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Ionis Reports Second Quarter 2018 Financial Results
Year-to-date revenues increased 15%, driven by increased SPINRAZA revenue
TEGSEDI approved and on track to launch in the EU
Positive FDA Advisory Committee vote recommending approval of WAYLIVRA
Conference call and webcast today, August 7, 2018, at 11:30 a.m. Eastern Time

CARLSBAD, Calif., Aug. 7, 2018 /PRNewswire/ -- Ionis Pharmaceuticals, Inc. (Nasdaq: IONS) today reported financial results for the second quarter of 2018 and highlighted its recent business and pipeline successes.

Ionis Pharmaceuticals (PRNewsFoto/Ionis Pharmaceuticals, Inc.)

"With the approval of TEGSEDI in Europe, Ionis is entering a new chapter as a multi-product, sustainably profitable company. We anticipate the approval and launch of TEGSEDI and WAYLIVRA in multiple markets this year," said Stanley T. Crooke, M.D., Ph.D., chairman of the board and chief executive officer of Ionis. "Adding TEGSEDI and WAYLIVRA product sales to growing revenues from SPINRAZA positions Ionis for continued growth. In addition, we expect at least three of our drugs to advance into pivotal trials by the end of 2019, representing our next wave of near-term commercial opportunities. Importantly, we have achieved these successes while generating operating profits due to the combination of our efficient technology platform and business strategy."

Second Quarter 2018 Financial Highlights

  • Revenues increased by 15 percent 
    • For the second quarter and year-to-date 2018 revenue was $118 million and $262 million, compared to $112 million and $228 million for the same periods in 2017
    • Commercial revenue from SPINRAZA for year-to-date 2018 was $98 million, a three-fold increase over year-to-date 2017
    • Commercial revenue was more than 35 percent of Ionis' total revenue in the first half of 2018 compared to less than 15 percent for the same period in 2017, reflecting Ionis' transition to a commercial company

  • On track for third consecutive year of pro forma operating profitability while investing in the launch of two drugs
    • GAAP operating results were a loss of $50 million and $54 million for the second quarter and year-to-date 2018, respectively, compared to income of $6 million and $26 million for the same periods in 2017
    • Pro forma operating results were a loss of $16 million and income of $9 million for the second quarter and year-to-date 2018, respectively, compared to income of $28 million and $68 million for the same periods in 2017
    • Operating expenses increased primarily due to higher SG&A expenses related to the commercialization of TEGSEDI and WAYLIVRA

  • Substantial cash position of $2 billion enabling investment in commercial products and pipeline
    • During the first half of 2018, Ionis received more than $1.2 billion in payments from partners, including $1 billion from Ionis' expanded collaboration with Biogen

"Our strong financial results were driven by a more than three-fold increase in commercial revenue from SPINRAZA compared to last year. Looking ahead to the second half of this year, we expect to continue to strengthen our financial performance as we add product sales from TEGSEDI and potentially WAYLIVRA to our growing SPINRAZA royalties. We also have the potential to earn numerous milestone payments from our partnered programs. In addition, we will have two full quarters of amortization from our expanded Biogen collaboration, providing further revenue growth," said Elizabeth L. Hougen, chief financial officer of Ionis. "We are on track to achieve our third consecutive year of pro forma operating income even as we prepare to launch two new drugs this year. In addition, we expect to end 2018 with more than $1.8 billion in cash."

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. Additionally, Ionis has labeled its prior period financial statements "as revised" to reflect the new revenue recognition accounting standard the Company adopted on January 1, 2018.

