Isis Reports Financial Results and Highlights for Third Quarter 2012
- Conference Call Webcast Tuesday, November 6, 11:30 a.m. ET at
CARLSBAD, Calif., Nov. 6, 2012
CARLSBAD, Calif., Nov. 6, 2012 /PRNewswire/ --Isis Pharmaceuticals, Inc.
(NASDAQ: ISIS) today reported a pro forma net operating loss (NOL) of $26.0
million and $36.0 million for the three and nine months ended September 30,
2012, respectively, compared to a pro forma NOL of $20.0 million and $44.9
million for the same periods in 2011. The Company ended the third quarter of
2012 with $343.6 million in cash.
"We have had a very successful year.With a number of exciting events on the
horizon, the remainder of 2012 promises to be equally eventful.Of course, the
most notable events this year are associated with KYNAMRO™.We are pleased
with the positive recommendation from the FDA's advisory committee for KYNAMRO
and look forward to the FDA's decision early next year.We believe KYNAMRO
could have a profound impact on the lives of patients with homozygous FH, who
are at extreme cardiovascular risk and are in need of new therapeutic
options.We look forward to bringing this important new medicine to these
patients," said B. Lynne Parshall, Chief Operating Officer and Chief Financial
Officer at Isis.
"While KYNAMRO is the most notable of our successes, we have had many
achievements across our pipeline.Most recently, we have completed key steps
to move two of our severe and rare disease drugs toward commercial markets.We
initiated the next clinical study in patients with spinal muscular atrophy for
our drug, ISIS-SMN[Rx], which we partnered with Biogen Idec earlier this
year.This study will be a relatively short study and will position us to
initiate a registration-directed Phase 2/3 study next year. In addition, we
and GSK amended the development plan for ISIS-TTR[Rx] to employ a more
efficient route to the market.We plan to initiate the Phase 2/3 study
evaluating ISIS-TTR[Rx] in patients with TTR amyloidosis later this year. Both
of these drugs have the potential for substantial commercial markets within
the next five years and could significantly change the lives of patients in
need," continued Ms. Parshall."We also benefit from our investments in our
satellite companies, like Regulus, which recently completed an initial public
offering, enabling it to be financially sustainable without the need for
funding from us and increasing the value of our assets."
Potential Upcoming Key Milestones
oReport clinical data from multiple drugs in Isis' pipeline
oInitiate a Phase 2/3 study of ISIS-TTR[Rx] in patients with familial
oReceive marketing approval of KYNAMRO in the United States and Europe
oEarn a $25 million milestone payment from Genzyme following FDA marketing
approval for KYNAMRO
On a GAAP basis, Isis reported a loss from operations of $28.0 million and
$42.8 million for the three and nine months ended September 30, 2012,
respectively, compared to a loss from operations of $22.3 million and $52.5
million for the same periods in 2011.
All pro forma amounts referred to in this press release exclude non-cash
compensation expense related to equity awards. Please refer to the
reconciliation of pro forma and GAAP measures, which is provided later in this
Revenue for the three and nine months ended September 30, 2012 was $11.6
million and $82.2 million, respectively, compared to $20.7 million and $66.7
million for the same periods in 2011.Isis' revenue fluctuates based on the
nature and timing of payments under agreements with the Company's partners,
including license fees, milestone-related payments and other payments. For
example, Isis' revenue in the first nine months of 2012 was significantly
higher than in 2011 primarily due to the $25 million milestone payment the
Company earned from Genzyme for FDA acceptance of the KYNAMRO NDA.Also in the
first nine months of 2012, Isis sold approximately $11 million of drug
substance to Genzyme to support the planned commercial launch of KYNAMRO and
began recognizing revenue from the $41 million in upfront payments the Company
received from the partnerships it entered into with Biogen Idec this year.
These increases were partially offset when the amortization of the upfront
payments associated with the Genzyme collaboration ended in May 2012.
