☒ |
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
☐ |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF SECURITIES EXCHANGE ACT OF 1934
|
Delaware
|
33-0336973
|
|
(State or other jurisdiction of incorporation or organization)
|
(IRS Employer Identification No.)
|
2855 Gazelle Court, Carlsbad, California
|
92010
|
|
(Address of Principal Executive Offices)
|
(Zip Code)
|
Title of each class
|
Trading symbol
|
Name of each exchange on which registered
|
||
Common Stock, $.001 Par Value
|
“IONS”
|
The Nasdaq Stock Market LLC
|
Large Accelerated Filer ☒
|
Accelerated Filer ☐
|
Non-accelerated Filer ☐
|
Smaller Reporting Company ☐
|
Emerging Growth Company ☐
|
June 30,
2020
|
December 31,
2019
|
|||||||
(Unaudited)
|
||||||||
ASSETS
|
||||||||
Current assets:
|
||||||||
Cash and cash equivalents
|
$
|
530,181
|
$
|
683,287
|
||||
Short-term investments
|
1,818,435
|
1,816,257
|
||||||
Contracts receivable
|
27,834
|
63,034
|
||||||
Inventories
|
23,722
|
18,180
|
||||||
Other current assets
|
131,015
|
139,839
|
||||||
Total current assets
|
2,531,187
|
2,720,597
|
||||||
Property, plant and equipment, net
|
172,618
|
153,651
|
||||||
Patents, net
|
27,700
|
25,674
|
||||||
Long-term deferred tax assets
|
305,980
|
305,557
|
||||||
Deposits and other assets
|
41,465
|
27,633
|
||||||
Total assets
|
$
|
3,078,950
|
$
|
3,233,112
|
||||
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
||||||||
Current liabilities:
|
||||||||
Accounts payable
|
$
|
7,407
|
$
|
16,067
|
||||
Accrued compensation
|
22,822
|
37,357
|
||||||
Accrued liabilities
|
67,802
|
66,769
|
||||||
Income taxes payable
|
27,943
|
32,514
|
||||||
Current portion of long-term obligations and other current liabilities
|
4,966
|
2,026
|
||||||
Current portion of deferred contract revenue
|
100,401
|
118,272
|
||||||
Total current liabilities
|
231,341
|
273,005
|
||||||
Long-term deferred contract revenue
|
448,576
|
490,060
|
||||||
0.125 percent convertible senior notes
|
445,150
|
434,711
|
||||||
1 percent convertible senior notes
|
284,083
|
275,333
|
||||||
Long-term obligations, less current portion
|
15,057
|
15,543
|
||||||
Long-term mortgage debt
|
59,948
|
59,913
|
||||||
Total liabilities
|
1,484,155
|
1,548,565
|
||||||
Stockholders’ equity:
|
||||||||
Common stock, $0.001 par value; 300,000,000 shares authorized, 139,489,405 and 140,339,615 shares issued and outstanding at June 30, 2020 (unaudited) and December 31, 2019, respectively
|
139
|
140
|
||||||
Additional paid-in capital
|
2,271,630
|
2,203,778
|
||||||
Accumulated other comprehensive loss
|
(16,440
|
)
|
(25,290
|
)
|
||||
Accumulated deficit
|
(878,154
|
)
|
(707,534
|
)
|
||||
Total Ionis stockholders’ equity
|
1,377,175
|
1,471,094
|
||||||
Noncontrolling interest in Akcea Therapeutics, Inc.
|
217,620
|
213,453
|
||||||
Total stockholders’ equity
|
1,594,795
|
1,684,547
|
||||||
Total liabilities and stockholders’ equity
|
$
|
3,078,950
|
$
|
3,233,112
|
Three Months Ended
June 30,
|
Six Months Ended
June 30,
|
|||||||||||||||
2020
|
2019
|
2020
|
2019
|
|||||||||||||
Revenue:
|
||||||||||||||||
Commercial revenue:
|
||||||||||||||||
SPINRAZA royalties
|
$
|
71,746
|
$
|
70,502
|
$
|
137,754
|
$
|
130,212
|
||||||||
Product sales, net
|
16,364
|
9,865
|
31,523
|
16,619
|
||||||||||||
Licensing and other royalty revenue
|
1,624
|
7,932
|
4,419
|
9,555
|
||||||||||||
Total commercial revenue
|
89,734
|
88,299
|
173,696
|
156,386
|
||||||||||||
Research and development revenue under collaborative agreements
|
55,803
|
75,514
|
105,209
|
304,640
|
||||||||||||
Total revenue
|
145,537
|
163,813
|
278,905
|
461,026
|
||||||||||||
Expenses:
|
||||||||||||||||
Cost of products sold
|
3,012
|
1,364
|
5,561
|
2,406
|
||||||||||||
Research, development and patent
|
122,264
|
106,165
|
239,214
|
212,582
|
||||||||||||
Selling, general and administrative
|
72,015
|
75,111
|
147,009
|
143,332
|
||||||||||||
Total operating expenses
|
197,291
|
182,640
|
391,784
|
358,320
|
||||||||||||
Income (loss) from operations
|
(51,754
|
)
|
(18,827
|
)
|
(112,879
|
)
|
102,706
|
|||||||||
Other income (expense):
|
||||||||||||||||
Investment income
|
9,243
|
13,735
|
19,459
|
25,880
|
||||||||||||
Interest expense
|
(11,173
|
)
|
(11,802
|
)
|
(22,163
|
)
|
(23,402
|
)
|
||||||||
Gain on investments
|
9,625
|
—
|
9,887
|
—
|
||||||||||||
Other income (expenses)
|
(149
|
)
|
(45
|
)
|
(249
|
)
|
(192
|
)
|
||||||||
Income (loss) before income tax (expense) benefit
|
(44,208
|
)
|
(16,939
|
)
|
(105,945
|
)
|
104,992
|
|||||||||
Income tax (expense) benefit
|
439
|
6,927
|
3,696
|
(24,119
|
)
|
|||||||||||
Net income (loss)
|
(43,769
|
)
|
(10,012
|
)
|
(102,249
|
)
|
80,873
|
|||||||||
Net loss attributable to noncontrolling interest in Akcea Therapeutics, Inc.
|
11,924
|
9,136
|
22,178
|
2,694
|
||||||||||||
Net income (loss) attributable to Ionis Pharmaceuticals, Inc. common stockholders
|
$
|
(31,845
|
)
|
$
|
(876
|
)
|
$
|
(80,071
|
)
|
$
|
83,567
|
|||||
Basic net income (loss) per share
|
$
|
(0.23
|
)
|
$
|
(0.01
|
)
|
$
|
(0.58
|
)
|
$
|
0.62
|
|||||
Shares used in computing basic net income (loss) per share
|
139,352
|
140,247
|
139,391
|
139,419
|
||||||||||||
Diluted net income (loss) per share
|
$
|
(0.23
|
)
|
$
|
(0.01
|
)
|
$
|
(0.58
|
)
|
$
|
0.61
|
|||||
Shares used in computing diluted net income (loss) per share
|
139,352
|
140,247
|
139,391
|
142,499
|
Three Months Ended
June 30,
|
Six Months Ended
June 30,
|
|||||||||||||||
2020
|
2019
|
2020
|
2019
|
|||||||||||||
Net income (loss)
|
$
|
(43,769
|
)
|
$
|
(10,012
|
)
|
$
|
(102,249
|
)
|
$
|
80,873
|
|||||
Unrealized gains on debt securities, net of tax
|
11,204
|
3,452
|
9,251
|
7,775
|
||||||||||||
Currency translation adjustment
|
74
|
(96
|
)
|
82
|
(11
|
)
|
||||||||||
Comprehensive income (loss)
|
(32,491
|
)
|
(6,656
|
)
|
(92,916
|
)
|
88,637
|
|||||||||
Comprehensive loss attributable to noncontrolling interests
|
(11,441
|
)
|
(9,136
|
)
|
(21,695
|
)
|
(2,696
|
)
|
||||||||
Comprehensive income (loss) attributable to Ionis Pharmaceuticals, Inc. stockholders
|
$
|
(21,050
|
)
|
$
|
2,480
|
$
|
(71,221
|
)
|
$
|
91,333
|
Common Stock
|
Additional
|
Accumulated Other
|
Accumulated
|
Total Ionis
Stockholders’
|
Noncontrolling
Interest in Akcea
|
Total
Stockholders’
|
||||||||||||||||||||||||||
Description
|
Shares
|
Amount
|
Paid in Capital
|
Comprehensive Loss
|
Deficit
|
Equity
|
Therapeutics, Inc.