Business Highlights

  • TEGSEDI™ (inotersen) – approved in the EU for the treatment of stage 1 or stage 2 polyneuropathy in adult patients with hereditary transthyretin amyloidosis (hATTR)
    • On track for post-summer launch in the EU
    • On track for approval and launch in the U.S. in 2018
    • License agreement with PTC Therapeutics accelerates access to TEGSEDI in Latin America
    • Results from the TEGSEDI pivotal study published in the New England Journal of Medicine
    • Akcea's commercial organization staffed; patient support program and supply chain in place

  • WAYLIVRA™ (volanesorsen) – potential first treatment for people with FCS
    • U.S. FDA Division of Metabolism and Endocrinology Products Advisory Committee voted in favor of approving WAYLIVRA
    • On track for approval and launch in the U.S. and EU in 2018
    • License agreement with PTC Therapeutics accelerates access to WAYLIVRA in Latin America
    • Akcea's commercial organization staffed; patient support program and supply chain in place

  • SPINRAZAthe first and only approved treatment for people with spinal muscular atrophy
    • SPINRAZA, commercialized by Biogen, continues to generate growth, with global sales of $423 million in the second quarter of 2018, a 250 percent increase from the second quarter of 2017
    • 10 percent of adults with SMA in the U.S. are currently on SPINRAZA treatment, a 20 percent increase from last quarter. Adult patients represent 60 percent of the U.S. SMA patient population
    • More than 5,000 people with SMA are now on SPINRAZA, representing a 28 percent increase from last quarter
    • Access outside the U.S. is expanding with reimbursement in 24 countries; Biogen expects reimbursement in at least four more countries by the end of 2018

Pipeline Progress

  • European Union granted PRIME designation to IONIS-HTTRx (RG6042), potentially providing accelerated assessment for the treatment of people with Huntington's disease
  • European Medicines Agency granted Orphan Drug Designation to IONIS-MAPTRx for the treatment of people with frontotemporal dementia
  • Ionis earned a $7.5 million milestone payment when the FDA approved Achaogen's ZEMDRI™ (plazomicin) for the treatment of people with complicated urinary tract infections.

Key Upcoming Events

  • TEGSEDI EU launch
  • TEGSEDI U.S. approval and launch
  • WAYLIVRA U.S. and EU approval and launch
  • Pivotal study of IONIS-HTTRx in patients with Huntington's disease initiation by Roche
  •  Results from a Phase 2 clinical study of AKCEA-APO(a)-LRx in patients with high Lp(a) and cardiovascular disease
  • Results from a Phase 1/2 study of IONIS-SOD1Rx in patients with ALS and mutations in SOD1
  • Phase 1 clinical study of IONIS-AZ4-2.5-LRx, Ionis' first Generation 2.5 LICA drug to enter clinical development

Revenue

Ionis' revenue in the three and six months ended June 30, 2018 was $117.7 million and $262.2 million, respectively, compared to $112.3 million and $228.1 million for the same periods in 2017 and was comprised of the following (amounts in millions):



Three months ended,


Six months ended




June 30,


June 30,




2018


2017


2018


2017


Revenue:


(as revised)




(as revised)


     Commercial revenue:










SPINRAZA royalties


$57


$23


$98


$28


Licensing and royalty revenue


-


1


1


4


Total commercial revenue


57


24


99


32


R&D Revenue:










Amortization from upfront payments


34


26


61


47


Milestone payments


12


59


18


78


License fees


1


1


63


65


Other services


14


2


21


6


Total R&D revenue


61


88


163


196


Total revenue


$118


$112


$262


$228


The increase in revenue in the first half of 2018 compared to the same period in 2017 was primarily due to the increase in commercial revenue from SPINRAZA royalties, which increased over 250%. Revenue from the amortization of upfront payments increased due to Ionis' expanded strategic neurology collaboration with Biogen. Ionis expects that the quarterly amortization from this collaboration will be nearly $14 million beginning in the third quarter. In the second quarter and year-to-date 2017, revenue included the $50 million milestone payment from Biogen for SPINRAZA approval in the EU. License fees in the first half of 2018 were $63 million, primarily from AstraZeneca for the license of IONIS-AZ5-2.5Rx and IONIS-AZ6-2.5-LRx compared to $65 million in 2017, primarily from Bayer for the license of IONIS-FXI-LRx.

