Full Press Release Details
CARLSBAD, Calif.,May 5, 2015/PRNewswire/ -- Isis Pharmaceuticals, Inc. (Nasdaq:ISIS) today reported pro forma operating income of$4.0 millionfor the three months endedMarch 31, 2015compared to a pro forma net operating loss of$22.6 millionfor the same period in 2014. Isis' significantly improved financial results were due to higher revenue from milestone payments earned from its partners compared to the same quarter last year. On a GAAP basis, Isis reported a loss from operations of$9.3 millionfor the three months endedMarch 31, 2015compared to$29.7 millionfor the same period in 2014. Isis maintained its strong cash position and ended the first quarter of 2015 with$695.1 millionin cash compared to$728.8 millionatDecember 31, 2014.
"Our successes in the first quarter enabled us to end the first quarter of 2015 in a strong financial position. We are continuing this momentum into the second quarter. Yesterday we achieved an important strategic objective for Isis when we licensed ISIS-FXIRxto Bayer. Bayer is the optimal partner to develop and commercialize ISIS-FXIRx. Our goals for the ISIS-FXIRxprogram were to maximize the value we derive from this program both in the near-term and in the long-term. We wanted a partner committed to investing to maximize the commercial value of the drug, and we wanted to retain substantial participation in the commercial value created. This partnership meets all of these goals. As a leader in the antithrombotic market, Bayer has the expertise, resources and commitment to broadly develop ISIS-FXIRx. They plan to conduct a robust development plan that represents a commitment to make a substantial investment in ISIS-FXIRx. Bayer's development plan combines near-term indications, which have the potential for early market entrance in patients with limited therapeutic options, with long-term indications in patients who are underserved by current antithrombotic treatments. In short, a development plan designed to take advantage of the profile of ISIS-FXIRxand maximize its value. We are also pleased with the financial aspects of the transaction, which provide significant value upfront as well as a substantial royalty that enables us to participate in the long-term commercial success of ISIS-FXIRx," saidB. Lynne Parshall, chief operating officer at Isis Pharmaceuticals.
"Subsequent to the first quarter, we licensed ISIS-FXIRxto Bayer for a substantial upfront payment and significant milestone and other payments of up to$375 millionplus tiered royalties in the low to high 20% range on gross margins of ISIS-FXIRxachieving all of our financial objectives for the transaction. The financial terms of the transaction optimally balance near term value to us with our ability to participate in the commercial success of the drug. Importantly, Bayer plans to conduct a robust development plan, which represents a substantial investment in ISIS-FXIRx. Upon Hart-Scott-Rodino clearance, we expect to recognize approximately$85 million to $95 millionof revenue from the Bayer upfront payment in 2015 and, of course the entire cash amount will augment our balance sheet," said Elizabeth L. Hougen, chief financial officer of Isis Pharmaceuticals. "We ended the first quarter in a strong financial position with pro forma operating income of$4 millionand we were nearly break even with a pro forma net loss of$3 million. In addition, so far this year, we have generated more than$195 millionin payments from our partners, including$100 millionfrom Bayer,$42 millionfrom Biogen,$35 millionfrom Janssen and$17 millionfrom GSK. This, together with continuing opportunities to earn additional milestone payments from our partners as we progress through the year, puts us on track to exceed our guidance of a pro forma net operating loss in the mid$50 millionrange and more than$630 millionin cash."
Financial ResultsAll 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.
RevenueRevenue for the three months endedMarch 31, 2015was$62.6 millioncompared to$28.2 millionfor the same period in 2014. Isis earned$46 millionin revenue from milestone payments from its partners in the first quarter of 2015, which consisted of:
• $31 millionfrom Biogen including the following:$10 millionfor initiating investigational new drug supporting studies for ISIS-BIIB4Rx;$9 millionfor advancing CHERISH, the Phase 3 study for ISIS-SMNRxin infants with SMA;$7 millionfor advancing the Phase 2 open-label extension study for ISIS-SMNRxin children with SMA; and$5 millionfor validating an undisclosed target to treat a neurological disorder.
• $15 millionfrom GSK for advancing the Phase 3 study of ISIS-TTRRx.
• $10 millionfor initiating investigational new drug supporting studies for ISIS-BIIB4Rx;
• $9 millionfor advancing CHERISH, the Phase 3 study for ISIS-SMNRxin infants with SMA;
• $7 millionfor advancing the Phase 2 open-label extension study for ISIS-SMNRxin children with SMA; and
• $5 millionfor validating an undisclosed target to treat a neurological disorder.
