A Pro Forma Profit for ISIS Pharmaceuticals, Inc.

Isis Pharmaceuticals (IONS -0.32%) reported earnings on Monday, and while the company does have a drug on the market, the focus is still entirely on the pipeline.

Isis Pharmaceuticals results: The raw numbers

Source: company press release.

What happened with Isis Pharmaceuticals this quarter?

• While Isis turned a profit this quarter on a pro forma basis, it's not because of revenue from its only drug, Kynamaro -- the company still isn't breaking out sales of the drug. Instead, most of the revenue is coming from licensing ISIS-FXI Rx to Bayer and from earned milestone payments.
• For instance, in the third quarter, the company earned a $22 million milestone payment from Roche for initiating the phase 1/2 study of ISIS-HTT Rx and an $11 million of milestone payments from Biogen Idec (BIIB 2.03%) for advancing the phase 3 studies of nusinersen, which used to be called ISIS-SMN Rx.
• The phase 3 trials for nusinersen are scheduled to complete enrollment by early next year. Given the unmet need for spinal muscular atrophy, nusinersen is ISIS' most obvious near-term big opportunity for its partnered programs.
• Of the unpartnered drugs, ISIS-APO(a) Rx and its related ligand conjugated antisense (LICA) drug, which recently released positive data, are on the right track toward approval.
• Isis plans to end the year with more than $750 million in cash.

What management had to say
The LICA APO(a) data is important for that drug, but as Stan Crooke, Isis Pharmaceuticals' chairman and CEO, said, the value in LICA technology extends beyond APO(a): "These data support the potential to dose this and our other LICA drugs weekly, monthly, quarterly, or even less frequently with a small and conveniently administered dose. This profile should open up much broader patient populations for all of our LICA drugs."

Lynne Parshall, Isis Pharmaceuticals' chief operating officer, hemmed and hawed about the potential for nusinersen to get an early FDA approval before the phase 3 data is in:

Our goal in these conversations [with the FDA] is to achieve the most expeditious path to the market for nusinersen. These conversations take time, but they have our absolute focus and commitment. We and Biogen are actively working on preparations for regulatory filings so that we'll be ready to file at the earliest possible date, and we're particularly pleased that Biogen is already working on pre-commercial activities with nusinersen.

Looking forward
Isis is in solid shape, with 38 drugs in development. Beyond nusinersen and ISIS-APO(a) Rx, look forward to data from the ISIS-TTR Rx phase 3 trial in TTR amyloidosis, which will finish enrollment this year, and data from anti-coagulant Isis-FXI Rx, the compound licensed to Bayer.

Continuing to collect milestone payments and licensing out drugs that don't fit in the company's core is a great way to generate funds while it waits for its second -- and beyond -- drug approval.