ITEM 1A.~~RISK FACTORS~~

RISK FACTORS

Investing in our securities involves a high degree of risk. You should consider carefully the following information about the risks described below, together with the other information contained in this report and in our other public filings in evaluating our business. If any of the following risks actually occur, our business could be materially harmed, and our financial condition and results of operations could be materially and adversely affected. As a result, the trading price of our securities could decline, and you might lose all or part of your investment. We have marked with an asterisk those risk factors that reflect substantive changes from the risk factors included in our Annual Report on Form 10-K for the year ended December 31, 2017.

Risks Associated with our Ionis Core and Akcea Therapeutics Businesses

If the market does not accept our drugs, including SPINRAZA, WAYLIVRA and TEGSEDI, we are not likely to generate revenues or become consistently profitable.

Even if our drugs are authorized for marketing, including SPINRAZA, WAYLIVRA and TEGSEDI, our success will depend upon the medical community, patients and ~~third party~~third-party payors accepting our drugs as medically useful, cost-effective and safe. Even when the FDA or foreign regulatory authorities authorize our or our partners' drugs for commercialization, doctors may not prescribe our drugs to treat patients. We and our partners may not successfully commercialize additional drugs.

Additionally, in many of the markets where we may sell our drugs in the future, if we cannot agree with the government regarding the price we can charge for our drugs, then we may not be able to sell our drugs in that market. Similarly, cost control initiatives by governments or ~~third party~~third-party payors could decrease the price received for our drugs or increase patient coinsurance to a level that makes our drugs, including SPINRAZA, WAYLIVRA and TEGSEDI, unaffordable.

The degree of market acceptance for our drugs, including SPINRAZA, WAYLIVRA and TEGSEDI, depends upon a number of factors, including the:

●

receipt and scope of marketing authorizations;

●

establishment and demonstration in the medical and patient community of the efficacy and safety of our drugs and their potential advantages over competing products;

●

cost and effectiveness of our drugs compared to other available therapies;

●

patient convenience of the dosing regimen for our drugs; and

●

reimbursement policies of government and third-party payors.

Based on the profile of our drugs, physicians, patients, patient advocates, payors or the medical community in general may not accept and/or use any drugs that we may develop.

For example, the product label for TEGSEDI in the United States has a boxed warning for thrombocytopenia and glomerulonephritis, requires periodic blood and urine monitoring, and TEGSEDI has a Risk Evaluation and Mitigation Strategy, or REMS, program. Our main competition in the U.S. market for TEGSEDI is ONPATTRO (patisiran), marketed by Alnylam Pharmaceuticals, Inc. Although ONPATTRO requires intravenous administration and pre-treatment with steroids, it does not have a boxed warning or REMS. Additionally, in the clinical studies with WAYLIVRA, ~~and TEGSEDI,~~ declines in platelet counts were observed in many patients and some patients discontinued the studies because of platelet declines. ~~In addition, in the TEGSEDI NEURO-TTR study, safety signals related to renal function were observed.~~ Therefore, we expect the product label for WAYLIVRA ~~and TEGSEDI~~ will require periodic ~~platelet monitoring and the product~~blood monitoring. In each case, these label ~~for TEGSEDI will require periodic renal monitoring, which~~requirements could negatively affect our ability to attract and retain patients for these drugs. We believe that the enhanced monitoring we have implemented to support early detection and management of these issues can help manage these safety issues so that patients can continue treatment. Since implementation of the enhanced monitoring, serious platelet events have been infrequent. While we believe we and Akcea can better maintain patients on TEGSEDI and WAYLIVRA through patient-centric commercial approaches where we and Akcea plan to have greater involvement with physicians and patients, if we and Akcea cannot effectively maintain patients on TEGSEDI or WAYLIVRA, we may not be able to generate substantial revenue from TEGSEDI or WAYLIVRA sales.

If we or our partners fail to compete effectively, our drugs, including SPINRAZA, WAYLIVRA and TEGSEDI, will not contribute significant revenues.

Our competitors engage in drug discovery throughout the world, are numerous, and include, among others, major pharmaceutical companies and specialized biopharmaceutical firms. Other companies engage in developing antisense technology. Our competitors may succeed in developing drugs that are:

●

priced lower than our drugs;

●

reimbursed more favorably by government and other third-party payors than our drugs;

●

safer than our drugs;

●

more effective than our drugs; or

●

more convenient to use than our drugs.

These competitive developments could make our drugs, including SPINRAZA, WAYLIVRA and TEGSEDI, obsolete or non-competitive.

Certain of our partners are pursuing other technologies or developing other drugs either on their own or in collaboration with others, including our competitors, to treat the same diseases our own collaborative programs target. Competition may negatively impact a partner's focus on and commitment to our drugs and, as a result, could delay or otherwise negatively affect the commercialization of our drugs, including SPINRAZA, WAYLIVRA and TEGSEDI.

Many of our competitors have substantially greater financial, technical and human resources than we do. In addition, many of these competitors have significantly greater experience than we do in conducting preclinical testing and human clinical studies of new pharmaceutical products, in obtaining FDA and other regulatory authorizations of such products and in commercializing such products. Accordingly, our competitors may succeed in obtaining regulatory authorization for products earlier than we do. Marketing and sales capability is another factor relevant to the competitive position of our drugs, and we will primarily rely on our partners, and Akcea to provide this capability.

There are several pharmaceutical and biotechnology companies engaged in the development or commercialization of products against targets that are also targets of products in our development pipeline. For example, AVXS-101, RG7916, and LMI070 could compete with SPINRAZA and metreleptin and Gemcabene could compete with WAYLIVRA; patisiran, tafamadis, diflunisal, tolcapone, PRX004 and ALN-TTRsc02 could compete with TEGSEDI. For example, patisiran is approved in the United States and Europe for a similar indication as TEGSEDI.

Following approval, our drugs, including SPINRAZA, WAYLIVRA and TEGSEDI could be subject to regulatory limitations.

Following approval of a drug, we and our partners must comply with comprehensive government regulations regarding the manufacture, marketing and distribution of drug products. We or our partners may not obtain the labeling claims necessary or desirable to successfully commercialize our drug products, including SPINRAZA, WAYLIVRA and TEGSEDI.

The FDA and foreign regulatory authorities have the authority to impose significant restrictions on an approved drug product through the product label and on advertising, promotional and distribution activities. For example:

●

In the United States, TEGSEDI’s label contains a boxed warning for thrombocytopenia and glomerulonephritis,

●

TEGSEDI requires periodic blood and urine monitoring, and

●

in the United States TEGSEDI is available only through a Risk Evaluation and Mitigation Strategy, or REMS, program.

In addition, when approved, the FDA or a foreign regulatory authority may condition approval on the performance of post-approval clinical studies or patient monitoring, which could be time consuming and expensive. If the results of such post-marketing studies are not satisfactory, the FDA or a foreign regulatory authority may withdraw marketing authorization or may condition continued marketing on commitments from us or our partners that may be expensive and/or time consuming to fulfill.

If we or others identify side effects after any of our drug products are on the market, or if manufacturing problems occur subsequent to regulatory approval, we or our partners may lose regulatory approval, or we or our partners may need to conduct additional clinical studies and/or change the labeling of our drug products including SPINRAZA, WAYLIVRA and TEGSEDI.

We depend on our collaboration with Biogen for the development and commercialization of SPINRAZA.

We have entered into a collaborative arrangement with Biogen to develop and commercialize SPINRAZA. We entered into this collaboration primarily to:

●

fund our development activities for SPINRAZA;

●

seek and obtain regulatory approvals for SPINRAZA; and

●

successfully commercialize SPINRAZA.

We are relying on Biogen to obtain additional regulatory approvals for SPINRAZA, and successfully commercialize SPINRAZA. In general, we cannot control the amount and timing of resources that Biogen devotes to our collaboration. If Biogen fails to further develop SPINRAZA, obtain additional regulatory approvals for SPINRAZA, or commercialize SPINRAZA, or if Biogen’s efforts are not effective, our business may be negatively affected.

Our collaboration with Biogen may not continue for various reasons. Biogen can terminate our collaboration at any time. If Biogen stops developing or commercializing SPINRAZA, we would have to seek or spend additional funding and SPINRAZA's commercialization may be harmed or delayed.

Our collaboration with Biogen may not result in the continued successful commercialization of SPINRAZA. If Biogen does not continue to successfully commercialize SPINRAZA, we will receive limited revenues for SPINRAZA.

