Isis Pharmaceuticals Inc. (ISIS) reported a net loss of 14 cents per share in the fourth quarter of 2010, narrower than the year-ago loss of 16 cents and the Zacks Consensus loss Estimate of 21 cents.
Full year 2010 loss came in at 62 cents, narrower than the Zacks Consensus loss Estimate of 70 cents. Loss, however, increased significantly from the year-ago loss of 31 cents. Full year revenues came in at $108.5 million, down 10.8%. Revenues, however, exceeded the Zacks Consensus Estimate of $106 million.
Quarter in Detail
Fourth quarter revenues, which include license fees, milestone-related payments and other payments, declined 18.1% to $26.4 million. Reported revenues exceeded the Zacks Consensus Estimate of $23 million. We note that the company finished amortizing the revenue associated with the $50 million upfront payment received from Johnson & Johnson’s (JNJ) Ortho-McNeil-Janssen in 2007.
Operating expenses declined 3.8% during the quarter to $42.3 million. While research and development expenses declined 1.9% to $39.3 million, general and administrative expenses declined 23.1% to $2.9 million.
2011 Outlook
Isis provided its outlook for 2011. The company expects net operating loss in the low $40 million range. Revenues are expected to increase by more than $10 million compared to 2010. Isis expects to exit the year with more than $350 million of cash.
Isis expects operating expenses to increase modestly (by about $15 million) in 2011. Isis intends to commence clinical development of ISIS-GSK1Rx, its first candidate under its agreement with GlaxoSmithKline (GSK) in 2011.
Pipeline Update
During 2010, Isis advanced three drugs into phase I development and initiated a phase II study with its anti-cancer drug. Meanwhile, Isis and partner Genzyme (GENZ) intend to file for European approval of mipomersen in the first half of 2011. The US application will be submitted in the second half of 2011.
The companies intend to initially file for the treatment of patients with homozygous familial hypercholesterolemia (hoFH). The filing may also include patients with severe heterozygous FH. Genzyme expects to file in additional territories as well.
The company is also looking to identify a candidate which will incorporate generation 2.5 chemistry, the next step in antisense technology. According to the company, generation 2.5 drugs will be five to ten times more potent than drugs currently in development. The company intends to add 3-5 new drugs to its pipeline during the year.
Neutral on Isis
We currently have a Neutral recommendation on Isis, which is supported by a Zacks #3 Rank (short-term Hold” recommendation). We believe that antisense technology, which is the main area of focus at Isis, represents an exciting and potentially revolutionary platform for developing therapeutic candidates to treat a wide margin of diseases. While we remain positive on Isis antisense technology, we are concerned about the company’s dependence on mipomersen for future growth. Any delay in the development and commercialization of the candidate would weigh heavily on the stock.
GENZYME-GENERAL (GENZ): Free Stock Analysis Report
GLAXOSMITHKLINE (GSK): Free Stock Analysis Report
ISIS PHARMACEUT (ISIS): Free Stock Analysis Report
JOHNSON & JOHNS (JNJ): Free Stock Analysis Report
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