Isis Pharmaceuticals, Inc. Q2 2010 Earnings Call Transcript

Isis Pharmaceuticals, Inc. Q2 2010 Earnings Call Transcript
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Isis Pharmaceuticals, Inc. (ISIS)

Q2 2010 Earnings Call Transcript

August 9, 2010 8:30 am ET

Executives

Stan Crooke – Chairman and CEO

Kristina Lemonidis – Director, IR

Lynne Parshall – COO and CFO

Analysts

Salveen Richter – Collins Stewart

Ted Tenthoff – Piper Jaffray

Eun Yang – Jefferies

Mark Monane – Needham & Company

Pamela Bassett – Cantor Fitzgerald

Carol Werther – Summer Street

Presentation

Operator

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Previous Statements by ISIS
» Isis Pharmaceuticals, Inc. Q1 2010 Earnings Call Transcript
» Isis Pharmaceuticals, Inc. Q4 2009 Earnings Call Transcript
» Isis Pharmaceuticals Inc. Q2 2009 Earnings Call Transcript

Welcome to Isis Pharmaceuticals second quarter financial results conference call. Leading the call today from Isis is Dr. Stan Crooke, Isis’ Chairman and CEO. Dr. Crooke, please begin.

Stan Crooke

Thank you. Well, again, apologies for the problems with the call. Good morning and thank you, everyone, for joining us on today’s conference call to discuss our second quarter financial results. Joining us on today’s call are Lynne Parshall, COO and CFO; Beth Hougen, Vice President of Finance; and Kristina Lemonidis, Director of Corporate Communication. Kris, will you read the forward-looking statements?

Kristina Lemonidis

Sure, Stan. Good morning, everyone. A reminder to everyone that this webcast includes forward-looking statements regarding Isis’s business; the financial outlook for Isis as well as Regulus, its majority-owned subsidiary; and the therapeutic and commercial potential of Isis technologies and products and 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 never materialized or proved correct could cause its results to differ materially from those expressed or implied by such forward-looking statements.

Although Isis’s 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, 2009 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.

And with that, I’ll turn the call over to Lynne to review our financial results.

Lynne Parshall

Thanks, Kris. We continue to make progress in the first half of 2010, highlighted by our announcement last week of additional positive data on mipomersen. We are now on track to file an NDA early next year to bring mipomersen to our first patient population. These are patients with severe risk who have no therapeutic alternative. We hope that mipomersen would be the therapeutic alternative that we will help them lead longer, healthier lives.

As usual, I’ll assume that you’ve read the details of our second quarter financial release in our press release. But I would like to cover a few of the highlights now. Of course, I’d be happy to take questions at the end of the call. We had a pro forma net operating loss of $17.1 million for the first half of 2010. This result reflects a slight decrease in revenue and an increase in expenses compared with the same period last year. We expect a reduction in revenue, as it comes from the end of amortization period for collaborations that we are ending in accordance with their terms.

The higher expenses in the first half of the year were also anticipated and mostly due to an increase in activities related to the ongoing mipomersen Phase 3 program, including work to complete the Phase 3 studies, NDA preparation, and preparation to manufacture for mipomersen launch. We expect our mipomersen expenses to continue at this level in the second half of the year, as we continue to progress towards our initial regulatory filings for mipomersen and continue clinical activities to support our next filings, as well as product enhancements.

In addition to our mipomersen progress, the second highlight of 2010 so far was the initiation of our new collaborative relationship with GlaxoSmithKline. We are extremely pleased that so early in the relationship we’ve achieved our first milestone in the collaboration, resulting not only in the new development candidate added to our pipeline, but also a $5 million milestone payment.

When we completed this transaction, we told you that it represented upside to our guidance. As promised, we are now formally amending our 2010 financial guidance to reflect the positive financial impact of this new partnership. Our previously announced financial guidance not only included predicted revenue from existing partnerships. Our updated guidance reflects revenue on expenses associated with our new relationship with GSK and the $1.9 million from Regulus resulting from their recent deal with sanofi-aventis.

Our new guidance for 2010 of a pro form net operating loss in the mid-to-high $40 million range represents a 10% to 20% improvement over our initial NOL projection. Additionally, we’ve improved our year-end cash guidance by $25 million and now expect to end the year with about $450 million in cash.

Let me just solidify the business picture in the first half of the year and its consequences. We added GSK as a new partner and received $35 million in upfront fees that we will amortize into revenue over five years. We’ve earned our first milestone payment under the collaboration of $5 million that we will recognize in the third quarter. BMS advanced their PCSK9 inhibitor in the clinical trial, from which we are in the $6 million milestone payment in the first quarter and we extended our collaboration with BMS for an additional two years to continue to build the PCSK9 franchise to follow on products.

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