If Akcea cannot ~~establish~~optimize and maintain effective marketing and sales capabilities or enter into agreements with third parties to market and sell TEGSEDI, we may not generate product revenue from TEGSEDI.

~~We plan to commercialize TEGSEDI through Akcea, if approved.~~ To successfully commercialize TEGSEDI Akcea must successfully manage its marketing, sales and distribution capabilities or make arrangements with third parties to perform these services. Akcea may not be successful in doing so. To commercialize TEGSEDI in the initial indications Akcea plans to pursue, Akcea will need to optimize and maintain a specialty sales force in each global region it expects to market TEGSEDI, supported by case managers, reimbursement specialists, partnerships with specialty pharmacies, injection training, routine ~~platelet~~blood and ~~renal~~urine monitoring and a medical affairs team. Akcea may seek to further penetrate markets by expanding its sales force or through strategic partnerships with other pharmaceutical or biotechnology companies or third-party sales organizations.

Even though certain members of Akcea’s management team and other employees have experience commercializing drug products, Akcea has no prior experience marketing, selling or distributing drug products, and there are significant risks involved in building and managing a commercial infrastructure. It will be expensive and time consuming for Akcea to maintain its own sales force and related compliance protocols to market TEGSEDI. Akcea may never successfully optimize or manage this capability and any failure could delay or preclude TEGSEDI’s launch. Akcea and its partners, if any, will have to compete with other companies to recruit, hire, train, manage and retain marketing and sales personnel.

Akcea ~~will incur~~has incurred expenses prior to the launch of TEGSEDI to integrate and manage the marketing and sales infrastructure. If regulatory requirements or other factors cause ~~a delay in~~ the commercial launch of TEGSEDI to be less successful than expected, Akcea would incur ~~additional~~ expenses for having invested in these capabilities ~~earlier than required and~~ prior to realizing any significant revenue from sales of TEGSEDI. Akcea’s sales force and marketing teams may not successfully commercialize TEGSEDI.

To the extent we and Akcea decide to rely on third parties to commercialize TEGSEDI in a particular geographic market, such as the collaboration Akcea has with PTC Therapeutics to commercialize TEGSEDI in Latin America, we and Akcea may receive less revenue than if it Akcea commercialized TEGSEDI by itself. Further we would have less control over the sales efforts of any other third parties involved in commercializing TEGSEDI.

If Akcea cannot effectively build and manage its distribution, medical affairs, market access, marketing and sales infrastructure, or find a suitable third party to perform such functions, the commercial launch and sales of TEGSEDI may be delayed, less successful or precluded. Such events may result in decreased sales and lower revenue, which could have a material adverse effect on our business, prospects, financial condition and results of operations.

If government or other third-party payors fail to provide adequate coverage and payment rates for our drugs, including SPINRAZA, TEGSEDI and WAYLIVRA, our revenue will be limited.

In both domestic and foreign markets, sales of our current and future products will depend in part upon the availability of coverage and reimbursement from third-party payors. The majority of people in the United States who would fit within our target patient populations for our drugs have their healthcare supported by a combination of Medicare coverage, other government health programs such as Medicaid, managed care providers, private health insurers and other organizations. Coverage decisions may depend upon clinical and economic standards that disfavor new drug products when more established or lower cost therapeutic alternatives are already available or subsequently become available. Assuming coverage is approved, the resulting reimbursement payment rates might not be enough to make our drugs affordable.

4450

Third-party payors, whether foreign or domestic, or governmental or commercial, are developing increasingly sophisticated methods of controlling healthcare costs. In addition, in the United States, no uniform policy of coverage and reimbursement for drug products exists among third-party payors. Therefore, coverage and reimbursement for drug products can differ significantly from payor to payor. Further, we believe that future coverage and reimbursement will likely be subject to increased restrictions both in the United States and in international markets. For example, in the United States, recent health reform measures have resulted in reductions in Medicare and other healthcare funding, and there have been several U.S. Congressional inquiries and proposed federal legislation designed to, among other things, reform government program reimbursement methodologies for drug products and bring more transparency to drug pricing. Third-party coverage and reimbursement for our products or drugs may not be available or adequate in either the United States or international markets, which would negatively affect the potential commercial success of our products, our revenue and our profits.

If Biogen cannot manufacture finished drug product for SPINRAZA or the post-launch supply of the active drug substance for SPINRAZA, SPINRAZA may not ~~achieve or~~ maintain commercial success.

Biogen is responsible for the ~~long term~~long-term supply of both SPINRAZA drug substance and finished drug product. Biogen may not be able to reliably manufacture SPINRAZA drug substance and drug product to support the ~~long term~~long-term commercialization of SPINRAZA. If Biogen cannot reliably manufacture SPINRAZA drug substance and drug product, SPINRAZA may not ~~achieve or~~ maintain commercial success, which will harm our ability to generate revenue.

If we or our partners fail to obtain regulatory approval for our drugs, including WAYLIVRA,_,~~TEGSEDI,~~ and additional approvals for SPINRAZA and TEGSEDI, we or our partners cannot sell them in the applicable markets.*

We cannot guarantee that any of our drugs, including WAYLIVRA, ~~and TEGSEDI,~~ will be considered safe and effective, or will be approved for commercialization. In addition, we cannot guarantee that SPINRAZA and TEGSEDI will be approved in additional markets or for additional indications. We and our partners must conduct time-consuming, extensive and costly clinical studies to show the safety and efficacy of each of our drugs before they can be approved for sale. We must conduct these studies in compliance with FDA regulations and with comparable regulations in other countries.

We and our partners may not obtain necessary regulatory approvals on a timely basis, if at all, for our drugs. It is possible that regulatory agencies will not approve our drugs including, WAYLIVRA ~~and TEGSEDI~~ for marketing or additional marketing authorizations for ~~SPINRAZA.~~SPINRAZA or TEGSEDI. If the FDA or another regulatory agency believes that we or our partners have not sufficiently demonstrated the safety or efficacy of any of our drugs, including SPINRAZA, WAYLIVRA and TEGSEDI, the agency will not approve the specific drug or will require additional studies, which can be time consuming and expensive and which will delay or harm commercialization of the drug. For example, Akcea received a complete response letter, or CRL, from the FDA ~~or foreign regulatory authorities could claim that we have not tested WAYLIVRA in~~and a ~~sufficient number~~preliminary notification of ~~patients to demonstrate WAYLIVRA is safe and effective in patients with FCS or FPL to support an application~~a notice of noncompliance withdrawal letter from Health Canada for marketing authorization, especially since a small number of patients in the APPROACH FCS study experienced severe thrombocytopenia, a condition where the patient has severely low platelet levels. In such a case, weWAYLIVRA. As result, Akcea may need to submit additional data to the FDA and Health Canada or conduct additional clinical studies before obtaining marketing authorization, which would be expensive and cause delays.

The FDA’s Division of Metabolism and Endocrinology Products advisory committee is scheduled to discuss and advise the FDA on the risk-benefit profile of WAYLIVRA for the treatment of FCS on May 10, 2018. In advance of this advisory committee meeting, we, Akcea and the FDA will submit briefing documents for the committee’s review, and these briefing documents will be made availableregulatory authorities in Europe could have a similar response to the ~~public and may include information from the WAYLIVRA development program that have not previously been disclosed. Historically, for some companies, disclosure of information~~marketing authorization application pending in this manner has led to increased volatility in their stock price. The advisory committee and FDA may interpret nonclinical and clinical data differently than we and our experts have. Press coverage and public scrutiny of the materials that will be discussed at the advisory committee meeting may negatively affect the potential for the NDA for WAYLIVRA to receive approval or the trading price of our securities. Even if we and Akcea ultimately obtain approval for WAYLIVRA, the matters discussed at the advisory committee meeting could limit Akcea’s ability to successfully commercialize WAYLIVRA.Europe.

Failure to receive marketing authorization for WAYLIVRA or our other drugs, ~~WAYLIVRA and TEGSEDI,~~ or failure to receive additional marketing authorizations for SPINRAZA or TEGSEDI, or delays in these authorizations could prevent or delay commercial introduction of the drug, and, as a result, could negatively impact our ability to generate revenue from product sales.

If the results of clinical testing indicate that any of our drugs are not suitable for commercial use we may need to abandon one or more of our drug development programs.

Drug discovery and development has inherent risks and the historical failure rate for drugs is high. Antisense drugs are a relatively new approach to therapeutics. If we cannot demonstrate that our drugs are safe and effective for human use, we may need to abandon one or more of our drug development programs.

