Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2016 | Nov. 02, 2016 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | IONIS PHARMACEUTICALS INC | |
Entity Central Index Key | 874,015 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2016 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Well-known Seasoned Issuer | Yes | |
Entity Voluntary Filers | No | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 121,202,967 | |
Document Fiscal Year Focus | 2,016 | |
Document Fiscal Period Focus | Q3 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($) $ in Thousands | Sep. 30, 2016 | Dec. 31, 2015 |
Current assets: | ||
Cash and cash equivalents | $ 84,275 | $ 128,797 |
Short-term investments | 603,573 | 650,386 |
Contracts receivable | 8,544 | 11,356 |
Inventories | 9,319 | 6,899 |
Investment in Regulus Therapeutics Inc. | 9,382 | 24,792 |
Other current assets | 15,236 | 14,773 |
Total current assets | 730,329 | 837,003 |
Property, plant and equipment, net | 90,970 | 90,233 |
Patents, net | 20,929 | 19,316 |
Deposits and other assets | 1,358 | 1,348 |
Total assets | 843,586 | 947,900 |
Current liabilities: | ||
Accounts payable | 15,680 | 28,355 |
Accrued compensation | 11,008 | 16,065 |
Accrued liabilities | 23,616 | 28,105 |
Current portion of long-term obligations | 49 | 9,029 |
Current portion of deferred contract revenue | 56,539 | 67,322 |
Total current liabilities | 106,892 | 148,876 |
Long-term deferred contract revenue | 101,831 | 134,306 |
Long-term obligations, less current portion | 14,892 | 2,341 |
Long-term financing liability for leased facility | 72,322 | 72,217 |
Total liabilities | 703,947 | 747,110 |
Stockholders' equity: | ||
Common stock, $0.001 par value; 300,000,000 shares authorized, 121,147,433 and 120,351,480 shares issued and outstanding at September 30, 2016 and December 31, 2015, respectively | 121 | 120 |
Additional paid-in capital | 1,373,309 | 1,309,107 |
Accumulated other comprehensive loss | (26,498) | (13,565) |
Accumulated deficit | (1,207,293) | (1,094,872) |
Total stockholders' equity | 139,639 | 200,790 |
Total liabilities and stockholders' equity | 843,586 | 947,900 |
1 Percent Convertible Senior Notes [Member] | ||
Current liabilities: | ||
Convertible senior notes | 356,440 | 339,847 |
2 3/4 Percent Convertible Senior Notes [Member] | ||
Current liabilities: | ||
Convertible senior notes | $ 51,570 | $ 49,523 |
CONDENSED CONSOLIDATED BALANCE3
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - $ / shares | Sep. 30, 2016 | Dec. 31, 2015 |
Stockholders' equity: | ||
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized (in shares) | 300,000,000 | 300,000,000 |
Common stock, shares issued (in shares) | 121,147,433 | 120,351,480 |
Common stock, shares outstanding (in shares) | 121,147,433 | 120,351,480 |
1 Percent Convertible Senior Notes [Member] | ||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||
Interest rate on convertible senior notes | 1.00% | 1.00% |
2 3/4 Percent Convertible Senior Notes [Member] | ||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||
Interest rate on convertible senior notes | 2.75% | 2.75% |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Revenue: | ||||
Research and development revenue under collaborative agreements | $ 108,913 | $ 48,918 | $ 166,583 | $ 230,469 |
Licensing and royalty revenue | 2,014 | 203 | 19,689 | 1,664 |
Total revenue | 110,927 | 49,121 | 186,272 | 232,133 |
Expenses: | ||||
Research, development and patent expenses | 84,631 | 88,508 | 243,169 | 220,962 |
General and administrative | 10,188 | 8,751 | 30,574 | 23,992 |
Total operating expenses | 94,819 | 97,259 | 273,743 | 244,954 |
Income (loss) from operations | 16,108 | (48,138) | (87,471) | (12,821) |
Other income (expense): | ||||
Investment income | 989 | 1,384 | 3,912 | 3,146 |
Interest expense | (9,746) | (9,233) | (28,861) | (27,381) |
Gain on investment in Regulus Therapeutics Inc. | 0 | 20,211 | 0 | 20,211 |
Income (loss) before income tax expense | 7,351 | (35,776) | (112,420) | (16,845) |
Income tax benefit (expense) | 0 | 0 | (1) | 0 |
Net income (loss) | $ 7,351 | $ (35,776) | $ (112,421) | $ (16,845) |
Basic net income (loss) per share (in dollars per share) | $ 0.06 | $ (0.30) | $ (0.93) | $ (0.14) |
Diluted net income (loss) per share (in dollars per share) | $ 0.06 | $ (0.30) | $ (0.93) | $ (0.14) |
Shares used in computing basic net income (loss) per share (in shares) | 120,989 | 119,979 | 120,795 | 119,348 |
Shares used in computing diluted net income (loss) per share (in shares) | 123,378 | 119,979 | 120,795 | 119,348 |
CONDENSED CONSOLIDATED STATEME5
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Unaudited) [Abstract] | ||||
Net income (loss) | $ 7,351 | $ (35,776) | $ (112,421) | $ (16,845) |
Unrealized losses on securities, net of tax | (170) | (16,157) | (13,458) | (37,493) |
Reclassification adjustment for realized (gains) losses included in net income (loss) | 525 | (20,211) | 525 | (20,211) |
Comprehensive income (loss) | $ 7,706 | $ (72,144) | $ (125,354) | $ (74,549) |
CONDENSED CONSOLIDATED STATEME6
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2016 | Sep. 30, 2015 | |
Operating activities: | ||
Net loss | $ (112,421) | $ (16,845) |
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | ||
Depreciation | 5,592 | 5,190 |
Amortization of patents | 1,171 | 1,012 |
Amortization of licenses | 1 | 1,405 |
Amortization of premium on investments, net | 5,314 | 5,495 |
Amortization of debt issuance costs | 910 | 841 |
Amortization of long-term financing liability for leased facility | 5,018 | 4,994 |
Stock-based compensation expense | 56,950 | 41,907 |
Gain on investment in Regulus Therapeutics Inc. | 0 | (20,211) |
Non-cash losses related to patents, licensing and property, plant and equipment | 1,134 | 244 |
Changes in operating assets and liabilities: | ||
Contracts receivable | 2,812 | 2,077 |
Inventories | (2,420) | (293) |
Other current and long-term assets | (27) | (13,457) |
Accounts payable | (15,200) | 862 |
Accrued compensation | (5,057) | (2,794) |
Accrued liabilities and deferred rent | (4,403) | (5,946) |
Deferred contract revenue | (43,258) | 37,726 |
Net cash provided by (used in) operating activities | (86,146) | 58,599 |
Investing activities: | ||
Purchases of short-term investments | (234,486) | (398,076) |
Proceeds from the sale of short-term investments | 277,971 | 293,109 |
Purchases of property, plant and equipment | (4,313) | (5,281) |
Acquisition of licenses and other assets, net | (3,374) | (3,334) |
Proceeds from the sale of equity investments | 0 | 25,566 |
Net cash provided by (used in) investing activities | 35,798 | (88,016) |
Financing activities: | ||
Proceeds from equity awards | 7,254 | 20,275 |
Proceeds from borrowing on line of credit facility | 4,000 | 0 |
Principal payments on debt and capital lease obligations | (5,428) | (7,263) |
Net cash provided by financing activities | 5,826 | 13,012 |
Net decrease in cash and cash equivalents | (44,522) | (16,405) |
Cash and cash equivalents at beginning of period | 128,797 | 142,998 |
Cash and cash equivalents at end of period | 84,275 | 126,593 |
Supplemental disclosures of cash flow information: | ||
Interest paid | 4,295 | 4,233 |
Supplemental disclosures of non-cash investing and financing activities: | ||
Amounts accrued for capital and patent expenditures | 2,521 | 447 |
2 3/4 Percent Convertible Senior Notes [Member] | ||
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | ||
Amortization of convertible senior notes discount | 1,902 | 1,741 |
1 Percent Convertible Senior Notes [Member] | ||
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | ||
Amortization of convertible senior notes discount | $ 15,836 | $ 14,651 |
CONDENSED CONSOLIDATED STATEME7
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (Parenthetical) | Sep. 30, 2016 | Dec. 31, 2015 | Sep. 30, 2015 |
1 Percent Convertible Senior Notes [Member] | |||
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | |||
Interest rate on convertible senior notes | 1.00% | 1.00% | 1.00% |
2 3/4 Percent Convertible Senior Notes [Member] | |||
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | |||
Interest rate on convertible senior notes | 2.75% | 2.75% | 2.75% |
Basis of Presentation
Basis of Presentation | 9 Months Ended |
Sep. 30, 2016 | |
Basis of Presentation [Abstract] | |
Basis of Presentation | 1. Basis of Presentation We prepared the unaudited interim condensed consolidated financial statements for the nine months ended September 30, 2016 and 2015 on the same basis as the audited financial statements for the year ended December 31, 2015. 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, 2015 included in our Annual Report on Form 10-K filed with the Securities and Exchange Commission, or SEC. In the condensed consolidated financial statements we included the accounts of Ionis Pharmaceuticals, Inc. ("we", "us" or "our") and our wholly owned subsidiary, Akcea Therapeutics, Inc., which we incorporated in December 2014. |
Significant Accounting Policies
Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2016 | |
Significant Accounting Policies [Abstract] | |
Significant Accounting Policies | 2. Significant Accounting Policies Revenue Recognition We generally recognize revenue when we have satisfied all contractual obligations and are reasonably assured of collecting the resulting receivable. We are often entitled to bill our customers and receive payment from our customers in advance of recognizing the revenue. In the instances in which we have received payment from our customers in advance of recognizing revenue, we include the amounts in deferred revenue on our consolidated condensed balance sheet. Arrangements with multiple deliverables Our collaboration agreements typically contain multiple elements, or deliverables, including technology licenses or options to obtain technology licenses, research and development services, and in certain cases manufacturing services, and we allocate the consideration to each unit of accounting based on the relative selling price of each deliverable. Identifying deliverables and units of accounting We evaluate the deliverables in our collaboration agreements 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 our customer, we 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, in May 2015, we entered into an exclusive license agreement with Bayer to develop and commercialize IONIS-FXI Rx Rx Rx Rx The exclusive license we granted to Bayer to develop and commercialize IONIS-FXI Rx The development services we agreed to perform for IONIS-FXI Rx The initial supply of API. We determined that each of these three units of accounting have stand-alone value. The license we granted to Bayer has stand-alone value because it gives Bayer the exclusive right to develop IONIS-FXI Rx Measurement and allocation of arrangement consideration Our collaborations may provide for various types of payments to us including upfront payments, funding of research and development, milestone payments, licensing fees and royalties on product sales. We initially allocate the amount of consideration that is fixed and determinable at the time the agreement is entered into and exclude contingent consideration. We allocate the consideration to each unit of accounting based on the relative selling price of each deliverable. We use 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 recognize 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 recognize the revenue ratably over our estimated period of performance. We determined that the allocable arrangement consideration for the Bayer collaboration was $100 million and we allocated it based on the relative BESP of each unit of accounting. We engaged a third party, independent valuation expert to assist us with determining BESP. We estimated the selling price of the license granted for IONIS-FXI Rx Rx Estimated future product sales; Estimated royalties on future product sales; Contractual milestone payments; Expenses we expect to incur; Income taxes; and An appropriate discount rate. We estimated the selling price of the ongoing development services by using our internal estimates of the cost to perform the specific services and estimates of expected cash outflows to third parties for services and supplies over the expected period that we will perform the development services. The significant inputs we used to determine the selling price of the ongoing development services included: The number of internal hours we will spend performing these services; The estimated cost of work we will perform; The estimated cost of work that we will contract with third parties to perform; and The estimated cost of drug product we will use. We determine the selling price of our API consistently for all of our partnerships. On an annual basis, we calculate our fully absorbed cost to manufacture API. We then determine the unit price we will charge our partners by dividing our fully absorbed costs by the quantity of API we expect to produce during the year. For purposes of determining BESP of the services we will perform and the API in our Bayer transaction, accounting guidance required us to include a markup for a reasonable profit margin. Based on the units of accounting under the agreement, we allocated the $100 million upfront payment from Bayer as follows: $91.2 million to the IONIS-FXI Rx $4.3 million for ongoing development services; and $4.5 Assuming a constant selling price for the other elements in the arrangement, if there was an assumed ten percent increase or decrease in the estimated selling price of the IONIS-FXI Rx Rx Timing of revenue recognition We recognize revenue as we deliver each item under the arrangement and the related revenue is realizable and earned. For example, we recognized revenue for the exclusive license we granted Bayer for IONIS-FXI Rx The following are the periods over which we are recognizing revenue for each of our units of accounting under our Bayer agreement: We recognized the portion of the consideration attributed to the IONIS-FXI Rx We are recognizing the amount attributed to the ongoing development services for IONIS-FXI Rx We are recognizing the amount attributed to the API supply as we deliver it to Bayer. During the nine months ended September 30, 2016, we recognized $3.2 million related to a portion of the API we delivered to Bayer during the first nine months of 2016. Multiple agreements From time to time, we may enter into separate agreements at or near the same time with the same partner. We 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 2012 and 2013, we entered into four collaboration agreements with Biogen: In January 2012, we entered into a collaboration agreement with Biogen to develop and commercialize SPINRAZA (nusinersen) for spinal muscular atrophy, or SMA. As part of the collaboration, we received a $29 million upfront payment and we are responsible for global development of SPINRAZA through completion of Phase 2/3 clinical trials. In June 2012, we entered into a second and separate collaboration agreement with Biogen to develop and commercialize a novel antisense drug targeting DMPK, or dystrophia myotonica-protein kinase. As part of the collaboration, we received a $12 million upfront payment and we are responsible for global development of the drug through the completion of a Phase 2 clinical trial. In December 2012, we entered into a third and separate collaboration agreement with Biogen to discover and develop antisense drugs against three targets to treat neurological or neuromuscular disorders. As part of the collaboration, we received a $30 million upfront payment and we are responsible for the discovery of a lead