Isis Reports Financial Results and Highlights for 2012

            Isis Reports Financial Results and Highlights for 2012

- Conference Call Webcast Thursday, February 28, 12:00 p.m. ET at
www.isispharm.com

PR Newswire

CARLSBAD, Calif., Feb. 28, 2013

CARLSBAD, Calif., Feb. 28, 2013 /PRNewswire/ -- Isis Pharmaceuticals, Inc.
(Nasdaq: ISIS) today announced its 2012 financial results and reviewed the
highlights of the year. Isis ended the year in a strong financial position
significantly outperforming both its pro forma net operating loss (NOL)
guidance and its cash guidance for the year. For the year ended December 31,
2012, Isis had an NOL of $60.4 million compared to $61.3 million for 2011.
Isis added a substantial amount of cash to its balance sheet throughout 2012,
ending the year with nearly $375 million. On a GAAP basis, Isis reported a
loss from operations of $26.1 million and $68.9 million for the three and
twelve months ended December 31, 2012, respectively, compared to $18.6 million
and $71.1 million for the same periods in 2011.

"Last month the FDA approved KYNAMRO™. KYNAMRO is the first systemic
antisense drug to be sold commercially. This is an important event for
patients with homozygous familial hypercholesterolemia, for Isis, and for our
antisense technology. KYNAMRO's approval for chronic use in patients who have
a severe and fatal disease highlights the potential of our technology to
create drugs that could provide benefit for patients," said B. Lynne Parshall,
chief operating officer of Isis. "In addition to KYNAMRO, we have a number of
promising new drugs that will report later-stage clinical data this year,
setting us up for an exciting year of pipeline activity."

"2012 was a strong year for Isis. We begin 2013 in a significantly improved
financial position with nearly $375 million in cash. Since the beginning of
2013, we have already received a $25 million milestone payment from Genzyme
and a $7.5 million milestone payment from GSK. With the commercial launch of
KYNAMRO and a maturing pipeline of drugs, we have many opportunities for
significant near-term revenue from partnerships while we are also setting the
stage for significant future revenue growth," said Elizabeth L. Hougen, chief
financial officer of Isis.

"In 2013, we are predicting another year of strong financial performance while
continuing to advance our pipeline. Although we are planning to have more than
a dozen drugs in later-stage clinical studies throughout the year, we are
projecting only a slight increase in our 2013 spending compared to 2012. As
such, we expect to end 2013 with a pro forma NOL in the mid $60 million range.
We are also projecting to end the year with more than $325 million in cash.
Our guidance is supported by our partnering successes in 2012. Because most
drugs are not profitable in their first year of commercialization, and because
it is too early in the year to predict the revenue trajectory of KYNAMRO, we
are being conservative in our projections by not including KYNAMRO profit
share revenue this year. We are pleased with the significant investment
Genzyme is making to ensure a successful KYNAMRO launch. This investment
should support strong revenue growth in the future. We are fortunate to have
Genzyme with its expertise in selling and marketing orphan drugs
commercializing KYNAMRO and we look forward to providing updates throughout
the year on KYNAMRO's commercial success," concluded Ms. Hougen.

Upcoming Key Milestones

  oReceive KYNAMRO marketing opinion from the European regulatory agency
  oInitiate a Phase 2/3 program of ISIS-SMN[Rx] in infants with spinal
    muscular atrophy
  oReport clinical data on ISIS-SMN[Rx] at the American Academy of Neurology
    meeting in March
  oReport clinical data on ISIS-CRP[Rx] in patients with rheumatoid arthritis
  oReport clinical data on ISIS-APOCIII[Rx] in patients with high
    triglycerides

Financial Results
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
release.

