☒ | 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 ☐ |
PART I | FINANCIAL INFORMATION | |
ITEM 1: | Financial Statements: | |
Condensed Consolidated Balance Sheets as of | 3 | |
Condensed Consolidated Statements of Operations for the three | 4 | |
Condensed Consolidated Statements of Comprehensive Loss for the three | 5 | |
Condensed Consolidated Statements of Stockholders’ Equity for the three | 6 | |
Condensed Consolidated Statements of Cash Flows for the | 7 | |
8 | ||
ITEM 2: | Management’s Discussion and Analysis of Financial Condition and Results of Operations: | |
ITEM 3: | ||
ITEM 4: | ||
PART II | ||
ITEM 1: | ||
ITEM 1A: | ||
ITEM 2: | ||
ITEM 3: | ||
ITEM 4: | ||
ITEM 5: | ||
ITEM 6: | ||
March 31, 2022 | December 31, 2021 | |||||||
(unaudited) | ||||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 542,513 | $ | 869,191 | ||||
Short-term investments | 1,509,880 | 1,245,782 | ||||||
Contracts receivable | 26,122 | 61,896 | ||||||
Inventories | 24,032 | 24,806 | ||||||
Other current assets | 150,577 | 143,374 | ||||||
Total current assets | 2,253,124 | 2,345,049 | ||||||
Property, plant and equipment, net | 177,724 | 178,069 | ||||||
Patents, net | 29,295 | 29,005 | ||||||
Deposits and other assets | 58,949 | 59,567 | ||||||
Total assets | $ | 2,519,092 | $ | 2,611,690 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 16,125 | $ | 11,904 | ||||
Accrued compensation | 16,525 | 38,810 | ||||||
Accrued liabilities | 99,256 | 88,560 | ||||||
Income taxes payable | 901 | 36 | ||||||
Current portion of long-term obligations | 4,206 | 3,526 | ||||||
Current portion of deferred contract revenue | 91,437 | 97,714 | ||||||
Total current liabilities | 228,450 | 240,550 | ||||||
Long-term deferred contract revenue | 333,138 | 351,879 | ||||||
0 percent convertible senior notes, net | 619,898 | 619,119 | ||||||
0.125 percent convertible senior notes, net | 542,860 | 542,314 | ||||||
Long-term obligations, less current portion | 25,710 | 26,378 | ||||||
Long-term mortgage debt | 59,462 | 59,713 | ||||||
Total liabilities | 1,809,518 | 1,839,953 | ||||||
Stockholders’ equity: | ||||||||
Common stock, $0.001 par value; 300,000,000 shares authorized, 141,753,122 and 141,210,015 shares issued and outstanding at March 31, 2022 (unaudited) and December 31, 2021, respectively | 142 | 141 | ||||||
Additional paid-in capital | 1,983,078 | 1,964,167 | ||||||
Accumulated other comprehensive loss | (48,578 | ) | (32,668 | ) | ||||
Accumulated deficit | (1,225,068 | ) | (1,159,903 | ) | ||||
Total stockholders’ equity | 709,574 | 771,737 | ||||||
Total liabilities and stockholders’ equity | $ | 2,519,092 | $ | 2,611,690 |
June 30, 2021 | December 31, 2020 | ||||
(as revised*) | |||||
ASSETS | |||||
Current assets: | |||||
Cash and cash equivalents | $ | 565,119 | $ | 397,664 | |
Short-term investments | 1,494,151 | 1,494,711 | |||
Contracts receivable | 24,004 | 76,204 | |||
Inventories | 24,099 | 21,965 | |||
Other current assets | 131,045 | 140,163 | |||
Total current assets | 2,238,418 | 2,130,707 | |||
Property, plant and equipment, net | 179,316 | 181,077 | |||
Patents, net | 29,373 | 27,937 | |||
Deposits and other assets | 49,962 | 50,034 | |||
Total assets | $ | 2,497,069 | $ | 2,389,755 | |
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||
Current liabilities: | |||||
Accounts payable | $ | 14,658 | $ | 17,199 | |
Accrued compensation | 30,222 | 65,728 | |||
Accrued liabilities | 75,150 | 90,161 | |||
Income taxes payable | 1,875 | 1,324 | |||
1 percent convertible senior notes, net | 61,876 | 308,809 | |||
Current portion of long-term obligations | 7,972 | 7,301 | |||
Current portion of deferred contract revenue | 102,072 | 108,376 | |||
Total current liabilities | 293,825 | 598,898 | |||
Long-term deferred contract revenue | 379,874 | 424,046 | |||
0 percent convertible senior notes, net | 617,399 | 0 | |||
0.125 percent convertible senior notes, net | 541,223 | 540,136 | |||
Long-term obligations, less current portion | 22,055 | 23,409 | |||
Long-term mortgage debt | 60,019 | 59,984 | |||
Total liabilities | 1,914,395 | 1,646,473 | |||
Stockholders’ equity: | |||||
Common stock, $0.001 par value; 300,000,000 shares authorized, 141,021,583 and 140,365,594 shares issued and outstanding at June 30, 2021 (unaudited) and December 31, 2020, respectively | 141 | 140 | |||
Additional paid-in capital | 1,910,379 | 1,895,519 | |||
Accumulated other comprehensive loss | (25,796) | (21,071) | |||
Accumulated deficit | (1,302,050) | (1,131,306) | |||
Total stockholders’ equity | 582,674 | 743,282 | |||
Total liabilities and stockholders’ equity | $ | 2,497,069 | $ | 2,389,755 |
Three Months Ended June 30, | Six Months Ended June 30, | Three Months Ended March 31, | |||||||||||||||||
2021 | 2020 | 2021 | 2020 | 2022 | 2021 | ||||||||||||||
(as revised*) | (as revised*) | ||||||||||||||||||
Revenue: | |||||||||||||||||||
Commercial revenue: | |||||||||||||||||||
SPINRAZA royalties | $ | 72,168 | $ | 71,746 | $ | 132,154 | $ | 137,754 | $ | 53,818 | $ | 59,986 | |||||||
TEGSEDI and WAYLIVRA revenue, net | 11,544 | 16,364 | 31,382 | 31,523 | 6,160 | 19,838 | |||||||||||||
Licensing and other royalty revenue | 2,149 | 1,624 | 6,773 | 4,419 | 12,307 | 4,624 | |||||||||||||
Total commercial revenue | 85,861 | 89,734 | 170,309 | 173,696 | 72,285 | 84,448 | |||||||||||||
Research and development revenue under collaborative agreements | 39,889 | 55,803 | 67,048 | 105,209 | |||||||||||||||
Research and development revenue: | |||||||||||||||||||
Collaborative agreement revenue | 49,784 | 27,159 | |||||||||||||||||
Eplontersen joint development revenue | 19,850 | 0 | |||||||||||||||||
Total research and development revenue | 69,634 | 27,159 | |||||||||||||||||
Total revenue | 125,750 | 145,537 | 237,357 | 278,905 | 141,919 | 111,607 | |||||||||||||
Expenses: | |||||||||||||||||||
Cost of sales | 2,958 | 3,012 | 5,537 | 5,561 | 4,170 | 2,578 | |||||||||||||
Research, development and patent | 139,306 | 122,264 | 279,107 | 239,214 | 161,126 | 139,801 | |||||||||||||
Selling, general and administrative | 56,455 | 72,015 | 117,653 | 147,009 | 34,127 | 61,199 | |||||||||||||
Total operating expenses | 198,719 | 197,291 | 402,297 | 391,784 | 199,423 | 203,578 | |||||||||||||
Loss from operations | (72,969) | (51,754) | (164,940) | (112,879) | (57,504 | ) | (91,971 | ) | |||||||||||
Other income (expense): | |||||||||||||||||||
Investment income | 2,734 | 9,243 | 7,364 | 19,459 | 1,993 | 4,643 | |||||||||||||
Interest expense | (2,357) | (2,441) | (4,771) | (4,648) | (2,122 | ) | (2,414 | ) | |||||||||||
Gain on investments | 860 | 9,625 | 873 | 9,887 | |||||||||||||||
Loss on early retirement of debt | (8,627) | 0 | (8,627) | 0 | |||||||||||||||
Other expenses | (189) | (149) | (186) | (249) | |||||||||||||||
Loss on investments | (6,625 | ) | 0 | ||||||||||||||||
Other income | 187 | 3 | |||||||||||||||||
Loss before income tax (expense) benefit | (80,548) | (35,476) | (170,287) | (88,430) | |||||||||||||||
Loss before income tax expense | (64,071 | ) | (89,739 | ) | |||||||||||||||
Income tax (expense) benefit | (327) | (2,084) | (457) | 988 | |||||||||||||||
Income tax expense | (1,094 | ) | (130 | ) | |||||||||||||||
Net loss | (80,875) | (37,560) | (170,744) | (87,442) | $ | (65,165 | ) | $ | (89,869 | ) | |||||||||
Net loss attributable to noncontrolling interest in Akcea Therapeutics, Inc. | 0 | 11,924 | 0 | 22,178 | |||||||||||||||
Net loss attributable to Ionis Pharmaceuticals, Inc. common stockholders | $ | (80,875) | $ | (25,636) | $ | (170,744) | $ | (65,264) | |||||||||||
Basic and diluted net loss per share | $ | (0.57) | $ | (0.18) | $ | (1.21) | $ | (0.47) | $ | (0.46 | ) | $ | (0.64 | ) | |||||
Shares used in computing basic and diluted net loss per share | 140,962 | 139,352 | 140,866 | 139,391 | 141,599 | 140,770 |
Three Months Ended June 30, | Six Months Ended June 30, | Three Months Ended March 31, | |||||||||||||||||
2021 | 2020 | 2021 | 2020 | 2022 | 2021 | ||||||||||||||
(as revised*) | (as revised*) | ||||||||||||||||||
Net loss | $ | (80,875) | $ | (37,560) | $ | (170,744) | $ | (87,442) | $ | (65,165 | ) | $ | (89,869 | ) | |||||
Unrealized gains (losses) on debt securities, net of tax | (1,697) | 11,204 | (4,703) | 9,251 | |||||||||||||||
Unrealized losses on debt securities, net of tax | (15,756 | ) | (3,006 | ) | |||||||||||||||
Currency translation adjustment | 104 | 74 | (22) | 82 | (154 | ) | (126 | ) | |||||||||||
Comprehensive loss | (82,468) | (26,282) | (175,469) | (78,109) | $ | (81,075 | ) | $ | (93,001 | ) | |||||||||
Comprehensive loss attributable to noncontrolling interest in Akcea Therapeutics, Inc. | 0 | (11,441) | 0 | (21,695) | |||||||||||||||
Comprehensive loss attributable to Ionis Pharmaceuticals, Inc. common stockholders | $ | (82,468) | $ | (14,841) | $ | (175,469) | $ | (56,414) |
Common Stock | Additional | Accumulated Other | Accumulated | Total Ionis Stockholders’ | Noncontrolling Interest in Akcea | Total Stockholders’ | Common Stock | Additional | Accumulated Other | Accumulated | Total Stockholders’ | ||||||||||||||||||||||||||||||||||||
Description | Shares | Amount | Paid in Capital | Comprehensive Loss | Deficit | Equity | Therapeutics, Inc. | Equity | Shares | Amount | Paid in Capital | Comprehensive Loss | Deficit | Equity | |||||||||||||||||||||||||||||||||
Balance at March 31, 2020 (as revised*) | 139,282 | $ | 139 | $ | 2,015,516 | $ | (27,235) | $ | (726,672) | $ | 1,261,748 | $ | 210,172 | $ | 1,471,920 | ||||||||||||||||||||||||||||||||
Balance at December 31, 2020 | 140,366 | $ | 140 | $ | 1,895,519 | $ | (21,071 | ) | $ | (1,131,306 | ) | $ | 743,282 | ||||||||||||||||||||||||||||||||||
Net loss | — | 0 | 0 | 0 | (25,636) | (25,636) | 0 | (25,636) | — | 0 | 0 | 0 | (89,869 | ) | (89,869 | ) | |||||||||||||||||||||||||||||||
Change in unrealized gains, net of tax | — | 0 | 0 | 11,204 | 0 | 11,204 | 0 | 11,204 | |||||||||||||||||||||||||||||||||||||||
Change in unrealized losses, net of tax | — | 0 | 0 | (3,006 | ) | 0 | (3,006 | ) | |||||||||||||||||||||||||||||||||||||||
Foreign currency translation | — | 0 | 0 | 74 | 0 | 74 | 0 | 74 | — | 0 | 0 | (126 | ) | 0 | (126 | ) | |||||||||||||||||||||||||||||||
Issuance of common stock in connection with employee stock plans | 214 | 0 | 8,800 | 0 | 0 | 8,800 | 0 | 8,800 | 809 | 1 | 7,758 | 0 | 0 | 7,759 | |||||||||||||||||||||||||||||||||
Stock-based compensation expense | — | 0 | 48,442 | 0 | 0 | 48,442 | 0 | 48,442 | — | 0 | 37,861 | 0 | 0 | 37,861 | |||||||||||||||||||||||||||||||||
Payments of tax withholdings related to vesting of employee stock awards and exercise of employee stock options | (7) | 0 | (367) | 0 | 0 | (367) | 0 | (367) | (251 | ) | 0 | (15,337 | ) | 0 | 0 | (15,337 | ) | ||||||||||||||||||||||||||||||
Noncontrolling interest in Akcea Therapeutics, Inc. | — | 0 | (18,889) | (483) | 0 | (19,372) | 7,448 | (11,924) | |||||||||||||||||||||||||||||||||||||||
Balance at June 30, 2020 (as revised*) | 139,489 | $ | 139 | $ | 2,053,502 | $ | (16,440) | $ | (752,308) | $ | 1,284,893 | $ | 217,620 | $ | 1,502,513 | ||||||||||||||||||||||||||||||||
Balance at March 31, 2021 | 140,924 | $ | 141 | $ | 1,925,801 | $ | (24,203 | ) | $ | (1,221,175 | ) | $ | 680,564 | ||||||||||||||||||||||||||||||||||
Balance at March 31, 2021 | 140,924 | $ | 141 | $ | 1,925,801 | $ | (24,203) | $ | (1,221,175) | $ | 680,564 | $ | 0 | $ | 680,564 | ||||||||||||||||||||||||||||||||
Balance at December 31, 2021 | 141,210 | $ | 141 | $ | 1,964,167 | $ | (32,668 | ) | $ | (1,159,903 | ) | $ | 771,737 | ||||||||||||||||||||||||||||||||||
