0001628280-21-016431.txt : 20210810 0001628280-21-016431.hdr.sgml : 20210810 20210810165528 ACCESSION NUMBER: 0001628280-21-016431 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 52 CONFORMED PERIOD OF REPORT: 20210630 FILED AS OF DATE: 20210810 DATE AS OF CHANGE: 20210810 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Regulus Therapeutics Inc. CENTRAL INDEX KEY: 0001505512 STANDARD INDUSTRIAL CLASSIFICATION: PHARMACEUTICAL PREPARATIONS [2834] IRS NUMBER: 264738379 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-35670 FILM NUMBER: 211160688 BUSINESS ADDRESS: STREET 1: 4224 CAMPUS POINT COURT STREET 2: SUITE 210 CITY: SAN DIEGO STATE: CA ZIP: 92121 BUSINESS PHONE: 858-202-6300 MAIL ADDRESS: STREET 1: 4224 CAMPUS POINT COURT STREET 2: SUITE 210 CITY: SAN DIEGO STATE: CA ZIP: 92121 10-Q 1 rgls-20210630.htm 10-Q rgls-20210630
false2021Q2REGULUS THERAPEUTICS INC.000150551212-31http://www.regulusrx.com/20210630#RevenueUnderCollaborationsMemberhttp://www.regulusrx.com/20210630#RevenueUnderCollaborationsMemberhttp://www.regulusrx.com/20210630#RevenueUnderCollaborationsMemberhttp://www.regulusrx.com/20210630#RevenueUnderCollaborationsMember00015055122021-01-012021-06-30xbrli:shares00015055122021-08-06iso4217:USD00015055122021-06-3000015055122020-12-31iso4217:USDxbrli:shares0001505512rgls:ClassA1ConvertiblePreferredStockAsConvertedMember2021-06-300001505512rgls:ClassA1ConvertiblePreferredStockAsConvertedMember2020-12-310001505512rgls:ClassA2ConvertiblePreferredStockAsConvertedMember2021-06-300001505512rgls:ClassA2ConvertiblePreferredStockAsConvertedMember2020-12-310001505512rgls:ClassA3ConvertiblePreferredStockMember2020-12-310001505512rgls:ClassA3ConvertiblePreferredStockMember2021-06-3000015055122020-04-012020-06-3000015055122020-01-012020-06-3000015055122021-04-012021-06-300001505512us-gaap:ConvertiblePreferredStockMember2020-12-310001505512us-gaap:CommonStockMember2020-12-310001505512us-gaap:AdditionalPaidInCapitalMember2020-12-310001505512us-gaap:RetainedEarningsMember2020-12-310001505512us-gaap:CommonStockMember2021-01-012021-03-310001505512us-gaap:AdditionalPaidInCapitalMember2021-01-012021-03-3100015055122021-01-012021-03-310001505512us-gaap:ConvertiblePreferredStockMember2021-01-012021-03-310001505512us-gaap:RetainedEarningsMember2021-01-012021-03-310001505512us-gaap:ConvertiblePreferredStockMember2021-03-310001505512us-gaap:CommonStockMember2021-03-310001505512us-gaap:AdditionalPaidInCapitalMember2021-03-310001505512us-gaap:RetainedEarningsMember2021-03-3100015055122021-03-310001505512us-gaap:CommonStockMember2021-04-012021-06-300001505512us-gaap:AdditionalPaidInCapitalMember2021-04-012021-06-300001505512us-gaap:ConvertiblePreferredStockMember2021-04-012021-06-300001505512us-gaap:RetainedEarningsMember2021-04-012021-06-300001505512us-gaap:ConvertiblePreferredStockMember2021-06-300001505512us-gaap:CommonStockMember2021-06-300001505512us-gaap:AdditionalPaidInCapitalMember2021-06-300001505512us-gaap:RetainedEarningsMember2021-06-300001505512us-gaap:ConvertiblePreferredStockMember2019-12-310001505512us-gaap:CommonStockMember2019-12-310001505512us-gaap:AdditionalPaidInCapitalMember2019-12-310001505512us-gaap:RetainedEarningsMember2019-12-3100015055122019-12-310001505512us-gaap:CommonStockMember2020-01-012020-03-3100015055122020-01-012020-03-310001505512us-gaap:AdditionalPaidInCapitalMember2020-01-012020-03-310001505512us-gaap:ConvertiblePreferredStockMember2020-01-012020-03-310001505512us-gaap:RetainedEarningsMember2020-01-012020-03-310001505512us-gaap:ConvertiblePreferredStockMember2020-03-310001505512us-gaap:CommonStockMember2020-03-310001505512us-gaap:AdditionalPaidInCapitalMember2020-03-310001505512us-gaap:RetainedEarningsMember2020-03-3100015055122020-03-310001505512us-gaap:AdditionalPaidInCapitalMember2020-04-012020-06-300001505512us-gaap:CommonStockMember2020-04-012020-06-300001505512us-gaap:ConvertiblePreferredStockMember2020-04-012020-06-300001505512us-gaap:RetainedEarningsMember2020-04-012020-06-300001505512us-gaap:ConvertiblePreferredStockMember2020-06-300001505512us-gaap:CommonStockMember2020-06-300001505512us-gaap:AdditionalPaidInCapitalMember2020-06-300001505512us-gaap:RetainedEarningsMember2020-06-3000015055122020-06-300001505512us-gaap:CashEquivalentsMember2021-06-300001505512us-gaap:CashEquivalentsMemberus-gaap:FairValueInputsLevel1Member2021-06-300001505512us-gaap:FairValueInputsLevel2Memberus-gaap:CashEquivalentsMember2021-06-300001505512us-gaap:CashEquivalentsMemberus-gaap:FairValueInputsLevel3Member2021-06-300001505512us-gaap:FairValueInputsLevel1Member2021-06-300001505512us-gaap:FairValueInputsLevel2Member2021-06-300001505512us-gaap:FairValueInputsLevel3Member2021-06-300001505512us-gaap:CashEquivalentsMember2020-12-310001505512us-gaap:CashEquivalentsMemberus-gaap:FairValueInputsLevel1Member2020-12-310001505512us-gaap:FairValueInputsLevel2Memberus-gaap:CashEquivalentsMember2020-12-310001505512us-gaap:CashEquivalentsMemberus-gaap:FairValueInputsLevel3Member2020-12-310001505512us-gaap:FairValueInputsLevel1Member2020-12-310001505512us-gaap:FairValueInputsLevel2Member2020-12-310001505512us-gaap:FairValueInputsLevel3Member2020-12-310001505512rgls:DebtFinancingAgreementMember2016-06-222016-06-22xbrli:pure0001505512rgls:DebtFinancingAgreementMember2016-06-170001505512rgls:DebtFinancingAgreementMemberus-gaap:LondonInterbankOfferedRateLIBORMember2016-06-172016-06-17rgls:number_of_paymentrgls:times00015055122017-10-012019-05-310001505512rgls:PPPLoanMember2020-05-010001505512rgls:TenthAmendmentMember2020-08-252020-08-250001505512rgls:TenthAmendmentMember2020-08-250001505512rgls:StrategicAlliancesandCollaborationsMemberrgls:SanofiMember2020-09-302020-09-300001505512rgls:StrategicAlliancesandCollaborationsMemberrgls:SanofiMember2020-10-082020-10-080001505512rgls:StrategicAlliancesandCollaborationsMemberrgls:SanofiMember2020-11-302020-11-300001505512rgls:TermLoanMember2020-09-302020-09-300001505512rgls:TermLoanMember2020-10-082020-10-080001505512rgls:TermLoanMember2020-11-302020-11-300001505512rgls:TermLoanMember2021-01-012021-06-300001505512rgls:TermLoanMember2021-06-30rgls:prepayments0001505512rgls:DebtFinancingAgreementMember2021-06-300001505512rgls:DebtFinancingAgreementTrancheAMember2021-06-300001505512rgls:PPPLoanMemberus-gaap:OtherCurrentLiabilitiesMember2020-04-23rgls:vote0001505512rgls:A2019PlanMember2020-01-222020-01-2200015055122020-01-222020-01-220001505512rgls:A2019PlanMember2020-01-220001505512rgls:A2019PlanMember2021-06-30rgls:closing00015055122019-05-030001505512us-gaap:PrivatePlacementMember2019-05-072019-05-070001505512us-gaap:PrivatePlacementMember2019-05-070001505512us-gaap:PreferredClassAMemberus-gaap:PrivatePlacementMember2019-05-070001505512us-gaap:WarrantMemberus-gaap:PreferredClassAMemberus-gaap:PrivatePlacementMember2019-05-070001505512rgls:CertainDirectorsandExecutiveOfficersMemberus-gaap:PrivatePlacementMember2019-05-072019-05-070001505512rgls:CertainDirectorsandExecutiveOfficersMemberus-gaap:PreferredClassAMemberus-gaap:PrivatePlacementMember2019-05-070001505512rgls:CertainDirectorsandExecutiveOfficersMemberus-gaap:PreferredClassAMemberus-gaap:PrivatePlacementMember2019-05-072019-05-070001505512rgls:ClassA2ConvertiblePreferredStockAsConvertedMemberrgls:MilestoneClosingMember2019-12-242019-12-240001505512rgls:ClassA2ConvertiblePreferredStockAsConvertedMemberrgls:MilestoneClosingMember2019-12-240001505512rgls:MilestoneClosingMember2019-12-242019-12-240001505512rgls:ClassA2ConvertiblePreferredStockAsConvertedMember2019-12-242019-12-240001505512rgls:ClassA2ConvertiblePreferredStockAsConvertedMemberrgls:CertainDirectorsandExecutiveOfficersMemberrgls:MilestoneClosingMember2019-12-242019-12-240001505512rgls:ClassA2ConvertiblePreferredStockAsConvertedMemberrgls:CertainDirectorsandExecutiveOfficersMemberrgls:MilestoneClosingMember2019-12-240001505512us-gaap:PrivatePlacementMember2020-12-042020-12-040001505512us-gaap:PrivatePlacementMember2020-12-040001505512rgls:ClassAThreeConvertiblePreferredStockMemberus-gaap:PrivatePlacementMember2020-12-040001505512us-gaap:WarrantMemberrgls:ClassAThreeConvertiblePreferredStockMemberus-gaap:PrivatePlacementMember2020-12-040001505512rgls:CertainDirectorsandExecutiveOfficersMemberus-gaap:PrivatePlacementMember2020-12-042020-12-040001505512rgls:CertainDirectorsandExecutiveOfficersMemberrgls:ClassAThreeConvertiblePreferredStockMemberus-gaap:PrivatePlacementMember2020-12-040001505512rgls:CertainDirectorsandExecutiveOfficersMemberrgls:ClassAThreeConvertiblePreferredStockMemberus-gaap:PrivatePlacementMember2020-12-042020-12-040001505512rgls:A2019SPAAnd2020SPAMemberrgls:ClassAOneConvertiblePreferredStockMember2020-12-310001505512rgls:A2019SPAAnd2020SPAMemberrgls:ClassATwoConvertiblePreferredStockMember2020-12-310001505512rgls:A2019SPAAnd2020SPAMemberrgls:ClassAThreeConvertiblePreferredStockMember