Revenue
Revenue for the three and twelve months ended December 31, 2012 was $19.9
million and $102.0 million, respectively, compared to $32.4 million and $99.1
million for the same periods in 2011. Isis' revenue fluctuates based on the
nature and timing of payments under agreements with Isis' partners, including
license fees, milestone-related payments and other payments. For example, in
2012, Isis recognized revenue from new sources in connection with the license
for ISIS-STAT3[Rx] which Isis granted to AstraZeneca under its recently
announced strategic alliance on RNA therapeutics for cancer, its three new
collaborations with Biogen Idec and the KYNAMRO FDA acceptance milestone from
Genzyme. At the same time, in 2012, Isis' revenue from amortization of the
upfront payments associated with the Genzyme collaboration ended as planned
midyear. 

Isis earned a $25 million milestone payment from Genzyme in January 2013 for
FDA approval of KYNAMRO and a $7.5 million milestone payment from GSK in
February 2013 for the initiation of the Phase 2/3 study of ISIS-TTR[Rx]. Isis
will reflect both of these milestone payments in its first quarter 2013
financial results.

Operating Expenses
On a pro forma basis, operating expenses for the three and twelve months ended
December 31, 2012 were $44.2 million and $162.4 million, respectively,
compared to $48.8 million and $160.3 million for the same periods in 2011. In
2012, Isis was able to advance and expand its pipeline while maintaining its
operating expenses essentially flat to 2011.

On a GAAP basis, Isis' operating expenses for the three and twelve months
ended December 31, 2012 were $46.0 million and $171.0 million, respectively,
compared to $51.0 million and $170.2 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). As
a result of the early redemption of the 2 ⅝% Notes, Isis recognized a $4.8
million loss primarily related to a non-cash write-off of the unamortized
portion of the debt discount and debt issuance costs.

Gain on Investment in Regulus Therapeutics Inc.
In October 2012, Regulus Therapeutics, Inc., a company Isis co-founded,
completed an initial public offering. In the fourth quarter, as a result of
the IPO, Isis recorded an $18.4 million gain to reflect the Company's change
in its ownership percentage in Regulus. Also in the fourth quarter, Isis
stopped using the equity method to account for its investment in Regulus and
instead began accounting for it at fair value. Isis now owns approximately
seven million shares, or 17%, of Regulus' common stock on a fully diluted
basis.

Net Loss
Isis reported a net loss of $2.6 million and $65.5 million for the three and
twelve months ended December 31, 2012, respectively, compared to $20.0 million
and $84.8 million for the same periods in 2011. Basic and diluted net loss
per share for the three and twelve months ended December 31, 2012 was $0.03
per share and $0.65 per share, compared to $0.20 per share and $0.85 per share
for the same periods in 2011. In 2012, Isis' net loss was significantly lower
than 2011 primarily due to the $18.4 million gain from its investment in
Regulus and the related $9.1 million tax benefit offset, in part, by an
increase in Isis' net operating loss, the $4.8 million loss on Isis' early
retirement of its 2 ⅝% Notes, and an increase in interest expense. Isis'
interest expense was higher than in 2011 due to additional non-cash interest
expense Isis recorded for the long-term liability associated with its primary
research and development facility and slightly higher interest expense related
to Isis' 2 ¾% Notes.

Balance Sheet
As of December 31, 2012, Isis had cash, cash equivalents and short-term
investments of $374.4 million compared to $343.7 million at December 31, 2011
and had working capital of $349.1 million at December 31, 2012 compared to
$284.0 million at December 31, 2011. During 2012, Isis received a substantial
amount of cash, including $96 million in upfront payments from Biogen Idec and
AstraZeneca, 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 its 2 ¾% Notes. Isis' working capital increased significantly in
2012 primarily due to the cash Isis received in 2012 and an increase in
current assets resulting from Isis' investment in Regulus because Isis is now
recording its investment at fair value. At December 31, 2012, the carrying
value of Isis' investment in Regulus was $33.6 million.

