Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2017 | Aug. 02, 2017 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | AKCEA THERAPEUTICS, INC. | |
Entity Central Index Key | 1,662,524 | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2017 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Well-known Seasoned Issuer | No | |
Entity Voluntary Filers | No | |
Entity Current Reporting Status | No | |
Entity Filer Category | Non-accelerated Filer | |
Entity Common Stock, Shares Outstanding | 66,541,629 | |
Document Fiscal Year Focus | 2,017 | |
Document Fiscal Period Focus | Q2 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($) $ in Thousands | Jun. 30, 2017 | Dec. 31, 2016 |
Current assets: | ||
Cash and cash equivalents | $ 75,445 | $ 7,857 |
Short-term investments | 43,223 | 0 |
Other current assets | 3,939 | 1,209 |
Total current assets | 122,607 | 9,066 |
Property, plant and equipment, net | 114 | 177 |
Licenses, net | 1,281 | 1,341 |
Deposits and other assets | 102 | 100 |
Total assets | 124,104 | 10,684 |
Current liabilities: | ||
Accounts payable | 143 | 476 |
Payable to Ionis Pharmaceuticals, Inc. | 11,244 | 24,355 |
Accrued compensation | 1,252 | 2,505 |
Accrued liabilities | 2,213 | 1,041 |
Current portion of deferred revenue | 54,155 | 0 |
Current portion of deferred rent | 40 | 33 |
Total current liabilities | 69,047 | 28,410 |
Long-term portion of deferred rent | 18 | 21 |
Line of credit with Ionis Pharmaceuticals, Inc. | 107,507 | 0 |
Long-term portion of deferred revenue | 30,515 | 0 |
Total liabilities | 207,087 | 28,431 |
Stockholders' equity (deficit): | ||
Series A convertible preferred stock, $0.001 par value; 28,884,540 shares authorized, issued and outstanding at June 30, 2017 and December 31, 2016, respectively; aggregate liquidation value of $628,613 and $610,304 as of June 30, 2017 and December 31, 2016, respectively; no shares authorized, issued or outstanding | 100,000 | 100,000 |
Common stock, $0.001 par value; 100,000,000 shares authorized and 0 shares issued and outstanding at June 30, 2017 and December 31, 2016, respectively | 0 | 0 |
Additional paid-in capital | 64,059 | 56,936 |
Accumulated other comprehensive loss | (84) | (21) |
Accumulated deficit | (246,958) | (174,662) |
Total stockholders' equity (deficit) | (82,983) | (17,747) |
Total liabilities and stockholders' equity (deficit) | $ 124,104 | $ 10,684 |
CONDENSED CONSOLIDATED BALANCE3
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - USD ($) $ in Thousands | Jun. 30, 2017 | Dec. 31, 2016 |
Stockholders' equity (deficit): | ||
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized (in shares) | 100,000,000 | 100,000,000 |
Common stock, shares issued (in shares) | 0 | 0 |
Common stock, shares outstanding (in shares) | 0 | 0 |
Series A Convertible Preferred Stock [Member] | ||
Stockholders' equity (deficit): | ||
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized (in shares) | 28,884,540 | 28,884,540 |
Preferred stock, shares issued (in shares) | 28,884,540 | 28,884,540 |
Preferred stock, shares outstanding (in shares) | 28,884,540 | 28,884,540 |
Preferred stock, aggregate liquidation value | $ 628,613 | $ 610,304 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Revenue: | ||||
Research and development revenue under collaborative agreements | $ 14,128 | $ 0 | $ 23,725 | $ 0 |
Total revenue | 14,128 | 0 | 23,725 | 0 |
Expenses: | ||||
Research and development | 18,487 | 10,944 | 83,282 | 22,734 |
General and administrative | 6,915 | 2,762 | 11,590 | 7,014 |
Total operating expenses | 25,402 | 13,706 | 94,872 | 29,748 |
Loss from operations | (11,274) | (13,706) | (71,147) | (29,748) |
Other income (expense): | ||||
Investment income | 295 | 91 | 358 | 177 |
Interest expense | (965) | 0 | (1,507) | 0 |
Net loss | $ (11,944) | $ (13,615) | $ (72,296) | $ (29,571) |
Net loss per share of preferred stock, basic and diluted (in dollars per share) | $ (0.41) | $ (0.47) | $ (2.50) | $ (1.02) |
Weighted-average shares of preferred stock outstanding, basic and diluted (in shares) | 28,884,540 | 28,884,540 | 28,884,540 | 28,884,540 |
CONDENSED CONSOLIDATED STATEME5
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (Unaudited) [Abstract] | ||||
Net loss | $ (11,944) | $ (13,615) | $ (72,296) | $ (29,571) |
Unrealized gains (losses) on investments, net of tax | 1 | 13 | (27) | 83 |
Currency translation adjustment | (42) | 0 | (36) | 0 |
Comprehensive loss | $ (11,985) | $ (13,602) | $ (72,359) | $ (29,488) |
CONDENSED CONSOLIDATED STATEME6
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2017 | Jun. 30, 2016 | |
Operating activities: | ||
Net loss | $ (72,296) | $ (29,571) |
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | ||
Depreciation | 56 | 3 |
Amortization of licenses | 60 | 60 |
Amortization of premium on investments, net | 139 | 94 |
Non-cash interest expense for line of credit with Ionis Pharmaceuticals, Inc. | 1,507 | 0 |
Non-cash sublicensing expense | 33,394 | 0 |
Stock-based compensation expense | 7,122 | 5,168 |
Changes in operating assets and liabilities: | ||
Other current and long-term assets | (1,226) | 72 |
Accounts payable | (799) | (137) |
Payable to Ionis Pharmaceuticals, Inc. | (13,111) | 22,086 |
Accrued compensation | (1,253) | (390) |
Deferred rent | 4 | 44 |
Accrued liabilities | 1,136 | (2) |
Deferred contract revenue | 51,275 | 0 |
Net cash provided by (used in) operating activities | 6,008 | (2,573) |
Investing activities: | ||
Purchases of short-term investments | (61,209) | 0 |
Proceeds from the sale of short-term investments | 17,820 | 6,520 |
Purchases of property, plant and equipment | 0 | (45) |
Net cash (used in) provided by investing activities | (43,389) | 6,475 |
Financing activities: | ||
Proceeds from line of credit from Ionis Pharmaceuticals, Inc. | 106,000 | 0 |
Offering costs paid | (1,031) | (483) |
Net cash provided by (used in) financing activities | 104,969 | (483) |
Net increase (decrease) in cash and cash equivalents | 67,588 | 3,419 |
Cash and cash equivalents at beginning of period | 7,857 | 29,389 |
Cash and cash equivalents at end of period | 75,445 | 32,808 |
Supplemental disclosures of non-cash financing activities: | ||
Unpaid deferred offering costs | $ 473 | $ 379 |
Basis of Presentation and Organ
Basis of Presentation and Organization | 6 Months Ended |
Jun. 30, 2017 | |
Basis of Presentation and Organization [Abstract] | |
Organization and Basis of Presentation | 1. Basis of Presentation and Organization We prepared the unaudited interim condensed consolidated financial statements for the three and six months ended June 30, 2017 and 2016 on the same basis as the audited financial statements for the year ended December 31, 2016. We included all normal recurring adjustments in the financial statements, which we considered necessary for a fair presentation of our financial position at such dates and our operating results and cash flows for those periods. Results for the interim periods are not necessarily indicative of the results for the entire year. For more complete financial information, these financial statements, and notes thereto, should be read in conjunction with the audited financial statements for the year ended December 31, 2016 included in our final prospectus dated July 13, 2017, filed with the Securities and Exchange Commission, or SEC, on July 14, 2017 pursuant to Rule 424(b)(4) under the Securities Act of 1933, as amended, or the Securities Act. In the condensed consolidated financial statements we include the accounts of Akcea Therapeutics, Inc. ( Akcea Therapeutics UK Ltd., or Akcea UK, (formed in August 2016), Akcea Intl Ltd., or Akcea Intl, (formed in February 2017) and Akcea Therapeutics Canada, Inc., or Akcea Canada (formed in May 2017). We incorporated in Delaware in December 2014. We were organized by Ionis Pharmaceuticals, Inc., or Ionis, to . As of the date of these financial statements we were wholly owned by Ionis. All intercompany transactions and balances have been eliminated in consolidation. On July 19, 2017, we completed our initial public offering, or IPO. As a result, Ionis is now our majority shareholder. |
Significant Accounting Policies
Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2017 | |
Significant Accounting Policies [Abstract] | |
Significant Accounting Policies | 2. Significant Accounting Policies Revenue Recognition We recognize revenue when we have satisfied all contractual obligations and we are reasonably assured of collecting the resulting receivable. We may be entitled to bill our customers and receive payment from our customers in advance of recognizing the revenue. In the instances in which we receive payment from our customers in advance of recognizing revenue, we will include the amounts in deferred revenue on our consolidated balance sheet. Research and development revenue under collaborative agreements Arrangements with multiple deliverables Our strategic collaboration, option and license agreement, or collaboration agreement, with Novartis, which we entered into in January 2017, contains multiple elements, or deliverables, including options to obtain licenses to drugs, research and development services, and manufacturing services. Therefore, we accounted for the collaboration under the multiple deliverables guidance. Multiple agreements When we enter into separate agreements at or near the same time with the same partner, we must first evaluate such agreements to determine whether they should be accounted for individually as distinct arrangements or whether the separate agreements are, in substance, a single multiple element arrangement. We evaluate whether the negotiations are conducted jointly as part of a single negotiation, whether the deliverables are interrelated or interdependent, whether fees in one arrangement are tied to performance in another arrangement, and whether elements in one arrangement are essential to another arrangement. Our evaluation involves significant judgment to determine whether a group of agreements might be so closely related that they are, in effect, part of a single arrangement. For example, in the first quarter of 2017, we and Ionis entered into two separate agreements with Novartis at the same time: a collaboration agreement and a stock purchase agreement, or SPA. We entered into the collaboration agreement with Novartis to develop and commercialize AKCEA-APO(a)-L Rx Rx Rx Rx Under the SPA, Novartis purchased 1.6 million shares of Ionis’ common stock for $100.0 million in the first quarter of 2017 and paid a premium over the weighted average trading price at the time of purchase. Additionally in July 2017, Novartis purchased $50.0 million of our common stock in a separate private placement concurrent with the completion of our IPO. Our IPO is discussed in note 9, Subsequent Events We evaluated the Novartis agreements to determine whether we should treat the agreements separately or as a single arrangement. We considered that the agreements were negotiated concurrently and in contemplation of one another. Additionally, the same individuals were involved in the negotiations of both agreements. Based on these facts and circumstances, we concluded that we should treat both agreements as a single arrangement, which we refer to as the Novartis collaboration. We evaluated the provisions of the agreements on a combined basis. Identifying deliverables and units of accounting We evaluate the deliverables in a collaboration agreement to determine whether they meet the criteria to be accounted for as separate units of accounting or whether they should be combined with other deliverables and accounted for as a single unit of accounting. When the delivered items in an arrangement have “stand-alone value” to the customer, we will account for the deliverables as separate units of accounting. Delivered items have stand-alone value if they are sold separately by any vendor or the customer could resell the delivered items on a stand-alone basis. For example, our Novartis collaboration and SPA have multiple elements. We evaluated the deliverables in the Novartis collaboration when we entered into the agreements and determined that certain deliverables have stand-alone value. We identified the following four separate units of accounting under the collaboration, each with stand-alone value: ● Development activities for AKCEA-APO(a)-L Rx ● Development activities for AKCEA-APOCIII-L Rx ● API for AKCEA-APO(a)-L Rx ● API for AKCEA-APOCIII-L Rx The development activities and the supply of API each have stand-alone value because Novartis or another third party could provide these items without our assistance. Measurement and allocation of arrangement consideration Our Novartis collaboration provides for various types of payments to us including upfront payments, milestone payments, licensing fees, royalties on product sales and payments for the purchase of common stock. We first evaluated the total consideration under both the collaboration agreement and SPA and determined how much of the total consideration was attributable to elements that we are delivering under the collaboration. We determined that our portion of the allocable arrangement consideration for the Novartis collaboration was $108.4 million, comprised of the following: ● $75.0 million from the upfront payment we received; ● $28.4 million for the premium paid by Novartis, which represents the excess of the fair value Ionis received from Novartis’ purchase of Ionis’ stock at a premium in the first quarter of 2017; and ● $5.0 million for the premium Novartis would have paid to purchase Ionis’ stock if we did not complete our IPO within 15 months from the inception of the agreement. We are recognizing the $75.0 million upfront payment plus the premium paid by Novartis from its purchase of Ionis’ stock and the premium associated with Novartis’ obligation to purchase Ionis’ stock if we did not complete our IPO because we are the party providing the services and API under the collaboration agreement. We initially allocated the amount of consideration that was fixed or determinable at the time the agreement was entered into and excluded contingent consideration. We allocated the consideration to each unit of accounting based on the relative selling price of each deliverable. We used the following hierarchy of values to estimate the selling price of each deliverable: (i) vendor-specific objective evidence of fair value; (ii) third-party evidence of selling price; and (iii) best estimate of selling price, or BESP. BESP reflects our best estimate of what the selling price would be if we regularly sold the deliverable on a stand-alone basis. We are recognizing the revenue allocated to each unit of accounting as we deliver the related goods or services. If we determine that we should treat certain deliverables as a single unit of accounting, then we will recognize the revenue ratably over our estimated period of performance. We allocated the consideration based on the relative BESP of each unit of accounting. We estimated the selling price of the development services over the expected period during which we will perform these services. The significant inputs we used to determine the selling price of the development services included: ● The number of internal hours we will spend performing these services; ● The estimated cost of the 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. For purposes of determining BESP of the services we will perform and the API we will deliver under our Novartis collaboration, accounting guidance required us to include a markup for a reasonable profit margin. Based on the units of accounting under the Novartis collaboration, we allocated the $108.4 million of allocable consideration as follows: ● $64.0 million for development services for AKCEA-APO(a)-L Rx ● $40.1 million for development services for AKCEA-APOCIII-L Rx ● $1.5 million for the delivery of AKCEA-APO(a)-L Rx ● $2.8 million for the delivery of AKCEA-APOCIII-L Rx Timing of revenue recognition We recognize revenue as we deliver each item under our Novartis collaboration as we provide services and the related revenue