CARLSBAD, Calif., Aug. 4, 2015 /PRNewswire/ -- Isis
Pharmaceuticals, Inc. (Nasdaq: ISIS) today reported net income of
$35.6 million and $18.9 million for the three and six months ended
June 30, 2015, respectively, compared
to a net loss of $12.1 million and
$43.4 million for the same periods in
2014. Isis' significantly improved financial results
were driven primarily by the more than $90
million of revenue Isis earned in the second quarter related
to the upfront payment from Bayer to license
ISIS-FXIRx. Isis increased its cash position
during the first half of 2015, ending June with more than
$750 million in cash compared to
approximately $730 million at
December 31, 2014. The increase in
the Company's cash position was primarily due to the more than
$165 million in cash received from
its partners in the first half of 2015.
"So far this year we have completed transactions that advance
every element of our business. These transactions support our
continued strong financial performance. However, their
strategic value now and in the future is even more important.
Yesterday, we announced an expansion of our strategic relationship
with AstraZeneca that takes advantage of the breadth of our
technology and provides us with a very strong partner to move
forward with in the large and growing area of cardiometabolic and
renal diseases. This strategic collaboration, which is valued
at up to more than $4 billion, will
continue to expand our technology in the kidney and builds on our
positive oncology and drug delivery collaborations. Early in
the year, we initiated a new collaboration with J&J that also
enables us to expand the reach of our antisense technology. With
J&J, we are focusing on the local treatment of inflammatory
disease in the GI track, capitalizing on J&J's expertise in
this area. In May, we licensed ISIS-FXIRx to
Bayer, a leader in the development and commercialization of
antithrombotic drugs. Bayer plans to advance ISIS-FXIRx
with a robust development plan designed to maximize the value of
the drug. The completion of these unique collaborations since
the beginning of the year, each of which is already providing
substantial added value to Isis, is an unparalleled achievement,"
said B. Lynne Parshall, chief
operating officer of Isis Pharmaceuticals. "Moreover, at the
beginning of the year, we created Akcea, a wholly owned subsidiary,
to develop and commercialize our suite of lipid drugs. The
Akcea team is making excellent progress in building a high-quality
team and preparing to commercialize volanesorsen. The
importance of the Akcea portfolio of drugs to provide new
treatments for patients with inadequately treated lipid disorders
is reflected in the fact that this portfolio has been the subject
of three articles in two major medical journals, The Lancet and The
New England Journal of Medicine. This is a testament to the
ability of antisense technology to approach targets that are not
easily approachable with other therapeutic modalities and to
rapidly identify potent and specific inhibitors to newly discovered
targets that play key roles in disease."
"In addition, our other collaborations continue to yield
successes. We reported positive top line conclusions from the
FOCUS FH study of KYNAMRO. We initiated the first clinical
study on ISIS-HTTRx in patients with Huntington's
disease in our Roche collaboration. And, we are conducting
Phase 3 trials for two separate indications in our Biogen
collaboration with ISIS-SMNRx. We are encouraged
by the maturing data from this program, and we continue to have
constructive interations with regulatory agencies. By the end of
the year, we expect that our drug, ISIS-TTRRx, which we
are developing with GSK, will also be in Phase 3 clinical trials
for two separate indications," continued Ms. Parshall.
"Our continued strong financial performance so far this year has
been driven by the successes across all areas of our
business. We reported significant operating and net income
for our second quarter and the first six months of this year
due in large part to the more than $90
million in revenue we earned from our license of
ISIS-FXIRx to Bayer in May. Moreover, we have
earned more than $180 million in
revenue from milestone and other payments for our partnered
programs and drugs. As these programs advance, we have the
potential to generate even more revenue and cash from milestone
payments this year. Additionally, so far this year, we have
generated nearly $300 million from
our partners, including the $65
million upfront fee from AstraZeneca that we will receive
upon Hart-Scott-Rodino clearance. It is important to note
that the cash we receive significantly underestimates the financial
value of our partnerships as our partners are contributing
substantial resources to our collaborations. AstraZeneca, Bayer,
Biogen and GSK are all conducting research and/or development in
parallel with the work we are conducting. In addition, Biogen
and GSK are preparing to commercialize ISIS-SMNRx and
ISIS-TTRRx, respectively. These are activities that we
benefit from, for which our partners bear the expense," said
Elizabeth L. Hougen, chief financial
officer of Isis Pharmaceuticals.
