Regulus RG-101 Results 'Potentially Breakthrough,' Chardan Says; Target Raised To $20

Chardan Capital Markets analysts Madhu Kumar and Gbola Amusa kept a Buy rating on Regulus Therapeutics Inc (NASDAQ: RGLS) following the positive top-line data on Hepatitis C virus treatment. The brokerage boosted its price target to $20 from $15.00 on the shares.

The analysts said their investment thesis is that Regulus has the potential for its lead asset, RG-101, to disrupt the HCV therapy market. They also said the company is a clinical-stage small RNA therapy firm focused on therapeutic modulation of MicroRNAs.

Related Link: Regulus Reveals Positive Top-line Data On Hepatitis C Virus Treatment

Chardan analysts said, "HCV is a widespread disease that is a common cause of liver cirrhosis and hepatocellular carcinoma (HCC). In interim data from a 79-patient phase IIa trial, Regulus has provided evidence for RG-101, when combined with a series of DAAs, achieving a sustained virologic response (SVR) after four weeks of treatment."

The brokerage said that while RG-101 with Harvoni continues to maintain a 100 percent SVR at all time points, rates of SVR are lower in the Olysio/Daklinza arms, along with multiple relapses in the Olysio/Daklinza arms, suggesting the potential for differential efficacy between DAAs.

The analysts think, "However, in our view, a more reasonable explanation for differences in SVR12 is the presence of highly effective DAA sofosbuvir (Sovaldi) in the Harvoni arm (Harvoni contains sofosbuvir) but not the Olysio/Daklinza arms. As discussed in our 11 May 2016 note, Olysio and Daklinza are both generally used in combination with Sovaldi, and yet four-week combinations of RG-101 with Olysio/Daklinza have efficacy comparable to eight/twelve-week regimens of Olysio/Daklinza with Sovaldi."

Shares of the company traded down 3 percent at $5.75 on Tuesday.