Isis' revenue in the first quarter of 2015 also included$16.6 millionin revenue from the amortization of upfront fees and manufacturing services performed for its partners, including revenue from the amortization of the$35 millionupfront payment Isis received from Janssen for the companies' new collaboration. Isis' revenue in the first quarter of 2014 included$19.5 millionin revenue from the amortization of upfront fees and manufacturing services and$7.7 millionin revenue from Alnylam.
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.
Operating ExpensesIsis is conducting more later-stage clinical trials in 2015 than it did in 2014, including the continuation of its Phase 3 programs for ISIS-TTRRx, ISIS-SMNRxand ISIS-APOCIIIRx. As such, Isis' pro forma operating expenses of$58.6 millionfor the three months endedMarch 31, 2015were higher compared to$50.8 millionfor the same period in 2014. As drugs move forward to more advanced stages of development, including into longer and larger clinical studies, the costs of development increase. On a GAAP basis, Isis' operating expenses for the three months endedMarch 31, 2015were$71.9 millioncompared to$57.8 millionfor the same period in 2014. Isis' operating expenses on a GAAP basis included non-cash compensation expense related to equity awards, which increased for the three months endedMarch 31, 2015compared to the same period in 2014 due to an increase in Isis' stock price from 2014 to 2015.
Income Tax BenefitIsis recognized a net tax benefit of$0.8 millionfor the three months endedMarch 31, 2015compared to a tax benefit of$2.3 millionfor the same period in 2014. Isis' tax benefit in both the first quarter of 2015 and 2014 was primarily the result of unrealized gains on its equity investment in Regulus, which reflected the significant increase in Regulus' stock price. As ofMarch 31, 2015, Isis' investment in Regulus was valued at more than$90 million.
Net LossIsis reported a net loss of$16.7 millionfor the three months endedMarch 31, 2015compared to$31.3 millionfor the same period in 2014. Basic and diluted net loss per share for the three months endedMarch 31, 2015was$0.14per share compared to$0.27per share for the same period in 2014. Isis' net loss decreased in the first quarter of 2015 primarily due to an increase in revenue from milestone payments.
Balance SheetAs ofMarch 31, 2015, Isis had cash, cash equivalents and short-term investments of$695.1 millioncompared to$728.8 millionatDecember 31, 2014and had working capital of$735.1 millionatMarch 31, 2015compared to$721.3 millionatDecember 31, 2014. Isis' working capital increased in the first quarter of 2015 primarily due to the increase in the carrying value of its investment in Regulus, slightly offset by the decrease in cash. Isis' cash balance atMarch 31, 2015did not include$124 million, which is comprised of$24 millionin payments Isis has received from its partners since the end of the first quarter plus the$100 millionupfront payment Isis is eligible to receive from Bayer.
Business Highlights"Bayer is the second new partner we added this year. Earlier in the year, we added Janssen as our partner in the discovery and development of antisense drugs to treat autoimmune disorders of the GI tract. Our Janssen collaboration expands our technology to a new area, the oral administration of antisense drugs for the local treatment of autoimmune diseases in the gastrointestinal tract," continued Ms. Parshall.
"We have a pipeline of novel antisense drugs that could provide significant value in the near-term with six drugs in Phase 3 development including, ISIS-SMNRx, ISIS-TTRRxand ISIS-APOCIIIRx. Enrollment for both of the Phase 3 studies of ISIS-SMNRxis on track, and we plan to share data on these studies in the 2016/2017 timeframe. We are pleased that Biogen is expanding the Phase 3 program for ISIS-SMNRxby conducting two additional studies of ISIS-SMNRxincluding a study evaluating ISIS-SMNRx, in newborns screened at birth and shown to have SMA, but who are presymptomatic. We presented positive data on ISIS-TTRRxin patients with FAP at the American Academy of Neurology. We are also pleased that GSK is planning to expand the clinical program for ISIS-TTRRxby initiating two additional Phase 3 studies, one in patients with TTR-related cardiomyopathy and one inJapanin patients with FAP. And of course, our wholly owned subsidiary, Akcea Therapeutics, is off to a great start, and we look forward to sharing more about this with you next month when we host an Akcea webcast call," concluded Ms. Parshall.
