On August 7, 2018 Ionis Pharmaceuticals, Inc. (Nasdaq: IONS) reported financial results for the second quarter of 2018 and highlighted its recent business and pipeline successes (Press release, Ionis Pharmaceuticals, AUG 7, 2018, View Source [SID1234528559]).
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"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
SPINRAZA – the 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
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.