Collaborative Arrangements and Licensing Agreements

6 Months Ended

Jun. 30, 2011

Collaborative Arrangements and Licensing Agreements

Collaborative Arrangements and Licensing Agreements

6. Collaborative Arrangements and Licensing Agreements

The information discussed below represents changes to partnerships entered into prior to 2011.  There are no other changes from the information provided in Note 8—Collaborative Arrangements and Licensing Agreements of the Consolidated Financial Statements section, included in our Annual Report on Form 10-K for the year ended December 31, 2010.

Traditional Pharmaceutical Alliances and Licensing

GlaxoSmithKline

In March 2010, we entered into a strategic alliance with GSK, which covers up to six programs, in which we use our antisense drug discovery platform to seek out and develop new drugs against targets for rare and serious diseases, including infectious diseases and some conditions causing blindness.  This alliance allows us to control and facilitate rapid development of drugs while still being eligible to receive milestone payments as we advance these drugs in clinical development.

Since March 2010, we have received $48 million from GSK, which includes the $35 million upfront payment and the $3 million payment we received in May 2011 when GSK expanded the collaboration by initiating a sixth program, both of which we are amortizing over the five year period of our performance. In addition we have received $10 million in milestone payments, including a $5 million milestone payment we earned in the second quarter of 2011 for initiating a Phase 1 clinical study for ISIS-TTRRx, the first antisense drug to enter development under our strategic alliance with GSK.  We are also eligible to receive on average up to $20 million in milestone payments per program up to Phase 2 proof-of-concept. GSK has the option to license drugs from these programs at Phase 2 proof-of-concept, and will be responsible for all further development and commercialization.  If all six programs are successfully developed for one or more indications and commercialized through pre-agreed sales targets we could receive license fees and milestone payments totaling up to nearly $1.5 billion. In addition, we will receive up to double-digit royalties on sales from any product that GSK successfully commercializes under this alliance.  During the three and six months ended June 30, 2011, we recognized revenue of $7.0 million and $8.7 million, respectively, from our relationship with GSK compared to $1.8 million in the same periods of 2010. Our balance sheet at June 30, 2011 included deferred revenue of $29.1 million, related to the upfront and expansion payments.