"Because of our strong financial performance in the first half
of this year, we expect to substantially improve upon our year-end
guidance. We are reducing our projected pro forma NOL by more
than 40 percent to a pro forma NOL in the low $30 million range. We are also projecting
to end the year with more than $750
million in cash, which is an increase over our original cash
guidance of more than $120 million
and a modest increase over our 2014 year end cash balance.
Our improved guidance reflects the revenue and cash from our
new AstraZeneca transaction and the $33
million in milestone payments we have achieved so far in the
third quarter. Our revised guidance also reflects the many
opportunities we have to generate revenue and cash throughout the
second half of this year although we do not anticipate that any one
event will contribute as much revenue as our Bayer license.
In addition, as we move forward, we expect our expenses to
increase as our Phase 3 drugs continue to progress and we continue
to advance and expand our pipeline. Of particular importance,
our expenses for Akcea will increase as they continue to build the
commercial infrastructure and advance the pre-commercialization
activities necessary to successfully launch volanesorsen within the
next couple of years," concluded Ms. Hougen.
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 six months ended June 30, 2015 was $120.4
million and $183.0 million,
respectively, compared to $57.1
million and $85.2 million for
the same periods in 2014. Isis recognized $91.2 million in connection with its recently
completed exclusive license agreement with Bayer in the second
quarter of 2015. Isis also earned $57
million in revenue from milestone payments from its partners
in the first half of 2015, which primarily consisted of:
- $41 million from Biogen including
payments for advancing ISIS-SMNRx in late-stage clinical
development, for advancing ISIS-BIIB4Rx into development
and for validating two new undisclosed targets for neurological
disorders; and
- $15 million from GSK for
advancing the Phase 3 study of ISIS-TTRRx.
Isis' revenue in the first half of 2015 also included
$26.0 million in revenue from the
amortization of upfront fees and manufacturing services performed
for its partners.
Already in the third quarter of 2015, Isis has earned
$33 million from milestone payments
from Roche for the initiation of a Phase 1/2 study for
ISIS-HTTRx and from Biogen for continuing to advance
ISIS-SMNRx. Isis also expects to earn approximately
$5 million over the second half of
2015 from the amortization of the upfront payment from its new
AstraZeneca collaboration.
Isis' revenue fluctuates based on the nature and timing of
payments under agreements with its partners and consists primarily
of revenue from the amortization of upfront fees, milestone
payments and license fees.
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
volanesorsen. As such, Isis' pro forma operating expenses of
$62.2 million and $120.8 million for the three and six months ended
June 30, 2015, respectively, were
higher than the $56.0 million and
$106.8 million in the same periods in
2014. On a GAAP basis, Isis' operating expenses for the three and
six months ended June 30, 2015 were
$75.8 million and $147.7 million, respectively, compared to
$63.7 million and $121.6 million for the same periods in 2014.
Isis' operating expenses on a GAAP basis included non-cash
compensation expense related to equity awards, which increased in
the first half of 2015 compared to the same period in 2014.
As Isis' Phase 3 programs continue to progress in the second half
of the year, the costs associated with these programs will increase
compared to the first half of 2015. Additionally, Isis'
operating expenses in the second half of the year will increase due
to Akcea expenses to prepare for the commercial launch of
volanesorsen.
Net Income (Loss)
Isis reported net income of $35.6
million and $18.9 million, for
the three and six months ended June 30,
2015, respectively, compared to a net loss of $12.1 million and $43.4
million for the same periods in 2014. Basic net income
per share for the three and six months ended June 30, 2015 was $0.30 and $0.16,
respectively, compared to a basic net loss per share of
$0.10 and $0.37 for the same periods in 2014. Diluted
net income per share for the three and six months ended
June 30, 2015 was $0.29 and $0.15,
respectively, compared to a diluted net loss of $0.10 and $0.37 for
the same periods in 2014. Isis' net income in the first half
of 2015 was primarily due to the revenue the Company earned from
its exclusive license agreement with Bayer for
ISIS-FXIRx.