is realizable and earned. We also recognize revenue over time. Our Novartis collaboration agreement includes a development project plan outlining the activities the agreement requires each party to perform during the collaboration. We estimated our period of performance when the agreement was entered into because the agreement did not clearly define such information. We then recognize revenue for development services ratably over such period. We made estimates of our time to complete our obligations under our Novartis collaboration agreement, and in certain instances the timing of satisfying these obligations may change as the development plans for our drugs progress. If our estimates and judgments change over the course of the Novartis collaboration agreement, it may affect the timing and amount of revenue that we will recognize in future periods. Any changes in estimates are recognized on prospective basis. The following are the periods over which we are recognizing revenue for each of our units of accounting under the Novartis collaboration: ● We are recognizing the amount attributed to the development services for AKCEA-APO(a)-L Rx ● We are recognizing the amount attributed to the development services for AKCEA-APOCIII-L Rx ● We will recognize the amount attributed to the AKCEA-APO(a)-L Rx ● We will recognize the amount attributed to the AKCEA-APOCIII-L Rx Milestone payments Our Novartis collaboration agreement contains contractual milestone payments that relate to the achievement of pre-specified development, regulatory and commercialization events. These three categories of milestone events reflect the three stages of the life-cycle of our drugs, which we describe in more detail in the following paragraphs. The designation of a development candidate is the first stage in the life-cycle of our drugs. A development candidate is a chemical compound that has demonstrated the necessary safety and efficacy in preclinical animal studies to warrant further study in humans. During the first step of the development stage, we or our partner study our drugs in Investigational New Drug, or IND,-enabling studies, which are animal studies intended to support an IND application and/or the foreign equivalent. An approved IND allows us or our partners to study our development candidate in humans. If the regulatory agency approves the IND, we or our partners initiate Phase 1 clinical trials in which we typically enroll a small number of healthy volunteers to ensure the development candidate is safe for use in patients. If we or our partners determine that a development candidate is safe based on the Phase 1 data, we or our partners initiate Phase 2 studies that are generally larger scale studies in patients with the primary intent of determining the efficacy of the development candidate. The final step in the development stage is Phase 3 studies to gather the necessary safety and efficacy data to request marketing authorization from the FDA and/or foreign equivalents. The Phase 3 studies typically involve large numbers of patients and can take up to several years to complete. If the data gathered during the trials demonstrates acceptable safety and efficacy results, we or our partners will submit an application to the FDA and/or its foreign equivalents for marketing authorization. This stage of the drug’s life-cycle is the regulatory stage. If a drug achieves marketing authorization, it moves into the commercialization stage, during which we or our partners will market and sell the drug to patients. Although our partner may ultimately be responsible for marketing and selling the partnered drug, our efforts to develop a drug that is safe, effective and reliable contributes significantly to our partner’s ability to successfully sell the drug. The FDA and its foreign equivalents have the authority to impose significant restrictions on an approved drug through the product label and on advertising, promotional and distribution activities. Therefore, our efforts designing and executing the necessary animal and human studies are critical to obtaining claims in the product label from the regulatory agencies that would allow us or our partners to successfully commercialize our drug. Further, the patent protection afforded our drugs as a result of our initial patent applications and related prosecution activities in the United States and foreign jurisdictions are critical to our partner’s ability to sell our drugs without competition from generic drugs. The potential sales volume of an approved drug is dependent on several factors including the size of the patient population, market penetration of the drug, and the price charged for the drug. The milestone events contained in our Novartis collaboration agreement coincide with the progression of our drugs from development, to marketing authorization and then to commercialization. The process of successfully discovering a new development candidate, having it approved and ultimately sold for a profit is highly uncertain. As such, the milestone payments we may earn from our partners involve a significant degree of risk to achieve. Therefore, as a drug progresses through the stages of its life-cycle, the value of the drug generally increases. Development milestones in our Novartis collaboration agreement or potential future collaborations may include the following types of events: ● Designation of a development candidate. Following the designation of a development candidate, IND-enabling animal studies for a new development candidate generally take 12 to 18 months to complete; ● Initiation of a Phase 1 clinical trial. Generally, Phase 1 clinical trials take one to two years to complete; ● Initiation or completion of a Phase 2 clinical trial. Generally, Phase 2 clinical trials take one to three years to complete; and ● Initiation or completion of a Phase 3 clinical trial. Generally, Phase 3 clinical trials take two to four years to complete. Regulatory milestones in our Novartis collaboration agreement or potential future collaborations may include the following types of events: ● Filing of regulatory applications for marketing authorization such as a New Drug Application, or NDA, in the United States or a Marketing Authorization Application, or MAA, in Europe. Generally, it takes six to twelve months to prepare and submit regulatory filings. ● Marketing authorization in a major market, such as the United States, Europe or Japan. Generally it takes one to two years after an application is submitted to obtain authorization from the applicable regulatory agency. Commercialization milestones in our Novartis agreement or potential future collaborations may include the following types of events: ● First commercial sale in a particular market, such as in the United States or Europe. ● Product sales in excess of a pre-specified threshold, such as annual sales exceeding $1 billion. The amount of time to achieve this type of milestone depends on several factors including but not limited to the dollar amount of the threshold, the pricing of the product and the pace at which customers begin using the product. We will assess whether a substantive milestone exists at the inception of the collaboration agreement. When a substantive milestone is achieved, we will recognize revenue related to the milestone payment immediately. In evaluating if a milestone is substantive we will consider whether: ● Substantive uncertainty exists as to the achievement of the milestone event at the inception of the arrangement; ● The achievement of the milestone involves substantive effort and can only be achieved based in whole or in part on the performance or the occurrence of a specific outcome resulting from its performance; ● The amount of the milestone payment appears reasonable either in relation to the effort expended or to the enhancement of the value of the delivered items; ● There is no future performance required to earn the milestone payment; and ● The consideration is reasonable relative to all deliverables and payment terms in the arrangement. If any of these conditions are not met, we will not consider the milestone to be substantive and we will defer recognition of the milestone payment and recognize it as revenue over the estimated period of performance, if any. We have determined that all milestones under our Novartis collaboration are substantive milestones. Option to license When we have a multiple element arrangement that includes an option to obtain a license, we will evaluate if the option is a deliverable at the inception of the arrangement. We do not consider the option to be a deliverable if we conclude that it is substantive and not priced at a significant and incremental discount. We will consider an option substantive if, at the inception of the arrangement, we are at risk as to whether the collaboration partner will choose to exercise its option to obtain the license. In those circumstances, we do not include the associated license fee in the allocable consideration at the inception of the agreement. Rather, we account for the license fee when our partner exercises its option. Under the Novartis collaboration, we concluded that the option to license is a substantive option. Therefore, we did not include any amounts in the initial allocable consideration at the inception of the collaboration. We will recognize any future exercise of an option to license a drug under our Novartis agreement in full in the period in which the option is exercised. Refer to note 8, Strategic Collaboration with Novartis Cash, Cash Equivalents and Short-Term Investments We consider all liquid investments with maturities of three months or less when we purchase them to be cash equivalents. Our short-term investments have initial maturities of greater than three months from date of purchase. We classify our short-term investments as available-for-sale and we carry them at fair market value based upon prices for identical or similar items on the last day of the fiscal period. We record unrealized gains and losses as a separate component of comprehensive income (loss) and we include net realized gains and losses in gain (loss) on investments on our consolidated statement of operations. We use the specific identification method to determine the cost of securities sold. Research and Development Expenses Our research and development expenses include wages, benefits, facilities, supplies, external services, clinical study and manufacturing costs and other expenses that are directly related to our research and development activities. We expense research and development costs as we incur them. If we make payments for research and development services prior to the services being rendered, we record those amounts as prepaid assets on our balance sheet and we expense them as the services are provided. Sublicensing Expenses We incur sublicense fee expenses under our development, commercialization and license agreement and services agreement with Ionis related to the drugs we have licensed under the agreement. We include our sublicense fee expenses in our research and development expenses on our consolidated results of operations since the applicable drugs are not yet approved for marketing. We recognize sublicense fee expenses in the period they are incurred. For example, in the first quarter of 2017, we incurred $48.4 million of sublicense fee expenses related to our collaboration with Novartis, of which $33.4 million of these expenses were non-cash and were related to the premium Novartis paid and the potential premium Novartis could have paid on Ionis’ stock if we did not complete our IPO. Under the Novartis collaboration, we will recognize $108.4 million of revenue over the period of our performance and $48.4 million of sublicensing expense in the first quarter of 2017. The $48.4 million is comprised of the following: ● $15.0 million for the portion of the $75.0 million upfront payment we received upon initiating the Novartis collaboration, which we paid in cash to Ionis; ● $28.4 million for the premium paid by Novartis for its purchase of Ionis’ stock in the first quarter of 2017, which is a non-cash expense. We determined the fair value of the premium by calculating the stated premium and applying a discount for lack of marketability because Ionis initially issued unregistered shares to Novartis; and ● $5.0 million for the premium associated with Novartis’ obligation to purchase Ionis’ stock if we did not complete our IPO, which is a non-cash expense. We determined the fair value of the potential premium at the inception of the collaboration by calculating the value of the future premium based upon the stated premium, adjusting for the probability of us completing an IPO by the 15-month anniversary of the SPA and applying a discount for lack of marketability because Ionis would have issued unregistered shares to Novartis if it purchased Ionis’ common stock. We will pay 50% of all future license fees, milestone payments and royalties we receive to Ionis as a sublicense fee. Use of Estimates The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires our management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates. Basic and Diluted Net Loss Per Share We issued 28,884,540 shares of Series A convertible preferred stock in December 2015. We used the Series A convertible preferred stock to calculate basic net loss per share because there was no common stock outstanding in any period presented, and the Series A convertible preferred stock represents the lowest subordinated form of outstanding equity. For purposes of calculating diluted net loss per share, we considered the conversion of the Series A convertible preferred stock using its 1:1 conversion ratio and the potential dilutive effect of employee stock options. Because the Series A convertible preferred stock was the only outstanding form of equity, cumulative accruing dividends on the Series A convertible preferred stock had no effect on net loss available to Ionis, our Series A convertible preferred stock holder. As we incurred a net loss for the three and six months ended June 30, 2017 and 2016, we did not include dilutive common equivalent shares, which consisted of outstanding common stock options in the computation of diluted net loss per share because the effect would have been anti-dilutive. Accumulated Other Comprehensive Loss Accumulated other comprehensive loss is comprised of unrealized gains and losses on investments, net of taxes and currency translation adjustments. The following table summarizes changes in accumulated other comprehensive loss for the three and six months ended June 30, 2017 and 2016 (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2017 2016 2017 2016 Beginning balance accumulated other comprehensive loss $ (43 ) $ (5 ) $ (21 ) $ (75 ) Unrealized losses on securities, net of tax (1) 1 13 (27 ) 83 Currency translation adjustment (42 ) — (36 ) — Net current period other comprehensive income (41 ) 13 (63 ) 83 Ending balance accumulated other comprehensive loss $ (84 ) $ 8 $ (84 ) $ 8 (1) There was no tax benefit for other comprehensive loss for the three and six months ended June 30, 2017 and 2016. Translation of Foreign Currency Akcea UK operates in the United Kingdom and uses the British pound sterling as its functional currency. When we consolidate Akcea UK’s financial results, we translate Akcea UK’s assets and liabilities using the exchange rate at the balance sheet date and Akcea UK’s income and expense items using the average exchange rate for the period. We translate Akcea UK’s capital accounts at the historical exchange rate in effect at the date of the transaction. We record adjustments resulting from the translation of Akcea UK’s financial statements as a separate component of stockholders’ equity (deficit) in accumulated other comprehensive income. Our other foreign subsidiaries translation of foreign currency is immaterial to our financial results. Segment Information We operate as a single segment because our chief decision maker reviews operating results on an aggregate basis and manages our operations as a single operating