2013 Goals
"We expect 2013 to be a year of substantial growth and maturation for Isis.
We believe that the initial commercial launch of KYNAMRO will be successful
and we support Genzyme's ongoing development efforts for KYNAMRO with the
FOCUS FH study, which Genzyme is conducting under a special protocol
assessment with the FDA," continued Ms. Parshall. "Beyond KYNAMRO, we have a
number of drugs in our pipeline that will complete later-stage clinical
studies, which are designed to provide clear evidence that these drugs have
the potential to work in patients in numerous different diseases. In
addition, we plan to advance many other drugs in our pipeline, creating
additional opportunities for significant long-term revenue. And finally, we
expect to explore partnering opportunities that are the right fit for Isis and
designed to provide the most benefit to our programs and drugs, the best
balance of risk and commercial participation, while allowing us to continue to
do what we do best, drug discovery and early drug development."

In 2013, Isis plans to achieve the following goals itself and with its
partners:

  oTogether with Genzyme, Isis will continue to support KYNAMRO development,
    marketing and commercialization activities.

       oSupport commercial launch in the United States for patients with
         HoFH.
       oContinue enrollment in FOCUS FH.
       oPursue marketing approval in Europe for HoFH in the first half of
         2013.

  oMature its pipeline:

       oComplete and report late-stage clinical data from Phase 2 or Phase 3
         studies from up to nine drugs in its pipeline.
       oInitiate Phase 2/3 or Phase 3 studies on two or three drugs for
         severe and rare diseases.
       oInitiate Phase 2 studies on up to five drugs in its pipeline.

  oBroaden its pipeline by adding up to five new drugs.
  oContinue to successfully execute its business strategy to generate revenue
    and cash.

Business Highlights
"2012 was a year of significant achievements for Isis. Together with Genzyme
we successfully completed the final steps to bring KYNAMRO to the market in
the US for patients with HoFH. We continued to mature and expand our severe
and rare disease franchise, receiving orphan drug designation for two of the
drugs in this franchise. We reported clinical data on seven drugs in our
pipeline and advanced three drugs into Phase 2 clinical studies that we plan
to report data from this year, which could support significant licensing
opportunities for us," continued Ms. Parshall.

"And finally, we have been successful in implementing our business strategy
and establishing strategic partnerships that provide us with significant
value. We established three collaborations with Biogen Idec focused on
neurologic severe and rare diseases. Biogen Idec's extensive expertise and
experience in neurological diseases makes Biogen Idec an ideal partner to work
with us to build a neurologic disease franchise. In addition, we established
a collaboration with AstraZeneca that allows us to broaden and expand our
antisense drug discovery and development efforts and apply our antisense
technology to novel oncology targets with a global leader in cancer drug
development and commercialization," concluded Ms. Parshall.

Drug Development Highlights for 2012/ Early 2013

  oIsis and Genzyme were successful in bringing KYNAMRO to the market for
    patients with HoFH. These patients are at high cardiovascular risk and
    may not be able to reduce their LDL-C sufficiently with currently
    available lipid-lowering therapies.

       oKYNAMRO was approved for marketing in the United States by the US FDA
         for the treatment of patients with HoFH.

            +Isis received a total of $50 million in milestone payments from
              Genzyme related to the NDA acceptance in 2012 and marketing
              approval of KYNAMRO by the FDA in 2013.

       oGenzyme continues to enroll the FOCUS FH study, which is designed to
         provide 60-week safety and efficacy data in FH patients to support an
         additional regulatory filing. Genzyme reached an agreement with the
         FDA on the design of the FOCUS FH study via a Special Protocol
         Assessment, or SPA.
       oGenzyme submitted a request for re-examination of the EMA's negative
         opinion on the marketing authorization application for KYNAMRO and
         expects to report the outcome of the re-examination in the first half
         of 2013.
       oIsis received European GMP certification of its manufacturing
         facility for production of drug substance to support KYNAMRO
         commercial launch.
       oClinical investigators presented KYNAMRO data at important
         cardiovascular medical meetings throughout the year.

