CARLSBAD, Calif., Feb. 28, 2013 /PRNewswire/ -- Isis Pharmaceuticals, Inc. (Nasdaq: ISIS) today announced its 2012 financial results and reviewed the highlights of the year. Isis ended the year in a strong financial position significantly outperforming both its pro forma net operating loss (NOL) guidance and its cash guidance for the year. For the year ended December 31, 2012, Isis had an NOL of $60.4 million compared to $61.3 million for 2011. Isis added a substantial amount of cash to its balance sheet throughout 2012, ending the year with nearly $375 million. On a GAAP basis, Isis reported a loss from operations of $26.1 million and $68.9 million for the three and twelve months ended December 31, 2012, respectively, compared to $18.6 million and $71.1 million for the same periods in 2011.
"Last month the FDA approved KYNAMRO™. KYNAMRO is the first systemic antisense drug to be sold commercially. This is an important event for patients with homozygous familial hypercholesterolemia, for Isis, and for our antisense technology. KYNAMRO's approval for chronic use in patients who have a severe and fatal disease highlights the potential of our technology to create drugs that could provide benefit for patients," said B. Lynne Parshall, chief operating officer of Isis. "In addition to KYNAMRO, we have a number of promising new drugs that will report later-stage clinical data this year, setting us up for an exciting year of pipeline activity."
"2012 was a strong year for Isis. We begin 2013 in a significantly improved financial position with nearly $375 million in cash. Since the beginning of 2013, we have already received a $25 million milestone payment from Genzyme and a $7.5 million milestone payment from GSK. With the commercial launch of KYNAMRO and a maturing pipeline of drugs, we have many opportunities for significant near-term revenue from partnerships while we are also setting the stage for significant future revenue growth," said Elizabeth L. Hougen, chief financial officer of Isis.
"In 2013, we are predicting another year of strong financial performance while continuing to advance our pipeline. Although we are planning to have more than a dozen drugs in later-stage clinical studies throughout the year, we are projecting only a slight increase in our 2013 spending compared to 2012. As such, we expect to end 2013 with a pro forma NOL in the mid $60 million range. We are also projecting to end the year with more than $325 million in cash. Our guidance is supported by our partnering successes in 2012. Because most drugs are not profitable in their first year of commercialization, and because it is too early in the year to predict the revenue trajectory of KYNAMRO, we are being conservative in our projections by not including KYNAMRO profit share revenue this year. We are pleased with the significant investment Genzyme is making to ensure a successful KYNAMRO launch. This investment should support strong revenue growth in the future. We are fortunate to have Genzyme with its expertise in selling and marketing orphan drugs commercializing KYNAMRO and we look forward to providing updates throughout the year on KYNAMRO's commercial success," concluded Ms. Hougen.
Upcoming Key Milestones
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 for the three and twelve months ended December 31, 2012 was $19.9 million and $102.0 million, respectively, compared to $32.4 million and $99.1 million for the same periods in 2011. Isis' revenue fluctuates based on the nature and timing of payments under agreements with Isis' partners, including license fees, milestone-related payments and other payments. For example, in 2012, Isis recognized revenue from new sources in connection with the license for ISIS-STAT3Rx which Isis granted to AstraZeneca under its recently announced strategic alliance on RNA therapeutics for cancer, its three new collaborations with Biogen Idec and the KYNAMRO FDA acceptance milestone from Genzyme. At the same time, in 2012, Isis' revenue from amortization of the upfront payments associated with the Genzyme collaboration ended as planned midyear.
Isis earned a $25 million milestone payment from Genzyme in January 2013 for FDA approval of KYNAMRO and a $7.5 million milestone payment from GSK in February 2013 for the initiation of the Phase 2/3 study of ISIS-TTRRx. Isis will reflect both of these milestone payments in its first quarter 2013 financial results.
On a pro forma basis, operating expenses for the three and twelve months ended December 31, 2012 were $44.2 million and $162.4 million, respectively, compared to $48.8 million and $160.3 million for the same periods in 2011. In 2012, Isis was able to advance and expand its pipeline while maintaining its operating expenses essentially flat to 2011.
On a GAAP basis, Isis' operating expenses for the three and twelve months ended December 31, 2012 were $46.0 million and $171.0 million, respectively, compared to $51.0 million and $170.2 million for the same periods in 2011.