On a pro forma basis, operating expenses for the three and nine months ended
September 30, 2012 were $37.6 million and $118.2 million, respectively,
compared to $40.7 million and $111.6 million for the same periods in 2011.The
moderately higher expenses in the first nine months of 2012 were primarily due
to higher development costs associated with Isis' maturing pipeline of drugs
offset by lower development expenses related to KYNAMRO because Genzyme is now
sharing these expenses equally with Isis until KYNAMRO is profitable.Genzyme
is paying all of the marketing and selling expenses until KYNAMRO is
On a GAAP basis, Isis' operating expenses for the three and nine months ended
September 30, 2012 were $39.6 million and $125.0 million, respectively,
compared to $43.0 million and $119.2 million for the same periods in 2011.
Early Retirement of Debt
In August 2012, Isis issued $201.3 million of 2 ¾% Convertible Senior Notes
due 2019 (2 ¾% Notes).In September 2012, Isis used a substantial portion of
the net proceeds from the issuance of these notes to redeem the entire $162.5
million of the Company's 2 ⅝% Convertible Subordinated Notes (2 ⅝% Notes), at
a redemption price plus accrued interest of $164.0 million.The carrying value
of the 2 ⅝% Notes on Isis' balance sheet included a discount based on the
estimated fair value of a similar debt instrument without the conversion
feature.Isis was amortizing this discount over the expected life of the debt
as additional non-cash interest expense.As a result of the early redemption
of the 2 ⅝% Notes, Isis recognized a $4.8 million loss in the third quarter of
2012.A significant portion of the loss, or $3.6 million, was non-cash and
related to the unamortized debt discount and debt issuance costs while the
remainder of the loss was related to a $1.2 million early redemption premium
Isis paid to the holders of the 2 ⅝% Notes.
Isis reported a net loss of $37.6 million and $62.8 million for the three and
nine months ended September 30, 2012, respectively, compared to $26.9 million
and $64.8 million for the same periods in 2011.Basic and diluted net loss per
share for the three and nine months ended September 30, 2012 was $0.37 per
share and $0.63 per share, compared to $0.27 per share and $0.65 per share for
the same periods in 2011.Isis' net loss for the first nine months of 2012
decreased slightly compared to the same period in 2011 primarily due to a
decrease in Isis' net operating loss offset, in part, by the $4.8 million loss
on the Company's early retirement of its 2 ⅝% Notes and additional non-cash
interest expense the Company recorded for the long-term liability associated
with its primary research and development facility.
As of September 30, 2012, Isis had cash, cash equivalents and short-term
investments of $343.6 million compared to $343.7 million at December 31, 2011
and had working capital of $310.0 million at September 30, 2012 compared to
$284.0 million at December 31, 2011.In the first nine months of 2012, Isis
received $41 million in upfront payments from Biogen Idec, a $25 million
milestone payment from Genzyme for FDA acceptance of the KYNAMRO NDA, and
approximately $30 million in net proceeds from Isis' issuance of the 2 ¾%
Notes after deducting offering fees and expenses and the redemption of the 2
⅝% Notes. Isis recorded the 2 ¾% Notes on its balance sheet at a discount
based on the estimated fair value of a similar debt instrument without the
conversion feature. Isis is amortizing this discount over the life of the debt
as additional non-cash interest expense.
Investment in Regulus Therapeutics Inc.
