Isis Reports Financial Results and Highlights for Third Quarter 2013
-Improved 2013 financial guidance
-Conference Call Webcast Tuesday, November 5, 11:30 a.m. ET at
CARLSBAD, Calif., Nov. 5, 2013
CARLSBAD, Calif., Nov. 5, 2013 /PRNewswire/ --Isis Pharmaceuticals, Inc.
(Nasdaq: ISIS) today reported a pro forma net operating loss (NOL) of $22.7
million and $23.5 million for the three and nine months ended September 30,
2013, respectively, compared to a pro forma NOL of $26.0 million and $36.0
million for the same periods in 2012. On a GAAP basis, Isis reported a loss
from operations of $25.5 million and $31.8 million for the three and nine
months ended September 30, 2013, respectively, compared to a loss from
operations of $28.0 million and $42.8 million for the same periods in 2012.
Isis increased its cash position during the first nine months of 2013, ending
September with $671 million in cash compared to $374 million at December 31,
2012. The substantial increase in the Company's cash position was primarily
due to the equity offering it completed in the second quarter and cash
received from its partners in the first nine months of 2013, including the
$100 million upfront payment Isis received from its recently announced
strategic collaboration with Biogen Idec.
"Our increasingly strong financial performance is a result of meeting key
milestones in our partnerships, adding new partners and expanding existing
relationships. Our financial success is also driven by achievements from our
expanding and maturing pipeline, as well as continuous improvements in our
technology platform. We have completed key steps to move two important drugs,
ISIS-APOCIII[Rx] and ISIS-SMN[Rx], into Phase 3 studies early next year. In
addition, our Phase 2/3 study for ISIS-TTR[Rx] is enrolling on schedule, and
we are pleased with the progress we and our partner, GlaxoSmithKline, are
making to advance this drug towards the market," said B. Lynne Parshall, chief
operating officer of Isis.
"The effective execution of our business strategy and the success of the drugs
in our pipeline have contributed significantly to our financial performance
this year. Already this year we have received $200 million from our
partners," said Elizabeth L. Hougen, chief financial officer at Isis.
"Because of our strong financial performance this year, we will substantially
exceed our year-end cash guidance. We are now projecting to end the year with
more than $625 million in cash. We are also reducing our projected pro forma
NOL by more than 30 percent to a pro forma NOL in the mid $40 million range."
Upcoming Key Milestones
oPresent the complete Phase 2 clinical data for ISIS-APOCIII[Rx ]and Phase
1 clinical data for ISIS-APO(a)[Rx] at the American Heart Association.
oReport data from two clinical studies evaluating ISIS-SMN[Rx] in children
and in infants with spinal muscular atrophy (SMA).
oInitiate Phase 3 programs on ISIS-APOCIII[Rx ]and ISIS-SMN[Rx].
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, 2013 was $23.6
million and $105.0 million, respectively, compared to $11.6 million and $82.2
million for the same periods in 2012. 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,
Isis earned more than $60 million in revenue from milestone and licensing
payments in the first nine months of 2013 including:
o$25 million from Genzyme when the FDA approved the KYNAMRO™ NDA;
o$10 million when AstraZeneca added a second development candidate,
ISIS-AR[Rx], to its collaboration;
o$16.5 million from GlaxoSmithKline because Isis initiated the Phase 2/3
study of ISIS-TTR[Rx] and advanced ISIS-GSK3[Rx] in development;
o$5.5 million from Biogen Idec because Isis advanced the Phase 2 study of
ISIS-SMN[Rx ]in infants; and
o$3.5 million when Xenon licensed XEN701.
Isis' revenue in the first nine months of 2013 also included more than $33
million in revenue Isis earned from its alliances with AstraZeneca, Biogen
Idec, GlaxoSmithKline and Roche.
In September 2013, Isis and Biogen Idec entered into a new strategic neurology
collaboration. As part of this collaboration, Isis received a $100 million
upfront payment, which Isis will begin amortizing into revenue over six years
starting in October 2013. In addition, in the fourth quarter of 2013, Isis has
already earned $10 million in a milestone payment for advancing ISIS-DMPK[Rx]
As projected, Isis' pro forma operating expenses of $46.3 million and $128.5
million for the three and nine months ended September 30, 2013, respectively,
were moderately higher compared to $37.6 million and $118.2 million for the
same periods in 2012 primarily due to higher development costs associated with
the progression of several of the drugs in Isis' pipeline into later stage
On a GAAP basis, Isis' operating expenses for the three and nine months ended
September 30, 2013 were $49.1 million and $136.8 million, respectively,
compared to $39.6 million and $125.0 million for the same periods in 2012.