segment. Stock-Based Compensation Expense We measure stock-based compensation expense for equity-classified stock option awards based on the estimated fair value of the award on the date of grant. We recognize the value of the portion of the award that we ultimately expect to vest as stock-based compensation expense over the requisite service period in our statements of operations. We reduce stock-based compensation expense for estimated forfeitures at the time of grant and revise the expense in subsequent periods if actual forfeitures differ from those estimates. We value our stock option awards using the Black-Scholes model. The determination of the grant date fair value of options using an option pricing model is affected principally by our estimated common stock fair value and requires us to make a number of other assumptions, including: the expected life of the option, the volatility of the underlying stock, the risk-free interest rate and expected dividends. Prior to December 2015, Ionis granted our employees options to purchase shares of Ionis’ common stock, or Ionis options. In December 2015, we granted our employees holding Ionis options additional options to purchase shares of our common stock, or Akcea options. Subject to service based vesting requirements, the Ionis options only become exercisable if (1) we are not acquired or if we do not complete a qualified financing transaction, such as an IPO, by June 30, 2017 and (2) the employee forfeits his or her Akcea equity. Upon the consummation of any such transaction (even if occurring after June 30, 2017), our employees would forfeit their rights to the Ionis options that they hold such that under no circumstances would an employee be able to exercise both Ionis options and Akcea options. As such, in July 2017 when we completed our IPO, the Ionis options our employees were holding were terminated. We determined the stock-based compensation expense for the Ionis options at the date of grant and recognized compensation expense over the vesting period of the Ionis options. In December 2015, we accounted for the issuance of the Akcea options as a modification to the original grant of the Ionis options because the grant of the Ionis options and Akcea options essentially represented a single stock award as the exercisability provisions of the Ionis options and Akcea options grants were interrelated and mutually exclusive. The total compensation expense measured on the modification date was the sum of the grant date fair value of the Ionis options plus any incremental compensation cost resulting from the grant of the Akcea options. In 2016, we began concurrently granting Ionis options and Akcea options to our employees. Because the exercisability provisions of the awards are interrelated and mutually exclusive as described above, the fair values of the Ionis options and the Akcea options were determined on the date of grant and the option with the greater fair value is recognized over the vesting period of the awards. Our board of directors only receive grants under the Akcea option plan. Following our IPO, we no longer grant Ionis options to our employees. For the six months ended June 30, 2017 and 2016, we used the following weighted-average assumptions in our Black-Scholes calculations for stock option grants under our 2015 Equity Incentive Plan: Employee Stock Options: Six Months Ended June 30, 2017 2016 Risk-free interest rate 1.9 % 1.6 % Dividend yield 0.0 % 0.0 % Volatility 79.4 % 69.3 % Expected life 6.08 years 6.08 years Fair value of common stock $ 12.12 $ 6.48 Board of Director Stock Options: Six Months Ended June 30, 2017 Risk-free interest rate 1.9 % Dividend yield 0.0 % Volatility 79.4 % Expected life 6.25 years Fair value of common stock $ 12.12 We did not grant any options to our board of directors during the six months ended June 30, 2016. The fair value of stock options granted under our 2015 Equity Incentive Plan is based on the fair value of our common stock on the date of grant. For the six months ended June 30, 2017 and 2016, we used the following weighted-average assumptions in our Black-Scholes calculations for stock option grants under the Ionis 2011 Equity Incentive Plan: Employee Stock Options: Six Months Ended June 30, 2017 2016 Risk-free interest rate 1.8% 1.5% Dividend yield 0.0% 0.0% Volatility 65.8% 59.1% Expected life 4.5 years 4.5 years The fair value of stock options granted under the Ionis 2011 Equity Incentive Plan is based on the fair value of Ionis’ common stock on the date of grant. The following table summarizes stock-based compensation expense for the three months ended June 30, 2017 and 2016 (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2017 2016 2017 2016 Research and development expenses $ 1,919 $ 1,311 $ 3,520 $ 2,147 General and administrative expenses 2,023 667 3,602 3,021 Total $ 3,942 $ 1,978 $ 7,122 $ 5,168 As of June 30, 2017, total unrecognized estimated non-cash stock-based compensation expense related to non-vested stock options was $23.0 million. We will adjust total unrecognized compensation cost for future forfeitures. We expect to recognize the cost of non-cash stock-based compensation expense related to non-vested stock options over a weighted average amortization period of 1.5 years. Income Taxes Prior to the completion of our IPO, we were included in Ionis’ consolidated U.S. federal income tax return filing. For these consolidated financial statements, we are using the separate return method, which determines income taxes as if we were a separate taxpayer from Ionis. As a result of our IPO, beginning in the third quarter of 2017, we will no longer file a consolidated federal tax return with Ionis. We have not determined the amount of tax attributes, including net operating losses and tax credit carryovers that will transfer over to us upon deconsolidation from Ionis. Impact of Recently Issued Accounting Standards In May 2014, the Financial Accounting Standards Board, or FASB, issued accounting guidance on the recognition of revenue from customers. Under this guidance, an entity will recognize revenue when it transfers promised goods or services to customers in an amount that reflects what the entity expects to receive in exchange for the goods or services. This new guidance also requires more detailed disclosures to enable users of the financial statements to understand the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. The guidance as originally issued is effective for annual and interim periods, beginning after December 15, 2016. In July 2015, the FASB issued updated accounting guidance to allow for an optional one-year deferral from the original effective date. As a result, we will adopt this guidance beginning on January 1, 2018. Prior to 2017, we had not generated revenue. In January 2017, we entered into a strategic collaboration agreement with Novartis and began recognizing revenue. We will adopt this guidance under the full retrospective approach, meaning we will apply the guidance to all periods presented. Given that we recently entered into the Novartis collaboration agreement, we are currently determining the effects the adoption will have on our consolidated financial statements and disclosures. In January 2016, the FASB issued amended accounting guidance related to the recognition, measurement, presentation, and disclosure of certain financial instruments. The amended guidance requires us to measure and record equity investments at fair value, except those accounted for under the equity method of accounting that have a readily determinable fair value, and for us to recognize the changes in fair value in our net income (loss), instead of recognizing unrealized gains and losses through accumulated other comprehensive income, as we currently do under the existing guidance. The amended guidance also changes several disclosure requirements for financial instruments, including the methods and significant assumptions we use to estimate fair value. The guidance is effective for annual and interim periods, beginning after December 15, 2017. We will adopt this guidance on January 1, 2018 and we will make any adjustments to beginning balances through a cumulative-effect adjustment to accumulated deficit on that date. We are currently dete |
Investments
Investments | 6 Months Ended |
Jun. 30, 2017 | |
Investments [Abstract] | |
Investments | 3. Investments As of June 30, 2017, we primarily invested our excess cash in debt instruments of the U.S. Treasury, financial institutions, corporations, and U.S. government agencies with strong credit ratings and an investment grade rating at or above A-1, P-1 or F-1 by Moody’s, Standard & Poor’s or Fitch, respectively. We have established guidelines relative to diversification and maturities that maintain safety and liquidity. We periodically review and modify these guidelines to maximize trends in yields and interest rates without compromising safety and liquidity. As of June 30, 2017, all of the securities held by us had a contractual maturity of one year or less and all of our available-for-sale securities were available to us for use in our current operations and are classified as current assets. As of December 31, 2016, we only invested in money market funds. The following is a summary of our investments at June 30, 2017 (in thousands): Gross Unrealized Cost Gains Losses Estimated Fair Value Available-for-sale securities (1): Corporate debt securities $ 40,250 $ — $ (25 ) $ 40,225 Other municipal debt securities 3,000 — (2 ) 2,998 Total available-for-sale securities $ 43,250 $ — $ (27 ) $ 43,223 (1) Our available-for-sale securities are held at amortized cost. Investments we consider to be temporarily impaired at June 30, 2017 were as follows (in thousands): Less than 12 Months of Temporary Impairment More than 12 Months of Temporary Impairment Total Temporary Impairment Number of Investments Estimated Fair Value Unrealized Losses Estimated Fair Value Unrealized Losses Estimated Fair Value Unrealized Losses Corporate debt securities 17 $ 31,437 $ (25 ) $ — $ — $ 31,437 $ (25 ) Other municipal debt securities 1 2,998 (2 ) — — 2,998 (2 ) Total temporarily impaired securities 18 $ 34,435 $ (27 ) $ — $ — $ 34,435 $ (27 ) We believe that the decline in value of these securities is temporary and are primarily related to the change in market interest rates since purchase. We believe it is more likely than not that we will be able to hold our debt securities to maturity. Therefore, we anticipate a full recovery of our debt securities’ amortized cost basis at maturity. |
Fair Value Measurements
Fair Value Measurements | 6 Months Ended |
Jun. 30, 2017 | |
Fair Value Measurements [Abstract] | |
Fair Value Measurements | 4. Fair Value Measurements We use a three-tier fair value hierarchy to prioritize the inputs used in our fair value measurements. These tiers include: Level 1, defined as observable inputs such as quoted prices in active markets for identical assets, which includes our money market funds and treasury securities classified as available-for-sale securities; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable, which includes our fixed income securities and commercial paper classified as available-for-sale securities; and Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring us to develop our own assumptions. We have not held any Level 3 investments. Our securities have been classified as Level 1 or Level 2. We obtain the fair value of our Level 2 investments from our custodian bank and from a professional pricing service. We validate the fair value of our Level 2 investments by understanding the pricing model used by the custodian banks or professional pricing service provider and comparing that fair value to the fair value based on observable market prices. During six months ended June 30, 2017, there were no transfers between our Level 1 and Level 2 investments. We recognize transfers between levels of the fair value hierarchy on the date of the event or change in circumstances that caused the transfer. We did not have any Level 3 investments or liabilities at June 30, 2017 and at December 31, 2016. At December 31, 2016, we held $7.1 million of money market fund investments which are Level 1 investments and are considered cash equivalents. The following tables present the major security types we held at June 30, 2017, that are regularly measured and carried at fair value. The table segregates each security by the level within the fair value hierarchy of the valuation techniques we utilized to determine the respective securities’ fair value (in thousands): At June 30, 2017 Quoted Prices in Active Markets (Level 1) Significant Other Observable Inputs (Level 2) Cash equivalents (1) $ 69,107 $ 69,107 $ — Corporate debt securities (2) 40,225 — 40,225 Other municipal debt securities (2) 2,998 — 2,998 Total $ 112,330 $ 69,107 $ 43,223 (1) Included in cash and cash equivalents on our condensed consolidated balance sheets. (2) Included in short-term investments on our condensed consolidated balance sheets. |
Development, Commercialization
Development, Commercialization and License Agreement and Services Agreement with Ionis | 6 Months Ended |
Jun. 30, 2017 | |
Development, Commercialization and License Agreement and Services Agreement with Ionis [Abstract] | |
Development, Commercialization and License Agreement and Services Agreement with Ionis | 5. Development, Commercialization and License Agreement and Services Agreement with Ionis We entered into a development, commercialization and license agreement and a services agreement in December 2015 with Ionis. The following section summarizes these related party agreements with Ionis. Development, Commercialization and License Agreement Our development, commercialization and license agreement, or the license agreement, with Ionis granted exclusive rights to us to develop and commercialize volanesorsen, AKCEA-APO(a)-L Rx Rx Rx We and Ionis share development responsibilities for the Lipid Drugs. We pay Ionis for the research and development expenses it incurs on our behalf, which include both external and internal expenses. External research and development expenses include costs for contract research organizations, or CROs, costs to conduct nonclinical and clinical studies on our drugs, costs to acquire and evaluate clinical study data such as investigator grants, patient screening fees and laboratory work, and fees paid to consultants. Internal research and development expenses include costs for the work that Ionis’ research and development employees perform for us. Ionis charges us a full-time equivalent rate that covers personnel-related expenses, including salaries and benefits, plus an allocation of facility-related expenses, including rent, utilities, insurance and property taxes, for those development employees who work either directly or indirectly on the development of our drugs. We also pay Ionis for the active pharmaceutical ingredient, or API, and drug product we use in our nonclinical and clinical studies for all of our drugs. Ionis manufactures the API for us and charges us a price per gram consistent with the price Ionis charges its pharmaceutical partners, which includes the cost for direct materials, direct labor and overhead required to manufacture the API. If we need the API filled in vials for our clinical studies, Ionis will contract with a third party to perform this work and Ionis will charge us for the resulting cost. As we commercialize each of the Lipid Drugs, we will pay Ionis royalties from the mid-teens to the mid-twenty percent range on sales related to the Lipid Drugs that we sell. If we sell a Lipid Drug for a Rare Disease Indication (defined in the agreement as less than 500,000 patients worldwide or an indication that required a Phase 3 program of less than 1,000 patients and less than two years of treatment), we will pay a higher royalty rate to Ionis than if we sell a Lipid Drug for a Broad Disease Patient Population (defined in the agreement as more than 500,000 patients worldwide or an indication that required a Phase 3 program of 1,000 or more patients and