Operating Expenses

Operating expenses for the three and six months ended June 30, 2018 on a GAAP basis were $168.0 million and $315.7 million, respectively, and on a pro forma basis were $134.2 million and $253.4 million, respectively. These amounts compare to GAAP operating expenses for the three and six months ended June 30, 2017 of $105.8 million and $202.1 million, respectively, and pro forma operating expenses of $84.6 million and $160.0 million, respectively. Operating expenses increased in the first half of 2018, compared to the same period in 2017, principally due to higher SG&A expenses as Akcea, Ionis' commercial affiliate, prepares to commercialize TEGSEDI and WAYLIVRA. The Company's SG&A expenses also increased in the first half of 2018 compared to the first half of 2017 due to an increase in fees the Company owed under its in-licensing agreements related to SPINRAZA. R&D expenses accounted for a smaller portion of the increase in operating expenses. R&D expenses increased primarily from medical affairs expenses related to the planned launch of TEGSEDI and WAYLIVRA.

Net Income (Loss)

Ionis reported a net loss of $56.6 million and $67.4 million for the three and six months ended June 30, 2018, respectively, compared to a net loss of $3.1 million and net income of $5.9 million for the same periods in 2017, all according to GAAP. On a pro forma basis, Ionis reported a net loss of $22.7 million and $5.1 million for the three and six months ended June 30, 2018, respectively, compared to net income of $18.2 million and $48.0 million for the same periods in 2017. Ionis' GAAP net loss increased in the first half of 2018 primarily due to increased operating expenses related to the commercialization of TEGSEDI and WAYLIVRA.

Net Loss Attributable to Noncontrolling Interest in Akcea Therapeutics, Inc.

From the closing of Akcea's IPO in July 2017 through mid-April 2018, Ionis owned 68 percent of Akcea. In April 2018, Ionis received an additional 18.7 million shares of Akcea's stock from the license of TEGSEDI and AKCEA-TTR-LRx to Akcea, increasing Ionis' ownership percentage to approximately 75 percent. Ionis' second quarter and year-to-date 2018 financial results reflect this increased ownership. The shares held by third parties represent an interest in Akcea's equity that Ionis does not control. However, because Ionis continues to maintain overall control of Akcea, Ionis reflects the assets, liabilities and results of operations of Akcea in Ionis' consolidated financial statements. Ionis reflects the noncontrolling interest attributable to other holders of Akcea's common stock in a separate line called "Net loss attributable to noncontrolling interest in Akcea" on Ionis' statement of operations. Ionis' net loss attributable to noncontrolling interest in Akcea for the three and six months ended June 30, 2018, was $16.2 million and $25.6 million, respectively. Ionis also added a corresponding account in its stockholders' equity section on its balance sheet called "Noncontrolling interest in Akcea Therapeutics, Inc."

Net Income (Loss) Attributable to Ionis Common Stockholders

Ionis reported a net loss attributable to Ionis' common stockholders of $40.4 million and $41.8 million for the three and six months ended June 30, 2018, respectively, compared to a net loss of $3.1 million and net income of $5.9 million for the same periods in 2017. For the three months ended June 30, 2018 and 2017, basic and diluted net loss per share were $0.29 and $0.02, respectively. For the six months ended June 30, 2018, basic and diluted net loss per share were each $0.30. For the six months ended June 30, 2017, basic and diluted net income per share were each $0.05. All amounts are on a GAAP basis.  

Balance Sheet

As of June 30, 2018, Ionis had cash, cash equivalents and short-term investments of $2.0 billion compared to $1.0 billion at December 31, 2017. During the first half of 2018, Ionis received over $1.2 billion in payments from its partners, primarily from Biogen.

Webcast and Conference Call

Today, at 11:30 a.m. Eastern Time, 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.

About Ionis Pharmaceuticals, Inc.