Income Tax Benefit
Isis recognized a tax benefit of $5.2 million and $6.4 million for the three
and nine months ended September 30, 2013, respectively, compared to $706,000
and $704,000 for the same periods in 2012. Isis' tax benefit in 2013 is
primarily related to an increase in the Company's unrealized gain on its
investment in Regulus, which reflects the increase in Regulus' stock price
Isis reported a net loss of $24.6 million and $36.4 million for the three and
nine months ended September 30, 2013, respectively, compared to $37.6 million
and $62.8 million for the same periods in 2012. Basic and diluted net loss
per share for the three and nine months ended September 30, 2013 were $0.21
per share and $0.33 per share, respectively, compared to $0.37 per share and
$0.63 per share for the same periods in 2012. Isis' net loss for the nine
months ended September 30, 2013 decreased compared to 2012 primarily due to
the increase in the amount of revenue Isis earned from its partners in the
first nine months of 2013, offset in part, by a moderate increase in operating
expenses. In addition, Isis' income tax benefit in 2013 increased by $5.7
million compared to 2012. Also contributing to the decrease in Isis' net loss
was a $4.8 million loss on the early retirement of its 2 ⅝% convertible
subordinated notes the Company recorded in 2012 when it successfully
refinanced its convertible debt.
As of September 30, 2013, Isis had cash, cash equivalents and short-term
investments of $670.9 million compared to $374.4 million at December 31, 2012
and working capital of $660 million at September 30, 2013 compared to $349.1
million at December 31, 2012. Contributing to the substantial increase in the
Company's cash in the first nine months of 2013 was the approximately $210
million from the issuance of its common stock and nearly $200 million in
payments from its partners, including the $100 million upfront payment Isis
received from its recently announced strategic collaboration with Biogen
Idec. Isis' working capital increased in 2013 primarily due to the increase
in cash and the increase in the value of Isis' ownership in Regulus. At
September 30, 2013, the carrying value of Isis' investment in Regulus
increased to $65.0 million compared to $33.6 million at December 31, 2012.
This increase demonstrates the value that Isis is realizing from its satellite
"So far in 2013, we have had a number of successes in our pipeline. We have
announced multiple sets of positive clinical data for both ISIS-APOCIII[Rx]
and ISIS-SMN[Rx]. And our Phase 3 program for ISIS-TTR[Rx] is on track to
complete enrollment next year. Beyond these late-stage assets, we have added
new drugs into our pipeline, including ISIS-DMPK[Rx] to treat patients with
myotonic dystrophy and ISIS-ANGPTL3[Rx] to treat patients with
hyperlipidemia. We have initiated new clinical studies on six drugs,
including Phase 2 studies for two of our drugs to treat type 2 diabetes in our
metabolic franchise. This maturing group of assets represents the next set of
commercial opportunities beyond our current late-stage drugs," continued Ms.
"The maturation of our pipeline and successes of our antisense technology have
allowed us to expand existing partnerships as well as add new partners. These
relationships allow us to broaden our therapeutic efforts into disease areas
that are outside of our internal expertise. For example, our broad strategic
alliance with Biogen Idec couples Biogen Idec's extensive resources and
expertise in neurological diseases with our antisense technology. Together we
plan to create a franchise of novel treatments for neurological disorders.
The benefits Biogen Idec brings to our efforts in neurological diseases are
evident in our SMA program, which we partnered with Biogen Idec early last
year. In less than two years, this program is poised to begin Phase 3 early
next year," continued Ms. Parshall.
"We expect the pipeline momentum we have created in 2013 to continue as we
advance our pipeline. The progress of our partnered programs should continue
to provide us with a steady stream of milestone payments as these programs
mature and as we add new partnered programs to the pipeline," concluded Ms.
Drug Development Highlights
oIsis reported encouraging Phase 1 and Phase 2 data on a number of
antisense drugs, demonstrating good safety and tolerability profiles with
encouraging results in measures of efficacy in multiple disease settings.
oIsis reported multiple Phase 2 data sets on ISIS-APOCIII[Rx]
demonstrating that ISIS-APOCIII[Rx] works in patients with high to
severely high triglycerides, including patients with FCS. Treatment
with ISIS-APOCIII[Rx] resulted in significant reductions of apoC-III
and triglycerides, and significant increases in HDL-C.
oDr. Kathy Swoboda presented follow up data from a single-dose
open-label Phase 1 study of ISIS-SMN[Rx] in children with SMA at the
International Congress of the World Muscle Society. In this study,
data suggest that children from the two highest doses continued to
show improvements in muscle function tests up to 14 months after a
single injection of ISIS-SMN[Rx].
oIsis reported Phase 2 data on ISIS-CRP[Rx] in patients with
rheumatoid arthritis (RA).
oIsis continued to mature its pipeline by advancing drugs in development
and initiating new clinical studies.
oIsis advanced the Phase 2/3 study of ISIS-TTR[Rx], a drug to treat
patients with familial amyloid polyneuropathy. As a result, Isis
earned $2 million from GlaxoSmithKline.
oIsis advanced the Phase 2 study of ISIS-SMN[Rx] in infants with SMA.