antisense drug for each of three targets. In September 2013, we entered into a fourth and separate collaboration agreement with Biogen to leverage antisense technology to advance the treatment of neurological diseases. We granted Biogen exclusive rights to the use of our antisense technology to develop therapies for neurological diseases as part of this broad collaboration. We received a $100 million upfront payment and we are responsible for discovery and early development through the completion of a Phase 2 clinical trial for each antisense drug identified during the six-year term of this collaboration, while Biogen is responsible for the creation and development of small molecule treatments and biologics. Under our collaboration agreement, in July 2016, Biogen exercised its option to license SPINRAZA. Our other three collaboration agreements with Biogen give Biogen the option to license one or more drugs resulting from the specific collaboration. Similar to our collaboration agreement for SPINRAZA, if Biogen exercises an option, it will pay us a license fee and will assume future development, regulatory and commercialization responsibilities for the licensed drug. We are also eligible to receive milestone payments associated with the research and/or development of the drugs prior to licensing, milestone payments if Biogen achieves pre-specified regulatory milestones, and royalties on any product sales from any drugs resulting from these collaborations. We evaluated all four of the Biogen agreements to determine whether we should account for them as separate agreements. We determined that we should account for the agreements separately because we conducted the negotiations independently of one another, each agreement focuses on different drugs, there are no interrelated or interdependent deliverables, there are no provisions in any of these agreements that are essential to the other agreement, and the payment terms and fees under each agreement are independent of each other. Milestone payments Our collaborations often include contractual milestones, which typically relate to the achievement of pre-specified development, regulatory and/ or 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. Prior to the first stage in the life-cycle of our drugs, we perform a significant amount of work using our proprietary antisense technology to design chemical compounds that interact with specific genes that are good targets for drug discovery. From these research efforts, we hope to identify a development candidate. 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 partners 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 Food and Drug Administration, or 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 partner 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 our partner will market and sell the drug to patients. Although our partner will ultimately be responsible for marketing and selling the partnered drug, our efforts to discover and 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 partner 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. Generally, the milestone events contained in our partnership agreements 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 partnerships 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; 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 partnerships 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 partnerships 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 assess whether a substantive milestone exists at the inception of our agreements. When a substantive milestone is achieved, we recognize revenue related to the milestone payment immediately. For our existing licensing and collaboration agreements in which we are involved in the discovery and/or development of the related drug or provide the partner with access to new technologies we discover, we have determined that the majority of future development, regulatory and commercialization milestones are substantive. For example, we consider most of the milestones associated with our strategic alliance with Biogen substantive because we are using our antisense drug discovery platform to discover and develop new drugs against targets for neurological diseases. In evaluating if a milestone is substantive we 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 our performance or the occurrence of a specific outcome resulting from our 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; and The consideration is reasonable relative to all deliverables and payment terms in the arrangement. If any of these conditions are not met, we do not consider the milestone to be substantive and we defer recognition of the milestone payment and recognize it as revenue over our estimated period of performance, if any. Further information about our collaborative arrangements can be found in Note 6, Collaborative Arrangements and Licensing Agreements Option to license In several of our collaboration agreements, we provide our partner with an option to obtain a license to one or more of our drugs. When we have a multiple element arrangement that includes an option to obtain a license, we 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 consider an option substantive if, at the inception of the arrangement, we are at risk as to whether our collaborative 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. For example, in the third quarter of 2016, we recognized $85.0 million in license fee revenue when two of our partners, Biogen and Janssen, exercised their option to license two of our drugs, which under the respective agreements we concluded to be substantive options at inception. As these amounts relate to research and development collaboration arrangements, we include these amounts in research and development revenue under collaborative agreements on our statement of operations. Licensing and royalty revenue We often enter into agreements to license and sell our proprietary patent rights on an exclusive or non-exclusive basis in exchange for upfront fees, milestone payments and/or royalties. We generally recognize as revenue immediately those payments for which we have no significant future performance obligations and for which we are reasonably assured of collecting the resulting receivable. 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 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 include net realized gains and losses in gain (loss) on investments. We use the specific identification method to determine the cost of securities sold. We have equity investments in privately and publicly held biotechnology companies that we have received as part of a technology license or collaboration agreement. At September 30, 2016, we held ownership interests of less than 20 percent in each of the respective companies. We account for our equity investments in publicly held companies at fair value and record unrealized gains and losses related to temporary increases and decreases in the stock of these publicly-held companies as a separate component of comprehensive income (loss). At September 30, 2016, we held equity investments in two publicly held companies, Antisense Therapeutics Limited and Regulus Therapeutics. We account for equity investments in privately held companies under the cost method of accounting because we own less than 20 percent and do not have significant influence over their operations. At September 30, 2016, we held two cost method investments in Atlantic Pharmaceuticals Limited and Kastle Therapeutics. Realization of our equity position in these private companies is uncertain. When realization of our investment is uncertain, we record a full valuation allowance. In determining if and when a decrease in market value below our cost in our equity positions is temporary or other-than-temporary, we examine historical trends in the stock price, the financial condition of the company, near term prospects of the company and our current need for cash. If we determine that a decline in value in either a public or private investment is other-than-temporary, we recognize an impairment loss in the period in which the other-than-temporary decline occurs. Inventory valuation We capitalize the costs of raw materials that we purchase for use in producing our drugs because until we use these raw materials they have alternative future uses. We include in inventory raw material costs for drugs that we manufacture for our partners under contractual terms and that we use primarily in our clinical development activities and drug products. We can use each of our raw materials in multiple products and, as a result, each raw material has future economic value independent of the development status of any single drug. For example, if one of our drugs failed, we could use the raw materials for that drug to manufacture our other drugs. We expense these costs when we deliver the drugs to our partners, or as we provide these drugs for our own clinical trials. We reflect our inventory on the balance sheet at the lower of cost or market value under the first-in, first-out method, or FIFO. We review inventory periodically and reduce the carrying value of items we consider to be slow moving or obsolete to their estimated net realizable value. We consider several factors in estimating the net realizable value, including shelf life of raw materials, alternative uses for our drugs and clinical trial materials, and historical write-offs. We did not record any inventory write-offs for the nine months ended September 30, 2016 and 2015. Total inventory was $9.3 million and $6.9 million as of September 30, 2016 and December 31, 2015, respectively. Research, development and patent expenses Our research and development expenses include wages, benefits, facilities, supplies, external services, clinical trial and manufacturing costs and other expenses that are directly related to our research and development operations. We expense research and development costs as we incur them. When we make payments for research and development services prior to the services being rendered, we record those amounts as prepaid assets on our condensed consolidated balance sheet and we expense them as the services are provided. We capitalize costs consisting principally of outside legal costs and filing fees related to obtaining patents. We amortize patent costs over the useful life of the patent, beginning with the date the United States Patent and Trademark Office, or foreign equivalent, issues the patent. We review our capitalized patent costs regularly to ensure that they include costs for patents and patent applications that have future value. We evaluate patents and patent applications that we are not actively pursuing and write off any associated costs. We recorded charges primarily related to the write-down of intangible assets of $0.7 million and $0.1 million for the three months ended September 30, 2016 and 2015, respectively, and $1.1 million and $0.2 million for the nine months ended September 30, 2016 and 2015, respectively. Long-lived assets We evaluate long-lived assets, which include property, plant and equipment and patent costs acquired from third parties, for impairment on at least a quarterly basis and whenever events or changes in circumstances indicate that we may not be able to recover the carrying amount of such assets. Use of estimates The preparation of condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. Actual results could differ from those estimates. Basic and diluted net income (loss) per share We compute basic net income (loss) per share by dividing the net income or loss by the weighted-average number of common shares outstanding during the period. For the nine months ended September 30, 2016 and the three and nine months ended September 30, 2015 we incurred a net loss, therefore we did not include dilutive common equivalent shares in the computation of diluted net loss per share because the effect would have been anti-dilutive. Common stock from the following would have had an anti-dilutive effect on net loss per share: Dilutive stock options; Unvested restricted stock units; Employee Stock Purchase Plan, or ESPP; 2¾ percent convertible senior notes; and 1 percent convertible senior notes. For the three months ended September 30, 2016, we had net income. As a result, we computed diluted net income per share using the weighted-average number of common shares and dilutive common equivalent shares outstanding during those periods. Diluted common equivalent shares for the three months ended September 30, 2016, consisted of the following (in thousands except per share amounts): Three months ended September 30, 2016 Income (Numerator) Shares (Denominator) Per-Share Amount Income available to common shareholders $ 7,351 120,989 $ 0.06 Effect of dilutive securities: Shares issuable upon exercise of stock options — 2,129 Shares issuable upon restricted stock award issuance — 202 Shares issuable related to our ESPP — 58 Income available to common shareholders, plus assumed conversions $ 7,351 123,378 $ 0.06 For the three months ended September 30, 2016, the calculation excludes the 2¾ percent notes and the 1 percent notes because the effect on diluted earnings per share would be anti-dilutive. Accumulated other comprehensive income (loss) We include unrealized gains and losses on investments, net of taxes, in accumulated other comprehensive income (loss) along with adjustments we make to reclassify realized gains and losses on investments from other accumulated comprehensive income (loss) to our condensed consolidated statement of operations. The following table summarizes changes in accumulated other comprehensive income (loss) for the three and nine months ended September 30, 2016 and 2015 (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2016 2015 2016 2015 Beginning balance accumulated other comprehensive income (loss) $ (26,853 ) $ 18,411 $ (13,565 ) $ 39,747 Unrealized losses on securities (1) (170 ) (16,157 ) (13,458 ) (37,493 ) Amounts reclassified from accumulated other comprehensive income (loss) 525 (20,211 ) 525 (20,211 ) Net current period other comprehensive loss 355 (36,368 ) (12,933 ) (57,704 ) Ending balance accumulated other comprehensive loss $ (26,498 ) $ (17,957 ) $ (26,498 ) $ (17,957 ) (1) There was no tax expense or benefit for the three and nine months ended September 30, 2016 and 2015. Convertible debt We account for convertible debt instruments, including our 1 percent and 2¾ percent notes, that may be settled in cash upon conversion (including partial cash settlement) by separating the liability and equity components of the instruments in a manner that reflects our nonconvertible debt borrowing rate. We determine the carrying amount of the liability component by measuring the fair value of similar debt instruments that do not have the conversion feature. If no similar debt instrument exists, we estimate fair value by using assumptions that market participants would use in pricing a debt instrument, including market interest rates, credit standing, yield curves and volatilities. Determining the fair value of the debt component requires the use of accounting estimates and assumptions. These estimates and assumptions are judgmental in nature and could have a significant impact on the determination of the debt component, and the associated non-cash interest expense. We assigned a value to the debt component of our convertible notes equal to the estimated fair value of similar debt instruments without the conversion feature, which resulted in us recording our debt at a discount. At January 1, 2016, we adopted the amended accounting guidance to simplify the presentation