In the past, we have invested in clinical studies of drugs that have not met the primary clinical end points in their Phase 3 studies. Similar results could occur in clinical studies for our drugs, including the study of WAYLIVRA in patients with FPL. If any of our drugs in clinical studies, including WAYLIVRA, do not show sufficient efficacy in patients with the targeted indication, it could negatively impact our development and commercialization goals for the drug and our stock price could decline.

Even if our drugs are successful in preclinical and human clinical studies, the drugs may not be successful in late-stage clinical studies.

Successful results in preclinical or initial human clinical studies, including the Phase 2 results for some of our drugs in development, may not predict the results of subsequent clinical studies, including the Phase 3 study of WAYLIVRA in patients with FPL. There are a number of factors that could cause a clinical study to fail or be delayed, including:

●

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 drug on subjects in the trial;

●

we 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;

●

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;

●

the cost of our clinical studies may be greater than we anticipate; and

●

the supply or quality of our drugs or other materials necessary to conduct our clinical studies may be insufficient, inadequate or delayed.

In addition, our current drugs, including SPINRAZA, WAYLIVRA and TEGSEDI, are chemically similar to each other. As a result, a safety observation we encounter with one of our drugs could have, or be perceived by a regulatory authority to have, an impact on a different drug we are developing. This could cause the FDA and other regulators to ask questions or take actions that could harm or delay our ability to develop and commercialize our drugs or increase our costs. For example, the FDA or other regulatory agencies could request, among other things, any of the following regarding one of our drugs: additional information or commitments before we can start or continue a clinical study, protocol amendments, increased safety monitoring, additional product labeling information, and post-approval commitments. Similarly, we have an ongoing Phase 3 study of WAYLIVRA in patients with FPL, an ongoing open label extension study of WAYLIVRA in patients with FCS, an ongoing open label extension study of TEGSEDI and expanded access programs for each drug. Adverse events or results from these studies could negatively impact our current or planned marketing approval applications for WAYLIVRA in patients with FCS ~~for TEGSEDI~~ or the commercial opportunity for each product.

Any failure or delay in the clinical studies, including the Phase 3 study for WAYLIVRA in patients with FPL, could reduce the commercial potential or viability of our drugs.

If we cannot manufacture our drugs or contract with a third party to manufacture our drugs at costs that allow us to charge competitive prices to buyers, we cannot market our products profitably.

To successfully commercialize any of our drugs, we or our partner would need to establish large-scale commercial manufacturing capabilities either on our own or through a ~~third party~~third-party manufacturer. We and Akcea will rely on ~~third party~~third-party manufacturers to supply the drug substance and drug product for TEGSEDI and WAYLIVRA. In addition, as our drug development pipeline increases and matures, we will have a greater need for clinical trial and commercial manufacturing capacity. We have limited experience manufacturing pharmaceutical products of the chemical class represented by our drugs, called oligonucleotides, on a commercial scale for the systemic administration of a drug. There are a small number of suppliers for certain capital equipment and raw materials that we use to manufacture our drugs, and some of these suppliers will need to increase their scale of production to meet our projected needs for commercial manufacturing. Further, we must continue to improve our manufacturing processes to allow us to reduce our drug costs. We may not be able to manufacture our drugs at a cost or in quantities necessary to make commercially successful products.

Also, manufacturers, including us, must adhere to the FDA's current Good Manufacturing Practices regulations and similar regulations in foreign countries, which the applicable regulatory authorities enforce through facilities inspection programs. We and our contract manufacturers may not comply or maintain compliance with Good Manufacturing Practices, or similar foreign regulations. Non-compliance could significantly delay or prevent receipt of marketing authorization for our drugs, including authorizations for SPINRAZA, WAYLIVRA and TEGSEDI, or result in enforcement action after authorization that could limit the commercial success of our drugs, including SPINRAZA, WAYLIVRA and TEGSEDI.

We depend on third parties to conduct our clinical studies for our drugs and any failure of those parties to fulfill their obligations could adversely affect our development and commercialization plans.

We depend on independent clinical investigators, contract research organizations and other third-party service providers to conduct our clinical studies for our drugs and expect to continue to do so in the future. For example, we use clinical research organizations, such as Icon Clinical Research Limited, INC Research Toronto, Inc. and Medpace for the clinical studies for our drugs, including WAYLIVRA and TEGSEDI. We rely heavily on these parties for successful execution of our clinical studies, but do not control many aspects of their activities. For example, the investigators are not our employees. However, we are responsible for ensuring that these third parties conduct each of our clinical studies in accordance with the general investigational plan and approved protocols for the study. Third parties may not complete activities on schedule or may not conduct our clinical studies in accordance with regulatory requirements or our stated protocols. The failure of these third parties to carry out their obligations or a termination of our relationship with these third parties could delay or prevent the development, marketing authorization and commercialization of our drugs, including authorizations for WAYLIVRA ~~and TEGSEDI~~ or additional authorizations for ~~SPINRAZA.~~

SPINRAZA and TEGSEDI.

Risks Associated with our Businesses as a Whole

We have incurred losses, and our business will suffer if we fail to consistently achieve profitability in the future.*

Because drug discovery and development requires substantial lead-time and money prior to commercialization, our expenses have generally exceeded our revenue since we were founded in January 1989. As of ~~March 31,~~September 30, 2018, we had an accumulated deficit of approximately ~~$1.2~~$1.3 billion and stockholders’ equity of approximately ~~$387.1~~$840.1 million. Most of the losses resulted from costs incurred in connection with our research and development programs and from selling, general and administrative costs associated with our operations. Most of our income has come from collaborative arrangements, including commercial revenue from royalties and R&D revenue, with additional income from research grants and the sale or licensing of our patents, as well as interest income. We may incur additional operating losses over the next several years, and these losses may increase if we cannot increase or sustain revenue. We may not successfully develop any additional products or achieve or sustain future profitability.

Our ability to use our net operating loss carryovers and certain other tax attributes may be limited.

As described above, we have incurred net losses. Under the Internal Revenue Code of 1986, as amended, or the Code, a corporation is generally allowed a deduction for net operating losses, or NOLs, carried over from a prior taxable year. Under that provision, we can carryforward our NOLs to offset our future taxable income, if any, until such NOLs are used or expire. The same is true of other unused tax attributes, such as tax credits.

As of December 31, 2017, we had federal and California net operating loss carryforwards of approximately $561.1 million and $887.1 million, respectively. The federal net operating loss carryforwards will begin to expire, if not utilized, beginning in 2024. These net operating loss carryforwards could expire unused and be unavailable to offset future income tax liabilities. Under the Tax Cut and Jobs Act of 2017, or the Tax Act, federal net operating losses incurred in 2018 and in future years may be carried forward indefinitely, but the deductibility of such federal net operating losses is limited. It is uncertain if and to what extent various states will conform to the newly enacted federal tax law. In addition, under Section 382 of the Internal Revenue Code of 1986, as amended, and corresponding provisions of state law, if a corporation undergoes an “ownership change,” which is generally defined as a greater than 50 percent change, by value, in its equity ownership over a three-year period, the corporation’s ability to use its pre-change net operating loss carryforwards and other pre-change tax attributes to offset its post-change income or taxes may be limited. It is possible that we have experienced an ownership change limitation. We may experience ownership changes in the future as a result of subsequent shifts in our stock ownership, some of which may be outside of our control. If an ownership change occurs and our ability to use our net operating loss carryforwards is materially limited, it would harm our future operating results by effectively increasing our future tax obligations.

Since corporate partnering is a significant part of our strategy to fund the development and commercialization of our development programs, if any of our collaborative partners fail to fund our collaborative programs, or if we cannot obtain additional partners, we may have to delay or stop progress on our drug development programs.

To date, corporate partnering has played a significant role in our strategy to fund our development programs and to add key development resources. We plan to continue to rely on additional collaborative arrangements to develop and commercialize our unpartnered drugs. However, we may not be able to negotiate favorable collaborative arrangements for these drug programs. If we cannot continue to secure additional collaborative partners, our revenues could decrease and the development of our drugs could suffer.

Our corporate partners are developing and/or funding many of the drugs in our development pipeline. If any of these pharmaceutical companies stops developing and/or funding these drugs, our business could suffer and we may not have, or be willing to dedicate, the resources available to develop these drugs on our own.

Our collaborators can terminate their relationships with us under certain circumstances, many of which are outside of our control. For example, as part of a reprioritization of its pipeline and strategic review of its rare disease business, GSK declined its option on TEGSEDI and IONIS-FB-L_Rx.