Drug Development Highlights(2015 first quarter and subsequent activities)
• Isis and its partners reported positive data on six drugs in Isis' pipeline, including:Isis reported positive results from an ongoing open-label extension study of ISIS-TTRRxin patients with FAP. In the open-label study after thirteen weeks of treatment with ISIS-TTRRx, TTR protein was reduced up to 92 percent with a median reduction of 78 percent in patients with FAP compared to their baseline TTR levels at entry into the Phase 3 study.AstraZeneca reported clinical and preclinical data on ISIS-STAT3-2.5Rxdemonstrating evidence of antitumor activity in patients with cancer including advanced/metastatic hepatocellular carcinoma and diffuse large B cell lymphoma. Additionally, AstraZeneca reported that, in preclinical studies, co-treatment of ISIS-STAT3-2.5Rxand MEDI4736, an immune checkpoint inhibitor, showed significantly greater antitumor activity than when either drug was administered alone. AstraZeneca plans to initiate two clinical studies evaluating ISIS-STAT3-2.5Rxin combination with MEDI4736 this year.Isis reported top-line Phase 2 data on ISIS-PTP1BRxdemonstrating that patients with type 2 diabetes experienced statistically significant mean reductions in body weight and HbA1c (0.7 percentage point) at 36 weeks.Regulus reported clinical data on RG-101 showing that patients with hepatitis C virus achieved sustained viral suppression after only a single dose of RG-101, and that some patients remained below the level of detection for hepatitis C virus 20 weeks after a single dose.Isis reported Phase 1 results showing that ISIS-ANGPTL3Rxproduced significant reductions of up to 93 percent in ANGPTL3, up to 63 percent in triglycerides and up to 46 percent in total cholesterol in healthy volunteers.Isis reported Phase 1 results showing that ISIS-PKKRxproduced significant, dose-dependent reductions of PKK of up to 95 percent in healthy volunteers.
• Isis reported positive results from an ongoing open-label extension study of ISIS-TTRRxin patients with FAP. In the open-label study after thirteen weeks of treatment with ISIS-TTRRx, TTR protein was reduced up to 92 percent with a median reduction of 78 percent in patients with FAP compared to their baseline TTR levels at entry into the Phase 3 study.
• AstraZeneca reported clinical and preclinical data on ISIS-STAT3-2.5Rxdemonstrating evidence of antitumor activity in patients with cancer including advanced/metastatic hepatocellular carcinoma and diffuse large B cell lymphoma. Additionally, AstraZeneca reported that, in preclinical studies, co-treatment of ISIS-STAT3-2.5Rxand MEDI4736, an immune checkpoint inhibitor, showed significantly greater antitumor activity than when either drug was administered alone. AstraZeneca plans to initiate two clinical studies evaluating ISIS-STAT3-2.5Rxin combination with MEDI4736 this year.
• Isis reported top-line Phase 2 data on ISIS-PTP1BRxdemonstrating that patients with type 2 diabetes experienced statistically significant mean reductions in body weight and HbA1c (0.7 percentage point) at 36 weeks.
• Regulus reported clinical data on RG-101 showing that patients with hepatitis C virus achieved sustained viral suppression after only a single dose of RG-101, and that some patients remained below the level of detection for hepatitis C virus 20 weeks after a single dose.
• Isis reported Phase 1 results showing that ISIS-ANGPTL3Rxproduced significant reductions of up to 93 percent in ANGPTL3, up to 63 percent in triglycerides and up to 46 percent in total cholesterol in healthy volunteers.
• Isis reported Phase 1 results showing that ISIS-PKKRxproduced significant, dose-dependent reductions of PKK of up to 95 percent in healthy volunteers.
Corporate Highlights(2015 first quarter and subsequent activities)
• Isis licensed ISIS-FXIRxto Bayer HealthCare to develop and commercialize ISIS-FXIRxfor the prevention of thrombosis.Isis is eligible to receive up to$375 millionin payments, including a$100 millionupfront payment and a$55 millionmilestone payment upon advancement of the program following completion of the planned Phase 2 study.Isis is eligible to receive tiered royalties in the low to high 20 percent range on gross margins of ISIS-FXIRx.This transaction is subject to clearances under the Hart-Scott Rodino Antitrust Improvements Act.
• Isis formed an alliance with Janssen to discover and develop antisense drugs to treat autoimmune disorders of the GI tract.Isis received$35 millionin upfront payments and is eligible to receive nearly$800 millionin development, regulatory and sales milestone payments and license fees for the programs under this alliance.Isis will also receive tiered royalties that on average are double digits on sales of drugs successfully commercialized.
• Isis formed a wholly owned subsidiary, Akcea Therapeutics, to develop and commercialize its lipid drugs, ISIS-APOCIIIRx, ISIS-APO(a)Rx, ISIS-ANGPTL3Rxand the follow on drugs for these programs.
• Isis and Alnylam formed a new agreement that includes a cross-license of intellectual property, providing each company rights to certain of each other's technology advances.The new agreement also provides each company with exclusive RNA therapeutic license rights for two programs.
