CARLSBAD, Calif., May 5, 2015 /PRNewswire/ -- Isis Pharmaceuticals,
Inc. (Nasdaq: ISIS) today reported pro forma operating income of
$4.0 million for the three months
ended March 31, 2015 compared to a
pro forma net operating loss of $22.6
million for 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 million for
the three months ended March 31, 2015
compared to $29.7 million for the
same period in 2014. Isis maintained its strong cash position and
ended the first quarter of 2015 with $695.1
million in cash compared to $728.8
million at December 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-FXIRx to Bayer. Bayer is the optimal
partner to develop and commercialize ISIS-FXIRx.
Our goals for the ISIS-FXIRx program 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-FXIRx
and 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," said
B. Lynne Parshall, chief operating
officer at Isis Pharmaceuticals.
"Subsequent to the first quarter, we licensed
ISIS-FXIRx to Bayer for a substantial upfront payment
and significant milestone and other payments of up to $375 million plus tiered royalties in the low to
high 20% range on gross margins of ISIS-FXIRx achieving
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 million of 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 million and 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
million in payments from our partners, including
$100 million from Bayer, $42 million from Biogen, $35 million from Janssen and $17 million from 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 million range and more than
$630 million in cash."
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 months ended
March 31, 2015 was $62.6 million compared to $28.2 million for the same period in 2014.
Isis earned $46 million in revenue
from milestone payments from its partners in the first quarter of
2015, which consisted of:
- $31 million from Biogen including
the following:
- $10 million for initiating
investigational new drug supporting studies for
ISIS-BIIB4Rx;
- $9 million for advancing CHERISH,
the Phase 3 study for ISIS-SMNRx in infants with
SMA;
- $7 million for advancing the
Phase 2 open-label extension study for ISIS-SMNRx in
children with SMA; and
- $5 million for validating an
undisclosed target to treat a neurological disorder.
- $15 million from GSK for
advancing the Phase 3 study of ISIS-TTRRx.
Isis' revenue in the first quarter of 2015 also included
$16.6 million in revenue from the
amortization of upfront fees and manufacturing services performed
for its partners, including revenue from the amortization of the
$35 million upfront payment Isis
received from Janssen for the companies' new collaboration.
Isis' revenue in the first quarter of 2014 included $19.5 million in revenue from the amortization of
upfront fees and manufacturing services and $7.7 million in 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 Expenses
Isis 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-SMNRx and ISIS-APOCIIIRx. As such,
Isis' pro forma operating expenses of $58.6
million for the three months ended March 31, 2015 were higher compared to
$50.8 million for 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 ended March 31, 2015
were $71.9 million compared to
$57.8 million for 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 ended March 31, 2015
compared to the same period in 2014 due to an increase in Isis'
stock price from 2014 to 2015.
Income Tax Benefit
Isis recognized a net tax
benefit of $0.8 million for the three
months ended March 31, 2015 compared
to a tax benefit of $2.3 million for
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 of
March 31, 2015, Isis' investment in
Regulus was valued at more than $90
million.
Net Loss
Isis reported a net loss of
$16.7 million for the three months
ended March 31, 2015 compared to
$31.3 million for the same period in
2014. Basic and diluted net loss per share for the three
months ended March 31, 2015 was
$0.14 per share compared to
$0.27 per 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 Sheet
As of March 31, 2015, Isis had cash, cash equivalents
and short-term investments of $695.1
million compared to $728.8
million at December 31, 2014
and had working capital of $735.1
million at March 31, 2015
compared to $721.3 million at
December 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 at March 31, 2015 did not
include $124 million, which is
comprised of $24 million in payments
Isis has received from its partners since the end of the first
quarter plus the $100 million upfront
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-TTRRx
and ISIS-APOCIIIRx. Enrollment for both of the
Phase 3 studies of ISIS-SMNRx is 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-SMNRx by conducting two additional studies of
ISIS-SMNRx including 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-TTRRx in patients with FAP at the American
Academy of Neurology. We are also pleased that GSK is
planning to expand the clinical program for ISIS-TTRRx
by initiating two additional Phase 3 studies, one in patients with
TTR-related cardiomyopathy and one in Japan in 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-TTRRx in 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-STAT3-2.5Rx demonstrating 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-STAT3-2.5Rx and 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-STAT3-2.5Rx in combination with MEDI4736 this
year.
- Isis reported top-line Phase 2 data on ISIS-PTP1BRx
demonstrating 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-ANGPTL3Rx produced 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-PKKRx produced 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-FXIRx to Bayer HealthCare to
develop and commercialize ISIS-FXIRx for the prevention
of thrombosis.
- Isis is eligible to receive up to $375
million in payments, including a $100
million upfront payment and a $55
million milestone 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 million in
upfront payments and is eligible to receive nearly $800 million in 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-ANGPTL3Rx and 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
million in payments from partners, including the following:
- $100 million from Bayer
- $42 million from Biogen
- $35 million from Janssen
- $17 million from GSK
Conference Call
At 11:30 a.m.
Eastern Time today, 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 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 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®, in
the United States and 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 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,
including KYNAMRO, ISIS-APOCIIIRx, ISIS-SMNRx
and 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 ended December 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.
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 Basis
As
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
|
|
|
|
|
|
|
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SOURCE Isis Pharmaceuticals, Inc.