Even with funding from corporate partners, if our partners do not effectively perform their obligations under our agreements with them, it would delay or stop the progress of our drug development and commercial programs.

In addition to receiving funding, we enter into collaborative arrangements with third parties to:

●

conduct clinical studies;

●

seek and obtain marketing authorization; and

●

manufacture, market and sell our drugs.

Once we have secured a collaborative arrangement to further develop and commercialize one of our drug development programs, such as our collaborations with AstraZeneca, Bayer, Biogen, GSK, Novartis and Roche, these collaborations may not continue or result in commercialized drugs, or may not progress as quickly as we first anticipated.

For example, a collaborator such as AstraZeneca, Bayer, Biogen, GSK, Novartis or Roche, could determine that it is in its financial interest to:

●

pursue alternative technologies or develop alternative products that may be competitive with the drug 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 drugs than it does for its own drugs.

If any of these occur, it could affect our partner's commitment to the collaboration with us and could delay or otherwise negatively affect the commercialization of our drugs, including SPINRAZA.

If we do not progress in our programs as anticipated, the price of our securities could decrease.

For planning purposes, we estimate and may disclose the timing of a variety of clinical, regulatory and other milestones, such as when we anticipate a certain drug will enter the clinic, when we anticipate completing a clinical study, or when we anticipate filing an application for, or obtaining, marketing authorization. We base our estimates on present facts and a variety of assumptions. Many underlying assumptions are outside of our control. If we do not achieve milestones in accordance with our or our investors' expectations, including milestones related to SPINRAZA, WAYLIVRA and TEGSEDI, the price of our securities could decrease.

If we cannot protect our patents or our other proprietary rights, others may compete more effectively against us.

Our success depends to a significant degree upon whether we can continue to develop and secure intellectual property rights to proprietary products and services. However, we may not receive issued patents on any of our pending patent applications in the United States or in other countries. In addition, the scope of any of our issued patents may not be sufficiently broad to provide us with a competitive advantage. Furthermore, other ~~partners~~parties may successfully challenge, invalidate or circumvent our issued patents or patents licensed to us so that our patent rights do not create an effective competitive barrier or revenue source.

Intellectual property litigation could be expensive and prevent us from pursuing our programs.

From time to time we have to defend our intellectual property rights. If we are involved in an intellectual property dispute, we sometimes need to litigate to defend our rights or assert them against others. Disputes can involve arbitration, litigation or proceedings declared by the United States Patent and Trademark Office or the International Trade Commission or foreign patent authorities. Intellectual property litigation can be extremely expensive, and this expense, as well as the consequences should we not prevail, could seriously harm our business. For example, in November 2013 we filed a patent infringement lawsuit against Gilead Sciences Inc. in the United States District Court for the Northern District of California. Intellectual property lawsuits may be costly and may not be resolved in our favor.

If a third party claims that our drugs or technology infringe its patents or other intellectual property rights, we may have to discontinue an important product or product line, alter our products and processes, pay license fees or cease certain activities. We may not be able to obtain a license to needed intellectual property on favorable terms, if at all. There are many patents issued or applied for in the biotechnology industry, and we may not be aware of patents or patent applications held by others that relate to our business. This is especially true since patent applications in the United States are filed confidentially for the first 18 months. Moreover, the validity and breadth of biotechnology patents involve complex legal and factual questions for which important legal issues remain.

If we fail to obtain timely funding, we may need to curtail or abandon some of our programs.*

Many of our drugs are undergoing clinical studies or are in the early stages of research and development. All of our drug programs will require significant additional research, development, preclinical and/or clinical testing, marketing authorization and/or commitment of significant additional resources prior to their successful commercialization. As of ~~March 31,~~September 30, 2018, we had cash, cash equivalents and short-term investments equal to ~~$1.0~~approximately $2.0 billion. If we do not meet our goals to successfully commercialize our drugs, including SPINRAZA, WAYLIVRA and TEGSEDI, or to license our drugs and proprietary technologies, we will need additional funding in the future. Our future capital requirements will depend on many factors, such as the following:

●

successful commercialization for ~~SPINRAZA;~~SPINRAZA and TEGSEDI;

●

marketing approvals for ~~WAYLIVRA and TEGSEDI;~~WAYLIVRA;

●

the profile and launch timing of our drugs, including WAYLIVRA and TEGSEDI;

●

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.

If we need additional funds, we may need to raise them through public or private financing. Additional financing may not be available at all or on acceptable terms. If we raise additional funds by issuing equity securities, the shares of existing stockholders will be diluted and the price, as well as the price of our other securities, may decline. If adequate funds are not available or not available on acceptable terms, we may have to cut back on one or more of our research, drug discovery or development programs. Alternatively, we may obtain funds through arrangements with collaborative partners or others, which could require us to give up rights to certain of our technologies or drugs.

The loss of key personnel, or the inability to attract and retain highly skilled personnel, could make it more difficult to run our business and reduce our likelihood of success.

We are dependent on the principal members of our management and scientific staff. We do not have employment agreements with any of our executive officers that would prevent them from leaving us. The loss of our management and key scientific employees might slow the achievement of important research and development goals. It is also critical to our success that we recruit and retain qualified scientific personnel to perform research and development work. We may not be able to attract and retain skilled and experienced scientific personnel on acceptable terms because of intense competition for experienced scientists among many pharmaceutical and health care companies, universities and non-profit research institutions. In addition, failure to succeed in clinical studies may make it more challenging to recruit and retain qualified scientific personnel.

If the price of our securities continues to be highly volatile, this could make it harder for you to liquidate your investment and could increase your risk of suffering a loss.*

The market price of our common stock, like that of the securities of many other biopharmaceutical companies, has been and is likely to continue to be highly volatile. These fluctuations in our common stock price may significantly affect the trading price of our securities. During the 12 months preceding ~~March 31,~~September 30, 2018, the market price of our common stock ranged from ~~$37.26~~$39.07 to $65.51 per share. Many factors can affect the market price of our securities, including, for example, fluctuations in our operating results, announcements of collaborations, clinical study results, technological innovations or new products being developed by us or our competitors, governmental regulation, marketing authorization, changes in payors' reimbursement policies, developments in patent or other proprietary rights, public concern regarding the safety of our drugs and general market conditions.

We are exposed to potential product liability claims, and insurance against these claims may not be available to us at a reasonable rate in the future or at all.

Our business exposes us to potential product liability risks that are inherent in the testing, manufacturing, marketing and sale of therapeutic products, including potential product liability claims related to SPINRAZA, WAYLIVRA and TEGSEDI. We have clinical study insurance coverage and commercial product liability insurance coverage. However, this insurance coverage may not be adequate to cover claims against us, or be available to us at an acceptable cost, if at all. Regardless of their merit or eventual outcome, product liability claims may result in decreased demand for our drug products, injury to our reputation, withdrawal of clinical study volunteers and loss of revenues. Thus, whether or not we are insured, a product liability claim or product recall may result in losses that could be material.

Because we use biological materials, hazardous materials, chemicals and radioactive compounds, if we do not comply with laws regulating the protection of the environment and health and human safety, our business could be adversely affected.

Our research, development and manufacturing activities involve the use of potentially harmful biological materials as well as materials, chemicals and various radioactive compounds that could be hazardous to human health and safety or the environment. We store most of these materials and various wastes resulting from their use at our facilities in Carlsbad, California pending ultimate use and disposal. We cannot completely eliminate the risk of contamination, which could cause:

●

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.

In such an event, we may be held liable for any resulting damages, and any liability could exceed our resources. Although we carry insurance in amounts and types that we consider commercially reasonable, we do not have insurance coverage for losses relating to an interruption of our research, development or manufacturing efforts caused by contamination, and the coverage or coverage limits of our insurance policies may not be adequate. If our losses exceed our insurance coverage, our financial condition would be affected. We manufacture the finished drug product for WAYLIVRA and TEGSEDI at ~~third party~~third-party contract manufacturers.

If a natural or man-made disaster strikes our research, development or manufacturing facilities or otherwise affects our business, it could delay our progress developing and commercializing our drugs.

We manufacture our research and clinical supplies in a manufacturing facility located in Carlsbad, California. The facilities and the equipment we and our contract manufacturers use to research, develop and manufacture our drugs would be costly to replace and could require substantial lead time to repair or replace. Our facilities or our contract manufacturers may be harmed by natural or man-made disasters, including, without limitation, earthquakes, floods, fires and acts of terrorism; and if our facilities are affected by a disaster, our development and commercialization efforts would be delayed. Although we possess insurance for damage to our property and the disruption of our business from casualties, this insurance may not be sufficient to cover all of our potential losses and may not continue to be available to us on acceptable terms, or at all. In addition, our development and commercialization activities could be harmed or delayed by a shutdown of the U.S. government, including the FDA.