|
Equity
|
||||||||||||||||||||||||
Balance at March 31, 2019
|
139,624
|
$
|
140
|
$
|
2,117,969
|
$
|
(27,608
|
)
|
$
|
(882,850
|
)
|
$
|
1,207,651
|
$
|
179,769
|
$
|
1,387,420
|
|||||||||||||||
Net loss
|
—
|
—
|
—
|
—
|
(876
|
)
|
(876
|
)
|
—
|
(876
|
)
|
|||||||||||||||||||||
Change in unrealized gains, net of tax
|
—
|
—
|
—
|
3,452
|
—
|
3,452
|
—
|
3,452
|
||||||||||||||||||||||||
Foreign currency translation
|
—
|
—
|
—
|
(96
|
)
|
—
|
(96
|
)
|
—
|
(96
|
)
|
|||||||||||||||||||||
Issuance of common stock in connection with employee stock plans
|
774
|
—
|
34,943
|
—
|
—
|
34,943
|
—
|
34,943
|
||||||||||||||||||||||||
Stock-based compensation expense
|
—
|
—
|
41,933
|
—
|
—
|
41,933
|
—
|
41,933
|
||||||||||||||||||||||||
Payments of tax withholdings related to vesting of employee stock awards and exercise of employee stock options
|
(5
|
)
|
—
|
(438
|
)
|
—
|
—
|
(438
|
)
|
—
|
(438
|
)
|
||||||||||||||||||||
Noncontrolling interest in Akcea Therapeutics, Inc
|
—
|
—
|
(17,185
|
)
|
—
|
—
|
(17,185
|
)
|
8,049
|
(9,136
|
)
|
|||||||||||||||||||||
Balance at June 30, 2019
|
140,393
|
$
|
140
|
$
|
2,177,222
|
$
|
(24,252
|
)
|
$
|
(883,726
|
)
|
$
|
1,269,384
|
$
|
187,818
|
$
|
1,457,202
|
|||||||||||||||
Balance at March 31, 2020
|
139,282
|
$
|
139
|
$
|
2,233,644
|
$
|
(27,235
|
)
|
$
|
(846,309
|
)
|
$
|
1,360,239
|
$
|
210,172
|
$
|
1,570,411
|
|||||||||||||||
Net loss
|
—
|
—
|
—
|
—
|
(31,845
|
)
|
(31,845
|
)
|
—
|
(31,845
|
)
|
|||||||||||||||||||||
Change in unrealized gains, net of tax
|
—
|
—
|
—
|
11,204
|
—
|
11,204
|
—
|
11,204
|
||||||||||||||||||||||||
Foreign currency translation
|
—
|
—
|
—
|
74
|
—
|
74
|
—
|
74
|
||||||||||||||||||||||||
Issuance of common stock in connection with employee stock plans
|
214
|
—
|
8,800
|
—
|
—
|
8,800
|
—
|
8,800
|
||||||||||||||||||||||||
Stock-based compensation expense
|
—
|
—
|
48,442
|
—
|
—
|
48,442
|
—
|
48,442
|
||||||||||||||||||||||||
Payments of tax withholdings related to vesting of employee stock awards and exercise of employee stock options
|
(7
|
)
|
—
|
(367
|
)
|
—
|
—
|
(367
|
)
|
—
|
(367
|
)
|
||||||||||||||||||||
Noncontrolling interest in Akcea Therapeutics, Inc.
|
—
|
—
|
(18,889
|
)
|
(483
|
)
|
—
|
(19,372
|
)
|
7,448
|
(11,924
|
)
|
||||||||||||||||||||
Balance at June 30, 2020
|
139,489
|
$
|
139
|
$
|
2,271,630
|
$
|
(16,440
|
)
|
$
|
(878,154
|
)
|
$
|
1,377,175
|
$
|
217,620
|
$
|
1,594,795
|
Common Stock
|
Additional
|
Accumulated Other
|
Accumulated
|
Total Ionis
Stockholders’
|
Noncontrolling
Interest in Akcea
|
Total
Stockholders’
|
||||||||||||||||||||||||||
Description
|
Shares
|
Amount
|
Paid in Capital
|
Comprehensive Loss
|
Deficit
|
Equity
|
Therapeutics, Inc.
|
Equity
|
||||||||||||||||||||||||
Balance at December 31, 2018
|
137,929
|
$
|
138
|
$
|
2,047,250
|
$
|
(32,016
|
)
|
$
|
(967,293
|
)
|
$
|
1,048,079
|
$
|
139,081
|
$
|
1,187,160
|
|||||||||||||||
Net income
|
—
|
—
|
—
|
—
|
83,567
|
83,567
|
—
|
83,567
|
||||||||||||||||||||||||
Change in unrealized gains, net of tax
|
—
|
—
|
—
|
7,775
|
—
|
7,775
|
—
|
7,775
|
||||||||||||||||||||||||
Foreign currency translation
|
—
|
—
|
—
|
(11
|
)
|
—
|
(11
|
)
|
—
|
(11
|
)
|
|||||||||||||||||||||
Issuance of common stock in connection with employee stock plans
|
2,600
|
2
|
102,002
|
—
|
—
|
102,004
|
—
|
102,004
|
||||||||||||||||||||||||
Stock-based compensation expense
|
—
|
—
|
87,437
|
—
|
—
|
87,437
|
—
|
87,437
|
||||||||||||||||||||||||
Payments of tax withholdings related to vesting of employee stock awards and exercise of employee stock options
|
(136
|
)
|
—
|
(8,034
|
)
|
—
|
—
|
(8,034
|
)
|
—
|
(8,034
|
)
|
||||||||||||||||||||
Noncontrolling interest in Akcea Therapeutics, Inc.
|
—
|
—
|
(51,433
|
)
|
—
|
—
|
(51,433
|
)
|
48,737
|
(2,696
|
)
|
|||||||||||||||||||||
Balance at June 30, 2019
|
140,393
|
$
|
140
|
$
|
2,177,222
|
$
|
(24,252
|
)
|
$
|
(883,726
|
)
|
$
|
1,269,384
|
$
|
187,818
|
$
|
1,457,202
|
|||||||||||||||
Balance at December 31, 2019
|
140,340
|
$
|
140
|
$
|
2,203,778
|
$
|
(25,290
|
)
|
$
|
(707,534
|
)
|
$
|
1,471,094
|
$
|
213,453
|
$
|
1,684,547
|
|||||||||||||||
Net loss
|
—
|
—
|
—
|
—
|
(80,071
|
)
|
(80,071
|
)
|
—
|
(80,071
|
)
|
|||||||||||||||||||||
Change in unrealized gains, net of tax
|
—
|
—
|
—
|
9,251
|
—
|
9,251
|
—
|
9,251
|
||||||||||||||||||||||||
Foreign currency translation
|
—
|
—
|
—
|
82
|
—
|
82
|
—
|
82
|
||||||||||||||||||||||||
Issuance of common stock in connection with employee stock plans
|
821
|
—
|
16,451
|
—
|
—
|
16,451
|
—
|
16,451
|
||||||||||||||||||||||||
Repurchases and retirements of common stock
|
(1,478
|
)
|
(1
|
)
|
—
|
—
|
(90,549
|
)
|
(90,550
|
)
|
—
|
(90,550
|
)
|
|||||||||||||||||||
Stock-based compensation expense
|
—
|
—
|
89,233
|
—
|
—
|
89,233
|
—
|
89,233
|
||||||||||||||||||||||||
Payments of tax withholdings related to vesting of employee stock awards and exercise of employee stock options
|
(194
|
)
|
—
|
(11,970
|
)
|
—
|
—
|
(11,970
|
)
|
—
|
(11,970
|
)
|
||||||||||||||||||||
Noncontrolling interest in Akcea Therapeutics, Inc.
|
—
|
—
|
(25,862
|
)
|
(483
|
)
|
—
|
(26,345
|
)
|
4,167
|
(22,178
|
)
|
||||||||||||||||||||
Balance at June 30, 2020
|
139,489
|
$
|
139
|
$
|
2,271,630
|
$
|
(16,440
|
)
|
$
|
(878,154
|
)
|
$
|
1,377,175
|
$
|
217,620
|
$
|
1,594,795
|
Six Months Ended
June 30,
|
||||||||
2020
|
2019
|
|||||||
Operating activities:
|
||||||||
Net income (loss)
|
$
|
(102,249
|
)
|
$
|
80,873
|
|||
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
|
||||||||
Depreciation
|
6,360
|
6,253
|
||||||
Amortization of right-of-use operating lease assets
|
784
|
1,035
|
||||||
Amortization of patents
|
999
|
948
|
||||||
Amortization of premium (discount) on investments, net
|
3,842
|
(5,163
|
)
|
|||||
Amortization of debt issuance costs
|
1,236
|
957
|
||||||
Amortization of convertible senior notes discount
|
17,807
|
17,661
|
||||||
Stock-based compensation expense
|
89,233
|
87,437
|
||||||
Gain on investments
|
(9,887
|
)
|
—
|
|||||
Non-cash losses related to patents, licensing and property, plant and equipment and investments
|
211
|
203
|
||||||
Provision for deferred income taxes
|
(2,513
|
)
|
14,436
|
|||||
Changes in operating assets and liabilities:
|
||||||||
Contracts receivable
|
35,200
|
(16,255
|
)
|
|||||
Inventories
|
(3,018
|
)
|
(5,736
|
)
|
||||
Other current and long-term assets
|
1,064
|
(6,372
|
)
|
|||||
Accounts payable
|
(14,939
|
)
|
(16,104
|
)
|
||||
Accrued compensation
|
(14,535
|
)
|
(9,219
|
)
|
||||
Other current liabilities
|
(1,968
|
)
|
3,283
|
|||||
Deferred contract revenue
|
(59,355
|
)
|
(73,643
|
)
|
||||
Net cash provided by (used in) operating activities
|
(51,728
|
)
|
80,594
|
|||||
Investing activities:
|
||||||||
Purchases of short-term investments
|
(976,284
|
)
|
(1,049,274
|
)
|
||||
Proceeds from sale of short-term investments
|
982,173
|
877,966
|
||||||
Purchases of property, plant and equipment
|
(18,178
|
)
|
(7,243
|
)
|
||||
Acquisition of licenses and other assets, net
|
(3,023
|
)
|
(2,310
|
)
|
||||
Net cash used in investing activities
|
(15,312
|
)
|
(180,861
|
)
|
||||
Financing activities:
|
||||||||
Proceeds from issuance of equity, net
|
16,453
|
102,004
|
||||||
Payments of tax withholdings related to vesting of employee stock awards and exercise of
employee stock options
|
(11,971
|
)
|
(8,034
|
)
|
||||
Repurchases and retirements of common stock
|
(90,548
|
)
|
—
|
|||||
Net cash provided by (used in) financing activities
|
(86,066
|
)
|
93,970
|
|||||
Net increase in cash and cash equivalents
|
(153,106
|
)
|
(6,297
|
)
|
||||
Cash and cash equivalents at beginning of period
|
683,287
|
278,820
|
||||||
Cash and cash equivalents at end of period
|
$
|
530,181
|
$
|
272,523
|
||||
Supplemental disclosures of cash flow information:
|
||||||||
Interest paid
|
$
|
3,093
|
$
|
4,776
|
||||
Income taxes paid
|
$
|
49
|
$
|
—
|
||||
Supplemental disclosures of non-cash investing and financing activities:
|
||||||||
Right-of-use assets obtained in exchange for lease liabilities
|
$
|
—
|
$
|
13,920
|
||||
Amounts accrued for capital and patent expenditures
|
$
|
6,461
|
$
|
3,073
|
1. |
Identify the contract
|
● |
We and our partner approved the contract and we are both committed to perform our obligations;
|
● |
We have identified our rights, our partner’s rights and the payment terms;
|
● |
We have concluded that the contract has commercial substance, meaning that the risk, timing, or amount of our future cash flows is expected to change as a result of the contract; and
|
● |
We believe collectability of the consideration is probable.