Ionis is the leading company in RNA-targeted drug discovery and development focused on developing drugs for patients who have the highest unmet medical needs, such as those patients with severe and rare diseases. Using its proprietary antisense technology, Ionis has created a large pipeline of first-in-class or best-in-class drugs, with over 45 drugs in development. SPINRAZA® (nusinersen) has been approved in global markets for the treatment of spinal muscular atrophy (SMA). Biogen is responsible for commercializing SPINRAZA. TEGSEDI (inotersen) and WAYLIVRA (volanesorsen) are two antisense drugs that Ionis discovered and successfully advanced through Phase 3 studies.  TEGSEDI is approved in the E.U. for the treatment of stage 1 or stage 2 polyneuropathy in adult patients with hereditary transthyretin amyloidosis, or hATTR, and is currently under regulatory review in the U.S. and Canada. WAYLIVRA is under regulatory review for marketing approval in the U.S., EU and Canada for the treatment of patients with familial chylomicronemia syndrome, or FCS. WAYLIVRA is also in a Phase 3 study in patients with familial partial lipodystrophy, or FPL. Akcea Therapeutics, an affiliate of Ionis focused on developing and commercializing drugs to treat patients with serious and rare diseases, will be responsible for commercializing TEGSEDI and WAYLIVRA. Ionis' patents provide strong and extensive protection for its drugs and technology. Additional information about Ionis is available at www.ionispharma.com.

Ionis' Forward-looking Statement

This press release includes forward-looking statements regarding business, financial guidance and the therapeutic and commercial potential of SPINRAZA, TEGSEDI (inotersen), WAYLIVRA (volanesorsen) and Ionis' technologies and products in development, including the business of Akcea Therapeutics, Inc., Ionis' majority owned affiliate. Any statement describing Ionis' 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. Ionis' 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 Ionis' forward-looking statements reflect the good faith judgment of its management, these statements are based only on facts and factors currently known by Ionis. As a result, you are cautioned not to rely on these forward-looking statements. These and other risks concerning Ionis' programs are described in additional detail in Ionis' annual report on Form 10-K for the year ended December 31, 2017, and most recent Form 10-Q quarterly filing, which are on file with the SEC. Copies of this and other documents are available from the Company.

In this press release, unless the context requires otherwise, "Ionis," "Company," "we," "our," and "us" refers to Ionis Pharmaceuticals and its subsidiaries.

Ionis Pharmaceuticals is a trademark of Ionis Pharmaceuticals, Inc.Akcea Therapeutics is a trademark of Akcea Therapeutics, Inc. TEGSEDI is a trademark of Akcea Therapeutics, Inc. WAYLIVRA is a trademark of Akcea Therapeutics, Inc. SPINRAZA® is a registered trademark of Biogen.

IONIS PHARMACEUTICALS, INC.

SELECTED FINANCIAL INFORMATION

Condensed Consolidated Statements of Operations

(In Thousands, Except Per Share Data)





Three months ended,


Six months ended,




June 30,


June 30,




2018


2017


2018


2017




(as revised)


(as revised)


Revenue:


(unaudited)


     Commercial revenue:










SPINRAZA royalties


$56,653


$22,366


$97,734


$27,577


Licensing and royalty revenue


545


1,322


1,487


3,912


Total commercial revenue


57,198


23,688


99,221


31,489


    Research and development revenue under collaborative agreements


60,549


88,585


162,944


196,584


Total revenue


117,747


112,273


262,165


228,073


Expenses:










    Research, development and patent


101,830


83,506


205,897


166,144


    Selling, general and administrative


66,198


22,317


109,851


35,994


Total operating expenses


168,028


105,823


315,748


202,138


Income (loss) from operations


(50,281)


6,450


(53,583)


25,935


Other income (expense):










Investment income


5,134


2,465


8,748


4,744


Interest expense


(11,113)


(11,778)


(22,051)


(23,141)


Other expenses


45


-


(123)


(1,438)


Income (loss) before income tax expense


(56,215)


(2,863)


(67,009)


6,100












Income tax expense


(358)


(222)


(372)


(222)












Net income (loss)


$(56,573)


$(3,085)


$(67,381)


$5,878


Net loss attributable to noncontrolling interest in Akcea Therapeutics, Inc.

Inc.