In October 2012, Regulus Therapeutics, Inc., a company co-founded by Isis,
completed an initial public offering of approximately 12.7 million shares of
its common stock at $4.00 per share. Isis purchased $3.0 million of Regulus'
common stock at the offering price and now owns approximately 7 million
shares, or 17%, of Regulus' common stock on a fully diluted basis. Beginning
in the fourth quarter, Isis will no longer use the equity method to account
for its investment in Regulus because Isis now owns less than 20% of Regulus'
common stock and no longer has significant influence over the operating and
financial policies of Regulus.Instead, Isis will account for its investment
in Regulus at fair value by adjusting the value to reflect fluctuations in
Regulus' stock price each reporting period.In the fourth quarter, Isis will
record a significant gain to reflect the change in its ownership percentage in
"With a pipeline of more than two dozen drugs in development, we have multiple
opportunities for pipeline news.A number of our drugs will complete
first-in-man studies this year, and we will share that data with you as it
becomes available.We also plan to advance several drugs into later-stage
clinical studies.These are drugs, like our TTR drug, that could have rapid
routes to the market in orphan patient populations who have limited treatment
options.In addition, as we have done every year for the past several years,
we plan to add three to five new drugs to our pipeline. In short, we are on
track to end the year with many significant accomplishments that demonstrate
the therapeutic potential of our drugs and the productivity of our
"We encourage the advancement of antisense drugs and support innovation in
antisense technology, in part through our satellite company strategy, which
allows us to work with a consortium of smaller companies in areas outside of
our core focus. Often, the investments we make in our satellite company
partners are not monetary, but rather, we provide our satellite company
partners access to our intellectual property, expertise in antisense
technology and manufacturing support in exchange for company equity, milestone
payments and future royalties as programs advance toward the market. Regulus
is a great example of the value of this strategy," commented Ms. Parshall."We
co-founded Regulus based on our know-how and clinical advances with antisense
drugs and applied this knowledge to the field of microRNAs. Last month
Regulus completed an initial public offering, which we supported, bringing our
ownership in Regulus to approximately seven million shares of Regulus' common
stock, which is currently valued at $35 million."
"In closing, 2012 has already been a very successful year, not just with our
pipeline and with KYNAMRO, but also financially.A key goal for us this year
was to refinance our existing debt on favorable terms.By taking advantage of
the favorable market conditions and the considerable interest in Isis, we
successfully completed a private placement of $201.3 million of 2 ¾%
Convertible Senior Notes at an excellent interest rate and conversion
price.More importantly, we used the proceeds from this placement to redeem
the entire $162.5 million of our 2 ⅝% Convertible Subordinated Notes.The
refinancing allowed us to take advantage of favorable market conditions to
strengthen our balance sheet," continued Ms. Parshall.
Corporate and Drug Development Highlights
oKYNAMRO continues to advance in development and move closer to the market
for patients with severe forms of familial hypercholesterolemia (FH;
homozygous FH and severe heterozygous FH) through regulatory approval and
with the FOCUS FH study.
oThe FDA's Endocrinologic and Metabolic Drugs Advisory Committee voted
9 to 6 that Genzyme had provided sufficient efficacy and safety data
to support the marketing of KYNAMRO for the treatment of patients
with homozygous FH.
oDr. Klaus Parhofer, a clinical investigator, presented an analysis of
data from the KYNAMRO Phase 3 study in patients with severe
heterozygous FH at the European Society of Cardiology.These data
highlighted the potential of KYNAMRO to reduce the need for apheresis
by lowering LDL-C values below the thresholds for apheresis
eligibility in patients with severe heterozygous FH.
oIsis received European GMP certification of its manufacturing
facility for production of drug substance to support KYNAMRO
oIsis initiated a Phase 2 study on ISIS-FXI[Rx] in patients undergoing
total knee replacement surgery and a Phase 1b/2a study on ISIS-SMN[Rx] in
children with spinal muscular atrophy.
oIsis and GlaxoSmithKline amended the clinical development plan and
financial terms relating to ISIS-TTR[Rx] to support an accelerated
development plan for the drug.As a result of the revised agreement, Isis
will receive a $2.5 million upfront payment and will receive $7.5 million
upon initiation of the Phase 2/3 study for ISIS-TTR[Rx].Isis is also
eligible to earn an additional $50 million in pre-licensing milestone
payments to support the ISIS-TTR[Rx] Phase 2/3 study.
oIsis reported preliminary Phase 1 data on ISIS-STAT3[Rx] in patients with
cancer and initiated a Phase 2 study evaluating ISIS-STAT3[Rx] in patients
with advanced lymphoma.
