69
Gainon Investments, Net
Net gainon investments for the year endedDecember 31, 2013was $2.4million compared to $1.5million for 2012. The net
gainon investments in2013was primarily due to the $1.1milliongainwe realizedwhenwe sold the stockwe held inSarepta
Therapeutics, Inc., the $490,000gainwe realizedwhenwe sold a portionof the stockwe hold in iCoTherapeutics Inc., and the
$844,000payment we received fromPfizer, Inc. related to its acquisitionof ExcaliardPharmaceuticals, Inc. During2012we
recognized a $1.5millionnet gainon investments primarily consistingof the $1.3millionpayment we received fromPfizer, Inc.
related to its acquisitionof Excaliard. These gains demonstrate the value that we are realizing fromour satellite company strategy.
See further discussion about our investments inExcaliard and iCoTherapeutics Inc. inNote 7,
CollaborativeArrangements and
LicensingAgreements
, in theNotes to theConsolidatedFinancial Statements.
EarlyRetirement ofDebt
Loss on early retirement of debt for the year endedDecember 31, 2012was $4.8million, reflecting the early redemptionof
our 2
5
/
8
percent convertible notes in the secondhalf of 2012.We didnot recognize any loss on early retirement of debt in 2013.
IncomeTaxBenefit
In2013, we recorded a taxbenefit of $5.9million, which reflectedour application of the intraperiod tax allocation
rules underwhichwe are required to record a taxbenefit in continuingoperations tooffset the taxprovisionwe recordeddirectly to
other comprehensive income primarily related tounrealizedgains onour equity investments inour satellite companies, including
Regulus. Our income tax benefit declined from$9.1million in2012because the unrealizedgains in2013were not as large as in
2012.
Net Loss andNet Loss Per Share
Net loss for the year endedDecember 31, 2013was $60.6million compared to$65.5million for 2012. Basic anddilutednet
loss per share for the year endedDecember 31, 2013was $0.55per share compared to$0.65 per share for 2012. Our net loss in2013
decreased compared to2012due to a decrease inour net operating loss resulting primarily from the significant increase in revenue
thatwe earned fromour partners in2013. The decrease inour net operating losswas partiallyoffset by the following items that
occurred in2012 anddidnot reoccur in2013:
$18.4million gainwe realized in2012because of the increase inRegulus’ valuation resulting from its IPO; and
$4.8million loss, $3.6millionofwhichwas non-cash, we recorded in2012on the early retirement of our 2
5
/
8
% convertible
subordinatednotes.
Net OperatingLossCarryforward
At December 31, 2013, we had federal andCalifornia tax net operating loss carryforwards of approximately $685.8million
and$894.9million, respectively.We alsohad federal andCalifornia research credit carryforwards of approximately$62.6million and
$22.2million, respectively. Our federal andCalifornia tax loss carryforwards expire at various dates starting in2014, unlesswe use
thembefore then. Our net operating loss and tax credit carryforwardsmaybe subject to an annual limitation regardingutilization
against taxable income in future periods due to “change of ownership” provisions of theTaxReformAct of 1986.We believe that
such limitationwill not have amaterial adverse impact on thebenefits thatmay arise fromour net operating loss and tax credit
carryforwards.
YearsEndedDecember 31, 2012 andDecember 31, 2011
Revenue
Total revenue for the year endedDecember 31, 2012was $102.0million compared to$99.1million for 2011. Our revenue
fluctuates basedon the nature and timingof payments under agreementswith our partners, including license fees,milestone-related
payments andother payments. For example, in 2012, we recognized revenue fromnew sources in connectionwith the license for
ISIS-STAT3
Rx
whichwe granted toAstraZeneca under our strategic alliance onRNA therapeutics for cancer, our three new
collaborationswithBiogen Idec and theKYNAMROFDA acceptancemilestone fromGenzyme. At the same time, in 2012, revenue
from amortizationof the upfront payments associatedwith theGenzyme collaboration ended as planned inmid-2012.
