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distribute in amanner similar toour second-generationRNaseH antisense drugs, without requiring the complex formulation or
deliveryvehicle typicallynecessary for double-strandedRNAi oligonucleotides. These new single-strandedRNAi drugdesigns are an
exciting advancement inRNAi technology. In2012, we published twopapers in the journal Cell demonstrating that single-stranded
RNAi drugs distributedbroadly, activated theRNAi pathway and reduced expressionof targetedgenes in animalmodels. These data
provide compelling evidence that single-strandedoligonucleotides canbe designed to exploit theRNAi pathway and silence gene
expression of specificmRNAs in target tissues.
In addition, the diversity of our technologyprovides uswith the potential to utilizemanydifferent antisensemechanisms, like
alternative splicing. Because splicingoccurs at theRNA level, we canutilize our technology todirect splicing toproduce aparticular
proteinproduct. For example, SMA is a splicingdisorder causedby a loss of, or defect in, the survivalmotor neuron1, or SMN1,
gene leading to a decrease in the proteinSMN. SMN is critical to the health and survival of nerve cells in the spinal cord that are
responsible for neuro-muscular growth and function. We designedour ISIS-SMN
Rx
drug to alter the splicingof a similar gene,
SMN2, to increase productionof a fully functional SMNprotein. ISIS-SMN
Rx
is currentlybeing evaluated inPhase 2 studies in
infants and childrenwithSMA. There are a number of diseases, including cystic fibrosis andDuchennemuscular dystrophy, which
scientists believe are splicingdisorders. These are diseaseswe couldpotentially treat using antisensemodulationof splicing.
Because there aremany different types ofRNA that existwithin the body, our antisense technology is not limited toRNA
sequences that translate intoproteins, but ratherwe can apply the principles of our technology todevelopdrugs that target other non-
codingRNAs, such as toxicRNAs. For example, DM1 is a formofmuscular dystrophy that is causedby an abnormally long, toxic
RNA that accumulates in cells andprevents the productionof proteins essential for normal cellular function. We designedour
drug, ISIS-DMPK
Rx
, to target and reduce the toxicDM1RNA. Inour preclinical studies, we observed effective reductions of the
toxicRNA that led to a reversal of disease symptoms that was sustained for up toone year in amousemodel of disease.
Another interestingRNA target for our antisense technology ismicroRNAs. Todate, scientists have identifiedmore than700
microRNAs in the human genome, andhave shown that the absence or presence of specificmicroRNAs in various cells is associated
with specific human diseases, including cancer, viral infection,metabolic disorders and inflammatory disease. To fully exploit the
therapeutic opportunities of targetingmicroRNAs, we andAlnylamPharmaceuticals, Inc. establishedRegulus as a company focused
on the discovery, development and commercialization ofmicroRNA-based therapeutics. Regulus plans to advance a development
candidate into clinical studies in2014.
CollaborativeArrangements andLicensingAgreements
PartnershipStrategy
Overview
Our partnership strategyhas allowedus tobuild a development pipeline of 31drugs, to create a broadbase of potential
license fees,milestone payments, royalties, profit sharing and earnout payments and to control our drugdevelopment expenses. In
thisway, we remain a focused and efficient research anddevelopment organization that can continue todiscover newdrugs and
expandour andour partners’ pipelines.
Through the efficiencyof our drugdiscoveryplatformwe candevelopdrugs to almost anygene target.We concentrate on
developing antisense drugs inour core therapeutic areaswith an emphasis on cardiovascular,metabolic, severe and rare diseases,
includingneurological disorders, and cancer.We believe our partnering strategyprovides us the flexibility tomaximize the near- and
long-termvalue of our drugs by licensing eachof our drugs at the right timewith the right partner. Using this strategy, we can expand
our andour partners’ pipelineswith antisense drugs thatwe design to address significantmedical needswhile remaining small and
focused. Just aswe have advanced andmaturedour technology andpipeline, we have evolvedour partnering strategy inorder to
maximize the value of eachof our assets. We form traditional partnering alliances that enable us to discover and conduct early
development of newdrugs, outlicense our drugs topartners, such asGenzyme, andbuild a broadbase of license fees,milestone
payments, profit share and royalty income. For example, we have a broadportfolioof drugs to treat type 2diabetes. We are
developing eachof these drugs throughPhase 2development, andwe plan to report proof-of-concept data on eachof these drugs
within the next 12 to 18months. Because late-stage clinical development for type 2diabetes canbe large and expensive, wewill seek
a partner to license these drugs and conduct late-stage clinical development and commercialization. With the potentially competitive
benefit of our drugs over existing therapies and clinical proof-of-concept data, we believe that we could license eachof thesedrugs to
a partner on lucrative economic terms.