Net loss | — | 0 | 0 | 0 | (80,875) | (80,875) | 0 | (80,875) | — | 0 | 0 | 0 | (65,165 | ) | (65,165 | ) | |||||||||||||||||||||||||||||||
Change in unrealized loss, net of tax | — | 0 | 0 | (1,697) | 0 | (1,697) | 0 | (1,697) | |||||||||||||||||||||||||||||||||||||||
Change in unrealized losses, net of tax | — | 0 | 0 | (15,756 | ) | 0 | (15,756 | ) | |||||||||||||||||||||||||||||||||||||||
Foreign currency translation | — | 0 | 0 | 104 | 0 | 104 | 0 | 104 | — | 0 | 0 | (154 | ) | 0 | (154 | ) | |||||||||||||||||||||||||||||||
Issuance of common stock in connection with employee stock plans | 108 | 0 | 1,882 | 0 | 0 | 1,882 | 0 | 1,882 | 847 | 1 | 1,848 | 0 | 0 | 1,849 | |||||||||||||||||||||||||||||||||
Issuance of warrants | — | 0 | 89,752 | 0 | 0 | 89,752 | 0 | 89,752 | |||||||||||||||||||||||||||||||||||||||
Purchase of note hedges | — | 0 | (136,620) | 0 | 0 | (136,620) | 0 | (136,620) | |||||||||||||||||||||||||||||||||||||||
Stock-based compensation expense | — | 0 | 30,022 | 0 | 0 | 30,022 | 0 | 30,022 | — | 0 | 26,236 | 0 | 0 | 26,236 | |||||||||||||||||||||||||||||||||
Payments of tax withholdings related to vesting of employee stock awards and exercise of employee stock options | (10) | 0 | (458) | 0 | 0 | (458) | 0 | (458) | (304 | ) | 0 | (9,173 | ) | 0 | 0 | (9,173 | ) | ||||||||||||||||||||||||||||||
Balance at June 30, 2021 | 141,022 | $ | 141 | $ | 1,910,379 | $ | (25,796) | $ | (1,302,050) | $ | 582,674 | $ | 0 | $ | 582,674 | ||||||||||||||||||||||||||||||||
Balance at March 31, 2022 | 141,753 | $ | 142 | $ | 1,983,078 | $ | (48,578 | ) | $ | (1,225,068 | ) | $ | 709,574 |
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, 2019 (as revised*) | 140,340 | $ | 140 | $ | 1,985,650 | $ | (25,290) | $ | (596,495) | $ | 1,364,005 | $ | 213,453 | $ | 1,577,458 | ||||||||
Net loss | — | 0 | 0 | 0 | (65,264) | (65,264) | 0 | (65,264) | |||||||||||||||
Change in unrealized gains, net of tax | — | 0 | 0 | 9,251 | 0 | 9,251 | 0 | 9,251 | |||||||||||||||
Foreign currency translation | — | 0 | 0 | 82 | 0 | 82 | 0 | 82 | |||||||||||||||
Issuance of common stock in connection with employee stock plans | 821 | 0 | 16,451 | 0 | 0 | 16,451 | 0 | 16,451 | |||||||||||||||
Repurchases and retirements of common stock | (1,478) | (1) | 0 | 0 | (90,549) | (90,550) | 0 | (90,550) | |||||||||||||||
Stock-based compensation expense | — | 0 | 89,233 | 0 | 0 | 89,233 | 0 | 89,233 | |||||||||||||||
Payments of tax withholdings related to vesting of employee stock awards and exercise of employee stock options | (194) | 0 | (11,970) | 0 | 0 | (11,970) | 0 | (11,970) | |||||||||||||||
Noncontrolling interest in Akcea Therapeutics, Inc. | — | 0 | (25,862) | (483) | 0 | (26,345) | 4,167 | (22,178) | |||||||||||||||
Balance at June 30, 2020 (as revised*) | 139,489 | $ | 139 | $ | 2,053,502 | $ | (16,440) | $ | (752,308) | $ | 1,284,893 | $ | 217,620 | $ | 1,502,513 | ||||||||
Balance at December 31, 2020 (as revised*) | 140,366 | $ | 140 | $ | 1,895,519 | $ | (21,071) | $ | (1,131,306) | $ | 743,282 | $ | 0 | $ | 743,282 | ||||||||
Net loss | — | 0 | 0 | 0 | (170,744) | (170,744) | 0 | (170,744) | |||||||||||||||
Change in unrealized losses, net of tax | — | 0 | 0 | (4,703) | 0 | (4,703) | 0 | (4,703) | |||||||||||||||
Foreign currency translation | — | 0 | 0 | (22) | 0 | (22) | 0 | (22) | |||||||||||||||
Issuance of common stock in connection with employee stock plans | 917 | 1 | 9,641 | 0 | 0 | 9,642 | 0 | 9,642 | |||||||||||||||
Issuance of warrants | — | 0 | 89,752 | 0 | 0 | 89,752 | 0 | 89,752 | |||||||||||||||
Purchase of note hedges | — | 0 | (136,620) | 0 | 0 | (136,620) | 0 | (136,620) | |||||||||||||||
Stock-based compensation expense | — | 0 | 67,882 | 0 | 0 | 67,882 | 0 | 67,882 | |||||||||||||||
Payments of tax withholdings related to vesting of employee stock awards and exercise of employee stock options | (261) | 0 | (15,795) | 0 | 0 | (15,795) | 0 | (15,795) | |||||||||||||||
Balance at June 30, 2021 | 141,022 | $ | 141 | $ | 1,910,379 | $ | (25,796) | $ | (1,302,050) | $ | 582,674 | $ | 0 | $ | 582,674 |
Six Months Ended June 30, | |||||
2021 | 2020 | ||||
(as revised*) | |||||
Operating activities: | |||||
Net loss | $ | (170,744) | $ | (87,442) | |
Adjustments to reconcile net loss to net cash used in operating activities: | |||||
Depreciation | 7,951 | 6,360 | |||
Amortization of right-of-use operating lease assets | 781 | 784 | |||
Amortization of patents | 1,137 | 999 | |||
Amortization of premium on investments, net | 8,824 | 3,842 | |||
Amortization of debt issuance costs | 2,193 | 1,527 | |||
Stock-based compensation expense | 67,882 | 89,233 | |||
Gain on investments | (873) | (9,887) | |||
Loss on early retirement of debt | 8,627 | 0 | |||
Non-cash losses related to patents | 827 | 192 | |||
Provision for deferred income taxes | 0 | 196 | |||
Changes in operating assets and liabilities: | |||||
Contracts receivable | 52,200 | 35,200 | |||
Inventories | (2,134) | (3,018) | |||
Other current and long-term assets | 9,179 | 1,001 | |||
Income taxes payable | 551 | (4,571) | |||
Accounts payable | (2,819) | (14,939) | |||
Accrued compensation | (35,506) | (14,535) | |||
Accrued liabilities and other current liabilities | (14,914) | 2,603 | |||
Deferred contract revenue | (50,476) | (59,355) | |||
Net cash used in operating activities | (117,314) | (51,810) | |||
Investing activities: | |||||
Purchases of short-term investments | (740,721) | (976,284) | |||
Proceeds from sale of short-term investments | 727,859 | 982,173 | |||
Purchases of property, plant and equipment | (6,130) | (18,178) | |||
Acquisition of licenses and other assets, net | (3,182) | (3,023) | |||
Net cash used in investing activities | (22,174) | (15,312) | |||
Financing activities: | |||||
Proceeds from equity, net | 9,642 | 16,453 | |||
Payments of tax withholdings related to vesting of employee stock awards and exercise of employee stock options | (15,795) | (11,971) | |||
Proceeds from issuance of 0 percent convertible senior notes | 632,500 | 0 | |||
0 percent convertible senior notes issuance costs | (15,551) | 0 | |||
Repurchase of $247.9 million principal amount of the 1 percent convertible senior notes | (256,963) | 0 | |||
Proceeds from issuance of warrants | 89,752 | 0 | |||
Purchase of note hedges | (136,620) | 0 | |||
Repurchases and retirements of common stock | 0 | (90,548) | |||
Net cash provided by (used in) financing activities | 306,965 | (86,066) | |||
Effects of exchange rates on cash | (22) | 82 | |||
Net increase (decrease) in cash and cash equivalents | 167,455 | (153,106) | |||
Cash and cash equivalents at beginning of period | 397,664 | 683,287 | |||
Cash and cash equivalents at end of period | $ | 565,119 | $ | 530,181 | |
Supplemental disclosures of cash flow information: | |||||
Interest paid | $ | 2,866 | $ | 3,093 | |
Supplemental disclosures of non-cash investing and financing activities: | |||||
Amounts accrued for capital and patent expenditures | $ | 278 | $ | 6,461 |
Three Months Ended March 31, | ||||||||
2022 | 2021 | |||||||
Operating activities: | ||||||||
Net loss | $ | (65,165 | ) | $ | (89,869 | ) | ||
Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
Depreciation | 3,701 | 3,917 | ||||||
Amortization of right-of-use operating lease assets | 602 | 394 | ||||||
Amortization of patents | 592 | 544 | ||||||
Amortization of premium on investments, net | 4,175 | 4,023 | ||||||
Amortization of debt issuance costs | 1,343 | 860 | ||||||
Stock-based compensation expense | 26,236 | 37,861 | ||||||
Gain on investments | (10 | ) | (13 | ) | ||||
Non-cash losses related to disposal of property, plant and equipment | 527 | 0 | ||||||
Non-cash losses related to patents | 110 | 221 | ||||||
Changes in operating assets and liabilities: | ||||||||
Contracts receivable | 35,774 | 52,807 | ||||||
Inventories | 774 | (234 | ) | |||||
Other current and long-term assets | (7,222 | ) | 16,481 | |||||
Income taxes receivable | 865 | 2 | ||||||
Accounts payable | 2,878 | (9,569 | ) | |||||
Accrued compensation | (22,285 | ) | (36,465 | ) | ||||
Accrued liabilities and other current liabilities | 10,473 | (11,905 | ) | |||||
Deferred contract revenue | (25,018 | ) | (23,717 | ) | ||||
Net cash used in operating activities | (31,650 | ) | (54,662 | ) | ||||
Investing activities: | ||||||||
Purchases of short-term investments | (462,855 | ) | (330,051 | ) | ||||
Proceeds from sale of short-term investments | 178,837 | 411,907 | ||||||
Purchases of property, plant and equipment | (2,705 | ) | (1,772 | ) | ||||
Acquisition of licenses and other assets, net | (826 | ) | (1,228 | ) | ||||
Net cash (used in) provided by investing activities | (287,549 | ) | 78,856 | |||||
Financing activities: | ||||||||
Proceeds from equity, net | 1,848 | 7,760 | ||||||
Payments of tax withholdings related to vesting of employee stock awards and exercise of employee stock options | (9,173 | ) | (15,337 | ) | ||||
Net cash used in financing activities | (7,325 | ) | (7,577 | ) | ||||
Effects of exchange rates on cash | (154 | ) | (126 | ) | ||||
Net (decrease) increase in cash and cash equivalents | (326,678 | ) | 16,491 | |||||
Cash and cash equivalents at beginning of period | 869,191 | 397,664 | ||||||
Cash and cash equivalents at end of period | $ | 542,513 | $ | 414,155 | ||||
Supplemental disclosures of cash flow information: | ||||||||
Interest paid | $ | 594 | $ | 594 | ||||
Income taxes paid | $ | 2 | $ | 2 | ||||
Supplemental disclosures of non-cash investing and financing activities: | ||||||||
Amounts accrued for capital and patent expenditures | $ | 1,344 | $ | 1,876 |
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 |
4. | Allocate the transaction price |
● | Estimated future product sales; |
● | Estimated royalties we may receive from future product sales; |
● | Estimated contractual milestone payments we may receive; |
● | Estimated expenses we may incur; |
● | Estimated income taxes; and |
● | A discount rate. |
● | The estimated number of internal hours 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 sold 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. |
June 30, 2021 | December 31, 2020 | March 31, 2022 | December 31, 2021 | ||||||||||
Raw materials: | |||||||||||||
Raw materials- clinical | $ | 11,987 | $ | 9,206 | $ | 15,764 | $ | 14,507 | |||||
Raw materials- commercial | 9,599 | 7,502 | 2,165 | 4,139 | |||||||||
Total raw materials | 21,586 | 16,708 | 17,929 | 18,646 | |||||||||
Work in process | 954 | 2,252 | 5,637 | 5,770 | |||||||||
Finished goods | 1,559 | 3,005 | 466 | 390 | |||||||||
Total inventory | $ | 24,099 | $ | 21,965 | $ | 24,032 | $ | 24,806 |
Three months ended June 30, 2020 | Weighted Average Shares Owned in Akcea | Akcea’s Net Loss Per Share | Basic Net Loss Per Share Calculation (as revised*) | |||||||||
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 | 12,016 | |||||||||||
Net loss available to Ionis common stockholders | $ | (25,649 | ) | |||||||||
Weighted average shares outstanding | 139,352 | |||||||||||
Basic net loss per share | $ | (0.18 | ) |
Six months ended June 30, 2020 | Weighted Average Shares Owned in Akcea | Akcea’s Net Loss Per Share | Basic Net Loss Per Share Calculation (as revised*) | |||||||||
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 income | 4,985 | |||||||||||
Net loss available to Ionis common stockholders | $ | (65,363 | ) | |||||||||
Weighted average shares outstanding | 139,391 | |||||||||||
Basic net loss per share | $ | (0.47 | ) |
● | 0.125 percent convertible senior notes, or 0.125% Notes; |
● | Note hedges related to the 0.125% Notes; |
● |