• Isis generated more than$195 millionin payments from partners, including the following:$100 millionfrom Bayer$42 millionfrom Biogen$35 millionfrom Janssen$17 millionfrom GSK
• Isis is eligible to receive up to$375 millionin payments, including a$100 millionupfront payment and a$55 millionmilestone payment upon advancement of the program following completion of the planned Phase 2 study.
• Isis is eligible to receive tiered royalties in the low to high 20 percent range on gross margins of ISIS-FXIRx.
• This transaction is subject to clearances under the Hart-Scott Rodino Antitrust Improvements Act.
• Isis received$35 millionin upfront payments and is eligible to receive nearly$800 millionin development, regulatory and sales milestone payments and license fees for the programs under this alliance.
• Isis will also receive tiered royalties that on average are double digits on sales of drugs successfully commercialized.
• The new agreement also provides each company with exclusive RNA therapeutic license rights for two programs.
• $100 millionfrom Bayer
• $42 millionfrom Biogen
• $35 millionfrom Janssen
• $17 millionfrom GSK
Conference CallAt11:30 a.m. Eastern Timetoday,May 5, 2015, 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 877-443-5662, or access the webcast atwww.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 RNA-targeted technology to discover and develop novel drugs for its product pipeline and for its partners. Isis' broad pipeline consists of 38 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®, inthe United Statesand other countries for the treatment of patients with homozygous FH. Isis has numerous drugs in Phase 3 development in severe/rare diseases and cardiovascular diseases. These include ISIS-APOCIIIRx, a drug Isis is developing and plans to commercialize through its wholly owned subsidiary, Akcea Therapeutics, to treat patients with familial chylomicronemia syndrome and partial lipodystrophy; ISIS-TTRRx, a drug Isis is developing with GSK to treat patients with the polyneuropathy and cardiomyopathy forms of TTR amyloidosis; and ISIS-SMNRx, a drug Isis is developing with Biogen to treat infants and children with spinal muscular atrophy, a severe and rare neuromuscular disease. Isis' patents provide strong and extensive protection for its drugs and technology. Additional information about Isis is available atwww.isispharm.com.
FORWARD-LOOKING STATEMENTThis 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, including KYNAMRO, ISIS-APOCIIIRx, ISIS-SMNRxand ISIS-TTRRx, in development. Any statement describing Isis' goals, expectations, financial or other projections, intentions or beliefs 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 endedDecember 31, 2014, which is on file with the SEC. Copies of this 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. Akcea Therapeutics™ is a trademark of Isis Pharmaceuticals, Inc. Regulus Therapeutics™ is a trademark of Regulus Therapeutics Inc. KYNAMRO®is a registered trademark of Genzyme Corporation.
| ISIS PHARMACEUTICALS, INC.SELECTED FINANCIAL INFORMATION | |||||
| Condensed Consolidated Statements of Operations(In Thousands, Except Per Share Data) | |||||
| Three months ended, | |||||
| March 31, | |||||
| 2015 | 2014 | ||||
| Revenue: | (unaudited) | ||||
| Research and development revenue | |||||
| under collaborative agreements | $61,892 | $19,550 | |||
| Licensing and royalty revenue | 691 | 8,611 | |||
| Total revenue | 62,583 | 28,161 | |||
| Expenses: | |||||
| Research, development and patent expenses | 64,447 | 53,448 | |||
| General and administrative | 7,466 | 4,380 | |||
| Total operating expenses | 71,913 | 57,828 | |||
| Income (loss) from operations | (9,330) | (29,667) | |||
| Other income (expense): | |||||
| Investment income | 845 | 657 | |||
| Interest expense | (9,021) | (4,943) | |||
| Gain on investments, net | - | 397 | |||
| Loss before income tax benefit | $(17,506) | $(33,556) | |||
| Income tax benefit | 789 | 2,276 | |||
| Net loss | $(16,717) | $(31,280) | |||
| Basic and diluted net loss per share | $(0.14) | $(0.27) | |||
| Shares used in computing basic and diluted net loss per share | 118,948 | 117,128 |
ISIS PHARMACEUTICALS, INC.
