Segment Information and Concentration of Business Risk

9 Months Ended

Sep. 30, 2015

Segment Information and Concentration of Business Risk [Abstract]

Segment Information and Concentration of Business Risk

7. Segment Information and Concentration of Business Risk

In 2015, we began reporting our financial results in two reportable segments, Isis Core, previously referred to as Drug Discovery and Development, and Akcea Therapeutics, our new wholly owned subsidiary. Segment loss from operations includes revenue less operating expenses attributable to each segment.

In our Isis Core segment we are exploiting a novel drug discovery platform we created to generate a broad pipeline of first-in-class or best-in-class drugs for us and our partners. Our Isis Core segment generates revenue from a multifaceted partnering strategy.

We established Akcea to develop and commercialize the drugs from our lipid franchise. Moving our lipid drugs into a company that we own and control ensures that our core focus at Isis remains on innovation while allowing us to maintain control over and retain more value from our lipid drugs. To date, Akcea has not earned any revenue.

The following is our segment information for the three and nine months ended September 30, 2015 (in thousands).

Three Months Ended September 30, 2015	Isis Core				Akcea Therapeutics				Elimination of Intercompany Activity			Total
Revenue:
Research and development		$	52,104			$	—		$	(3,186	)		$	48,918
Licensing and royalty			203				—			—				203
Total segment revenue		$	52,307			$	—		$	(3,186	)		$	49,121
Loss from operations		$	(37,183	)		$	(14,621	)	$	3,186			$	(48,618	)

Nine Months Ended September 30, 2015	Isis Core			Akcea Therapeutics				Elimination of Intercompany Activity			Total
Revenue:
Research and development		$	233,655		$	—		$	(3,186	)		$	230,469
Licensing and royalty			1,664			—			—				1,664
Total segment revenue		$	235,319		$	—		$	(3,186	)		$	232,133
Loss from operations		$	14,174		$	(30,661	)	$	3,186			$	(13,301	)

The following is our segment information for the three and nine months ended September 30, 2014 (in thousands) revised for comparative purposes to show operating costs for Akcea-related projects in 2014:

Three Months Ended September 30, 2014	Isis Core				Akcea Therapeutics				Total
Revenue:
Research and development		$	43,798			$	—			$	43,798
Licensing and royalty			265				—				265
Total segment revenue		$	44,063			$	—			$	44,063
Loss from operations		$	(14,886	)		$	(6,607	)		$	(21,493	)

Nine Months Ended September 30, 2014	Isis Core				Akcea Therapeutics				Total
Revenue:
Research and development		$	119,975			$	—			$	119,975
Licensing and royalty			9,325				—				9,325
Total segment revenue		$	129,300			$	—			$	129,300
Loss from operations		$	(41,609	)		$	(16,202	)		$	(57,811	)

We have historically funded our operations from collaborations with corporate partners and a relatively small number of partners have accounted for a significant percentage of our revenue. Revenue from significant partners, which is defined as ten percent or more of our total revenue, was as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2015		2014		2015		2014
Partner A		49 %		5 %		12 %		5 %
Partner B		37 %		72 %		32 %		59 %
Partner C		3 %		12 %		10 %		9 %
Partner D		2 %		0 %		40 %		0 %

Contracts receivables from three significant partners comprised approximately 96 percent and 99 percent of our contracts receivables at September 30, 2015 and December 31, 2014, respectively.