of debt issuance costs. As a result of this amended guidance, we reclassed our debt issuance costs in all periods presented from other assets to the carrying amount of the related debt liability on our consolidated balance sheet. We are amortizing our debt issuance costs and debt discount over the life of the convertible notes as additional non-cash interest expense utilizing the effective interest method. Segment information We have two operating segments, our Ionis Core segment and Akcea Therapeutics, which includes the operations of our wholly-owned subsidiary, Akcea Therapeutics, Inc. We formed Akcea to develop and commercialize drugs for patients with serious cardiometabolic diseases caused by lipid disorders. We provide segment financial information and results for our Ionis Core segment and our Akcea Therapeutics segment based on the segregation of revenues and expenses that our chief decision maker reviews to assess operating performance and to make operating decisions. We use judgments and estimates in determining the allocation of shared expenses to the two segments. Stock-based compensation expense We measure stock-based compensation expense for equity-classified awards, principally related to stock options, restricted stock units, or RSUs, and stock purchase rights under our ESPP, 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 condensed consolidated statements of operations. We reduce stock-based compensation expense for estimated forfeitures at the time of grant and revise in subsequent periods if actual forfeitures differ from those estimates. We use the Black-Scholes model to estimate the fair value of stock options granted and stock purchase rights under our ESPP. The expected term of stock options granted represents the period of time that we expect them to be outstanding. We estimate the expected term of options granted based on historical exercise patterns. For the nine months ended September 30, 2016 and 2015, we used the following weighted-average assumptions in our Black-Scholes calculations: Employee Stock Options: Nine Months Ended September 30, 2016 2015 Risk-free interest rate 1.5% 1.5% Dividend yield 0.0% 0.0% Volatility 58.5% 53.7% Expected life 4.5 years 4.5 years ESPP: Nine Months Ended September 30, 2016 2015 Risk-free interest rate 0.4% 0.1% Dividend yield 0.0% 0.0% Volatility 86.4% 51.7% Expected life 6 months 6 months Board of Director Stock Options: Nine Months Ended September 30, 2016 2015 Risk-free interest rate 1.3 % 2.1 % Dividend yield 0.0 % 0.0 % Volatility 53.1 % 52.2 % Expected life 6.5 years 6.9 years The fair value of RSUs is based on the market price of our common stock on the date of grant. RSUs vest ann |
Investments
Investments | 9 Months Ended |
Sep. 30, 2016 | |
Investments [Abstract] | |
Investments | 3. Investments As of September 30, 2016, we had 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 S&P, 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. The following table summarizes the contract maturity of the available-for-sale securities we held as of September 30, 2016: One year or less 54% After one year but within two years 28% After two years but within three and a half years 18% Total 100% As illustrated above, at September 30, 2016, 82 percent of our available-for-sale securities had a maturity of less than two years. All of our available-for-sale securities are available to us for use in our current operations. As a result, we categorize all of these securities as current assets even though the stated maturity of some individual securities may be one year or more beyond the balance sheet date. At September 30, 2016, we had an ownership interest of less than 20 percent in two private companies and two public companies with which we conduct business. The privately-held companies are Atlantic Pharmaceuticals Limited and Kastle and the publicly-traded companies are Antisense Therapeutics Limited and Regulus. We account for equity investments in the privately-held companies under the cost method of accounting and we account for equity investments in the publicly-traded companies at fair value. We record unrealized gains and losses as a separate component of comprehensive income (loss) and include net realized gains and losses in gain (loss) on investments. The following is a summary of our investments (in thousands): Gross Unrealized September 30, 2016 Cost Gains Losses Other-Than- Temporary Impairment Loss Estimated Fair Value Available-for-sale securities: Corporate debt securities $ 195,953 $ 36 $ (152 ) $ — $ 195,837 Debt securities issued by U.S. government agencies 29,512 11 — — 29,523 Debt securities issued by the U.S. Treasury (2) 28,011 14 — — 28,025 Debt securities issued by states of the U.S. and political subdivisions of the states (2) 79,805 2 (119 ) — 79,688 Total securities with a maturity of one year or less 333,281 63 (271 ) — 333,073 Corporate debt securities 217,980 457 (713 ) — 217,724 Debt securities issued by U.S. government agencies 33,859 1 (33 ) — 33,827 Debt securities issued by states of the U.S. and political subdivisions of the states 36,169 24 (100 ) — 36,093 Total securities with a maturity of more than one year 288,008 482 (846 ) — 287,644 Total available-for-sale securities $ 621,289 $ 545 $ (1,117 ) $ — $ 620,717 Equity securities: Regulus Therapeutics Inc. $ 7,162 $ 2,745 $ — $ (525 ) $ 9,382 Total equity securities $ 7,162 $ 2,745 $ — $ (525 ) $ 9,382 Total available-for-sale and equity securities $ 628,451 $ 3,290 $ (1,117 ) $ (525 ) $ 630,099 Gross Unrealized December 31, 2015 Cost Gains Losses Estimated Fair Value Available-for-sale securities: Corporate debt securities $ 181,670 $ 5 $ (250 ) $ 181,425 Debt securities issued by U.S. government agencies 50,559 1 (19 ) 50,541 Debt securities issued by the U.S. Treasury 2,604 — (3 ) 2,601 Debt securities issued by states of the U.S. and political subdivisions of the states (2) 79,414 18 (88 ) 79,344 Total securities with a maturity of one year or less 314,247 24 (360 ) 313,911 Corporate debt securities 258,703 3 (1,705 ) 257,001 Debt securities issued by U.S. government agencies 38,956 — (244 ) 38,712 Debt securities issued by states of the U.S. and political subdivisions of the states 48,552 3 (243 ) 48,312 Total securities with a maturity of more than one year 346,211 6 (2,192 ) 344,025 Total available-for-sale securities $ 660,458 $ 30 $ (2,552 ) $ 657,936 Equity securities: Regulus Therapeutics Inc. $ 7,162 $ 17,630 $ — $ 24,792 Total equity securities $ 7,162 $ 17,630 $ — $ 24,792 Total available-for-sale and equity securities $ 667,620 $ 17,660 $ (2,552 ) $ 682,728 (1) Our available-for-sale securities are held at amortized cost. (2) Includes investments classified as cash equivalents on our condensed consolidated balance sheet. Investments we consider to be temporarily impaired at September 30, 2016 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 162 $ 203,357 $ (470 ) $ 33,639 $ (395 ) $ 236,996 $ (865 ) Debt securities issued by U.S. government agencies 19 31,517 (33 ) — — 31,517 (33 ) Debt securities issued by states of the U.S. and political subdivisions of the states 117 63,551 (140 ) 16,979 (79 ) 80,530 (219 ) Total temporarily impaired securities 298 $ 298,425 $ (643 ) $ 50,618 $ (474 ) $ 349,043 $ (1,117 ) We believe that the decline in value of these securities is temporary and for our debt securities is 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 full recovery of our debt securities’ amortized cost basis at maturity. |
Fair Value Measurements
Fair Value Measurements | 9 Months Ended |
Sep. 30, 2016 | |
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 and our investment in equity securities in publicly-held biotechnology companies; 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. The majority of our securities have been classified as Level 2. We obtain the fair value of our Level 2 investments from our custodian bank or 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 the nine months ended September 30, 2016, 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 investments that were valued with significant unobservable inputs, or Level 3 investments, at September 30, 2016 and December 31, 2015. The following tables present the major security types we held at September 30, 2016 and December 31, 2015 that are regularly measured and carried at fair value. The tables segregate each security type by the level within the fair value hierarchy of the valuation techniques we utilized to determine the respective securities’ fair value (in thousands): At September 30, 2016 Quoted Prices in Active Markets (Level 1) Significant Other Observable Inputs (Level 2) Cash equivalents (1) $ 60,146 $ 60,146 $ — Corporate debt securities (2) 413,561 — 413,561 Debt securities issued by U.S. government agencies (2) 63,350 — 63,350 Debt securities issued by the U.S. Treasury (3) 28,025 28,025 — Debt securities issued by states of the U.S. and political subdivisions of the states (4) 115,781 — 115,781 Investment in Regulus Therapeutics Inc. 9,382 9,382 — Total $ 690,245 $ 97,553 $ 592,692 At December 31, 2015 Quoted Prices in Active Markets (Level 1) Significant Other Observable Inputs (Level 2) Cash equivalents (1) $ 88,902 $ 88,902 $ — Corporate debt securities (2) 438,426 — 438,426 Debt securities issued by U.S. government agencies (2) 89,253 — 89,253 Debt securities issued by the U.S. Treasury (2) 2,601 2,601 — Debt securities issued by states of the U.S. and political subdivisions of the states (4) 127,656 — 127,656 Investment in Regulus Therapeutics Inc. 24,792 24,792 — Total $ 771,630 $ 116,295 $ 655,335 (1) Included in cash and cash equivalents on our condensed consolidated balance sheet. (2) Included in short-term investments on our condensed consolidated balance sheet. (3) At September 30, 2016, $6.0 million was included in cash and cash equivalents on our condensed consolidated balance sheet, with the difference included in short-term investments on our condensed consolidated balance sheet. (4) At September 30, 2016 and December 31, 2015, $11.1 million and $7.5 million, respectively, were included in cash and cash equivalents on our condensed consolidated balance sheet, with the difference included in short-term investments on our condensed consolidated balance sheet. Other Fair Value Disclosures Our 1 percent and 2¾ percent notes had a fair value of $467.2 million and $137.3 million, respectively, at September 30, 2016. We determine the fair value of our notes based on quoted market prices for these notes, which are Level 2 measurements because the notes do not trade regularly. |
Line of Credit Arrangement
Line of Credit Arrangement | 9 Months Ended |
Sep. 30, 2016 | |
Line of Credit Arrangement [Abstract] | |
Line of Credit Arrangement | 5. Line of Credit Arrangement In June 2015, we entered into a five-year revolving line of credit agreement with Morgan Stanley Private Bank, National Association, or Morgan Stanley. Under the credit agreement, we can borrow up to a maximum of $30 million of revolving credit for general working capital purposes. Under the credit agreement interest is payable monthly in arrears on the outstanding principal at a rate based on our option of: (i) a floating rate equal to the one-month London Interbank Offered Rate, or LIBOR, in effect plus 1.25 percent per annum; (ii) a fixed rate equal to LIBOR plus 1.25 percent for a period of one, two, three, four, six, or twelve months as elected by us; or (iii) a fixed rate equal to the LIBOR swap rate during the period of the loan. Additionally, we will pay 0.25 percent per annum, payable quarterly in arrears, for any amount unused under the credit facility beginning after June 2016. As of September 30, 2016 we had $12.5 million in outstanding borrowings under the credit facility, which we used to fund our capital equipment needs in 2015 and is consistent with our historical practice to finance these costs. In September 2016, we converted our total borrowings of $12.5 million into a fixed rate note with a 2.31 percent interest rate and a maturity date of September 2019. The credit agreement includes customary affirmative and negative covenants and restrictions. We are in compliance with all covenants of the credit agreement. |
Collaborative Arrangements and
Collaborative Arrangements and Licensing Agreements | 9 Months Ended |
Sep. 30, 2016 | |
Collaborative Arrangements and Licensing Agreements [Abstract] | |
Collaborative Arrangements and Licensing Agreements | 6. Collaborative Arrangements and Licensing Agreements Below, we have included our collaborations with substantive changes during the first nine months of 2016 from those included in Note 6 of our audited financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2015. Strategic Partnership Biogen We have established four strategic collaborations with Biogen focused on using antisense technology to advance the treatment of neurological and neuromuscular disorders. These collaborations combine our expertise in creating antisense drugs with Biogen's expertise in developing therapies for neurological disorders. We and Biogen are currently developing six drugs to treat neurological diseases under these collaborations, including SPINRAZA, IONIS-DMPK-2.5 Rx Rx Rx Rx Rx SPINRAZA In January 2012, we entered into a collaboration agreement with Biogen to develop and commercialize SPINRAZA for the treatment of SMA. SPINRAZA is an RNA-targeted therapy in development for the treatment of infants and children with SMA. SPINRAZA is currently under Priority Review with the FDA and Accelerated Assessment with the EMA for marketing authorization. Recently, a number of positive events have provided evidence for the transformative potential of this drug, including: CHERISH, our Phase 3 trial evaluating SPINRAZA in children with later-onset SMA ENDEAR, our Phase 3 trial evaluating SPINRAZA in infants with infantile-onset SMA- License Fee- Based on the results of these pre-specified interim analyses, we are stopping the CHERISH and ENDEAR studies and participants are transitioning into the SHINE open-label study in which all patients receive SPINRAZA. Additionally, participants enrolled in the sham-controlled arm of EMBRACE, a Phase 2 study which also included infantile-onset patients, will have the opportunity to receive SPINRAZA. The open-label NURTURE study in pre-symptomatic infants with SMA will continue as planned in order to collect the data to demonstrate the safety and efficacy of SPINRAZA in this population. We will complete the Phase 3 studies and we are working with Biogen to transition the clinical programs for SPINRAZA that we are conducting to Biogen. Under the terms of the agreement, we received an upfront payment of $29 million in January 2012, which we are amortizing through December 2016. Over the term of the collaboration, we are eligible to receive up to an additional $346 million in a license fee and payments, including up to $121 million in substantive milestone and other payments associated with the clinical development of SPINRAZA prior to licensing and up to $150 million in substantive milestone payments if Biogen achieves pre-specified regulatory milestones. We are also eligible to receive tiered royalties up to the mid-teens on any sales of SPINRAZA. We have exclusively in-licensed patents related to SPINRAZA from Cold Spring Harbor Laboratory and the University of Massachusetts. We will pay Cold Spring Harbor Laboratory and the University of Massachusetts nominal amounts when we receive license fees and milestone payments and a low single digit royalty on sales of SPINRAZA. From inception through September 2016, we have received more than $235 million in payments