two or more years of treatment). Other than with respect to the drugs licensed to Novartis under the collaboration agreement, if our annual sales reach $500.0 million, $1.0 billion and $2.0 billion, we will be obligated to pay Ionis sales milestones in the amount of $50.0 million for each sales milestone reached by each Lipid Drug. If and when triggered, we will pay Ionis each of these sales milestones over the subsequent 12 quarters in equal payments. We may terminate this agreement if Ionis is in material breach of the agreement. Ionis may terminate this agreement if we are in material breach of the agreement. In each circumstance the party that is in breach will have an opportunity to cure the breach prior to the other party terminating this agreement. In the first quarter of 2017, we entered into letter agreements with Ionis to reflect the agreed upon payment terms with respect to the upfront option payment that we received from Novartis and to allocate the premium that Novartis paid for Ionis’ common stock in connection with our strategic collaboration with Novartis. For additional detail regarding our strategic collaboration with Novartis see note 8, Strategic Collaboration with Novartis. Services Agreement Under the services agreement, Ionis provides us certain services, including, without limitation, general and administrative support services and development support services. Ionis has allocated a certain percentage of personnel to perform the services that it provides to us based on its good faith estimate of the required services. We pay Ionis for these allocated costs, which reflect the Ionis full-time equivalent, or FTE, rate for the applicable personnel, plus out-of-pocket expenses such as occupancy costs associated with the FTEs allocated to providing us these services. We do not pay a mark-up or profit on the external or internal expenses Ionis bills to us. Ionis invoices us quarterly for all amounts due under the services agreement and payments are due within 30 days of the receipt of an invoice. In addition, as long as Ionis continues to consolidate our financials, we will comply with Ionis’ policies and procedures and internal controls. As long as we are consolidated into Ionis’ financial statements under U.S. GAAP, we will continue to obtain the following services from Ionis: ● investor relations services, ● human resources and personnel services, ● risk management and insurance services, ● tax related services, ● corporate record keeping services, ● financial and accounting services, ● credit services, and ● COO/CFO/CBO oversight. However, if we wanted to provide for our own human resources and personnel services, and doing so would not negatively impact Ionis’ internal controls and procedures for financial reporting, we can negotiate in good faith with Ionis for a reduced scope of services related to human resources and personnel services. When Ionis determines it should no longer consolidate our financials, we may mutually agree with Ionis in writing to extend the term in six-month increments. We can establish our own benefits programs or can continue to use Ionis’ benefits, however, we must provide Ionis a minimum advance notice to opt-out of using Ionis’ benefits. As of June 30, 2017 and December 31, 2016, we owed Ionis $11.2 million and $24.4 million, respectively. The following table summarizes the amounts included in our operating expenses that were generated by transactions with Ionis for the following periods (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2017 2016 2017 2016 Services performed by Ionis $ 2,998 $ 2,059 $ 5,955 $ 4,112 Active pharmaceutical ingredient manufactured by Ionis 2,930 — 6,013 — Sublicensing expenses — — 48,394 — Out-of-pocket expenses paid by Ionis 5,316 8,123 17,189 17,974 Total expenses generated by transactions with Ionis 11,244 10,182 77,551 22,086 Payable balance to Ionis at the beginning of the period 15,000 21,102 $ 24,355 9,198 Less: total amounts paid to Ionis during the period (15,000 ) — (57,268 ) — Less: non-cash sublicensing expenses — — (33,394 ) — Total amount payable to Ionis at period end $ 11,244 $ 31,284 $ 11,244 $ 31,284 |
Line of Credit Agreement with I
Line of Credit Agreement with Ionis | 6 Months Ended |
Jun. 30, 2017 | |
Line of Credit Agreement with Ionis [Abstract] | |
Line of Credit Agreement with Ionis | 6. Line of Credit Agreement with Ionis In January 2017, we entered into a line of credit agreement with Ionis for up to $150.0 million. We had $106.0 million outstanding as of June 30, 2017. We used a portion of the $106.0 million to pay our intercompany expenses. The amounts we borrowed under the line of credit bore interest at an annual interest rate of 4%, compounded monthly. At June 30, 2017, the outstanding balance on the line of credit with Ionis, including principal and interest, was $107.5 million. For the three and six months ended June 30, 2017, interest expense was $1.0 million and $1.5 million. The outstanding principal and accrued interest under our line of credit converted into 13,438,339 shares of our common stock in connection with the closing of our IPO. Additionally, we no longer have access to this line of credit following the closing of our IPO. Our IPO is discussed in note 9, Subsequent Events |
Stockholders' Equity (Deficit)
Stockholders' Equity (Deficit) | 6 Months Ended |
Jun. 30, 2017 | |
Stockholders' Equity (Deficit) [Abstract] | |
Stockholders' Equity (Deficit) | 7. Stockholders’ Equity (Deficit) Series A Convertible Preferred Stock In December 2015, we issued and sold to Ionis an aggregate of 28,884,540 shares of Series A convertible preferred stock for a total purchase price of $100.0 million plus the grant of the rights and licenses we received under the development, commercialization and license agreement with Ionis. The $100.0 million of proceeds we received was recorded in Series A convertible preferred stock on our consolidated balance sheet. We had 28,884,540 shares of Series A convertible preferred stock authorized, issued and outstanding as of June 30, 2017 and December 31, 2016, of which all was held by Ionis. Conversion Shares of our Series A convertible preferred stock were convertible 1:1 into common stock, subject to certain adjustments for reorganizations, reclassifications, stock splits, stock dividends and dilutive issuances. All shares of Series A convertible preferred stock automatically converted into common stock upon completion of the IPO in July 2017. Our IPO is discussed in note 9, Subsequent Events Common Stock At June 30, 2017 and December 31, 2016, we had 100,000,000 shares of common stock authorized, of which none was issued or outstanding. In May 2017, our board of directors approved an amendment to our certificate of incorporation to (1) effect a reverse stock split on outstanding shares of our common stock and preferred stock on a one-for-2.555 basis, (2) decrease the authorized shares of our preferred stock to 40,000,000 and (3) modify the threshold for automatic conversion of our preferred stock into shares of our common stock in connection with an IPO to eliminate the price per share threshold and only require that we raise at least $50.0 million in gross proceeds (collectively, the “Charter Amendment”). The par values of the common stock and preferred stock were not adjusted as a result of the reverse stock split. The amendment to our certificate of incorporation was approved by our stockholder and became effective upon the filing with the State of Delaware in June 2017. All issued and outstanding common stock and preferred stock and related share and per share amounts contained in these condensed consolidated financial statements have been retroactively adjusted to reflect the reverse stock split for all periods presented. Stock Plans 2015 Equity Incentive Plan In December 2015, our board of directors and stockholders adopted and approved our 2015 Equity Incentive Plan, or the 2015 Plan. In May 2017 and June 2017, our board of directors and stockholder, respectively, approved an amendment to our 2015 Equity Incentive Plan in order to, among other things, increase the number of shares of common stock reserved for issuance thereunder to 8,500,000 shares of common stock in conjunction with the IPO. As of June 30, 2017 and after giving effect to the IPO, the aggregate number of shares of common stock that may be issued pursuant to stock awards under the 2015 Plan was 8,500,000 shares. The 2015 Plan also provides for the grant of nonstatutory stock options, or NSOs, incentive stock options, or ISOs, stock appreciation rights, restricted stock awards, and restricted stock unit awards. At June 30, 2017, options with respect to a total of 6,742,246 shares of common stock were outstanding, of which 2,278,211 were exercisable, and 1,757,754 shares were available for future grant under the 2015 Plan, after giving effect to the IPO. 2017 Employee Stock Purchase Plan In May 2017 and June 2017, our board of directors and stockholder, respectively, approved our 2017 Employee Stock Purchase Plan, or 2017 ESPP, which became effective upon the completion of our IPO, and the reservation for issuance thereunder of 500,000 shares of common stock. As of June 30, 2017, there were no shares outstanding under our 2017 ESPP. |
Strategic Collaboration with No
Strategic Collaboration with Novartis | 6 Months Ended |
Jun. 30, 2017 | |
Strategic Collaboration with Novartis [Abstract] | |
Strategic Collaboration with Novartis | 8. Strategic Collaboration with Novartis In January 2017, we initiated a strategic collaboration with Novartis for the development and commercialization of AKCEA-APO(a)-L Rx Rx If Novartis exercises its option for a drug, Novartis will pay us a license fee equal to $150.0 million for each drug licensed by Novartis. In addition, for AKCEA-APO(a)-L Rx Rx Rx Rx The agreement with Novartis will continue until the earlier of the date that all of Novartis’ options to obtain the exclusive licenses under the agreement expire unexercised or, if Novartis exercises its options, until the expiration of all payment obligations under the agreement. In addition, the agreement as a whole or with respect to any drug under the agreement, may terminate early under the following situations: ● Novartis may terminate the agreement as a whole or with respect to any drug at any time by providing written notice to us; ● Either us or Novartis may terminate the agreement with respect to any drug by providing written notice to the other party in good faith that we or Novartis have determined that the continued development or commercialization of the drug presents safety concerns that pose an unacceptable risk or threat of harm in humans or would violate any applicable law, ethical principles, or principles of scientific integrity; ● Either we or Novartis may terminate the agreement for a drug by providing written notice to the other party upon the other party’s uncured failure to perform a material obligation related to the drug under the agreement, or the entire agreement if the other party becomes insolvent; and ● We may terminate the agreement if Novartis disputes or assists a third party to dispute the validity of any of our or Ionis’ patents. Additionally, in January 2017, we and Ionis entered into a SPA with Novartis. Under the SPA, in July 2017, as part of our IPO, Novartis purchased $50.0 million of our common stock in a separate private placement concurrent with the completion of our IPO at a price per share equal to the IPO price. Our IPO is discussed in note 9, Subsequent Events During the three and six months ended June 30, 2017, we earned revenue of $14.1 million and $23.7 million, respectively from our relationship with Novartis, representing 100% of our revenue for each period. Our consolidated balance sheet at June 30, 2017 included deferred revenue of $84.7 million related to our relationship with Novartis. |
Subsequent Events
Subsequent Events | 6 Months Ended |
Jun. 30, 2017 | |
Subsequent Events [Abstract] | |
Subsequent Events | 9. Subsequent Events On July 19, 2017, we completed our IPO. Total net proceeds were $182.4 million, including the following: ● $132.4 million from the sale of 17,968,750 shares of our common stock in our IPO; and ● $50.0 million from the purchase of 6,250,000 shares by Novartis in a concurrent private placement. In addition, both of the following occurred in connection with the completion of our IPO on July 19, 2017: ● the conversion of all outstanding shares of Series A convertible preferred stock into 28,884,540 shares of our common stock; and ● the conversion of $106.0 million of outstanding principal plus accrued interest from the line of credit into 13,438,339 shares of common stock. The following table summarizes certain actual balance sheet data and pro forma balance sheet data to reflect the activities related to our IPO noted above and Novartis’ concurrent private placement, as of June 30, 2017 (in thousands): June 30, 2017 Pro Forma June 30, 2017 Cash and cash equivalents and short-term investments $ 118,668 $ 302,382 Other current assets 3,939 2,052 Accounts payable and accrued expenses 3,608 2,998 Line of credit with Ionis Pharmaceuticals, Inc. 107,507 — Convertible preferred stock 100,000 — Common stock — 67 Additional paid-in capital 64,059 453,936 Total stockholders’ equity (deficit) (82,983 ) 206,961 |
Basis of Presentation and Org16
Basis of Presentation and Organization (Policies) | 6 Months Ended |
Jun. 30, 2017 | |
Basis of Presentation and Organization [Abstract] | |
Basis of Presentation | We prepared the unaudited interim condensed consolidated financial statements for the three and six months ended June 30, 2017 and 2016 on the same basis as the audited financial statements for the year ended December 31, 2016. We included all normal recurring adjustments in the financial statements, which we considered necessary for a fair presentation of our financial position at such dates and our operating results and cash flows for those periods. Results for the interim periods are not necessarily indicative of the results for the entire year. For more complete financial information, these financial statements, and notes thereto, should be read in conjunction with the audited financial statements for the year ended December 31, 2016 included in our final prospectus dated July 13, 2017, filed with the Securities and Exchange Commission, or SEC, on July 14, 2017 pursuant to Rule 424(b)(4) under the Securities Act of 1933, as amended, or the Securities Act. |
Consolidation | In the condensed consolidated financial statements we include the accounts of Akcea Therapeutics, Inc. ( Akcea Therapeutics UK Ltd., or Akcea UK, (formed in August 2016), Akcea Intl Ltd., or Akcea Intl, (formed in February 2017) and Akcea Therapeutics Canada, Inc., or Akcea Canada (formed in May 2017). We incorporated in Delaware in December 2014. We were organized by Ionis Pharmaceuticals, Inc., or Ionis, to . As of the date of these financial statements we were wholly owned by Ionis. All intercompany transactions and balances have been eliminated in consolidation. On July 19, 2017, we completed our initial public offering, or IPO. As a result, Ionis is now our majority shareholder. |
Significant Accounting Polici17
Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 2017 | |
Significant Accounting Policies [Abstract] | |