Dilutive stock options; |
● | Unvested restricted stock units, or RSUs; |
● | Unvested performance restricted stock units, or PRSUs; and |
● | Employee Stock Purchase Plan, or ESPP. |
● | 0 percent convertible senior notes, or 0% Notes; and |
● | Note hedges related to the 0% Notes. |
December 31, 2020 | ||||||||||||
As Previously Reported | ASU 2020-06 Adjustment | As Revised | ||||||||||
1 percent convertible senior notes | $ | 293,161 | $ | 15,648 | $ | 308,809 | ||||||
0.125 percent convertible senior notes | $ | 455,719 | $ | 84,417 | $ | 540,136 | ||||||
Additional paid-in-capital | $ | 2,113,646 | $ | (218,127 | ) | $ | 1,895,519 | |||||
Accumulated deficit | $ | (1,249,368 | ) | $ | 118,062 | $ | (1,131,306 | ) |
Three Months Ended June 30, 2020 | ||||||||||||
As Previously Reported | ASU 2020-06 Adjustment | As Revised | ||||||||||
Interest expense | $ | (11,173 | ) | $ | 8,732 | $ | (2,441 | ) | ||||
Loss before income tax benefit | $ | (44,208 | ) | $ | 8,732 | $ | (35,476 | ) | ||||
Income tax benefit (expense) | $ | 439 | $ | (2,523 | ) | $ | (2,084 | ) | ||||
Net loss | $ | (43,769 | ) | $ | 6,209 | $ | (37,560 | ) | ||||
Net loss attributable to Ionis Pharmaceuticals, Inc. common stockholders | $ | (31,845 | ) | $ | 6,209 | $ | (25,636 | ) | ||||
Basic and diluted net loss per share | $ | (0.23 | ) | $ | 0.05 | $ | (0.18 | ) |
Six Months Ended June 30, 2020 | ||||||||||||
As Previously Reported | ASU 2020-06 Adjustment | As Revised | ||||||||||
Interest expense | $ | (22,163 | ) | $ | 17,515 | $ | (4,648 | ) | ||||
Loss before income tax benefit | $ | (105,945 | ) | $ | 17,515 | $ | (88,430 | ) | ||||
Income tax benefit | $ | 3,696 | $ | (2,708 | ) | $ | 988 | |||||
Net loss | $ | (102,249 | ) | $ | 14,807 | $ | (87,442 | ) | ||||
Net loss attributable to Ionis Pharmaceuticals, Inc. common stockholders | $ | (80,071 | ) | $ | 14,807 | $ | (65,264 | ) | ||||
Basic and diluted net loss per share | $ | (0.58 | ) | $ | 0.11 | $ | (0.47 | ) |
December 31, 2020 | ||||||||||||
As Previously Reported | ASU 2020-06 Adjustment | As Revised | ||||||||||
Additional paid-in-capital | $ | 2,113,646 | $ | (218,127 | ) | $ | 1,895,519 | |||||
Accumulated deficit | $ | (1,249,368 | ) | $ | 118,062 | $ | (1,131,306 | ) | ||||
Total stockholders’ equity | $ | 843,347 | $ | (100,065 | ) | $ | 743,282 |
December 31, 2019 | ||||||||||||
As Previously Reported | ASU 2020-06 Adjustment | As Revised | ||||||||||
Additional paid-in-capital | $ | 2,203,778 | $ | (218,128 | ) | $ | 1,985,650 | |||||
Accumulated deficit | $ | (707,534 | ) | $ | 111,039 | $ | (596,495 | ) | ||||
Total stockholders’ equity | $ | 1,684,547 | $ | (107,089 | ) | $ | 1,577,458 |
Six Months Ended June 30, | Three Months Ended March 31, | |||||||||||||||
2021 | 2020 | 2022 | 2021 | |||||||||||||
Risk-free interest rate | 0.5 | % | 1.6 | % | 1.7 | % | 0.5 | % | ||||||||
Dividend yield | 0.0 | % | 0.0 | % | 0.0 | % | 0.0 | % | ||||||||
Volatility | 54.8 | % | 58.9 | % | 55.2 | % | 55.1 | % | ||||||||
Expected life | 4.9 years | 4.7 years | ||||||||||||||
Expected life* | 6.3 years | 4.9 years |
* | In 2021, our Compensation Committee approved an amendment to the 2011 Equity Incentive Plan, or 2011 Plan, and 2020 Plan, that increased the contractual term of stock options granted under these plans from seven years to ten years for stock options granted on January 1, 2022 and thereafter. We determined that we are unable to rely on our historical exercise data as a basis for estimating the expected life of stock options granted to employees following this change because the contractual term changed and we have no other means to reasonably estimate future exercise behavior. We therefore used the simplified method for determining the expected life of stock options granted to employees in the three months ended March 31, 2022. Under the simplified method, we calculate the expected term as the average of the time-to-vesting and the contractual life of the options. As we gain additional historical information, we will transition to calculating our expected term based on our historical exercise patterns. |
Six Months Ended June 30, | Three Months Ended March 31, | |||||||||||||||
2021 | 2020 | 2022 | 2021 | |||||||||||||
Risk-free interest rate | 0.1 | % | 1.1 | % | 0.6 | % | 0.1 | % | ||||||||
Dividend yield | 0.0 | % | 0.0 | % | 0.0 | % | 0.0 | % | ||||||||
Volatility | 39.1 | % | 47.2 | % | 50.2 | % | 39.1 | % | ||||||||
Expected life | 6 months | 6 months | 6 months | 6 months |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||||||
Cost of sales | $ | 0 | $ | 350 | $ | 182 | $ | 587 | ||||||||
Research, development and patent expense | 22,748 | 26,016 | 48,647 | 51,573 | ||||||||||||
Selling, general and administrative expense | 7,274 | 22,076 | 19,053 | 37,073 | ||||||||||||
Total non-cash stock-based compensation expense | $ | 30,022 | $ | 48,442 | $ | 67,882 | $ | 89,233 |
Three Months Ended March 31, | ||||||||
2022 | 2021 | |||||||
Cost of sales | $ | 160 | $ | 182 | ||||
Research, development and patent expense | 19,082 | 25,899 | ||||||
Selling, general and administrative expense | 6,994 | 11,780 | ||||||
Total | $ | 26,236 | $ | 37,861 |
One year or less | % | |||
After one year but within two years | % | |||
After two years but within three and a half years | % | |||
Total | 100 | % |
Gross Unrealized | Estimated | Amortized | Gross Unrealized | Estimated | ||||||||||||||||||||||||||||
June 30, 2021 | Cost (1) | Gains | Losses | Fair Value | ||||||||||||||||||||||||||||
March 31, 2022 | Cost | Gains | Losses | Fair Value | ||||||||||||||||||||||||||||
Available-for-sale securities: | ||||||||||||||||||||||||||||||||
Corporate debt securities | $ | 463,247 | $ | 1,577 | $ | (38 | ) | $ | 464,786 | $ | 420,081 | $ | 131 | $ | (1,766 | ) | $ | 418,446 | ||||||||||||||
Debt securities issued by U.S. government agencies | 65,610 | 164 | (2 | ) | 65,772 | 34,407 | 0 | (49 | ) | 34,358 | ||||||||||||||||||||||
Debt securities issued by the U.S. Treasury | 173,305 | 47 | (5 | ) | 173,347 | 330,358 | 1 | (1,133 | ) | 329,226 | ||||||||||||||||||||||
Debt securities issued by states of the U.S. and political subdivisions of the states | 167,235 | 191 | (13 | ) | 167,413 | 158,548 | 1 | (376 | ) | 158,173 | ||||||||||||||||||||||
Other municipal debt securities | 5,083 | 0 | (4 | ) | 5,079 | 6,419 | 0 | (99 | ) | 6,320 | ||||||||||||||||||||||
Total securities with a maturity of one year or less | 874,480 | 1,979 | (62 | ) | 876,397 | 949,813 | 133 | (3,423 | ) | 946,523 | ||||||||||||||||||||||
Corporate debt securities | 390,651 | 2,091 | (294 | ) | 392,448 | 345,813 | 24 | (10,275 | ) | 335,562 | ||||||||||||||||||||||
Debt securities issued by U.S. government agencies | 71,619 | 1 | (127 | ) | 71,493 | 72,844 | 0 | (1,974 | ) | 70,870 | ||||||||||||||||||||||
Debt securities issued by the U.S. Treasury | 88,192 | 275 | (72 | ) | 88,395 | 164,040 | 70 | (2,544 | ) | 161,566 | ||||||||||||||||||||||
Debt securities issued by states of the U.S. and political subdivisions of the states | 65,371 | 20 | (52 | ) | 65,339 | 34,995 | 0 | (818 | ) | 34,177 | ||||||||||||||||||||||
Other municipal debt | 6,201 | 0 | (22 | ) | 6,179 | |||||||||||||||||||||||||||
Total securities with a maturity of more than one year | 622,034 | 2,387 | (567 | ) | 623,854 | 617,692 | 94 | (15,611 | ) | 602,175 | ||||||||||||||||||||||
Total available-for-sale securities | $ | 1,496,514 | $ | 4,366 | $ | (629 | ) | $ | 1,500,251 | $ | 1,567,505 | $ | 227 | $ | (19,034 | ) | $ | 1,548,698 | ||||||||||||||
Equity securities: | ||||||||||||||||||||||||||||||||
Total equity securities included in other current assets (3) | $ | 4,712 | $ | 0 | $ | (1,451 | ) | $ | 3,261 | |||||||||||||||||||||||
Total equity securities included in deposits and other assets (4) | 15,062 | 16,707 | 0 | 31,769 | ||||||||||||||||||||||||||||
Total equity securities included in other current assets (2) | $ | 11,897 | $ | 3,946 | $ | (4,274 | ) | $ | 11,569 | |||||||||||||||||||||||
Total equity securities included in deposits and other assets (3) | 23,115 | 16,707 | 0 | 39,822 | ||||||||||||||||||||||||||||
Total equity securities | 19,774 | 16,707 | (1,451 | ) | 35,030 | 35,012 | 20,653 | (4,274 | ) | 51,391 | ||||||||||||||||||||||
Total available-for-sale and equity securities | $ | 1,516,288 | $ | 21,073 | $ | (2,080 | ) | $ | 1,535,281 | $ | 1,602,517 | $ | 20,880 | $ | (23,308 | ) | $ | 1,600,089 |
Gross Unrealized | Estimated | Amortized | Gross Unrealized | Estimated | ||||||||||||||||||||||||||||
December 31, 2020 | Cost (1) | Gains | Losses | Fair Value | ||||||||||||||||||||||||||||
December 31, 2021 | Cost | Gains | Losses | Fair Value | ||||||||||||||||||||||||||||
Available-for-sale securities: | ||||||||||||||||||||||||||||||||
Corporate debt securities | $ | 514,182 | $ | 2,194 | $ | (41 | ) | $ | 516,335 | $ | 383,870 | $ | 728 | $ | (226 | ) | $ | 384,372 | ||||||||||||||
Debt securities issued by U.S. government agencies | 94,234 | 354 | (2 | ) | 94,586 | 48,493 | 19 | (18 | ) | 48,494 | ||||||||||||||||||||||
Debt securities issued by the U.S. Treasury | 307,576 | 233 | (9 | ) | 307,800 | 45,424 | 0 | (64 | ) | 45,360 | ||||||||||||||||||||||
Debt securities issued by states of the U.S. and political subdivisions of the states | 104,271 | 196 | (12 | ) | 104,455 | 134,770 | 45 | (37 | ) | 134,778 | ||||||||||||||||||||||
Other municipal debt securities | 5,191 | 0 | (7 | ) | 5,184 | |||||||||||||||||||||||||||
Total securities with a maturity of one year or less | 1,025,454 | 2,977 | (71 | ) | 1,028,360 | 612,557 | 792 | (345 | ) | 613,004 | ||||||||||||||||||||||
Corporate debt securities | 325,079 | 4,941 | (40 | ) | 329,980 | 382,000 | 331 | (2,644 | ) | 379,687 | ||||||||||||||||||||||
Debt securities issued by U.S. government agencies | 80,099 | 185 | (9 | ) | 80,275 | 72,935 | 0 | (561 | ) | 72,374 | ||||||||||||||||||||||
Debt securities issued by the U.S. Treasury | 50,318 | 383 | (4 | ) | 50,697 | 137,635 | 139 | (500 | ) | 137,274 | ||||||||||||||||||||||
Debt securities issued by states of the U.S. and political subdivisions of the states | 31,779 | 91 | (16 | ) | 31,854 | 39,909 | 1 | (224 | ) | 39,686 | ||||||||||||||||||||||
Other municipal debt securities | 1,041 | 0 | 0 | 1,041 | 6,136 | 0 | (37 | ) | 6,099 | |||||||||||||||||||||||
Total securities with a maturity of more than one year | 488,316 | 5,600 | (69 | ) | 493,847 | 638,615 | 471 | (3,966 | ) | 635,120 | ||||||||||||||||||||||
Total available-for-sale securities | $ | 1,513,770 | $ | 8,577 | $ | (140 | ) | $ | 1,522,207 | $ | 1,251,172 | $ | 1,263 | $ | (4,311 | ) | $ | 1,248,124 | ||||||||||||||
Equity securities: | ||||||||||||||||||||||||||||||||
Total equity securities included in other current assets (3) | $ | 4,712 | $ | 0 | $ | (2,681 | ) | $ | 2,031 | |||||||||||||||||||||||
Total equity securities included in deposits and other assets (4) | 15,062 | 15,938 | 0 | 31,000 | ||||||||||||||||||||||||||||
Total equity securities included in other current assets (2) | $ | 11,897 | $ | 7,145 | $ | (837 | ) | $ | 18,205 | |||||||||||||||||||||||
Total equity securities included in deposits and other assets (3) | 15,615 | 16,707 | 0 | 32,322 | ||||||||||||||||||||||||||||
Total equity securities | 19,774 | 15,938 | (2,681 | ) | 33,031 | 27,512 | 23,852 | (837 | ) | 50,527 | ||||||||||||||||||||||
Total available-for-sale and equity securities | $ | 1,533,544 | $ | 24,515 | $ | (2,821 | ) | $ | 1,555,238 | $ | 1,278,684 | $ | 25,115 | $ | (5,148 | ) | $ | 1,298,651 |
(1) |
Includes investments classified as cash equivalents on our condensed consolidated balance sheet. |
