ISIS PHARMACEUTICALS, INC.
CONSOLIDATED STATEMENTSOFCASHFLOWS
(In thousands)
Years Ended December 31,
2014
2013
2012
Operating activities:
Net loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (38,984) $ (60,644) $ (65,478)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6,380
6,591
7,074
Amortization of patents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,142
1,184
1,224
Amortization of licenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,882
2,007
2,457
Amortization of premium on investments, net. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7,470
5,572
4,193
Amortization of debt issuance costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
595
415
619
Amortization of 2
⅝
percent convertible subordinated notes discount . . . . . . . . . . . . . . .
— — 6,169
Amortization of 2¾ percent convertible senior notes discount . . . . . . . . . . . . . . . . . . . .
6,723
6,344
2,268
Amortization of 1 percent convertible senior notes discount . . . . . . . . . . . . . . . . . . . . .
2,256
— —
Amortization of long-term financing liability for leased facility. . . . . . . . . . . . . . . . . . .
6,622
6,567
6,503
Share-based compensation expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
31,383 11,418
8,571
Equity in net loss of Regulus Therapeutics Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
— — 1,406
Gain on investment in Regulus Therapeutics Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(19,902)
— (18,356)
Loss on early retirement of debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
8,292
— 4,770
Gain on investments, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(1,256)
(2,378)
(1,465)
Non-cash losses related to patents, licensing and property, plant and equipment . . . . . . .
1,305
6,306
825
Tax benefit from other unrealized gains on securities . . . . . . . . . . . . . . . . . . . . . . . . . .
(12,835)
(5,914)
(9,111)
Changes in operating assets and liabilities:
Contracts receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7,199 (10,580)
6,399
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,743 (1,912)
(1,982)
Other current and long-term assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(1,750)
(1,091)
279
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4,824
66
1,292
Income taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(4,034)
— —
Accrued compensation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
134
4,290 (1,305)
Deferred rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
153
217
255
Accrued liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
8,358
6,691 (3,254)
Deferred contract revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(11,415)
88,344 48,523
Net cash provided by operating activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6,285 63,493
1,876
Investing activities:
Purchases of short-term investments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(391,883) (425,554) (217,877)
Proceeds from the sale of short-term investments . . . . . . . . . . . . . . . . . . . . . . . . . . .
294,727 172,762 242,659
Purchases of property, plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(7,518)
(1,552)
(1,479)
Acquisition of licenses and other assets, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(3,586)
(3,810)
(3,691)
Investment in Regulus Therapeutics Inc.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
— — (3,000)
Purchases of strategic investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
— — (790)
Proceeds from the sale of Regulus Therapeutics, Inc. . . . . . . . . . . . . . . . . . . . . . . . .
22,949
— —
Proceeds from the sale of strategic investments . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,463
2,428
2,177
Net cash (used in) provided by investing activities . . . . . . . . . . . . . . . . . . . . . . . .
(82,848) (255,726)
17,999
Financing activities:
Proceeds from equity awards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
23,071 62,958
9,470
Proceeds from issuance of 2¾ percent convertible senior notes, net of issuance costs .
— — 194,697
Proceeds from issuance of 1 percent convertible senior notes, net of issuance costs . .
487,035
— —
Principal and premium payment on redemption of the 2
⅝
percent convertible
subordinated notes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
— — (163,718)
Repurchase of $140 million principal amount of the 2¾ percent convertible senior
notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(441,394)
— —
Proceeds from public common stock offering . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
— 173,292
—
Proceeds from equipment financing arrangement . . . . . . . . . . . . . . . . . . . . . . . . . . .
— 2,513
9,100
Excess tax benefits from share-based compensation awards. . . . . . . . . . . . . . . . . . . .
1,463
— —
Principal payments on debt and capital lease obligations. . . . . . . . . . . . . . . . . . . . . .
(10,587) (11,039) (10,419)
Net cash provided by financing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
59,588 227,724 39,130
Net (decrease) increase in cash and cash equivalents. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(16,975)
35,491 59,005
Cash and cash equivalents at beginning of year . . . . . . . . . . . . . . . . . . . . . . . . . . . .
159,973 124,482 65,477
Cash and cash equivalents at end of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 142,998 $ 159,973 $ 124,482
Supplemental disclosures of cash flow information:
Interest paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 6,353 $ 6,000 $ 5,770
Supplemental disclosures of non-cash investing and financing activities:
Amounts accrued for capital and patent expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,151 $ 704 $ 647
F-7
See accompanying notes.
