Isis Pharmaceuticals, Inc. Reports Financial Results And Highlights For Second Quarter 2014

CARLSBAD, Calif., Aug. 4, 2014 /PRNewswire/ -- Isis Pharmaceuticals, Inc. (NASDAQ: ISIS) today reported pro forma net operating income of $1.1 million and a pro forma net operating loss (NOL) of $21.5 million for the three and six months ended June 30, 2014, respectively, compared to an NOL of $5.3 million and $799,000 for the same periods in 2013.  Isis' pro forma operating income in the second quarter of 2014 was primarily driven by more than $40 million of milestone payments from partners the Company earned during the second quarter.  On a GAAP basis, Isis reported a loss from operations of $6.7 million and $36.3 million for the three and six months ended June 30, 2014, respectively, compared to a loss from operations of $7.9 million and $6.3 million for the three and six months ended June 30, 2013.  Isis ended the first half of 2014 with approximately $591 million in cash, not including approximately $41 million that Isis received after the quarter ended, compared to $657 million at December 31, 2013.

"Our strong financial position demonstrates the value our unique business strategy creates as our pipeline continues to advance.  We have initiated the Phase 3 program for ISIS-SMN_Rx to treat patients with spinal muscular atrophy.  Our Phase 3 clinical study of ISIS-TTR_Rx in patients with the polyneuropathy form of transthyretin amyloidosis is enrolling well and patients who have completed the controlled portion of the study can continue to receive treatment in our open-label extension study.  Also this year, we plan to initiate the Phase 3 program for ISIS-APOCIII_Rx to treat patients with severely elevated triglyceride levels with the first study starting very shortly," said B. Lynne Parshall, chief operating officer of Isis.   "By the end of the year, we plan to be conducting Phase 3 programs on a number of different drugs to treat important genetically driven diseases for which antisense may offer a unique therapeutic approach."

"We ended the second quarter with pro forma net operating income of $1.1 million, including more than $40 million in milestone payments reflecting the significant progress our partnered programs are achieving.  So far this year, because of our successful execution of our business strategy, we have achieved nearly $75 million in payments from our partners.  With numerous successful partnerships encompassing multiple drugs, we have continuing opportunities to earn additional milestone payments from our partners as we progress through the year, including an $18 million milestone payment from Biogen Idec when we dose the first infant in our ISIS-SMN_Rx Phase 3 study.  Further, we maintained our strong cash position by ending the quarter with more than $590 million in cash, which does not include cash from the $40 million in milestone payments we earned late in the second quarter.  Because of the timing of these payments, the $40 million will be reflected in our third quarter cash balance," said Elizabeth L. Hougen, chief financial officer of Isis.  "We remain on track to meet our financial guidance of a pro forma NOL in the low $50 million range and year end cash in excess of $575 million."

Upcoming Key Milestones

• Initiate an additional Phase 3 clinical study on ISIS-SMN_Rx.
• Initiate a Phase 3 clinical program on ISIS-APOCIII_Rx.
• Report the full data analysis of the Phase 2 study of ISIS-FXI_Rx at an upcoming medical meeting.
• Report data from Phase 2 studies of ISIS-SMN_Rx in both children and infants with SMA at an upcoming medical meeting.
• Report Phase 2 data from ISIS-GCCR_Rx and ISIS-PTP1B_Rx in patients with type 2 diabetes.

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, 2014 was $57.1 million and $85.2 million, respectively, compared to $38.1 million and $81.5 million for the same periods in 2013. 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. Isis' revenue from the amortization of payments from its partners was $31.4 million in the first half of 2014, compared to $19.2 million for the same period in 2013, and increased primarily due to the amortization of upfront fees related to the strategic neurology partnership Isis entered into with Biogen Idec in September 2013.

Isis also earned $41.5 million in milestone payments in the first half of 2014, consisting of the following:

• $24.5 million from Biogen Idec related to advancing ISIS-SMN_Rx, initiating a Phase 1 study for ISIS-DMPK_Rx, and validating an undisclosed target to treat a neurological disorder;
• $15 million from AstraZeneca related to initiating a Phase 1 clinical study of ISIS-AR_Rx; and
• $2 million from GSK related to advancing ISIS-TTR_Rx.