Our equity securities included in other current assets consisted of our investments in 2 publicly traded |
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. |
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 | Number of Investments | Estimated Fair Value | Unrealized Losses | Estimated Fair Value | Unrealized Losses | Estimated Fair Value | Unrealized Losses | |||||||||||||||||||||||||||||||
Corporate debt securities | 136 | $ | 271,444 | $ | (332 | ) | 337 | $ | 647,390 | $ | (11,694 | ) | $ | 11,300 | $ | (347 | ) | $ | 658,690 | $ | (12,041 | ) | ||||||||||||||||||
Debt securities issued by U.S. government agencies | 11 | 82,076 | (129 | ) | 14 | 95,543 | (1,697 | ) | 9,685 | (326 | ) | 105,228 | (2,023 | ) | ||||||||||||||||||||||||||
Debt securities issued by the U.S. Treasury | 10 | 99,310 | (77 | ) | 44 | 406,747 | (3,539 | ) | 4,860 | (138 | ) | 411,607 | (3,677 | ) | ||||||||||||||||||||||||||
Debt securities issued by states of the U.S. and political subdivisions of the states | 334 | 108,012 | (65 | ) | 619 | 173,537 | (1,096 | ) | 5,455 | (98 | ) | 178,992 | (1,194 | ) | ||||||||||||||||||||||||||
Other municipal debt securities | 3 | 11,257 | (26 | ) | 3 | 1,315 | (16 | ) | 5,005 | (83 | ) | 6,320 | (99 | ) | ||||||||||||||||||||||||||
Total temporarily impaired securities | 494 | $ | 572,099 | $ | (629 | ) | 1,017 | $ | 1,324,532 | $ | (18,042 | ) | $ | 36,305 | $ | (992 | ) | $ | 1,360,837 | $ | (19,034 | ) |
At June 30, 2021 | Quoted Prices in Active Markets (Level 1) | Significant Other Observable Inputs (Level 2) | At March 31, 2022 | Quoted Prices in Active Markets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | ||||||||||||||||||||||
Cash equivalents (1) | $ | 461,711 | $ | 461,711 | $ | 0 | $ | 407,399 | $ | 407,399 | $ | 0 | $ | 0 | ||||||||||||||
Corporate debt securities (2) | 857,234 | 0 | 857,234 | 754,008 | 0 | 754,008 | 0 | |||||||||||||||||||||
Debt securities issued by U.S. government agencies | 137,265 | 0 | 137,265 | 105,228 | 0 | 105,228 | 0 | |||||||||||||||||||||
Debt securities issued by the U.S. Treasury | 261,742 | 261,742 | 0 | 490,792 | 490,792 | 0 | 0 | |||||||||||||||||||||
Debt securities issued by states of the U.S. and political subdivisions of the states | 232,752 | 0 | 232,752 | 192,350 | 0 | 192,350 | 0 | |||||||||||||||||||||
Other municipal debt securities | 11,258 | 0 | 11,258 | 6,320 | 0 | 6,320 | 0 | |||||||||||||||||||||
Investment in ProQR Therapeutics N.V. (4) | 3,261 | 3,261 | 0 | |||||||||||||||||||||||||
Investment in Bicycle Therapeutics plc (6) | 11,131 | 0 | 0 | 11,131 | ||||||||||||||||||||||||
Investment in ProQR Therapeutics N.V. (6) | 438 | 438 | 0 | 0 | ||||||||||||||||||||||||
Total | $ | 1,965,223 | $ | 726,714 | $ | 1,238,509 | $ | 1,967,666 | $ | 898,629 | $ | 1,057,906 | $ | 11,131 |
At December 31, 2020 | Quoted Prices in Active Markets (Level 1) | Significant Other Observable Inputs (Level 2) | At December 31, 2021 | Quoted Prices in Active Markets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | ||||||||||||||||||||||
Cash equivalents (1) | $ | 221,125 | $ | 221,125 | $ | 0 | $ | 541,199 | $ | 541,199 | $ | 0 | $ | 0 | ||||||||||||||
Corporate debt securities | 846,315 | 0 | 846,315 | 764,059 | 0 | 764,059 | 0 | |||||||||||||||||||||
Debt securities issued by U.S. government agencies | 174,861 | 0 | 174,861 | 120,868 | 0 | 120,868 | 0 | |||||||||||||||||||||
Debt securities issued by the U.S. Treasury | 358,497 | 358,497 | 0 | 182,634 | 182,634 | 0 | 0 | |||||||||||||||||||||
Debt securities issued by states of the U.S. and political subdivisions of the states | 136,309 | 0 | 136,309 | 174,464 | 0 | 174,464 | 0 | |||||||||||||||||||||
Other municipal debt securities | 6,225 | 0 | 6,225 | 6,099 | 0 | 6,099 | 0 | |||||||||||||||||||||
Investment in ProQR Therapeutics N.V. (4) | 2,031 | 2,031 | 0 | |||||||||||||||||||||||||
Investment in Bicycle Therapeutics plc (6) | 14,330 | 0 | 0 | 14,330 | ||||||||||||||||||||||||
Investment in ProQR Therapeutics N.V. (6) | 3,875 | 3,875 | 0 | 0 | ||||||||||||||||||||||||
Total | $ | 1,745,363 | $ | 581,653 | $ | 1,163,710 | $ | 1,807,528 | $ | 727,708 | $ | 1,065,490 | $ | 14,330 |
(1) | Included in cash and cash equivalents on our condensed consolidated balance sheet. |
(2) | $13.5 million was included in cash and cash equivalents on our condensed consolidated balance sheet, with the difference included in short-term investments on our condensed consolidated balance sheet. |
(3) | Included in short-term investments. |
$ |
$10.3 million was included in cash and cash equivalents on our condensed consolidated balance sheet, with the difference included in short-term investments on our condensed consolidated balance sheet. |
(6) | Included in other current assets on our condensed consolidated balance sheet. |
$ |
Three Months Ended June 30, | Six Months Ended June 30, | Three Months Ended March 31, | ||||||||||||||||||||||
2021 | 2020 | 2021 | 2020 | 2022 | 2021 | |||||||||||||||||||
SPINRAZA royalties (commercial revenue) | $ | 72.2 | $ | 71.7 | $ | 132.2 | $ | 137.8 | $ | 53.8 | $ | 60.0 | ||||||||||||
R&D revenue | 27.8 | 26.0 | 45.9 | 47.4 | 40.1 | 18.1 | ||||||||||||||||||
Total revenue from our relationship with Biogen | $ | 100.0 | $ | 97.7 | $ | 178.1 | $ | 185.2 | $ | 93.9 | $ | 78.1 | ||||||||||||
Percentage of total revenue | 80 | % | 67 | % | 75 | % | 66 | % | 66 | % | 70 | % |
0% Notes | 0% Notes | |||||||
Outstanding principal balance | $ | 632.5 | $ | 632.5 | ||||
Unamortized debt issuance costs | $ | 15.1 | $ | 12.6 | ||||
Maturity date | April 2026 | April 2026 | ||||||
Interest rate | 0 percent | 0 percent | ||||||
Effective interest rate | 0.5 percent | 0.5 percent | ||||||
Conversion price per share | $ | 57.84 | $ | 57.84 | ||||
Effective conversion price per share with call spread | $ | 76.39 | $ | 76.39 | ||||
Total shares of common stock subject to conversion | 10.9 | 10.9 |
0.125% Notes | 0.125% Notes | |||||||
Outstanding principal balance | $ | 548.8 | $ | 548.8 | ||||
Unamortized debt issuance costs | $ | 7.6 | $ | 6.0 | ||||
Maturity date | December 2024 | December 2024 | ||||||
Interest rate | 0.125 percent | 0.125 percent | ||||||
Effective interest rate | 0.5 percent | 0.5 percent | ||||||
Conversion price per share | $ | 83.28 | $ | 83.28 | ||||
Effective conversion price per share with call spread | $ | 123.38 | $ | 123.38 | ||||
Total shares of common stock subject to conversion | 6.6 | 6.6 |
Severance and Retention Expenses | |||
Total estimated expenses | $ | 28.5 | |
Expenses incurred from inception to June 30, 2021 | 25.2 | ||
Remaining estimated expenses to be recognized through October 2021 | $ | 3.3 |
Three Months Ended June 30, 2021 | Six Months Ended June 30, 2021 | |||||
Research, development and patent expenses | $ | 1.3 | $ | 3.8 | ||
Selling, general and administrative expenses | 3.1 | 6.0 | ||||
Total | $ | 4.4 | $ | 9.8 |
Six Months Ended June 30, 2021 | |||
Beginning balance as of January 1, 2021 | $ | 14.7 | |
Amounts expensed during the period | 11.2 | ||
Reserve adjustments during the period | (1.4) | ||
Net amount expensed during the period | 9.8 | ||
Amounts paid during the period | (18.1) | ||
Ending balance as of June 30, 2021 | $ | 6.4 |
Severance and Retention Expenses | |||
Total estimated expenses | $ | 13.6 | |
Expenses incurred from inception to June 30, 2021 | 13.4 | ||
Remaining estimated expenses to be recognized through October 2021 | $ | 0.2 |
Three Months Ended June 30, 2021 | Six Months Ended June 30, 2021 | |||||
Research, development and patent expenses | $ | 0 | $ | 0.1 | ||
Selling, general and administrative expenses | 0.4 | 1.0 | ||||
Total | $ | 0.4 | $ | 1.1 |
Six Months Ended June 30, 2021 | |||
Beginning balance as of January 1, 2021 | $ | 12.4 | |
Amounts expensed during the period | 2.4 | ||
Reserve adjustments during the period | (1.3) | ||
Net amount expensed during the period | 1.1 | ||
Amounts paid during the period | (12.9) | ||
Ending balance as of June 30, 2021 | $ | 0.6 |
Three Months Ended June 30, 2021 | |||
Research, development and patent expenses | $ | 2.3 | |
Selling, general and administrative expenses | 7.1 | ||
Total | $ | 9.4 |
Three Months Ended June 30, 2021 | |||
Beginning balance as of April 1, 2021 | $ | 0 | |
Amounts expensed during the period | 9.4 | ||
Amounts paid during the period | (7.6) | ||
Ending balance as of June 30, 2021 | $ | 1.8 |
● |
In the second quarter of 2022, we achieved our original enrollment goal and increased the study size and duration in the Phase 3 CARDIO-TTRansform study in patients with ATTR cardiomyopathy, or ATTR-CM, with the aim to ensure a highly positive outcome and generate an even more robust data set to successfully compete in this growing and dynamic market. We |
o | Enrollment is complete in the NEURO-TTRansform Phase 3 study |
o | In the |
● |
o | We published positive data from the Phase 2 study of olezarsen in patients with hypertriglyceridemia and either at high risk for or with established cardiovascular disease in the European Heart Journal |
o | We initiated a study of olezarsen in patients with hypertriglyceridemia to support the broad Phase 3 program |
● | Donidalorsen: our medicine in development for hereditary angioedema, or HAE |
o | We published positive data from the Phase 2 study of donidalorsen in patients with HAE in the New England Journal of Medicine |
o | We presented positive data from the Phase 2 study of donidalorsen in patients with HAE at the American Academy of Allergy, Asthma and Immunology annual meeting |
● | ION363: our medicine in development for amyotrophic lateral sclerosis, or ALS, with mutations in the fused in sarcoma gene, or FUS. FUS-ALS is the most common cause of juvenile-onset ALS |
o | Enrollment is ongoing in the Phase 3 study in patients with FUS-ALS |
● | Pelacarsen: our medicine in development for lipoprotein(a), or Lp(a), driven cardiovascular disease |
o | Enrollment is ongoing in Novartis’ Lp(a) HORIZON Phase 3 cardiovascular outcome study in patients with established cardiovascular disease and elevated lipoprotein(a), or Lp(a) |
● | Tofersen: our medicine in development for superoxide dismutase 1 ALS, or SOD1-ALS |
o | Biogen plans to present new data from the ongoing VALOR open-label extension, or OLE, study at the European Network to Cure ALS meeting in June 2022 |
o | Biogen remains engaged with regulators to identify a potential path forward for tofersen |
Three Months Ended | Six Months Ended | ||||||||||||||||||
June 30, | June 30, | Three Months Ended March 31, | |||||||||||||||||
2021 | 2020 | 2021 | 2020 | 2022 | 2021 | ||||||||||||||
(as revised*) | (as revised*) | ||||||||||||||||||
Total revenue | $ | 125.8 | $ | 145.5 | $ | 237.4 | $ | 278.9 | $ | 141.9 | $ | 111.6 | |||||||
Total operating expenses | $ | 198.7 | $ | 197.3 | $ | 402.3 | $ | 391.8 | $ | 199.4 | $ | 203.6 | |||||||
Loss from operations | $ | (73.0) | $ | (51.8) | $ | (164.9) | $ | (112.9) | $ | (57.5 | ) | $ | (92.0 | ) | |||||
Net loss | $ | (80.9) | $ | (37.6) | $ | (170.7) | $ | (87.4) | $ | (65.2 | ) | $ | (89.9 | ) |
Financial Statement Line | Impact of Cost-Sharing Provisions on our Statement of Operations | |||||
Phase 3 Development: Ionis leads and conducts | (R&D Revenue) | $20M | 55% of Ionis’ Phase 3 development expenses, including internal+external costs & CMC costs | |||
Development Expenses (R&D expenses) | $36M | 100% of Ionis’ Phase 3 development expenses |
SPINRAZA®: the global market leader for the treatment of |