2020-12-310001505512rgls:A2019SPAAnd2020SPAMemberus-gaap:WarrantMember2020-12-310001505512us-gaap:CommonStockMemberrgls:A2019SPAAnd2020SPAMember2020-12-310001505512rgls:A2019SPAAnd2020SPAMemberrgls:ClassAOneConvertiblePreferredStockMember2021-01-012021-03-310001505512rgls:A2019SPAAnd2020SPAMemberrgls:ClassATwoConvertiblePreferredStockMember2021-01-012021-03-310001505512rgls:A2019SPAAnd2020SPAMemberrgls:ClassAThreeConvertiblePreferredStockMember2021-01-012021-03-310001505512rgls:A2019SPAAnd2020SPAMemberus-gaap:WarrantMember2021-01-012021-03-310001505512us-gaap:CommonStockMemberrgls:A2019SPAAnd2020SPAMember2021-01-012021-03-310001505512rgls:A2019SPAAnd2020SPAMemberrgls:ClassAOneConvertiblePreferredStockMember2021-03-310001505512rgls:A2019SPAAnd2020SPAMemberrgls:ClassATwoConvertiblePreferredStockMember2021-03-310001505512rgls:A2019SPAAnd2020SPAMemberrgls:ClassAThreeConvertiblePreferredStockMember2021-03-310001505512rgls:A2019SPAAnd2020SPAMemberus-gaap:WarrantMember2021-03-310001505512us-gaap:CommonStockMemberrgls:A2019SPAAnd2020SPAMember2021-03-310001505512rgls:A2019SPAAnd2020SPAMemberrgls:ClassAOneConvertiblePreferredStockMember2021-04-012021-06-300001505512rgls:A2019SPAAnd2020SPAMemberrgls:ClassATwoConvertiblePreferredStockMember2021-04-012021-06-300001505512rgls:A2019SPAAnd2020SPAMemberrgls:ClassAThreeConvertiblePreferredStockMember2021-04-012021-06-300001505512rgls:A2019SPAAnd2020SPAMemberus-gaap:WarrantMember2021-04-012021-06-300001505512us-gaap:CommonStockMemberrgls:A2019SPAAnd2020SPAMember2021-04-012021-06-300001505512rgls:A2019SPAAnd2020SPAMemberrgls:ClassAOneConvertiblePreferredStockMember2021-06-300001505512rgls:A2019SPAAnd2020SPAMemberrgls:ClassATwoConvertiblePreferredStockMember2021-06-300001505512rgls:A2019SPAAnd2020SPAMemberrgls:ClassAThreeConvertiblePreferredStockMember2021-06-300001505512rgls:A2019SPAAnd2020SPAMemberus-gaap:WarrantMember2021-06-300001505512us-gaap:CommonStockMemberrgls:A2019SPAAnd2020SPAMember2021-06-300001505512rgls:A2019SPAAnd2020SPAMemberrgls:ClassAOneConvertiblePreferredStockMember2019-12-310001505512rgls:A2019SPAAnd2020SPAMemberrgls:ClassATwoConvertiblePreferredStockMember2019-12-310001505512rgls:A2019SPAAnd2020SPAMemberrgls:ClassAThreeConvertiblePreferredStockMember2019-12-310001505512rgls:A2019SPAAnd2020SPAMemberus-gaap:WarrantMember2019-12-310001505512us-gaap:CommonStockMemberrgls:A2019SPAAnd2020SPAMember2019-12-310001505512rgls:A2019SPAAnd2020SPAMemberrgls:ClassAOneConvertiblePreferredStockMember2020-01-012020-03-310001505512rgls:A2019SPAAnd2020SPAMemberrgls:ClassATwoConvertiblePreferredStockMember2020-01-012020-03-310001505512rgls:A2019SPAAnd2020SPAMemberrgls:ClassAThreeConvertiblePreferredStockMember2020-01-012020-03-310001505512rgls:A2019SPAAnd2020SPAMemberus-gaap:WarrantMember2020-01-012020-03-310001505512us-gaap:CommonStockMemberrgls:A2019SPAAnd2020SPAMember2020-01-012020-03-310001505512rgls:A2019SPAAnd2020SPAMemberrgls:ClassAOneConvertiblePreferredStockMember2020-03-310001505512rgls:A2019SPAAnd2020SPAMemberrgls:ClassATwoConvertiblePreferredStockMember2020-03-310001505512rgls:A2019SPAAnd2020SPAMemberrgls:ClassAThreeConvertiblePreferredStockMember2020-03-310001505512rgls:A2019SPAAnd2020SPAMemberus-gaap:WarrantMember2020-03-310001505512us-gaap:CommonStockMemberrgls:A2019SPAAnd2020SPAMember2020-03-310001505512rgls:A2019SPAAnd2020SPAMemberrgls:ClassAOneConvertiblePreferredStockMember2020-04-012020-06-300001505512rgls:A2019SPAAnd2020SPAMemberrgls:ClassATwoConvertiblePreferredStockMember2020-04-012020-06-300001505512rgls:A2019SPAAnd2020SPAMemberrgls:ClassAThreeConvertiblePreferredStockMember2020-04-012020-06-300001505512rgls:A2019SPAAnd2020SPAMemberus-gaap:WarrantMember2020-04-012020-06-300001505512us-gaap:CommonStockMemberrgls:A2019SPAAnd2020SPAMember2020-04-012020-06-300001505512rgls:A2019SPAAnd2020SPAMemberrgls:ClassAOneConvertiblePreferredStockMember2020-06-300001505512rgls:A2019SPAAnd2020SPAMemberrgls:ClassATwoConvertiblePreferredStockMember2020-06-300001505512rgls:A2019SPAAnd2020SPAMemberrgls:ClassAThreeConvertiblePreferredStockMember2020-06-300001505512rgls:A2019SPAAnd2020SPAMemberus-gaap:WarrantMember2020-06-300001505512us-gaap:CommonStockMemberrgls:A2019SPAAnd2020SPAMember2020-06-300001505512rgls:AtTheMomentMember2018-12-120001505512rgls:AtTheMomentMember2021-04-012021-06-300001505512rgls:AtTheMomentMember2021-01-012021-06-300001505512rgls:AtTheMomentMember2020-01-012020-06-300001505512rgls:AtTheMomentMember2020-04-012020-06-300001505512rgls:AtTheMomentMember2021-06-300001505512rgls:AtTheMomentMemberus-gaap:SubsequentEventMember2021-08-100001505512rgls:ClassA1ConvertiblePreferredStockAsConvertedMember2021-06-300001505512rgls:ClassA2ConvertiblePreferredStockAsConvertedMember2021-06-300001505512rgls:ClassA3ConvertiblePreferredStockMember2021-06-300001505512rgls:InitialClosingWarrantsMember2021-06-300001505512rgls:MilestoneClosingWarrantsMember2021-06-300001505512rgls:A2020PIPEWarrantsMember2021-06-300001505512us-gaap:RestrictedStockUnitsRSUMember2021-06-300001505512rgls:TwentyTwelvePlanMember2021-06-300001505512us-gaap:EmployeeStockMember2021-06-300001505512us-gaap:EmployeeStockOptionMember2020-12-310001505512us-gaap:RestrictedStockUnitsRSUMember2020-12-310001505512us-gaap:EmployeeStockOptionMember2021-01-012021-06-300001505512us-gaap:RestrictedStockUnitsRSUMember2021-01-012021-06-300001505512us-gaap:EmployeeStockOptionMember2021-06-300001505512us-gaap:EmployeeStockOptionMember2021-04-012021-06-300001505512us-gaap:EmployeeStockOptionMember2020-04-012020-06-300001505512us-gaap:EmployeeStockOptionMember2020-01-012020-06-300001505512us-gaap:PerformanceSharesMember2021-04-012021-06-300001505512us-gaap:PerformanceSharesMember2020-04-012020-06-300001505512us-gaap:PerformanceSharesMember2021-01-012021-06-300001505512us-gaap:PerformanceSharesMember2020-01-012020-06-300001505512us-gaap:EmployeeStockMember2021-04-012021-06-300001505512us-gaap:EmployeeStockMember2020-04-012020-06-300001505512us-gaap:EmployeeStockMember2021-01-012021-06-300001505512us-gaap:EmployeeStockMember2020-01-012020-06-300001505512us-gaap:ResearchAndDevelopmentExpenseMember2021-04-012021-06-300001505512us-gaap:ResearchAndDevelopmentExpenseMember2020-04-012020-06-300001505512us-gaap:ResearchAndDevelopmentExpenseMember2021-01-012021-06-300001505512us-gaap:ResearchAndDevelopmentExpenseMember2020-01-012020-06-300001505512us-gaap:GeneralAndAdministrativeExpenseMember2021-04-012021-06-300001505512us-gaap:GeneralAndAdministrativeExpenseMember2020-04-012020-06-300001505512us-gaap:GeneralAndAdministrativeExpenseMember2021-01-012021-06-300001505512us-gaap:GeneralAndAdministrativeExpenseMember2020-01-012020-06-300001505512rgls:StrategicAlliancesandCollaborationsMember2021-01-012021-06-300001505512rgls:StrategicAlliancesandCollaborationsMember2021-04-012021-06-300001505512rgls:StrategicAlliancesandCollaborationsMember2020-04-012020-06-300001505512rgls:StrategicAlliancesandCollaborationsMember2020-01-012020-06-30rgls:target0001505512rgls:SanofiMember2012-07-012012-07-310001505512rgls:DevelopmentCommercializationAndLicenseAgreementMemberrgls:SanofiMember2014-02-012014-02-280001505512rgls:DevelopmentCommercializationAndLicenseAgreementMemberrgls:SanofiMember2013-06-012013-06-300001505512rgls:ProofofConceptTrialMemberrgls:SanofiMember2021-06-300001505512rgls:DevelopmentCommercializationAndLicenseAgreementMemberrgls:SanofiMember2021-01-012021-06-300001505512rgls:ClinicalMemberrgls:SanofiMember2021-06-300001505512rgls:RegulatoryAndCommercializationMilestonesMemberrgls:SanofiMember2021-06-300001505512rgls:SanofiMembercountry:USsrt:MinimumMember2021-01-012021-06-300001505512srt:MaximumMemberrgls:SanofiMembercountry:US2021-01-012021-06-300001505512rgls:SanofiMembersrt:MinimumMemberus-gaap:NonUsMember2021-01-012021-06-300001505512srt:MaximumMemberrgls:SanofiMemberus-gaap:NonUsMember2021-01-012021-06-300001505512rgls:SanofiMember2018-11-012018-11-300001505512rgls:SanofiMember2018-11-300001505512rgls:DevelopmentMilestonesMemberrgls:SanofiMember2018-11-300001505512rgls:EnrollmentMilestoneMemberrgls:SanofiMember2018-11-300001505512rgls:SanofiMember2019-01-012019-12-310001505512rgls:SanofiMember2020-08-012020-08-310001505512rgls:SanofiMember2020-08-310001505512rgls:SanofiMemberrgls:MaterialsSoldMember2020-08-310001505512rgls:SanofiMemberrgls:AchievementOfEnrollmentMilestoneMember2020-08-310001505512rgls:DevelopmentMilestonesMemberrgls:SanofiMember2020-08-310001505512rgls:SanofiMember2020-09-012020-09-300001505512rgls:SanofiMember2020-10-012020-10-310001505512rgls:SanofiMember2020-11-300001505512rgls:SanofiMember2021-06-30utr:sqft0001505512rgls:PriorPremisesMember2019-06-190001505512rgls:PriorPremisesMember2019-07-010001505512rgls:CampusPointLeaseMember2021-02-110001505512rgls:CampusPointLeaseMember2021-02-112021-02-11rgls:contract0001505512rgls:CampusPointLeaseMember2021-04-30