for advancing SPINRAZA, including the . Neurology In December 2012, we and Biogen entered into a third and separate collaboration agreement to develop and commercialize novel antisense drugs to up to three targets to treat neurological or neuromuscular diseases. We are responsible for the development of each of the drugs through the completion of the initial Phase 2 clinical study for such drug. Biogen has the option to license a drug from each of the three programs through the completion of the first Phase 2 study for each program. We are currently advancing IONIS-BIIB4 Rx Rx Rx During the three and nine months ended September 30, 2016, we earned revenue of $90.2 million and $120.9 million, respectively from our relationship with Biogen. This revenue represented 81 percent and 65 percent of our total revenue for the three and nine months ended September 30, 2016, respectively. In comparison, we earned revenue of $18.1 million and $75.1 million for the same periods in 2015, respectively, which represented 37 percent and 32 percent of our total revenue for those periods, respectively. Our condensed consolidated balance sheet at September 30, 2016 included deferred revenue of $73.1 million related to our relationship with Biogen. Research, Development and Commercialization Partners GSK In March 2010, we entered into an alliance with GSK using our antisense drug discovery platform to discover and develop new drugs against targets for rare and serious diseases, including infectious diseases and some conditions causing blindness. Our alliance currently comprises five drugs in development, including our Phase 3 drug IONIS-TTR Rx Rx Rx In October 2012, we and GSK amended the original agreement to reflect an accelerated clinical development plan for IONIS-TTR Rx Rx Rx In addition to IONIS-TTR Rx Rx Rx Rx Rx Rx Under our agreement, if GSK successfully develops all five drugs for one or more indications and achieves pre-agreed sales targets, we could receive license fees and substantive milestone payments of more than $1.0 billion, including up to $168.5 million for the achievement of development milestones, up to $363.5 million for the achievement of regulatory milestones and up to $338 million for the achievement of commercialization milestones. Through September 2016, we have received more than $154 million in payments under this alliance with GSK. In the first quarter of 2016, we earned a $1.5 million milestone payment when GSK initiated a Phase 1 study of IONIS-HBV-L Rx During the three and nine months ended September 30, 2016, we earned revenue of $1.2 million, and $8.2 million, respectively, from our relationship with GSK, which represented one percent and four percent, respectively, of our total revenue for those periods. In comparison, we earned revenue of $1.6 million and $22.4 million for the same periods in 2015, respectively, which represented three percent and ten percent of our total revenue for those periods, respectively. Our condensed consolidated balance sheet at September 30, 2016 included deferred revenue of $4.7 million related to our relationship with GSK. Janssen Biotech, Inc., a pharmaceutical company of Johnson & Johnson In December 2014, we entered into a collaboration agreement with Janssen Biotech, Inc. to discover and develop antisense drugs that can be locally administered, including oral delivery, to treat autoimmune disorders of the gastrointestinal tract. Janssen has the option to license drugs from us through the designation of a development candidate for up to three programs. Prior to option exercise we are responsible for the discovery activities to identify a development candidate. If Janssen exercises an option for one of the programs, it will be responsible for the global development, regulatory and commercial activities under that program. Under the terms of the agreement, we received $35 million in upfront payments, which we are amortizing through December 2018. We are eligible to receive an additional up to nearly $800 million in license fees and substantive milestone payments for these programs, including up to $175 million for the achievement of development milestones, up to $420 million for the achievement of regulatory milestones and up to $180 million for the achievement of commercialization milestones. In addition, we are eligible to receive tiered royalties up to the near teens on sales from any drugs resulting from this collaboration. From inception through September 2016, we received nearly $47 million in payments under this collaboration with Janssen, including the $10 million license fee we earned in July 2016 when Janssen licensed IONIS-JBI1-2.5 Rx which we recognized as revenue in the third quarter of 2016 During the three and nine months ended September 30, 2016, we earned revenue of $12.2 million and $16.6 million, respectively, from our relationship with Janssen, which represented 11 percent and nine percent, respectively, of our total revenue for those periods. In comparison, we earned revenue of $2.2 million and $6.6 million for the same periods in 2015, respectively, which represented four percent and three percent, respectively, of our total revenue for those periods. Our condensed consolidated balance sheet at September 30, 2016 included deferred revenue of $21.6 million related to our relationship with Janssen. Kastle Therapeutics In May 2016, we entered into an agreement with Kastle under which Kastle acquired the global rights to develop and commercialize Kynamro. Kynamro is approved in the United States for use in patients with homozygous familial hypercholesterolemia to reduce low density lipoprotein-cholesterol, apolipoprotein B, total cholesterol and non-high density lipoprotein-cholesterol as an adjunct to lipid lowering medications and diet. Under the terms of the agreement, we are eligible to receive up to $95 million, which includes the $15 million up-front payment we received in May 2016, a $10 million payment in May 2019 and up to $70 million in sales milestones. Beginning in 2017, we are eligible to earn tiered royalties on global sales of Kynamro that average in the mid to low teens. In addition, we also received a 10 percent common equity position in Kastle. Because realization of our equity position is uncertain, we recorded a full valuation allowance. Sanofi Genzyme will earn a three percent royalty on sales of Kynamro and three percent of non-royalty cash payments we receive from Kastle. During the nine months ended September 30, 2016, we earned revenue of $15 million from our relationship with Kastle, which represented eight percent of our total revenue for that period. |
Segment Information and Concent
Segment Information and Concentration of Business Risk | 9 Months Ended |
Sep. 30, 2016 | |
Segment Information and Concentration of Business Risk [Abstract] | |
Segment Information and Concentration of Business Risk | 7. Segment Information and Concentration of Business Risk We have two reportable segments Ionis Core and Akcea Therapeutics, our wholly owned subsidiary. Segment income (loss) from operations includes revenue less operating expenses attributable to each segment. In our Ionis Core segment we are exploiting a novel drug discovery platform we created to generate a broad pipeline of first-in-class or best-in-class drugs for us and our partners. Our Ionis Core segment generates revenue from a multifaceted partnering strategy. We formed Akcea to develop and commercialize drugs for patients with serious cardiometabolic diseases caused by lipid disorders. Moving our lipid drugs into a company that we own and control ensures that our core focus at Ionis remains on innovation while allowing us to maintain control over and retain more value from our lipid drugs. To date, Akcea has not earned any revenue. The following table shows our segment revenue and income (loss) from operations for the three and nine months ended September 30, 2016 and September 30, 2015 (in thousands), respectively. Three Months Ended September 30, 2016 Ionis Core Akcea Therapeutics Elimination of Intercompany Activity Total Revenue: Research and development $ 112,761 $ — $ (3,848 ) $ 108,913 Licensing and royalty 2,014 — — 2,014 Total segment revenue $ 114,775 $ — (3,848 ) $ 110,927 Income (loss) from operations $ 36,328 $ (20,250 ) $ 30 $ 16,108 Three Months Ended September 30, 2015 Ionis Core Akcea Therapeutics Elimination of Intercompany Activity Total Revenue: Research and development $ 50,511 $ — $ (1,593 ) $ 48,918 Licensing and royalty 203 — — 203 Total segment revenue $ 50,714 $ — (1,593 ) $ 49,121 Loss from operations $ (35,067 ) $ (13,101 ) $ 30 $ (48,138 ) Nine Months Ended September 30, 2016 Ionis Core Akcea Therapeutics Elimination of Intercompany Activity Total Revenue: Research and development $ 170,431 $ — $ (3,848 ) $ 166,583 Licensing and royalty 19,689 — — 19,689 Total segment revenue $ 190,120 $ — $ (3,848 ) $ 186,272 Loss from operations $ (36,465 ) $ (51,096 ) $ 90 $ (87,471 ) Nine Months Ended September 30, 2015 Ionis Core Akcea Therapeutics Elimination of Intercompany Activity Total Revenue: Research and development $ 232,062 $ — $ (1,593 ) $ 230,469 Licensing and royalty 1,664 — — 1,664 Total segment revenue $ 233,726 $ — $ (1,593 ) $ 232,133 Loss from operations $ 16,323 $ (29,054 ) $ (90 ) $ (12,821 ) The following table shows our total assets by segment at September 30, 2016 and December 31, 2015 (in thousands), respectively. Total Assets Ionis Core Akcea Therapeutics Elimination of Intercompany Activity Total September 30, 2016 $ 931,231 $ 62,009 $ (149,654 ) $ 843,586 December 31, 2015 $ 994,191 $ 66,068 $ (112,359 ) $ 947,900 We have historically funded our operations from collaborations with corporate partners and a relatively small number of partners have accounted for a significant percentage of our revenue. Revenue from significant partners, which is defined as ten percent or more of our total revenue, was as follows: Three Months Ended September 30, Nine Months Ended September 30, 2016 2015 2016 2015 Partner A 81 % 37 % 65 % 32 % Partner B 11 % 4 % 9 % 3 % Partner C 2 % 49 % 3 % 12 % Partner D 0 % 2 % 3 % 40 % Partner E 1 % 3 % 4 % 10 % Contracts receivables from one significant partner comprised approximately 95 percent of our contracts receivables at September 30, 2016. Contracts receivables from two significant partners comprised approximately 99 percent of our contracts receivables at December 31, 2015. |
Significant Accounting Polici15
Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2016 | |
Significant Accounting Policies [Abstract] | |
Revenue Recognition | Revenue Recognition We generally recognize revenue when we have satisfied all contractual obligations and are reasonably assured of collecting the resulting receivable. We are often entitled to bill our customers and receive payment from our customers in advance of recognizing the revenue. In the instances in which we have received payment from our customers in advance of recognizing revenue, we include the amounts in deferred revenue on our consolidated condensed balance sheet. Arrangements with multiple deliverables Our collaboration agreements typically contain multiple elements, or deliverables, including technology licenses or options to obtain technology licenses, research and development services, and in certain cases manufacturing services, and we allocate the consideration to each unit of accounting based on the relative selling price of each deliverable. Identifying deliverables and units of accounting We evaluate the deliverables in our collaboration agreements 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 our customer, we 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, in May 2015, we entered into an exclusive license agreement with Bayer to develop and commercialize IONIS-FXI Rx Rx Rx Rx The exclusive license we granted to Bayer to develop and commercialize IONIS-FXI Rx The development services we agreed to perform for IONIS-FXI Rx The initial supply of API. We determined that each of these three units of accounting have stand-alone value. The license we granted to Bayer has stand-alone value because it gives Bayer the exclusive right to develop IONIS-FXI Rx Measurement and allocation of arrangement consideration Our collaborations may provide for various types of payments to us including upfront payments, funding of research and development, milestone payments, licensing fees and royalties on product sales. We initially allocate the amount of consideration that is fixed and determinable at the time the agreement is entered into and exclude contingent consideration. We allocate the consideration to each unit of accounting based on the relative selling price of each deliverable. We use 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 recognize 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 recognize the revenue ratably over our estimated period of performance. We determined that the allocable arrangement consideration for the Bayer collaboration was $100 million and we allocated it based on the relative BESP of each unit of accounting. We engaged a third party, independent valuation expert to assist us with determining BESP. We estimated the selling price of the license granted for IONIS-FXI Rx Rx Estimated future product sales; Estimated royalties on future product sales; Contractual milestone payments; Expenses we expect to incur; Income taxes; and An appropriate discount rate. We estimated the selling price of the ongoing development services by using our internal estimates of the cost to perform the specific services and estimates of expected cash outflows to third parties for services and supplies over the expected period that we will perform the development services. The significant inputs we used to determine the selling price of the ongoing development services included: The number of internal hours we will spend performing these services; The estimated cost of work we will perform; The estimated cost of work that we will contract with third parties to perform; and The estimated cost of drug product we will use. We determine the selling price of our API consistently for all of our partnerships. On an annual basis, we calculate our fully absorbed cost to manufacture API. We then determine the unit price we will charge our partners by dividing our fully absorbed costs by the quantity of API we expect to produce during the year. For purposes of determining BESP of the services we will perform and the API in our Bayer transaction, accounting guidance required us to include a markup for a reasonable profit margin. Based on the units of accounting under the agreement, we allocated the $100 million upfront payment from Bayer as follows: $91.2 million to the IONIS-FXI Rx $4.3 million for ongoing development services; and $4.5 Assuming a constant selling price for the other elements in the arrangement, if there was an assumed ten percent increase or decrease in the estimated selling price of the IONIS-FXI Rx Rx Timing of revenue recognition We recognize revenue as we deliver each item under the arrangement and the related revenue is realizable and earned. For example, we recognized revenue for the exclusive license we granted Bayer for IONIS-FXI Rx The following are the periods over which we are recognizing revenue for each of our units of accounting under our Bayer agreement: We recognized the portion of the consideration attributed to the IONIS-FXI Rx We are recognizing the amount attributed to the ongoing development services for IONIS-FXI Rx We are recognizing the amount attributed to the API supply as we deliver it to Bayer. During the nine months ended September 30, 2016, we recognized $3.2 