Revenue Recognition | Revenue Recognition We recognize revenue when we have satisfied all contractual obligations and we are reasonably assured of collecting the resulting receivable. We may be entitled to bill our customers and receive payment from our customers in advance of recognizing the revenue. In the instances in which we receive payment from our customers in advance of recognizing revenue, we will include the amounts in deferred revenue on our consolidated balance sheet. Research and development revenue under collaborative agreements Arrangements with multiple deliverables Our strategic collaboration, option and license agreement, or collaboration agreement, with Novartis, which we entered into in January 2017, contains multiple elements, or deliverables, including options to obtain licenses to drugs, research and development services, and manufacturing services. Therefore, we accounted for the collaboration under the multiple deliverables guidance. Multiple agreements When we enter into separate agreements at or near the same time with the same partner, we must first evaluate such agreements to determine whether they should be accounted for individually as distinct arrangements or whether the separate agreements are, in substance, a single multiple element arrangement. We evaluate whether the negotiations are conducted jointly as part of a single negotiation, whether the deliverables are interrelated or interdependent, whether fees in one arrangement are tied to performance in another arrangement, and whether elements in one arrangement are essential to another arrangement. Our evaluation involves significant judgment to determine whether a group of agreements might be so closely related that they are, in effect, part of a single arrangement. For example, in the first quarter of 2017, we and Ionis entered into two separate agreements with Novartis at the same time: a collaboration agreement and a stock purchase agreement, or SPA. We entered into the collaboration agreement with Novartis to develop and commercialize AKCEA-APO(a)-L Rx Rx Rx Rx Under the SPA, Novartis purchased 1.6 million shares of Ionis’ common stock for $100.0 million in the first quarter of 2017 and paid a premium over the weighted average trading price at the time of purchase. Additionally in July 2017, Novartis purchased $50.0 million of our common stock in a separate private placement concurrent with the completion of our IPO. Our IPO is discussed in note 9, Subsequent Events We evaluated the Novartis agreements to determine whether we should treat the agreements separately or as a single arrangement. We considered that the agreements were negotiated concurrently and in contemplation of one another. Additionally, the same individuals were involved in the negotiations of both agreements. Based on these facts and circumstances, we concluded that we should treat both agreements as a single arrangement, which we refer to as the Novartis collaboration. We evaluated the provisions of the agreements on a combined basis. Identifying deliverables and units of accounting We evaluate the deliverables in a collaboration agreement to determine whether they meet the criteria to be accounted for as separate units of accounting or whether they should be combined with other deliverables and accounted for as a single unit of accounting. When the delivered items in an arrangement have “stand-alone value” to the customer, we will account for the deliverables as separate units of accounting. Delivered items have stand-alone value if they are sold separately by any vendor or the customer could resell the delivered items on a stand-alone basis. For example, our Novartis collaboration and SPA have multiple elements. We evaluated the deliverables in the Novartis collaboration when we entered into the agreements and determined that certain deliverables have stand-alone value. We identified the following four separate units of accounting under the collaboration, each with stand-alone value: ● Development activities for AKCEA-APO(a)-L Rx ● Development activities for AKCEA-APOCIII-L Rx ● API for AKCEA-APO(a)-L Rx ● API for AKCEA-APOCIII-L Rx The development activities and the supply of API each have stand-alone value because Novartis or another third party could provide these items without our assistance. Measurement and allocation of arrangement consideration Our Novartis collaboration provides for various types of payments to us including upfront payments, milestone payments, licensing fees, royalties on product sales and payments for the purchase of common stock. We first evaluated the total consideration under both the collaboration agreement and SPA and determined how much of the total consideration was attributable to elements that we are delivering under the collaboration. We determined that our portion of the allocable arrangement consideration for the Novartis collaboration was $108.4 million, comprised of the following: ● $75.0 million from the upfront payment we received; ● $28.4 million for the premium paid by Novartis, which represents the excess of the fair value Ionis received from Novartis’ purchase of Ionis’ stock at a premium in the first quarter of 2017; and ● $5.0 million for the premium Novartis would have paid to purchase Ionis’ stock if we did not complete our IPO within 15 months from the inception of the agreement. We are recognizing the $75.0 million upfront payment plus the premium paid by Novartis from its purchase of Ionis’ stock and the premium associated with Novartis’ obligation to purchase Ionis’ stock if we did not complete our IPO because we are the party providing the services and API under the collaboration agreement. We initially allocated the amount of consideration that was fixed or determinable at the time the agreement was entered into and excluded contingent consideration. We allocated the consideration to each unit of accounting based on the relative selling price of each deliverable. We used the following hierarchy of values to estimate the selling price of each deliverable: (i) vendor-specific objective evidence of fair value; (ii) third-party evidence of selling price; and (iii) best estimate of selling price, or BESP. BESP reflects our best estimate of what the selling price would be if we regularly sold the deliverable on a stand-alone basis. We are recognizing the revenue allocated to each unit of accounting as we deliver the related goods or services. If we determine that we should treat certain deliverables as a single unit of accounting, then we will recognize the revenue ratably over our estimated period of performance. We allocated the consideration based on the relative BESP of each unit of accounting. We estimated the selling price of the development services over the expected period during which we will perform these services. The significant inputs we used to determine the selling price of the development services included: ● The number of internal hours we will spend performing these services; ● The estimated cost of the 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. For purposes of determining BESP of the services we will perform and the API we will deliver under our Novartis collaboration, accounting guidance required us to include a markup for a reasonable profit margin. Based on the units of accounting under the Novartis collaboration, we allocated the $108.4 million of allocable consideration as follows: ● $64.0 million for development services for AKCEA-APO(a)-L Rx ● $40.1 million for development services for AKCEA-APOCIII-L Rx ● $1.5 million for the delivery of AKCEA-APO(a)-L Rx ● $2.8 million for the delivery of AKCEA-APOCIII-L Rx Timing of revenue recognition We recognize revenue as we deliver each item under our Novartis collaboration as we provide services and the related revenue is realizable and earned. We also recognize revenue over time. Our Novartis collaboration agreement includes a development project plan outlining the activities the agreement requires each party to perform during the collaboration. We estimated our period of performance when the agreement was entered into because the agreement did not clearly define such information. We then recognize revenue for development services ratably over such period. We made estimates of our time to complete our obligations under our Novartis collaboration agreement, and in certain instances the timing of satisfying these obligations may change as the development plans for our drugs progress. If our estimates and judgments change over the course of the Novartis collaboration agreement, it may affect the timing and amount of revenue that we will recognize in future periods. Any changes in estimates are recognized on prospective basis. The following are the periods over which we are recognizing revenue for each of our units of accounting under the Novartis collaboration: ● We are recognizing the amount attributed to the development services for AKCEA-APO(a)-L Rx ● We are recognizing the amount attributed to the development services for AKCEA-APOCIII-L Rx ● We will recognize the amount attributed to the AKCEA-APO(a)-L Rx ● We will recognize the amount attributed to the AKCEA-APOCIII-L Rx Milestone payments Our Novartis collaboration agreement contains contractual milestone payments that relate to the achievement of pre-specified development, regulatory and commercialization events. These three categories of milestone events reflect the three stages of the life-cycle of our drugs, which we describe in more detail in the following paragraphs. The designation of a development candidate is the first stage in the life-cycle of our drugs. A development candidate is a chemical compound that has demonstrated the necessary safety and efficacy in preclinical animal studies to warrant further study in humans. During the first step of the development stage, we or our partner study our drugs in Investigational New Drug, or IND,-enabling studies, which are animal studies intended to support an IND application and/or the foreign equivalent. An approved IND allows us or our partners to study our development candidate in humans. If the regulatory agency approves the IND, we or our partners initiate Phase 1 clinical trials in which we typically enroll a small number of healthy volunteers to ensure the development candidate is safe for use in patients. If we or our partners determine that a development candidate is safe based on the Phase 1 data, we or our partners initiate Phase 2 studies that are generally larger scale studies in patients with the primary intent of determining the efficacy of the development candidate. The final step in the development stage is Phase 3 studies to gather the necessary safety and efficacy data to request marketing authorization from the FDA and/or foreign equivalents. The Phase 3 studies typically involve large numbers of patients and can take up to several years to complete. If the data gathered during the trials demonstrates acceptable safety and efficacy results, we or our partners will submit an application to the FDA and/or its foreign equivalents for marketing authorization. This stage of the drug’s life-cycle is the regulatory stage. If a drug achieves marketing authorization, it moves into the commercialization stage, during which we or our partners will market and sell the drug to patients. Although our partner may ultimately be responsible for marketing and selling the partnered drug, our efforts to develop a drug that is safe, effective and reliable contributes significantly to our partner’s ability to successfully sell the drug. The FDA and its foreign equivalents have the authority to impose significant restrictions on an approved drug through the product label and on advertising, promotional and distribution activities. Therefore, our efforts designing and executing the necessary animal and human studies are critical to obtaining claims in the product label from the regulatory agencies that would allow us or our partners to successfully commercialize our drug. Further, the patent protection afforded our drugs as a result of our initial patent applications and related prosecution activities in the United States and foreign jurisdictions are critical to our partner’s ability to sell our drugs without competition from generic drugs. The potential sales volume of an approved drug is dependent on several factors including the size of the patient population, market penetration of the drug, and the price charged for the drug. The milestone events contained in our Novartis collaboration agreement coincide with the progression of our drugs from development, to marketing authorization and then to commercialization. The process of successfully discovering a new development candidate, having it approved and ultimately sold for a profit is highly uncertain. As such, the milestone payments we may earn from our partners involve a significant degree of risk to achieve. Therefore, as a drug progresses through the stages of its life-cycle, the value of the drug generally increases. Development milestones in our Novartis collaboration agreement or potential future collaborations may include the following types of events: ● Designation of a development candidate. Following the designation of a development candidate, IND-enabling animal studies for a new development candidate generally take 12 to 18 months to complete; ● Initiation of a Phase 1 clinical trial. Generally, Phase 1 clinical trials take one to two years to complete; ● Initiation or completion of a Phase 2 clinical trial. Generally, Phase 2 clinical trials take one to three years to complete; and ● Initiation or completion of a Phase 3 clinical trial. Generally, Phase 3 clinical trials take two to four years to complete. Regulatory milestones in our Novartis collaboration agreement or potential future collaborations may include the following types of events: ● Filing of regulatory applications for marketing authorization such as a New Drug Application, or NDA, in the United States or a Marketing Authorization Application, or MAA, in Europe. Generally, it takes six to twelve months to prepare and submit regulatory filings. ● Marketing authorization in a major market, such as the United States, Europe or Japan. Generally it takes one to two years after an application is submitted to obtain authorization from the applicable regulatory agency. Commercialization milestones in our Novartis agreement or potential future collaborations may include the following types of events: ● First commercial sale in a particular market, such as in the United States or Europe. ● Product sales in excess of a pre-specified threshold, such as annual sales exceeding $1 billion. The amount of time to achieve this type of milestone depends on several factors including but not limited to the dollar amount of the threshold, the pricing of the product and the pace at which customers begin using the product. We will assess whether a substantive milestone exists at the inception of the collaboration agreement. When a substantive milestone is achieved, we will recognize revenue related to the milestone payment immediately. In evaluating if a milestone is substantive we will consider whether: ● Substantive uncertainty exists as to the achievement of the milestone event at the inception of the arrangement; ● The achievement of the milestone involves substantive effort and can only be achieved based in whole or in part on the performance or the occurrence of a specific outcome resulting from its performance; ● The amount of the milestone payment appears reasonable either in relation to the effort expended or to the enhancement of the value of the delivered items; ● There is no future performance required to earn the milestone payment; and ● The consideration is reasonable relative to all deliverables and payment terms in the arrangement. If any of these conditions are not met, we will not consider the milestone to be substantive and we will defer recognition of the milestone payment and recognize it as revenue over the estimated period of performance, if any. We have determined that all milestones under our Novartis collaboration are substantive milestones. Option to license When we have a multiple element arrangement that includes an option to obtain a license, we will evaluate if the option is a deliverable at the inception of the arrangement. We do not consider the option to be a deliverable if we conclude that it is substantive and not priced at a significant and incremental discount. We will consider an option substantive if, at the inception of the arrangement, we are at risk as to whether the collaboration partner will choose to exercise its option to obtain the license. In those circumstances, we do not include the associated license fee in the allocable consideration at the inception of the agreement. Rather, we account for the license fee when our partner exercises its option. Under the Novartis collaboration, we concluded that the option to license is a substantive option. Therefore, we did not include any amounts in the initial allocable consideration at the inception of the collaboration. We will recognize any future exercise of an option to license a drug under our Novartis agreement in full in the period in which the option is exercised. Refer to note 8, Strategic Collaboration with Novartis |