            +Dr. Raul Santos presented data from the long-term extension
              study of KYNAMRO at the International Symposium on
              Atherosclerosis. These data highlighted the long-term safety
              and efficacy of KYNAMRO in patients who have been treated with
              KYNAMRO.
            +Dr. Klaus Parhofer 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.
            +Dr. Sotirios Tsimikas presented an analysis of Lp(a) data from
              the KYNAMRO Phase 3 program at the European Atherosclerosis
              Society. These data demonstrated sustained reductions of Lp(a),
              an independent risk factor for cardiovascular disease.

  oIsis and its partners reported positive clinical data on seven drugs and
    Isis added four drugs to its pipeline.
  oIsis and its partners initiated Phase 2 or Phase 3 clinical studies on
    eight drugs.
  oIsis received Orphan Drug Designation and Fast Track Status in the US for
    ISIS-SMN[Rx] and ISIS-TTR[Rx]. Isis received Orphan Drug Designation in
    the EU for ISIS-SMN[Rx].

Corporate Highlights for 2012/ Early 2013

  oIsis formed three new strategic alliances with Biogen Idec to develop and
    commercialize antisense drugs for severe and rare and neurologic
    diseases. In total all three alliances are valued at up to $1.2 billion.

       oIsis entered into an alliance with Biogen Idec to develop and
         commercialize its drug, ISIS-SMN[Rx], to treat SMA. Isis received a
         $29 million upfront payment and is eligible to receive up to an
         additional $270 million in a license fee and milestone payments, and
         double-digit royalties on sales of ISIS-SMN[Rx].
       oIsis entered into an alliance with Biogen Idec to develop and
         commercialize a drug to treat myotonic dystrophy. Isis received a
         $12 million upfront payment and is eligible to receive up to an
         additional $259 million in a licensing fee and milestone payments.
         Isis is also eligible to receive double-digit royalties on product
         sales.
       oIsis entered into an alliance with Biogen Idec to discover and
         develop antisense drugs against three targets to treat neurological
         or neuromuscular disorders. Isis received a $30 million upfront
         payment and is eligible to receive up to another $200 million in a
         license fee and regulatory milestone payments per program. Isis is
         also eligible to receive double-digit royalties on product sales for
         each drug.

  oIsis formed a new strategic alliance with AstraZeneca to discover and
    develop antisense drugs against five cancer targets, which included a
    license to develop and commercialize ISIS-STAT3[Rx].

       oThe agreement comprises $31 million in upfront and near-term
         payments, including a $25 million payment Isis has received followed
         by a $6 million payment Isis is eligible to receive in the second
         quarter of 2013 assuming the research program is continuing. Isis is
         also eligible to receive milestone payments, license fees and
         royalties.
       oIsis added the first drug from its research collaboration,
         ISIS-AZ1[Rx], to the pipeline.

  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
    received a $2.5 million upfront payment.

       oIsis received a $7.5 million milestone payment upon initiation of the
         Phase 2/3 study for ISIS-TTR[Rx].
       oIsis 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 benefited as its partners advanced RNA-based technologies and
    products incorporating its technology.

       oIsis received $2.7 million from Alnylam as a result of Alnylam's
         licenses that included Isis' patents.
       oIsis received $1.3 million 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
    diluted basis, which is valued at approximately $36 million.
  oIsis completed a successful $201.3 million convertible debt financing.
    Isis used the majority of the proceeds of this financing to redeem its
    outstanding $162.5 million 2 ⅝% subordinated convertible debt.
  oThe securities class action lawsuit was voluntarily withdrawn and there
    are no pending lawsuits related to any violation of securities laws.
  oIsis and its collaborators published papers in leading scientific journals
    demonstrating the broad applicability of its technologies.

       oA paper in Nature demonstrating that an antisense compound
         selectively and rapidly reduced target RNA in skeletal muscle and
         alleviated disease in animal models of myotonic dystrophy.
       oA paper in Neuron demonstrating that an antisense compound reversed
         disease in animal models of Huntington's disease.
       oTwo 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.