million related to a portion of the API we delivered to Bayer during the first nine months of 2016. Multiple agreements From time to time, we may enter into separate agreements at or near the same time with the same partner. We 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 2012 and 2013, we entered into four collaboration agreements with Biogen: In January 2012, we entered into a collaboration agreement with Biogen to develop and commercialize SPINRAZA (nusinersen) for spinal muscular atrophy, or SMA. As part of the collaboration, we received a $29 million upfront payment and we are responsible for global development of SPINRAZA through completion of Phase 2/3 clinical trials. In June 2012, we entered into a second and separate collaboration agreement with Biogen to develop and commercialize a novel antisense drug targeting DMPK, or dystrophia myotonica-protein kinase. As part of the collaboration, we received a $12 million upfront payment and we are responsible for global development of the drug through the completion of a Phase 2 clinical trial. In December 2012, we entered into a third and separate collaboration agreement with Biogen to discover and develop antisense drugs against three targets to treat neurological or neuromuscular disorders. As part of the collaboration, we received a $30 million upfront payment and we are responsible for the discovery of a lead antisense drug for each of three targets. In September 2013, we entered into a fourth and separate collaboration agreement with Biogen to leverage antisense technology to advance the treatment of neurological diseases. We granted Biogen exclusive rights to the use of our antisense technology to develop therapies for neurological diseases as part of this broad collaboration. We received a $100 million upfront payment and we are responsible for discovery and early development through the completion of a Phase 2 clinical trial for each antisense drug identified during the six-year term of this collaboration, while Biogen is responsible for the creation and development of small molecule treatments and biologics. Under our collaboration agreement, in July 2016, Biogen exercised its option to license SPINRAZA. Our other three collaboration agreements with Biogen give Biogen the option to license one or more drugs resulting from the specific collaboration. Similar to our collaboration agreement for SPINRAZA, if Biogen exercises an option, it will pay us a license fee and will assume future development, regulatory and commercialization responsibilities for the licensed drug. We are also eligible to receive milestone payments associated with the research and/or development of the drugs prior to licensing, milestone payments if Biogen achieves pre-specified regulatory milestones, and royalties on any product sales from any drugs resulting from these collaborations. We evaluated all four of the Biogen agreements to determine whether we should account for them as separate agreements. We determined that we should account for the agreements separately because we conducted the negotiations independently of one another, each agreement focuses on different drugs, there are no interrelated or interdependent deliverables, there are no provisions in any of these agreements that are essential to the other agreement, and the payment terms and fees under each agreement are independent of each other. Milestone payments Our collaborations often include contractual milestones, which typically relate to the achievement of pre-specified development, regulatory and/ or 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. Prior to the first stage in the life-cycle of our drugs, we perform a significant amount of work using our proprietary antisense technology to design chemical compounds that interact with specific genes that are good targets for drug discovery. From these research efforts, we hope to identify a development candidate. 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 partners 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 Food and Drug Administration, or 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 partner 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 our partner will market and sell the drug to patients. Although our partner will ultimately be responsible for marketing and selling the partnered drug, our efforts to discover and 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 partner 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. Generally, the milestone events contained in our partnership agreements 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 partnerships 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; 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 partnerships 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 partnerships 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 assess whether a substantive milestone exists at the inception of our agreements. When a substantive milestone is achieved, we recognize revenue related to the milestone payment immediately. For our existing licensing and collaboration agreements in which we are involved in the discovery and/or development of the related drug or provide the partner with access to new technologies we discover, we have determined that the majority of future development, regulatory and commercialization milestones are substantive. For example, we consider most of the milestones associated with our strategic alliance with Biogen substantive because we are using our antisense drug discovery platform to discover and develop new drugs against targets for neurological diseases. In evaluating if a milestone is substantive we 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 our performance or the occurrence of a specific outcome resulting from our 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; and The consideration is reasonable relative to all deliverables and payment terms in the arrangement. If any of these conditions are not met, we do not consider the milestone to be substantive and we defer recognition of the milestone payment and recognize it as revenue over our estimated period of performance, if any. Further information about our collaborative arrangements can be found in Note 6, Collaborative Arrangements and Licensing Agreements Option to license In several of our collaboration agreements, we provide our partner with an option to obtain a license to one or more of our drugs. When we have a multiple element arrangement that includes an option to obtain a license, we 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 consider an option substantive if, at the inception of the arrangement, we are at risk as to whether our collaborative 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. For example, in the third quarter of 2016, we recognized $85.0 million in license fee revenue when two of our partners, Biogen and Janssen, exercised their option to license two of our drugs, which under the respective agreements we concluded to be substantive options at inception. As these amounts relate to research and development collaboration arrangements, we include these amounts in research and development revenue under collaborative agreements on our statement of operations. Licensing and royalty revenue We often enter into agreements to license and sell our proprietary patent rights on an exclusive or non-exclusive basis in exchange for upfront fees, milestone payments and/or royalties. We generally recognize as revenue immediately those payments for which we have no significant future performance obligations and for which we are reasonably assured of collecting the resulting receivable. |
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 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 include net realized gains and losses in gain (loss) on investments. We use the specific identification method to determine the cost of securities sold. We have equity investments in privately and publicly held biotechnology companies that we have received as part of a technology license or collaboration agreement. At September 30, 2016, we held ownership interests of less than 20 percent in each of the respective companies. We account for our equity investments in publicly held companies at fair value and record unrealized gains and losses related to temporary increases and decreases in the stock of these publicly-held companies as a separate component of comprehensive income (loss). At September 30, 2016, we held equity investments in two publicly held companies, Antisense Therapeutics Limited and Regulus Therapeutics. We account for equity investments in privately held companies under the cost method of accounting because we own less than 20 percent and do not have significant influence over their operations. At September 30, 2016, we held two cost method investments in Atlantic Pharmaceuticals Limited and Kastle Therapeutics. Realization of our equity position in these private companies is uncertain. When realization of our investment is uncertain, we record a full valuation allowance. In determining if and when a decrease in market value below our cost in our equity positions is temporary or other-than-temporary, we examine historical trends in the stock price, the financial condition of the company, near term prospects of the company and our current need for cash. If we determine that a decline in value in either a public or private investment is other-than-temporary, we recognize an impairment loss in the period in which the other-than-temporary decline occurs. |
Inventory Valuation | Inventory valuation We capitalize the costs of raw materials that we purchase for use in producing our drugs because until we use these raw materials they have alternative future uses. We include in inventory raw material costs for drugs that we manufacture for our partners under contractual terms and that we use primarily in our clinical development activities and drug products. We can use each of our raw materials in multiple products and, as a result, each raw material has future economic value independent of the development status of any single drug. For example, if one of our drugs failed, we could use the raw materials for that drug to manufacture our other drugs. We expense these costs when we deliver the drugs to our partners, or as we provide these drugs for our own clinical trials. We reflect our inventory on the balance sheet at the lower of cost or market value under the first-in, first-out method, or FIFO. We review inventory periodically and reduce the carrying value of items we consider to be slow moving or obsolete to their estimated net realizable value. We consider several factors in estimating the net realizable value, including shelf life of raw materials, alternative uses for our drugs and clinical trial materials, and historical write-offs. We did not record any inventory write-offs for the nine months ended September 30, 2016 and 2015. Total inventory was $9.3 million and $6.9 million as of September 30, 2016 and December 31, 2015, respectively. |
Research, Development and Patent Expenses | Research, development and patent expenses Our research and development expenses include wages, benefits, facilities, supplies, external services, clinical trial and manufacturing costs and other expenses that are directly related to our research and development operations. We expense research and development costs as we incur them. When we make payments for research and development services prior to the services being rendered, we record those amounts as prepaid assets on our condensed consolidated balance sheet and we expense them as the services are provided. We capitalize costs consisting principally of outside legal costs and filing fees related to obtaining patents. We amortize patent costs over the useful life of the patent, beginning with the date the United States Patent and Trademark Office, or foreign equivalent, issues the patent. We review our capitalized patent costs regularly to ensure that they include costs for patents and patent applications that have future value. We evaluate patents and patent applications that we are not actively pursuing and write off any associated costs. We recorded charges primarily related to the write-down of intangible assets of $0.7 million and $0.1 million for the three months ended September 30, 2016 and 2015, respectively, and $1.1 million and $0.2 million for the nine months ended September 30, 2016 and 2015, respectively. |
Long-Lived Assets | Long-lived assets We evaluate long-lived assets, which include property, plant and equipment and patent costs acquired from third parties, for impairment on at least a quarterly basis and whenever events or changes in circumstances indicate that we may not be able to recover the carrying amount of such assets. |
Use of Estimates | Use of estimates The preparation of condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. Actual results could differ from those estimates. |
Basic and Diluted Net Income (Loss) per Share | Basic and diluted net income (loss) per share We compute basic net income (loss) per share by dividing the net income or loss by the weighted-average number of common shares outstanding during the period. For the nine months ended September 30, 2016 and the three and nine months ended September 30, 2015 we incurred a net loss, therefore we did not include dilutive common equivalent shares in the computation of diluted net loss per share because the effect would have been anti-dilutive. Common stock from the following would have had an anti-dilutive effect on net loss per share: Dilutive stock options; Unvested restricted stock units; Employee Stock Purchase Plan, or ESPP; 2¾ percent convertible senior notes; and 1 percent convertible senior notes. For the three months ended September 30, 2016, we had net income. As a result, we computed diluted net income per share using the weighted-average number of common shares and dilutive common equivalent shares outstanding during those periods. Diluted common equivalent shares for the three months ended September 30, 2016, consisted of the following (in thousands except per share amounts): Three months ended September 30, 2016 Income (Numerator) Shares (Denominator) Per-Share Amount Income available to common shareholders $ 7,351 120,989 $ 0.06 Effect of dilutive securities: Shares issuable upon exercise of stock options — 2,129 Shares issuable upon restricted stock award issuance — 202 Shares issuable related to our ESPP — 58 Income available to common shareholders, plus assumed conversions $ 7,351 123,378 $ 0.06 For the three months ended September 30, 2016, the calculation excludes the 2¾ percent notes and the 1 percent notes because the effect on diluted earnings per share would be anti-dilutive. |
Accumulated Other Comprehensive Income (Loss) | Accumulated other comprehensive income (loss) We include unrealized gains and losses on investments, net of taxes, in accumulated other comprehensive income (loss) along with adjustments we make to reclassify realized gains and losses on investments from other accumulated comprehensive income (loss) to our condensed consolidated statement of operations. The following table summarizes changes in accumulated other comprehensive income (loss) for the three and nine months ended September 30, 2016 and 2015 (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2016 2015 2016 2015 Beginning balance accumulated other comprehensive income (loss) $ (26,853 ) $ 18,411 $ (13,565 ) $ 39,747 Unrealized losses on securities (1) (170 ) (16,157 ) (13,458 ) (37,493 ) Amounts reclassified from accumulated other comprehensive income (loss) 525 (20,211 ) 525 (20,211 ) Net current period other comprehensive loss 355 (36,368 ) (12,933 ) (57,704 ) Ending balance accumulated other comprehensive loss $ (26,498 ) $ (17,957 ) $ (26,498 ) $ (17,957 ) (1) There was no tax expense or benefit for the three and nine months ended September 30, 2016 and 2015. |