Cash, Cash Equivalents and Short-Term Investments | Cash, Cash Equivalents and Short-Term Investments We consider all liquid investments with maturities of three months or less when we purchase them to be cash equivalents. Our short-term investments have initial maturities of greater than three months from date of purchase. We classify our short-term investments as available-for-sale and we carry them at fair market value based upon prices for identical or similar items on the last day of the fiscal period. We record unrealized gains and losses as a separate component of comprehensive income (loss) and we include net realized gains and losses in gain (loss) on investments on our consolidated statement of operations. We use the specific identification method to determine the cost of securities sold. |
Research and Development Expenses | Research and Development Expenses Our research and development expenses include wages, benefits, facilities, supplies, external services, clinical study and manufacturing costs and other expenses that are directly related to our research and development activities. We expense research and development costs as we incur them. If we make payments for research and development services prior to the services being rendered, we record those amounts as prepaid assets on our balance sheet and we expense them as the services are provided. Sublicensing Expenses We incur sublicense fee expenses under our development, commercialization and license agreement and services agreement with Ionis related to the drugs we have licensed under the agreement. We include our sublicense fee expenses in our research and development expenses on our consolidated results of operations since the applicable drugs are not yet approved for marketing. We recognize sublicense fee expenses in the period they are incurred. For example, in the first quarter of 2017, we incurred $48.4 million of sublicense fee expenses related to our collaboration with Novartis, of which $33.4 million of these expenses were non-cash and were related to the premium Novartis paid and the potential premium Novartis could have paid on Ionis’ stock if we did not complete our IPO. Under the Novartis collaboration, we will recognize $108.4 million of revenue over the period of our performance and $48.4 million of sublicensing expense in the first quarter of 2017. The $48.4 million is comprised of the following: ● $15.0 million for the portion of the $75.0 million upfront payment we received upon initiating the Novartis collaboration, which we paid in cash to Ionis; ● $28.4 million for the premium paid by Novartis for its purchase of Ionis’ stock in the first quarter of 2017, which is a non-cash expense. We determined the fair value of the premium by calculating the stated premium and applying a discount for lack of marketability because Ionis initially issued unregistered shares to Novartis; and ● $5.0 million for the premium associated with Novartis’ obligation to purchase Ionis’ stock if we did not complete our IPO, which is a non-cash expense. We determined the fair value of the potential premium at the inception of the collaboration by calculating the value of the future premium based upon the stated premium, adjusting for the probability of us completing an IPO by the 15-month anniversary of the SPA and applying a discount for lack of marketability because Ionis would have issued unregistered shares to Novartis if it purchased Ionis’ common stock. We will pay 50% of all future license fees, milestone payments and royalties we receive to Ionis as a sublicense fee. |
Use of Estimates | Use of Estimates The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires our management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates. |
Basic and Diluted Net Loss per Share | Basic and Diluted Net Loss Per Share We issued 28,884,540 shares of Series A convertible preferred stock in December 2015. We used the Series A convertible preferred stock to calculate basic net loss per share because there was no common stock outstanding in any period presented, and the Series A convertible preferred stock represents the lowest subordinated form of outstanding equity. For purposes of calculating diluted net loss per share, we considered the conversion of the Series A convertible preferred stock using its 1:1 conversion ratio and the potential dilutive effect of employee stock options. Because the Series A convertible preferred stock was the only outstanding form of equity, cumulative accruing dividends on the Series A convertible preferred stock had no effect on net loss available to Ionis, our Series A convertible preferred stock holder. As we incurred a net loss for the three and six months ended June 30, 2017 and 2016, we did not include dilutive common equivalent shares, which consisted of outstanding common stock options in the computation of diluted net loss per share because the effect would have been anti-dilutive. |
Accumulated Other Comprehensive Loss | Accumulated Other Comprehensive Loss Accumulated other comprehensive loss is comprised of unrealized gains and losses on investments, net of taxes and currency translation adjustments. The following table summarizes changes in accumulated other comprehensive loss for the three and six months ended June 30, 2017 and 2016 (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2017 2016 2017 2016 Beginning balance accumulated other comprehensive loss $ (43 ) $ (5 ) $ (21 ) $ (75 ) Unrealized losses on securities, net of tax (1) 1 13 (27 ) 83 Currency translation adjustment (42 ) — (36 ) — Net current period other comprehensive income (41 ) 13 (63 ) 83 Ending balance accumulated other comprehensive loss $ (84 ) $ 8 $ (84 ) $ 8 (1) There was no tax benefit for other comprehensive loss for the three and six months ended June 30, 2017 and 2016. |
Translation of Foreign Currency | Translation of Foreign Currency Akcea UK operates in the United Kingdom and uses the British pound sterling as its functional currency. When we consolidate Akcea UK’s financial results, we translate Akcea UK’s assets and liabilities using the exchange rate at the balance sheet date and Akcea UK’s income and expense items using the average exchange rate for the period. We translate Akcea UK’s capital accounts at the historical exchange rate in effect at the date of the transaction. We record adjustments resulting from the translation of Akcea UK’s financial statements as a separate component of stockholders’ equity (deficit) in accumulated other comprehensive income. Our other foreign subsidiaries translation of foreign currency is immaterial to our financial results. |
Segment Information | Segment Information We operate as a single segment because our chief decision maker reviews operating results on an aggregate basis and manages our operations as a single operating segment. |
Stock-Based Compensation Expense | Stock-Based Compensation Expense We measure stock-based compensation expense for equity-classified stock option awards based on the estimated fair value of the award on the date of grant. We recognize the value of the portion of the award that we ultimately expect to vest as stock-based compensation expense over the requisite service period in our statements of operations. We reduce stock-based compensation expense for estimated forfeitures at the time of grant and revise the expense in subsequent periods if actual forfeitures differ from those estimates. We value our stock option awards using the Black-Scholes model. The determination of the grant date fair value of options using an option pricing model is affected principally by our estimated common stock fair value and requires us to make a number of other assumptions, including: the expected life of the option, the volatility of the underlying stock, the risk-free interest rate and expected dividends. Prior to December 2015, Ionis granted our employees options to purchase shares of Ionis’ common stock, or Ionis options. In December 2015, we granted our employees holding Ionis options additional options to purchase shares of our common stock, or Akcea options. Subject to service based vesting requirements, the Ionis options only become exercisable if (1) we are not acquired or if we do not complete a qualified financing transaction, such as an IPO, by June 30, 2017 and (2) the employee forfeits his or her Akcea equity. Upon the consummation of any such transaction (even if occurring after June 30, 2017), our employees would forfeit their rights to the Ionis options that they hold such that under no circumstances would an employee be able to exercise both Ionis options and Akcea options. As such, in July 2017 when we completed our IPO, the Ionis options our employees were holding were terminated. We determined the stock-based compensation expense for the Ionis options at the date of grant and recognized compensation expense over the vesting period of the Ionis options. In December 2015, we accounted for the issuance of the Akcea options as a modification to the original grant of the Ionis options because the grant of the Ionis options and Akcea options essentially represented a single stock award as the exercisability provisions of the Ionis options and Akcea options grants were interrelated and mutually exclusive. The total compensation expense measured on the modification date was the sum of the grant date fair value of the Ionis options plus any incremental compensation cost resulting from the grant of the Akcea options. In 2016, we began concurrently granting Ionis options and Akcea options to our employees. Because the exercisability provisions of the awards are interrelated and mutually exclusive as described above, the fair values of the Ionis options and the Akcea options were determined on the date of grant and the option with the greater fair value is recognized over the vesting period of the awards. Our board of directors only receive grants under the Akcea option plan. Following our IPO, we no longer grant Ionis options to our employees. For the six months ended June 30, 2017 and 2016, we used the following weighted-average assumptions in our Black-Scholes calculations for stock option grants under our 2015 Equity Incentive Plan: Employee Stock Options: Six Months Ended June 30, 2017 2016 Risk-free interest rate 1.9 % 1.6 % Dividend yield 0.0 % 0.0 % Volatility 79.4 % 69.3 % Expected life 6.08 years 6.08 years Fair value of common stock $ 12.12 $ 6.48 Board of Director Stock Options: Six Months Ended June 30, 2017 Risk-free interest rate 1.9 % Dividend yield 0.0 % Volatility 79.4 % Expected life 6.25 years Fair value of common stock $ 12.12 We did not grant any options to our board of directors during the six months ended June 30, 2016. The fair value of stock options granted under our 2015 Equity Incentive Plan is based on the fair value of our common stock on the date of grant. For the six months ended June 30, 2017 and 2016, we used the following weighted-average assumptions in our Black-Scholes calculations for stock option grants under the Ionis 2011 Equity Incentive Plan: Employee Stock Options: Six Months Ended June 30, 2017 2016 Risk-free interest rate 1.8% 1.5% Dividend yield 0.0% 0.0% Volatility 65.8% 59.1% Expected life 4.5 years 4.5 years The fair value of stock options granted under the Ionis 2011 Equity Incentive Plan is based on the fair value of Ionis’ common stock on the date of grant. The following table summarizes stock-based compensation expense for the three months ended June 30, 2017 and 2016 (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2017 2016 2017 2016 Research and development expenses $ 1,919 $ 1,311 $ 3,520 $ 2,147 General and administrative expenses 2,023 667 3,602 3,021 Total $ 3,942 $ 1,978 $ 7,122 $ 5,168 As of June 30, 2017, total unrecognized estimated non-cash stock-based compensation expense related to non-vested stock options was $23.0 million. We will adjust total unrecognized compensation cost for future forfeitures. We expect to recognize the cost of non-cash stock-based compensation expense related to non-vested stock options over a weighted average amortization period of 1.5 years. |
Income Taxes | Income Taxes Prior to the completion of our IPO, we were included in Ionis’ consolidated U.S. federal income tax return filing. For these consolidated financial statements, we are using the separate return method, which determines income taxes as if we were a separate taxpayer from Ionis. As a result of our IPO, beginning in the third quarter of 2017, we will no longer file a consolidated federal tax return with Ionis. We have not determined the amount of tax attributes, including net operating losses and tax credit carryovers that will transfer over to us upon deconsolidation from Ionis. |
Impact of Recently Issued Accounting Standards | Impact of Recently Issued Accounting Standards In May 2014, the Financial Accounting Standards Board, or FASB, issued accounting guidance on the recognition of revenue from customers. Under this guidance, an entity will recognize revenue when it transfers promised goods or services to customers in an amount that reflects what the entity expects to receive in exchange for the goods or services. This new guidance also requires more detailed disclosures to enable users of the financial statements to understand the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. The guidance as originally issued is effective for annual and interim periods, beginning after December 15, 2016. In July 2015, the FASB issued updated accounting guidance to allow for an optional one-year deferral from the original effective date. As a result, we will adopt this guidance beginning on January 1, 2018. Prior to 2017, we had not generated revenue. In January 2017, we entered into a strategic collaboration agreement with Novartis and began recognizing revenue. We will adopt this guidance under the full retrospective approach, meaning we will apply the guidance to all periods presented. Given that we recently entered into the Novartis collaboration agreement, we are currently determining the effects the adoption will have on our consolidated financial statements and disclosures. In January 2016, the FASB issued amended accounting guidance related to the recognition, measurement, presentation, and disclosure of certain financial instruments. The amended guidance requires us to measure and record equity investments at fair value, except those accounted for under the equity method of accounting that have a readily determinable fair value, and for us to recognize the changes in fair value in our net income (loss), instead of recognizing unrealized gains and losses through accumulated other comprehensive income, as we currently do under the existing guidance. The amended guidance also changes several disclosure requirements for financial instruments, including the methods and significant assumptions we use to estimate fair value. The guidance is effective for annual and interim periods, beginning after December 15, 2017. We will adopt this guidance on January 1, 2018 and we will make any adjustments to beginning balances through a cumulative-effect adjustment to accumulated deficit on that date. We are currently determining the effects the adoption will have on our consolidated financial statements and disclosures. In February 2016, the FASB issued amended accounting guidance related to lease accounting, which requires us to record all leases with a term longer than one year on our balance sheet. When we record leases on our balance sheet under the new guidance, we will record a liability with a value equal to the present value of payments we will make