Conference Call
At 12:00 p.m. Eastern Time today, February 28, 2013, Isis will conduct a live
webcast conference call to discuss this earnings release and related
activities. Interested parties may listen to the call by dialing 866-323-2841
and provide the conference identification number "90809537", 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 28 drugs to treat a wide variety of diseases with
an emphasis on cardiovascular, metabolic, severe and rare diseases, and
cancer. Isis' partner, Genzyme, is commercializing Isis' lead product,
KYNAMRO™, in the United States for the treatment of patients with HoFH.
Genzyme is also pursuing marketing approval of KYNAMRO in other markets,
including Europe. Isis' patents provide strong and extensive protection for
its drugs and technology. Additional information about Isis is available at
www.isispharm.com.

FORWARD-LOOKING STATEMENT
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 commercial potential
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
subsidiaries.

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,  Years ended,
                                     December 31,         December 31,
                                     2012      2011       2012       2011
Revenue:                             (unaudited)
 Research and development
revenue under collaborative          $19,015   $31,682    $99,100    $96,190
agreements
 Licensing and royalty revenue    858       721        2,949      2,896
Total revenue                        19,873    32,403     102,049    99,086
Expenses:
 Research and development         42,758    47,219     158,458    157,397
 General and administrative       3,234     3,800      12,515     12,789
Total operating expenses             45,992    51,019     170,973    170,186
Loss from operations                 (26,119)  (18,616)   (68,924)   (71,100)
Other income (expense):
Equity in net loss of Regulus        (267)     (1,279)    (1,406)    (3,554)
Therapeutics Inc.
Investment income                    359       518        1,844      2,414
Interest expense                     (4,817)   (5,108)    (21,152)   (16,732)
Gain on investments, net             1,446     4,449      1,465      4,182
Gain on investment in Regulus        18,356    -          18,356     -
Therapeutics Inc.
Loss on early retirement of debt     -         -          (4,770)    -
Loss before income tax benefit       (11,042)  (20,036)   (74,587)   (84,790)
(expense)
Income tax benefit (expense)         8,405     -          9,109      (11)
Net loss                             $(2,637)  $(20,036)  $(65,478)  $(84,801)
Basic and diluted net loss per       $(0.03)   $(0.20)    $(0.65)    $(0.85)
share
Shares used in computing basic and   101,246   99,763     100,576    99,656
diluted net loss per share



Isis Pharmaceuticals, Inc.

Reconciliation of GAAP to Pro Forma Basis:

Condensed Consolidated Operating Expenses and Loss From Operations

(In Thousands)
                                   Three months ended,   Years ended,

                                   December 31,          December 31,
                                   2012       2011       2012       2011
                                   (unaudited)           (unaudited)
As reported operating expenses     $45,992    $51,019    $170,973   $170,186
according to GAAP
Excluding compensation expense     (1,811)    (2,249)    (8,571)    (9,845)
related to equity awards
Pro forma operating expenses       $44,181    $48,770    $162,402   $160,341
As reported loss from operations   $(26,119)  $(18,616)  $(68,924)  $(71,100)
according to GAAP
Excluding compensation expense     (1,811)    (2,249)    (8,571)    (9,845)
related to equity awards
Pro forma loss from operations     $(24,308)  $(16,367)  $(60,353)  $(61,255)



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
(In Thousands)
                                                    December 31,  December 31,
                                                    2012          2011
Assets:
 Cash, cash equivalents and short-term             $374,446      $343,664
investments
 Investment in Regulus Therapeutics Inc.           33,622        -
 Other current assets                              15,370        16,475
 Property, plant and equipment, net                91,084        96,615
 Other assets                                      31,164        28,140
 Total assets                                   $545,686      $484,894
Liabilities and stockholders' equity:
 Other current liabilities                         $38,397       $39,528
 Current portion of deferred contract revenue      35,925        36,584
 2 3/4% convertible senior notes                   143,990       -
 2 5/8% convertible subordinated notes             -             141,448
 Long-term obligations, less current portion       77,952        74,002
 Investment in Regulus Therapeutics Inc.           -             4,424
 Long-term deferred contract revenue               66,656        17,474
 Stockholders' equity                              182,766       171,434
 Total liabilities and stockholders' equity      $545,686      $484,894



SOURCE Isis Pharmaceuticals, Inc.

Website: http://www.isispharm.com
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