Operating Expenses
On a pro forma basis, Isis' operating expenses for the three and six months ended June 30, 2014 were $56.0 million and $106.8 million, respectively, compared to $43.4 million and $82.3 million for the same periods in 2013.  As projected, Isis' operating expenses in 2014 increased due to higher development costs associated with Isis' maturing pipeline of drugs.  On a GAAP basis, Isis' operating expenses for the three and six months ended June 30, 2014 were $63.7 million and $121.6 million, respectively, compared to $46.0 million and $87.8 million for the same periods in 2013.

Net Loss
Isis reported a net loss of $12.1 million and $43.4 million for the three and six months ended June 30, 2014, respectively, compared to $10.1 million and $11.8 million for the same periods in 2013.  Basic and diluted net loss per share for the three and six months ended June 30, 2014 was $0.10 per share and $0.37 per share, respectively, compared to $0.09 per share and $0.11 per share for the same periods in 2013.  Isis' net loss increased in the first half of 2014 primarily due to the planned increase in operating expenses associated with the Company's maturing pipeline of drugs.

Balance Sheet
As of June 30, 2014, Isis had cash, cash equivalents and short-term investments of $590.8 million compared to $656.8 million at December 31, 2013 and had working capital of $605.0 million at June 30, 2014 compared to $637.7 million at December 31, 2013.  The decrease in cash and working capital primarily relates to cash used to fund Isis' operations.  Isis' cash balance at June 30, 2014 does not include approximately $41 million in payments that it recognized into revenue in the second quarter and received in the third quarter.

Business Highlights  
"We have had a successful start to the year. We reported positive Phase 2 data from five of the drugs in our pipeline.  These data highlight the potential of our antisense technology to create drugs to treat a wide range of diseases, including type 2 diabetes, high triglycerides and orphan diseases, like SMA and FCS, where there are no therapeutic options. We advanced two partnered drugs into clinical development for which we earned $29 million in milestone payments from our partners at Biogen Idec and AstraZeneca.  In addition, our unpartnered drugs continued to advance.  Our Lp(a) drug, ISIS-APO(a)_Rx, entered  Phase 2 clinical trials and we plan to begin Phase 3 clinical trials for ISIS-APOCIII_Rx shortly," continued Ms. Parshall.  "We look forward to continuing this momentum in the second half of this year."

Corporate and Drug Development Highlights   

•  Isis reported positive clinical results from five drugs in later-stage development.  These data exemplify the broad applicability and potential for antisense drugs to provide therapeutic benefit to many different diseases.
  • Isis reported positive Phase 2 data on ISIS-APOCIII_Rx in patients with high to extremely high triglyceride levels as a single agent and in combination with fibrates.  In these studies, patients experienced substantial reductions of triglyceride and apoC-III levels with significant increases in HDL-cholesterol.  These Phase 2 data were presented at the Arteriosclerosis, Thrombosis and Vascular Biology and the National Lipid Association meetings.
  • Isis presented positive results from both of the ongoing multiple-dose open label Phase 2 studies of ISIS-SMN_Rx in infants and children with SMA, which were consistent with earlier reported data.  In these studies, Isis reported increases in muscle function scores in infants and children treated with ISIS-SMN_Rx. These Phase 2 data were presented at the American Academy of Neurology meeting.
  • Isis reported positive Phase 2 data for ISIS-GCGR_Rx in patients with type 2 diabetes.  In this study, patients with type 2 diabetes uncontrolled on stable metformin therapy experienced up to a 2.25 percentage point mean reduction in HbA1c levels after 13 weeks of dosing. These Phase 2 data were presented at the American Diabetes Association Scientific Sessions.
  • Isis reported positive top-line Phase 2 clinical results for ISIS-FXI_Rx in patients undergoing total knee replacement.  In this study, ISIS-FXI_Rx-treated patients experienced a dose-dependent decrease in venous thromboembolism and numerically fewer bleeding events compared to patients treated with enoxaparin. 
  • Isis reported Phase 2 results showing that ISIS-CRP_Rx produced statistically significant mean reductions of CRP protein of 65% with reductions as great as 84% in patients with atrial fibrillation (AF).  In addition, two patients who had elevated levels of CRP (>5 mg/L) experienced a reduction of CRP that was associated with a decline to zero in overall AF burden while on treatment.
  
  
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