Balance Sheet
As of June 30, 2015, Isis had
cash, cash equivalents and short-term investments of $754.9 million compared to $728.8 million at December
31, 2014. Isis' working capital was $753.3 million at June 30,
2015 compared to $721.3
million at December 31, 2014.
The increase in the Company's cash and working capital primarily
relates to the more than $165 million
the Company received from its partners, including the $100 million up-front payment Isis received from
Bayer. Isis' cash balance at June 30,
2015 did not include nearly $100
million, which is comprised of payments Isis has generated
to date in the third quarter.
Business Highlights
"We believe that the second half of the year will be equally
productive with a number of pipeline activities that should
continue to provide value to Isis and its shareholders. From
our lipid franchise, we plan to report data from our Phase 2 study
on our novel Lp(a)-lowering drug. The importance of therapies
to specifically reduce Lp(a) and the promise of Akcea's drug to do
so was highlighted in a recent Lancet article and points to
patients' need for a specific Lp(a) lowering medicine. We
have numerous clinical trial initiations planned, including the
Phase 3 study in cardiomyopathy being conducted by GSK and the
Phase 3 study evaluating volanesorsen in patients with familial
partial lipodystrophy. This second Phase 3 study for
volanesorsen is designed to support bringing this important drug to
the market for these patients who have an ultra-rare orphan disease
and who are in need of effective new therapies. And of
course, we expect to continue to add new drugs to our pipeline this
year," concluded Ms. Parshall.
Corporate Highlights (2015 second quarter
and subsequent activities)
- Isis licensed ISIS-FXIRx to Bayer to develop and
commercialize ISIS-FXIRx for the prevention of
thrombosis.
- Isis generated a $100 million
upfront payment from Bayer and is eligible to earn up to
$275 million in additional payments,
including 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.
- Isis and AstraZeneca formed a multi-year collaboration to
discover and develop novel antisense drugs primarily focused on
treating cardiovascular, metabolic and kidney diseases.
- In total, Isis has the potential to earn up to more than
$4 billion in license fees and
milestone payments.
- Isis will receive a $65 million
upfront payment from AstraZeneca and is eligible to earn
substantial development and regulatory milestone payments and
license fees. Isis is eligible to earn a payment of
$25-30 million under this
collaboration next year upon identification of the first drug
candidate to move into development.
- Isis is also eligible to earn tiered double digit royalties on
annual net sales for each of the programs.
- This transaction is subject to clearance under the
Hart-Scott-Rodino Antitrust Improvements Act.
- To date this year, Isis has generated nearly $300 million in payments from its partners.
Drug Development Highlights (2015 second
quarter and subsequent activities)
- Isis reported positive clinical results from KYNAMRO,
ISIS-SMNRx and ISIS-TTRRx. These data
exemplify the broad applicability and potential for antisense drugs
to provide therapeutic benefit for many different diseases.
- Isis reported that the FOCUS FH study evaluating KYNAMRO in
patients with severe heterozygous familial hypercholesterolemia met
its primary endpoint with a statistically significant reduction of
LDL-Cholesterol. Genzyme and Isis plan to report the full
data from this study at an upcoming medical meeting.
- Isis presented positive results based on an April 17, 2015 data analysis from the ongoing
open-label Phase 2 clinical study of ISIS-SMNRx in
infants with Type I spinal muscular atrophy. The data
reported showed continued increases in median event-free survival
and muscle function scores as well as achievement of developmental
milestones.
- Isis provided an update based on a May
15, 2015 data analysis in children with spinal muscular
atrophy who have completed the open-label, Phase 2 multiple-dose
study of ISIS-SMNRx and are continuing to receive
treatment in an open-label extension study. Consistent with
earlier observations, increases in muscle function scores and
additional motor function tests were observed in children treated
with ISIS-SMNRx.