Convertible Debt | Convertible debt We account for convertible debt instruments, including our 1 percent and 2¾ percent notes, that may be settled in cash upon conversion (including partial cash settlement) by separating the liability and equity components of the instruments in a manner that reflects our nonconvertible debt borrowing rate. We determine the carrying amount of the liability component by measuring the fair value of similar debt instruments that do not have the conversion feature. If no similar debt instrument exists, we estimate fair value by using assumptions that market participants would use in pricing a debt instrument, including market interest rates, credit standing, yield curves and volatilities. Determining the fair value of the debt component requires the use of accounting estimates and assumptions. These estimates and assumptions are judgmental in nature and could have a significant impact on the determination of the debt component, and the associated non-cash interest expense. We assigned a value to the debt component of our convertible notes equal to the estimated fair value of similar debt instruments without the conversion feature, which resulted in us recording our debt at a discount. At January 1, 2016, we adopted the amended accounting guidance to simplify the presentation of debt issuance costs. As a result of this amended guidance, we reclassed our debt issuance costs in all periods presented from other assets to the carrying amount of the related debt liability on our consolidated balance sheet. We are amortizing our debt issuance costs and debt discount over the life of the convertible notes as additional non-cash interest expense utilizing the effective interest method. |
Segment Information | Segment information We have two operating segments, our Ionis Core segment and Akcea Therapeutics, which includes the operations of our wholly-owned subsidiary, Akcea Therapeutics, Inc. We formed Akcea to develop and commercialize drugs for patients with serious cardiometabolic diseases caused by lipid disorders. We provide segment financial information and results for our Ionis Core segment and our Akcea Therapeutics segment based on the segregation of revenues and expenses that our chief decision maker reviews to assess operating performance and to make operating decisions. We use judgments and estimates in determining the allocation of shared expenses to the two segments. |
Stock-Based Compensation Expense | Stock-based compensation expense We measure stock-based compensation expense for equity-classified awards, principally related to stock options, restricted stock units, or RSUs, and stock purchase rights under our ESPP, 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 condensed consolidated statements of operations. We reduce stock-based compensation expense for estimated forfeitures at the time of grant and revise in subsequent periods if actual forfeitures differ from those estimates. We use the Black-Scholes model to estimate the fair value of stock options granted and stock purchase rights under our ESPP. The expected term of stock options granted represents the period of time that we expect them to be outstanding. We estimate the expected term of options granted based on historical exercise patterns. For the nine months ended September 30, 2016 and 2015, we used the following weighted-average assumptions in our Black-Scholes calculations: Employee Stock Options: Nine Months Ended September 30, 2016 2015 Risk-free interest rate 1.5% 1.5% Dividend yield 0.0% 0.0% Volatility 58.5% 53.7% Expected life 4.5 years 4.5 years ESPP: Nine Months Ended September 30, 2016 2015 Risk-free interest rate 0.4% 0.1% Dividend yield 0.0% 0.0% Volatility 86.4% 51.7% Expected life 6 months 6 months Board of Director Stock Options: Nine Months Ended September 30, 2016 2015 Risk-free interest rate 1.3 % 2.1 % Dividend yield 0.0 % 0.0 % Volatility 53.1 % 52.2 % Expected life 6.5 years 6.9 years The fair value of RSUs is based on the market price of our common stock on the date of grant. RSUs vest annually over a four-year period. The weighted-average grant date fair value of RSUs granted to employees and the members of our board of directors for the nine months ended September 30, 2016 was $42.94 and $24.42 per share, respectively. The following table summarizes stock-based compensation expense for the three and nine months ended September 30, 2016 and 2015 (in thousands). Our consolidated non-cash stock-based compensation expense includes $2.9 million and $1.3 million of stock-based compensation expense for Akcea employees for the three months ended September 30, 2016 and 2015, respectively, and $9.1 million and $2.8 million of stock-based compensation expense for Akcea employees for the nine months ended September 30, 2016 and 2015, respectively. Three Months Ended September 30, Nine Months Ended September 30, 2016 2015 2016 2015 Research, development and patent expenses $ 13,279 $ 11,297 $ 42,541 $ 32,248 General and administrative 4,307 3,700 14,409 9,659 Total non-cash stock-based compensation expense $ 17,586 $ 14,997 $ 56,950 $ 41,907 The amount of non-cash stock-based compensation expense we recognized in the first nine months of 2016 has increased compared to the same period in 2015 because the average fair value of unvested stock options has risen due to the increase in the exercise price of the stock options we have granted over the past several years. As of September 30, 2016, total unrecognized estimated non-cash stock-based compensation expense related to non-vested stock options and RSUs was $60.5 million and $17.3 million, respectively. 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 and RSUs over a weighted average amortization period of 1.3 years and 1.4 years, respectively. |
Impact of Recently Issued Accounting Standards | Impact of recently issued accounting standards In May 2014, the 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 in exchange for the goods or services. This 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 fiscal years, and interim periods within that year, 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. The guidance allows us to select one of two methods of adoption, either the full retrospective approach, meaning the guidance would be applied to all periods presented, or modified retrospective, meaning the cumulative effect of applying the guidance would be recognized as an adjustment to our opening accumulated deficit balance. We are currently determining the adoption method and the effects the adoption will have on our consolidated financial statements and disclosures. In August 2014, the FASB issued accounting guidance on how and when to disclose going-concern uncertainties in the financial statements. This guidance will require us to perform interim and annual assessments to determine our ability to continue as a going concern within one year from the date that we issue our financial statements. The guidance is effective for annual periods ending after December 15, 2016, and interim and annual periods thereafter. We will adopt this guidance for our year ended December 31, 2016. We do not expect this guidance to have any effect 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, except those accounted for under the equity method of accounting that have a readily determinable fair value, at 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 fiscal years, and interim periods within that year, 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 leasing, which requires us to record all leases 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 our leases are operating or financing leases, similar to current accounting guidance. We will record expense for operating type leases on a straight-line basis as an operating expense and we will record expense for finance type leases 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 our leases 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 statement of operations on a prospective basis. As we have a valuation allowance, this change will impact our net operating loss carryforward and our 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 our statement of cash flows for each period we present. 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 will adopt this guidance on January 1, 2017. We do not expect the amended guidance to have a significant impact on 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 lifetime expected credit loss, 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. |
Significant Accounting Polici16
Significant Accounting Policies (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Significant Accounting Policies [Abstract] | |
Basic and Diluted Net Income per Share | For the three months ended September 30, 2016, we had net income. As a result, we computed diluted net income per share using the weighted-average number of common shares and dilutive common equivalent shares outstanding during those periods. Diluted common equivalent shares for the three months ended September 30, 2016, consisted of the following (in thousands except per share amounts): Three months ended September 30, 2016 Income (Numerator) Shares (Denominator) Per-Share Amount Income available to common shareholders $ 7,351 120,989 $ 0.06 Effect of dilutive securities: Shares issuable upon exercise of stock options — 2,129 Shares issuable upon restricted stock award issuance — 202 Shares issuable related to our ESPP — 58 Income available to common shareholders, plus assumed conversions $ 7,351 123,378 $ 0.06 |
Changes in Accumulated Other Comprehensive Income (Loss) | We include unrealized gains and losses on investments, net of taxes, in accumulated other comprehensive income (loss) along with adjustments we make to reclassify realized gains and losses on investments from other accumulated comprehensive income (loss) to our condensed consolidated statement of operations. The following table summarizes changes in accumulated other comprehensive income (loss) for the three and nine months ended September 30, 2016 and 2015 (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2016 2015 2016 2015 Beginning balance accumulated other comprehensive income (loss) $ (26,853 ) $ 18,411 $ (13,565 ) $ 39,747 Unrealized losses on securities (1) (170 ) (16,157 ) (13,458 ) (37,493 ) Amounts reclassified from accumulated other comprehensive income (loss) 525 (20,211 ) 525 (20,211 ) Net current period other comprehensive loss 355 (36,368 ) (12,933 ) (57,704 ) Ending balance accumulated other comprehensive loss $ (26,498 ) $ (17,957 ) $ (26,498 ) $ (17,957 ) (1) There was no tax expense or benefit for the three and nine months ended September 30, 2016 and 2015. |
Significant Accounting Policies [Abstract] | |
Weighted-Average Assumptions - ESPP | ESPP: Nine Months Ended September 30, 2016 2015 Risk-free interest rate 0.4% 0.1% Dividend yield 0.0% 0.0% Volatility 86.4% 51.7% Expected life 6 months 6 months |
Stock-Based Compensation Expense | The following table summarizes stock-based compensation expense for the three and nine months ended September 30, 2016 and 2015 (in thousands). Our consolidated non-cash stock-based compensation expense includes $2.9 million and $1.3 million of stock-based compensation expense for Akcea employees for the three months ended September 30, 2016 and 2015, respectively, and $9.1 million and $2.8 million of stock-based compensation expense for Akcea employees for the nine months ended September 30, 2016 and 2015, respectively. Three Months Ended September 30, Nine Months Ended September 30, 2016 2015 2016 2015 Research, development and patent expenses $ 13,279 $ 11,297 $ 42,541 $ 32,248 General and administrative 4,307 3,700 14,409 9,659 Total non-cash stock-based compensation expense $ 17,586 $ 14,997 $ 56,950 $ 41,907 |
Employee Stock Options [Member] | |
Significant Accounting Policies [Abstract] | |
Weighted-Average Assumptions | We use the Black-Scholes model to estimate the fair value of stock options granted and stock purchase rights under our ESPP. The expected term of stock options granted represents the period of time that we expect them to be outstanding. We estimate the expected term of options granted based on historical exercise patterns. For the nine months ended September 30, 2016 and 2015, we used the following weighted-average assumptions in our Black-Scholes calculations: Employee Stock Options: Nine Months Ended September 30, 2016 2015 Risk-free interest rate 1.5% 1.5% Dividend yield 0.0% 0.0% Volatility 58.5% 53.7% Expected life 4.5 years 4.5 years |
Board of Director Stock Options [Member] | |
Significant Accounting Policies [Abstract] | |
Weighted-Average Assumptions | Board of Director Stock Options: Nine Months Ended September 30, 2016 2015 Risk-free interest rate 1.3 % 2.1 % Dividend yield 0.0 % 0.0 % Volatility 53.1 % 52.2 % Expected life 6.5 years 6.9 years |
Investments (Tables)
Investments (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Investments [Abstract] | |
Contract Maturity of Available-for-Sale Securities | The following table summarizes the contract maturity of the available-for-sale securities we held as of September 30, 2016: One year or less 54% After one year but within two years 28% After two years but within three and a half years 18% Total 100% |
Summary of Investments | The following is a summary of our investments (in thousands): Gross Unrealized September 30, 2016 Cost Gains Losses Other-Than- Temporary Impairment Loss Estimated Fair Value Available-for-sale securities: Corporate debt securities $ 195,953 $ 36 $ (152 ) $ — $ 195,837 Debt securities issued by U.S. government agencies 29,512 11 — — 29,523 Debt securities issued by the U.S. Treasury (2) 28,011 14 — — 28,025 Debt securities issued by states of the U.S. and political subdivisions of the states (2) 79,805 2 (119 ) — 79,688 Total securities with a maturity of one year or less 333,281 63 (271 ) — 333,073 Corporate debt securities 217,980 457 (713 ) — 217,724 Debt securities issued by U.S. government agencies 33,859 1 (33 ) — 33,827 Debt securities issued by states of the U.S. and political subdivisions of the states 36,169 24 (100 ) — 36,093 Total securities with a maturity of more than one year 288,008 482 (846 ) — 287,644 Total available-for-sale securities $ 621,289 $ 545 $ (1,117 ) $ — $ 620,717 Equity securities: Regulus Therapeutics Inc. $ 7,162 $ 2,745 $ — $ (525 ) $ 9,382 Total equity securities $ 7,162 $ 2,745 $ — $ (525 ) $ 9,382 Total available-for-sale and equity securities $ 628,451 $ 3,290 $ (1,117 ) $ (525 ) $ 630,099 Gross Unrealized December 31, 2015 Cost Gains Losses Estimated Fair Value Available-for-sale securities: Corporate debt securities $ 181,670 $ 5 $ (250 ) $ 181,425 Debt securities issued by U.S. government agencies 50,559 1 (19 ) 50,541 Debt securities issued by the U.S. Treasury 2,604 — (3 ) 2,601 Debt securities issued by states of the U.S. and political subdivisions of the states (2) 79,414 18 (88 ) 79,344 Total securities with a maturity of one year or less 314,247 24 (360 ) 313,911 Corporate debt securities 258,703 3 (1,705 ) 257,001 Debt securities issued by U.S. government agencies 38,956 — (244 ) 38,712 Debt securities issued by states of the U.S. and political subdivisions of the states 48,552 3 (243 ) 48,312 Total securities with a maturity of more than one year 346,211 6 (2,192 ) 344,025 Total available-for-sale securities $ 660,458 $ 30 $ (2,552 ) $ 657,936 Equity securities: Regulus Therapeutics Inc. $ 7,162 $ 17,630 $ — $ 24,792 Total equity securities $ 7,162 $ 17,630 $ — $ 24,792 Total available-for-sale and equity securities $ 667,620 $ 17,660 $ (2,552 ) $ 682,728 (1) Our available-for-sale securities are held at amortized cost. (2) Includes investments classified as cash equivalents on our condensed consolidated balance sheet. |
