- Isis ends the second quarter with more than $535 million in cash

- Conference Call Webcast Thursday, August 7, 8:30 a.m. EDT at http://www.isispharm.com

CARLSBAD, Calif., Aug. 7 /PRNewswire-FirstCall/ -- Isis Pharmaceuticals, Inc. (Nasdaq: ISIS) today announced its financial results for the second quarter ended June 30, 2008. The Company ended the quarter in the strongest financial position in its history with more than $535 million of cash and $873,000 of pro forma operating income in the second quarter.

'Over the last year we have added significant cash through our recent collaborations. More importantly, as our corporate alliances continue to be successful, we will continue to add cash to our balance sheet and revenue to our P&L. We remain on track to end 2008 with more than $450 million in cash and to meet our pro forma net operating loss guidance of less than $15 million for the year,' commented B. Lynne Parshall, COO and CFO of Isis.

'Our strong financial position is a result of the successful execution of our business strategy, enabled by the efficiency of our antisense technology. The transactions we have completed balance both our short-term and long-term objectives. In addition, the maturation of our satellite companies is providing exactly the types of financial benefits for which they were created,' continued Ms. Parshall. 'Because of our partnering successes, we have reported our second profitable quarter in the past year. While we are not yet at the point of sustainable profitability and our quarter-to-quarter performance will continue to fluctuate based on one-time events such as the Teva-ATL license fee, our significant continuing revenue base coupled to our business model supports expansion of our pipeline while controlling our expenses, which we believe will lead to continuing strong financial performance.'

    Upcoming Key Milestones
    --  Initiate three trials in addition to the Phase 3 study in patients
        with heterozygous Familial Hypercholesterolemia (FH) announced this
        week, studying mipomersen in apheresis-eligible patients and high-risk
        high cholesterol patients
    --  Present liver imaging safety data on mipomersen
    --  Initiate Phase 1 clinical study on ISIS 353512, Isis' drug targeting
        CRP for the treatment of cardiovascular, renal and inflammatory
        diseases
    --  Report Phase 2 study data in type 2 diabetics treated with ISIS 113715
        and sulfonylureas
    --  Complete Phase 1 study with ISIS 325568, targeting GCGR for the
        treatment of type 2 diabetes
    --  Initiate Phase 1 study on ISIS 333611, Isis' first CNS drug targeting
        SOD1 for the treatment of ALS
    --  Advance a second new drug candidate into development
    --  Potential acquisition of Ibis by Abbott

Financial Results

Isis had $873,000 of pro forma profit from operations in the second quarter of 2008 and a pro forma net operating loss (NOL) for the six months ended June 30, 2008 of $4.2 million, excluding compensation expense related to stock options, compared to an NOL of $17.3 million and $35.8 million during the same periods in 2007. On a GAAP basis, Isis recorded a loss from operations for the three and six months ended June 30, 2008 of $3.1 million and $12.0 million, respectively, compared to $19.7 million and $40.6 million for the same periods in 2007. The significant improvement in the Company's pro forma and GAAP operating results was driven primarily by the significant increase in revenue in 2008 from Isis' corporate partnerships. This was offset, in part, by higher expenses associated with the expansion of the companies' programs and, for Isis' GAAP results, an increase in non-cash stock compensation expense reflecting the increase in Isis' stock price over the same periods. The reconciliation of pro forma and GAAP measures is explained later in this release.

Revenue

Total revenue for the three and six months ended June 30, 2008 of $33.0 million and $54.3 million, respectively, was significantly higher than the revenue from the same periods in 2007 of $3.8 million and $6.3 million as a result of Isis' new collaborations. As part of Isis' strategic relationship with Genzyme Corporation, in the first quarter of 2008 Genzyme purchased $150 million of Isis stock at $30 per share and in the second quarter paid Isis a licensing fee of $175 million. Isis is amortizing the premium on the stock and the license fee into revenue through June 2012. Additionally, in the second quarter of 2008, Isis continued to recognize significant value from its partnerships, satellite companies and subsidiaries including:

    --  $2.0 million milestone payment from Bristol-Myers Squibb for a PCSK9
        development candidate
    --  $4.6 million from Alnylam Pharmaceuticals, Inc.
    --  $1.4 million from Antisense Therapeutics Limited
    --  $3.3 million from Ibis representing a 72% increase from second half of
        2007
    --  $656,000 of revenue from Regulus primarily from its GlaxoSmithKline
        (GSK) alliance

Operating Expenses

On a pro forma basis, operating expenses for the three and six months ended June 30, 2008 were $32.1 million and $58.5 million, respectively, compared to $21.1 million and $42.1 million for the same periods in 2007. The increase in operating expenses year over year is due to Isis' expanded clinical development programs as its drugs advance in development, an increase in Ibis' operating expenses to support the growth of its commercial business and the activities to achieve the Abbott milestones, and expenses for Regulus, which began in September 2007. On a GAAP basis, Isis' operating expenses for the three and six months ended June 30, 2008 were $36.1 million and $66.3 million, respectively, compared to $23.5 million and $46.8 million for the same periods in 2007, including non-cash compensation expense related to stock options of $4.0 million and $7.8 million for the three and six months ended June 30, 2008 and $2.4 million and $4.8 million for the same periods in 2007.

Net Loss

Isis' net loss for the three and six months ended June 30, 2008 was $2.2 million and $6.5 million, respectively, compared to $11.0 million and $24.0 million for the same periods in 2007. Isis' net loss for the first half of 2008 was lower than the first half of 2007 primarily due to the decrease in the Company's loss from operations.

Balance Sheet

As of June 30, 2008, Isis had cash, cash equivalents and short-term investments of $537.0 million compared to $193.7 million at December 31, 2007. In 2008, Isis has received a significant amount of cash from its partners including:

    --  $325.0 million from Genzyme
    --  $40.5 million from Abbott
    --  $20.0 million from GSK

As of June 30, 2008, Isis had consolidated working capital of $428.1 million compared to $145.1 million at December 31, 2007. The cash Isis received in the first half of 2008 primarily led to the increase in Isis' consolidated working capital, offset by $68.9 million of deferred revenue from Genzyme and GSK that is included in current liabilities.

Based on Isis' existing and committed cash, not including the cash Isis could receive from Abbott if Abbott completes its purchase of Ibis, Isis remains on track to meet its cash guidance with a 2008 year end cash balance greater than $450 million, which the Company expects will last for at least five years.

Ibis Biosciences, Inc.

Ibis' revenue for the three and six months ended June 30, 2008 was $3.3 million and $6.2 million, respectively, compared to $1.9 million and $3.5 million for the same periods in 2007.