|
2. |
Identify the performance obligations
|
3. |
Determine the transaction price
|
● |
Estimated future product sales;
|
● |
Estimated royalties we may receive from future product sales;
|
● |
Estimated contractual milestone payments we may receive;
|
● |
Expenses we expect to incur;
|
● |
Income taxes; and
|
● |
A discount rate.
|
● |
The number of internal hours we estimate we will spend performing these services;
|
● |
The estimated cost of work we will perform;
|
● |
The estimated cost of work that we will contract with third parties to perform; and
|
● |
The estimated cost of API we will use.
|
5. |
Recognize revenue
|
1) |
If the additional goods and/or services are distinct from the other performance obligations in the original agreement; and
|
2) |
If the goods and/or services are at a stand-alone selling price.
|
● |
Whether the agreements were negotiated together with a single objective;
|
● |
Whether the amount of consideration in one contract depends on the price or performance of the other agreement; or
|
● |
Whether the goods and/or services promised under the agreements are a single performance obligation.
|
● |
2.8 million shares in the first quarter of 2019 as payment for the sublicense fee Akcea owed us for Novartis’s license of AKCEA-APO(a)-LRx, and
|
● |
6.9 million shares in the fourth quarter of 2019 as payment for the sublicense fee Akcea owed us for Pfizer’s license of vupanorsen.
|
June 30, 2020
|
December 31, 2019
|
|||||||
Raw materials:
|
||||||||
Raw materials- clinical
|
$
|
9,967
|
$
|
9,363
|
||||
Raw materials- commercial
|
9,543
|
6,520
|
||||||
Total raw materials
|
19,510
|
15,883
|
||||||
Work in process
|
3,471
|
2,039
|
||||||
Finished goods
|
741
|
258
|
||||||
Total inventory
|
$
|
23,722
|
$
|
18,180
|
Three months ended June 30, 2020
|
Weighted
Average Shares
Owned in Akcea
|
Akcea’s
Net Loss
Per Share
|
Basic
Net Loss Per
Share Calculation
|
|||||||||
Ionis’ portion of Akcea’s net loss
|
77,095
|
$
|
(0.49
|
)
|
$
|
(37,665
|
)
|
|||||
Akcea’s net loss attributable to our ownership
|
$
|
(37,665
|
)
|
|||||||||
Ionis’ stand-alone net income
|
5,807
|
|||||||||||
Net loss available to Ionis common stockholders
|
$
|
(31,858
|
)
|
|||||||||
Weighted average shares outstanding
|
139,352
|
|||||||||||
Basic net loss per share
|
$
|
(0.23
|
)
|
Six months ended June 30, 2020
|
Weighted
Average Shares
Owned in Akcea
|
Akcea’s
Net Loss
Per Share
|
Basic
Net Loss Per
Share Calculation
|
|||||||||
Ionis’ portion of Akcea’s net loss
|
77,095
|
$
|
(0.91
|
)
|
$
|
(70,348
|
)
|
|||||
Akcea’s net loss attributable to our ownership
|
$
|
(70,348
|
)
|
|||||||||
Ionis’ stand-alone net loss
|
(9,822
|
)
|
||||||||||
Net loss available to Ionis common stockholders
|
$
|
(80,170
|
)
|
|||||||||
Weighted average shares outstanding
|
139,391
|
|||||||||||
Basic net loss per share
|
$
|
(0.58
|
)
|
Three months ended June 30, 2019
|
Weighted
Average Shares
Owned in Akcea
|
Akcea’s
Net Income
Per Share
|
Basic
Net Loss Per
Share Calculation
|
|||||||||
Ionis’ portion of Akcea’s net loss
|
70,221
|
$
|
(0.40
|
)
|
$
|
(28,244
|
)
|
|||||
Akcea’s net loss attributable to our ownership
|
$
|
(28,244
|
)
|
|||||||||
Ionis’ stand-alone net income
|
27,311
|
|||||||||||
Net loss available to Ionis common stockholders
|
$
|
(933
|
)
|
|||||||||
Weighted average shares outstanding
|
140,247
|
|||||||||||
Basic net loss per share
|
$
|
(0.01
|
)
|
Six months ended June 30, 2019
|
Weighted
Average Shares
Owned in Akcea
|
Akcea’s
Net Loss
Per Share
|
Basic
Net Income Per
Share Calculation
|
|||||||||
Ionis’ portion of Akcea’s net loss
|
69,406
|
$
|
(0.06
|
)
|
$
|
(4,380
|
)
|
|||||
Akcea’s net loss attributable to our ownership
|
$
|
(4,380
|
)
|
|||||||||
Ionis’ stand-alone net income
|
91,008
|
|||||||||||
Net income available to Ionis common stockholders
|
$
|
86,628
|
||||||||||
Weighted average shares outstanding
|
139,419
|
|||||||||||
Basic net income per share
|
$
|
0.62
|
● |
0.125 percent convertible senior notes (for the three and six months ended June 30, 2020);
|
● |
1 percent convertible senior notes;
|
● |
Dilutive stock options;
|
● |
Unvested restricted stock units; and
|
● |
Employee Stock Purchase Plan, or ESPP.
|
Six months ended June 30, 2019
|
Income
(Numerator)
|
Shares
(Denominator)
|
Per-Share
Amount
|
|||||||||
Net income available to Ionis common stockholders
|
$
|
86,628
|
139,419
|
$
|
0.62
|
|||||||
Effect of dilutive securities:
|
||||||||||||
Shares issuable upon exercise of stock options
|
—
|
2,327
|
||||||||||
Shares issuable upon restricted stock award issuance
|
—
|
745
|
||||||||||
Shares issuable related to our Employee Stock Purchase Plan
|
—
|
8
|
||||||||||
Income available to Ionis common stockholders
|
$
|
86,628
|
142,499
|
$
|
0.61
|
|
Six Months Ended
June 30,
|
|||||||
2020
|
2019
|
|||||||
Risk-free interest rate
|
1.6
|
%
|
2.4
|
%
|
||||
Dividend yield
|
0.0
|
%
|
0.0
|
%
|
||||
Volatility
|
58.9
|
%
|
60.3
|
%
|
||||
Expected life
|
4.7 years
|
4.6 years
|
|
Six Months Ended
June 30,
|
|||||||
2020
|
2019
|
|||||||
Risk-free interest rate
|
1.1
|
%
|
2.5
|
%
|
||||
Dividend yield
|
0.0
|
%
|
0.0
|
%
|
||||
Volatility
|
47.2
|
%
|
45.5
|
%
|
||||
Expected life
|
6 months
|
6 months
|
|
Six Months Ended
June 30,
|
|||||||
2020
|
2019
|
|||||||
Risk-free interest rate
|
1.3
|
%
|
2.5
|
%
|
||||
Dividend yield
|
0.0
|
%
|
0.0
|
%
|
||||
Volatility
|
74.5
|
%
|
76.3
|
%
|
||||
Expected life
|
6.1 years
|
6.1 years
|
|
Six Months Ended
June 30,
|
|||||||
2020
|
2019
|
|||||||
Risk-free interest rate
|
0.8
|
%
|
1.9
|
%
|
||||
Dividend yield
|
0.0
|
%
|
0.0
|
%
|
||||
Volatility
|
75.3
|
%
|
74.3
|
%
|
||||
Expected life
|
5.7 years
|
6.3 years
|
|
Six Months Ended
June 30,
|
|||||||
2020
|
2019
|
|||||||
Risk-free interest rate
|
1.0
|
%
|
2.5
|
%
|
||||
Dividend yield
|
0.0
|
%
|
0.0
|
%
|
||||
Volatility
|
71.9
|
%
|
64.1
|
%
|
||||
Expected life
|
6 months
|
6 months
|
Three Months Ended
June 30,
|
Six Months Ended
June 30,
|
|||||||||||||||
|
2020
|
2019
|
2020
|
2019
|
||||||||||||
Cost of products sold
|
$
|
350
|
$
|
137
|
$
|
587
|
$
|
255
|
||||||||
Research, development and patent
|
26,016
|
23,756
|
51,573
|
48,191
|
||||||||||||
Selling, general and administrative
|
22,076
|
18,040
|
37,073
|
38,991
|
||||||||||||
Total non-cash stock-based compensation expense
|
$
|
48,442
|
$
|
41,933
|
$
|
89,233
|
$
|
87,437
|
● |
An increase to the total number of shares reserved for issuance under the plan from 2 million to 2.8 million shares;
|
● |
A reduction to the amount of the automatic awards under the plan;
|
● |
A revision to the vesting schedule of awards; and
|
● |
An extension of the term of the plan.
