Isis Pharmaceuticals Inc., feeling the pinch from its failed Affinitak Phase III trial, outlined its plan - including cutting back on staff and programs - to conserve cash and focus on products it feels are most important.
Discussing the plan, Isis CEO Stanley Crooke said, "We are absolutely confident this is the best route to returning value to our shareholders, long term." He added on the conference call that Isis would "use our resources efficiently to advance as many of our antisense drugs as possible to as many key development milestones to give us as many shots on goal as possible."
The seminal event behind the moves is the troubled Phase III Affinitak non-small-cell lung cancer trial, results of which showed the antisense drug did not meet its primary endpoint of a difference in primary log-rank analysis of survival vs. control. The trial was the first of two Affinitak non-small-cell lung cancer Phase III studies, and news of the miss lowered Isis' stock by nearly 32 percent the day the news was released. However, the missed revenue and yet-unachieved milestones from it partner, Indianapolis-based Eli Lilly and Co., hurt Isis financially, too. (See BioWorld Today, March 18, 2003.)
Lynn Parshall, executive vice president and chief financial officer, put it bluntly.
"The commercialization of the drug is delayed," she said on the call. "Given the current climate of the industry, we do not expect to receive revenue from other sources [similar to what was expected from Lilly]."
Isis had figured on milestone payments and continued development funding, as well as proceeds from the manufacture of the drug. The original deal between the companies was signed in August 2001 and valued at potentially more than $400 million to Carlsbad, Calif.-based Isis. While the amount of payments now not to be achieved in 2003 isn't known, the deal at the time called for up to $50 million in Affinitak milestones. (See BioWorld Today, Aug. 23, 2001.)
The bottom line is that Isis will see an operating loss that climbs in 2003 to the "mid-$70 million range" and will stay there "going forward," Crooke said. In 2002, its loss from operations was $50.8 million. While the company said it is "comfortable with an increased level of loss," mainly because of a strong cash balance, it took steps to curtail spending.
Isis let 9 percent of its work force go, a "significant number" of whom were related to the commercialization and manufacture of Affinitak. The company will take a one-time restructuring charge related to the reduction of about $1.8 million.
On the clinical side, Isis is "not planning a Phase III trial at this time" for ISIS 2503 in pancreatic cancer, the reasons being that other therapies currently in development could change how the disease is treated, and, of course, the cost associated with Phase III work. Crooke said the company will consider partnering the drug.
Also, Isis said it would delay the initiation of the next planned study of ISIS 104838 in psoriasis. In essence, Crooke said, Isis is "stepping back" and re-examining the entire plan for that product; however, it believes the compound has great potential. It is stopping development of ISIS 2302 (alicaforsen) in psoriasis, in part because it believes ISIS 104838 is more attractive because of its TNF-alpha target. And ISIS 13650, being developed for degenerative eye diseases, will be shelved as "part of a broader decision to pursue ophthalmic research through partnerships," Crooke said.
Now for the good news - that cash position. Isis finished 2002 with $289 million in cash and equivalents. Throw in $53 million in committed funding from Eli Lilly and another $50 in commitments from other partners and Isis has "nearly $400 million over the next three years" to fund operations, Parshall said. Crooke said the cash pile is enough to continue strong research "even as we take these cost-cutting measures."
And there are plenty of programs. In the first half of 2003 alone, Isis anticipates reporting results from a Phase II study of alicaforsen (enema formulation) in ulcerative colitis/pouchitis, announcing data from Phase II studies of ISIS 2503 at ASCO and initiating Phase II trials of ISIS 14803 in combination with current therapies in hepatitis C. The second half of the year and the beginning of 2004 look equally busy.
Separately, Sequenom Inc., of San Diego, said Wednesday it entered a collaboration with Isis to discover single nucleotide polymorphisms within Isis' antisense drug target regions. Financial terms were not disclosed, but the deal underlines Crooke's statement that Isis is continuing its research efforts. And although Isis was forced to reduce its staff, it implemented an employee stock option exchange program allowing employees to surrender higher-priced options granted prior to Jan. 5, 2002, in exchange for a lesser number of lower-priced options.
With the failure of the Affinitak non-small-cell lung cancer trial, what some considered a litmus test for antisense, the second Phase III trial looms large. While some are withholding their opinion of antisense until more data are seen, beneath all that Isis has a pipeline teeming with antisense activity.
"We have a lot of assets in this company," Crooke said. "They are promising, they are close to the finish line and they merit continued investment. And we'll continue to do that."
Isis' stock (NASDAQ:ISIS) fell 1 cent Wednesday to close at $3.74.