Our business and operations would suffer in the event of computer system failures.

Despite the implementation of security measures, our internal computer systems, and those of our clinical research organizations, manufacturers, commercial partners and other third parties on which we rely, are vulnerable to damage from computer viruses, unauthorized access, natural disasters, terrorism, war and telecommunication and electrical failures. If issues were to arise and cause interruptions in our operations, it could result in a material disruption of our drug programs. For example, the loss of clinical study data from completed or ongoing clinical studies could result in delays in our regulatory approval efforts and significantly increase our costs to recover or reproduce the data. To the extent that any disruption or security breach were to result in a loss of or damage to our data or applications, or inappropriate disclosure of confidential or proprietary information, we could incur liability and the further development or commercialization of our drugs, including SPINRAZA, WAYLIVRA and TEGSEDI could be harmed or delayed.

Provisions in our certificate of incorporation, other agreements and Delaware law may prevent stockholders from receiving a premium for their shares.

Our certificate of incorporation provides for classified terms for the members of our board of directors. Our certificate also includes a provision that requires at least 66 2/3 percent of our voting stockholders to approve a merger or certain other business transactions with, or proposed by, any holder of 15 percent or more of our voting stock, except in cases where certain directors approve the transaction or certain minimum price criteria and other procedural requirements are met.

Our certificate of incorporation also requires that any action required or permitted to be taken by our stockholders must be taken at a duly called annual or special meeting of stockholders and may not be taken by written consent. In addition, only our board of directors, chairman of the board or chief executive officer can call special meetings of our stockholders. We have in the past, and may in the future, implement a stockholders' rights plan, also called a poison pill, which could make it uneconomical for a third party to acquire our company on a hostile basis. In addition, our board of directors has the authority to fix the rights and preferences of, and issue shares of preferred stock, which may have the effect of delaying or preventing a change in control of our company without action by our stockholders.

The provisions of our convertible senior notes could make it more difficult or more expensive for a third party to acquire us. Upon the occurrence of certain transactions constituting a fundamental change, holders of the notes will have the right, at their option, to require us to repurchase all of their notes or a portion of their notes, which may discourage certain types of transactions in which our stockholders might otherwise receive a premium for their shares over the then current market prices.

These provisions, as well as Delaware law, including Section 203 of the Delaware General Corporation Law, and other of our agreements, may discourage certain types of transactions in which our stockholders might otherwise receive a premium for their shares over then current market prices, and may limit the ability of our stockholders to approve transactions that they think may be in their best interests.

Future sales of our common stock in the public market could adversely affect the trading price of our securities.

Future sales of substantial amounts of our common stock in the public market, or the perception that such sales could occur, could adversely affect trading prices of our securities. For example, we may issue approximately 10.3 million shares of our common stock upon conversion of our convertible senior notes. The addition of any of these shares into the public market may have an adverse effect on the price of our securities.

Our business is subject to changing regulations for corporate governance and public disclosure that has increased both our costs and the risk of noncompliance.

Each year we are required to evaluate our internal controls systems in order to allow management to report on and our Independent Registered Public Accounting Firm to attest to, our internal controls as required by Section 404 of the Sarbanes-Oxley Act. As a result, we continue to incur additional expenses and divert our management's time to comply with these regulations. In addition, if we cannot continue to comply with the requirements of Section 404 in a timely manner, we might be subject to sanctions or investigation by regulatory authorities, such as the SEC, the Public Company Accounting Oversight Board, or PCAOB, or The Nasdaq Global Select Market. Any such action could adversely affect our financial results and the market price of our common stock.

The SEC and other regulators have continued to adopt new rules and regulations and make additional changes to existing regulations that require our compliance. On July 21, 2010, the Dodd-Frank Wall Street Reform and Protection Act, or the Dodd-Frank Act, was enacted. There are significant corporate governance and executive compensation-related provisions in the Dodd-Frank Act that require the SEC to adopt, or where the SEC has adopted, additional rules and regulations in these areas such as "say on pay" and proxy access. Stockholder activism, the current political environment and the current high level of government intervention and regulatory reform may lead to substantial new regulations and disclosure obligations, which may lead to additional compliance costs and impact the manner in which we operate our business.

The ~~recently passed~~ comprehensive tax reform bill could adversely affect our business and financial condition.

The Tax Act significantly revises the Internal Revenue Code of 1986, as amended. The Tax Act, among other things, contains significant changes to corporate taxation, including reduction of the corporate tax rate from a top marginal rate of 35 percent to a flat rate of 21 percent, limitation of the tax deduction for interest expense to 30 percent of adjusted earnings (except for certain small businesses), limitation of the deduction for net operating losses to 80 percent of current year taxable income and elimination of net operating loss carrybacks, one time taxation of offshore earnings at reduced rates regardless of whether they are repatriated, elimination of U.S. tax on foreign earnings (subject to certain important exceptions), immediate deductions for certain new investments instead of deductions for depreciation expense over time, and modifying or repealing many business deductions and credits. Notwithstanding the reduction in the corporate income tax rate, the overall impact of the new federal tax law is uncertain and our business and financial condition could be adversely affected. In addition, it is uncertain if and to what extent various states will conform to the newly enacted federal tax law. The impact of this tax reform on holders of our common stock is also uncertain and could be adverse. We urge our stockholders to consult with their legal and tax advisors with respect to this legislation and the potential tax consequences of investing in or holding our common stock.

We could be subject to additional tax liabilities.

We are subject to U.S. federal, state, local and sales taxes in the U.S. and foreign income taxes, withholding taxes and transaction taxes in foreign jurisdictions. Significant judgment is required in evaluating our tax positions and our worldwide provision for taxes. During the ordinary course of business, there are many activities and transactions for which the ultimate tax determination is uncertain. In addition, our tax obligations and effective tax rates could be adversely affected by changes in the relevant tax, accounting and other laws, regulations, principles and interpretations, including those relating to income tax nexus, by recognizing tax losses or lower than anticipated earnings in jurisdictions where we have lower statutory rates and higher than anticipated earnings in jurisdictions where we have higher statutory rates, by changes in foreign currency exchange rates, or by changes in the valuation of our deferred tax assets and liabilities. We may be audited in various jurisdictions, and such jurisdictions may assess additional taxes, sales taxes and value-added taxes against us. Although we believe our tax estimates are reasonable, the final determination of any tax audits or litigation could be materially different from our historical tax provisions and accruals, which could have a material adverse effect on our operating results or cash flows in the period for which a determination is made.

Negative conditions in the global credit markets and financial services and other industries may adversely affect our business.

The global credit markets, the financial services industry, the U.S. capital markets, and the U.S. economy as a whole have in the past experienced periods of substantial turmoil and uncertainty characterized by unprecedented intervention by the U.S. federal government and the failure, bankruptcy, or sale of various financial and other institutions. It is possible that a crisis in the global credit markets, the U.S. capital markets, the financial services industry or the U.S. economy may adversely affect our business, vendors and prospects, as well as our liquidity and financial condition. More specifically, our insurance carriers and insurance policies covering all aspects of our business may become financially unstable or may not be sufficient to cover any or all of our losses and may not continue to be available to us on acceptable terms, or at all.

ITEM 2.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Not applicable.

ITEM 3.

DEFAULT UPON SENIOR SECURITIES

Not applicable.

ITEM 4.

MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5.

OTHER INFORMATION

Not applicable.

ITEM 6.

EXHIBITS

Exhibits

5157

Exhibit Number		Description of Document

10.1		~~Strategic Advisory Services Agreement, dated as of January 15, 2018, by and between B. Lynne Parshall and Ionis Pharmaceuticals, Inc.~~

~~10.2~~		~~Development, Commercialization,~~Second Amendment to Research Collaboration, Option and License Agreement ~~dated as~~ of ~~March 14, 2018,~~December 22, 2014, by and between Ionis Pharmaceuticals, Inc. and ~~Akcea Therapeutics,~~Janssen Biotech Inc.
~~10.3~~		~~Amended~~ Portions of this exhibit have been omitted and ~~Restated Services Agreement, dated as of March 14, 2018, by and between Ionis Pharmaceuticals, Inc. and Akcea Therapeutics, Inc.~~separately filed with the SEC.