oIsis and collaborators published a paper in Nature demonstrating that an
antisense compound selectively and rapidly reduced target RNA in skeletal
muscle and alleviated disease in animal models of muscular dystrophy type
oIsis and collaborators published two papers in the journal Cell
demonstrating that single-stranded RNA-like antisense technology can
activate the RNAi pathway and inhibit the expression of targeted genes.
oIsis benefits from its partners as they advance RNA-based technologies and
products that incorporate Isis' technology resulting in financial benefits
as these assets mature.
oIsis earned $2.7 million from Alnylam as a result of Alnylam's
licenses that included Isis' patents.
oRegulus formed a strategic alliance with AstraZeneca for the
discovery, development and commercialization of microRNA
oRegulus formed a strategic alliance with Biogen Idec to identify
microRNAs as biomarkers for multiple sclerosis.
oIsis received a $1.25 million payment from Pfizer triggered by
Pfizer's decision to advance EXC 001 into a Phase 2 study.
oRegulus Therapeutics completed an initial public offering and is now
traded on The NASDAQ Global Market under the ticker RGLS. Isis purchased
$3 million of Regulus' common stock at the offering price and remains a
significant shareholder with approximately 17% ownership on a fully
oIsis completed a successful offering of $201.3 million of 2 ¾% Convertible
Senior Notes. Isis used the proceeds of this offering to redeem the
entire $162.5 million of 2 ⅝% Convertible Subordinated Notes.
At 11:30 a.m. Eastern Time today, November 6, Isis will conduct a live webcast
conference call to discuss this earnings release and business
highlights.Interested parties may listen to the call by dialing 800-237-9752
and refer to passcode "ISIS 2012," or access the webcast at
www.isispharm.com.A webcast replay will be available for a limited time at
the same address.
About Isis Pharmaceuticals, Inc.
Isis is exploiting its leadership position in antisense technology to discover
and develop novel drugs for its product pipeline and for its partners.Isis'
broad pipeline consists of 25 drugs to treat a wide variety of diseases with
an emphasis on cardiovascular, metabolic, severe and rare diseases, and
cancer.Isis' partner, Genzyme, plans to commercialize Isis' lead product,
KYNAMRO, in the United States and Europe following regulatory approval.Isis'
patents provide strong and extensive protection for its drugs and technology.
Additional information about Isis is available at www.isispharm.com.
Forward Looking Statements
This press release includes forward-looking statements regarding Isis
Pharmaceuticals' financial position and outlook, Isis' business, and the
therapeutic and commercial potential of Isis' technologies and products in
development.Any statement describing Isis' goals, expectations, financial or
other projections, intentions or beliefs, including the planned
commercialization of KYNAMRO, is a forward-looking statement and should be
considered an at-risk statement. Such statements are subject to certain risks
and uncertainties, particularly those inherent in the process of discovering,
developing and commercializing drugs that are safe and effective for use as
human therapeutics, and in the endeavor of building a business around such
drugs. Isis' forward-looking statements also involve assumptions that, if
they never materialize or prove correct, could cause its results to differ
materially from those expressed or implied by such forward-looking
statements. Although Isis' forward-looking statements reflect the good faith
judgment of its management, these statements are based only on facts and
factors currently known by Isis. As a result, you are cautioned not to rely
on these forward-looking statements. These and other risks concerning Isis'
programs are described in additional detail in Isis' annual report on Form
10-K for the year ended December 31, 2011 and its most recent quarterly report
on Form 10-Q, which are on file with the SEC. Copies of these and other
documents are available from the Company.
In this press release, unless the context requires otherwise, "Isis,"
"Company," "we," "our," and "us" refers to Isis Pharmaceuticals and its
Isis Pharmaceuticals® is a registered trademark of Isis Pharmaceuticals,
Inc.Regulus Therapeutics™ is a trademark of Regulus Therapeutics
Inc.KYNAMRO™ is a trademark of Genzyme Corporation.
ISIS PHARMACEUTICALS, INC.
