cause extensive liver damage and even catastrophic failure which will lead to inevitable death. Currently, treatments can last somewhere in the range of 50 weeks. It was reported in the middle of February Regulus’ microRNA RG-101that an interim analysis of a four-week short duration treatment regimen that includes two doses of RG-101 -- one on day one and the other on day 29 -- showed a 97% response rate at week eight in 38 test subjects.The RG-101 is currently in FDA Phase II.

Other treatments in the pipeline include RG-012, an anti-miR targeting microRNA-21 for the treatment of Alport syndrome; and RG-125, a GalNAc-conjugated anti-miR targeting microRNA-103/107 to treat nonalcoholic steatohepatitis in patients with type 2 diabetes/pre-diabetes. The Company has strategic alliances with several top large cap drug manufacturers to discover and develop microRNA therapeutics for immuno-inflammatory diseases, for fibrotic diseases, cardiovascular diseases, metabolic diseases, and oncology.

As with any venture stage small cap biotech stock gauging value in traditional terms like EPS growth and P/E are not applicable. EPS is currently negative. The Company has been mostly financed with equity. As a result there was no debt on the books as of the end of the year in 2015, a positive sign.

RGLS is a solid ‘cheap’ play in the biotech sector with proven successes in hitting the all important FDA trial timeline with positive results. Look for several pops this year and a rise of the stock to the $9 level.

Have a great day!

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