As a result, Isis earned a $2 million milestone payment from Biogen
oIsis initiated Phase 2 studies on ISIS-GCGR[Rx] and ISIS-PTP1B[Rx],
antisense drugs designed to control glucose in patients with type 2
oIsis and its partners continued to add new drugs to the development
oIsis and Biogen Idec selected a development candidate, ISIS-DMPK[Rx],
for the treatment of patients with myotonic dystrophy type I. Upon
initiation of IND-enabling studies, Isis earned a $10 million
milestone payment from Biogen Idec.
oGlaxoSmithKline added a development candidate, ISIS-GSK3[Rx ]to its
collaboration with Isis. Isis earned $7 million in milestone
payments from GlaxoSmithKline as a result.
oRegulus nominated a development candidate, RG-101, to move forward in
development for the treatment of patients with hepatitis C virus.
This is the first drug targeting a microRNA that Regulus has moved
oIsis formed a broad strategic alliance with Biogen Idec to discover and
develop antisense drugs to treat neurological disorders.
oIsis received a $100 million upfront payment from Biogen Idec as part
of the collaboration that combines Biogen Idec's expertise in
neurology with Isis' leadership in antisense technology to develop
novel therapies to treat neurological diseases. Isis is eligible to
receive substantial milestone payments, license fees and royalty
payments for all treatments developed through this collaboration.
At 11:30 a.m. Eastern Time today, November 5, 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
866-652-5200, 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 30 drugs to treat a wide variety of diseases with
an emphasis on cardiovascular, metabolic, severe and rare diseases, including
neurological disorders, and cancer. Isis' partner, Genzyme, is
commercializing Isis' lead product, KYNAMRO™, in the United States for the
treatment of patients with HoFH. Isis' patents provide strong and extensive
protection for its drugs and technology. Additional information about Isis is
available at www.isispharm.com.
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, 2012, 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,
2013 2012 2013 2012
Revenue: (unaudited) (unaudited)
Research and development
revenue under collaborative $23,383 $11,127 $102,918 $80,085
Licensing and royalty revenue 202 474 2,118 2,091
Total revenue $23,585 11,601 105,036 82,176
Research, development and 45,660 36,551 126,603 115,700
General and administrative 3,430 3,096 10,241 9,281
Total operating expenses 49,090 39,647 136,844 124,981
Loss from operations (25,505) (28,046) (31,808) (42,805)
Other income (expense):
Equity in net loss of Regulus - - - (1,139)
Investment income 434 408 1,400 1,485
Interest expense (4,867) (5,937) (14,470) (16,335)
Gain on investments, net 175 - 2,073 19
Loss on early retirement of debt - (4,770) - (4,770)
Loss before income tax benefit (29,763) (38,345) (42,805) (63,545)
Income tax benefit 5,193 706 6,437 704
Net loss $(24,570) $(37,639) $(36,368) $(62,841)
Basic and diluted net loss per $(0.21) $(0.37) $(0.33) $(0.63)
Shares used in computing basic 115,263 100,680 108,608 100,351
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,
2013 2012 2013 2012
As reported operating expenses $49,090 $39,647 $136,844 $124,981
according to GAAP
expense related to equity (2,812) (2,034) (8,318) (6,761)
Pro forma operating expenses $46,278 $37,613 $128,526 $118,220
As reported loss from operations $(25,505) $(28,046) $(31,808) $(42,805)
according to GAAP
Excluding compensation expense (2,812) (2,034) (8,318) (6,761)
related to equity awards
Pro forma loss from operations $(22,693) $(26,012) $(23,490) $(36,044)
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 results
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 $670,898 $374,446
Investment in Regulus Therapeutics Inc. 65,004 33,622
Other current assets 27,402 15,370
Property, plant and equipment, net 87,273 91,084
Other assets 31,339 31,164
Liabilities and stockholders' equity:
Other current liabilities $47,301 $38,397
Current portion of deferred contract revenue 55,977 35,925
2 3/4% convertible senior notes 148,705 143,990
Long-term obligations, less current portion 77,481 77,952
Long-term deferred contract revenue 151,006 66,656
Stockholders' equity 401,446 182,766
Total liabilities and stockholders' equity $881,916 $545,686
SOURCE Isis Pharmaceuticals, Inc.
Contact: Isis Pharmaceuticals' Contacts: D. Wade Walke, Ph.D., Vice President,
Corporate Communications and Investor Relations, 760-603-2741, Amy Blackley,
Ph.D., Associate Director, Corporate Communications, 760-603-2772
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