73
EarlyRetirement ofDebt
InSeptember 2012, we redeemed our 2
5
/
8
percent convertible subordinatednotes. The carryingvalue of the 2
5
/
8
percent
notes onour balance sheet included a discount basedon the estimated fair value of similar debt instrumentswithout the conversion
feature. Wewere amortizing this discount over the expected life of the debt as additional non-cash interest expense. As a result of our
early redemption of the 2
5
/
8
percent notes, we recognized a $4.8million loss primarily related to a non-cashwrite-off of the
unamortizedportionof the debt discount anddebt issuance costs. SeeNote 4,
Long-TermObligations andCommitments
, in theNotes
to theConsolidatedFinancial Statements for additional information about our redemption of the 2
5
/
8
percent notes.
IncomeTaxBenefit
In2012, we recorded a taxbenefit of $9.1million, 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 to the unrealized gainonour investment inRegulus.
Net Loss andNet Loss Per Share
Net loss for the year endedDecember 31, 2012was $65.5million compared to$84.8million for 2011. Basic anddilutednet
loss per share for the year endedDecember 31, 2012was $0.65per share compared to$0.85 per share for 2011. Our net loss for 2012
was significantly lower than2011primarilydue to the $18.4milliongain fromour investment inRegulus and the related$9.1million
income tax benefit offset, inpart, by an increase inour net operating loss, the $4.8million loss on the early retirement of our 2
5
8
percent convertible subordinated notes, additional non-cash interest expensewe recorded for the long-term liability associatedwith
our primary research anddevelopment facility, and slightlyhigher interest expense related toour convertible notes.
Net OperatingLossCarryforward
At December 31, 2012, we had federal andCalifornia tax net operating loss carryforwards of approximately $636.9million
and$561.2million, respectively.We alsohad federal andCalifornia research credit carryforwards of approximately$44.2million and
$18.4million, respectively.
LiquidityandCapitalResources
We have financedour operationswith revenue primarily from research anddevelopment collaborative agreements.
Additionally, we have earned revenue from the sale or licensingof our intellectual property.We have also financedour operations
through the sale of our equity securities and the issuance of long-termdebt. Fromour inception throughDecember 31, 2013, we have
earned approximately$1.3billion in revenue from contract research anddevelopment and the sale and licensingof our intellectual
property. From the timewewere founded throughDecember 31, 2013, we have raised net proceeds of approximately $1.1 billion
from the sale of our equity securities andwe have borrowed approximately$786.9millionunder long-termdebt arrangements to
finance a portionof our operations.
At December 31, 2013, we had cash, cash equivalents and short-term investments of $656.8million and stockholders’ equity
of $378.4million. In comparison, we had cash, cash equivalents and short-term investments of $374.4million and stockholders’
equity of $182.8million atDecember 31, 2012. We received a substantial amount of cash in 2013, including:
$225million inpayments fromour partners;
$173million innet proceeds from a public offeringof our common stock; and
$63million inproceeds from stockoption exercises.
At December 31, 2013, we had consolidatedworking capital of $637.7million compared to $349.1million at December 31,
2012. The significant increase inourworking capital in2013was primarily due to the cashwe received in2013 fromour partners and
the issuance of our common stock aswell as an increase in the carryingvalue of our investment inRegulus.
As ofDecember 31, 2013, our debt andother obligations totaled $283.5million compared to $284.1million atDecember 31,
2012. The decreasewas primarilydue to rent andprincipal paymentswemade in2013onour lease obligations andnotes payable,
partiallyoffset by$2.5millionwe drewdown in June 2013onour equipment financing arrangement. SeeNote 4
, Long-Term
Obligations andCommitments,
in theNotes to theConsolidatedFinancial Statements.
