Isis Pharmaceuticals converts Eli Lilly $100 million loan to 2.5 million shares

By Jennifer Chiou

New York, Aug. 8 - Isis Pharmaceuticals said it converted a $100 million interest-free loan from Eli Lilly and Co. into 2.5 million shares of its stock.

Isis, a Carlsbad, Calif., biopharmaceutical company, said that Lilly agreed not to sell the shares until the fourth quarter of 2006 in exchange for credits against milestones and royalties if Isis' stock price declines.

"The $100 million loan funded our four-year strategic research collaboration from which two drug candidates emerged. The loan was shown on our books as debt, so we are pleased that we've also substantially improved our balance sheet in this transaction," Isis executive vice president and chief financial officer B. Lynne Parshall said in a news release.

The conversion is connected to the company's two-year extension of its antisense drug discovery collaboration with Eli Lilly.

The companies have completed the initial four-year term of the alliance.

Isis and Lilly plan to add a second-generation antisense inhibitor to Lilly's oncology drug discovery and development portfolio, Signal Transducer and Activator of Transcription 3 (STAT-3), a protein that regulates cell division and growth and prevents cell death.

Isis will be entitled to receive milestones and royalties as the antisense inhibitor moves through various stages of development.

Lilly is also advancing two other antisense oncology drugs, one that is targeted to Survivin and one targeted to eIF-4E.

Isis is developing the Tiger biosensor system to identify infectious organisms.

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