|
1) |
When a participant is considered a customer in a collaborative arrangement, all of the associated accounting under Topic 606 should be applied
|
● |
We are applying all of the associated accounting under Topic 606 when we determine a participant in a collaborative arrangement is a customer
|
2) |
Adds “unit of account” concept to collaboration accounting guidance to align with Topic 606. The “unit of account” concept is used to determine if revenue is recognized or if a contra expense is recognized from consideration received under a collaboration
|
● |
We use the “unit of account” concept when we receive consideration under a collaborative arrangement to determine when we recognize revenue or a contra expense
|
3) |
The clarifying guidance precludes us from recognizing revenue under Topic 606 when we determine a transaction with a collaborative partner is not a customer and is not directly related to the sales to third parties
|
● |
When we conclude a collaboration partner is not a customer and is not directly related to the sales to third parties, we do not recognize revenue for the transaction
|
One year or less
|
69
|
%
|
||
After one year but within two years
|
23
|
%
|
||
After two years but within three years
|
8
|
%
|
||
Total
|
100
|
%
|
|
Gross Unrealized
|
Estimated
|
||||||||||||||
June 30, 2020
|
Cost (1)
|
Gains
|
Losses
|
Fair Value
|
||||||||||||
Available-for-sale securities:
|
||||||||||||||||
Corporate debt securities (2)
|
$
|
652,555
|
$
|
4,275
|
$
|
(17
|
)
|
$
|
656,813
|
|||||||
Debt securities issued by U.S. government agencies
|
139,810
|
673
|
(9
|
)
|
140,474
|
|||||||||||
Debt securities issued by the U.S. Treasury (2)
|
325,925
|
815
|
(7
|
)
|
326,733
|
|||||||||||
Debt securities issued by states of the U.S. and political subdivisions of the states
|
68,651
|
214
|
(3
|
)
|
68,862
|
|||||||||||
Other municipal debt securities
|
902
|
7
|
—
|
909
|
||||||||||||
Total securities with a maturity of one year or less
|
1,187,843
|
5,984
|
(36
|
)
|
1,193,791
|
|||||||||||
Corporate debt securities
|
485,487
|
8,780
|
(121
|
)
|
494,146
|
|||||||||||
Debt securities issued by U.S. government agencies
|
118,538
|
521
|
(28
|
)
|
119,031
|
|||||||||||
Debt securities issued by the U.S. Treasury
|
58,334
|
588
|
(4
|
)
|
58,918
|
|||||||||||
Debt securities issued by states of the U.S. and political subdivisions of the states
|
50,514
|
371
|
(3
|
)
|
50,882
|
|||||||||||
Total securities with a maturity of more than one year
|
712,873
|
10,260
|
(156
|
)
|
722,977
|
|||||||||||
Total available-for-sale securities
|
$
|
1,900,716
|
$
|
16,244
|
$
|
(192
|
)
|
$
|
1,916,768
|
|||||||
Equity securities:
|
||||||||||||||||
Total equity securities included in other current assets (3)
|
$
|
4,712
|
$
|
—
|
$
|
(2,322
|
)
|
$
|
2,390
|
|||||||
Total equity securities included in deposits and other assets (4)
|
15,019
|
9,318
|
—
|
24,337
|
||||||||||||
Total equity securities
|
19,731
|
9,318
|
(2,322
|
)
|
26,727
|
|||||||||||
Total available-for-sale and equity securities
|
$
|
1,920,447
|
$
|
25,562
|
$
|
(2,514
|
)
|
$
|
1,943,495
|
|
Gross Unrealized
|
Estimated
|
||||||||||||||
December 31, 2019
|
Cost (1)
|
Gains
|
Losses
|
Fair Value
|
||||||||||||
Available-for-sale securities:
|
||||||||||||||||
Corporate debt securities (2)
|
$
|
669,665
|
$
|
1,451
|
$
|
(43
|
)
|
$
|
671,073
|
|||||||
Debt securities issued by U.S. government agencies
|
188,216
|
303
|
(43
|
)
|
188,476
|
|||||||||||
Debt securities issued by the U.S. Treasury (2)
|
327,670
|
232
|
(27
|
)
|
327,875
|
|||||||||||
Debt securities issued by states of the U.S. and political subdivisions of the states (2)
|
21,065
|
26
|
(5
|
)
|
21,086
|
|||||||||||
Total securities with a maturity of one year or less
|
1,206,616
|
2,012
|
(118
|
)
|
1,208,510
|
|||||||||||
Corporate debt securities
|
428,627
|
2,911
|
(43
|
)
|
431,495
|
|||||||||||
Debt securities issued by U.S. government agencies
|
140,988
|
57
|
(117
|
)
|
140,928
|
|||||||||||
Debt securities issued by the U.S. Treasury
|
35,822
|
9
|
(12
|
)
|
35,819
|
|||||||||||
Debt securities issued by states of the U.S. and political subdivisions of the states
|
19,309
|
18
|
(6
|
)
|
19,321
|
|||||||||||
Total securities with a maturity of more than one year
|
624,746
|
2,995
|
(178
|
)
|
627,563
|
|||||||||||
Total available-for-sale securities
|
$
|
1,831,362
|
$
|
5,007
|
$
|
(296
|
)
|
$
|
1,836,073
|
|||||||
Equity securities:
|
||||||||||||||||
Total equity securities included in other current assets (3)
|
4,712
|
—
|
(870
|
)
|
3,842
|
|||||||||||
Total equity securities included in deposits and other assets (4)
|
10,000
|
—
|
—
|
10,000
|
||||||||||||
Total equity securities
|
14,712
|
—
|
(870
|
)
|
13,842
|
|||||||||||
Total available-for-sale and equity securities
|
$
|
1,846,074
|
$
|
5,007
|
$
|
(1,166
|
)
|
$
|
1,849,915
|
(1) |
We hold our available-for-sale securities at amortized cost.
|
(2) |
Includes investments classified as cash equivalents on our condensed consolidated balance sheet.
|
(3) |
Our equity securities included in other current assets consisted of our investments in publicly-traded companies. We recognize publicly-traded equity securities at fair value.
|
(4) |
Our equity securities included in deposits and other assets consisted of our investments in privately-held companies. We recognize our private company equity securities at cost minus impairments, plus or minus changes resulting from observable price changes in orderly transactions for the identical or similar investment of the same issuer on our condensed consolidated balance sheet.
|
|
Less than 12 Months of
Temporary Impairment
|
More than 12 Months of
Temporary Impairment
|
Total Temporary
Impairment
|
|||||||||||||||||||||||||
Number of
Investments
|
Estimated
Fair Value
|
Unrealized
Losses
|
Estimated
Fair Value
|
Unrealized
Losses
|
Estimated
Fair Value
|
Unrealized
Losses
|
||||||||||||||||||||||
Corporate debt securities
|
37
|
$
|
87,460
|
$
|
(138
|
)
|
$
|
—
|
$
|
—
|
$
|
87,460
|
$
|
(138
|
)
|
|||||||||||||
Debt securities issued by U.S. government agencies
|
10
|
44,389
|
(33
|
)
|
26,997
|
(4
|
)
|
71,386
|
(37
|
)
|
||||||||||||||||||
Debt securities issued by the U.S. Treasury
|
9
|
110,067
|
(11
|
)
|
—
|
—
|
110,067
|
(11
|
)
|
|||||||||||||||||||
Debt securities issued by states of the U.S. and political subdivisions of the states
|
22
|
7,763
|
(6
|
)
|
—
|
—
|
7,763
|
(6
|
)
|
|||||||||||||||||||
Total temporarily impaired securities
|
78
|
$
|
249,679
|
$
|
(188
|
)
|
$
|
26,997
|
$
|
(4
|
)
|
$
|
276,676
|
$
|
(192
|
)
|
|
At
June 30, 2020
|
Quoted Prices in
Active Markets
(Level 1)
|
Significant Other
Observable Inputs
(Level 2)
|
Significant
Unobservable Inputs
(Level 3)
|
||||||||||||
Cash equivalents (1)
|
$
|
363,019
|
$
|
363,019
|
$
|
—
|
$
|
—
|
||||||||
Corporate debt securities (2)
|
1,150,959
|
—
|
1,150,959
|
—
|
||||||||||||
Debt securities issued by U.S. government agencies (3)
|
259,505
|
—
|
259,505
|
—
|
||||||||||||
Debt securities issued by the U.S. Treasury (4)
|
385,651
|
385,651
|
—
|
—
|
||||||||||||
Debt securities issued by states of the U.S. and political subdivisions of the states (5)
|
119,744
|
—
|
119,744
|
—
|
||||||||||||
Other municipal debt securities (3)
|
909
|
—
|
909
|
—
|
||||||||||||
Investment in ProQR Therapeutics N.V. (6)
|
2,390
|
684
|
—
|
1,706
|
||||||||||||
Total
|
$
|
2,282,177
|
$
|
749,354
|
$
|
1,531,117
|
$
|
1,706
|
|
At
December 31, 2019
|
Quoted Prices in
Active Markets
(Level 1)
|
Significant Other
Observable Inputs
(Level 2)
|
Significant
Unobservable Inputs
(Level 3)
|
||||||||||||
Cash equivalents (1)
|
$
|
418,406
|
$
|
418,406
|
$
|
—
|
$
|
—
|
||||||||
Corporate debt securities (7)
|
1,102,568
|
—
|
1,102,568
|
—
|
||||||||||||
Debt securities issued by U.S. government agencies (8)
|
329,404
|
—
|
329,404
|
—
|
||||||||||||
Debt securities issued by the U.S. Treasury (3)
|
363,694
|
363,694
|
—
|
—
|
||||||||||||
Debt securities issued by states of the U.S. and political subdivisions of the states (3)
|
40,407
|
—
|
40,407
|
—
|
||||||||||||
Investment in ProQR Therapeutics N.V. (6)
|
4,506
|
—
|
—
|
4,506
|
||||||||||||
Total
|
$
|
2,258,985
|
$
|
782,100
|
$
|
1,472,379
|
$
|
4,506
|
(1) |
Included in cash and cash equivalents.
|
(2) |
$32.4 million was included in cash and cash equivalents, with the difference included in short-term investments.
|
(3) |
Included in short-term investments.
|
(4) |
$59.7 million was included in cash and cash equivalents, with the difference included in short-term investments.
|
(5) |
$6.2 million was included in cash and cash equivalents, with the difference included in short-term investments.
|
(6) |
Included in other current assets.
|
(7) |
$19.0 million was included in cash and cash equivalents, with the difference included in short-term investments.
|
(8) |
$0.8 million was included in cash and cash equivalents, with the difference included in short-term investments.