Temporarily Impaired Investments | Investments we consider to be temporarily impaired at September 30, 2016 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 162 $ 203,357 $ (470 ) $ 33,639 $ (395 ) $ 236,996 $ (865 ) Debt securities issued by U.S. government agencies 19 31,517 (33 ) — — 31,517 (33 ) Debt securities issued by states of the U.S. and political subdivisions of the states 117 63,551 (140 ) 16,979 (79 ) 80,530 (219 ) Total temporarily impaired securities 298 $ 298,425 $ (643 ) $ 50,618 $ (474 ) $ 349,043 $ (1,117 ) |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Fair Value Measurements [Abstract] | |
Assets Measured at Fair Value on a Recurring Basis | The following tables present the major security types we held at September 30, 2016 and December 31, 2015 that are regularly measured and carried at fair value. The tables segregate each security type by the level within the fair value hierarchy of the valuation techniques we utilized to determine the respective securities’ fair value (in thousands): At September 30, 2016 Quoted Prices in Active Markets (Level 1) Significant Other Observable Inputs (Level 2) Cash equivalents (1) $ 60,146 $ 60,146 $ — Corporate debt securities (2) 413,561 — 413,561 Debt securities issued by U.S. government agencies (2) 63,350 — 63,350 Debt securities issued by the U.S. Treasury (3) 28,025 28,025 — Debt securities issued by states of the U.S. and political subdivisions of the states (4) 115,781 — 115,781 Investment in Regulus Therapeutics Inc. 9,382 9,382 — Total $ 690,245 $ 97,553 $ 592,692 At December 31, 2015 Quoted Prices in Active Markets (Level 1) Significant Other Observable Inputs (Level 2) Cash equivalents (1) $ 88,902 $ 88,902 $ — Corporate debt securities (2) 438,426 — 438,426 Debt securities issued by U.S. government agencies (2) 89,253 — 89,253 Debt securities issued by the U.S. Treasury (2) 2,601 2,601 — Debt securities issued by states of the U.S. and political subdivisions of the states (4) 127,656 — 127,656 Investment in Regulus Therapeutics Inc. 24,792 24,792 — Total $ 771,630 $ 116,295 $ 655,335 (1) Included in cash and cash equivalents on our condensed consolidated balance sheet. (2) Included in short-term investments on our condensed consolidated balance sheet. (3) At September 30, 2016, $6.0 million was included in cash and cash equivalents on our condensed consolidated balance sheet, with the difference included in short-term investments on our condensed consolidated balance sheet. (4) At September 30, 2016 and December 31, 2015, $11.1 million and $7.5 million, respectively, were included in cash and cash equivalents on our condensed consolidated balance sheet, with the difference included in short-term investments on our condensed consolidated balance sheet. |
Segment Information and Conce19
Segment Information and Concentration of Business Risk (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Segment Information and Concentration of Business Risk [Abstract] | |
Segment Information | The following table shows our segment revenue and income (loss) from operations for the three and nine months ended September 30, 2016 and September 30, 2015 (in thousands), respectively. Three Months Ended September 30, 2016 Ionis Core Akcea Therapeutics Elimination of Intercompany Activity Total Revenue: Research and development $ 112,761 $ — $ (3,848 ) $ 108,913 Licensing and royalty 2,014 — — 2,014 Total segment revenue $ 114,775 $ — (3,848 ) $ 110,927 Income (loss) from operations $ 36,328 $ (20,250 ) $ 30 $ 16,108 Three Months Ended September 30, 2015 Ionis Core Akcea Therapeutics Elimination of Intercompany Activity Total Revenue: Research and development $ 50,511 $ — $ (1,593 ) $ 48,918 Licensing and royalty 203 — — 203 Total segment revenue $ 50,714 $ — (1,593 ) $ 49,121 Loss from operations $ (35,067 ) $ (13,101 ) $ 30 $ (48,138 ) Nine Months Ended September 30, 2016 Ionis Core Akcea Therapeutics Elimination of Intercompany Activity Total Revenue: Research and development $ 170,431 $ — $ (3,848 ) $ 166,583 Licensing and royalty 19,689 — — 19,689 Total segment revenue $ 190,120 $ — $ (3,848 ) $ 186,272 Loss from operations $ (36,465 ) $ (51,096 ) $ 90 $ (87,471 ) Nine Months Ended September 30, 2015 Ionis Core Akcea Therapeutics Elimination of Intercompany Activity Total Revenue: Research and development $ 232,062 $ — $ (1,593 ) $ 230,469 Licensing and royalty 1,664 — — 1,664 Total segment revenue $ 233,726 $ — $ (1,593 ) $ 232,133 Loss from operations $ 16,323 $ (29,054 ) $ (90 ) $ (12,821 ) The following table shows our total assets by segment at September 30, 2016 and December 31, 2015 (in thousands), respectively. Total Assets Ionis Core Akcea Therapeutics Elimination of Intercompany Activity Total September 30, 2016 $ 931,231 $ 62,009 $ (149,654 ) $ 843,586 December 31, 2015 $ 994,191 $ 66,068 $ (112,359 ) $ 947,900 |
Revenue from Significant Partners | We have historically funded our operations from collaborations with corporate partners and a relatively small number of partners have accounted for a significant percentage of our revenue. Revenue from significant partners, which is defined as ten percent or more of our total revenue, was as follows: Three Months Ended September 30, Nine Months Ended September 30, 2016 2015 2016 2015 Partner A 81 % 37 % 65 % 32 % Partner B 11 % 4 % 9 % 3 % Partner C 2 % 49 % 3 % 12 % Partner D 0 % 2 % 3 % 40 % Partner E 1 % 3 % 4 % 10 % |
Significant Accounting Polici20
Significant Accounting Policies, Revenue Recognition (Details) $ in Thousands | 1 Months Ended | 3 Months Ended | 9 Months Ended | ||||||
Sep. 30, 2013USD ($) | Dec. 31, 2012USD ($)Target | Jun. 30, 2012USD ($) | Jan. 31, 2012USD ($) | Sep. 30, 2016USD ($)PartnerDrug | Sep. 30, 2015USD ($) | Jun. 30, 2015USD ($)AccountingUnit | Sep. 30, 2016USD ($)AgreementCategoryStage | Sep. 30, 2015USD ($) | |
Revenue Recognition [Abstract] | |||||||||
Revenue earned | $ 110,927 | $ 49,121 | $ 186,272 | $ 232,133 | |||||
Number of categories of milestone events | Category | 3 | ||||||||
Number of stages of life-cycle of drugs | Stage | 3 | ||||||||
Number of partners that exercised option to license drugs | Partner | 2 | ||||||||
Number of drugs licensed under option in collaboration agreements | Drug | 2 | ||||||||
Biogen and Janssen [Member] | |||||||||
Revenue Recognition [Abstract] | |||||||||
Revenue earned | $ 85,000 | ||||||||
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 | $ 1,000,000 | ||||||||
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 | ||||||||
IONIS-FXI [Member] | |||||||||
Revenue Recognition [Abstract] | |||||||||
Upfront fee received | $ 100,000 | ||||||||
Number of units of accounting | AccountingUnit | 3 | ||||||||
Upfront payment allocated to exclusive license | $ 91,200 | ||||||||
Upfront payment allocated to ongoing development services | 4,300 | ||||||||
Upfront payment allocated to delivery of API | $ 4,500 | ||||||||
Assumed percentage change in estimated selling price | 10.00% | ||||||||
Percentage change in earned revenue based on assumed change in estimated selling price | 1.00% | ||||||||
Amount by which earned revenue would change based on assumed change in estimated selling price | $ 900 | ||||||||
Revenue earned | $ 3,200 | ||||||||
Collaboration Agreements [Member] | |||||||||
Revenue Recognition [Abstract] | |||||||||
Revenue earned | $ 90,200 | $ 18,100 | $ 120,900 | $ 75,100 | |||||
Number of collaboration agreements | Agreement | 4 | ||||||||
Number of remaining collaboration agreements with option to license drugs | Agreement | 3 | ||||||||
SPINRAZA [Member] | |||||||||
Revenue Recognition [Abstract] | |||||||||
Upfront payment recorded as deferred revenue | $ 29,000 | ||||||||
DMPK [Member] | |||||||||
Revenue Recognition [Abstract] | |||||||||
Upfront payment recorded as deferred revenue | $ 12,000 | ||||||||
Neurology [Member] | |||||||||
Revenue Recognition [Abstract] | |||||||||
Upfront payment recorded as deferred revenue | $ 30,000 | ||||||||
Number of targets | Target | 3 | ||||||||
Strategic Neurology [Member] | |||||||||
Revenue Recognition [Abstract] | |||||||||
Upfront payment recorded as deferred revenue | $ 100,000 | ||||||||
Term of collaboration agreement | 6 years |
Significant Accounting Polici21
Significant Accounting Policies, Investments and Inventory Valuation (Details) $ in Thousands | Sep. 30, 2016USD ($)Company | Dec. 31, 2015USD ($) |
Cash, Cash Equivalents, and Short-term Investments [Abstract] | ||
Number of publicly-held companies in which the entity has an equity ownership interest | 2 | |
Number of privately-held companies in which the entity has an equity ownership interest | 2 | |
Inventory Valuation [Abstract] | ||
Inventories | $ | $ 9,319 | $ 6,899 |
Significant Accounting Polici22
Significant Accounting Policies, Research, Development and Patent Expenses (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Patents [Member] | ||||
Research, Development and Patent Expenses [Abstract] | ||||
Write-down | $ 0.7 | $ 0.1 | $ 1.1 | $ 0.2 |
Significant Accounting Polici23
Significant Accounting Policies, Basic and Diluted Net Income (Loss) per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | Dec. 31, 2015 | |
Income (Numerator) [Abstract] | |||||
Income available to common shareholders | $ 7,351 | ||||
Effect of Diluted Securities [Abstract] | |||||
Shares exercisable upon exercise of stock options | 0 | ||||
Shares issuable upon restricted stock award issuance | 0 | ||||
Shares issuable related to our ESPP | 0 | ||||
Income available to common shareholders, plus assumed conversions | $ 7,351 | ||||
Shares (Denominator) [Abstract] | |||||
Shares used in computing basic net income per share (in shares) | 120,989 | 119,979 | 120,795 | 119,348 | |
Effect of Diluted Securities [Abstract] | |||||
Shares issuable upon exercise of stock options (in shares) | 2,129 | ||||
Shares issuable upon restricted stock award issuance (in shares) | 202 | ||||
Shares issuable related to our ESPP (in shares) | 58 | ||||
Shares used in computing diluted net income per share (in shares) | 123,378 | 119,979 | 120,795 | 119,348 | |
Per-Share Amount [Abstract] | |||||
Basic net income (loss) per share (in dollars per share) | $ 0.06 | $ (0.30) | $ (0.93) | $ (0.14) | |
Diluted net income (loss) per share (in dollars per share) | $ 0.06 | $ (0.30) | $ (0.93) | $ (0.14) | |
2 3/4 Percent Convertible Senior Notes [Member] | |||||
Basic and Diluted Net Loss per Share [Abstract] | |||||
Interest rate on convertible senior notes | 2.75% | 2.75% | 2.75% | 2.75% | 2.75% |
1 Percent Convertible Senior Notes [Member] | |||||
Basic and Diluted Net Loss per Share [Abstract] | |||||
Interest rate on convertible senior notes | 1.00% | 1.00% | 1.00% | 1.00% | 1.00% |
Significant Accounting Polici24
Significant Accounting Policies, Accumulated Other Comprehensive Income (Loss) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | ||
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | |||||
Beginning balance | $ 200,790 | ||||
Ending balance | $ 139,639 | 139,639 | |||
Accumulated Other Comprehensive Income (Loss) [Member] | |||||
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | |||||
Beginning balance | (26,853) | $ 18,411 | (13,565) | $ 39,747 | |
Ending balance | (26,498) | (17,957) | (26,498) | (17,957) | |
Unrealized Losses on Securities [Member] | |||||
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | |||||
Other comprehensive loss before reclassifications, net of tax | [1] | (170) | (16,157) | (13,458) | (37,493) |
Amounts reclassified from accumulated other comprehensive income (loss) | 525 | (20,211) | 525 | (20,211) | |
Net current period other comprehensive loss | 355 | (36,368) | (12,933) | (57,704) | |
Income tax benefit included in other comprehensive income | $ 0 | $ 0 | $ 0 | $ 0 | |
[1] | There was no tax expense or benefit for the three and nine months ended September 30, 2016 and 2015. |
Significant Accounting Polici25
Significant Accounting Policies, Convertible Debt and Segment Information (Details) - Segment | 9 Months Ended | ||
Sep. 30, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | |
Segment Information [Abstract] | |||
Number of operating segments | 2 | ||
1 Percent Convertible Senior Notes [Member] | |||
Convertible Debt [Abstract] | |||
Interest rate on convertible senior notes | 1.00% | 1.00% | 1.00% |
2 3/4 Percent Convertible Senior Notes [Member] | |||
Convertible Debt [Abstract] | |||
Interest rate on convertible senior notes | 2.75% | 2.75% | 2.75% |
Significant Accounting Polici26
Significant Accounting Policies, Stock-Based Compensation Expense - Weighted-Average Assumptions (Details) | 9 Months Ended | |
Sep. 30, 2016 | Sep. 30, 2015 | |
Employee Stock Options [Member] | ||
Weighted-Average Assumptions [Abstract] | ||
Risk-free interest rate | 1.50% | 1.50% |
Dividend yield | 0.00% | 0.00% |
Volatility | 58.50% | 53.70% |
Expected life | 4 years 6 months | 4 years 6 months |
ESPP [Member] | ||
Weighted-Average Assumptions [Abstract] | ||
Risk-free interest rate | 0.40% | 0.10% |
Dividend yield | 0.00% | 0.00% |
Volatility | 86.40% | 51.70% |
Expected life | 6 months | 6 months |
Board of Director Stock Options [Member] | ||
Weighted-Average Assumptions [Abstract] | ||
Risk-free interest rate | 1.30% | 2.10% |
Dividend yield | 0.00% | 0.00% |
Volatility | 53.10% | 52.20% |
Expected life | 6 years 6 months | 6 years 10 months 24 days |
Significant Accounting Polici27
Significant Accounting Policies, Stock-Based Compensation Expense (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Stock-based Compensation Expense [Abstract] | ||||
Non-cash stock-based compensation expense | $ 17,586 | $ 14,997 | $ 56,950 | $ 41,907 |
Stock Options [Member] | ||||
Unrecognized Compensation Expense [Abstract] | ||||
Unrecognized compensation expense related to non-vested stock options | 60,500 | $ 60,500 | ||
Weighted average period for recognition | 1 year 3 months 18 days | |||
RSUs [Member] | ||||
Stock-based Compensation Expense [Abstract] | ||||
Vesting period | 4 years | |||
Unrecognized Compensation Expense [Abstract] | ||||
Unrecognized compensation cost related to non-vested RSUs | 17,300 | $ 17,300 | ||
Weighted average period for recognition | 1 year 4 months 24 days | |||
RSUs [Member] | Employees [Member] | ||||
Stock-based Compensation Expense [Abstract] | ||||
Weighted-average grant date fair value (in dollars per share) | $ 42.94 | |||
RSUs [Member] | Board of Directors [Member] | ||||
Stock-based Compensation Expense [Abstract] | ||||
Weighted-average grant date fair value (in dollars per share) | $ 24.42 | |||
Research, Development and Patent Expenses [Member] | ||||
Stock-based Compensation Expense [Abstract] | ||||
Non-cash stock-based compensation expense | 13,279 | 11,297 | $ 42,541 | 32,248 |
General and Administrative [Member] | ||||
Stock-based Compensation Expense [Abstract] | ||||
Non-cash stock-based compensation expense | 4,307 | 3,700 | 14,409 | 9,659 |
Akcea Therapeutics [Member] | ||||
Stock-based Compensation Expense [Abstract] | ||||
Non-cash stock-based compensation expense | $ 2,900 | $ 1,300 | $ 9,100 | $ 2,800 |
Investments, Contract Maturity
Investments, Contract Maturity of Available-for-Sale Securities (Details) | Sep. 30, 2016Company |