- Dr. Merrill Benson, an
investigator of ISIS-TTRRx, reported positive data from
an investigator-initiated study in patients with TTR
amyloid-related cardiomyopathy. In this study, Dr. Benson
observed apparent stabilization of cardiac disease after six months
of treatment with ISIS-TTRRx with no progression of
cardiac disease. Patients also experienced up to 88 percent
reduction in TTR after nine months of dosing compared to
baseline.
- Isis reported positive results from an ongoing open-label
extension study of ISIS-TTRRx in patients with familial
amyloid polyneuropathy (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.
- Isis reported positive Phase 2 data for ISIS-GCCRRx
in patients with type 2 diabetes. In this study after six
weeks of treatment with ISIS-GCCRRx, patients achieved
improvements in multiple measures of glucose control with trends
toward improvements in insulin sensitivity.
- Isis published clinical data from its novel lipid drugs,
volanesorsen and ISIS-APO(a)Rx, in the New England
Journal of Medicine and The Lancet, respectively, two prestigious
medical journals. These data highlight the significant
interest from the medical community in Isis' lipid drugs and the
significance of the clinical data from these programs.
- Volanesorsen was granted orphan drug designation from the US
FDA for the treatment of patients with familial chylomicronemia
syndrome.
- Isis continued to advance its pipeline of drugs.
- Isis initiated a Phase 1/2 study of ISIS-HTTRx in
patients with Huntington's disease (HD). ISIS-HTTRx has
been granted orphan drug designation by the European Medicines
Agency for the treatment of patients with HD.
- Isis initiated a Phase 2 study to evaluate the safety and
activity of ISIS-FGFR4Rx in patients who are obese.
Conference Call
At 11:30 a.m. Eastern Time today,
August 4, 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
volanesorsen, a drug Isis is developing and plans to commercialize
through its wholly owned subsidiary, Akcea Therapeutics, to treat
patients with familial chylomicronemia syndrome and familial
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, the business of Akcea Therapeutics, Inc., a subsidiary of
Isis Pharmaceuticals, and the therapeutic and commercial potential
of Isis' technologies and products, including KYNAMRO,
ISIS-SMNRx, ISIS-TTRRx and volanesorsen, 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, and its most recent quarterly report on Form 10-Q,
which are 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,
|
|
Six months
ended,
|
|
|
June 30,
|
|
June 30,
|
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
Revenue:
|
|
(unaudited)
|
|
(unaudited)
|
Research and development revenue under collaborative
agreements
|
|
$119,658
|
|
$56,628
|
|
181,551
|
|
$76,177
|
Licensing and royalty revenue
|
|
770
|
|
448
|
|
1,461
|
|
9,060
|
Total
revenue
|
|
120,428
|
|
57,076
|
|
183,012
|
|
85,237
|
Expenses:
|
|
|
|
|
|
|
|
|
Research, development and patent expenses
|
|
68,007
|
|
59,264
|
|
132,454
|
|
112,712
|
General and administrative
|
|
7,775
|
|
4,462
|
|
15,241
|
|
8,842
|
Total operating
expenses
|
|
75,782
|
|
63,726
|
|
147,695
|
|
121,554
|
Income (loss) from
operations
|
|
44,646
|
|
(6,650)
|
|
35,317
|
|
(36,317)
|
Other income
(expense):
|
|
|
|
|
|
|
|
|
Investment
income
|
|
917
|
|
671
|
|
1,761
|
|
1,328
|
Interest
expense
|
|
(9,127)
|
|
(4,961)
|
|
(18,148)
|
|
(9,904)
|
Gain (loss) on
investments, net
|
|
1
|
|
(260)
|
|
1
|
|
137
|
Income (loss) before
income tax benefit
|
|
36,437
|
|
(11,200)
|
|
18,931
|
|
(44,756)
|
|
|
|
|
|
|
|
|
|
Income tax benefit
(expense)
|
|
(789)
|
|
(881)
|
|
-
|
|
1,395
|
|
|
|
|
|
|
|
|
|
Net income
(loss)
|
|
35,648
|
|
$(12,081)
|
|
18,931
|
|
$(43,361)
|
|
|
|
|
|
|
|
|
|
Basic net income
(loss) per share
|
|
$0.30
|
|
$(0.10)
|
|
$0.16
|
|
$(0.37)
|
Diluted net income
(loss) per share
|
|
$0.29
|
|
$(0.10)
|
|
$0.15
|
|
$(0.37)
|
Shares used in
computing basic net income (loss) per share
|
|
119,742
|
|
117,588
|
|
119,348
|
|
117,359
|
Shares used in
computing diluted net income (loss) per share
|
|
127,779
|
|
117,588
|
|
124,061
|
|
117,359
|
|
|
|
|
|
|
|
|
|
Isis
Pharmaceuticals, Inc.
