Ionis Pharma Reports Financial Results And Highlights For First Quarter 2017
CARLSBAD, Calif., May 9, 2017 /PRNewswire/ -- Ionis Pharmaceuticals, Inc. (Nasdaq: IONS) today reported significantly improved financial results over the same period last year with operating income of $14 million and net income of $3 million, both on a GAAP basis. The Company's pro forma results were also improved over the same period last year. Ionis ended the first quarter with more than $860 million in cash, cash equivalents and short-term investments and is on track to meet its financial guidance for the year.
"SPINRAZA's launch is off to a strong start with sales in the first quarter of over $47 million. As of April 21st, more than 165 insurance plans, including commercial and Medicaid plans, have approved individual uses of SPINRAZA. Importantly, Biogen estimates that 75% of commercially insured SMA patients in the U.S. are covered under a plan with an established policy for SPINRAZA and half of those patients are under a policy with broad access. Additionally, Biogen has had success in streamlining access to SPINRAZA at SMA treatment centers, and patient access is expanding further as non-SMA centers are also treating SMA patients. Further, we believe the positive data presented at AAN from the CHERISH study in patients with later-onset SMA and from the NURTURE study in pre-symptomatic infants demonstrate the benefit of treatment across SMA populations," said B. Lynne Parshall, chief operating officer of Ionis Pharmaceuticals. "We anticipate the European Commission's approval decision for SPINRAZA shortly following the recent CHMP positive opinion with a recommendation for a broad indication. Biogen also expects regulatory approvals in Canada and Japan this year and plans to initiate filings in additional countries this year. We are looking forward to seeing growth in SPINRAZA sales as the launch progresses.
"We and Akcea reported positive results from the Phase 3 APPROACH study of volanesorsen in March. With these positive data in hand, we are well along in preparing to file for regulatory approval in the U.S., EU and Canada in the third quarter. In addition, Akcea is making substantial progress in their preparations to launch volanesorsen in 2018. The Akcea team has also continued to make progress in advancing the rest of their pipeline. In January, Akcea formed a collaboration with Novartis to develop and commercialize AKCEA-APO(a)-LRx and AKCEA-APOCIII-LRx. Novartis will be responsible for globally developing and commercializing each drug, including conducting and paying for the cardiovascular outcome study for each drug when the Phase 2b study for that drug is complete, and Novartis exercises its option to license the drug. Akcea plans to co-commercialize any drug Novartis licenses through the specialized sales force it is building to commercialize volanesorsen. Recently, Akcea initiated the Phase 2b study of AKCEA-APO(a)-LRx to determine the dose and regimen for the planned Phase 3 outcome study. Later this year, Akcea also plans to initiate a Phase 2b study of AKCEA-APOCIII-LRx in preparation for the planned Phase 3 outcome study.
"This quarter, we plan to report data from our Phase 3 NEURO-TTR study of IONIS-TTRRx in patients with familial amyloid polyneuropathy. We and our partner, GSK, are preparing to file for marketing approval before year-end. With the SPINRAZA launch gaining momentum, volanesorsen moving toward the market, Phase 3 data for IONIS-TTRRx imminent, and a large and growing pipeline supported by our efficient technology platform, we believe we have the elements in place to achieve sustained, long-term financial growth," concluded Ms. Parshall.
Financial Results
"We continued the momentum from 2016 into the first quarter of this year by achieving operating income and net income on both a GAAP and pro forma basis. These strong financial results were driven by more than $110 million of revenue we earned in the first quarter. Importantly, we added more than $5 million of commercial revenue from SPINRAZA royalties to our substantial base of R&D revenue, which included $66 million from the expansion of our Bayer relationship. Consistent with our expectations, our operating expenses were relatively flat year over year. During the remainder of 2017, we expect our SG&A expenses to increase as Akcea continues to prepare to launch volanesorsen globally in 2018. However, we expect our R&D expenses to decrease over the year as we conclude our Phase 3 programs. We received more than $290 million from our partners in the first quarter to end the quarter with a cash balance of more than $860 million," said Elizabeth L. Hougen, chief financial officer of Ionis Pharmaceuticals.
"We are on track to meet our 2017 guidance of being breakeven or profitable at the operating line on a pro forma basis and a year-end cash balance of over $825 million. We are encouraged by SPINRAZA sales in the first quarter of 2017 and we look forward to continued growth in commercial revenue from SPINRAZA royalties as the launch progresses and SPINRAZA is approved in additional countries," concluded Ms. Hougen.
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
Ionis' revenue for the three months ended March 31, 2017 was $110.3 million, compared to $36.9 million for the same period in 2016. Ionis' revenue in the first quarter of 2017 consisted of the following:
Commercial Revenue:
- $5.2 million from SPINRAZA royalties; and
- $3.6 million from other licensing and royalty payments.
R&D Revenue:
- $65.5 million from Bayer primarily for the license of IONIS-FXI-LRx;
- $5.0 million milestone payment from Biogen for validating an undisclosed neurological disease target;
- $25.3 million from the amortization of upfront fees; and
- $5.7 million primarily from services Ionis performed for its partners.
Ionis' R&D 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
Ionis' operating expenses for the three months ended March 31, 2017 on a GAAP basis were $96.3 million, and on a pro forma basis were $75.4 million. These amounts compare to GAAP operating expenses of $91.5 million and pro forma operating expenses of $71.4 million for the same period in 2016. Ionis' operating expenses were relatively flat year over year. As the year progresses, Ionis projects that its R&D expenses will decrease as its Phase 3 programs wind down and its SG&A expenses will increase as Akcea continues to prepare to launch volanesorsen. Because of the efficiency of Ionis' technology, even with its projected declining R&D expenses this year, Ionis will continue to advance its earlier stage drugs and add new drugs to its pipeline.
Net Income
Ionis reported net income of $3.5 million on a GAAP basis for the three months ended March 31, 2017, compared to a net loss of $62.9 million for the same period in 2016. Ionis reported pro forma net income of $24.4 million for the three months ended March 31, 2017 compared to a pro forma net loss of $42.8 million for the same period in 2016. For the three months ended March 31, 2017, basic and diluted net income per share was $0.03. Basic and diluted net loss per share for the same period in 2016 was $0.52. Ionis' net income increased for the three months ended March 31, 2017 compared to the same period in 2016 primarily due to increased R&D revenue and the addition of commercial revenue from SPINRAZA royalties.
Balance Sheet
As of March 31, 2017, Ionis had cash, cash equivalents and short-term investments of $860.3 million compared to $665.2 million at December 31, 2016. Ionis' cash balance increased in 2017 due to the over $290 million in payments the Company received primarily from Novartis and Biogen. Ionis' first quarter cash balance did not include the $75 million payment from Bayer it received in April 2017. Ionis' working capital was $791.8 million at March 31, 2017 compared to $664.1 million at December 31, 2016.
Conference Call
At 11:30 a.m. Eastern Time today, May 9, 2017, Ionis 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.ionispharma.com. A webcast replay will be available for a limited time at the same address.
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