16,215


-


25,606


-


Net income (loss) attributable to Ionis Pharmaceuticals, Inc. common stockholders


$(40,358)


$(3,085)


$(41,775)


$5,878












Basic net income (loss) per share


$(0.29)


$(0.02)


$(0.30)


$0.05


Diluted net income (loss) per share


$(0.29)


$(0.02)


$(0.30)


$0.05


Shares used in computing basic net income (loss) per share


128,712


123,989


127,030


123,428


Shares used in computing diluted net income (loss) per share


128,712


123,989


127,030


125,511


 

IONIS PHARMACEUTICALS, INC.

SELECTED FINANCIAL INFORMATION

Condensed Consolidating Statement of Operations

(In Thousands)



Six months ended,
June 30, 2018
(unaudited)





Ionis


Akcea


Eliminations


Ionis Consolidated

Revenue:



     Commercial revenue:









SPINRAZA royalties


$97,734


$-


$-


$97,734

Licensing and royalty revenue


1,487


-


-


1,487

Total commercial revenue


99,221


-


-


99,221

    Research and development revenue under collaborative agreements


127,515


35,429


-


162,944

    Intercompany revenue


5,229


-


(5,229)


-

Total revenue


231,965


35,429


(5,229)


262,165

Expenses:









    Research, development and patent expenses


143,770


67,427


(5,300)


205,897

    Selling, general and administrative


47,649


61,752


450


109,851

Total operating expenses


191,419


129,179


(4,850)


315,748

Income (loss) from operations


40,546


(93,750)


(379)


(53,583)

Other income (expense):









Investment income


6,334


2,414


-


8,748

Interest expense


(22,051)


-


-


(22,051)

Other expenses


-


(123)


-


(123)

Income (loss) before income tax expense


24,829


(91,459)


(379)


(67,009)










Income tax expense


(158)


(214)


-


(372)










Net income (loss)


24,671


(91,673)


(379)


$(67,381)

Net loss attributable to noncontrolling interest in Akcea Therapeutics, Inc.

Inc.


-


-


25,606


$25,606

Net income (loss) attributable to Ionis Pharmaceuticals, Inc. common stockholders


$24,671


$(91,673)


$(25,227)


$(41,775)

 

IONIS PHARMACEUTICALS, INC.

Reconciliation of GAAP to Pro Forma Basis:

Condensed Consolidated Operating Expenses, Income (Loss) From Operations, and Net
Income (Loss)




Three months ended,
June 30,


Six months ended,
June 30,



2018


2017


2018


2017



(as revised)


(as revised)



(unaudited)

As reported operating expenses according to GAAP


$168,028


$105,823


$315,748


$202,138

    Excluding compensation expense related to equity awards      


(33,876)


(21,258)


(62,327)


(42,170)










Pro forma operating expenses


$134,152


$84,565


$253,421


$159,968










As reported income (loss) from operations according to GAAP


$(50,281)


$6,450


$(53,583)


$25,935

Excluding compensation expense related to equity awards


(33,876)


(21,258)


(62,327)


(42,170)

Pro forma income (loss) from operations


$(16,405)


$27,708


$8,744


$68,105

As reported net income (loss) attributable to Ionis Pharmaceuticals, Inc. common stockholders according to GAAP


$(40,358)


$(3,085)


$(41,775)


$5,878

Excluding compensation expense related to equity awards


(33,876)


(21,258)


(62,327)


(42,170)

Pro forma net income (loss) attributable to Ionis Pharmaceuticals, Inc. common stockholders according to GAAP


$(6,482)


$18,173


$20,552


$48,048

Reconciliation of GAAP to Pro Forma Basis

As illustrated in the Selected Financial Information in this press release, pro forma operating expenses, pro forma income (loss) from operations, and pro forma net income (loss) were adjusted from GAAP to exclude compensation expense related to equity awards, which are non-cash. Ionis has regularly reported non-GAAP measures for operating results as pro forma results. These measures are provided as supplementary information and are not a substitute for financial measures calculated in accordance with GAAP. Ionis 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 Ionis' pro forma results is consistent with how Ionis' management internally evaluates the performance of its operations.