Early Retirement of Debt
In August 2012, Isis issued $201.3 million of 2 ¾% convertible senior notes due 2019 (2 ¾% Notes). In September 2012, Isis used a substantial portion of the net proceeds from the issuance of these notes to redeem the entire $162.5 million of the Company's 2 ⅝% convertible subordinated notes (2 ⅝% Notes). As a result of the early redemption of the 2 ⅝% Notes, Isis recognized a $4.8 million loss primarily related to a non-cash write-off of the unamortized portion of the debt discount and debt issuance costs.
Gain on Investment in Regulus Therapeutics Inc.
In October 2012, Regulus Therapeutics, Inc., a company Isis co-founded, completed an initial public offering. In the fourth quarter, as a result of the IPO, Isis recorded an $18.4 million gain to reflect the Company's change in its ownership percentage in Regulus. Also in the fourth quarter, Isis stopped using the equity method to account for its investment in Regulus and instead began accounting for it at fair value. Isis now owns approximately seven million shares, or 17%, of Regulus' common stock on a fully diluted basis.
Isis reported a net loss of $2.6 million and $65.5 million for the three and twelve months ended December 31, 2012, respectively, compared to $20.0 million and $84.8 million for the same periods in 2011. Basic and diluted net loss per share for the three and twelve months ended December 31, 2012 was $0.03 per share and $0.65 per share, compared to $0.20 per share and $0.85 per share for the same periods in 2011. In 2012, Isis' net loss was significantly lower than 2011 primarily due to the $18.4 million gain from its investment in Regulus and the related $9.1 million tax benefit offset, in part, by an increase in Isis' net operating loss, the $4.8 million loss on Isis' early retirement of its 2 ⅝% Notes, and an increase in interest expense. Isis' interest expense was higher than in 2011 due to additional non-cash interest expense Isis recorded for the long-term liability associated with its primary research and development facility and slightly higher interest expense related to Isis' 2 ¾% Notes.
As of December 31, 2012, Isis had cash, cash equivalents and short-term investments of $374.4 million compared to $343.7 million at December 31, 2011 and had working capital of $349.1 million at December 31, 2012 compared to $284.0 million at December 31, 2011. During 2012, Isis received a substantial amount of cash, including $96 million in upfront payments from Biogen Idec and AstraZeneca, a $25 million milestone payment from Genzyme for FDA acceptance of the KYNAMRO NDA and approximately $30 million in net proceeds from Isis' issuance of its 2 ¾% Notes. Isis' working capital increased significantly in 2012 primarily due to the cash Isis received in 2012 and an increase in current assets resulting from Isis' investment in Regulus because Isis is now recording its investment at fair value. At December 31, 2012, the carrying value of Isis' investment in Regulus was $33.6 million.
"We expect 2013 to be a year of substantial growth and maturation for Isis. We believe that the initial commercial launch of KYNAMRO will be successful and we support Genzyme's ongoing development efforts for KYNAMRO with the FOCUS FH study, which Genzyme is conducting under a special protocol assessment with the FDA," continued Ms. Parshall. "Beyond KYNAMRO, we have a number of drugs in our pipeline that will complete later-stage clinical studies, which are designed to provide clear evidence that these drugs have the potential to work in patients in numerous different diseases. In addition, we plan to advance many other drugs in our pipeline, creating additional opportunities for significant long-term revenue. And finally, we expect to explore partnering opportunities that are the right fit for Isis and designed to provide the most benefit to our programs and drugs, the best balance of risk and commercial participation, while allowing us to continue to do what we do best, drug discovery and early drug development."
In 2013, Isis plans to achieve the following goals itself and with its partners:
"2012 was a year of significant achievements for Isis. Together with Genzyme we successfully completed the final steps to bring KYNAMRO to the market in the US for patients with HoFH. We continued to mature and expand our severe and rare disease franchise, receiving orphan drug designation for two of the drugs in this franchise. We reported clinical data on seven drugs in our pipeline and advanced three drugs into Phase 2 clinical studies that we plan to report data from this year, which could support significant licensing opportunities for us," continued Ms. Parshall.
"And finally, we have been successful in implementing our business strategy and establishing strategic partnerships that provide us with significant value. We established three collaborations with Biogen Idec focused on neurologic severe and rare diseases. Biogen Idec's extensive expertise and experience in neurological diseases makes Biogen Idec an ideal partner to work with us to build a neurologic disease franchise. In addition, we established a collaboration with AstraZeneca that allows us to broaden and expand our antisense drug discovery and development efforts and apply our antisense technology to novel oncology targets with a global leader in cancer drug development and commercialization," concluded Ms. Parshall.