|
|
Three Months Ended
June 30,
|
Six Months Ended
June 30,
|
||||||||||||||
2020
|
2019
|
2020
|
2019
|
|||||||||||||
SPINRAZA royalties (commercial revenue)
|
$
|
71.7
|
$
|
70.5
|
$
|
137.8
|
$
|
130.2
|
||||||||
R&D revenue
|
26.0
|
31.9
|
47.4
|
56.4
|
||||||||||||
Total revenue from our relationship with Biogen
|
$
|
97.7
|
$
|
102.4
|
$
|
185.2
|
$
|
186.6
|
||||||||
Percentage of total revenue
|
67
|
%
|
63
|
%
|
66
|
%
|
41
|
%
|
|
Three Months Ended
June 30,
|
Six Months Ended
June 30,
|
||||||||||||||
2020
|
2019
|
2020
|
2019
|
|||||||||||||
R&D revenue
|
$
|
16.8
|
$
|
3.8
|
$
|
30.5
|
$
|
7.8
|
||||||||
Percentage of total revenue
|
12
|
%
|
2
|
%
|
11
|
%
|
2
|
%
|
Three Months Ended June 30, 2020
|
Ionis Core
|
Akcea
Therapeutics
|
Elimination of
Intercompany Activity
|
Total
|
||||||||||||
Revenue:
|
||||||||||||||||
Commercial revenue:
|
||||||||||||||||
SPINRAZA royalties
|
$
|
71,746
|
$
|
—
|
$
|
—
|
$
|
71,746
|
||||||||
Product sales, net
|
—
|
16,364
|
—
|
16,364
|
||||||||||||
Licensing and other royalty revenue
|
2,237
|
—
|
(613
|
)
|
1,624
|
|||||||||||
Total commercial revenue
|
73,983
|
16,364
|
(613
|
)
|
89,734
|
|||||||||||
R&D revenue under collaborative agreements
|
55,070
|
6,013
|
(5,280
|
)
|
55,803
|
|||||||||||
Total segment revenue
|
$
|
129,053
|
$
|
22,377
|
$
|
(5,893
|
)
|
$
|
145,537
|
|||||||
Total operating expenses
|
$
|
131,177
|
$
|
73,468
|
$
|
(7,354
|
)
|
$
|
197,291
|
|||||||
Loss from operations
|
$
|
(2,124
|
)
|
$
|
(51,091
|
)
|
$
|
1,461
|
$
|
(51,754
|
)
|
Three Months Ended June 30, 2019
|
Ionis Core
|
Akcea
Therapeutics
|
Elimination of
Intercompany Activity
|
Total
|
||||||||||||
Revenue:
|
||||||||||||||||
Commercial revenue:
|
||||||||||||||||
SPINRAZA royalties
|
$
|
70,502
|
$
|
—
|
$
|
—
|
$
|
70,502
|
||||||||
Product sales, net
|
—
|
9,865
|
—
|
9,865
|
||||||||||||
Licensing and other royalty revenue
|
4,896
|
6,036
|
(3,000
|
)
|
7,932
|
|||||||||||
Total commercial revenue
|
75,398
|
15,901
|
(3,000
|
)
|
88,299
|
|||||||||||
R&D revenue under collaborative agreements
|
64,791
|
10,723
|
—
|
75,514
|
||||||||||||
Total segment revenue
|
$
|
140,189
|
$
|
26,624
|
$
|
(3,000
|
)
|
$
|
163,813
|
|||||||
Total operating expenses
|
$
|
121,774
|
$
|
65,328
|
$
|
(4,462
|
)
|
$
|
182,640
|
|||||||
Income (loss) from operations
|
$
|
18,415
|
$
|
(38,704
|
)
|
$
|
1,462
|
$
|
(18,827
|
)
|
Six Months Ended June 30, 2020
|
Ionis Core
|
Akcea
Therapeutics
|
Elimination of
Intercompany Activity
|
Total
|
||||||||||||
Revenue:
|
||||||||||||||||
Commercial revenue:
|
||||||||||||||||
SPINRAZA royalties
|
$
|
137,754
|
$
|
—
|
$
|
—
|
$
|
137,754
|
||||||||
Product sales, net
|
—
|
31,523
|
—
|
31,523
|
||||||||||||
Licensing and other royalty revenue
|
5,835
|
—
|
(1,416
|
)
|
4,419
|
|||||||||||
Total commercial revenue
|
143,589
|
31,523
|
(1,416
|
)
|
173,696
|
|||||||||||
R&D revenue under collaborative agreements
|
103,561
|
6,928
|
(5,280
|
)
|
105,209
|
|||||||||||
Total segment revenue
|
$
|
247,150
|
$
|
38,451
|
$
|
(6,696
|
)
|
$
|
278,905
|
|||||||
Total operating expenses
|
$
|
266,602
|
$
|
134,800
|
$
|
(9,618
|
)
|
$
|
391,784
|
|||||||
Loss from operations
|
$
|
(19,452
|
)
|
$
|
(96,349
|
)
|
$
|
2,922
|
$
|
(112,879
|
)
|
Six Months Ended June 30, 2019
|
Ionis Core
|
Akcea
Therapeutics
|
Elimination of
Intercompany Activity
|
Total
|
||||||||||||
Revenue:
|
||||||||||||||||
Commercial revenue:
|
||||||||||||||||
SPINRAZA royalties
|
$
|
130,212
|
$
|
—
|
$
|
—
|
$
|
130,212
|
||||||||
Product sales, net
|
—
|
16,619
|
—
|
16,619
|
||||||||||||
Licensing and other royalty revenue
|
6,519
|
6,036
|
(3,000
|
)
|
9,555
|
|||||||||||
Total commercial revenue
|
136,731
|
22,655
|
(3,000
|
)
|
156,386
|
|||||||||||
R&D revenue under collaborative agreements
|
225,347
|
167,785
|
(88,492
|
)
|
304,640
|
|||||||||||
Total segment revenue
|
$
|
362,078
|
$
|
190,440
|
$
|
(91,492
|
)
|
$
|
461,026
|
|||||||
Total operating expenses
|
$
|
236,290
|
$
|
202,938
|
$
|
(80,908
|
)
|
$
|
358,320
|
|||||||
Income (loss) from operations
|
$
|
125,788
|
$
|
(12,498
|
)
|
$
|
(10,584
|
)
|
$
|
102,706
|
Total Assets
|
Ionis Core
|
Akcea
Therapeutics
|
Elimination of
Intercompany Activity
|
Total
|
||||||||||||
June 30, 2020
|
$
|
3,397,604
|
$
|
527,937
|
$
|
(846,591
|
)
|
$
|
3,078,950
|
|||||||
December 31, 2019
|
$
|
3,478,081
|
$
|
599,250
|
$
|
(844,219
|
)
|
$
|
3,233,112
|
ITEM 2. |
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
Three Months Ended
|
Six Months Ended
|
|||||||||||||||
June 30,
|
June 30,
|
|||||||||||||||
2020
|
2019
|
2020
|
2019
|
|||||||||||||
Total revenue
|
$
|
145,537
|
$
|
163,813
|
$
|
278,905
|
$
|
461,026
|
||||||||
Total operating expenses
|
$
|
197,291
|
$
|
182,640
|
$
|
391,784
|
$
|
358,320
|
||||||||
Income (loss) from operations
|
$
|
(51,754
|
)
|
$
|
(18,827
|
)
|
$
|
(112,879
|
)
|
$
|
102,706
|
|||||
Net income (loss)
|
$
|
(43,769
|
)
|
$
|
(10,012
|
)
|
$
|
(102,249
|
)
|
$
|
80,873
|
|||||
Net income (loss) attributable to Ionis Pharmaceuticals, Inc. common stockholders
|
$
|
(31,845
|
)
|
$
|
(876
|
)
|
$
|
(80,071
|
)
|
$
|
83,567
|
● |
SPINRAZA: a global foundation-of-care for the treatment of SMA patients of all ages
|
o |
$495 million in worldwide sales in the second quarter of this year
|
o |
More than 11,000 patients were on SPINRAZA treatment worldwide at the end of the second quarter, including patients across commercial, expanded access and clinical trial settings
|
o |
The Phase 4 RESPOND study to evaluate SPINRAZA benefit in patients with a suboptimal clinical response to Zolgensma® (onasemnogene abeparvovec) is expected to begin early next year
|
o |
The DEVOTE study evaluating a higher dose of SPINRAZA with the potential to deliver even greater efficacy in SMA patients of all ages is progressing
|
o |
New clinical data from the NURTURE and SHINE studies, as well as new real-world data, further support SPINRAZA’s durable efficacy and established safety profile across SMA patients of all ages
|
● |
TEGSEDI: the only approved at-home subcutaneous therapy for the treatment of hereditary transthyretin amyloidosis (hATTR) with polyneuropathy in adult patients
|
o
|
Commercially available in 15 countries
|
o
|
Reimbursement approved in Portugal, Spain, Italy and Austria
|
o
|
Expanding commercial availability in additional EU countries and in Latin America this year
|
● |
WAYLIVRA: the only approved treatment in the EU for adults with genetically confirmed familial chylomicronemia syndrome (FCS) at high risk for pancreatitis
|
o |
Launch progressing in Germany, Austria, Greece and through the ATU in France; launching in additional EU countries this year
|
o |
Filed for marketing approval in Brazil; refiling new drug application for U.S. marketing authorization
|
● |
Completed enrollment in the global GENERATION HD1 Phase 3 study of tominersen in patients with Huntington’s disease
|
● |
Progressed multiple neurological disease medicines under our broad Biogen collaboration
|
o |
Published data from the Phase 1/2 study of tofersen in the New England Journal of Medicine
|
o |
Progressed the IONIS-MAPTRx long-term extension study in patients with Alzheimer’s disease and achieved a $12 million milestone payment
|
o |
Advanced ION464 into a Phase 1/2 study in patients with multiple system atrophy and achieved an $18 million milestone payment
|
● |
Advanced medicines for the treatment of cancer and immune-mediated GI disease
|
o |
Licensed ION736 to AstraZeneca for the treatment of cancer and achieved a $13 million license fee
|
o |
Initiated a Phase 1 study of ION253 for the treatment of immune-mediated GI disease and achieved a $5 million milestone payment from Janssen
|
● |
Expanded the Ionis-owned pipeline with the addition of ION363 for the treatment of FUS-ALS
|
● |
Assessing the propriety of revenue recognition and associated deferred revenue;
|
● |
Determining the appropriate cost estimates for unbilled preclinical studies and clinical development activities; and
|
● |
Estimating our income taxes
|
Three Months Ended
June 30,
|
Six Months Ended
June 30,
|
|||||||||||||||
2020
|
2019
|
2020
|
2019
|
|||||||||||||
Revenue:
|
||||||||||||||||
Commercial revenue:
|
||||||||||||||||
SPINRAZA royalties
|
$
|
71,746
|
$
|
70,502
|
$
|
137,754
|
$
|
130,212
|
||||||||
Product sales, net
|
16,364
|
9,865
|
31,523
|
16,619
|
||||||||||||
