Regulus tanks on CEO's exit as investors fear a bad omen

Kleanthis Xanthopoulos

Regulus Therapeutics ($RGLS) CEO Kleanthis Xanthopoulos is abruptly stepping down from the top spot as the company awaits key clinical trial results for its in-development hepatitis C treatment, spooking investors and sending the biotech's shares sharply downward.

Xanthopoulos is leaving "to pursue investment opportunities in the biotechnology industry," Regulus said. And Chief Scientific Officer Neil Gibson is on his way out, too, leaving former Chief Medical Officer Paul Grint in the CEO spot.

The turnover comes at a pivotal point for Regulus, which is expecting crucial four-week data on the microRNA hep C therapy RG-101 later this year. The biotech is pushing forward with a broad Phase II program for its lead candidate, at once moving toward clinical trials for RG-012, a treatment for the rare Alport syndrome.

Xanthopoulos' surprise exit alarmed investors already wary of RG-101's rollercoaster clinical path so far, sending Regulus' shares down more than 15% on Tuesday morning.

Perhaps driving the concern is what happened at the CEO's last gig. Back in the summer of 2006, Xanthopoulos announced he would leave Anadys Pharmaceuticals, a company he founded and ran, at year's end to join Enterprise Partners Venture Capital. Two weeks after the announcement, Anadys revealed that it was halting development of its hep C treatment after observing some alarming preclinical safety signals, sending the biotech's shares plummeting. 

Xanthopoulos has maintained that he had no knowledge of the data when making his decision. But investors on Twitter were quick to bring up the end of his Anadys tenure while discussing the Regulus news, questioning whether another shoe is set to drop on RG-101.

The drug is an injectable therapy that targets microRNA-122, which is found in liver hepatocytes and used by hep C as a viral replication factor. By standing in the way of that interaction, RG-101 can halt hep C's proliferation and limit the development of treatment resistance, according to Regulus.

The biotech, formed in 2007 with microRNA assets from Isis ($ISIS) and Alnylam ($ALNY), is also working on preclinical candidates for cancer, fibrosis and metabolic disease alongside partners including GlaxoSmithKline ($GSK), Sanofi ($SNY) and AstraZeneca ($AZN).

- read the statement