TEGSEDI® and WAYLIVRA®: important medicines approved for the treatment of patients with polyneuropathy caused by hereditary TTR amyloidosis and familial chylomicronemia syndrome, respectively
First Quarter 2022 and Recent Events Advancing our near-term commercial opportunities toward the market
Advancing our leading neurological disease franchise
Business Segment Critical Accounting Estimates We prepare our condensed consolidated financial statements in conformity with accounting principles generally accepted in the U.S. As such, we make certain estimates, judgments and assumptions that we believe are reasonable, based upon the information available to us. These judgments involve making estimates about the effect of matters that are inherently uncertain and may significantly impact our quarterly or annual results of operations and financial condition. Each quarter, our senior management reviews the development, selection and disclosure of such estimates with the audit committee of our board of directors. The following are our significant accounting estimates, which we believe are the most critical to aid in fully understanding and evaluating our reported financial results:
There have been no other material changes to our critical accounting policies and estimates from the information provided in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our Annual Report on Form 10-K for the year ended December 31, Revenue Total
Our Our commercial revenue in the first quarter of 2022 decreased compared to the same period last year. We completed the transition to Sobi of our TEGSEDI and WAYLIVRA commercial operations in Europe and our TEGSEDI commercial operations in North America in the first and second quarters of 2021, respectively. As a result of our distribution agreements with Sobi for TEGSEDI and WAYLIVRA, our commercial revenue from product sales shifted to commercial revenue from distribution fees based on net sales generated by Sobi. Operating Expenses Our operating expenses were as follows (in millions):
Operating expenses, excluding non-cash compensation expense related to equity awards, for the To analyze and compare our results of operations to other similar companies, we believe it is important to exclude non-cash compensation expense related to equity awards from our operating expenses. We believe non-cash compensation expense related to equity awards is not indicative of our operating results or cash flows from our operations. Further, we internally evaluate the performance of our operations excluding it. Cost of Sales Our cost of sales consisted of manufacturing costs, including certain fixed costs, transportation and freight, indirect overhead costs associated with the manufacturing and distribution of TEGSEDI and WAYLIVRA and certain associated period costs. Our cost of sales were as follows (in millions):
Our cost of sales, excluding non-cash compensation expense related to equity awards, Research, Development and Patent Expenses Our research, development and patent expenses consist of expenses for antisense drug discovery, antisense drug development, manufacturing and development chemistry and R&D support expenses. The following table sets forth information on research, development and patent expenses (in millions):
Antisense Drug Discovery We use our proprietary antisense technology to generate information about the function of genes and to determine the value of genes as drug discovery targets. We use this information to direct our own antisense drug discovery research, and that of our partners. Antisense drug discovery is also the function that is responsible for advancing our antisense core technology. This function is also responsible for making investments in complementary technologies to expand the reach of Our antisense drug discovery expenses were as follows (in millions):
Antisense drug discovery expenses, excluding non-cash compensation expense related to equity awards, Antisense Drug Development The following table sets forth drug development expenses, including expenses for our marketed medicines and those in Phase 3 development for which we have incurred significant costs (in millions):
Our development expenses, excluding non-cash compensation expense related to equity awards, increased for the We may conduct multiple clinical trials on a drug candidate, including multiple clinical trials for the various indications we may be studying. Furthermore, as we obtain results from trials, we may elect to discontinue clinical trials for certain drug candidates in certain indications in order to focus our resources on more promising drug candidates or indications. Our Phase 1 and Phase 2 programs are clinical research programs that fuel our Phase 3 pipeline. When our medicines are in Phase 1 or Phase 2 clinical trials, they are in a dynamic state in which we may adjust the development strategy for each medicine. Although we may characterize a medicine as “in Phase 1” or “in Phase 2,” it does not mean that we are conducting a single, well-defined study with dedicated resources. Instead, we allocate our internal resources on a shared basis across numerous medicines based on each medicine’s particular needs at that time. This means we are constantly shifting resources among medicines. Therefore, what we spend on each medicine during a particular period is usually a function of what is required to keep the medicines progressing in clinical development, not what medicines we think are most important. For example, the number of people required to start a new study is large, the number of people required to keep a study going is modest and the number of people required to finish a study is large. However, such fluctuations are not indicative of a shift in our emphasis from one medicine to another and cannot be used to accurately predict future costs for each medicine. And, because we always have numerous medicines in preclinical and early stage clinical research, the fluctuations in expenses from medicine to medicine, in large part, offset one another. If we partner a medicine, it may affect the size of a trial, its timing, its total cost and the timing of the related costs. Medical Affairs Our medical affairs function is responsible for communicating scientific and clinical information to healthcare providers, medical professionals and patients. Our medical affairs expenses were as follows (in millions):
Medical affairs expenses, excluding non-cash compensation expense related to equity awards, were essentially flat in the three months ended March 31, 2022 compared to the same period in 2021. We expect medical affairs expenses to increase throughout 2022 as we advance our late-stage pipeline. Manufacturing and Development Chemistry Expenditures in our manufacturing and development chemistry function consist primarily of personnel costs, specialized chemicals for oligonucleotide manufacturing, laboratory supplies and outside services. Our manufacturing and development chemistry function is responsible for providing drug supplies to antisense drug development and our collaboration partners. Our manufacturing procedures include testing to satisfy good laboratory and good manufacturing practice requirements. Our manufacturing and development chemistry expenses were as follows (in millions):
Manufacturing and development chemistry expenses, excluding non-cash compensation expense related to equity awards, R&D Support In our research, development and patent expenses, we include support costs such as rent, repair and maintenance for buildings and equipment, utilities, depreciation of laboratory equipment and facilities, amortization of our intellectual property, informatics costs, procurement costs and waste disposal costs. We call these costs R&D support expenses. The following table sets forth information on R&D support expenses (in millions):
R&D support expenses, excluding non-cash compensation expense related to equity awards, Selling, General and Administrative Expenses Selling, general and administrative, or SG&A, expenses include personnel and outside costs associated with the pre-commercialization and commercialization activities for our medicines and costs to support our company, our employees and our stockholders including, legal, human resources, investor relations, and finance. Additionally, we include in selling, general and administrative expenses such costs as rent, repair and maintenance of buildings and equipment, depreciation and utilities costs that we need to support the corporate functions listed above. We also include fees we owe under our in-licensing agreements related to SPINRAZA. The following table sets forth information on SG&A expenses (in millions):
SG&A expenses, excluding non-cash compensation expense related to equity awards, decreased Investment Income Investment income for the three Interest Expense The following table sets forth information on interest expense (in millions):
Net Loss and Net Loss per Share We had a net loss of We have financed our operations primarily from research and development collaborative agreements. We also finance our operations from commercial revenue from SPINRAZA royalties and TEGSEDI and WAYLIVRA commercial revenue. From our inception through Our cash, cash equivalents and short-term investments, debt obligations and working capital The following table summarizes our contractual obligations as of
Our contractual obligations consist primarily of our convertible debt. In addition, we also have facility mortgages, facility leases, equipment financing arrangements and other obligations. Due to the uncertainty with respect to the timing of future cash flows associated with our unrecognized tax benefits, we are unable to make reasonably reliable estimates of the period of cash settlement with the respective taxing authorities. Therefore, we have excluded our gross unrecognized tax benefits from our contractual obligations table above. We have not entered into, nor do we currently have, any off-balance sheet arrangements (as defined under SEC rules). Convertible Debt and Call Spread Refer to our Convertible Debt and Call Spread accounting policies in Note 2, Significant Accounting Policies, and Note Research and Development and Manufacturing Facilities In July 2017, we purchased the building that houses our primary R&D facility for $79.4 million and our manufacturing facility for $14.0 million. We financed the purchase of these two facilities with mortgage debt of $60.4 million in total. Our primary R&D facility mortgage has an interest rate of 3.88 percent. Our manufacturing facility mortgage has an interest rate of 4.20 percent. During the first five years of both mortgages, we are only required to make interest payments. Both mortgages mature in August 2027. Other Obligations In addition to contractual obligations, we had outstanding purchase orders as of We may enter into additional collaborations with partners which could provide for additional revenue to us and we may incur additional cash expenditures related to our obligations under any of the new agreements we may enter into. We currently intend to use our cash, cash equivalents and short-term investments to finance our activities. However, we may also pursue other financing alternatives, like issuing additional shares of our common stock, issuing debt instruments, refinancing our existing debt, or securing lines of credit. Whether we use our existing capital resources or choose to obtain financing will depend on various factors, including the future success of our business, the prevailing interest rate environment and the condition of financial markets generally.