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
  FORM10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2021
or 
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM                      TO                     
Commission file number: 001-35670
Regulus Therapeutics Inc.
(Exact name of registrant as specified in its charter)
Delaware 26-4738379
(State or Other Jurisdiction of
Incorporation or Organization)
 (I.R.S. Employer
Identification No.)
4224 Campus Point Court, Suite 210 92121
San Diego
CA
(Address of Principal Executive Offices) (Zip Code)
858-202-6300
(Registrant’s Telephone Number, Including Area Code)
N/A
(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class Trading Symbol(s)  Name of Each Exchange on Which Registered
Common Stock, par value $0.001 per share

 RGLS  The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  x    No  ¨
Indicate by check mark whether registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.



Large accelerated filer  Accelerated filer 
Non-accelerated filer  Smaller reporting company 
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.    ☐
Indicate by check mark whether registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes      No 
As of August 6, 2021, the registrant had 87,040,335 shares of Common Stock ($0.001 par value) outstanding.



REGULUS THERAPEUTICS INC.
TABLE OF CONTENTS
 
PART I. FINANCIAL INFORMATION
PART II. OTHER INFORMATION

RISK FACTOR SUMMARY

Below is a summary of the material factors that make an investment in our common stock speculative or risky. This summary does not address all of the risks that we face. Additional discussion of the risks summarized in this risk factor summary, and other risks that we face, can be found below under the heading “Risk Factors” under Part II, Item 1A of this Quarterly Report and should be carefully considered, together with other information in this Quarterly Report before making investment decisions regarding our common stock.

The approach we are taking to discover and develop drugs is novel and may never lead to marketable products.

We may not be successful in our efforts to identify or discover potential product candidates.

Preclinical and clinical studies of our product candidates may not be successful. If we are unable to generate successful results from our preclinical and clinical studies of our product candidates, or experience significant delays in doing so, our business may be materially harmed.

If clinical trials of our product candidates fail to demonstrate safety and efficacy to the satisfaction of regulatory authorities or do not otherwise produce positive results, we may incur additional costs or experience delays in completing, or ultimately be unable to complete, the development and commercialization of our product candidates.

Any of our product candidates may cause adverse effects or have other properties that could delay or prevent their regulatory approval or limit the scope of any approved label or market acceptance.




Even if we complete the necessary preclinical studies and clinical trials, we cannot predict whether or when we will obtain regulatory approval to commercialize a product candidate and we cannot, therefore, predict the timing of any revenue from a future product.

We will need to raise additional capital, and if we are unable to do so when needed, we will not be able to continue as a going concern.

Payments under the instruments governing our indebtedness may reduce our working capital. In addition, a default under our loan and security agreement could cause a material adverse effect on our financial position.

We have incurred significant losses since our inception and anticipate that we will continue to incur significant losses for the foreseeable future.

We have never generated any revenue from product sales and may never be profitable.

We will depend upon collaborations for the development and eventual commercialization of certain microRNA product candidates. If these collaborations are unsuccessful or are terminated, we may be unable to commercialize certain product candidates and we may be unable to generate revenues from our development programs.

We rely on limited sources of supply for the drug substance of product candidates and any disruption in the chain of supply may cause a delay in developing and commercializing these product candidates.

Manufacturing issues may arise that could increase product and regulatory approval costs or delay commercialization.

We rely on third parties to conduct, supervise and monitor our clinical trials, and if those third parties perform in an unsatisfactory manner, it may harm our business.

If we are unable to obtain or protect intellectual property rights related to our future products and product candidates, we may not be able to compete effectively in our markets.

We face significant competition from other biotechnology and pharmaceutical companies and our operating results will suffer if we fail to compete effectively.

Our business could be adversely affected by the effects of health pandemics or epidemics, including the ongoing COVID-19 pandemic, in regions where we or third parties on which we rely have significant manufacturing facilities, concentrations of clinical trial sites or other business operations, or materially affect our operations globally, including at our headquarters in San Diego, and at our clinical trial sites, as well as the business or operations of our collaborators, manufacturers, contract research organizations ("CROs") or other third parties with whom we conduct business.

The market price of our common stock may be highly volatile.

We may be unable to comply with the applicable continued listing requirements of The Nasdaq Capital Market.




PART I. FINANCIAL INFORMATION

ITEM 1.     FINANCIAL STATEMENTS
Regulus Therapeutics Inc.
CONDENSED BALANCE SHEETS
(in thousands, except share and per share data)
June 30,
2021
December 31,
2020
 (Unaudited) 
Assets
Current assets:
Cash and cash equivalents$41,440 $31,087 
Restricted cash62  
Contract and other receivables194 503 
Prepaid materials, net3,269 3,314 
Prepaid expenses and other current assets1,348 1,826 
Total current assets46,313 36,730 
Property and equipment, net284 472 
Intangibles, net105 125 
Right of use asset2,814 253 
Other assets 24 
Total assets$49,516 $37,604 
Liabilities and stockholders’ equity (deficit)
Current liabilities:
Accounts payable$1,393 $535 
Accrued liabilities477 581 
Accrued research and development expenses762 1,097 
Accrued compensation1,158 1,743 
Current portion of term loan, less debt issuance costs4,662 4,652 
Other current liabilities1,516 2,970 
Total current liabilities9,968 11,578 
Lease liability, less current portion2,720  
Total liabilities12,688 11,578 
Commitments and Contingencies  
Stockholders’ equity:
Class A-1 convertible preferred stock, $0.001 par value; 256,700 shares authorized, issued, and outstanding at June 30, 2021 (unaudited) and December 31, 2020
  
Class A-2 convertible preferred stock, $0.001 par value; 1,330,832 and 1,416,453 shares authorized, issued, and outstanding at June 30, 2021 (unaudited) and December 31, 2020, respectively
1 1 
Class A-3 convertible preferred stock, $0.001 par value; 258,707 shares authorized, issued, and outstanding at June 30, 2021 (unaudited) and December 31, 2020
1 1 
Common stock, $0.001 par value; 400,000,000 shares and 200,000,000 authorized at June 30, 2021 and December 31, 2020, respectively; 87,040,335 and 67,432,712 shares issued and outstanding at June 30, 2021 (unaudited) and December 31, 2020, respectively
87 67 
Additional paid-in capital475,831 453,002 
Accumulated deficit(439,092)(427,045)
Total stockholders’ equity 36,828 26,026 
Total liabilities and stockholders’ equity $49,516 $37,604 
3


See accompanying notes to these condensed financial statements.


