It's been quite a news-filled week for Isis Pharmaceuticals (NASDAQ:IONS). And it's only Tuesday.
Yesterday, Isis announced that it had signed up one of its current partner, AstraZeneca (NYSE:AZN), to a larger deal. Then after the bell, the biotech said that Kynamro passed a phase 3 trial. And today the company released second -quarter earnings, which mostly serves as a pipeline update for the company, since Kynamro sales pale in comparison with revenue from upfront and milestone payments from Isis' partners.
AstraZeneca already has rights to two of Isis' cancer drugs, ISIS-STAT3-2.5Rx and ISIS-AR-2.5Rx, which AstraZeneca calls AZD9150 and AZD5312 respectively, and is also working with Isis to develop other drugs targeted at cancer.
The new discovery deal calls for the British pharma to pay Isis $65 million upfront as well as undisclosed development and regulatory milestones for each program that AstraZeneca advances to clinical development. If the drugs make it to market, Isis is eligible to receive tiered double-digit royalties on annual net sales for each program.
Beyond that information, the duo is keeping mum about the financials of the deal. In fact, all we really know is that the drugs will target cardiovascular, metabolic, and renal diseases. We don't even know how many drugs AstraZeneca has the right to develop.
Kynamro is currently approved to treat patients with homozygous familial hypercholesterolemia. The homozygous part means the patients have two copies of a mutation that causes the patients to not process cholesterol properly, leading to cholesterol levels that are so high that the patients typically die of cardiovascular disease at an early age.
The new trial confirmed that Kynamro can also reduce the level of LDL cholesterol -- that's the bad one -- compared with placebo in patients with severe heterozygous familial hypercholesterolemia. Heterozygous patients have only one mutation, so their cholesterol levels aren't typically as high as homozygous patients, but there's a spectrum of cholesterol levels depending on the mutation. In this trial, Isis' partner Sanofi, was testing severe heterozygotes at the higher end of the spectrum.
Isis didn't disclose the actual level of LDL reduction, although Richard Geary, ISIS' VP of development, said the reduction was "similar to what we've observed in previous phase 3 studies." We'll have to wait until Sanofi presents the data at a medical meeting to know if the reduction is clinically meaningful, but hopefully it'll be enough to gain an expanded approval to market the drug for severe heterozygotes.
And finally, earnings
Isis actually turned a profit for the second quarter, to the tune of $35.6 million.
Of course, the profit was entirely due to the $91.2 million that Isis recognized in revenue from the $100 million upfront payment from Bayer for licensing ISIS-FXI Rx; the rest of the payment will be recognized in future quarters as the drug progresses toward the market. Including the amortization of other upfront fees and milestone payments, Isis brought in $120 million in the second quarter.
While seeing black at the bottom of the profit-loss statement is nice, it's not going to last in the short term. Isis is guiding for a pro forma net operating loss for 2015 in the low $30 million range.
With 38 drugs in the clinic, including 20 in phase 2 or phase 3, it shouldn't be too long until Isis can get to profitability the old-fashioned way: by selling drugs.
Most importantly, Isis has plenty of cash to get there. With the addition of the cash from Bayer, Isis had $755 million in the bank at the end of the quarter. After adding in the $65 million from AstraZeneca and other expected milestone payments this year, Isis thinks it'll end the year with about as much cash as it had at the end of the second quarter.