We are exposed to changes in interest rates primarily from our investments in certain short-term investments. We primarily invest our excess cash in highly liquid short-term investments of the U.S. Treasury and reputable financial institutions, corporations, and U.S. government agencies with strong credit ratings. We typically hold our investments for the duration of the term of the respective instrument. We do not utilize derivative financial instruments, derivative commodity instruments or other market risk sensitive instruments, positions or transactions to manage exposure to interest rate changes. Accordingly, we believe that, while the securities we hold are subject to changes in the financial standing of the issuer of such securities, we are not subject to any material risks arising from changes in interest rates, foreign currency exchange rates, commodity prices, equity prices or other market changes that affect market risk sensitive instruments. We are also exposed to changes in foreign currency exchange rates as we have foreign subsidiaries with functional currencies other than the U.S. dollar. We translate our subsidiaries’ functional currencies into our reporting currency, the U.S. dollar. As a result, our financial position, results of operations and cash flows can be affected by market fluctuations in the foreign currencies to U.S. dollar exchange rate, which are difficult to predict. A hypothetical 10 percent change in foreign exchange rates during any of the periods presented would not have had a material impact on our condensed consolidated financial statements.
We maintain disclosure controls and procedures that are designed to ensure that information we are required to disclose in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. We design and evaluate our disclosure controls and procedures recognizing that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance and not absolute assurance of achieving the desired control objectives. As of our most recently completed fiscal year and as of the end of the period covered by this Quarterly Report on Form 10-Q, we carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer. Based on our evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of We also performed an evaluation of any changes in our internal controls over financial reporting that occurred during our last fiscal quarter and that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting. We conducted this evaluation under the supervision of and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer. That evaluation did not identify any changes in our internal controls over financial reporting that occurred during our latest fiscal quarter and that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.
From time to time, we are involved in legal proceedings arising in the ordinary course of our business. Periodically, we evaluate the status of each legal matter and assess our potential financial exposure. If the potential loss from any legal proceeding is considered probable and the amount can be reasonably estimated, we accrue a liability for the estimated loss. Significant judgment is required to determine the probability of a loss and whether the amount of the loss is reasonably estimable. The outcome of any proceeding is not determinable in advance. As a result, the assessment of a potential liability and the amount of accruals recorded are based only on the information available to us at the time. As additional information becomes available, we reassess the potential liability related to the legal proceeding, and may revise our estimates. On
Investing in our securities involves a high degree of risk. You should carefully consider 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, Summary of Risk Factors There are a number of risks related to our business and our securities. Some of the principal risks related to our business include the following:
Risks Related to the COVID-19 Pandemic Our business could be materially adversely affected by the effects of health epidemics. To date, we believe the impacts of the recent COVID-19 pandemic on our business are limited and manageable. Our business could be materially adversely affected by health epidemics in regions where we or our partners are commercializing our medicines, have concentrations of clinical trial sites or other business operations, and could cause significant disruption in the operations of third-party manufacturers and contract research organizations upon whom we rely. For example, since December 2019, a novel strain of coronavirus, SARS-CoV-2, causing a disease referred to as COVID-19, has spread worldwide. In March 2020, the World Health Organization declared the COVID-19 outbreak a pandemic, or the COVID-19 Pandemic, and the U.S. In response to these public health directives and orders, in March 2020, we implemented work-from-home policies for most of our employees globally and generally suspended business-related travel. In the U.S., as vaccinations have become more widely available, states have lifted restrictions implemented as part of the pandemic response and reopened their economies. In June 2021, the Governor of California terminated the vast majority of executive actions that were put in place beginning in March 2020, leaving only a subset of provisions that facilitate the ongoing recovery. In May 2021, the Commonwealth of Massachusetts also lifted most of its pandemic restrictions. We These public health directives and orders have impacted our and our partners’ sales efforts. For example, some physician and hospital policies that have been put in place as a result of the COVID-19 Pandemic restrict in-person access by third parties, which has in some cases impacted our commercialization efforts for TEGSEDI and WAYLIVRA. Additionally, Biogen has reported that Quarantines, shelter-in-place, executive and similar government orders, or the perception that such orders, shutdowns or other restrictions on the conduct of business operations could occur, could impact personnel at third-party manufacturing facilities in the U.S. and other countries, or the availability or cost of materials, which would disrupt our supply chain. Recently there have been major disruptions to the global supply chain due to the COVID-19 Pandemic. To date, we have not experienced any significant consequences to our business as a result of the current supply chain disruptions, but could in the future if such disruptions persist or worsen. We have experienced impacts to our clinical trial operations due to the COVID-19 Pandemic; however, we believe such impacts are limited and manageable. Some examples of these impacts include:
In addition, some of our partners have experienced impacts to their clinical trial operations as a result of the COVID-19 Pandemic. For example, in December 2021, Novartis announced that enrollment for the Phase 3 HORIZON study had been delayed due to the COVID-19 Pandemic. The spread of COVID-19 has caused a broad impact globally. While the potential economic impact brought by, and the duration of, the COVID-19 Pandemic may be difficult to assess or predict, it could result in significant disruption of global financial markets, reducing our ability to access capital, which could in the future negatively affect our liquidity. In addition, a recession or market correction resulting from the spread of COVID-19 could materially affect our business and has and could continue to affect the value of our securities. The global COVID-19 Pandemic continues to rapidly evolve. While we have not yet experienced material adverse effects to our business as a result of the COVID-19 Pandemic, the ultimate impact of the COVID-19 Pandemic or a similar health epidemic is highly uncertain and subject to change. As such, we do not yet know the full extent of delays or impacts on our business, our clinical trials, healthcare systems or the global economy as a whole. However, these effects could have a material impact on our operations, and we will continue to monitor the COVID-19 Pandemic closely. Risks Related to the Commercialization of our Medicines We have limited experience as a company in commercializing medicines and we We have limited experience as a company in commercializing medicines and we will have to invest significant financial and management resources to develop the If the market does not accept our medicines, including SPINRAZA, TEGSEDI and WAYLIVRA, and our medicines in development, we are not likely to generate substantial revenues or become consistently profitable. Even if our medicines are authorized for marketing, Additionally, in many of the markets where we or our partners may sell our medicines in the future, if we or our partners cannot agree with the government or other third-party payers regarding the price we can charge for our medicines, then we may not be able to sell our medicines in that market. Similarly, cost control initiatives by governments or third-party payers could decrease the price received for our medicines or increase patient coinsurance to a level that makes our medicines, including SPINRAZA, TEGSEDI and WAYLIVRA, and our medicines in development, economically unviable. If the pricing of any of our medicines decreases for any reason, it will reduce our revenue for such medicine. For example, Biogen has disclosed that SPINRAZA revenue has decreased in part due to lower pricing in the U.S. and certain rest of world markets. The degree of market acceptance for our medicines, including SPINRAZA, TEGSEDI and WAYLIVRA, and our medicines in development, depends upon a number of factors, including the:
Based on the profile of our medicines, physicians, patients, patient advocates, payers or the medical community in general may not accept or use any medicines that we may develop. For example, TEGSEDI requires periodic blood and urine monitoring, is available in the U.S. only through a REMS program, and the product label If we or our partners fail to compete effectively, our medicines, including SPINRAZA, TEGSEDI and WAYLIVRA, and our medicines in development, will not Our competitors engage in drug discovery throughout the world, are numerous, and include, among others, major pharmaceutical companies and specialized biopharmaceutical firms. Other companies are engaged in developing antisense technology. Our competitors may succeed in developing medicines that are:
These competitive developments could make our medicines, including SPINRAZA, TEGSEDI and WAYLIVRA, and our medicines in development, obsolete or non-competitive. Certain of our partners are pursuing other technologies or developing other medicines 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 medicines and, as a result, could delay or otherwise negatively affect the commercialization of our medicines, including SPINRAZA, TEGSEDI and WAYLIVRA. 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. There are several pharmaceutical and biotechnology companies engaged in the development or commercialization in certain geographic markets of products against targets that are also targets of products in our development pipeline. For example:
SPINRAZA injection for intrathecal use is an antisense medicine indicated for the treatment of SMA patients of all ages approved in over 50 countries. Specifically, SPINRAZA faces competition from onasemnogene abeparvovec, a Additionally, companies that are developing medicines that target the same patient populations as our medicines in development may compete with us to enroll participants in the clinical trials for such medicines, which could make it more difficult for us to complete enrollment for these clinical trials. Our medicines could be subject to regulatory limitations following approval. Following approval of a medicine, we and our partners must comply with comprehensive government regulations regarding the manufacture, marketing and distribution of medicines. Promotional communications regarding prescription medicines must be consistent with the information in the product’s approved labeling. We or our partners may not obtain the labeling claims necessary or desirable to successfully commercialize our medicines, including SPINRAZA, TEGSEDI and WAYLIVRA, and our medicines in development. The FDA and foreign regulatory bodies have the authority to impose significant restrictions on an approved medicine through the product label and on advertising, promotional and distribution activities. For example:
Prescription medicines may be promoted only for the approved indications in accordance with the approved label. The FDA and other agencies actively enforce the laws and regulations prohibiting the promotion of off-label uses, and a company that is found to have improperly promoted off-label uses may be subject to significant liability. 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. For example, in connection with the conditional marketing approval for WAYLIVRA in the EU, we are required to conduct a post-authorization safety study to evaluate the safety of WAYLIVRA on thrombocytopenia and bleeding in FCS patients taking WAYLIVRA. If the results of such post-marketing studies are not satisfactory, the FDA, EC or other foreign regulatory authority may withdraw marketing authorization or may condition continued marketing on commitments from us or our partners that may be expensive and time consuming to fulfill. If we or others identify side effects after any of our medicines are on the market, or if manufacturing problems occur subsequent to regulatory approval, or if we, our manufacturers or our partners fail to comply with regulatory requirements, we or our partners may, among other things, lose regulatory approval and be forced to withdraw products from the market, need to conduct additional clinical studies, incur restrictions on the marketing, distribution or manufacturing of the product, and/or change the labeling of our medicines, including SPINRAZA, TEGSEDI and WAYLIVRA. 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:
We are relying on Biogen to obtain additional regulatory approvals for SPINRAZA, generate additional clinical data for SPINRAZA, manufacture 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, manufacture 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. We depend on our collaboration with AstraZeneca for the joint development and commercialization of eplontersen. We have entered into a collaborative arrangement with AstraZeneca to develop and commercialize eplontersen. Under the terms of the collaboration agreement, Ionis and AstraZeneca will co-develop and co-commercialize eplontersen in the U.S. and AstraZeneca will have the sole right to commercialize eplontersen in all other countries, except for certain Latin American countries. Prior to co-commercializing eplontersen in the U.S., we will need to negotiate a co-commercialization agreement with AstraZeneca to govern the parties’ performance of co-commercialization, which agreement will include a commercial plan and budget. As a company we do not have experience with co-commercialization arrangements. We also do not have control over the amount and timing of resources that AstraZeneca devotes to our collaboration, particularly outside of the U.S. If the co-commercialization arrangement for eplontersen is not successful for any reason, eplontersen may not meet our commercial objectives and our revenues for eplontersen may be limited. In addition, a Joint Steering Committee, or JSC, having equal membership from us and AstraZeneca, and various subcommittees oversee and coordinate the development, manufacturing, commercialization and other exploitation activities for eplontersen in the U.S. by mutual agreement. If any subcommittee cannot reach unanimous agreement on any matter within its respective scope of authority, such matter may be referred to the JSC for resolution. If the JSC cannot come to a mutual agreement on any particular matter, this could delay our ability to develop or commercialize eplontersen. We are relying on third parties to market, sell and distribute TEGSEDI and WAYLIVRA. We have entered into agreements with third parties to commercialize TEGSEDI and WAYLIVRA as