4


Regulus Therapeutics Inc.
CONDENSED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(In thousands, except share and per share data)
 
 Three months ended
June 30,
Six months ended
June 30,
 2021202020212020
 (Unaudited)
Revenues:
Revenue under collaborations
$ $ $ $6 
Total revenues   6 
Operating expenses:
Research and development4,150 4,242 7,470 7,360 
General and administrative2,488 2,254 4,967 4,676 
Total operating expenses6,638 6,496 12,437 12,036 
Loss from operations(6,638)(6,496)(12,437)(12,030)
Other income (expense):
Interest and other income821 10 822 89 
Interest and other expense(216)(461)(431)(951)
Loss before income taxes(6,033)(6,947)(12,046)(12,892)
Income tax (expense) benefit(1) (1)8 
Net loss and comprehensive loss$(6,034)$(6,947)$(12,047)$(12,884)
Net loss per share, basic and diluted$(0.08)$(0.23)$(0.16)$(0.48)
Weighted average shares used to compute basic and diluted net loss per share77,175,831 29,801,974 74,249,631 26,933,173 
See accompanying notes to these condensed financial statements.

5


Regulus Therapeutics Inc.
CONDENSED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
(In thousands, except share data)

Convertible preferred stockCommon stockAdditional paid-in capitalAccumulated deficitTotal stockholders’ equity (deficit)
SharesAmountSharesAmount
Balance at December 31, 20201,931,860 $2 67,432,712 $67 $453,002 $(427,045)$26,026 
Issuance of common stock upon vesting of restricted stock units— — 16,902 — — — — 
Issuance of common stock upon exercise of options— — 26,770 — 26 — 26 
Issuance of common stock upon exercise of warrants— — 2,418,681 3 663 — 666 
Issuance of common stock through ATM— — 4,009,585 4 5,709 — 5,713 
Issuance of common stock under Employee Stock Purchase Plan— — 4,122 — 2 — 2 
Conversions of convertible preferred stock(78,036)— 780,360 1 (1)—  
Stock-based compensation expense— — — — 691 — 691 
Net loss— — — — — (6,013)(6,013)
Balance at March 31, 20211,853,824 $2 74,689,132 $75 $460,092 $(433,058)$27,111 
Issuance of common stock upon vesting of restricted stock units— — 16,849 — — — — 
Issuance of common stock upon exercise of options— — 958 —  —  
Issuance of common stock upon exercise of warrants— — 250,000  166 — 166 
Issuance of common stock through ATM— — 12,007,546 12 14,819 — 14,831 
Conversions of convertible preferred stock(7,585) 75,850    
Stock-based compensation expense— — — — 754 — 754 
Net loss— — — — — (6,034)(6,034)
Balance at June 30, 20211,846,239 $2 87,040,335 $87 $475,831 $(439,092)$36,828 
Balance at December 31, 20193,704,288 $4 21,018,663 $21 $431,305 $(411,315)$20,015 
Issuance of common stock upon vesting of restricted stock units— — 21,166 — — — — 
Issuance of common stock upon exercise of options— — 468 — — —  
Issuance of common stock under Employee Stock Purchase Plan— — 1,666 — 1 — 1 
Conversions of convertible preferred stock(656,682)(1)6,566,820 7 (6)—  
Stock-based compensation expense— — — — 823 — 823 
Net loss— — — — — (5,937)(5,937)
Balance at March 31, 20203,047,606 $3 27,608,783 $28 $432,123 $(417,252)$14,902 
Stock-based compensation expense— — — — 629 — 629 
Issuance of common stock upon vesting of restricted stock units— — 17,703 — — — — 
Conversions of convertible preferred stock(829,643)(1)8,296,430 8 (7)—  
Net loss— — — — (6,947)(6,947)
Balance at June 30, 20202,217,963 $2 35,922,916 $36 $432,745 $(424,199)$8,584 

6


See accompanying notes to these condensed financial statements.
7


Regulus Therapeutics Inc.
CONDENSED STATEMENTS OF CASH FLOWS
(In thousands)
 Six months ended
June 30,
 20212020
 (Unaudited)
Operating activities
Net loss$(12,047)$(12,884)
Adjustments to reconcile net loss to net cash used in operating activities
Depreciation and amortization expense380 248 
Stock-based compensation1,445 1,452 
Gain on PPP Loan forgiveness(662) 
Other22 143 
Change in operating assets and liabilities:
Contracts and other receivables309 467 
Prepaid materials45  
Prepaid expenses and other assets501 647 
Accounts payable858 (297)
Accrued liabilities(105)(74)
Accrued research and development expenses(335)239 
Accrued compensation(585)(738)
Operating lease right-of-use assets and liabilities, net275 (72)
Contract liabilities (6)
Other liabilities
(836)(353)
Net cash used in operating activities(10,735)(11,228)
Investing activities
Purchases of property and equipment(184) 
Net cash used in investing activities(184) 
Financing activities
Proceeds from borrowing under Paycheck Protection Program 662 
Proceeds from issuance of common stock, net21,379 1 
Proceeds from exercise of common stock options27  
Other  
Payments on financing leases(72)(137)
Net cash provided by financing activities21,334 526 
Net increase (decrease) in cash and cash equivalents10,415 (10,702)
Cash and cash equivalents at beginning of period31,087 34,121 
Cash and cash equivalents at end of period$41,502 $23,419 
Reconciliation of cash, cash equivalents and restricted cash
Cash and cash equivalents$41,440 $23,419 
Restricted cash62  
Total cash, cash equivalents and restricted cash$41,502 $23,419 
Supplemental disclosure of cash flow information
Paycheck Protection Program loan forgiveness$662 $ 
Interest paid$(222)$(728)
Income taxes (paid) refunded$(1)$8 
See accompanying notes to these condensed financial statements.
8


Regulus Therapeutics Inc.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
1. Basis of Presentation and Summary of Significant Accounting Policies
Basis of Presentation
The accompanying unaudited condensed financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In management’s opinion, the accompanying financial statements reflect all adjustments, consisting of normal recurring adjustments, considered necessary for a fair presentation of the results for the interim periods presented.
Interim financial results are not necessarily indicative of results anticipated for the full year. These unaudited condensed financial statements should be read in conjunction with the audited financial statements and footnotes included in our Annual Report on Form 10-K for the year ended December 31, 2020, from which the balance sheet information herein was derived.

Liquidity
The accompanying financial statements have been prepared on a basis which assumes we are a going concern, and does not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result from any uncertainty related to our ability to continue as a going concern. Through the date of the issuance of these financial statements, we have principally been financed through proceeds received from the sale of our common stock and other equity securities, debt financings, up-front payments and milestones received from collaboration agreements, totaling $505.6 million. As of June 30, 2021, we had approximately $41.4 million of cash and cash equivalents. Based on our operating plans, we believe our cash and cash equivalents may not be sufficient to fund our operations for the period one year following the issuance of these financial statements. As a result, there is substantial doubt about our ability to continue as a going concern. All amounts due under the Term Loan (see note 5) have been classified as a current liability as of June 30, 2021 and December 31, 2020, due to the considerations discussed above and the assessment that the material adverse change clause under the Term Loan is not within our control. In the first quarter of 2021, we received a waiver from the Lender (as defined below) with respect to noncompliance with a covenant under the Loan Agreement (as defined below). We are in compliance with all Loan Agreement covenants.
We intend to seek additional capital through equity and/or debt financings, collaborative or other funding arrangements with partners or through other sources of financing. Should we seek additional financing from outside sources, we may not be able to raise such financing on terms acceptable to us or at all. If we are unable to raise additional capital when required or on acceptable terms, we may be required to scale back or discontinue the advancement of product candidates, reduce headcount, file for bankruptcy, reorganize, merge with another entity, or cease operations.
If we become unable to continue as a going concern, we may have to liquidate our assets, and might realize significantly less than the values at which they are carried on our financial statements, and stockholders may lose all or part of their investment in our common stock.
Use of Estimates
Our condensed financial statements are prepared in accordance with GAAP, which requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and the disclosure of contingent assets and liabilities in our financial statements and accompanying notes. An estimated loss contingency is accrued in our financial statements if it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated. Although these estimates are based on our knowledge of current events and actions we may undertake in the future, actual results may ultimately differ from these estimates and assumptions. Additionally, the impact of the COVID-19 pandemic to our business and operating results presents additional uncertainty.

Revenue Recognition
Our revenues generally consist of upfront payments for licenses or options to obtain licenses in the future, milestone payments and payments for other research services under license and collaboration agreements.
9


We recognize revenue when we transfer promised goods or services to customers in an amount that reflects the consideration to which we expect to be entitled in exchange for those goods or services. To determine revenue recognition for contracts with customers we perform the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligation(s) in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligation(s) in the contract; and (v) recognize revenue when (or as) we satisfy the performance obligation(s). At contract inception, we assess the goods or services promised within each contract, assess whether each promised good or service is distinct and identify those that are performance obligations. We recognize as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied.
Collaborative Arrangements
We enter into collaborative arrangements with partners that typically include payment to us of one of more of the following: (i) license fees; (ii) payments related to the achievement of developmental, regulatory, or commercial milestones; and (iii) royalties on net sales of licensed products. Where a portion of non-refundable up-front fees or other payments received are allocated to continuing performance obligations under the terms of a collaborative arrangement, they are recorded as contract liabilities and recognized as revenue when (or as) the underlying performance obligation is satisfied.
As part of the accounting for these arrangements, we must develop estimates and assumptions that require judgment to determine the underlying stand-alone selling price for each performance obligation which determines how the transaction price is allocated among the performance obligation(s). The stand-alone selling price may include items such as forecasted revenues, development timelines, discount rates, and probabilities of technical and regulatory success. We evaluate each performance obligation to determine if it can be satisfied at a point in time, or over time. In addition, variable consideration must be evaluated to determine if it is constrained and, therefore, excluded from the transaction price.
License Fees
If a license to our intellectual property is determined to be distinct from the other performance obligations identified in the arrangement, we recognize revenues from non-refundable, up-front fees allocated to the license when the license is transferred to the licensee and the licensee is able to use and benefit from the license. For licenses that are bundled with other performance obligations, we use judgment to assess the nature of the combined performance obligation to determine whether it is satisfied over time or at a point in time and, if over time, the appropriate method of measuring progress for purposes of recognizing revenue. We evaluate the measure of progress each reporting period and, if necessary, adjust the measure of performance and related revenue recognition.