SELECTED FINANCIAL INFORMATION
Condensed Consolidated Statements of Operations
(In Thousands, Except Per Share Data)
Three months ended,
March 31,
2015
2014
Revenue:
(unaudited)
Research and development revenue
under collaborative agreements
$61,892
$19,550
Licensing and royalty revenue
691
8,611
Total revenue
62,583
28,161
Expenses:
Research, development and patent expenses
64,447
53,448
General and administrative
7,466
4,380
Total operating expenses
71,913
57,828
Income (loss) from operations
(9,330)
(29,667)
Other income (expense):
Investment income
845
657
Interest expense
(9,021)
(4,943)
Gain on investments, net
-
397
Loss before income tax benefit
$(17,506)
$(33,556)
Income tax benefit
789
2,276
Net loss
$(16,717)
$(31,280)
Basic and diluted net loss per share
$(0.14)
$(0.27)
Shares used in computing basic and diluted net loss per share
118,948
117,128
| Isis Pharmaceuticals, Inc.Reconciliation of GAAP to Pro Forma Basis:Condensed Consolidated Operating Expenses, and (Income) Loss From Operations(In Thousands) | |||||
| Three months ended,March 31, | |||||
| 2015 | 2014 | ||||
| (unaudited) | |||||
| As reported operating expenses according to GAAP | $71,913 | $57,828 | |||
| Excluding compensation expense related to equity awards | (13,305) | (7,069) | |||
| Pro forma operating expenses | $58,608 | $50,759 | |||
| As reported income (loss) from operations according to GAAP | $(9,330) | $(29,667) | |||
| Excluding compensation expense related to equity awards | (13,305) | (7,069) | |||
| Pro forma income (loss) from operations | $3,975 | $(22,598) | |||
| As reported net loss according to GAAP | $(16,717) | $(31,280) | |||
| Excluding compensation expense related to equity awards | (13,305) | (7,069) | |||
| Pro forma net loss | $(3,412) | $(24,211) |
Isis Pharmaceuticals, Inc.
Reconciliation of GAAP to Pro Forma Basis:
Condensed Consolidated Operating Expenses, and (Income) Loss From Operations
(In Thousands)
Three months ended,March 31,
2015
2014
(unaudited)
As reported operating expenses according to GAAP
$71,913
$57,828
Excluding compensation expense related to equity awards
(13,305)
(7,069)
Pro forma operating expenses
$58,608
$50,759
As reported income (loss) from operations according to GAAP
$(9,330)
$(29,667)
Excluding compensation expense related to equity awards
(13,305)
(7,069)
Pro forma income (loss) from operations
$3,975
$(22,598)
As reported net loss according to GAAP
$(16,717)
$(31,280)
Excluding compensation expense related to equity awards
(13,305)
(7,069)
Pro forma net loss
$(3,412)
$(24,211)
Reconciliation of GAAP to Pro Forma BasisAs illustrated in the Selected Financial Information in this press release, pro forma operating expenses, pro forma income (loss) from operations, and proforma net income (loss) 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 | |||||
| (In Thousands) | |||||
| March 31, | December 31, | ||||
| 2015 | 2014 | ||||
| (unaudited) | |||||
| Assets: | |||||
| Cash, cash equivalents and short-term investments | $695,054 | $728,832 | |||
| Investment in Regulus Therapeutics Inc. | 93,446 | 81,881 | |||
| Other current assets | 46,927 | 25,884 | |||
| Property, plant and equipment, net | 89,047 | 88,958 | |||
| Other assets | 30,959 | 30,254 | |||
| Total assets | $955,433 | $955,809 | |||
| Liabilities and stockholders' equity: | |||||
| Other current liabilities | $47,702 | $63,619 | |||
| Current portion of deferred contract revenue | 52,586 | 51,713 | |||
| 1% convertible senior notes | 332,274 | 327,486 | |||
| 2 3/4% convertible senior notes | 48,579 | 48,014 | |||
| Long-term obligations, less current portion | 79,358 | 79,400 | |||
| Long-term deferred contract revenue | 119,083 | 127,797 | |||
| Stockholders' equity | 275,851 | 257,780 | |||
| Total liabilities and stockholders' equity | $955,433 | $955,809 | |||
Isis Pharmaceuticals, Inc.
Condensed Consolidated Balance Sheets
(In Thousands)
March 31,
December 31,
2015
2014
(unaudited)
Assets:
Cash, cash equivalents and short-term investments
$695,054
$728,832
Investment in Regulus Therapeutics Inc.
93,446
81,881
Other current assets
46,927
25,884
Property, plant and equipment, net
89,047
88,958
Other assets
30,959
30,254
Total assets
$955,433
$955,809
Liabilities and stockholders' equity:
Other current liabilities
$47,702
$63,619
Current portion of deferred contract revenue
52,586
51,713
1% convertible senior notes
332,274
327,486
2 3/4% convertible senior notes
48,579
48,014
Long-term obligations, less current portion
79,358
79,400
Long-term deferred contract revenue
119,083
127,797
Stockholders' equity
275,851
257,780
Total liabilities and stockholders' equity
$955,433
$955,809