We are relying on Sobi and PTC to effectively market, sell and distribute TEGSEDI and WAYLIVRA and have less control over sales efforts and may receive less revenue than if we commercialized TEGSEDI or WAYLIVRA by ourselves. If Sobi or PTC does not successfully commercialize TEGSEDI or WAYLIVRA, including as a result of delays or disruption caused by the current COVID-19 Pandemic, we may receive limited revenue for TEGSEDI or WAYLIVRA in the U.S., Canada, Europe, Latin America or certain Caribbean countries, which could have a material adverse effect on our business, prospects, financial condition and results of operations. Our operations are subject to additional healthcare laws. Our operations are subject to additional healthcare laws, including federal and state anti-kickback laws, false claims laws, transparency laws, such as the federal Sunshine Act, and health information privacy and security laws, which are subject to change at any time. For example, in November 2020, the U.S. Department of Health and Human Services issued a final rule modifying the anti-kickback law safe harbors for Medicare Part D plans, pharmacies, and pharmaceutical benefit managers. Efforts to ensure that our operations comply with current applicable healthcare laws and regulations involve substantial costs. It is possible that governmental authorities will conclude that our business practices may not comply with current or future statutes, regulations or case law involving applicable fraud and abuse or other healthcare laws and regulations. Penalties for violations of applicable healthcare laws and regulations may include significant civil, criminal and administrative penalties, damages, disgorgement, fines, imprisonment, exclusion of products from government funded healthcare programs, such as Medicare and Medicaid, and additional reporting requirements and oversight if we enter into a corporate integrity agreement or similar agreement to resolve allegations of non-compliance with these laws. In addition, violations may also result in reputational harm, diminished profits and future If government or other third-party payers fail to provide adequate coverage and payment rates for our medicines, including SPINRAZA, TEGSEDI and WAYLIVRA, and our medicines in development, 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 payers. The majority of patients in the U.S. who would fit within our target patient populations for our medicines 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 medicines 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 medicines affordable. Even if favorable coverage status and adequate reimbursement rates are attained, less favorable coverage policies and reimbursement rates may be implemented in the future. Accordingly, SPINRAZA, TEGSEDI and WAYLIVRA, and our medicines in development, will face competition from other therapies and medicines for limited financial resources. We or our partners may need to conduct post-marketing studies to demonstrate the cost-effectiveness of any future products to satisfy third-party payers. These studies might require us to commit a significant amount of management time and financial and other resources. Third-party payers may never consider our future products as cost-effective. Adequate third-party coverage and reimbursement might not be available to enable us to maintain price levels sufficient to realize an appropriate return on investment in product development. Third-party payers, whether foreign or domestic, or governmental or commercial, are developing increasingly sophisticated methods of controlling healthcare costs. In addition, in the U.S., no uniform policy of coverage and reimbursement for medicines exists among third-party payers. Therefore, coverage and reimbursement for medicines can differ significantly from payer to payer. For example, Further, we believe that future coverage, reimbursement and pricing will likely be subject to increased restrictions both in the U.S. and in international markets. In the U.S., recent health reform measures have resulted in reductions in Medicare and other healthcare funding, and there have been several recent U.S. Congressional inquiries, legislation and executive orders designed to, among other things, reduce drug prices (e.g., by If we cannot manufacture our medicines or contract with a third party to manufacture our medicines at costs that allow us to charge competitive prices to buyers, we cannot market our products profitably.* To successfully commercialize any of our medicines, we would need to optimize and manage large-scale commercial manufacturing capabilities either on a standalone basis or through a third-party manufacturer. We rely on third-party manufacturers to supply the drug substance and drug product for TEGSEDI and drug product for WAYLIVRA. Any delays or disruption to our own or third-party commercial manufacturing capabilities, including any interruption to our supply chain as a result of the current COVID-19 Pandemic or the ongoing war between Russia and Ukraine, could limit the commercial success of our medicines. In addition, as our drug development and commercial pipeline increases and matures, we will have a greater need for clinical trial and commercial manufacturing capacity. For example, we have plans to expand our manufacturing infrastructure to support our wholly owned pipeline. If we are not successful in executing this expansion, it could limit our ability to meet our manufacturing requirements and commercial objectives in the future. Additionally, we have limited experience manufacturing pharmaceutical products of the chemical class represented by our medicines, called oligonucleotides, on a commercial scale for the systemic administration of a medicine. There are a small number of suppliers for certain capital equipment and raw materials that we use to manufacture our medicines, 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 or our partners may not be able to manufacture our medicines at a cost or in quantities necessary to make commercially successful products. Also, manufacturers, including us, must adhere to the FDA’s cGMP regulations and similar regulations in foreign countries, which the applicable regulatory authorities enforce through facilities inspection programs. We, our partners and our contract manufacturers may not comply or maintain compliance with cGMP, or similar foreign regulations. Non-compliance could significantly delay or prevent receipt of marketing authorizations for our medicines, including authorizations for SPINRAZA, TEGSEDI and WAYLIVRA, and our medicines in development, or result in enforcement action after authorization that could limit the commercial success of our medicines, including SPINRAZA, TEGSEDI and WAYLIVRA, and our medicines in development. Risks Related to the Development and Regulatory Approval of our Medicines If we or our partners fail to obtain regulatory approval for our medicines and additional approvals for SPINRAZA, TEGSEDI and WAYLIVRA, we or our partners cannot sell them in the applicable markets. We cannot guarantee that any of our medicines will be considered safe and effective or will be approved for commercialization. In addition, it is possible that SPINRAZA, TEGSEDI and WAYLIVRA may not be approved in additional markets or for additional indications. We and our partners must conduct time-consuming, extensive and costly clinical studies to demonstrate the safety and efficacy of each of our medicines before they can be approved or receive additional approvals for sale. We and our partners 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 medicines. It is possible that regulatory agencies will not approve our medicines for marketing or SPINRAZA, TEGSEDI or WAYLIVRA in additional markets or for additional indications. 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 medicines, including SPINRAZA, TEGSEDI and WAYLIVRA, or our medicines in development, the agency will not approve the specific medicine or will require additional studies, which can be time consuming and expensive and The FDA or other comparable foreign regulatory authorities can delay, limit or deny approval of a medicine for many reasons, including:
Failure to receive marketing authorization for our medicines, or failure to receive additional marketing authorizations for SPINRAZA, TEGSEDI or WAYLIVRA, or delays in these authorizations, could prevent or delay commercial introduction of the medicine, and, as a result, could negatively impact our ability to generate revenue from product sales. We may not be able to benefit from orphan drug designation for our medicines. In the U.S., under the Orphan Drug Act, the FDA may designate a medicine as an orphan drug if it is intended to treat a rare disease or condition affecting fewer than 200,000 individuals in the U.S. Orphan drug designation does not convey any advantage in, or shorten the duration of, the regulatory review and approval process, but it can provide financial incentives, such as tax advantages and user-fee waivers, as well as longer regulatory exclusivity periods. The FDA has granted orphan drug designation to eplontersen for the treatment of patients with transthyretin-mediated amyloidosis. The FDA and EMA have granted orphan drug designation to TEGSEDI for the treatment of patients with ATTRv-PN, to WAYLIVRA for the treatment of patients with FCS, and to tominersen for the treatment of patients with HD. In addition, the EMA has granted orphan drug designation to WAYLIVRA for the treatment of patients with FPL. Even if approval is obtained on a medicine that has been designated as an orphan drug, we may lose orphan drug exclusivity if the FDA or EMA determines that the request for designation was materially defective or if we cannot assure sufficient quantity of the applicable medicine to meet the needs of patients with the rare disease or condition, or if a competitor is able to gain approval for the same medicine in a safer or more effective form or that makes a major contribution to patient care. If we lose orphan drug exclusivity on any of our medicines, we may face increased competition and lose market share for such medicine. If the results of clinical testing indicate that any of our medicines 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 medicines are a relatively new approach to therapeutics. If we cannot demonstrate that our medicines are safe and effective for human use in the intended indication, we may need to abandon one or more of our drug development programs. Even if our medicines are successful in preclinical and human clinical studies, the medicines 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 medicines in development, may not predict the results of subsequent clinical studies. If any of our medicines in Phase 3 clinical studies, including the studies of eplontersen, olezarsen, donidalorsen, ION363, pelacarsen and tofersen, do not show sufficient efficacy in patients with the targeted indication, or if such studies are discontinued for any other reason, it could negatively impact our development and commercialization goals for these medicines and our stock price could decline. In the past, we have invested in clinical studies of medicines that have not met the primary clinical
The current COVID-19 Pandemic could make some of these factors more likely to occur. In addition, our current medicines, including SPINRAZA, TEGSEDI and WAYLIVRA, are chemically similar to each other. As a result, a safety observation we encounter with one of our medicines could have, or be perceived by a regulatory authority to have, an impact on a different medicine we are developing. This could cause the FDA Any failure or delay in We depend on third parties to conduct our clinical studies for our medicines 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 medicines and expect to continue to do so in the future. For example, we use clinical research organizations, such as In addition, while we do not have any clinical trial sites in Ukraine, we do have a limited number of clinical trial sites in Russia and surrounding countries that may be impacted by the ongoing war between Russia and Ukraine, and could result in difficulties enrolling or completing our clinical trials in such areas on schedule. Furthermore, the U.S. and its European allies have imposed significant new sanctions against Russia, including regional embargoes, full blocking sanctions, and other restrictions targeting major Russian financial institutions. The U.S. government has also indicated it will consider imposing additional sanctions and other similar measures in the near future. Our ability to conduct clinical trials in Russia may become restricted under applicable sanctions laws, which would require us to identify alternative trial sites, and could increase our costs and delay the clinical development of certain of our medicines. Since corporate partnering is a significant part of our strategy to fund the advancement 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 many of our unpartnered medicines. 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 medicines could suffer. Our corporate partners are developing and/or funding many of the medicines in our development pipeline. For example, we are relying on:
If any of these pharmaceutical companies stops developing and/or funding these medicines, our business could suffer and we may not have, or be willing to dedicate, the resources available to develop these medicines on our own. Our collaborators can terminate their relationships with us under certain circumstances, many of which are outside of our control. For example, 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:
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, For example, a collaborator such as AstraZeneca, Bayer, Biogen, GSK,
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 medicines, 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 medicine will enter clinical trials, when we anticipate completing a clinical study, or when we anticipate filing an application for, or obtaining, marketing authorization, or when we or our partners plan to commercially launch a medicine. We base our estimates on present facts and a variety of assumptions, many of which are outside of our control, including the current COVID-19 Pandemic. If we do not achieve milestones in accordance with our or our investors’ or securities analysts’ expectations, including milestones related to SPINRAZA, TEGSEDI, WAYLIVRA, Risks Associated with our Businesses as a Whole Risks related to our financial condition 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 If we fail to obtain timely funding, we may need to curtail or abandon some of our programs. Many of our medicines are undergoing clinical studies or are in the early stages of research and development. Most of our drug programs will require significant additional research, development, manufacturing, preclinical and clinical testing, marketing authorizations, preclinical activities and commitment of significant additional resources prior to their successful commercialization. These activities will require significant cash. As of
