In order to analyze and compare our results of operations to other similar companies, we believe it is
important to exclude non-cash compensation expense related to equity awards from our operating expenses. We
believe non-cash compensation expense is not indicative of our operating results or cash flows from our
operations. Further, we internally evaluate the performance of our operations excluding it. Non-cash
compensation expense related to equity awards increased significantly in 2014 compared to 2013 primarily due
to the increase in our stock price.
Research, Development and Patent Expenses
Our research, development and patent expenses consist of costs for antisense drug discovery, antisense drug
development, manufacturing and operations and R&D support costs.
The following table sets forth information on research, development and patent expenses (in thousands):
Year Ended
December 31,
2014
2013
Research, development and patent expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . $215,908 $174,360
Non-cash compensation expense related to equity awards. . . . . . . . . . . . . . . .
25,843 9,673
Total research, development and patent expenses. . . . . . . . . . . . . . . . . . . . . $241,751 $184,033
For the year ended December 31, 2014, total research, development and patent expenses were
$215.9 million compared to $174.4 million for 2013, and were higher primarily due to more costs incurred in
2014 compared to 2013 associated with the clinical studies of the three drugs we currently have in Phase 3
studies, which we continued to advance. In addition, we progressed numerous drugs in our pipeline into later
stage clinical trials. We initiated Phase 2 studies for several of the drugs in our pipeline beginning in the second
half of 2013, which were ongoing in 2014, and we have advanced several drugs into clinical development. All
amounts exclude non-cash compensation expense related to equity awards.
Antisense Drug Discovery
We use our proprietary antisense technology to generate information about the function of genes and to
determine the value of genes as drug discovery targets. We use this information to direct our own antisense drug
discovery research, and that of our partners. Antisense drug discovery is also the function that is responsible for
advancing our antisense core technology.
As we continue to advance our antisense technology, we are investing in our drug discovery programs to
expand our and our partners’ drug pipelines. We anticipate that our existing relationships and collaborations, as
well as prospective new partners, will continue to help fund our research programs and contribute to the
advancement of the science by funding core antisense technology research.
Our antisense drug discovery expenses were as follows (in thousands):
Year Ended
December 31,
2014
2013
Antisense drug discovery expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $43,620 $42,402
Non-cash compensation expense related to equity awards. . . . . . . . . . . . . . . .
7,290 2,878
Total antisense drug discovery. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $50,910 $45,280
Antisense drug discovery costs were $43.6 million for the year ended December 31, 2014, and were
essentially flat compared to $42.4 million for 2013. All amounts exclude non-cash compensation expense related
to equity awards.
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