Licensing and other royalty revenue
|
1,624
|
7,932
|
4,419
|
9,555
|
||||||||||||
Total commercial revenue
|
89,734
|
88,299
|
173,696
|
156,386
|
||||||||||||
R&D revenue:
|
||||||||||||||||
Amortization from upfront payments
|
27,925
|
40,556
|
49,071
|
75,345
|
||||||||||||
Milestone payments
|
6,737
|
12,016
|
29,856
|
52,032
|
||||||||||||
License fees
|
14,669
|
21,626
|
14,669
|
172,689
|
||||||||||||
Other services
|
6,472
|
1,316
|
11,613
|
4,574
|
||||||||||||
Total R&D revenue
|
55,803
|
75,514
|
105,209
|
304,640
|
||||||||||||
Total revenue
|
$
|
145,537
|
$
|
163,813
|
$
|
278,905
|
$
|
461,026
|
Three Months Ended
June 30,
|
Six Months Ended
June 30,
|
|||||||||||||||
2020
|
2019
|
2020
|
2019
|
|||||||||||||
Ionis Core
|
$
|
95,671
|
$
|
82,739
|
$
|
190,689
|
$
|
161,254
|
||||||||
Akcea Therapeutics
|
60,795
|
62,430
|
121,897
|
190,536
|
||||||||||||
Elimination of intercompany activity
|
(7,353
|
)
|
(4,462
|
)
|
(9,618
|
)
|
(80,908
|
)
|
||||||||
Subtotal
|
149,113
|
140,707
|
302,968
|
270,882
|
||||||||||||
Non-cash compensation expense related to equity awards
|
48,442
|
41,933
|
89,233
|
87,438
|
||||||||||||
Total operating expenses
|
$
|
197,555
|
$
|
182,640
|
$
|
392,201
|
$
|
358,320
|
Three Months Ended
June 30,
|
Six Months Ended
June 30,
|
|||||||||||||||
2020
|
2019
|
2020
|
2019
|
|||||||||||||
Ionis Core
|
$
|
—
|
$
|
—
|
$
|
—
|
$
|
—
|
||||||||
Akcea Therapeutics
|
4,693
|
5,645
|
9,239
|
7,972
|
||||||||||||
Elimination of intercompany activity
|
(2,031
|
)
|
(4,419
|
)
|
(4,253
|
)
|
(5,822
|
)
|
||||||||
Subtotal
|
2,662
|
1,227
|
4,986
|
2,151
|
||||||||||||
Non-cash compensation expense related to equity awards
|
350
|
137
|
587
|
255
|
||||||||||||
Total operating expenses
|
$
|
3,012
|
$
|
1,364
|
$
|
5,573
|
$
|
2,406
|
Three Months Ended
June 30,
|
Six Months Ended
June 30,
|
|||||||||||||||
2020
|
2019
|
2020
|
2019
|
|||||||||||||
Research, development and patent expenses, excluding non-cash compensation expense related to equity awards
|
$
|
96,248
|
$
|
82,409
|
$
|
187,642
|
$
|
164,391
|
||||||||
Non-cash compensation expense related to equity awards
|
26,016
|
23,756
|
51,572
|
48,191
|
||||||||||||
Total research, development and patent expenses
|
$
|
122,264
|
$
|
106,165
|
$
|
239,214
|
$
|
212,582
|
Three Months Ended
June 30,
|
Six Months Ended
June 30,
|
|||||||||||||||
2020
|
2019
|
2020
|
2019
|
|||||||||||||
Ionis Core
|
$
|
75,323
|
$
|
64,745
|
$
|
150,754
|
$
|
126,072
|
||||||||
Akcea Therapeutics
|
26,247
|
17,707
|
42,253
|
113,405
|
||||||||||||
Elimination of intercompany activity
|
(5,322
|
)
|
(43
|
)
|
(5,365
|
)
|
(75,086
|
)
|
||||||||
Subtotal
|
96,248
|
82,409
|
187,644
|
164,391
|
||||||||||||
Non-cash compensation expense related to equity awards
|
26,016
|
23,756
|
51,572
|
48,191
|
||||||||||||
Total research, development and patent expenses
|
$
|
122,264
|
$
|
106,165
|
$
|
239,214
|
$
|
212,582
|
Three Months Ended
June 30,
|
Six Months Ended
June 30,
|
|||||||||||||||
2020
|
2019
|
2020
|
2019
|
|||||||||||||
Antisense drug discovery expenses, excluding non-cash compensation expense related to equity awards
|
$
|
18,751
|
$
|
15,693
|
$
|
37,117
|
$
|
30,325
|
||||||||
Non-cash compensation expense related to equity awards
|
6,090
|
5,297
|
12,396
|
10,790
|
||||||||||||
Total antisense drug discovery expenses
|
$
|
24,841
|
$
|
20,990
|
$
|
49,513
|
$
|
41,115
|
Three Months Ended
June 30,
|
Six Months Ended
June 30,
|
|||||||||||||||
2020
|
2019
|
2020
|
2019
|
|||||||||||||
AKCEA TTR-LRx
|
$
|
5,847
|
$
|
1,599
|
$
|
11,426
|
$
|
2,540
|
||||||||
WAYLIVRA
|
2,272
|
3,134
|
3,277
|
5,105
|
||||||||||||
TEGSEDI
|
3,483
|
3,426
|
7,796
|
8,117
|
||||||||||||
Other antisense development projects
|
24,491
|
23,979
|
46,608
|
45,348
|
||||||||||||
Development overhead expenses
|
17,828
|
16,850
|
35,761
|
35,794
|
||||||||||||
Total antisense drug development, excluding non-cash compensation expense related to equity awards
|
53,921
|
48,988
|
104,868
|
96,904
|
||||||||||||
Non-cash compensation expense related to equity awards
|
14,019
|
11,118
|
25,806
|
23,352
|
||||||||||||
Total antisense drug development expenses
|
$
|
67,940
|
$
|
60,106
|
$
|
130,674
|
$
|
120,256
|
Three Months Ended
June 30,
|
Six Months Ended
June 30,
|
|||||||||||||||
2020
|
2019
|
2020
|
2019
|
|||||||||||||
Ionis Core
|
$
|
40,847
|
$
|
34,952
|
$
|
79,949
|
$
|
64,022
|
||||||||
Akcea Therapeutics
|
13,074
|
14,036
|
24,919
|
107,882
|
||||||||||||
Elimination of intercompany activity
|
—
|
—
|
—
|
(75,000
|
)
|
|||||||||||
Subtotal
|
53,921
|
48,988
|
104,868
|
96,904
|
||||||||||||
Non-cash compensation expense related to equity awards
|
14,019
|
11,118
|
25,806
|
23,352
|
||||||||||||
Total antisense drug development expenses
|
$
|
67,940
|
$
|
60,106
|
$
|
130,674
|
$
|
120,256
|
Three Months Ended
June 30,
|
Six Months Ended
June 30,
|
|||||||||||||||
2020
|
2019
|
2020
|
2019
|
|||||||||||||
Manufacturing and development chemistry expenses, excluding non-cash compensation expense related to equity awards
|
$
|
13,880
|
$
|
9,328
|
$
|
25,863
|
$
|
19,482
|
||||||||
Non-cash compensation expense related to equity awards
|
2,832
|
2,524
|
5,664
|
4,581
|
||||||||||||
Total manufacturing and development chemistry expenses
|
$
|
16,712
|
$
|
11,852
|
$
|
31,527
|
$
|
24,063
|
Three Months Ended
June 30,
|
Six Months Ended
June 30,
|
|||||||||||||||
2020
|
2019
|
2020
|
2019
|
|||||||||||||
Ionis Core
|
$
|
10,458
|
$
|
8,062
|
$
|
20,768
|
$
|
16,860
|
||||||||
Akcea Therapeutics
|
8,702
|
1,266
|
10,374
|
2,621
|
||||||||||||
Elimination of intercompany activity
|
(5,280
|
)
|
—
|
(5,280
|
)
|
—
|
||||||||||
Subtotal
|
13,880
|
9,328
|
25,862
|
19,482
|
||||||||||||
Non-cash compensation expense related to equity awards
|
2,832
|
2,524
|
5,664
|
4,581
|
||||||||||||
Total manufacturing and development chemistry expenses
|
$
|
16,712
|
$
|
11,852
|
$
|
31,527
|
$
|
24,063
|
Three Months Ended
June 30,
|
Six Months Ended
June 30,
|
|||||||||||||||
2020
|
2019
|
2020
|
2019
|
|||||||||||||
Personnel costs
|
$
|
3,505
|
$
|
3,414
|
$
|
7,343
|
$
|
7,324
|
||||||||
Occupancy
|
2,439
|
2,254
|
4,881
|
4,431
|
||||||||||||
Patent expenses
|
559
|
673
|
1,231
|
1,196
|
||||||||||||
Depreciation and amortization
|
163
|
138
|
325
|
259
|
||||||||||||
Insurance
|
619
|
412
|
1,229
|
823
|
||||||||||||
Other
|
2,411
|
1,509
|
4,787
|
3,647
|
||||||||||||
Total R&D support expenses, excluding non-cash compensation expense related to equity awards
|
9,696
|
8,400
|
19,796
|
17,680
|
||||||||||||
Non-cash compensation expense related to equity awards
|
3,075
|
4,816
|
7,706
|
9,467
|
||||||||||||
Total R&D support expenses
|
$
|
12,771
|
$
|
13,216
|
$
|
27,502
|
$
|
27,147
|
Three Months Ended
June 30,
|
Six Months Ended
June 30,
|
|||||||||||||||
2020
|
2019
|
2020
|
2019
|
|||||||||||||
Ionis Core
|
$
|
5,267
|
$
|
6,038
|
$
|
12,920
|
$
|
14,864
|
||||||||
Akcea Therapeutics
|
4,471
|
2,405
|
6,960
|
2,902
|
||||||||||||
Elimination of intercompany activity
|
(42
|
)
|
(43
|
)
|
(85
|
)
|
(86
|
)
|
||||||||
Subtotal
|
9,696
|
8,400
|
19,795
|
17,680
|
||||||||||||
Non-cash compensation expense related to equity awards
|
3,075
|
4,816
|
7,706
|
9,467
|
||||||||||||
Total R&D support expenses
|
$
|
12,771
|
$
|
13,216
|
$
|
27,502
|
$
|
27,147
|
Three Months Ended
June 30,
|
Six Months Ended
June 30,
|
|||||||||||||||
2020
|
2019
|
2020
|
2019
|
|||||||||||||
Selling, general and administrative expenses, excluding non-cash compensation expense related to equity awards
|
$
|
50,203
|
$
|
57,071
|
$
|
110,341
|
$
|
104,341
|
||||||||
Non-cash compensation expense related to equity awards
|
22,076
|
18,040
|
37,073
|
38,991
|
||||||||||||
Total selling, general and administrative expenses
|
$
|
72,279
|
$
|
75,111
|
$
|
147,414
|
$
|
143,332
|
Three Months Ended
June 30,
|
Six Months Ended
June 30,
|
|||||||||||||||
2020
|
2019
|
2020
|
2019
|
|||||||||||||
Ionis Core
|
$
|
20,348
|
$
|
17,994
|
$
|
39,935
|
$
|
35,181
|
||||||||
Akcea Therapeutics
|
29,855
|
39,077
|
70,406
|
69,159
|
||||||||||||
Subtotal
|
50,203
|
57,071
|
110,341
|
104,340
|
||||||||||||
Non-cash compensation expense related to equity awards
|
22,076
|
18,040
|
37,073
|
38,992
|
||||||||||||
Total selling, general and administrative expenses
|
$
|
72,279
|
$
|
75,111
|
$
|
147,414
|
$
|
143,332
|
Three Months Ended
June 30,
|
Six Months Ended
June 30,
|