over the life of the lease and an asset representing the underlying leased asset. The new accounting guidance requires us to determine if any lease we have is an operating or financing lease, similar to current accounting guidance. We will record expense for an operating type lease on a straight-line basis as an operating expense and we will record expense for a finance type lease as interest expense. The new lease standard is effective for annual and interim periods beginning after December 15, 2018, with early adoption permitted. We must adopt the new standard on a modified retrospective basis, which requires us to reflect any leases we have on our consolidated balance sheet for the earliest comparative period presented. We are currently assessing the timing of adoption as well as the effects it will have on our consolidated financial statements and disclosures. In March 2016, the FASB issued amended guidance to simplify certain aspects of share-based payment accounting. Under the amended guidance, we will recognize excess tax benefits and tax deficiencies as income tax expense or benefit in our consolidated statement of operations on a prospective basis. As we have a valuation allowance, this change will impact our net operating loss carryforward and the valuation allowance disclosures. Additionally, we will classify excess tax benefits as an operating activity and classify amounts we withhold in shares for the payment of employee taxes as a financing activity on the consolidated statement of cash flows for each period presented. Lastly, the amended guidance allows us to account for forfeitures when they occur or continue to estimate them. We will continue to estimate our forfeitures. The amended share-based payment standard is effective for annual and interim periods beginning after December 15, 2016, with early adoption permitted in any interim or annual period. We adopted this guidance on January 1, 2017. The amended guidance did not impact our financial results. In June 2016, the FASB issued guidance that changes the measurement of credit losses for most financial assets and certain other instruments. If we have credit losses, this updated guidance requires us to record allowances for these instruments under a new expected credit loss model. This model requires us to estimate the expected credit loss of an instrument over its lifetime, which represents the portion of the amortized cost basis we do not expect to collect. This change will result in us remeasuring our allowance in each reporting period we have credit losses. The new standard is effective for annual and interim periods beginning after December 15, 2019. Early adoption is permitted for periods beginning after December 15, 2018. When we adopt the new standard, we will make any adjustments to beginning balances through a cumulative-effect adjustment to accumulated deficit on that date. We are currently assessing the timing of adoption as well as the effects it will have on our consolidated financial statements and disclosures. In May 2017, the FASB issued clarifying guidance related to the accounting for modifications of share-based payment awards. The new guidance is meant to clarify when modification accounting is required. We early adopted this guidance in these financial statements for the quarter ended June 30, 2017 and it did not have an effect on our consolidated financial statements and disclosures. |
Significant Accounting Polici18
Significant Accounting Policies (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Significant Accounting Policies [Abstract] | |
Changes in Accumulated Other Comprehensive Loss | Accumulated other comprehensive loss is comprised of unrealized gains and losses on investments, net of taxes and currency translation adjustments. The following table summarizes changes in accumulated other comprehensive loss for the three and six months ended June 30, 2017 and 2016 (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2017 2016 2017 2016 Beginning balance accumulated other comprehensive loss $ (43 ) $ (5 ) $ (21 ) $ (75 ) Unrealized losses on securities, net of tax (1) 1 13 (27 ) 83 Currency translation adjustment (42 ) — (36 ) — Net current period other comprehensive income (41 ) 13 (63 ) 83 Ending balance accumulated other comprehensive loss $ (84 ) $ 8 $ (84 ) $ 8 (1) There was no tax benefit for other comprehensive loss for the three and six months ended June 30, 2017 and 2016. |
Significant Accounting Policies [Abstract] | |
Stock-Based Compensation Expense | The following table summarizes stock-based compensation expense for the three months ended June 30, 2017 and 2016 (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2017 2016 2017 2016 Research and development expenses $ 1,919 $ 1,311 $ 3,520 $ 2,147 General and administrative expenses 2,023 667 3,602 3,021 Total $ 3,942 $ 1,978 $ 7,122 $ 5,168 |
2015 Equity Incentive Plan [Member] | |
Significant Accounting Policies [Abstract] | |
Weighted-Average Assumptions | For the six months ended June 30, 2017 and 2016, we used the following weighted-average assumptions in our Black-Scholes calculations for stock option grants under our 2015 Equity Incentive Plan: Employee Stock Options: Six Months Ended June 30, 2017 2016 Risk-free interest rate 1.9 % 1.6 % Dividend yield 0.0 % 0.0 % Volatility 79.4 % 69.3 % Expected life 6.08 years 6.08 years Fair value of common stock $ 12.12 $ 6.48 Board of Director Stock Options: Six Months Ended June 30, 2017 Risk-free interest rate 1.9 % Dividend yield 0.0 % Volatility 79.4 % Expected life 6.25 years Fair value of common stock $ 12.12 |
Ionis 2011 Equity Incentive Plan [Member] | |
Significant Accounting Policies [Abstract] | |
Weighted-Average Assumptions | For the six months ended June 30, 2017 and 2016, we used the following weighted-average assumptions in our Black-Scholes calculations for stock option grants under the Ionis 2011 Equity Incentive Plan: Employee Stock Options: Six Months Ended June 30, 2017 2016 Risk-free interest rate 1.8% 1.5% Dividend yield 0.0% 0.0% Volatility 65.8% 59.1% Expected life 4.5 years 4.5 years |
Investments (Tables)
Investments (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Investments [Abstract] | |
Summary of Investments | The following is a summary of our investments at June 30, 2017 (in thousands): Gross Unrealized Cost Gains Losses Estimated Fair Value Available-for-sale securities (1): Corporate debt securities $ 40,250 $ — $ (25 ) $ 40,225 Other municipal debt securities 3,000 — (2 ) 2,998 Total available-for-sale securities $ 43,250 $ — $ (27 ) $ 43,223 (1) Our available-for-sale securities are held at amortized cost. |
Temporarily Impaired Investments | Investments we consider to be temporarily impaired at June 30, 2017 were as follows (in thousands): Less than 12 Months of Temporary Impairment More than 12 Months of Temporary Impairment Total Temporary Impairment Number of Investments Estimated Fair Value Unrealized Losses Estimated Fair Value Unrealized Losses Estimated Fair Value Unrealized Losses Corporate debt securities 17 $ 31,437 $ (25 ) $ — $ — $ 31,437 $ (25 ) Other municipal debt securities 1 2,998 (2 ) — — 2,998 (2 ) Total temporarily impaired securities 18 $ 34,435 $ (27 ) $ — $ — $ 34,435 $ (27 ) |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Fair Value Measurements [Abstract] | |
Assets Measured at Fair Value on a Recurring Basis | At December 31, 2016, we held $7.1 million of money market fund investments which are Level 1 investments and are considered cash equivalents. The following tables present the major security types we held at June 30, 2017, that are regularly measured and carried at fair value. The table segregates each security by the level within the fair value hierarchy of the valuation techniques we utilized to determine the respective securities’ fair value (in thousands): At June 30, 2017 Quoted Prices in Active Markets (Level 1) Significant Other Observable Inputs (Level 2) Cash equivalents (1) $ 69,107 $ 69,107 $ — Corporate debt securities (2) 40,225 — 40,225 Other municipal debt securities (2) 2,998 — 2,998 Total $ 112,330 $ 69,107 $ 43,223 (1) Included in cash and cash equivalents on our condensed consolidated balance sheets. (2) Included in short-term investments on our condensed consolidated balance sheets. |
Development, Commercializatio21
Development, Commercialization and License Agreement and Services Agreement with Ionis (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Development, Commercialization and License Agreement and Services Agreement with Ionis [Abstract] | |
Operating Expenses Generated by Transactions with Ionis | The following table summarizes the amounts included in our operating expenses that were generated by transactions with Ionis for the following periods (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2017 2016 2017 2016 Services performed by Ionis $ 2,998 $ 2,059 $ 5,955 $ 4,112 Active pharmaceutical ingredient manufactured by Ionis 2,930 — 6,013 — Sublicensing expenses — — 48,394 — Out-of-pocket expenses paid by Ionis 5,316 8,123 17,189 17,974 Total expenses generated by transactions with Ionis 11,244 10,182 77,551 22,086 Payable balance to Ionis at the beginning of the period 15,000 21,102 $ 24,355 9,198 Less: total amounts paid to Ionis during the period (15,000 ) — (57,268 ) — Less: non-cash sublicensing expenses — — (33,394 ) — Total amount payable to Ionis at period end $ 11,244 $ 31,284 $ 11,244 $ 31,284 |
Subsequent Events (Tables)
Subsequent Events (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Subsequent Events [Abstract] | |
Subsequent Activities Related to IPO and Novartis' Concurrent Private Placement | The following table summarizes certain actual balance sheet data and pro forma balance sheet data to reflect the activities related to our IPO noted above and Novartis’ concurrent private placement, as of June 30, 2017 (in thousands): June 30, 2017 Pro Forma June 30, 2017 Cash and cash equivalents and short-term investments $ 118,668 $ 302,382 Other current assets 3,939 2,052 Accounts payable and accrued expenses 3,608 2,998 Line of credit with Ionis Pharmaceuticals, Inc. 107,507 — Convertible preferred stock 100,000 — Common stock — 67 Additional paid-in capital 64,059 453,936 Total stockholders’ equity (deficit) (82,983 ) 206,961 |
Significant Accounting Polici23
Significant Accounting Policies, Revenue Recognition (Details) shares in Millions, $ in Millions | 1 Months Ended | 3 Months Ended | 6 Months Ended |
Jul. 31, 2017USD ($) | Mar. 31, 2017USD ($)AgreementDrugshares | Jun. 30, 2017USD ($)AccountingUnitCategoryStage | |
Revenue Recognition [Abstract] | |||
Number of categories of milestone events | Category | 3 | ||
Number of stages in life-cycle of drugs | Stage | 3 | ||
Minimum [Member] | |||
Revenue Recognition [Abstract] | |||
Period to complete IND-enabling animal studies | 12 months | ||
Period to complete Phase 1 clinical trial | 1 year | ||
Period to complete Phase 2 clinical trial | 1 year | ||
Period to complete Phase 3 clinical trial | 2 years | ||
Period to prepare and submit regulatory filings | 6 months | ||
Period to obtain marketing authorization from applicable regulatory agency | 1 year | ||
Pre-specified product sales threshold included in commercialization milestones | $ 1,000 | ||
Maximum [Member] | |||
Revenue Recognition [Abstract] | |||
Period to complete IND-enabling animal studies | 18 months | ||
Period to complete Phase 1 clinical trial | 2 years | ||
Period to complete Phase 2 clinical trial | 3 years | ||
Period to complete Phase 3 clinical trial | 4 years | ||
Period to prepare and submit regulatory filings | 12 months | ||
Period to obtain marketing authorization from applicable regulatory agency | 2 years | ||
Novartis [Member] | |||
Revenue Recognition [Abstract] | |||
Number of agreements | Agreement | 2 | ||
Upfront payment received | $ 75 | ||
Number of drugs with exclusive option that could be exercised | Drug | 1 | ||
Number of units of accounting | AccountingUnit | 4 | ||
Allocable arrangement consideration | $ 108.4 | ||
Premium received on shares issued by Ionis | $ 28.4 | ||
Premium received if IPO is not completed within 15 months from inception of agreement | $ 5 | $ 5 | |
Number of months from inception of agreement for IPO to be completed | 15 months | ||
Novartis [Member] | Subsequent Event [Member] | |||
Revenue Recognition [Abstract] | |||
Proceeds from sale of common stock | $ 50 | ||
Novartis [Member] | AKCEA-APO(a)-L [Member] | |||
Revenue Recognition [Abstract] | |||
Consideration allocated to development activities | $ 64 | ||
Consideration allocated to delivery of API | 1.5 | ||
Novartis [Member] | AKCEA-APOCIII-L [Member] | |||
Revenue Recognition [Abstract] | |||
Consideration allocated to development activities | 40.1 | ||
Consideration allocated to delivery of API | $ 2.8 | ||
Novartis SPA [Member] | Private Placement [Member] | Subsequent Event [Member] | |||
Revenue Recognition [Abstract] | |||
Proceeds from sale of common stock | $ 50 | ||
Ionis [Member] | Novartis SPA [Member] | |||
Revenue Recognition [Abstract] | |||
Shares issued (in shares) | shares | 1.6 | ||
Proceeds from sale of common stock | $ 100 |
Significant Accounting Polici24
Significant Accounting Policies, Research and Development Expenses (Details) - Novartis [Member] - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended |
Mar. 31, 2017 | Jun. 30, 2017 | |
Research and Development Expenses [Abstract] | ||
Sublicense fee expenses | $ 48.4 | |
Non-cash sublicense expenses | 33.4 | |
Allocable arrangement consideration | $ 108.4 | |
Portion of upfront payment paid as sublicense fee to Ionis | 15 | |
Upfront payment received | 75 | |
Premium received on shares issued by Ionis | 28.4 | |
Premium received if IPO is not completed | $ 5 | $ 5 |
Number of months from inception of agreement for IPO to be completed | 15 months | |
Percentage of license fees, milestone payments and royalties paid as sublicense fee to Ionis | 50.00% |
Significant Accounting Polici25
Significant Accounting Policies, Basic and Diluted Net Loss Per Share (Details) - shares | 1 Months Ended | 6 Months Ended | |
Dec. 31, 2015 | Jun. 30, 2017 | Dec. 31, 2016 | |
Basic and Diluted Net Loss Per Share [Abstract] | |||
Common stock, shares outstanding (in shares) | 0 | 0 | |
Series A Convertible Preferred Stock [Member] | |||
Basic and Diluted Net Loss Per Share [Abstract] | |||
Shares issued (in shares) | 28,884,540 | ||
Conversion ratio | convertible 1:1 into common stock |
Significant Accounting Polici26
Significant Accounting Policies, Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | ||
Accumulated Other Comprehensive Loss [Roll Forward] | |||||
Beginning balance | $ (17,747) | ||||
Net current period other comprehensive loss | $ (41) | $ 13 | (63) | $ 83 | |
Ending balance | (82,983) | (82,983) | |||
Tax benefit included in other comprehensive loss | 0 | 0 | |||
Accumulated Other Comprehensive Loss [Member] | |||||
Accumulated Other Comprehensive Loss [Roll Forward] | |||||
Beginning balance | (43) | (5) | (21) | (75) | |
Ending balance | (84) | 8 | (84) | 8 | |
Unrealized Losses on Securities [Member] | |||||
Accumulated Other Comprehensive Loss [Roll Forward] | |||||
Other comprehensive loss before reclassifications, net of tax | [1] | 1 | 13 | (27) | 83 |
Currency Translation Adjustment [Member] | |||||
Accumulated Other Comprehensive Loss [Roll Forward] | |||||
Other comprehensive loss before reclassifications, net of tax | $ (42) | $ 0 | $ (36) | $ 0 | |
[1] | There was no tax benefit for other comprehensive loss for the three and six months ended June 30, 2017 and 2016. |
Significant Accounting Polici27
Significant Accounting Policies, Stock-Based Compensation Expense (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Stock-based Compensation Expense [Abstract] | ||||
Stock-based compensation expense | $ 3,942 | $ 1,978 | $ 7,122 | $ 5,168 |
Unrecognized Compensation Expense [Abstract] | ||||
Unrecognized compensation expense related to non-vested stock options | 23,000 | $ 23,000 | ||
Weighted average period for recognition | 1 year 6 months | |||
