Form 4: Regulus Therapeutics CFO Disposes All Holdings Following Novartis Merger Completion

Regulus Therapeutics Inc.'s Chief Financial Officer, Crispina Calsada, has reported the disposition of all her common stock, performance stock units, and stock options following the completion of the acquisition by Novartis AG.

Summary

• Crispina Calsada, Chief Financial Officer of Regulus Therapeutics Inc. (RGLS), reported the disposition of all her beneficial ownership in the company's securities.
• The disposition occurred on June 25, 2025, as a result of the merger of Regulus Therapeutics Inc. with Redwood Merger Sub Inc., a wholly-owned indirect subsidiary of Novartis AG.
• Under the merger agreement, each share of Regulus common stock was converted into the right to receive $7.00 in cash (the 'Closing Amount') plus one contingent value right (CVR).
• Each CVR represents the right to receive an additional contingent payment of $7.00 in cash upon the achievement of a specified milestone, potentially bringing the total value per share to $14.00.
• Ms. Calsada disposed of 140,228 shares of common stock.
• 83,500 performance stock units (PSUs) were canceled and converted into cash equal to the product of the number of shares underlying the PSU and the Closing Amount, plus one CVR per share.
• Stock options with an exercise price less than the Closing Amount ('In-the-Money Options') were canceled and converted into cash equal to the difference between the Closing Amount and the exercise price, multiplied by the number of shares, plus one CVR per share.
• Stock options with an exercise price equal to or greater than the Closing Amount but less than $14.00 ('Out-of-the-Money Options') were canceled and converted into one CVR per share, with potential future cash payment if the CVR milestone is met.
• Following these transactions, Ms. Calsada holds 0 shares of common stock and 0 derivative securities in Regulus Therapeutics Inc.

Sentiment

Score: 7

Explanation: The sentiment is positive for shareholders as the company was acquired at a premium with a potential upside via CVRs. However, the contingent nature of the CVR introduces some uncertainty, preventing a higher score.

Positives

• Shareholders, including the reporting person, received a cash payment of $7.00 per share, representing a premium over the pre-merger stock price.
• The inclusion of a Contingent Value Right (CVR) provides an opportunity for shareholders to receive an additional $7.00 per share upon the achievement of a specific milestone, potentially increasing the total consideration to $14.00 per share.
• The merger provides liquidity and a defined exit for Regulus Therapeutics Inc. shareholders.

Negatives

• The reporting person, and all other shareholders, no longer hold direct equity in Regulus Therapeutics Inc., losing potential future upside beyond the merger consideration.
• The full $14.00 per share consideration is contingent on the achievement of a specific milestone for the CVR, meaning the additional $7.00 is not guaranteed.
• Stock options with exercise prices equal to or greater than the Closing Amount but less than $14.00 only received CVRs, with no immediate cash payment, and their value is entirely dependent on the CVR milestone.

Risks

• The Contingent Value Right (CVR) payment of $7.00 per share is contingent upon the achievement of a specific milestone, and there is no guarantee that this milestone will be met, meaning the additional payment may not be received.
• Out-of-the-Money Options will only receive a cash payment if the CVR milestone is met, and if no Milestone Payment is made, then no payments will be made with respect to these options.

Future Outlook

The future outlook for former Regulus Therapeutics Inc. shareholders who received Contingent Value Rights (CVRs) is dependent on the achievement of a specific milestone. If the milestone is met, CVR holders will receive an additional $7.00 in cash per CVR. If the milestone is not met, no further payment will be made for the CVRs.

Industry Context

This filing reflects the completion of an acquisition in the biotechnology sector, where larger pharmaceutical companies like Novartis AG often acquire smaller, innovative biotech firms to expand their pipelines and intellectual property. Such mergers are common strategies for growth and portfolio diversification in the highly competitive pharmaceutical industry.

Comparison to Industry Standards

• The acquisition price of $7.00 cash plus a $7.00 CVR (total potential $14.00) per share is a common structure in biotech M&A, allowing acquirers to mitigate risk by tying a portion of the payment to future performance milestones.
• The conversion of employee equity incentives (stock options, PSUs) into cash and CVRs is standard practice in mergers to ensure continuity of incentives or provide a payout for vested interests.
• The use of a tender offer followed by a short-form merger is a typical and efficient method for acquiring publicly traded companies in the U.S.

Stakeholder Impact

• Shareholders: Received cash consideration and CVRs for their shares, providing liquidity and potential future upside.
• Employees (holding options/PSUs): Their equity incentives were converted into cash and CVRs, providing a payout for their vested interests and aligning them with the CVR milestone.
• Regulus Therapeutics Inc. as an entity: Now operates as a wholly-owned subsidiary of Novartis AG, implying changes in operational and strategic direction under the new parent company.

Next Steps

• Achievement or non-achievement of the milestone specified in the CVR Agreement, which will determine if the additional $7.00 contingent payment is made.
• Novartis AG will integrate Regulus Therapeutics Inc. as a wholly-owned subsidiary.

Key Dates

Keywords

Regulus Therapeutics, RGLS, Novartis AG, Merger, Acquisition, SEC Form 4, Beneficial Ownership, Contingent Value Right, CVR, Stock Options, Performance Stock Units, Tender Offer, Biotechnology, Pharmaceuticals