Isis Pharmaceuticals, Inc. (ISIS)
Q1 2009 Earnings Call
May 7, 2009 08:30 am ET
Executives
Dr. Stanley Crooke - Founder, Chairman, Chief Executive Officer
B. Lynne Parshall - Chief Operating Officer, Chief Financial Officer
Kristina Lemonidis - Director of Corporate Communications
Analysts
Salveen Kochnover - Collins Stewart
Mark Monane - Needham & Co.
Edward Tenthoff - Piper Jaffray
Jim Birchenough - Barclays Capital
Craig Gordon - Cowen & Co.
Lucy Lu - Citi
Presentation
Operator
Good day everyone and welcome to the Isis Pharmaceuticals 2009 first quarter financial results conference call. Today’s call is being recorded. Leading the call today from Isis is Dr. Stan Crooke, Isis’ Chairman and CEO.
Dr. Stanley Crooke
Good morning and thank you for joining us on today’s conference call to discuss our first quarter financial results. Joining us on today’s call are Lynne Parshall, COO and CFO; and Kristina Lemonidis, Director of Corporate Communications.
The purposes of the call today are to report our financial performance for the first quarter of 2009 and to give you a brief update on what’s going in the business. So, I’ll have Lynne go over the financial results and then I’ll give you an update on the business and highlights to look forward to. First, Kris, will you read our forward-looking statement.
Kristina Lemonidis
Good morning. A reminder to everyone that this webcast includes forward-looking statements regarding Isis’ 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 in 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 in human therapeutics and immune to ever building a business around such products.
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’ forward-looking statements reflect the good faith and judgment of its management, these statements are based only on facts and factors 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, 2008, which is on file with the SEC. Copies of these and other documents are available from the company.
B. Lynne Parshall
Good morning everyone and thank you for joining us today. In addition to a brief discussion of the financial highlights of the quarter, I’d like to provide some guidance to you that some of the line items of our P&L much as I did during our year-end earnings call in February. At that time I had provided some details about the components of our revenue. This morning I’d like to spend a few minutes explaining how those components are reflected in our first quarter revenue. Also, many of you have asked us to provide a similar level of granularity on our operating expenses; so I’d like to do that for you this morning too. Next, we have some new items affecting our P&L which are briefly discussed with you so that you can understand why some of these things were different in our financial statements this quarter. Lastly, I’d like to spend a few minutes discussing the recent successes of our satellite company strategy.
Clearly one of the highlights of our first quarter was the sale of our diagnostic subsidiary Ibis to Abbott Molecular. Not only was this transaction a substantial contributor to our first quarter net income allowing us to achieve our fourth profitable quarter in the past three years, but the $175 million we received from the completion of the sale also considerably increased our cash position. We ended the first quarter in a very strong financial position with over $650 million in cash, and we’re on track to meet our guidance, which is to end this year with more than $550 million in cash and pro forma net income greater than $145 million. We’re pleased in this environment to be one of the few very well funded biotechnology companies and our business strategies enable us to maintain that position.
As you are aware, our business strategy is to discover unique antisense drugs, develop these drugs to key value and function points, and the partner them. In this way we can control our size, infrastructure, and expenses by building a very large pipeline as a broad base of license fees, milestone payments, and product revenue.
As I reviewed in our last conference call, the revenue we earn consists of three primary components. The first component is revenue from the amortization of upfront fees we receive from our partners. Our first quarter 2009 revenue was almost twice that of the first quarter last year, principally because of the amortization of the upfront payments we received through licensing mipomersen to Genzyme last year.
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