2015 Equity Incentive Plan [Member] | Employee Stock Options [Member] | ||||
Weighted-Average Assumptions [Abstract] | ||||
Risk-free interest rate | 1.90% | 1.60% | ||
Dividend yield | 0.00% | 0.00% | ||
Volatility | 79.40% | 69.30% | ||
Expected life | 6 years 29 days | 6 years 29 days | ||
Fair value of common stock (in dollars per share) | $ 12.12 | $ 6.48 | ||
2015 Equity Incentive Plan [Member] | Board of Director Stock Options [Member] | ||||
Weighted-Average Assumptions [Abstract] | ||||
Risk-free interest rate | 1.90% | |||
Dividend yield | 0.00% | |||
Volatility | 79.40% | |||
Expected life | 6 years 3 months | |||
Fair value of common stock (in dollars per share) | $ 12.12 | |||
Stock-based Compensation Expense [Abstract] | ||||
Options granted (in shares) | 0 | |||
Ionis 2011 Equity Incentive Plan [Member] | Employee Stock Options [Member] | ||||
Weighted-Average Assumptions [Abstract] | ||||
Risk-free interest rate | 1.80% | 1.50% | ||
Dividend yield | 0.00% | 0.00% | ||
Volatility | 65.80% | 59.10% | ||
Expected life | 4 years 6 months | 4 years 6 months | ||
Research and Development Expenses [Member] | ||||
Stock-based Compensation Expense [Abstract] | ||||
Stock-based compensation expense | 1,919 | 1,311 | $ 3,520 | $ 2,147 |
General and Administrative Expenses [Member] | ||||
Stock-based Compensation Expense [Abstract] | ||||
Stock-based compensation expense | $ 2,023 | $ 667 | $ 3,602 | $ 3,021 |
Investments, Summary of Investm
Investments, Summary of Investments (Details) - Securities with Maturity of One Year or Less [Member] $ in Thousands | Jun. 30, 2017USD ($) | |
Summary of Investments [Abstract] | ||
Cost | $ 43,250 | [1] |
Gross unrealized gains | 0 | |
Gross unrealized losses | (27) | |
Estimated fair value | 43,223 | |
Corporate Debt Securities [Member] | ||
Summary of Investments [Abstract] | ||
Cost | 40,250 | [1] |
Gross unrealized gains | 0 | |
Gross unrealized losses | (25) | |
Estimated fair value | 40,225 | |
Other Municipal Debt Securities [Member] | ||
Summary of Investments [Abstract] | ||
Cost | 3,000 | [1] |
Gross unrealized gains | 0 | |
Gross unrealized losses | (2) | |
Estimated fair value | $ 2,998 | |
[1] | Our available-for-sale securities are held at amortized cost. |
Investments, Investments Tempor
Investments, Investments Temporarily Impaired (Details) $ in Thousands | Jun. 30, 2017USD ($)Investment |
Temporarily Impaired Investments [Abstract] | |
Number of investments | Investment | 18 |
Estimated fair value, less than 12 months of temporary impairment | $ 34,435 |
Unrealized losses, less than 12 months of temporary impairment | (27) |
Estimated fair value, more than 12 months of temporary impairment | 0 |
Unrealized losses, more than 12 months of temporary impairment | 0 |
Estimated fair value, total temporary impairment | 34,435 |
Unrealized losses, total temporary impairment | $ (27) |
Corporate Debt Securities [Member] | |
Temporarily Impaired Investments [Abstract] | |
Number of investments | Investment | 17 |
Estimated fair value, less than 12 months of temporary impairment | $ 31,437 |
Unrealized losses, less than 12 months of temporary impairment | (25) |
Estimated fair value, more than 12 months of temporary impairment | 0 |
Unrealized losses, more than 12 months of temporary impairment | 0 |
Estimated fair value, total temporary impairment | 31,437 |
Unrealized losses, total temporary impairment | $ (25) |
Other Municipal Debt Securities [Member] | |
Temporarily Impaired Investments [Abstract] | |
Number of investments | Investment | 1 |
Estimated fair value, less than 12 months of temporary impairment | $ 2,998 |
Unrealized losses, less than 12 months of temporary impairment | (2) |
Estimated fair value, more than 12 months of temporary impairment | 0 |
Unrealized losses, more than 12 months of temporary impairment | 0 |
Estimated fair value, total temporary impairment | 2,998 |
Unrealized losses, total temporary impairment | $ (2) |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - USD ($) $ in Thousands | Jun. 30, 2017 | Dec. 31, 2016 | |
Fair Value Measurements [Abstract] | |||
Transfers from Level 1 to Level 2 | $ 0 | $ 0 | |
Transfers from Level 2 to Level 1 | 0 | 0 | |
Recurring Basis [Member] | |||
Fair Value Measurements [Abstract] | |||
Cash equivalents | [1] | 69,107 | |
Total | 112,330 | ||
Recurring Basis [Member] | Corporate Debt Securities [Member] | |||
Fair Value Measurements [Abstract] | |||
Available-for-sale securities | [2] | 40,225 | |
Recurring Basis [Member] | Other Municipal Debt Securities [Member] | |||
Fair Value Measurements [Abstract] | |||
Available-for-sale securities | [2] | 2,998 | |
Recurring Basis [Member] | Quoted Prices in Active Markets (Level 1) [Member] | |||
Fair Value Measurements [Abstract] | |||
Cash equivalents | 69,107 | $ 7,100 | |
Total | 69,107 | ||
Recurring Basis [Member] | Quoted Prices in Active Markets (Level 1) [Member] | Corporate Debt Securities [Member] | |||
Fair Value Measurements [Abstract] | |||
Available-for-sale securities | 0 | ||
Recurring Basis [Member] | Quoted Prices in Active Markets (Level 1) [Member] | Other Municipal Debt Securities [Member] | |||
Fair Value Measurements [Abstract] | |||
Available-for-sale securities | 0 | ||
Recurring Basis [Member] | Significant Other Observable Inputs (Level 2) [Member] | |||
Fair Value Measurements [Abstract] | |||
Cash equivalents | 0 | ||
Total | 43,223 | ||
Recurring Basis [Member] | Significant Other Observable Inputs (Level 2) [Member] | Corporate Debt Securities [Member] | |||
Fair Value Measurements [Abstract] | |||
Available-for-sale securities | 40,225 | ||
Recurring Basis [Member] | Significant Other Observable Inputs (Level 2) [Member] | Other Municipal Debt Securities [Member] | |||
Fair Value Measurements [Abstract] | |||
Available-for-sale securities | 2,998 | ||
Recurring Basis [Member] | Significant Unobservable Inputs (Level 3) [Member] | |||
Fair Value Measurements [Abstract] | |||
Total | $ 0 | ||
[1] | Included in cash and cash equivalents on our condensed consolidated balance sheets. | ||
[2] | Included in short-term investments on our condensed consolidated balance sheets. |
Development, Commercializatio31
Development, Commercialization and License Agreement and Services Agreement with Ionis (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2017USD ($) | Mar. 31, 2017USD ($) | Jun. 30, 2016USD ($) | Jun. 30, 2017USD ($)PatientPayment | Jun. 30, 2016USD ($) | |
Operating Expenses Generated by Transactions with Ionis [Abstract] | |||||
Payable balance to Ionis at beginning of the period | $ 24,355 | $ 24,355 | |||
Total amount payable to Ionis at period end | $ 11,244 | $ 11,244 | |||
Ionis [Member] | Development, Commercialization and License Agreement [Member] | |||||
Development, Commercialization and License Agreement with Ionis [Abstract] | |||||
Royalty percentage paid on sales of lipid drug | 20.00% | ||||
First annual sales threshold | $ 500,000 | ||||
Second annual sales threshold | 1,000,000 | ||||
Third annual sales threshold | 2,000,000 | ||||
Sales milestone payment | $ 50,000 | ||||
Number of quarters in which equal payments are made | Payment | 12 | ||||
Ionis [Member] | Development, Commercialization and License Agreement [Member] | Lipid Drug for Rare Disease Indication [Member] | Maximum [Member] | |||||
Development, Commercialization and License Agreement with Ionis [Abstract] | |||||
Number of patients worldwide | Patient | 500,000 | ||||
Number of patients for Phase 3 program | Patient | 1,000 | ||||
Number of years of treatment | 2 years | ||||
Ionis [Member] | Development, Commercialization and License Agreement [Member] | Lipid Drug for a Broad Disease Patient Population [Member] | Minimum [Member] | |||||
Development, Commercialization and License Agreement with Ionis [Abstract] | |||||
Number of patients worldwide | Patient | 500,000 | ||||
Number of patients for Phase 3 program | Patient | 1,000 | ||||
Number of years of treatment | 2 years | ||||
Ionis [Member] | Services Agreement [Member] | |||||
Services Agreement with Ionis [Abstract] | |||||
Payment term after receipt of invoice | 30 days | ||||
Term of extension for services agreement | 6 months | ||||
Operating Expenses Generated by Transactions with Ionis [Abstract] | |||||
Services performed by Ionis | 2,998 | $ 2,059 | $ 5,955 | $ 4,112 | |
Active pharmaceutical ingredient manufactured by Ionis | 2,930 | 0 | 6,013 | 0 | |
Sublicensing expenses | 0 | 0 | 48,394 | 0 | |
Out-of-pocket expenses paid by Ionis | 5,316 | 8,123 | 17,189 | 17,974 | |
Total expenses generated by transactions with Ionis | 11,244 | 10,182 | 77,551 | 22,086 | |
Payable balance to Ionis at beginning of the period | 15,000 | 24,355 | 21,102 | 24,355 | 9,198 |
Less: total amounts paid to Ionis during the period | (15,000) | 0 | (57,268) | 0 | |
Less: non-cash sublicensing expenses | 0 | 0 | (33,394) | 0 | |
Total amount payable to Ionis at period end | $ 11,244 | $ 15,000 | $ 31,284 | $ 11,244 | $ 31,284 |
Line of Credit Agreement with32
Line of Credit Agreement with Ionis (Details) - USD ($) $ in Thousands | Jul. 19, 2017 | Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | Jan. 31, 2017 | Dec. 31, 2016 |
Line of Credit Agreement with Ionis [Abstract] | |||||||
Outstanding balance, including principal and interest | $ 107,507 | $ 107,507 | $ 0 | ||||
Interest expense | 965 | $ 0 | 1,507 | $ 0 | |||
Subsequent Event [Member] | |||||||
Line of Credit Agreement with Ionis [Abstract] | |||||||
Shares issued upon conversion of line of credit (in shares) | 13,438,339 | ||||||
Ionis [Member] | Line of Credit [Member] | |||||||
Line of Credit Agreement with Ionis [Abstract] | |||||||
Maximum borrowing capacity | $ 150,000 | ||||||
Outstanding balance | $ 106,000 | $ 106,000 | |||||
Interest rate | 4.00% | 4.00% | |||||
Outstanding balance, including principal and interest | $ 107,500 | $ 107,500 | |||||
Interest expense | $ 965 | $ 1,507 |
Stockholders' Equity (Deficit),
Stockholders' Equity (Deficit), Series A Convertible Preferred Stock (Details) - Series A Convertible Preferred Stock [Member] - USD ($) $ in Millions | 1 Months Ended | 6 Months Ended | |
Dec. 31, 2015 | Jun. 30, 2017 | Dec. 31, 2016 | |
Series A Convertible Preferred Stock [Abstract] | |||
Shares issued (in shares) | 28,884,540 | ||
Proceeds from sale of stock | $ 100 | ||
Preferred stock, shares authorized (in shares) | 28,884,540 | 28,884,540 | |
Preferred stock, shares issued (in shares) | 28,884,540 | 28,884,540 | |
Preferred stock, shares outstanding (in shares) | 28,884,540 | 28,884,540 | |
Conversion ratio | convertible 1:1 into common stock |
Stockholders' Equity (Deficit34
Stockholders' Equity (Deficit), Common Stock (Details) $ in Millions | 1 Months Ended | ||
May 31, 2017USD ($)shares | Jun. 30, 2017shares | Dec. 31, 2016shares | |
Stockholders' Equity (Deficit) [Abstract] | |||
Common stock, shares authorized (in shares) | 40,000,000 | 100,000,000 | 100,000,000 |
Common stock, shares issued (in shares) | 0 | 0 | |
Common stock, shares outstanding (in shares) | 0 | 0 | |
Stock split ratio | 0.3914 | ||
Minimum threshold for gross proceeds from IPO required under Charter Amendment | $ | $ 50 |
Stockholders' Equity (Deficit35
Stockholders' Equity (Deficit), Stock Plans (Details) - shares | Jun. 30, 2017 | Dec. 31, 2016 |
Stock Plans [Abstract] | ||
Common stock, shares outstanding (in shares) | 0 | 0 |
2015 Equity Incentive Plan [Member] | ||
Stock Plans [Abstract] | ||
Number of shares of common stock reserved for issuance (in shares) | 8,500,000 | |
2015 Equity Incentive Plan [Member] | Common Stock Options [Member] | ||
Stock Plans [Abstract] | ||
Options outstanding (in shares) | 6,742,246 | |
Options exercisable (in shares) | 2,278,211 | |
Number of shares available for future grant (in shares) | 1,757,754 | |
2017 Employee Stock Purchase Plan [Member] | ||
Stock Plans [Abstract] | ||
Number of shares of common stock reserved for issuance (in shares) | 500,000 | |
Common stock, shares outstanding (in shares) | 0 |
Strategic Collaboration with 36
Strategic Collaboration with Novartis (Details) $ in Thousands | 1 Months Ended | 3 Months Ended | 6 Months Ended | |||
Jul. 31, 2017USD ($) | Jun. 30, 2017USD ($) | Mar. 31, 2017USD ($)Drug | Jun. 30, 2016USD ($) | Jun. 30, 2017USD ($) | Jun. 30, 2016USD ($) | |
Strategic Collaboration with Novartis [Abstract] | ||||||
Revenue earned | $ 14,128 | $ 0 | $ 23,725 | $ 0 | ||
Novartis [Member] | ||||||
Strategic Collaboration with Novartis [Abstract] | ||||||
Number of drugs with exclusive option that could be exercised | Drug | 1 | |||||
Upfront payment received | $ 75,000 | |||||
Portion of upfront payment retained | 60,000 | |||||
Portion of upfront payment paid as sublicense fee to Ionis | $ 15,000 | |||||
License fee receivable per drug | 150,000 | 150,000 | ||||
Next prospective milestone | 25,000 | $ 25,000 | ||||
Percentage of license fees, milestone payments and royalties paid as sublicense fee to Ionis | 50.00% | |||||
Revenue earned | $ 14,100 | $ 23,700 | ||||
Concentration percentage | 100.00% | 100.00% | ||||
Deferred revenue | $ 84,700 | $ 84,700 | ||||
Novartis [Member] | Subsequent Event [Member] | ||||||
Strategic Collaboration with Novartis [Abstract] | ||||||
Proceeds from sale of common stock | $ 50,000 | |||||
Novartis [Member] | AKCEA-APO(a)-L [Member] | ||||||
Strategic Collaboration with Novartis [Abstract] | ||||||
Maximum amount of payments receivable for milestones | 600,000 | 600,000 | ||||
Maximum amount of payments receivable for development milestones | 25,000 | 25,000 | ||||
Maximum amount of payments receivable for regulatory milestones | 290,000 | 290,000 | ||||
Maximum amount of payments receivable for commercialization milestones | 285,000 | $ 285,000 | ||||
Royalty percentage received on sales of drug | 20.00% | |||||
Novartis [Member] | AKCEA-APOCIII-L [Member] | ||||||
Strategic Collaboration with Novartis [Abstract] | ||||||
Maximum amount of payments receivable for milestones | 530,000 | $ 530,000 | ||||
Maximum amount of payments receivable for development milestones | 25,000 | 25,000 | ||||
Maximum amount of payments receivable for regulatory milestones | 240,000 | 240,000 | ||||
Maximum amount of payments receivable for commercialization milestones | $ 265,000 | $ 265,000 | ||||
Royalty percentage received on sales of drug | 20.00% |
Subsequent Events (Details)
Subsequent Events (Details) - USD ($) $ in Thousands | Jul. 19, 2017 | Jun. 30, 2017 | Dec. 31, 2016 |
Balance Sheet Data [Abstract] | |||
Cash and cash equivalents and short-term investments | $ 118,668 | ||
Other current assets | 3,939 | $ 1,209 | |
Accounts payable and accrued expenses | 3,608 | ||
Line of credit with Ionis Pharmaceuticals, Inc. | 107,507 | 0 | |
Convertible preferred stock | 100,000 | 100,000 | |
Common stock | 0 | 0 | |
Additional paid-in capital | 64,059 | 56,936 | |
Total stockholders' equity (deficit) | (82,983) | $ (17,747) | |
Pro Forma [Member] | |||
Balance Sheet Data [Abstract] | |||
Cash and cash equivalents and short-term investments | 302,382 | ||
Other current assets | 2,052 | ||
Accounts payable and accrued expenses | 2,998 | ||
Line of credit with Ionis Pharmaceuticals, Inc. | 0 | ||
Convertible preferred stock | 0 | ||
Common stock | 67 | ||
Additional paid-in capital | 453,936 | ||
Total stockholders' equity (deficit) | $ 206,961 | ||
Subsequent Event [Member] | |||
Subsequent Events [Abstract] | |||
Net proceeds from sale of common stock | $ 182,400 | ||
Shares issued upon conversion of Series A Convertible Preferred Stock (in shares) | 28,884,540 | ||
Principal and accrued interest from line of credit converted | $ 106,000 | ||
Shares issued upon conversion of line of credit (in shares) | 13,438,339 | ||
Subsequent Event [Member] | IPO [Member] | |||
Subsequent Events [Abstract] | |||
Gross proceeds from sale of common stock in IPO | $ 132,400 | ||
Shares issued (in shares) | 17,968,750 | ||
Subsequent Event [Member] | Private Placement [Member] | Novartis [Member] | |||
Subsequent Events [Abstract] | |||
Gross proceeds from sale of common stock in IPO | $ 50,000 | ||
Shares issued (in shares) | 6,250,000 |