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Also,manufacturers, includingus,must adhere to theFDA’s currentGoodManufacturingPractices regulations and similar
regulations in foreign countries, which the applicable regulatory authorities enforce through facilities inspectionprograms.We andour
contractmanufacturersmaynot complyormaintain compliancewithGoodManufacturingPractices, or similar foreign regulations.
Non-compliance could significantly delay or prevent receipt ofmarketing approval for our drugs, including additional approvals for
KYNAMRO, and initial approvals for ISIS-APOCIII
Rx
, ISIS-SMN
Rx
and ISIS-TTR
Rx
, or result in enforcement action after approval
that could limit the commercial success of our drugs, includingKYNAMRO, ISIS-APOCIII
Rx
, ISIS-SMN
Rx
and ISIS-TTR
Rx
.
We dependon thirdparties to conduct our clinical studies for ourdrugs and any failure of those parties to fulfill their
obligations could adverselyaffect our development and commercializationplans.
We dependon independent clinical investigators, contract researchorganizations andother third-party service providers to
conduct our clinical studies for our drugs and expect to continue todo so in the future. For example, we use clinical research
organizations, such as IconClinical ResearchLimited, INCResearchToronto, Inc. andMedpace for the clinical studies for our drugs,
includingKYNAMRO, ISIS-APOCIII
Rx
, ISIS-SMN
Rx
and ISIS-TTR
Rx
.We relyheavilyon these parties for successful executionof
our clinical studies, but donot controlmany aspects of their activities. For example, the investigators are not our employees. However,
we are responsible for ensuring that these third parties conduct each of our clinical studies in accordancewith the general
investigational plan and approvedprotocols for the study. Thirdpartiesmaynot complete activities on schedule, ormaynot conduct
our clinical studies in accordancewith regulatory requirements or our statedprotocols. The failure of these thirdparties to carryout
their obligations or a termination of our relationshipwith these thirdparties coulddelayor prevent the development, approval and
commercializationof our drugs, including any expandedproduct label forKYNAMRO and initial approvals for ISIS-
APOCIII
Rx
, ISIS-SMN
Rx
and ISIS-TTR
Rx
.
RisksAssociatedwithourBusinesses as aWhole
We have incurred losses, and our businesswill suffer ifwe fail to consistentlyachieve profitability in the future.
Because drugdiscovery anddevelopment requires substantial lead-time andmoney prior to commercialization, our expenses
have generally exceededour revenue sincewewere founded in January 1989. As ofDecember 31, 2013, we had an accumulated
deficit of approximately$967.6million and stockholders’ equityof approximately$378.4million. Most of the losses resulted from
costs incurred in connectionwith our research anddevelopment programs and fromgeneral and administrative costs associatedwith
our operations.Most of our revenue has come from collaborative arrangements, with additional revenue from researchgrants and the
sale or licensingof our patents, aswell as interest income.Wemay incur additional operating losses over the next several years, and
these lossesmay increase ifwe cannot increase or sustain revenue.Wemay not successfully develop any additional products or
achieve or sustain future profitability.
Since corporate partnering is akeypart of our strategy to fund thedevelopment and commercializationof ourdevelopment
programs, if anyof our collaborative partners fail to fundour collaborativeprograms, or ifwe cannot obtainadditional
partners, wemayhave todelayor stopprogress onour drugdevelopment programs.
Todate, corporate partneringhas played a key role inour strategy to fundour development programs and to addkey
development resources.We plan to continue to relyon additional collaborative arrangements todevelop and commercialize our
unpartnereddrugs. However, wemaynot be able tonegotiate favorable collaborative arrangements for these drugprograms. Ifwe
cannot continue to secure additional collaborative partners, our revenues coulddecrease and the development of our drugs could
suffer.
Our corporate partners are developing and/or fundingmany of the drugs inour development pipeline, includingAstraZeneca,
ATL, AtlanticPharmaceuticals, Biogen Idec, iCo, Genzyme, GSK, OncoGenex, Pfizer, Regulus, andTeva Pharmaceutical Industries
Ltd. If any of these pharmaceutical companies stops developing and/or funding these drugs, our business could suffer andwemaynot
have, or bewilling todedicate, the resources available todevelop these drugs onour own.
Our collaborators can terminate their relationshipswithus under certain circumstances,manyofwhich are outside of our
control. In the past, basedon the disappointing results of Phase 3 clinical studies, we had a partner discontinue its investment in one of
our drugs.
