Novartis’ $1.7 billion Regulus Therapeutics buyout last month came after a hard-fought battle in which the Swiss pharma and another interested party raised the stakes several times, a new securities filing shows.
Regulus’ autosomal dominant polycystic kidney disease (ADPKD) prospect farabursen was a hot commodity that attracted interest from multiple pharma suitors, according to the filing, especially after phase 1b data, revealed in March, set the stage for a phase 3 trial set to begin in the third quarter of this year.
The SEC filing (PDF) shows that Regulus tapped Evercore ISI to scout for “strategic alternatives” as its financial advisor in June 2024, shortly after early phase 1b farabursen data enabled the company to raise some $100 million in a private placement equity financing.
In turn, Evercore reached out to 22 potentially interested parties, 17 of whom engaged in further discussions with Regulus about possible partnership and collaboration opportunities.
Soon after, an unnamed global biopharmaceutical company—described as “Party A” in the filing—offered a non-binding indication of interest in a global licensing deal for farabursen. Ultimately, Party A was informed that a global licensing deal for the asset would “not be in the best interest” of Regulus, according to the filing.
And thus, the stage was set for a merger or buyout. Through the end of 2024 and start of 2025, Novartis was one of six interested companies, and execs for those firms each spoke with Regulus executives around January’s J.P. Morgan Healthcare Conference.
By April, the bidding war’s focus had narrowed down to Novartis and Party A. For weeks, each company gradually increased their respective offers, until Novartis' final offer on April 28 sealed the deal.
Novartis' proposal featured $7 per share upfront and $7 per share in a contingent value right (CVR) payable upon farabursen’s FDA approval in ADPKD. Originally, Novartis had proposed $3 per share upfront with a $1.50 CVR.
The final offer was stacked up against Party A’s April 23 bid for $5 per share with a $5 CVR available upon regulatory approval. Party A had been set to boost its offer with another sales-based CVR on April 28, but it did not submit the revised proposal in writing, according to the filing.
Ultimately, on April 29, Regulus officially went to Novartis for the agreed-upon terms of $7 per share upfront and another $7 per share upon the regulatory milestone. Assuming approval, the deal values Regulus at $1.7 billion, with $800 million of that being the upfront payment.
Other than the shareholder value the Regulus board saw in the Novartis deal, the biotech's three top-ranking executives will each receive their own financial boon in the form of a “golden parachute."
CEO Joseph Hagan, who helmed Regulus for 8 years after starting out as chief operating officer in 2016, will receive a total payout of $64 million, including $53 million in accelerated vesting on equity and $1.7 million in cash.
R&D head Preston Klassen, M.D., is set to take home $30 million, while long-time chief financial officer Cris Calsada’s pay package will total $25.5 million, according to the SEC filing.
If all pans out as hoped for farabursen, Novartis will look to capture a market currently served by Otsuka’s Jynarque. Regulus executives have said that Otsuka’s offering is only used in about 7% of the addressable population, and they have labeled farabursen as a multibillion-dollar opportunity.