Milestone Payments
At the inception of each arrangement that includes milestone payments (variable consideration), we evaluate whether the milestones are considered probable of being reached and estimate the amount to be included in the transaction price. If it is probable that a milestone event would occur at the inception of an arrangement, the associated milestone value is included in the transaction price. Milestone payments that are contingent upon the achievement of events that are uncertain or not controllable, such as regulatory approvals, are generally not considered probable of being achieved until those approvals are received, and therefore not included in the transaction price. The transaction price is then allocated to each performance obligation on a relative stand-alone selling price basis, for which we recognize revenue as or when the performance obligations under the contract are satisfied. At the end of each reporting period, we evaluate the probability of achievement of such milestones and any related constraint(s), and if necessary, may adjust our estimate of the overall transaction price. Any such adjustments are recorded on a cumulative catch-up basis, which could affect license, collaboration or other revenues and earnings in the period of adjustment.
Royalties
For arrangements that include sales-based royalties, including milestone payments based on the level of sales, and for which the license is deemed to be the predominant item to which the royalties relate, we recognize revenue at the later of (i) when the related sales occur, or (ii) when the performance obligation to which some or all of the royalty has been allocated has been satisfied (or partially satisfied). To date, we have not recognized any royalty revenue resulting from any of our collaborative arrangements.
Stock-Based Compensation
10


We account for stock-based compensation expense related to stock options granted to employees and members of our board of directors by estimating the fair value of each stock option on the date of grant using the Black-Scholes option pricing model. We recognize stock-based compensation expense using the accelerated multiple-option approach. Under the accelerated multiple-option approach (also known as the graded-vesting method), we recognize compensation expense over the requisite service period for each separately vesting tranche of the award as though the award was in substance multiple awards, resulting in accelerated expense recognition over the vesting period. For performance-based awards granted to employees (i) the fair value of the award is determined on the grant date, (ii) we assess the probability of the individual milestones under the award being achieved and (iii) the fair value of the shares subject to the milestone is expensed over the implicit service period commencing once management believes the performance criteria is probable of being met.
We account for restricted stock units by determining the fair value of each restricted stock unit based on the closing market price of our common stock on the date of grant. We recognize stock-based compensation expense using the accelerated multiple-option approach over the requisite service periods of the awards.
Clinical Trial and Preclinical Study Accruals
We make estimates of our accrued expenses for clinical trial and preclinical study activities as of each balance sheet date in our financial statements based on the facts and circumstances known to us at that time. These accruals are based upon estimates of costs incurred and fees that may be associated with services provided by clinical trial investigational sites and CROs and for other clinical trial-related activities. Payments under certain contracts with such parties depend on factors such as successful enrollment of patients, site initiation and the completion of clinical trial milestones. In accruing for these services, we estimate the time period over which services will be performed and the level of effort to be expended in each period. If possible, we obtain information regarding unbilled services directly from these service providers. However, we may be required to estimate these services based on other information available to us. If we underestimate or overestimate the activities or fees associated with a study or service at a given point in time, adjustments to research and development expenses may be necessary in future periods. Historically, our estimated accrued liabilities have approximated actual expense incurred. Subsequent changes in estimates may result in a material change in our accruals.
Prepaid Materials
We capitalize the purchase of certain raw materials and related supplies for use in the manufacturing of drug product in our preclinical and clinical development programs, as we have determined that these materials have alternative future use. We can use these raw materials and related supplies in multiple clinical drug products, and therefore have future use independent of the development status of any particular drug program until it is utilized in the manufacturing process. We expense the cost of materials when used. We periodically review these capitalized materials for continued alternative future use and write down the asset to its net realizable value in the period in which an impairment is identified.
Recent Accounting Pronouncements

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. Subsequently, in November 2018, the FASB issued ASU 2018-19, Codification Improvements to Topic 326, Financial Instruments-Credit Losses. ASU 2016-13 requires entities to measure all expected credit losses for most financial assets held at the reporting date based on an expected loss model which includes historical experience, current conditions, and reasonable and supportable forecasts. ASU 2016-13 also requires enhanced disclosures to help financial statement users better understand significant estimates and judgments used in estimating credit losses. This ASU is effective for smaller reporting companies for fiscal years beginning after December 15, 2022, with early adoption permitted. We are assessing the impact this standard will have on our financial statements and disclosures.
In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848), which provides guidance around reference rate reform initiatives to identify alternative reference rates that are more observable or transaction-based and less susceptible to manipulation in response to concerns about structural risks of interbank offered rates and the risk of cessation of the London Interbank Offered Rate ("LIBOR"). The amendments in the ASU provide option expedients and exceptions for applying GAAP to contracts, hedging relationships and other transactions affected by reference rate reform and apply only if such contracts, hedging relationships and other transactions that reference LIBOR or another reference rate are expected to be discontinued because of reference rate reform. The guidance does not apply to contract modifications made, and hedging relationships entered into or evaluated, after December 31, 2022. We are assessing the impact this standard will have on our financial statements and disclosures.

11


In August 2020, the FASB issued ASU 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity, which simplifies accounting for convertible instruments by removing major separation models required under current GAAP. This standard removes certain settlement conditions that are required for equity contracts to qualify for the derivative scope exception and it also simplifies the diluted earnings per share calculation in certain areas. This standard is effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020 and adoption must be as of the beginning of the Company’s annual fiscal year. The adoption of this standard on January 1, 2021 did not impact our financial statements or disclosures.
2. Net Loss Per Share
Basic net loss per share is calculated by dividing net loss by the weighted average number of common shares outstanding for the period, without consideration for common stock equivalents. Diluted net loss per share is calculated by dividing net loss by the weighted-average number of common share equivalents outstanding for the period determined using the treasury-stock method or if-converted method. Dilutive common stock equivalents are comprised of stock options, restricted stock units and convertible preferred stock outstanding. For all periods presented, there is no difference in the number of shares used to calculate basic and diluted net loss per share.
Potentially dilutive securities not included in the calculation of diluted net loss per common share, because to do so would be anti-dilutive, were (in common stock equivalent shares) 28,465,276 for the three months and six months ended June 30, 2021, consisting of convertible preferred stock, stock options and restricted stock units, and 28,577,380 for the three and six months ended June 30, 2020, consisting of convertible preferred stock, stock options and restricted stock units.
3. Investments
Historically, we have invested our excess cash primarily in debt instruments of financial institutions, corporations, U.S. government-sponsored agencies and the U.S. Treasury. We generally hold our investments to maturity and do not sell our investments before we have recovered our amortized cost basis. As of June 30, 2021 and December 31, 2020, our cash balance was comprised entirely of cash and cash equivalents (money market funds).
4. Fair Value Measurements
We have certain financial assets recorded at fair value which have been classified as Level 1, 2, or 3 within the fair value hierarchy as described in the accounting standards for fair value measurements.
Accounting standards define fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants as of the measurement date. Market participants are buyers and sellers in the principal market that are (i) independent, (ii) knowledgeable, (iii) able to transact, and (iv) willing to transact. The accounting standards provide an established hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs that market participants would use in valuing the asset or liability and are developed based on market data obtained from independent sources. Unobservable inputs are inputs that reflect our assumptions about the factors that market participants would use in valuing the asset or liability. The accounting standards prioritize the inputs used in measuring the fair value into the following hierarchy:
 
Level 1 includes financial instruments for which quoted market prices for identical instruments are available in active markets.
Level 2 includes financial instruments for which there are inputs other than quoted prices included within Level 1 that are observable for the instrument such as quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets with insufficient volume or infrequent transactions (less active markets) or model-driven valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.
Level 3 includes financial instruments for which fair value is derived from valuation techniques in which one or more significant inputs are unobservable, including management’s own assumptions.

Financial Assets Measured at Fair Value
12


The following table presents our fair value hierarchy for assets measured at fair value on a recurring basis as of June 30, 2021 and December 31, 2020 (in thousands):
 
 Fair value as of June 30, 2021
 TotalLevel 1Level 2Level 3
Assets:
Cash equivalents (money market funds)$36,903 $36,903 $ $ 
$36,903 $36,903 $ $ 
 
 Fair value as of December 31, 2020
 TotalLevel 1Level 2Level 3
Assets:
Cash equivalents (money market funds)$26,901 $26,901 $ $ 
$26,901 $26,901 $ $ 
We obtain pricing information from quoted market prices or quotes from brokers/dealers. We have historically determined the fair value of our investment securities using standard observable inputs, including reported trades, broker/dealer quotes, bids and/or offers.
5. Debt
Term Loan
On June 17, 2016, we entered into a loan and security agreement ("Loan Agreement") with Oxford Finance, LLC, (the Lender), pursuant to which we received $20.0 million in proceeds, net of debt issuance costs, on June 22, 2016 (the "Term Loan").
The outstanding Term Loan will mature on May 1, 2022 (the “Maturity Date”) and bears interest at a floating per annum rate equal to (i) 8.51% plus (ii) the greater of (a) the 30 day U.S. Dollar LIBOR rate reported in The Wall Street Journal on the last business day of the month that immediately precedes the month in which the interest will accrue and (b) 0.44%. Under the original Loan Agreement, we were required to make interest-only payments through June 1, 2018, followed by 24 equal monthly payments of principal and unpaid accrued interest.