IONIS PHARMACEUTICALS, INC.

Condensed Consolidated Balance Sheets
(In Thousands) (unaudited)









June 30,


December 31,



2018


2017





(as revised)

Assets:





  Cash, cash equivalents and short-term investments


$1,980,450


$1,022,715

  Contracts receivable


16,761


62,955

  Other current assets


86,061


83,064

  Property, plant and equipment, net


127,940


121,907

  Other assets


36,103


32,133

     Total assets


$2,247,315


$1,322,774






Liabilities and stockholders' equity:





  Other current liabilities


$88,030


$118,276

  Current portion of deferred contract revenue


160,589


125,336

  1% convertible senior notes


550,328


533,111

  Long-term obligations, less current portion


74,346


72,745

  Long-term deferred contract revenue


556,586


108,026

  Total Ionis stockholders' equity


696,255


281,013

  Noncontrolling interest in Akcea Therapeutics, Inc.


121,181


84,267

  Total stockholders' equity


817,436


365,280

    Total liabilities and stockholders' equity


$2,247,315


$1,322,774







 

IONIS PHARMACEUTICALS, INC.

Condensed Consolidating Balance Sheet

(In Thousands)












June 30, 2018

(unaudited)









Ionis



Ionis


Akcea


Eliminations


 Consolidated










Assets:









  Cash, cash equivalents and short-term investments


$1,598,599


$381,851


$-


$1,980,450

  Contracts receivable


13,466


3,295


-


16,761

  Receivable from Akcea Therapeutics, Inc.


27,137


-


(27,137)


-

  Other current assets


82,486


3,575


-


86,061

  Property, plant and equipment, net


126,417


1,523


-


127,940

  Other assets


502,993


4,761


(471,651)


36,103

     Total assets


$2,351,098


$395,005


$(498,788)


$2,247,315










Liabilities and stockholders' equity:









  Other current liabilities


$53,669


$61,498


$(27,137)


$88,030

  Current portion of deferred contract revenue


129,583


35,713


(4,708)


160,589

  1% convertible senior notes


550,328


-


-


550,328

  Long-term obligations, less current portion


72,795


1,551


-


74,346

  Long-term deferred contract revenue


552,445


5,839


(1,698)


556,586

  Total stockholders' equity before noncontrolling interest

Interest


992,278


290,404


(586,427)


696,255

  Noncontrolling interest in Akcea Therapeutics, Inc.


-


-


121,181


121,181

  Total stockholders' equity


992,278


290,404


(465,246)


817,436

    Total liabilities and stockholders' equity


$2,351,098


$395,005


$(498,788)


$2,247,315

















 

SPINRAZA Q2 2017 – Q2 2018 Patient Dynamics


U.S. Patient Dynamics*

Q2:17

Q3:17

Q4:17

Q1:18

Q2:18

Total patients

710

1,230

1,640

1,910

2,160

New patient starts

500

520

420

290

270

Average doses per patient

2.6

1.9

1.6

1.1

1.1

% Loading doses

100%

90%

75%

60%

45%

% Maintenance doses

0%

10%

25%

40%

55%

% Free doses

20%

20%

20%

20%

15%

*As announced by Biogen in their Q2:18 Earnings call

 

Cision View original content with multimedia:http://www.prnewswire.com/news-releases/ionis-reports-second-quarter-2018-financial-results-300692891.html

SOURCE Ionis Pharmaceuticals, Inc.

Ionis Pharmaceuticals Investor Contact: D. Wade Walke, Ph.D., Vice President, Investor Relations, 760-603-2741, Ionis Pharmaceuticals Media Contact: Roslyn Patterson, Vice President, Corporate Communications, 760-603-2681

©1999 - 2017 Ionis Pharmaceuticals™ is a trademark of Ionis Pharmaceuticals, Inc. Akcea Therapeutics™ is a trademark of Ionis Pharmaceuticals, Inc.