Isis Pharmaceuticals Inc. (ISIS) filed Quarterly Report for the period ended 2009-09-30.
Isis Pharmaceuticals Inc. is a leading genomics-based drug discoveryand development company that is focused on RNA. RNA is a novel target for drug discovery and Isis has established a dominant position in RNA research. The company has integrated the expertise in molecular and cellular biology medicinal chemistry RNA biochemistry bioinformatics pharmacology and clinical development to create two exciting technologies antisense and Ibis a robust pipeline of drugs in development and genomics services. Isis Pharmaceuticals Inc. has a market cap of $1.33 billion; its shares were traded at around $13.55 with and P/S ratio of 12.5.
Highlight of Business Operations:
Ibis Biosciences, Inc. In January 2009, we sold our Ibis Biosciences subsidiary to AMI for a total purchase price of $215 million. In 2008, AMI invested $40 million in Ibis, which provided the capital for Ibis to make significant progress in expanding commercial product offerings and building the foundation for Ibis to enter regulated markets, such as clinical diagnostics. When AMI completed the acquisition of Ibis, we received an additional $175 million. We are also eligible to receive an earn out on future sales of Ibis products that will enable us and our shareholders to continue to benefit from Ibis’ successes. The earn out payments from AMI are equal to a percentage of Ibis’ revenue related to sales of Ibis systems, including instruments, assay kits and successor products, through the end of 2025. The earn out payments will be 5% of net sales over $140 million through net sales of $2.1 billion and 3% of net sales over $2.1 billion, with the percentages subject to reduction in certain circumstances.
As a result of selling Ibis to AMI, Ibis’ financial results are considered discontinued operations. Accordingly, we have presented the operating results of Ibis for all prior periods in our financial statements separately as discontinued operations and therefore Ibis is no longer included in our segment reporting. Net income from discontinued operations in the first nine months of 2009 primarily consists of a $202.5 million gain related to the sale of Ibis to AMI less $30.7 million of income taxes.
Total revenue for the three and nine months ended September 30, 2009 was $26.8 million and $89.3 million, respectively, compared to $29.5 million and $77.5 million for the same periods in 2008. Our revenue fluctuates based on the nature and timing of payments under agreements with our partners, including license fees, milestone-related payments and other payments. In August 2009, we finished amortizing the revenue associated with the $50 million upfront payment we received from OMJP in 2007 resulting in less revenue in the third quarter of 2009 compared to the same period in 2008. Our revenue for the first nine months of 2009 increased compared to the same period in 2008 due primarily to an increase in revenue from our collaboration with Genzyme. As part of our strategic relationship with Genzyme, in the first quarter of 2008 Genzyme purchased $150 million of our common stock at $30 per share and in the second quarter paid us a license fee of $175 million. We are amortizing the premium on the stock, $100 million calculated using a Black-Scholes option valuation model, and the license fee ratably into revenue through June 2012, which represents the end of our performance obligation based on the research and development plan included in the agreement.
ISIS is in the portfolios of Jean-Marie Eveillard of Arnhold & S. Bleichroeder Advisers, LLC.
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