Isis Pharma (ISIS) Posts Narrower than Expected Q1 Loss of 14c/Share

Isis Pharma (NASDAQ: ISIS) reported Q1 EPS of ($0.14), $0.07 better than the analyst estimate of ($0.21). Revenue for the quarter came in at $62.6 million versus the consensus estimate of $52.74 million.

Isis 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.”

For earnings history and earnings-related data on Isis Pharma (ISIS) click here.

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