|||||||||||||||
2020
|
2019
|
2020
|
2019
|
|||||||||||||
Cost of products sold
|
$
|
4,693
|
$
|
5,645
|
$
|
9,238
|
$
|
7,971
|
||||||||
Development and patent expenses
|
26,247
|
17,707
|
42,253
|
38,406
|
||||||||||||
Sublicense fee to Ionis
|
—
|
—
|
—
|
75,000
|
||||||||||||
Selling, general and administrative expenses
|
29,855
|
39,077
|
70,406
|
69,159
|
||||||||||||
Profit (loss) share for TEGSEDI commercialization activities
|
(3,447
|
)
|
(11,465
|
)
|
(10,498
|
)
|
(20,521
|
)
|
||||||||
Total operating expenses, excluding non-cash compensation expense related to equity awards
|
57,348
|
50,965
|
111,399
|
170,015
|
||||||||||||
Non-cash compensation expense related to equity awards
|
16,120
|
14,363
|
23,402
|
32,923
|
||||||||||||
Total Akcea Therapeutics operating expenses
|
$
|
73,468
|
$
|
65,328
|
$
|
134,801
|
$
|
202,938
|
Three Months Ended
June 30,
|
Six Months Ended
June 30,
|
|||||||||||||||
2020
|
2019
|
2020
|
2019
|
|||||||||||||
Convertible notes:
|
||||||||||||||||
Non-cash amortization of the debt discount and debt issuance costs
|
$
|
9,594
|
$
|
9,382
|
$
|
19,006
|
$
|
18,582
|
||||||||
Interest expense payable in cash
|
946
|
1,714
|
1,892
|
3,428
|
||||||||||||
Interest on mortgage for primary R&D and manufacturing facilities
|
601
|
601
|
1,201
|
1,183
|
||||||||||||
Other
|
32
|
105
|
64
|
209
|
||||||||||||
Total interest expense
|
$
|
11,173
|
$
|
11,802
|
$
|
22,163
|
$
|
23,402
|
Contractual Obligations
|
Payments Due by Period (in millions)
|
|||||||||||||||||||
(selected balances described below)
|
Total
|
Less than 1 year
|
1-3 years
|
3-5 years
|
After 5 years
|
|||||||||||||||
0.125% Notes (principal and interest payable)
|
$
|
551.9
|
$
|
0.7
|
$
|
1.3
|
$
|
549.9
|
$
|
—
|
||||||||||
1% Notes (principal and interest payable)
|
$
|
314.5
|
$
|
3.1
|
$
|
311.4
|
$
|
—
|
$
|
—
|
||||||||||
Building mortgage payments
|
$
|
77.1
|
$
|
2.4
|
$
|
5.7
|
$
|
6.9
|
$
|
62.1
|
||||||||||
Operating leases
|
$
|
21.8
|
$
|
3.2
|
$
|
5.5
|
$
|
4.8
|
$
|
8.3
|
||||||||||
Other obligations (principal and interest payable)
|
$
|
1.0
|
$
|
0.1
|
$
|
0.1
|
$
|
0.1
|
$
|
0.7
|
||||||||||
Total
|
$
|
966.3
|
$
|
9.5
|
$
|
324.0
|
$
|
561.7
|
$
|
71.1
|
|
0.125% Notes
|
|||
Outstanding principal balance
|
$
|
548.8
|
||
Maturity date
|
December 2024
|
|||
Interest rate
|
0.125 percent
|
|||
Conversion price per share
|
$
|
83.28
|
||
Total shares of common stock subject to conversion
|
6.6
|
1% Notes
|
||||
Outstanding principal balance
|
$
|
309.9
|
||
Maturity date
|
November 2021
|
|||
Interest rate
|
1 percent
|
|||
Conversion price per share
|
$
|
66.81
|
||
Total shares of common stock subject to conversion
|
4.6
|
ITEM 3. |
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
ITEM 4. |
CONTROLS AND PROCEDURES
|
ITEM 1. |
LEGAL PROCEEDINGS
|
ITEM 1A. |
RISK FACTORS
|
● |
we have experienced some impact on clinical site initiation and patient enrollment due to restrictions imposed as a result of the COVID-19 Pandemic;
|
o |
For example, in March 2020, Akcea instituted a temporary suspension of enrollment for new subjects in its Phase 3 studies of AKCEA-TTR-LRx based on advice from Akcea’s trial advisory committee; however, enrollment has resumed as sites have come back online as local and regional restrictions have eased.
|
● |
some patients have not been able to comply with clinical trial protocols as quarantines have impeded patient movement and interrupted healthcare services;
|
● |
we have experienced some impact on our ability to recruit and retain patients and principal investigators and site staff who, as healthcare providers, may have heightened exposure to COVID-19; and
|
● |
we have experienced some delays in necessary interactions with regulators, ethics committees and other important agencies and contractors due to limitations in employee resources or forced furlough of government or contractor personnel.
|
● |
receipt and scope of marketing authorizations;
|
● |
establishment and demonstration in the medical and patient community of the efficacy and safety of our medicines and their potential advantages over competing products;
|
● |
cost and effectiveness of our medicines compared to other available therapies;
|
● |
patient convenience of the dosing regimen for our medicines; and
|
● |
reimbursement policies of government and third-party payers.
|
● |
priced lower than our medicines;
|
● |
reimbursed more favorably by government and other third-party payers than our medicines;
|
● |
safer than our medicines;
|
● |
more effective than our medicines; or
|
● |
more convenient to use than our medicines.
|
● |
ZOLGENSMA and risdiplam could compete with SPINRAZA;
|
● |
ONPATTRO, VYNDAQEL and VYNDAMAX, AG10 and vutrisiran could compete with TEGSEDI and AKCEA-TTR-LRx;
|
● |
ARO-APOC3, metreleptin and gemcabene could compete with WAYLIVRA;
|
● |
WVE-120101/WVE-120102, Selistat and VX15 could compete with tominersen; and
|
● |
Arimoclomol could compete with tofersen.
|
● |
in the U.S., TEGSEDI’s label contains a boxed warning for thrombocytopenia and glomerulonephritis;
|
● |
TEGSEDI requires periodic blood and urine monitoring;
|
● |
in the U.S., TEGSEDI is available only through a REMS program; and
|
● |
we expect WAYLIVRA will require periodic blood monitoring if approved in the U.S.
|
● |
fund our development activities for SPINRAZA;
|
● |
seek and obtain regulatory approvals for SPINRAZA; and
|
● |
successfully commercialize SPINRAZA.
|
● |
such authorities may disagree with the design or implementation of our clinical studies;
|
● |
we or our partners may be unable to demonstrate to the satisfaction of the FDA or other regulatory authorities that a medicine is safe and effective for any indication;
|
● |
such authorities may not accept clinical data from studies conducted at clinical facilities that have deficient clinical practices or that are in countries where the standard of care is potentially different from the U.S.;
|
● |
we or our partners may be unable to demonstrate that our medicine's clinical and other benefits outweigh its safety risks to support approval;
|
● |
such authorities may disagree with the interpretation of data from preclinical or clinical studies;
|
● |
such authorities may find deficiencies in the manufacturing processes or facilities of third-party manufacturers who manufacture clinical and commercial supplies for our medicines; and
|
● |
the approval policies or regulations of such authorities or their prior guidance to us or our partners during clinical development may significantly change in a manner rendering our clinical data insufficient for approval.
|
● |
the clinical study may produce negative or inconclusive results;
|
● |
regulators may require that we hold, suspend or terminate clinical research for noncompliance with regulatory requirements;
|
● |
we, our partners, the FDA or foreign regulatory authorities could suspend or terminate a clinical study due to adverse side effects of a medicine on subjects in the trial;
|
● |
we, or our partners, may decide, or regulators may require us, to conduct additional preclinical testing or clinical studies;
|
● |
enrollment in our clinical studies may be slower than we anticipate;
|
● |
we or our partners, including our independent clinical investigators, contract research organizations and other third-party service providers on which we rely, may not identify, recruit and train suitable clinical investigators at a sufficient number of study sites or timely enroll a sufficient number of study subjects in the clinical study;
|
● |
the institutional review board for a prospective site might withhold or delay its approval for the study;
|
● |
enrollment in our clinical studies may be slower than we anticipate;
|
● |
people who enroll in the clinical study may later drop out due to adverse events, a perception they are not benefiting from participating in the study, fatigue with the clinical study process or personal issues;
|
● |
a clinical study site may deviate from the protocol for the study;
|
● |
the cost of our clinical studies may be greater than we anticipate;
|
● |
our partners may decide not to exercise any existing options to license and conduct additional clinical studies for our medicines; and
|
● |
the supply or quality of our medicines or other materials necessary to conduct our clinical studies may be insufficient, inadequate or delayed.