The Loan Agreement was amended eight times between October 2017 through May 2019. On May 1, 2020 we entered into a ninth amendment to the Term Loan with the Lender (the “Ninth Amendment”). Pursuant to the terms of the Ninth Amendment, (i) the approximately $0.7 million of loan proceeds (the "PPP Loan") we received under the Paycheck Protection Program ("PPP") was included as permitted indebtedness under the terms of the Term Loan, (ii) we agreed to apply for forgiveness of the maximum amount of PPP Loan permissible in accordance with the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) and use best efforts to cause not less than $0.5 million of the PPP Loan to be forgiven by the PPP Loan lender on or before September 30, 2020 and (iii) we agreed not to amend any material provision in any document relating to the PPP Loan nor make any prepayment of the PPP Loan unless such prepayment is necessary or advisable due to change in the applicable law or guidance issued by the U.S. Small Business Administration (“SBA”).

On August 25, 2020 we entered into a tenth amendment to the Term Loan with the Lender (the "Tenth Amendment"). Pursuant to the terms of the Tenth Amendment, we are eligible for up to an additional seven months of interest only payments in the event we paid down $10.0 million in loan principal before April 30, 2021 (the "Principal Paydown Event"). In the event the Principal Paydown Event did not occur by April 30, 2021, we would make principal and accrued interest payments, in arrears, commencing May 1, 2021, in accordance with the terms of the Eighth Amendment. If the Principal Paydown Event occurred after April 30, 2021 but on or before July 31, 2021, we would recommence an extended interest only payment period through December 31, 2021. In the event we received the additional interest only period, principal and accrued interest payments would recommence on January 1, 2022.

We received $1.0 million, $4.0 million and $5.0 million in proceeds from Sanofi (see Note 7) on September 30, 2020, October 8, 2020 and November 30, 2020, respectively. Under the terms of the Tenth Amendment, we prepaid $1.0 million, $4.0 million and $5.0 million of outstanding principal to the Lender on September 30, 2020, October 8, 2020 and November 30, 2020, respectively, for a total of $10.0 million. We also paid the applicable 5.5% final payment fees related to the three prepayments to the Lender. As the Principal Paydown Event occurred by April 30, 2021, we received an additional seven
13


months of interest only payment extension and are not obligated to make principal payments on the Term Loan until January 1, 2022.

We used the proceeds from the Term Loan solely for working capital and to fund our general business requirements. Our obligations under the Loan Agreement are secured by a first priority security interest in substantially all of our current and future assets, other than our intellectual property, for which the Lender currently has a positive lien, and certain assets under finance lease obligations. We have also agreed not to encumber our intellectual property assets, except as permitted by the Loan Agreement. The Loan Agreement includes customary events of default, including instances of a material adverse change in our operations, that may require prepayment of the outstanding Term Loan. During the first quarter of 2021, we received a waiver from the Lender with respect to noncompliance with a covenant under the Loan Agreement. As of the date of the filing of this Form 10-Q, we are in compliance with all Loan Agreement covenants as of the date of the filing of this Form 10-Q.      
As of June 30, 2021, $4.7 million was outstanding under the Term Loan. An additional $1.3 million is also payable at the conclusion of the Term Loan (presented in other current liabilities on our balance sheet at June 30, 2021). We had less than $0.1 million of debt issuance costs outstanding as of June 30, 2021, which are being accreted to interest expense over the life of the Term Loan using an effective interest rate of 8.98%. The exit fees are being accrued over the life of the Term Loan through interest expense.
As of June 30, 2021, future principal payments for the Term Loan due under the Loan Agreement are as follows (in thousands):
2021 
20224,681 
$4,681 

Paycheck Protection Program Loan
On April 23, 2020, we received the proceeds from the PPP Loan in the amount of approximately $0.7 million from Silicon Valley Bank, as lender, pursuant to the PPP of the CARES Act. The PPP Loan was set to mature on April 23, 2022 and bore interest at a rate of 1.0% per annum. The PPP Loan was evidenced by a promissory note dated April 23, 2020, which contained customary events of default relating to, among other things, payment defaults and breaches of representations and warranties. The PPP Loan was prepayable by us at any time prior to maturity with no prepayment penalties.
Under the CARES Act and PPP Flexibility Act, loan forgiveness is available for the sum of documented payroll costs, covered mortgage interest, covered rent payments and covered utilities during the 24 week period beginning on the date of loan disbursement. For purposes of the PPP, payroll costs exclude compensation of an individual employee in excess of $100,000, annualized, prorated for the covered period. Not more than 40% of the forgiven amount may be for non-payroll costs. Forgiveness is reduced if full-time headcount declines during the covered period as compared to specified reference periods, or if salaries and wages for employees with salaries of $100,000 or less annually are reduced by more than 25%, unless certain safe harbors are satisfied. In the event the PPP Loan, or any portion thereof, is forgiven pursuant to the PPP, the amount forgiven is applied to outstanding principal and includes accrued interest.

We have used all proceeds from the PPP Loan to retain employees, maintain payroll and make lease and utility payments, and we sought forgiveness in accordance with the program. We received full forgiveness of our PPP Loan in the second quarter of 2021. We accounted for the full forgiveness of our PPP Loan by recording a gain in interest and other income for the three and six months ended June 30, 2021.
6. Stockholders’ Equity

Common Stock

As of June 30, 2021, there were 87,040,335 shares of common stock outstanding. Each share of common stock is entitled to one vote. The holders of the common stock are also entitled to receive dividends whenever funds are legally available and when declared by our Board of Directors.

2019 Equity Incentive Plan
14


On June 15, 2019, the Company's board of directors approved, and on August 1, 2019 the Company's stockholders approved, the Company's 2019 Equity Incentive Plan (the "2019 Plan"). The 2019 Plan is intended as the successor to and continuation of the Company's 2012 Equity Incentive Plan. The number of shares authorized for issuance under the 2019 Plan may be increased by (a) the shares subject to outstanding stock awards granted under the Company’s 2009 Equity Incentive Plan (the “2009 Plan”) and the Company’s 2012 Equity Incentive Plan (together the with 2009 Plan, the “Prior Plans”) that on or after the effective date of the 2019 Plan (i) expire or terminate for any reason prior to exercise or settlement; (ii) are forfeited because of the failure to meet a contingency or condition required to vest such shares or otherwise return to the Company, or (iii) are reacquired, withheld (or not issued) to satisfy a tax withholding obligation in connection with an award or to satisfy the purchase price or exercise price of a stock award. No further grants will be made under the Prior Plans. In addition, on January 22, 2020, an additional 4,166,860 shares of common stock became available for issuance under the 2019 Plan pursuant to the Milestone Closing (defined below) of the May 2019 SPA (defined below). Further, on January 1st of each year, for a period of not more than ten years, beginning on January 1, 2021 and continuing through January 1, 2029, the number of shares authorized for issuance under the 2019 Plan will increase by 5.0% of the total number of shares of our capital stock outstanding on December 31 of the preceding calendar year, or a lesser number of shares as may be determined by our Board of Directors. As of June 30, 2021, 1,023,111 shares of common stock were available for new equity award grants under the 2019 Plan and 10,002,886 shares of common stock are reserved for issuance pursuant to equity awards outstanding as of June 30, 2021.

Private Placements of Common Stock, Non-Voting Preferred Stock and Warrants

On May 3, 2019, we entered into a securities purchase agreement (the "May 2019 SPA") with certain institutional and other accredited investors, including certain directors, executive officers and employees of the Company (the “Purchasers”), pursuant to which we agreed to sell and issue shares of our common stock, shares of our newly designated non-voting convertible preferred stock, and warrants to purchase common stock, in up to two closings, in a private placement transaction (the “Private Placement”).

At an initial closing under the May 2019 SPA that occurred on May 7, 2019 (the “Initial Closing”), we sold and issued to the Purchasers (i) 9,730,534 shares of common stock and accompanying warrants to purchase up to an aggregate of 9,730,534 shares of common stock at a combined purchase price of $1.205 per share, and (ii) 415,898 shares of non-voting Class A-1 convertible preferred stock, in lieu of shares of common stock, at a price of $10.80 per share, and accompanying warrants to purchase an aggregate of 4,158,980 shares of common stock at a price of $0.125 for each share of common stock underlying such warrants. Total gross proceeds from the Initial Closing were approximately $16.7 million, which does not include any proceeds that may be received upon exercise of the warrants. Each share of non-voting Class A-1 convertible preferred stock is convertible into 10 shares of Common Stock, subject to certain beneficial ownership conversion limitations. The warrants are exercisable for a period of five years following the date of issuance and have an exercise price of $1.08 per share, subject to proportional adjustments in the event of stock splits or combinations or similar events. The warrants are exercisable on a net exercise "cashless" basis. An aggregate of 526,083 shares of common stock and warrants to purchase up to 526,083 shares of common stock were purchased for $0.6 million by certain directors and executive officers of the Company under the Initial Closing.