31.1		Certification by Chief Executive Officer pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as amended.

31.2		Certification by Chief Financial Officer pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as amended.

~~32.1~~32.1**		Certification Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101		The following financial statements from the Ionis Pharmaceuticals, Inc. Quarterly Report on Form 10-Q for the quarter ended ~~March 31,~~September 30, 2018, formatted in Extensive Business Reporting Language (XBRL): (i) condensed consolidated balance sheets, (ii) condensed consolidated statements of operations, (iii) condensed consolidated statements of comprehensive income (loss), (iv) condensed consolidated statements of cash flows and (v) notes to condensed consolidated financial statements (detail tagged).

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.

5258

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

Signatures	Title	Date

/s/ STANLEY T. CROOKE	Chairman of the Board, President, and Chief Executive Officer
Stanley T. Crooke, M.D., Ph.D.	(Principal executive officer)	~~May 4,~~November 6, 2018

/s/ ELIZABETH L. HOUGEN	Senior Vice President, Finance and Chief Financial Officer
Elizabeth L. Hougen	(Principal financial and accounting officer)	~~May 4,~~November 6, 2018

5359

Delaware		33-~~0336973~~ 33-0336973
(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification No.)

2855 Gazelle Court, Carlsbad, CA		92010
(Address of Principal Executive Offices)		(Zip Code)

Title of each class		Name of each exchange on which registered
Common Stock, $.001 Par Value		The Nasdaq Stock Market, LLC

Large accelerated filer 	Accelerated filer 

Non-accelerated filer 	Smaller reporting company 
(Do not check if a smaller reporting company)
	Emerging growth company 

PART I	FINANCIAL INFORMATION

ITEM 1:	Financial Statements:

	Condensed Consolidated Balance Sheets as of ~~March 31,~~September 30, 2018 and December 31, 2017 (unaudited) (as revised)	3

	Condensed Consolidated Statements of Operations for the three and nine months ended ~~March 31,~~September 30, 2018 and 2017 (unaudited) (as revised)	4

	Condensed Consolidated Statements of Comprehensive Income (Loss) for the three and nine months ended ~~March 31,~~September 30, 2018 and 2017 (unaudited) (as revised)	5

	Condensed Consolidated Statements of Cash Flows for the ~~three~~nine months ended ~~March 31,~~September 30, 2018 and 2017 (unaudited) (as revised)	6

	Notes to Condensed Consolidated Financial Statements (unaudited)	7

ITEM 2:	Management’s Discussion and Analysis of Financial Condition and Results of Operations:

	Overview	2631

	Results of Operations	3440

	Liquidity and Capital Resources	4045

ITEM 3:	Quantitative and Qualitative Disclosures about Market Risk	4147

ITEM 4:	Controls and Procedures	4147

PART II	OTHER INFORMATION	4248

ITEM 1:	Legal Proceedings	4248
ITEM 1A:	Risk Factors	4248
ITEM 2:	Unregistered Sales of Equity Securities and Use of Proceeds	5157

ITEM 3:	Default upon Senior Securities	5157

ITEM 4:	Mine Safety Disclosures	5157

ITEM 5:	Other Information	5157

ITEM 6:	Exhibits	5158

SIGNATURES		5359

	March 31, 2018			December 31, 2017			September 30, 2018			December 31, 2017
				(as revised*)						(as revised*)
ASSETS
Current assets:
Cash and cash equivalents	$	227,505		$	129,630		$	479,891		$	129,630
Short-term investments		807,796			893,085			1,479,098			893,085
Contracts receivable		36,858			62,955			14,732			62,955
Inventories		9,060			9,982			8,378			9,982
Other current assets		62,064			73,082			97,125			73,082
Total current assets		1,143,283			1,168,734			2,079,224			1,168,734
Property, plant and equipment, net		123,188			121,907			132,003			121,907
Patents, net		22,914			22,004			24,027			22,004
Deposits and other assets		10,175			10,129			12,659			10,129
Total assets	$	1,299,560		$	1,322,774		$	2,247,913		$	1,322,774

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	13,833		$	24,886		$	13,576		$	24,886
Accrued compensation		12,166			25,151			24,259			25,151
Accrued liabilities		66,470			66,618			50,786			66,618
Current portion of long-term obligations		47			1,621			14,472			1,621
Current portion of deferred contract revenue		120,127			125,336			157,145			125,336
Total current liabilities		212,643			243,612			260,238			243,612
Long-term deferred contract revenue		85,446			108,026			523,384			108,026
1 percent convertible senior notes		541,635			533,111			559,184			533,111
Long-term obligations, less current portion		12,946			12,974			5,138			12,974
Long-term mortgage debt		59,789			59,771			59,825			59,771
Total liabilities		912,459			957,494			1,407,769			957,494
Stockholders’ equity:
Common stock, $0.001 par value; 300,000,000 shares authorized, 125,448,746 and 124,976,373 shares issued and outstanding at March 31, 2018 and December 31, 2017, respectively		125			125
Common stock, $0.001 par value; 300,000,000 shares authorized, 137,506,203 and 124,976,373 shares issued and outstanding at September 30, 2018 and December 31, 2017, respectively								138			125
Additional paid-in capital		1,576,954			1,553,681			2,030,313			1,553,681
Accumulated other comprehensive loss		(33,234	)		(31,759	)		(32,532	)		(31,759	)
Accumulated deficit		(1,242,454	)		(1,241,034	)		(1,287,369	)		(1,241,034	)
Total Ionis stockholders’ equity		301,391			281,013			710,550			281,013
Noncontrolling interest in Akcea Therapeutics, Inc.		85,710			84,267			129,594			84,267
Total stockholders’ equity		387,101			365,280			840,144			365,280
Total liabilities and stockholders’ equity	$	1,299,560		$	1,322,774		$	2,247,913		$	1,322,774

	Three Months Ended March 31, 2017						Three Months Ended September 30,						Nine Months Ended September 30,
	2018			2017			2018			2017			2018			2017
Revenue:				(as revised*)						(as revised*)						(as revised*)
Commercial revenue:
SPINRAZA royalties	$	41,081		$	5,211		$	70,010		$	32,890		$	167,743		$	60,467
Licensing and other royalty revenue		942			2,590			12,746			1,727			14,232			5,639
Total commercial revenue		42,023			7,801			82,756			34,617			181,975			66,106
Research and development revenue under collaborative agreements		102,396			107,999			62,639			83,697			225,584			280,281
Total revenue		144,419			115,800			145,395			118,314			407,559			346,387

Expenses:
Research, development and patent		104,067			82,638			95,255			80,214			301,153			246,358
Selling, general and administrative		43,653			13,677			68,712			26,788			178,563			62,782
Total operating expenses		147,720			96,315			163,967			107,002			479,716			309,140

Income (loss) from operations		(3,301	)		19,485			(18,572	)		11,312			(72,157	)		37,247

Other income (expense):
Investment income		3,610			2,280			9,963			2,811			18,711			7,504
Interest expense		(10,938	)		(11,363	)		(11,282	)		(10,825	)		(33,332	)		(33,966	)
Other expenses		(168	)		(1,438	)
Loss on extinguishment of financing liability for leased facility								—			(7,689	)		—			(7,689	)
Other income (expenses)								(22	)		(2,141	)		(145	)		(3,528	)

Income (loss) before income tax expense		(10,797	)		8,964
Loss before income tax expense								(19,913	)		(6,532	)		(86,923	)		(432	)

Income tax expense		(15	)		—			(452	)		(961	)		(824	)		(1,184	)

Net income (loss)		(10,812	)		8,964
Net loss								(20,365	)		(7,493	)		(87,747	)		(1,616	)

Net loss attributable to noncontrolling interest in Akcea Therapeutics, Inc.		9,392			—			15,806			4,882			41,412			4,882

Net income (loss) attributable to Ionis Pharmaceuticals, Inc. common stockholders	$	(1,420	)	$	8,964		$	(4,559	)	$	(2,611	)	$	(46,335	)	$	3,266

Basic net income (loss) per share	$	(0.01	)	$	0.07		$	(0.03	)	$	(0.02	)	$	(0.33	)	$	0.13
Shares used in computing basic net income (loss) per share		125,330			122,861			143,314			124,370			132,518			123,746
Diluted net income (loss) per share	$	(0.01	)	$	0.07		$	(0.03	)	$	(0.02	)	$	(0.33	)	$	0.13
Shares used in computing diluted net income (loss) per share		125,330			124,972			143,314			124,370			132,518			125,858