SELECTED FINANCIAL INFORMATION
Condensed Consolidated Statements of Operations
(In Thousands, Except Per Share Data)
Three months ended, Nine months ended,
September 30, September 30,
2012 2011 2012 2011
Revenue: (unaudited) (unaudited)
Research and development
revenue under collaborative $11,127 $20,189 $80,085 $64,508
Licensing and royalty revenue 474 524 2,091 2,175
Total revenue 11,601 20,713 82,176 66,683
Research and development 36,551 39,924 115,700 110,178
General and administrative 3,096 3,105 9,281 8,989
Total operating expenses 39,647 43,029 124,981 119,167
Loss from operations (28,046) (22,316) (42,805) (52,484)
Other income (expense):
Equity in net loss of Regulus - (386) (1,139) (2,275)
Investment income 408 575 1,485 1,896
Interest expense (5,937) (4,773) (16,335) (11,624)
Gain (loss) on investments, net - 18 19 (267)
Loss on early retirement of debt (4,770) - (4,770) -
Loss before income tax benefit (38,345) (26,882) (63,545) (64,754)
Income tax benefit (expense) 706 - 704 (11)
Net loss $(37,639) $(26,882) $(62,841) $(64,765)
Basic and diluted net loss per $(0.37) $(0.27) $(0.63) $(0.65)
Shares used in computing basic 100,680 99,687 100,351 99,620
and diluted net loss per share
Isis Pharmaceuticals, Inc.
Reconciliation of GAAP to Pro Forma Basis:
Condensed Consolidated Operating Expenses and Loss From Operations
Three months ended, Nine months ended,
September 30, September 30,
2012 2011 2012 2011
As reported operating expenses $39,647 $43,029 $124,981 $119,167
according to GAAP
Excluding compensation (2,034) (2,364) (6,761) (7,596)
expense related to equity awards
Pro forma operating expenses $37,613 $40,665 $118,220 $111,571
As reported loss from operations $(28,046) $(22,316) $(42,805) $(52,484)
according to GAAP
Excluding compensation expense (2,034) (2,364) (6,761) (7,596)
related to equity awards
Pro forma loss from operations $(26,012) $(19,952) $(36,044) $(44,888)
Reconciliation of GAAP to Pro Forma Basis
As illustrated in the Selected Financial Information in this press release,
pro forma operating expenses and pro forma loss from operations were adjusted
from GAAP to exclude compensation expense related to equity awards, which are
non-cash. Isis has regularly reported non-GAAP measures for operating expenses
and loss from operations as pro forma results. These measures are provided as
supplementary information and are not a substitute for financial measures
calculated in accordance with GAAP. Isis reports these pro forma results to
better enable financial statement users to assess and compare its historical
performance and project its future operating results and cash flows. Further,
the presentation of Isis' pro forma results is consistent with how Isis'
management internally evaluates the performance of its operations.
Isis Pharmaceuticals, Inc.
Condensed Consolidated Balance Sheets
September 30, December 31,
Cash, cash equivalents and short-term $343,573 $343,664
Other current assets 18,013 16,475
Property, plant and equipment, net 92,598 96,615
Other assets 31,497 28,140
Total assets $485,681 $484,894
Liabilities and stockholders' equity:
Other current liabilities $28,174 $39,528
Current portion of deferred contract revenue 23,427 36,584
2 3/4% convertible senior notes 142,500 -
2 5/8% convertible subordinated notes - 141,448
Long-term obligations, less current portion 78,779 74,002
Investment in Regulus Therapeutics Inc. 5,563 4,424
Long-term deferred contract revenue 36,961 17,474
Stockholders' equity 170,277 171,434
Total liabilities and stockholders' equity $485,681 $484,894
SOURCE Isis Pharmaceuticals, Inc.
Contact: D. Wade Walke, Ph.D., Executive Director, Corporate Communications
and Investor Relations, +1-760-603-2741, or Amy Blackley, Ph.D., Associate
Director, Corporate Communications, +1-760-603-2772
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