Pursuant to the May 2019 SPA, in the event our Board of Directors unanimously resolved to recommence our Phase 1 multiple ascending dose clinical trial of our RGLS4326 product candidate for the treatment of ADPKD (the “Phase 1 Trial”) based on correspondence from the U.S. Food and Drug Administration’s Division of Cardiovascular and Renal Products, and thereafter but on or before December 31, 2019, we made a public announcement of our plan to recommence the Phase 1 Trial (the “Public Announcement”), we would sell and the Purchasers would purchase, at a second closing under the May 2019 SPA (“Milestone Closing”), shares of our non-voting convertible preferred stock and accompanying warrants to purchase shares of Common Stock (collectively, "Milestone Securities"). On December 15, 2019, the Company's Board of Directors unanimously resolved to recommence the Phase 1 Trial based on correspondence from the U.S. Food & Drug Administration’s Division of Cardiovascular and Renal Products and on December 16, 2019, we made the related Public Announcement, triggering the Milestone Closing, which occurred on December 24, 2019. At the Milestone Closing, we sold and issued to the Purchasers 3,288,390 shares of non-voting Class A-2 convertible preferred stock and accompanying warrants to purchase an aggregate of 32,883,900 shares of common stock for an aggregate purchase price of approximately $26.0 million. Net proceeds to the Company from the Milestone Closing were approximately $24.6 million. Each share of non-voting Class A-2 convertible preferred stock is convertible into 10 shares of Common Stock, subject to certain beneficial ownership conversion limitations. The warrants will be exercisable for a period of five years following the date of issuance and have an exercise price of $0.666 per share, subject to proportional adjustments in the event of stock splits or combinations or similar events. The warrants are exercisable on a net exercise “cashless” basis. An aggregate of 121,581 shares of Class A-2 convertible preferred stock and warrants to purchase up to 1,215,810 shares of common stock were purchased for approximately $1.0 million by certain directors and executive officers of the Company under the Milestone Closing.
15



We evaluated the non-voting Class A-1 convertible preferred stock and common stock warrants sold in the Initial Closing and the Class A-2 convertible preferred stock and common stock warrants sold in the Milestone Closing under ASC 480, Distinguishing Liabilities from Equity, and ASC 815, Derivatives and Hedging, and determined permanent equity treatment was appropriate for these freestanding financial instruments. The Initial Closing and Milestone Closing did not include any embedded features that required bifurcation. The non-voting Class A-2 convertible preferred stock and warrants issuable under the Milestone Closing were not subject to accounting recognition until the Milestone Closing occurred, as the terms of the Milestone Closing did not provide a right or an obligation on either the Company nor the Purchasers.

On December 1, 2020, we entered into a Securities Purchase Agreement (the "December 2020 SPA") with certain institutional and other accredited investors, including certain directors, executive officers and employees of the Company (the “2020 Purchasers”), pursuant to which we agreed to sell and issue shares of our common stock, shares of newly designated non-voting convertible preferred stock and warrants to purchase common stock (the “2020 PIPE”).

At the closing under the December 2020 SPA that occurred on December 4, 2020 (the “2020 Closing”), we sold and issued to the 2020 Purchasers (i) 24,341,607 shares of common stock and accompanying warrants to purchase up to an aggregate of 18,256,204 shares of common stock at a combined purchase price of $0.7464 per share, and (ii) 272,970 shares of non-voting Class A-3 convertible preferred stock, in lieu of shares of common stock, at a price of $6.22 per share, and accompanying warrants to purchase an aggregate of 2,047,276 shares of common stock at a price of $0.125 for each share of common stock underlying such warrants. Total gross proceeds from the 2020 Closing were approximately $19.4 million, which does not include any proceeds that may be received upon exercise of the warrants. Each share of non-voting Class A-3 convertible preferred stock is convertible into 10 shares of common stock, subject to certain beneficial ownership conversion limitations. The warrants are exercisable for a period of five years following the date of issuance and have an exercise price of $0.622 per share, subject to proportional adjustments in the event of stock splits or combinations or similar events. The warrants are exercisable on a net exercise "cashless" basis. An aggregate of 833,208 shares of common stock and warrants to purchase up to 624,906 shares of common stock were purchased for $0.6 million by certain directors and executive officers of the Company at the 2020 Closing.

We evaluated the non-voting Class A-3 convertible preferred stock and common stock warrants sold in the 2020 PIPE under ASC 480, Distinguishing Liabilities from Equity, and ASC 815, Derivatives and Hedging, and determined permanent equity treatment was appropriate for these freestanding financial instruments and there were no embedded features that required bifurcation.

The following table summarizes preferred stock conversions and warrant exercises (and the related impact on common stock) under the 2019 SPA and 2020 SPA for the three and six months ended June 30, 2021 and 2020 (in thousands):
Class A-1 Convertible Preferred StockClass A-2 Convertible Preferred StockClass A-3 Convertible Preferred StockWarrantsCommon Stock
Balance at December 31, 2020257 1,416 259 66,038  
Conversions/Exercises (78) (3,920)3,199 
Balance at March 31, 2021257 1,338 259 62,118 
Conversions/Exercises (7) (250)326 
Balance at June 30, 2021257 1,331 259 61,868 
Balance at December 31, 2019416 3,288  46,774  
Conversions/Exercises (656)  6,567 
Balance at March 31, 2020416 2,632  46,774 
Conversions/Exercises(159)(671)  8,296 
Balance at June 30, 2020257 1,961  46,774 

ATM Offering
On December 12, 2018, we entered into a Common Stock Sales Agreement (the “Stock Sales Agreement”) with H.C. Wainwright & Co., LLC (“HCW”), pursuant to which we may sell and issue shares of our common stock from time to time through HCW, as our sales agent (the “ATM Offering”). We have no obligation to sell any shares of common stock in the ATM Offering, and may at any time suspend offers under the Stock Sales Agreement or terminate the Stock Sales Agreement.
16


Subject to the terms and conditions of the Stock Sales Agreement, HCW will use its commercially reasonable efforts to sell shares of our common stock from time to time based upon our instructions (including any price, time or size limits or other parameters or conditions the we may impose, subject to certain restrictions). We pay HCW a commission of 3.0% of the gross sales price of any shares sold under the Stock Sales Agreement. A total of 12,007,546 shares were sold and settled for proceeds of $14.8 million (net of $0.5 million in commissions) under the ATM Offering during the three months ended June 30, 2021. A total of 16,017,131 shares were sold and settled for proceeds of $20.5 million (net of $0.8 million in offering costs) under the ATM Offering during the six months ended June 30, 2021. No shares were sold under the ATM Offering during the three and six months ended June 30, 2020. At June 30, 2021, approximately $13.6 million remained available for sale in the ATM Offering. On August 10, 2021, we increased the amount of common stock available for sale in ATM Offerings under the Stock Sales Agreement to $50.0 million
Shares Reserved for Future Issuance
The following shares of common stock were reserved for future issuance as of June 30, 2021 (in thousands):
 
Class A-1 convertible preferred stock outstanding (as-converted)2,567 
Class A-2 convertible preferred stock outstanding (as-converted)13,308 
Class A-3 convertible preferred stock outstanding (as-converted)2,587 
2019 PIPE Initial Closing warrants12,778 
2019 PIPE Milestone Closing warrants30,595 
2020 PIPE warrants18,495 
Common stock options outstanding9,557 
RSUs outstanding446 
Common stock available for future grant under 2019 Equity Incentive Plan1,023 
Employee Stock Purchase Plan267 
Total common shares reserved for future issuance91,623 
The following table summarizes our stock option and RSU (together Stock Awards) activity under all equity incentive plans for the six months ended June 30, 2021 (shares in thousands): 
Number of
options
Weighted
average
exercise
price
Number of
RSUs
Weighted average grant date fair value
Stock Awards outstanding at December 31, 20206,813 $1.10 34 $1.50 
Granted2,973 $1.51 446 $0.95 
Exercised (options) or Vested (RSUs)(28)$0.96 (34)$1.50 
Canceled/forfeited/expired(201)$1.22  $1.50 
Stock Awards outstanding at June 30, 20219,557 $1.23 446 $0.95 

Stock-Based Compensation
The following table summarizes the weighted average assumptions used to estimate the fair value of stock options and performance stock awards granted to employees under our 2012 Equity Incentive Plan, 2015 Inducement Plan, 2019 Equity Incentive Plan and the shares purchasable under our Employee Stock Purchase Plan during the periods presented:
 
17


 Three months ended
June 30,
Six months ended
June 30,
 2021202020212020
Stock options
    Risk-free interest rate1.1 %3.9 %1.0 %1.3 %
    Volatility96.5 %95.4 %95.8 %95.4 %
    Dividend yield     
    Expected term (years)6.16.16.16.1
Performance stock options
    Risk-free interest rate  1.0 %1.4 %
    Volatility  95.7 %95.4 %
    Dividend yield    
    Expected term (years)006.16.1
Employee stock purchase plan shares
    Risk-free interest rate0.1 %0.4 %0.1 %0.9 %
    Volatility108.9 %93.7 %105.1 %99.8 %
    Dividend yield    
    Expected term (years)0.50.50.50.5
The following table summarizes the allocation of our stock-based compensation expense for all stock awards during the periods presented (in thousands): 
 Three months ended
June 30,
Six months ended
June 30,
 2021202020212020
Research and development$229 $159 $410 $316 
General and administrative525 470 1,035 1,136 
Total$754 $629 $1,445 $1,452 
7. Collaborations
Revenue recognized from our strategic collaborations was zero for the three and six months ended June 30, 2021, and zero and less than $0.1 million for the three and six months ended June 30, 2020, respectively.