Reconciliation of
GAAP to Pro Forma Basis:
Condensed
Consolidated Operating Expenses, (Income) Loss From Operations, and
Net Loss
(In
Thousands)
|
|
|
|
Three months
ended,
June 30,
|
|
Six months
ended,
June 30,
|
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
|
(unaudited)
|
|
(unaudited)
|
|
|
|
|
|
|
|
As reported
operating expenses according to GAAP
|
|
$75,782
|
|
$63,726
|
|
$147,695
|
|
$121,554
|
Excluding compensation expense related to equity awards
|
|
(13,605)
|
|
(7,708)
|
|
(26,910)
|
|
(14,777)
|
|
|
|
|
|
|
|
|
|
Pro forma
operating expenses
|
|
$62,177
|
|
$56,018
|
|
$120,785
|
|
$106,777
|
|
|
|
|
|
|
|
|
|
As reported income
(loss) from operations according to GAAP
|
|
$44,646
|
|
$(6,650)
|
|
$35,317
|
|
$(36,317)
|
Excluding compensation
expense related to equity awards
|
|
(13,605)
|
|
(7,708)
|
|
(26,910)
|
|
(14,777)
|
|
|
|
|
|
|
|
|
|
Pro forma income
(loss) from operations
|
|
$58,251
|
|
$1,058
|
|
$62,227
|
|
$(21,540)
|
As reported net
income (loss) according to GAAP
|
|
$35,648
|
|
$(12,081)
|
|
$18,931
|
|
$(43,361)
|
Excluding compensation
expense related to equity awards
|
|
(13,605)
|
|
(7,708)
|
|
(26,910)
|
|
(14,777)
|
|
|
|
|
|
|
|
|
|
Pro forma net
income (loss)
|
|
$49,253
|
|
$(4,373)
|
|
$45,841
|
|
$(28,584)
|
|
|
|
|
|
|
|
|
|
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 pro forma 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)
|
|
|
|
|
|
|
|
June 30,
|
|
December
31,
|
|
|
2015
|
|
2014
|
|
|
(unaudited)
|
|
|
Assets:
|
|
|
|
|
Cash, cash
equivalents and short-term investments
|
|
$754,934
|
|
$728,832
|
Investment in
Regulus Therapeutics Inc.
|
|
60,604
|
|
81,881
|
Other current
assets
|
|
39,914
|
|
25,884
|
Property,
plant and equipment, net
|
|
89,692
|
|
88,958
|
Other
assets
|
|
31,114
|
|
30,254
|
Total assets
|
|
$976,258
|
|
$955,809
|
|
|
|
|
|
Liabilities and
stockholders' equity:
|
|
|
|
|
Other current
liabilities
|
|
$43,847
|
|
$63,619
|
Current
portion of deferred contract revenue
|
|
58,285
|
|
51,713
|
1% convertible
senior notes
|
|
337,158
|
|
327,486
|
2 3/4%
convertible senior notes
|
|
49,160
|
|
48,014
|
Long-term
obligations, less current portion
|
|
79,360
|
|
79,400
|
Long-term
deferred contract revenue
|
|
108,128
|
|
127,797
|
Stockholders'
equity
|
|
300,320
|
|
257,780
|
Total liabilities and stockholders' equity
|
|
$976,258
|
|
$955,809
|
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SOURCE Isis Pharmaceuticals, Inc.