|
● |
Roche for development and funding of tominersen;
|
● |
Novartis for development and funding of AKCEA-APO(a)-LRx; and
|
● |
Biogen for development and funding of tofersen.
|
● |
conduct clinical studies;
|
● |
seek and obtain marketing authorization; and
|
● |
manufacture, market and sell our medicines.
|
● |
pursue alternative technologies or develop alternative products that may be competitive with the medicine that is part of the collaboration with us;
|
● |
pursue higher-priority programs or change the focus of its own development programs; or
|
● |
choose to devote fewer resources to our medicines than it does for its own medicines.
|
● |
successful commercialization of SPINRAZA, TEGSEDI and WAYLIVRA;
|
● |
additional marketing approvals for WAYLIVRA and TEGSEDI;
|
● |
the profile and launch timing of our medicines, including TEGSEDI and WAYLIVRA;
|
● |
changes in existing collaborative relationships and our ability to establish and maintain additional collaborative arrangements;
|
● |
continued scientific progress in our research, drug discovery and development programs;
|
● |
the size of our programs and progress with preclinical and clinical studies;
|
● |
the time and costs involved in obtaining marketing authorizations; and
|
● |
competing technological and market developments, including the introduction by others of new therapies that address our markets.
|
● |
interruption of our research, development and manufacturing efforts;
|
● |
injury to our employees and others;
|
● |
environmental damage resulting in costly clean up; and
|
● |
liabilities under federal, state and local laws and regulations governing health and human safety, as well as the use, storage, handling and disposal of these materials and resultant waste products.
|
ITEM 2. |
UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
|
ITEM 3. |
DEFAULT UPON SENIOR SECURITIES
|
ITEM 4. |
MINE SAFETY DISCLOSURES
|
ITEM 5. |
OTHER INFORMATION
|
ITEM 6. |
EXHIBITS
|
a. |
Exhibits
|
Exhibit Number
|
Description of Document
|
|
Side Letter dated June 11, 2020 to the Second Amended and Restated Strategic Neurology Drug Discovery and Development Collaboration, Option and License Agreement by and between the Registrant and Biogen MA Inc. dated October 17, 2018 (portions of the exhibit have been omitted because they are both (i) not material and (ii) would be competitively harmful if publicly disclosed).
|
||
Amendment No. 2 to the Strategic Collaboration Agreement by and between the Registrant and AstraZeneca AB dated July 31, 2015 (portions of the exhibit have been omitted because they are both (i) not material and (ii) would be competitively harmful if publicly disclosed).
|
||
Amended and Restated 2002 Non-Employee Directors’ Stock Option Plan. Filed as an exhibit to the Registrant’s Form DEF 14A filed with the SEC on April 24, 2020 and incorporated herein by reference.
|
||
Certification by Chief Executive Officer pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as amended.
|
||
Certification by Chief Financial Officer pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as amended.
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||
32.1*
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Certification Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
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101
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The following financial statements from the Ionis Pharmaceuticals, Inc. Quarterly Report on Form 10-Q for the quarter ended June 30, 2020, formatted in Inline Extensible Business Reporting Language (iXBRL): (i) condensed consolidated balance sheets, (ii) condensed consolidated statements of operations, (iii) condensed consolidated statements of comprehensive income (loss), (iv) condensed consolidated statements of stockholders' equity, (v) condensed consolidated statements of cash flows and (vi) notes to condensed consolidated financial statements (detail tagged).
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|
104
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Cover Page Interactive Data File (formatted in iXBRL and included in exhibit 101).
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* |
This certification is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section, nor shall it be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended.
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Signatures
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Title
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Date
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||
/s/ BRETT P. MONIA
|
Director and Chief Executive Officer
|
|||
Brett P. Monia, Ph.D.
|
(Principal executive officer)
|
August 5, 2020
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||
/s/ ELIZABETH L. HOUGEN
|
Executive Vice President, Finance and Chief Financial Officer
|
|||
Elizabeth L. Hougen
|
(Principal financial and accounting officer)
|
August 5, 2020
|
|
(i) |
Milestones for [***]. For purposes of the [***] Collaboration Program only, the ALS Pre-Licensing Milestone Event set forth in the
last row of Table 2 of Section 6.5 of the Neurology II Agreement shall be deleted in its entirety and replaced with the following:
|
|
(ii) |
Except as expressly amended herein, all other provisions of the Neurology II Agreement will remain in full force and effect.
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(1)
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ASTRAZENECA AB, a company incorporated in Sweden under no. 556011-7482 with its registered office at SE-151 85 Södertälje, Sweden (“AstraZeneca”)
and
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(2)
|
IONIS PHARMACEUTICALS, INC., a Delaware corporation, (formally known as Isis Pharmaceuticals, Inc.) having its principal place of business at 2855 Gazelle Court,
Carlsbad, California 92010 U.S.A. (“Ionis”),
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1.
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Definitions
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2.
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Modifications
|
a.
|
With respect to the [***] Program, AstraZeneca will use Commercially Reasonable Efforts to [***] of the [***] Product known as [***] by [***].
|
b.
|
Notwithstanding the provisions of Section 6.4 of the Agreement, upon the earlier of:
|
(i)
|
[***] by AstraZeneca, its Affiliates or Sublicensees with respect to [***]; and
|
(ii)
|
[***],
|
c.
|
Notwithstanding the provisions of Section 6.4 of the Agreement, in respect of the Licensed Program that is the [***] Program, if the following Product
Milestone Events are first achieved by a [***] Product, then the corresponding Product Milestone Event Payments in TABLE 1 shall be amended to read as:
|
TABLE 1
|
|
Product Milestone Event
|
Product Milestone Event Payment
(Applicable only if first achieved by a [***]
Product)
|
[***]
|
$[***]
|
[***]
|
$[***]
|
d.
|
Notwithstanding that both [***] Products and [***] Products arise from the [***] Program, for purposes of Section 6.7 (Royalty Payments) of the Agreement,
[***] Products shall be treated as arising from one Licensed Program (and royalties will be due on [***] Products in accordance with Section 2(e) below) and [***] Products shall be treated as arising from another Licensed Program
(and royalties will be due on [***] Products in accordance with Section 6.7 of the Agreement).
|
e.
|
Solely with respect to such Licensed Program applicable to [***] Products, TABLE 2 in Section 6.7.1 (AstraZeneca Full Royalty) of the
Agreement shall be amended to read as follows:
|
TABLE 2
|
||
Royalty Tier
|
Annual Worldwide Net Sales of Products from a Licensed Program
(Applicable onlyto[***]
Products)
|
Royalty
Rate
|
1
|
For the portion of Annual Worldwide Net Sales < $[***]
|
[***]%
|
2
|
For the portion of Annual Worldwide Net Sales > $[***] but < $[***]
|
[***]%
|
3
|
For the portion of Annual Worldwide Net Sales > $[***] but < $[***]
|
[***]%
|
4
|
For the portion of Annual Worldwide Net Sales > $[***]
|
[***]%
|
f.
|
The following shall be added as Section 6.14 to the Agreement:
|
TABLE 3
|
|
Commercial Milestone Event
If aggregate Net Sales of all [***]
Products sold by AstraZeneca, its
Affiliates or Sublicensees in a given
Calendar Year exceeds the amount
stated below for such Calendar Year:
|
Commercial Milestone Event Payment
then AstraZeneca will pay to Ionis:
|
US$ [***]
|
US$ [***]
|
US$ [***]
|
US$ [***]
|
US$ [***]
|
US$ [***]
|
US$ [***]
|
US$ [***]
|
US$ [***]
|
US$ [***]
|
US$ [***] | US$ [***] |
US$ [***] | US$ [***] |
3.
|
Amendment Effective Date
|
4.
|
Entire Agreement
|
ASTRAZENECA AB (publ.)
|
IONIS PHARMACEUTICALS, INC.
|
|||
|
|
|||
Signature:
|
/s/ Regina Fritsche-Danielson
|
Signature:
|
/s/ Brett Monia
|
|
|
|
|||
Name:
|
Regina Fritsche-Danielson
|
Name:
|
Brett Monia
|
|
|
|
|||
Title:
|
SVP and Head of Research and Early
Development, Cardiovascular, Renal and Metabolic
|
Title:
|
CEO
|
1. |
I have reviewed this Quarterly Report on Form 10-Q of Ionis Pharmaceuticals, Inc.;
|
2. |
Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;
|
3. |
Based on my knowledge, the condensed consolidated financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, condensed consolidated results of operations and condensed consolidated cash flows of the registrant as of, and for, the periods presented in this quarterly report;
|
4. |
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a) |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b) |
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c) |
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d) |
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5. |
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):
|
a) |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b) |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Dated: August 5, 2020
|
|
|
|
/s/ BRETT P. MONIA
|
|
Brett P. Monia, Ph.D.
|
|
Chief Executive Officer
|
|
1. |
I have reviewed this Quarterly Report on Form 10-Q of Ionis Pharmaceuticals, Inc.;
|
2. |
Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;
|
3. |
Based on my knowledge, the condensed consolidated financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, condensed consolidated results of operations and condensed consolidated cash flows of the registrant as of, and for, the periods presented in this quarterly report;
|
4. |
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a) |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b) |
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c) |
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d) |
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5. |
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):
|
a) |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b) |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
|
|
|
|
/s/ ELIZABETH L. HOUGEN
|
|
Elizabeth L. Hougen
|
|
Chief Financial Officer
|
|
1. |
The Company’s Quarterly Report on Form 10-Q for the period ended June 30, 2020, to which this Certification is attached as Exhibit 32.1 (the “Periodic Report”), fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934, as amended; and
|
2. |
The information contained in the Periodic Report fairly presents, in all material respects, the financial condition of the Company at the end of the period covered by the Periodic Report and the results of operations of the Company for the period covered by the Periodic Report.
|
|
|
|
|
|
|
/s/ BRETT P. MONIA
|
|
/s/ ELIZABETH L. HOUGEN
|
Brett P. Monia, Ph.D.
|
|
Elizabeth L. Hougen
|
Chief Executive Officer
|
|
Chief Financial Officer
|