	Three Months Ended March 31,						Three Months Ended September 30,						Nine Months Ended September 30,
	2018			2017			2018			2017			2018			2017
				(as revised*)						(as revised*)						(as revised*)
Net income (loss)	$	(10,812	)	$	8,964
Net loss							$	(20,365	)	$	(7,493	)	$	(87,747	)	$	(1,616	)
Unrealized gains (losses) on debt securities, net of tax		(1,530	)		266			133			215			(834	)		610
Reclassification adjustment for realized gains included in net income (loss)		—			(374	)		—			—			—			(374	)
Currency translation adjustment		55			(6	)		(28	)		(42	)		61			(77	)

Comprehensive income (loss)		(12,287	)		8,850
Comprehensive loss								(20,260	)		(7,320	)		(88,520	)		(1,457	)

Comprehensive loss attributable to noncontrolling interests		9,423			—			15,797			3,952			41,455			3,952

Comprehensive income (loss) attributable to Ionis Pharmaceuticals, Inc. stockholders	$	(2,864	)	$	8,850		$	(4,463	)	$	(3,368	)	$	(47,065	)	$	2,495

	Three Months Ended March 31, 2017
	As Previously Reported under Topic 605		Topic 606 Adjustment			As Revised
Revenue:
Commercial revenue:
SPINRAZA royalties	$	5,211	$	—		$	5,211
Licensing and other royalty revenue		3,547		(957	)		2,590
Total commercial revenue		8,758		(957	)		7,801
Research and development revenue under collaborative agreements		101,546		6,453			107,999
Total revenue	$	110,304	$	5,496		$	115,800

	At December 31, 2017
	As Previously Reported under Topic 605			Topic 606 Adjustment			As Revised
Current portion of deferred revenue	$	106,465		$	18,871		$	125,336
Long-term portion of deferred revenue	$	72,708		$	35,318		$	108,026
Accumulated deficit	$	(1,187,398	)	$	(53,636	)	$	(1,241,034	)
Noncontrolling interest in Akcea Therapeutics, Inc.	$	87,847		$	(3,580	)	$	84,267
Total stockholders’ equity	$	418,719		$	(53,439	)	$	365,280

	Three Months Ended September 30, 2017
	As Previously Reported under Topic 605			Topic 606 Adjustment			As Revised
Revenue:
Commercial revenue:
SPINRAZA royalties	$	32,890		$	—		$	32,890
Licensing and other royalty revenue		879			848			1,727
Total commercial revenue		33,769			848			34,617
Research and development revenue under collaborative agreements		87,142			(3,445	)		83,697
Total revenue	$	120,911		$	(2,597	)	$	118,314
Income (loss) from operations	$	13,909		$	(2,597	)	$	11,312
Net income (loss)	$	(4,896	)	$	(2,597	)	$	(7,493	)
Net income (loss) attributable to Ionis Pharmaceuticals, Inc. common stockholders	$	(976	)	$	(1,635	)	$	(2,611	)
Net income (loss) per share, basic and diluted	$	0.00		$	(0.02	)	$	(0.02	)

	Nine Months Ended September 30, 2017
	As Previously Reported under Topic 605			Topic 606 Adjustment		As Revised
Revenue:
Commercial revenue:
SPINRAZA royalties	$	60,467		$	—	$	60,467
Licensing and other royalty revenue		4,983			656		5,639
Total commercial revenue		65,450			656		66,106
Research and development revenue under collaborative agreements		269,917			10,364		280,281
Total revenue	$	335,367		$	11,020	$	346,387
Income from operations	$	26,227		$	11,020	$	37,247
Net income (loss)	$	(12,636	)	$	11,020	$	(1,616	)
Net income (loss) attributable to Ionis Pharmaceuticals, Inc. common stockholders	$	(8,716	)	$	11,982	$	3,266
Net income (loss) per share, basic	$	0.02		$	0.11	$	0.13
Net income (loss) per share, diluted	$	0.02		$	0.11	$	0.13

Three months ended March 31, 2018	Weighted Average Shares Owned in Akcea		Akcea’s Net Income (Loss) Per Share			Ionis’ Portion of Akcea’s Net Loss
Three months ended September 30, 2018									Weighted Average Shares Owned in Akcea		Akcea’s Net Income (Loss) Per Share			Ionis’ Portion of Akcea’s Net Loss

Common shares		45,448	$	(0.44	)	$	(19,997	)		65,538	$	(0.73	)	$	(47,843	)
Akcea’s net loss attributable to our ownership						$	(19,997	)						$	(47,843	)
Ionis’ stand-alone net income							18,785								43,226
Net loss available to Ionis common stockholders						$	(1,212	)						$	(4,616	)
Weighted average shares outstanding							125,330								143,314
Basic net loss per share						$	(0.01	)						$	(0.03	)

Nine months ended September 30, 2018	Weighted Average Shares Owned in Akcea		Akcea’s Net Loss Per Share			Ionis’ Portion of Akcea’s Net Loss

Common shares		57,347	$	(1.93	)	$	(110,680	)
Akcea’s net loss attributable to our ownership						$	(110,680	)
Ionis’ stand-alone net income							67,517
Net income available to Ionis common stockholders						$	(43,162	)
Weighted average shares outstanding							132,518
Basic net loss per share						$	(0.33	)

Three months ended March 31, 2017	Income (Numerator)		Shares (Denominator)		Per-Share Amount
Nine months ended September 30, 2017							Income (Numerator)		Shares (Denominator)		Per-Share Amount

Net income available to Ionis common stockholders	$	8,964		122,861	$	0.07	$	16,321		123,746	$	0.13
Effect of dilutive securities:
Shares issuable upon exercise of stock options		—		1,674				—		1,658
Shares issuable upon restricted stock award issuance		—		377				—		430
Shares issuable related to our ESPP		—		60				—		24
Income available to Ionis common stockholders	$	8,964		124,972	$	0.07
Income available to Ionis common stockholders, plus assumed conversions							$	16,321		125,858	$	0.13

	Three Months Ended March 31,
	2018			2017
Research, development and patent		$	19,682		$	16,122
Selling, general and administrative			8,769			4,790
Total		$	28,451		$	20,912

One year or less	~~77%~~80%
After one year but within two years	~~18%~~15%
After two years but within three ~~and a half~~ years	5%
Total	100%

			Gross Unrealized									Gross Unrealized
March 31, 2018	Cost (1)		Gains		Losses			Estimated Fair Value
September 30, 2018										Cost (1)		Gains		Losses			Estimated Fair Value
Available-for-sale securities:
Corporate debt securities (2)	$	433,297	$	1	$	(1,286	)	$	432,012	$	841,397	$	23	$	(1,264	)	$	840,156
Debt securities issued by U.S. government agencies		129,235		—		(323	)		128,912		143,008		2		(169	)		142,841
Debt securities issued by the U.S. Treasury (2)		54,076		1		(43	)		54,034		154,280		—		(89	)		154,191
Debt securities issued by states of the U.S. and political subdivisions of the states (2)		31,624		1		(194	)		31,431		49,873		—		(330	)		49,543
Total securities with a maturity of one year or less		648,232		3		(1,846	)		646,389		1,188,558		25		(1,852	)		1,186,731
Corporate debt securities		126,128		5		(1,807	)		124,326		240,208		16		(1,420	)		238,804
Debt securities issued by U.S. government agencies		21,547		—		(162	)		21,385		32,435		—		(109	)		32,326
Debt securities issued by the U.S. Treasury											9,872		—		(10	)		9,862
Debt securities issued by states of the U.S. and political subdivisions of the states		52,746		—		(785	)		51,961		31,666		—		(551	)		31,115
Total securities with a maturity of more than one year		200,421		5		(2,754	)		197,672		314,181		16		(2,090	)		312,107
Total available-for-sale securities	$	848,653	$	8	$	(4,600	)	$	844,061	$	1,502,739	$	41	$	(3,942	)	$	1,498,838

			Gross Unrealized
December 31, 2017	Cost (1)		Gains		Losses			Estimated Fair Value
Available-for-sale securities:
Corporate debt securities	$	500,599	$	2	$	(752	)	$	499,849
Debt securities issued by U.S. government agencies		83,926		—		(212	)		83,714
Debt securities issued by the U.S. Treasury		29,428		—		(17	)		29,411
Debt securities issued by states of the U.S. and political subdivisions of the states (2)		29,240		4		(122	)		29,122
Total securities with a maturity of one year or less		643,193		6		(1,103	)		642,096
Corporate debt securities		148,663		8		(1,059	)		147,612
Debt securities issued by U.S. government agencies		52,779		—		(168	)		52,611
Debt securities issued by the U.S. Treasury		1,409		—		(2	)		1,407
Debt securities issued by states of the U.S. and political subdivisions of the states		65,550		—		(740	)		64,810
Total securities with a maturity of more than one year		268,401		8		(1,969	)		266,440
Total available-for-sale securities	$	911,594	$	14	$	(3,072	)	$	908,536