Sanofi
In July 2012, we amended and restated our collaboration and license agreement with Sanofi to expand the potential therapeutic applications of the microRNA alliance targets to be developed under such agreement. The following elements were delivered as part of the strategic collaboration with Sanofi: (1) a license for up to four microRNA targets; and (2) a research license under our technology collaboration.
In June 2013, the original research term expired, upon which we and Sanofi entered into an option agreement pursuant to which Sanofi was granted an exclusive right to negotiate the co-development and commercialization of certain of our unencumbered microRNA programs and we were granted the exclusive right to negotiate with Sanofi for co-development and commercialization of certain miR-21 anti-miRs in oncology and Alport syndrome.
In February 2014, we and Sanofi entered into a second amended and restated collaboration and license agreement (the “2014 Sanofi Amendment”) to discover, develop and commercialize microRNA therapeutics to focus on specific orphan disease and oncology targets. Under the terms of the 2014 Sanofi Amendment, Sanofi had opt-in rights to our clinical fibrosis program targeting miR-21 for the treatment of Alport syndrome, our preclinical program targeting miR-21 for oncology indications, and our preclinical program targeting miR-221/222 for hepatocellular carcinoma (“HCC”). We were responsible for developing each of these programs to proof-of-concept, at which time Sanofi had an exclusive option on each program. If Sanofi chooses to exercise its option on any of these programs, Sanofi would reimburse us for a significant portion of our preclinical and clinical development costs and would also pay us an option exercise fee for any such program, provided that $1.25 million of the $2.5 million upfront option fee paid to us by Sanofi in connection with the June 2013 option agreement will
18


be creditable against such option exercise fee. We are eligible to receive royalties on microRNA therapeutic products commercialized by Sanofi and will have the right to co-promote these products relating to our preclinical program targeting miR-221/222. As indicated below, we entered into an additional amendment with Sanofi in November 2018, under which Sanofi's opt-in rights to our miR-21 programs under the 2014 Sanofi Amendment were relinquished. Sanofi's opt-in rights with regard to our miR-221/222 preclinical program under the 2014 Sanofi Amendment remained unchanged.
We are eligible to receive milestone payments related to the development and commercialization of miR-221/222 for HCC of up to $38.8 million for proof-of-concept option exercise fees (net of $1.25 million creditable, as noted above), $25.0 million for clinical milestones and up to $130.0 million for regulatory and commercial milestones. In addition, we are entitled to receive royalties based on a percentage of net sales of any products from the miR-221/222 program which, in the case of sales in the United States, will be in the middle of the 10% to 20% range, and, in the case of sales outside of the United States, will range from the low end to the middle of the 10% to 20% range, depending upon the volume of sales. If we exercise our option to co-promote a miR-221/222 product, we will continue to be eligible to receive royalties on net sales of each product in the United States at the same rate, unless we elect to share a portion of Sanofi’s profits from sales of such product in the United States in lieu of royalties.
In November 2018, we entered into an amendment to the 2014 Sanofi Amendment with Sanofi to modify the parties’ rights and obligations with respect to our miR-21 programs, including our RG-012 program (the “2018 Sanofi Amendment”). Under the terms of the 2018 Sanofi Amendment, we have granted Sanofi a worldwide, royalty-free, fee-bearing, exclusive license, with the right to grant sublicenses, under our know-how and patents to develop and commercialize miR-21 compounds and products for all indications, including Alport Syndrome. Sanofi will control and will assume all responsibilities and obligations for developing and commercializing each of our miR-21 programs, including our obligations regarding the administration and expense of clinical trials and all other costs, including in-license royalties and other in-license payments, related to our miR-21 programs. Under the terms of the 2018 Sanofi Amendment, we have assigned to Sanofi certain agreements, product-specific patents and all materials directed to miR-21 or to any miR-21 compound or product and are required to provide reasonable technical assistance to Sanofi for a period of 24 months after the date of the 2018 Sanofi Amendment. Under the terms of the 2018 Sanofi Amendment, we were eligible to receive approximately $6.8 million in upfront payments for the license and for miR-21 program-related materials (collectively, the “Upfront Amendment Payments”). We were also eligible to receive up to $40.0 million in development milestone payments, including a $10.0 million payment for an interim enrollment milestone (the "Enrollment Milestone"). In addition, Sanofi has agreed to reimburse us for certain out-of-pocket transition activities and assume our upstream license royalty obligations. In 2019, we completed the performance obligations under the 2018 Sanofi Amendment and recognized revenue for the $6.8 million in Upfront Amendment Payments.
In August 2020, we entered into an amendment to the 2018 Sanofi Amendment (the "2020 Sanofi Amendment"). Under the terms of the 2020 Sanofi Amendment, we agreed to transfer to Sanofi additional RG-012 development program materials (the “Materials”) in exchange for a payment from Sanofi of $1.0 million (the “Transfer Payment”). In addition, in lieu of the $10.0 million Enrollment Milestone under the 2018 Sanofi Amendment, Sanofi agreed to pay us a $4.0 million milestone upon the completion of the transfer and verification of the Materials, and $5.0 million upon achievement of the Enrollment Milestone. Additionally, we are eligible to receive $25.0 million upon achievement of an additional development milestone related to Sanofi's development of the miR-21 compounds. In September 2020, we received $1.0 million in exchange for the transfer of the Materials to Sanofi, and received an additional $4.0 million in October 2020 as a result of Sanofi's completion and verification of the Materials in September 2020. As the performance obligations associated with both of these payments had been satisfied under Topic 606 as of September 30, 2020, both amounts were recognized as revenue in the third quarter of 2020. In November 2020, we received $5.0 million upon achievement of the Enrollment Milestone. As the performance obligations associated with this payment had been satisfied under Topic 606 as of December 31, 2020, this amount was recognized as revenue in the fourth quarter of 2020.
As of June 30, 2021, the $25.0 million in development milestone payments (variable consideration) is fully constrained and therefore, does not meet the criteria for revenue recognition.
8. Leases

At the inception of a contractual arrangement, we determine whether the contract contains a lease by assessing whether there is an identified asset and whether the contract conveys the right to control the use of the identified asset in exchange for consideration over a period of time. For operating leases with an initial term greater than 12 months, we recognize operating lease right of use assets ("ROU assets") and operating lease liabilities based on the present value of lease payments over the lease term at the commencement date. Operating lease ROU assets are comprised of the lease liability plus any lease payments made and excludes lease incentives. Lease terms include options to renew or terminate the lease when we are reasonably certain that the renewal option will be exercised or when it is reasonably certain that the termination option will not be exercised. For
19


our operating leases, we generally cannot determine the interest rate implicit in the lease, in which case we use our incremental borrowing rate as the discount rate for the lease. We estimate our incremental borrowing rate for our operating leases based on what we would normally pay to borrow on a collateralized basis over a similar term for an amount equal to the lease payments. Operating lease expense is recognized on a straight-line basis over the lease term. Leases with a lease term of 12 months or less are not recorded on the unaudited condensed balance sheet. Instead, we recognize lease expense for these leases on a straight-line basis over the lease term. Our lease agreements do not contain any material variable lease payments, residual value guarantees or restrictive covenants. Certain leases require us to pay taxes, insurance, utilities, and maintenance costs for the building, which do not represent lease components. We elected to not separate lease and non-lease components.
On June 19, 2019, we entered into a lease agreement (the “Prior Lease”) with ARE SD Region No.44 LLC ("Landlord") for the lease of approximately 8,727 square feet of rentable area of the building located at 10628 Science Center Drive, Suite 225, San Diego, California 92121 (the “Prior Premises”). The commencement date of the Prior Lease was July 1, 2019 (the “Prior Commencement Date”). We used the Prior Premises as our principal executive offices and as a laboratory for research and development and other related uses. The term of the Prior Lease (the “Prior Initial Term”) was two years, six months, ending December 31, 2021. The base rent payments due for the Prior Premises were $0.4 million in 2020 and $0.4 million in 2021, net of certain rent abatement terms. We were also responsible for the payment of additional rent to cover our share of the annual operating expenses of the building, the annual tax expenses of the building and the annual utilities cost of the building.
On July 1, 2019, we recorded a $0.8 million lease liability for the Prior Lease, which was calculated as the present value of future lease payments to be made under the Prior Lease. A $0.6 million ROU asset was also recorded on July 1, 2019, which represents the difference between the lease liability and the remaining $0.2 million deferred credit for the reduction of the lease liability under the operating lease agreement with Landlord dated February 25, 2019.
On February 11, 2021, we entered into a lease agreement (the "Campus Point Lease") with ARE-SD Region No. 61, LLC (as successor in interest to ARE-SD Region No. 58, LLC) ("Campus Point Landlord"), for the lease of approximately 13,438 square feet of rentable area located at 4224 Campus Point Court, Suite 210, San Diego, California, 92121 (the "Campus Point Premises"). The commencement date of the Campus Point Lease was April 15, 2021. However, for accounting purposes the lease commencement date was February 11, 2021. We are using the Campus Point Premises as our new principal executive offices and as a laboratory for research and development, manufacturing and other related uses. The term of the Campus Point Lease (“Campus Point Initial Term”) is 60 months, ending April 30, 2026. The aggregate base rent due over the initial term of the Campus Point Lease is approximately $3.8 million. We are also responsible for the payment of additional amounts to cover our share of the annual operating expenses of the building, the annual tax expenses of the building and the utilities costs for the building.

On February 11, 2021, concurrently with entry into the Campus Point Lease, we entered into an Assignment and Assumption of Lease (the “Assignment Agreement”) with Turning Point Therapeutics, Inc. (“Assignee”) and a Consent to Assignment (the "Consent") with Landlord. Pursuant to the Assignment Agreement, we will assign all rights, title, and interest under the New Lease to Assignee and delivered the New Premises to Assignee on April 22, 2021. Pursuant to the Assignment Agreement, Assignee paid us $60,000 in non-refundable assignment consideration. Additionally, the Consent stipulates that we were not required to pay a fee pursuant to the Prior Lease in connection with the assignment.

The execution of the Campus Point Lease, Consent, and Assignment Agreement resulted in a modification which was not accounted for as a separate contract. Rather, we accounted for the three contracts with Campus Point Landlord in combination, as they were entered into at the same time and negotiated as a package to achieve the same commercial objective. We accounted for a $0.2 million reduction in the lease liability for the Prior Lease as a deferred credit that is amortized as a reduction to rent expense over the term of the Campus Point Lease. A lease liability of less than $0.1 million and ROU asset of less than $0.1 million remained with respect to the Prior Lease and was fully amortized as of April 30, 2021. On February 11, 2021, we recorded a $3.2 million lease liability for the Campus Point Lease, which was calculated as the present value of future lease payments to be made under the Campus Point Lease. A $3.0 million ROU asset was also recorded on February 11, 2021, which represents the difference between the lease liability and the $0.2 million deferred credit for the reduction of the lease liability under the Prior Lease.

20


Our future lease payments under operating leases at June 30, 2021 are as follows (in thousands):
Operating Leases
Remaining 2021$341 
2022754 
2023776 
2024800 
Thereafter1,101 
Total lease payments$3,772 
Less: amount representing interest
(519)
Present value of obligations under leases3,253 
Less: current portion
(