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 medicines. Risks related to our intellectual property If we cannot protect our patent rights 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, secure and maintain intellectual property rights to proprietary products and services. However, we may not receive issued patents on any of our pending patent applications in the U.S. or in other countries and we may not be able to obtain, maintain or enforce our patents and other intellectual property rights which could impact our ability to compete effectively. In addition, the scope of any of our issued patents may not be sufficiently broad to provide us with a competitive advantage. Furthermore, other 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. We cannot be certain that the U.S. Patent and Trademark Office, or U.S. PTO, and courts in the U.S. or the patent offices and courts in foreign countries will consider the claims in our patents and applications covering SPINRAZA, TEGSEDI, WAYLIVRA, or any of our medicines in development as patentable. Method-of-use patents protect the use of a product for the specified method. This type of patent does not prevent a competitor from making and marketing a product that is identical to our product for an indication that is outside the scope of the patented method. Moreover, even if competitors do not actively promote their product for our targeted indications, physicians may prescribe these products off-label. Although off-label prescriptions may infringe or contribute to the infringement of method-of-use patents, the practice is common and such infringement is difficult to prevent, If we or any licensor partner loses or cannot obtain patent protection for SPINRAZA, TEGSEDI, WAYLIVRA, or any of our other medicines in development, it could have a material adverse impact on our 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 may need to litigate to defend our rights or assert them against others. Disputes can involve arbitration, litigation or proceedings declared by the U.S. PTO or the International Trade Commission or foreign patent authorities. Even if resolved in our favor, litigation or other legal proceedings relating to intellectual property claims may cause us to incur significant expenses and could distract our technical and management personnel from their normal responsibilities. In addition, there could be public announcements of the results of hearings, motions or other interim proceedings or developments and if securities analysts or investors perceive these results to be negative, it could have a substantial adverse effect on the price of our common stock. If a third party claims that our medicines 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 U.S. 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. Risks related to our If our management transition is not successful our business could suffer. In January 2020, Dr. Crooke, our founder and Chief Executive Officer, transitioned from Chief Executive Officer to Executive Chairman of our Board of 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. Risks related to taxes Our ability to use our net operating loss carryovers and certain other tax attributes may be limited. 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 Under the In addition, under Sections 382 and 383 of the Code, and corresponding provisions of state law, if a corporation undergoes an “ownership change,” which is generally defined as a greater than 50 Our future taxable income could be impacted by changes in tax laws, regulations and treaties. A change in tax laws, treaties or regulations, or their interpretation, of any country in which we operate could materially affect us. We could be subject to additional tax liabilities. We are subject to U.S. federal, state, local and foreign income taxes, sales taxes in the U.S. General If the price of our securities continues to be highly volatile, this could make it harder 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 Provisions in our certificate of incorporation, convertible notes documents, call spread hedge transaction documents 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. In April 2021, we completed a $632.5 million offering of 0% Notes and used a portion of the net proceeds from the issuance of the 0% Notes to repurchase $247.9 million of our 1% Notes for $257.0 million. In December 2019, we entered into privately negotiated exchange and/or subscription agreements with certain new investors and certain holders of our existing 1% Notes to exchange $375.6 million of our 1% Notes for $439.3 million of our 0.125% Notes, and to issue $109.5 million of our 0.125% Notes. Additionally, in connection with the pricing of our 0% Notes and 0.125% Notes, we entered into call spread transactions in which we purchased note hedges and sold warrants. Terminating or unwinding the call spread transactions could require us to make substantial payments to the counterparties under those agreements or may increase our stock price. The costs or any increase in stock price that may arise from terminating or unwinding such agreements could make an acquisition of our company significantly more expensive to the purchaser. 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 In addition, pursuant to the call spread transactions we entered into in connection with the pricing of our 0% Notes and 0.125% Notes, the counterparties are likely to modify their hedge positions from time to time at or prior to the conversion or maturity of the notes by purchasing and selling shares of our common stock, other of our securities, or other instruments, including over-the-counter derivative instruments, that they may wish to use in connection with such hedging, which may have a negative effect on the conversion value of those notes and an adverse impact on the trading price of our common stock. The call spread transactions are expected generally to reduce potential dilution to holders of our common stock upon any conversion of our 0% Notes or 0.125% Notes or offset any cash payments we are required to make in excess of the principal amount of the converted 0% Notes or 0.125% Notes, as the case may be. However, the warrant transactions could separately have a dilutive effect to the extent that the market value per share of our common stock exceeds the applicable strike price of the warrants. 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, TEGSEDI and WAYLIVRA, and our medicines in development. 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 medicines, 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. We are dependent on information technology systems, infrastructure and data, which exposes us to data security risks.* We are dependent upon our own and third-party information technology systems, infrastructure and data, including mobile technologies, to operate our business. The multitude and complexity of our computer systems may make them vulnerable to service interruption or destruction, disruption of data integrity, malicious intrusion, or random attacks. Likewise, data privacy or security incidents or breaches by employees or others may pose a risk that sensitive data, including our intellectual property, trade secrets or personal information of our employees, patients, customers or other business partners may be exposed to unauthorized persons or to the public. Cyber-attacks are increasing in their frequency, sophistication and intensity, with third-party phishing and social engineering attacks in particular increasing Cyber-attacks could include the deployment of harmful malware, denial-of-service, social engineering and other means to affect service reliability and threaten data confidentiality, integrity and availability. Our business partners face similar risks and any security breach of their systems could adversely affect our security posture. A security breach or privacy violation that leads to disclosure or modification of or prevents access to patient information, including personally identifiable information or protected health information, could harm our reputation, compel us to comply with federal and state breach notification laws and foreign law equivalents, subject us to financial penalties and mandatory and costly corrective action, require us to verify the correctness of database contents and otherwise subject us to litigation or other liability under laws and regulations that protect personal data, any of which could disrupt our business and result in increased costs or loss of revenue. Moreover, the prevalent use of mobile devices that access confidential information increases the risk of data security breaches, which could lead to the loss of confidential information, trade secrets or other intellectual property. While we have invested, and continue to invest, in the protection of our data and information technology infrastructure, our efforts may not prevent service interruptions or identify breaches in our systems that could adversely affect our business and operations and result in the loss of critical or sensitive information, which could result in financial, legal, business or reputational harm to us. In addition, our liability insurance may not be sufficient in type or amount to cover us against claims related to security breaches, cyber-attacks and other related breaches. 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:
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 adversely affected. In recent years, extreme weather events and changing weather patterns have become more common. As a result, we are potentially exposed to varying natural disaster or extreme weather risks such as hurricanes, tornadoes, fires, droughts, floods, or other events that may result from the impact of climate change on the environment. The potential impacts of climate change may also include increased operating costs associated with additional regulatory requirements and investments in reducing energy, water use and greenhouse gas emissions. In addition, we manufacture most of our research and clinical supplies in a manufacturing facility located in Carlsbad, California. We manufacture the finished drug product for TEGSEDI and WAYLIVRA at third-party contract manufacturers. Biogen manufactures the finished drug product for SPINRAZA. The facilities and the equipment we, our partners and our contract manufacturers use to research, develop and manufacture our medicines would be costly to replace and could require substantial lead time to repair or replace. Our facilities or those of our partners or contract manufacturers may be harmed by natural disasters or 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 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. 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 A variety of risks associated with operating our business and marketing our medicines internationally could adversely affect our business. In addition to our U.S. operations, we are commercializing TEGSEDI in the EU, Canada, Latin America and certain Caribbean countries, and WAYLIVRA in the EU, Latin America and certain Caribbean countries. We face risks associated with our international operations, including possible unfavorable regulatory, pricing and reimbursement, political, tax and labor conditions, which could harm our business. Because we have international operations, we are subject to numerous risks associated with international business activities, including:
The United Kingdom’s exit from the E.U. could increase these risks. Our business activities outside of the U.S. are subject to the FCPA and similar anti-bribery or anti-corruption laws, regulations or rules of other countries in which we operate, including the United Kingdom’s Bribery Act 2010. In many other countries, the healthcare providers who prescribe pharmaceuticals are employed by their government, and the purchasers of pharmaceuticals are government entities; therefore, any dealings with these prescribers and purchasers may be subject to regulation under the FCPA. There is no certainty that all employees and third-party business partners (including our distributors, wholesalers, agents, contractors and other partners) will comply with anti-bribery laws. In particular, we do not control the actions of manufacturers and other third-party agents, although we may be liable for their actions. Violation of these laws may result in civil or criminal sanctions, which could include monetary fines, criminal penalties, and disgorgement of past profits, which could have an adverse impact on our business and financial condition. The impact on us of the vote by the United Kingdom to leave the European Union cannot be predicted. The withdrawal of the UK from the EU, commonly referred to as “Brexit,” may adversely impact our ability to obtain regulatory approvals of our medicines in the EU, result in restrictions or imposition of taxes and duties for importing our medicines into the EU, and may require us to incur additional expenses in order to develop, manufacture and commercialize our medicines in the EU. Following the result of a referendum in 2016, the UK left the EU on January 31, 2020. Pursuant to the formal withdrawal arrangements agreed between the UK and the EU, the UK was subject to a transition period that ended December 31, 2020, or the Transition Period, during which EU rules continued to apply. A trade and cooperation agreement, or the Trade and Cooperation Agreement, that outlines the future trading relationship between the UK and the EU was Since a significant proportion of the regulatory framework in the UK applicable to our business and our medicines is derived from EU directives and regulations, Brexit has had, and may continue to have, a material impact upon the regulatory regime with respect to the development, manufacture, importation, approval and commercialization of our medicines in the UK or the EU. For example, Great Britain is no longer covered by the centralized procedures for obtaining EU-wide marketing authorization from the EMA, and a separate marketing authorization will be required to market our medicines in Great Britain. It is currently unclear whether the Medicines & Healthcare products Regulatory Agency in the UK is sufficiently prepared to handle the increased volume of marketing authorization applications that it is likely to receive. Any delay in obtaining, or an inability to obtain, any marketing approvals, as a result of Brexit or otherwise, would delay or prevent us from commercializing our medicines in the UK or the While the Trade and Cooperation Agreement provides for the tariff-free trade of medicinal products between the UK and the EU, there may be additional non-tariff costs to such trade which did not exist prior to the end of the Transition Period. Further, should the UK diverge from the EU from a regulatory perspective in relation to medicinal products, tariffs could be put into place in the future. We could therefore, both now and in the future, face significant additional expenses (when compared to the position prior to the end of the Transition Period) to operate our
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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.
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