			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		420	$	470,960	$	(2,308	)	$	71,370	$	(785	)	$	542,330	$	(3,093	)
Debt securities issued by U.S. government agencies		52		124,729		(397	)		25,569		(88	)		150,298		(485	)
Debt securities issued by the U.S. Treasury		7		32,329		(43	)		—		—			32,329		(43	)
Debt securities issued by states of the U.S. and political subdivisions of the states		50		48,477		(588	)		32,145		(391	)		80,622		(979	)
Total temporarily impaired securities		529	$	676,495	$	(3,336	)	$	129,084	$	(1,264	)	$	805,579	$	(4,600	)

	At March 31, 2018		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		At September 30, 2018		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)
Cash equivalents (1)	$	138,350	$	138,350	$	—	$	395,649	$	395,649	$	—
Corporate debt securities (2)		556,338		—		556,338		1,078,960		—		1,078,960
Debt securities issued by U.S. government agencies (3)		150,297		—		150,297		175,167		—		175,167
Debt securities issued by the U.S. Treasury (3)		54,034		54,034		—		164,053		164,053		—
Debt securities issued by states of the U.S. and political subdivisions of the states (3)		83,392		—		83,392		80,658		—		80,658
Total	$	982,411	$	192,384	$	790,027	$	1,894,487	$	559,702	$	1,334,785

	At December 31, 2017		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)
Cash equivalents (1)	$	86,262	$	86,262	$	—
Corporate debt securities (3)		647,461		—		647,461
Debt securities issued by U.S. government agencies (3)		136,325		—		136,325
Debt securities issued by the U.S. Treasury (3)		30,818		30,818		—
Debt securities issued by states of the U.S. and political subdivisions of the states (4)		93,932		—		93,932
Total	$	994,798	$	117,080	$	877,718


Beginning balance of Level 3 instruments at January 1, 2017	$	—
Value of the potential premium we would have received from Novartis at inception of the SPA (January 2017)		5,035
Recurring fair value adjustment during the three months ended March 31, 2017		(1,438	)
Ending balance of Level 3 instruments at March 31, 2017	$	3,597

Three Months Ended March 31, 2018	Ionis Core		Akcea Therapeutics			Elimination of Intercompany Activity			Total
Three Months Ended September 30, 2018												Ionis Core		Akcea Therapeutics			Elimination of Intercompany Activity			Total
Revenue:
Commercial revenue:
SPINRAZA royalties	$	41,081	$	—		$	—		$	41,081		$	70,010	$	—		$	—		$	70,010
Licensing and other royalty revenue		942		—			—			942			7,946		12,000			(7,200	)		12,746
Total commercial revenue	$	42,023	$	—		$	—		$	42,023			77,956		12,000			(7,200	)		82,756
R&D revenue under collaborative agreements	$	90,517	$	17,108		$	(5,229	)	$	102,396			100,105		7,241			(44,707	)		62,639
Total segment revenue	$	132,540	$	17,108		$	(5,229	)	$	144,419		$	178,061	$	19,241		$	(51,907	)	$	145,395
Total operating expenses	$	105,544	$	47,435		$	(5,259	)	$	147,720		$	87,664	$	84,249		$	(7,946	)	$	163,967
Income (loss) from operations	$	26,996	$	(30,327	)	$	30		$	(3,301	)	$	90,397	$	(65,008	)	$	(43,961	)	$	(18,572	)

Three Months Ended March 31, 2017 (as revised)	Ionis Core		Akcea Therapeutics			Elimination of Intercompany Activity			Total
Three Months Ended September 30, 2017 (as revised)											Ionis Core		Akcea Therapeutics			Elimination of Intercompany Activity			Total
Revenue:
Commercial revenue:
SPINRAZA royalties	$	5,211	$	—		$	—		$	5,211	$	32,890	$	—		$	—		$	32,890
Licensing and other royalty revenue		2,590		—			—			2,590		1,727		—			—			1,727
Total commercial revenue	$	7,801	$	—		$	—		$	7,801		34,617		—			—			34,617
R&D revenue under collaborative agreements	$	153,382	$	6,094		$	(51,477	)	$	107,999		73,791		9,906			—			83,697
Total segment revenue	$	161,183	$	6,094		$	(51,477	)	$	115,800	$	108,408	$	9,906		$	—		$	118,314
Total operating expense	$	78,352	$	69,470		$	(51,507	)	$	96,315
Total operating expenses											$	81,019	$	26,013		$	(30	)	$	107,002
Income (loss) from operations	$	82,831	$	(63,376	)	$	30		$	19,485	$	27,389	$	(16,107	)	$	30		$	11,312

Nine Months Ended September 30, 2017 (as revised)	Ionis Core		Akcea Therapeutics			Elimination of Intercompany Activity			Total
Revenue:
Commercial revenue:
SPINRAZA royalties	$	60,467	$	—		$	—		$	60,467
Licensing and other royalty revenue		5,639		—			—			5,639
Total commercial revenue		66,106		—			—			66,106
R&D revenue under collaborative agreements		312,976		21,712			(54,407	)		280,281
Total segment revenue	$	379,082	$	21,712		$	(54,407	)	$	346,387
Total operating expenses	$	242,753	$	120,884		$	(54,497	)	$	309,140
Income (loss) from operations	$	136,329	$	(99,172	)	$	90		$	37,247

	Three Months Ended March 31,					Three Months Ended						Nine Months Ended
	2018			2017		September 30,						September 30,
				(as revised)		2018			2017			2018			2017
Total revenue	$	144,419		$	115,800	$	145,395		$	118,314		$	407,559		$	346,387
Total operating expenses	$	147,720		$	96,315	$	163,967		$	107,002		$	479,716		$	309,140
Income (loss) from operations	$	(3,301	)	$	19,485	$	(18,572	)	$	11,312		$	(72,157	)	$	37,247
Net income (loss)	$	(10,812	)	$	8,964
Net loss						$	(20,365	)	$	(7,493	)	$	(87,747	)	$	(1,616	)
Net income (loss) attributable to Ionis Pharmaceuticals, Inc. common stockholders		(1,420	)		8,964	$	(4,559	)	$	(2,611	)	$	(46,335	)	$	3,266
Cash, cash equivalents and short-term investments		1,035,301			1,022,715

	Three Months Ended March 31,
	2018			��	2017
Medical affairs expenses, excluding non-cash compensation expense related to equity awards		$	5,132			$	901
Non-cash compensation expense related to equity awards			766				556
Total medical affairs expenses		$	5,898			$	1,457

	Payments Due by Period (in millions)										Payments Due by Period (in millions)
Contractual Obligations (selected balances described below)	Total		Less than 1 year		1-3 years		3-5 years		After 5 years		Total		Less than 1 year		1-3 years		3-5 years		After 5 years
Convertible senior notes (principal and interest payable)	$	712.9	$	6.9	$	13.7	$	692.3	$	—	$	709.4	$	6.9	$	13.7	$	688.8	$	—
Building mortgage payments		82.6		2.4		4.8		5.4		70.0	$	81.4	$	2.4	$	4.8	$	5.9	$	68.3
Financing arrangements (principal and interest payable)		13.0		0.3		12.7		—		—	$	12.8	$	12.8	$	—	$	—	$	—
Other obligations (principal and interest payable)		1.1		0.1		0.1		0.1		0.8	$	1.1	$	0.1	$	0.1	$	0.1	$	0.8
Operating leases		3.1		0.9		1.5		0.6		0.1	$	26.6	$	3.1	$	5.9	$	5.2	$	12.4
Total	$	812.7	$	10.6	$	32.8	$	698.4	$	70.9	$	831.3	$	25.3	$	24.5	$	700.0	$	81.5

	1 Percent Convertible Senior Notes
Outstanding principal balance	$	685.5
Original issue date ($500 million of principal)	November 2014
Additional issue date ($185.5 million of principal)	December 2016
Maturity date	November 2021
Interest rate	1 percent
Conversion price per share	$	66.81
Total shares of common stock subject to conversion		10.3