Drug Development Highlights for 2012/ Early 2013
Corporate Highlights for 2012/ Early 2013
At 12:00 p.m. Eastern Time today, February 28, 2013, Isis will conduct a live webcast conference call to discuss this earnings release and related activities. Interested parties may listen to the call by dialing 866-323-2841 and provide the conference identification number "90809537", or access the webcast at www.isispharm.com. A webcast replay will be available for a limited time at the same address.
ABOUT ISIS PHARMACEUTICALS, INC.
Isis is exploiting its leadership position in antisense technology to discover and develop novel drugs for its product pipeline and for its partners. Isis' broad pipeline consists of 28 drugs to treat a wide variety of diseases with an emphasis on cardiovascular, metabolic, severe and rare diseases, and cancer. Isis' partner, Genzyme, is commercializing Isis' lead product, KYNAMRO™, in the United States for the treatment of patients with HoFH. Genzyme is also pursuing marketing approval of KYNAMRO in other markets, including Europe. Isis' patents provide strong and extensive protection for its drugs and technology. Additional information about Isis is available at www.isispharm.com.
This press release includes forward-looking statements regarding Isis Pharmaceuticals' financial position and outlook, Isis' business, and the therapeutic and commercial potential of Isis' technologies and products in development. Any statement describing Isis' goals, expectations, financial or other projections, intentions or beliefs, including the commercial potential of KYNAMRO, is a forward-looking statement and should be considered an at-risk statement. Such statements are subject to certain risks and uncertainties, particularly those inherent in the process of discovering, developing and commercializing drugs that are safe and effective for use as human therapeutics, and in the endeavor of building a business around such drugs. Isis' forward-looking statements also involve assumptions that, if they never materialize or prove correct, could cause its results to differ materially from those expressed or implied by such forward-looking statements. Although Isis' forward-looking statements reflect the good faith judgment of its management, these statements are based only on facts and factors currently known by Isis. As a result, you are cautioned not to rely on these forward-looking statements. These and other risks concerning Isis' programs are described in additional detail in Isis' annual report on Form 10-K for the year ended December 31, 2011 and its most recent quarterly report on Form 10-Q, which are on file with the SEC. Copies of these and other documents are available from the Company.
In this press release, unless the context requires otherwise, "Isis," "Company," "we," "our," and "us" refers to Isis Pharmaceuticals and its subsidiaries.
Isis Pharmaceuticals® is a registered trademark of Isis Pharmaceuticals, Inc. Regulus Therapeutics™ is a trademark of Regulus Therapeutics Inc. KYNAMRO™ is a trademark of Genzyme Corporation.
ISIS PHARMACEUTICALS, INC.
SELECTED FINANCIAL INFORMATION
Condensed Consolidated Statements of Operations
(In Thousands, Except Per Share Data)
Three months ended,
Research and development revenue under collaborative agreements
Licensing and royalty revenue
Research and development
General and administrative
Total operating expenses
Loss from operations
Other income (expense):
Equity in net loss of Regulus Therapeutics Inc.
Gain on investments, net
Gain on investment in Regulus Therapeutics Inc.
Loss on early retirement of debt
Loss before income tax benefit (expense)
Income tax benefit (expense)
Basic and diluted net loss per share
Shares used in computing basic 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,
As reported operating expenses according to GAAP
Excluding compensation expense related to equity awards
Pro forma operating expenses
As reported loss from operations according to GAAP
Excluding compensation expense related to equity awards
Pro forma loss from operations
Reconciliation of GAAP to Pro Forma Basis
As illustrated in the Selected Financial Information in this press release, pro forma operating expenses and pro forma loss from operations were adjusted from GAAP to exclude compensation expense related to equity awards, which are non-cash. Isis has regularly reported non-GAAP measures for operating expenses and loss from operations as pro forma results. These measures are provided as supplementary information and are not a substitute for financial measures calculated in accordance with GAAP. Isis reports these pro forma results to better enable financial statement users to assess and compare its historical performance and project its future operating results and cash flows. Further, the presentation of Isis' pro forma results is consistent with how Isis' management internally evaluates the performance of its operations.
Isis Pharmaceuticals, Inc.
Condensed Consolidated Balance Sheets
Cash, cash equivalents and short-term investments
Investment in Regulus Therapeutics Inc.
Other current assets
Property, plant and equipment, net
Liabilities and stockholders' equity:
Other current liabilities
Current portion of deferred contract revenue
2 3/4% convertible senior notes
2 5/8% convertible subordinated notes
Long-term obligations, less current portion
Investment in Regulus Therapeutics Inc.
Long-term deferred contract revenue
Total liabilities and stockholders' equity
SOURCE Isis Pharmaceuticals, Inc.