Gain on Investment in Regulus Therapeutics Inc.
In 2014, we realized a gain on our investment in Regulus of $19.9 million when we sold a portion of our
stock. We did not sell any of our stock in Regulus in 2013.
Early Retirement of Debt
In 2014, we recorded a $8.3 million non-cash loss on early retirement of debt, reflecting the early retirement
of a large portion of our 2¾ percent convertible notes in November 2014. We did not recognize any loss on early
retirement of debt in 2013.
Income Tax Benefit
In 2014, we recorded a net tax benefit of $15.4 million, of which $12.8 million related to our application of
the intraperiod tax allocation rules that required us to record a tax benefit in continuing operations to offset the
tax provision we recorded directly to other comprehensive income primarily related to the unrealized gains on
our equity investment in Regulus. In addition, $4.3 million of the tax benefit we recorded in 2014 related to a
tax refund we expect to receive in the first quarter of 2015 from the State of California Franchise Tax Board
related to the California franchise taxes we paid for the tax year ended December 31, 2009. Our income tax
benefit in 2013 was $5.9 million. The increase in 2014 compared to 2013 was due to larger unrealized gains year
over year and the tax refund we recorded in 2014.
Net Loss and Net Loss Per Share
Net loss for the year ended December 31, 2014 was $39.0 million compared to $60.6 million for 2013.
Basic and diluted net loss per share for the year ended December 31, 2014 was $0.33 per share compared to
$0.55 per share for 2013. Our net loss for the year ended December 31, 2014 decreased significantly compared
to 2013 due to the significant increase in revenue that we earned from our partners in 2014, offset mostly by the
planned increase in operating expenses associated with our advancing pipeline of drugs. The decrease in our net
loss was further impacted by the $19.9 million gain we realized in 2014 from the sale of a portion of our stock
in Regulus, the $15.4 million net tax benefit we recorded in 2014 offset, in part, by the $8.3 million non-cash
loss we recorded in 2014 on the early retirement of a large portion of our 2¾ percent convertible notes.
Net Operating Loss Carryforward
At December 31, 2014, we had federal and California tax net operating loss carryforwards of approximately
$671.9 million and $888.7 million, respectively. Our federal tax loss carryforwards begin to expire in 2023. Our
California tax loss carryforwards began to expire in 2014. At December 31, 2014, we also had federal and
California research and development tax credit carryforwards of approximately $86.0 million and $34.5 million,
respectively. Our Federal research and development tax credit carryforwards began expiring in 2004 and will
continue to expire unless we use them prior to expiration. Our California research and development tax credit
carryforwards are available indefinitely. Our net operating loss and research and development tax credit
carryforwards may be subject to an annual limitation regarding utilization against taxable income in future
periods due to ‘‘change of ownership’’ provisions of the Tax ReformAct of 1986. We believe that such limitation
will not have a material adverse impact on the benefits that may arise from our net operating loss and research
and development tax credit carryforwards.
Years Ended December 31, 2013 and December 31, 2012
Revenue
Total revenue for the year ended December 31, 2013 was $147.3 million compared to $102.0 million for
2012. Our revenue fluctuates based on the nature and timing of payments under agreements with our partners,
including license fees, milestone-related payments and other payments. In 2013, we earned $82.8 million in
revenue frommilestone and licensing payments including:
•
$26.5 million fromGSK because we advanced ISIS-TTR
Rx
, ISIS-HBV
Rx
, formerly ISIS-GSK3
Rx
, and
ISIS-GSK4-L
Rx
in development;
•
$25 million fromGenzyme when the FDAapproved the KYNAMRONDA;
•
$10 million whenAstraZeneca added a second development candidate, ISIS-AR-2.5
Rx
, to our
collaboration;
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