Contract Maturity of Available-for-Sale Securities [Abstract] | |
One year or less | 54.00% |
After one year but within two years | 28.00% |
After two years but within three and a half years | 18.00% |
Total | 100.00% |
Percentage of available-for-sale securities with a maturity of less than two years | 82.00% |
Ownership Interests in Private and Public Companies [Abstract] | |
Number of privately-held companies in which the entity has an equity ownership interest of less than 20% | 2 |
Number of publicly-held companies in which the entity has an equity ownership interest of less than 20% | 2 |
Investments, Summary of Investm
Investments, Summary of Investments (Details) - USD ($) $ in Thousands | Sep. 30, 2016 | Dec. 31, 2015 | ||
Summary of Investments [Abstract] | ||||
Cost | $ 628,451 | $ 667,620 | ||
Gross unrealized gains | 3,290 | 17,660 | ||
Gross unrealized losses | (1,117) | (2,552) | ||
Other-than-temporary impairment loss | (525) | |||
Estimated fair value | 630,099 | 682,728 | ||
Available-for-sale Securities [Member] | ||||
Summary of Investments [Abstract] | ||||
Cost | [1] | 621,289 | 660,458 | |
Gross unrealized gains | 545 | 30 | ||
Gross unrealized losses | (1,117) | (2,552) | ||
Other-than-temporary impairment loss | 0 | |||
Estimated fair value | 620,717 | 657,936 | ||
Available-for-sale Securities [Member] | Securities with Maturity of One Year or Less [Member] | ||||
Summary of Investments [Abstract] | ||||
Cost | [1] | 333,281 | 314,247 | |
Gross unrealized gains | 63 | 24 | ||
Gross unrealized losses | (271) | (360) | ||
Other-than-temporary impairment loss | 0 | |||
Estimated fair value | 333,073 | 313,911 | ||
Available-for-sale Securities [Member] | Securities with Maturity of More than One Year [Member] | ||||
Summary of Investments [Abstract] | ||||
Cost | [1] | 288,008 | 346,211 | |
Gross unrealized gains | 482 | 6 | ||
Gross unrealized losses | (846) | (2,192) | ||
Other-than-temporary impairment loss | 0 | |||
Estimated fair value | 287,644 | 344,025 | ||
Corporate Debt Securities [Member] | Securities with Maturity of One Year or Less [Member] | ||||
Summary of Investments [Abstract] | ||||
Cost | [1] | 195,953 | 181,670 | |
Gross unrealized gains | 36 | 5 | ||
Gross unrealized losses | (152) | (250) | ||
Other-than-temporary impairment loss | 0 | |||
Estimated fair value | 195,837 | 181,425 | ||
Corporate Debt Securities [Member] | Securities with Maturity of More than One Year [Member] | ||||
Summary of Investments [Abstract] | ||||
Cost | [1] | 217,980 | 258,703 | |
Gross unrealized gains | 457 | 3 | ||
Gross unrealized losses | (713) | (1,705) | ||
Other-than-temporary impairment loss | 0 | |||
Estimated fair value | 217,724 | 257,001 | ||
Debt Securities issued by U.S. Government Agencies [Member] | Securities with Maturity of One Year or Less [Member] | ||||
Summary of Investments [Abstract] | ||||
Cost | [1] | 29,512 | 50,559 | |
Gross unrealized gains | 11 | 1 | ||
Gross unrealized losses | 0 | (19) | ||
Other-than-temporary impairment loss | 0 | |||
Estimated fair value | 29,523 | 50,541 | ||
Debt Securities issued by U.S. Government Agencies [Member] | Securities with Maturity of More than One Year [Member] | ||||
Summary of Investments [Abstract] | ||||
Cost | [1] | 33,859 | 38,956 | |
Gross unrealized gains | 1 | 0 | ||
Gross unrealized losses | (33) | (244) | ||
Other-than-temporary impairment loss | 0 | |||
Estimated fair value | 33,827 | 38,712 | ||
Debt Securities issued by the U.S. Treasury [Member] | Securities with Maturity of One Year or Less [Member] | ||||
Summary of Investments [Abstract] | ||||
Cost | [1] | 28,011 | [2] | 2,604 |
Gross unrealized gains | 14 | 0 | ||
Gross unrealized losses | 0 | (3) | ||
Other-than-temporary impairment loss | 0 | |||
Estimated fair value | 28,025 | 2,601 | ||
Debt Securities issued by States of the U.S. and Political Subdivisions of the States [Member] | Securities with Maturity of One Year or Less [Member] | ||||
Summary of Investments [Abstract] | ||||
Cost | [1],[2] | 79,805 | 79,414 | |
Gross unrealized gains | 2 | 18 | ||
Gross unrealized losses | (119) | (88) | ||
Other-than-temporary impairment loss | 0 | |||
Estimated fair value | 79,688 | 79,344 | ||
Debt Securities issued by States of the U.S. and Political Subdivisions of the States [Member] | Securities with Maturity of More than One Year [Member] | ||||
Summary of Investments [Abstract] | ||||
Cost | [1] | 36,169 | 48,552 | |
Gross unrealized gains | 24 | 3 | ||
Gross unrealized losses | (100) | (243) | ||
Other-than-temporary impairment loss | 0 | |||
Estimated fair value | 36,093 | 48,312 | ||
Equity Securities [Member] | ||||
Summary of Investments [Abstract] | ||||
Cost | 7,162 | 7,162 | ||
Gross unrealized gains | 2,745 | 17,630 | ||
Gross unrealized losses | 0 | 0 | ||
Other-than-temporary impairment loss | (525) | |||
Estimated fair value | 9,382 | 24,792 | ||
Regulus Therapeutics Inc. [Member] | ||||
Summary of Investments [Abstract] | ||||
Cost | 7,162 | 7,162 | ||
Gross unrealized gains | 2,745 | 17,630 | ||
Gross unrealized losses | 0 | 0 | ||
Other-than-temporary impairment loss | (525) | |||
Estimated fair value | $ 9,382 | $ 24,792 | ||
[1] | Our available-for-sale securities are held at amortized cost. | |||
[2] | Includes investments classified as cash equivalents on our condensed consolidated balance sheet. |
Investments, Investments Tempor
Investments, Investments Temporarily Impaired (Details) $ in Thousands | Sep. 30, 2016USD ($)Investment |
Temporarily Impaired Investments [Abstract] | |
Number of investments | Investment | 298 |
Estimated fair value, less than 12 months of temporary impairment | $ 298,425 |
Unrealized losses, less than 12 months of temporary impairment | (643) |
Estimated fair value, more than 12 months of temporary impairment | 50,618 |
Unrealized losses, more than 12 months of temporary impairment | (474) |
Estimated fair value, total temporary impairment | 349,043 |
Unrealized losses, total temporary impairment | $ (1,117) |
Corporate Debt Securities [Member] | |
Temporarily Impaired Investments [Abstract] | |
Number of investments | Investment | 162 |
Estimated fair value, less than 12 months of temporary impairment | $ 203,357 |
Unrealized losses, less than 12 months of temporary impairment | (470) |
Estimated fair value, more than 12 months of temporary impairment | 33,639 |
Unrealized losses, more than 12 months of temporary impairment | (395) |
Estimated fair value, total temporary impairment | 236,996 |
Unrealized losses, total temporary impairment | $ (865) |
Debt Securities issued by U.S. Government Agencies [Member] | |
Temporarily Impaired Investments [Abstract] | |
Number of investments | Investment | 19 |
Estimated fair value, less than 12 months of temporary impairment | $ 31,517 |
Unrealized losses, less than 12 months of temporary impairment | (33) |
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 | 31,517 |
Unrealized losses, total temporary impairment | $ (33) |
Debt Securities issued by States of the U.S. and Political Subdivisions of the States [Member] | |
Temporarily Impaired Investments [Abstract] | |
Number of investments | Investment | 117 |
Estimated fair value, less than 12 months of temporary impairment | $ 63,551 |
Unrealized losses, less than 12 months of temporary impairment | (140) |
Estimated fair value, more than 12 months of temporary impairment | 16,979 |
Unrealized losses, more than 12 months of temporary impairment | (79) |
Estimated fair value, total temporary impairment | 80,530 |
Unrealized losses, total temporary impairment | $ (219) |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - USD ($) $ in Thousands | Sep. 30, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | |||
Fair Value Measurements [Abstract] | ||||||
Transfers from Level 1 to Level 2 | $ 0 | |||||
Transfers from Level 2 to Level 1 | 0 | |||||
Fair Value Measurements [Abstract] | ||||||
Available-for-sale securities | 630,099 | $ 682,728 | ||||
Investment in Regulus Therapeutics Inc. | $ 9,382 | $ 24,792 | ||||
1 Percent Convertible Senior Notes [Member] | ||||||
Fair Value Measurements [Abstract] | ||||||
Interest rate on convertible senior notes | 1.00% | 1.00% | 1.00% | |||
Fair value of convertible notes | $ 467,200 | |||||
2 3/4 Percent Convertible Senior Notes [Member] | ||||||
Fair Value Measurements [Abstract] | ||||||
Interest rate on convertible senior notes | 2.75% | 2.75% | 2.75% | |||
Fair value of convertible notes | $ 137,300 | |||||
Recurring Basis [Member] | ||||||
Fair Value Measurements [Abstract] | ||||||
Cash equivalents | [1] | 60,146 | $ 88,902 | |||
Investment in Regulus Therapeutics Inc. | 9,382 | 24,792 | ||||
Total assets | 690,245 | 771,630 | ||||
Recurring Basis [Member] | Corporate Debt Securities [Member] | ||||||
Fair Value Measurements [Abstract] | ||||||
Available-for-sale securities | [2] | 413,561 | 438,426 | |||
Recurring Basis [Member] | Corporate Debt Securities [Member] | Cash and Cash Equivalents [Member] | ||||||
Fair Value Measurements [Abstract] | ||||||
Available-for-sale securities | 6,000 | |||||
Recurring Basis [Member] | Debt Securities issued by U.S. Government Agencies [Member] | ||||||
Fair Value Measurements [Abstract] | ||||||
Available-for-sale securities | [2] | 63,350 | 89,253 | |||
Recurring Basis [Member] | Debt Securities issued by the U.S. Treasury [Member] | ||||||
Fair Value Measurements [Abstract] | ||||||
Available-for-sale securities | 28,025 | [3] | 2,601 | [2] | ||
Recurring Basis [Member] | Debt Securities issued by States of the U.S. and Political Subdivisions of the States [Member] | ||||||
Fair Value Measurements [Abstract] | ||||||
Available-for-sale securities | [4] | 115,781 | 127,656 | |||
Recurring Basis [Member] | Debt Securities issued by States of the U.S. and Political Subdivisions of the States [Member] | Cash and Cash Equivalents [Member] | ||||||
Fair Value Measurements [Abstract] | ||||||
Available-for-sale securities | 11,100 | 7,500 | ||||
Recurring Basis [Member] | Quoted Prices in Active Markets (Level 1) [Member] | ||||||
Fair Value Measurements [Abstract] | ||||||
Cash equivalents | 60,146 | 88,902 | ||||
Investment in Regulus Therapeutics Inc. | 9,382 | 24,792 | ||||
Total assets | 97,553 | 116,295 | ||||
Recurring Basis [Member] | Quoted Prices in Active Markets (Level 1) [Member] | Corporate Debt Securities [Member] | ||||||
Fair Value Measurements [Abstract] | ||||||
Available-for-sale securities | 0 | 0 | ||||
Recurring Basis [Member] | Quoted Prices in Active Markets (Level 1) [Member] | Debt Securities issued by U.S. Government Agencies [Member] | ||||||
Fair Value Measurements [Abstract] | ||||||
Available-for-sale securities | 0 | 0 | ||||
Recurring Basis [Member] | Quoted Prices in Active Markets (Level 1) [Member] | Debt Securities issued by the U.S. Treasury [Member] | ||||||
Fair Value Measurements [Abstract] | ||||||
Available-for-sale securities | 28,025 | 2,601 | ||||
Recurring Basis [Member] | Quoted Prices in Active Markets (Level 1) [Member] | Debt Securities issued by States of the U.S. and Political Subdivisions of the States [Member] | ||||||
Fair Value Measurements [Abstract] | ||||||
Available-for-sale securities | 0 | 0 | ||||
Recurring Basis [Member] | Significant Other Observable Inputs (Level 2) [Member] | ||||||
Fair Value Measurements [Abstract] | ||||||
Cash equivalents | 0 | 0 | ||||
Investment in Regulus Therapeutics Inc. | 0 | 0 | ||||
Total assets | 592,692 | 655,335 | ||||
Recurring Basis [Member] | Significant Other Observable Inputs (Level 2) [Member] | Corporate Debt Securities [Member] | ||||||
Fair Value Measurements [Abstract] | ||||||
Available-for-sale securities | 413,561 | 438,426 | ||||
Recurring Basis [Member] | Significant Other Observable Inputs (Level 2) [Member] | Debt Securities issued by U.S. Government Agencies [Member] | ||||||
Fair Value Measurements [Abstract] | ||||||
Available-for-sale securities | 63,350 | 89,253 | ||||
Recurring Basis [Member] | Significant Other Observable Inputs (Level 2) [Member] | Debt Securities issued by the U.S. Treasury [Member] | ||||||
Fair Value Measurements [Abstract] | ||||||
Available-for-sale securities | 0 | 0 | ||||
Recurring Basis [Member] | Significant Other Observable Inputs (Level 2) [Member] | Debt Securities issued by States of the U.S. and Political Subdivisions of the States [Member] | ||||||
Fair Value Measurements [Abstract] | ||||||
Available-for-sale securities | 115,781 | 127,656 | ||||
Recurring Basis [Member] | Significant Unobservable Inputs (Level 3) [Member] | ||||||
Fair Value Measurements [Abstract] | ||||||
Total assets | $ 0 | $ 0 | ||||
[1] | Included in cash and cash equivalents on our condensed consolidated balance sheet. | |||||
[2] | Included in short-term investments on our condensed consolidated balance sheet. | |||||
[3] | At September 30, 2016, $6.0 million was included in cash and cash equivalents on our condensed consolidated balance sheet, with the difference included in short-term investments on our condensed consolidated balance sheet. | |||||
[4] | At September 30, 2016 and December 31, 2015, $11.1 million and $7.5 million, respectively, were included in cash and cash equivalents on our condensed consolidated balance sheet, with the difference included in short-term investments on our condensed consolidated balance sheet. |
Line of Credit Arrangement (Det
Line of Credit Arrangement (Details) $ in Millions | 9 Months Ended |
Sep. 30, 2016USD ($) | |
Fixed Rate Note [Member] | |
Note Payable [Abstract] | |
Amount of borrowings converted | $ 12.5 |
Interest rate | 2.31% |
Maturity date | Sep. 30, 2019 |
Morgan Stanley [Member] | Revolving Line of Credit [Member] | |
Line of Credit Arrangement [Abstract] | |
Term of agreement | 5 years |
Maximum borrowing capacity | $ 30 |
Commitment fee percentage on unused capacity beginning after June 2016 | 0.25% |
Outstanding borrowings | $ 12.5 |
Morgan Stanley [Member] | Revolving Line of Credit [Member] | LIBOR [Member] | |
Line of Credit Arrangement [Abstract] | |
Term of variable rate | 1 month |
Basis spread on variable rate | 1.25% |
Term of fixed rate elected | one, two, three, four, six, or twelve months |
Collaborative Arrangements an33
Collaborative Arrangements and Licensing Agreements, Strategic Partnership - Biogen (SPINRAZA) (Details) $ in Thousands | 1 Months Ended | 3 Months Ended | 9 Months Ended | |||
Jul. 31, 2016USD ($) | Jan. 31, 2012USD ($) | Sep. 30, 2016USD ($) | Sep. 30, 2015USD ($) | Sep. 30, 2016USD ($)AgreementDrug | Sep. 30, 2015USD ($) | |
Collaborative Arrangement and Licensing Agreement [Abstract] | ||||||
Revenue earned | $ 110,927 | $ 49,121 | $ 186,272 | $ 232,133 | ||
Biogen [Member] | ||||||
Collaborative Arrangement and Licensing Agreement [Abstract] | ||||||
Revenue earned | 75,000 | |||||
Collaboration Agreements [Member] | ||||||
Collaborative Arrangement and Licensing Agreement [Abstract] | ||||||
Number of strategic collaboration agreements | Agreement | 4 | |||||
Number of drugs in clinical development to treat neurological diseases | Drug | 6 | |||||
Number of drugs in clinical development to treat undisclosed neurodegenerative diseases | Drug | 3 | |||||
Number of collaboration agreements with substantive changes | Agreement | 2 | |||||
Revenue earned | 90,200 | $ 18,100 | $ 120,900 | $ 75,100 | ||
SPINRAZA [Member] | ||||||
Collaborative Arrangement and Licensing Agreement [Abstract] | ||||||
License fee received | $ 75,000 | |||||
Upfront payment recorded as deferred revenue | $ 29,000 | |||||
Maximum amount of payments receivable for license fee and substantive milestones | 346,000 | 346,000 | ||||
Maximum amount of payments receivable for development milestones | 121,000 | 121,000 | ||||
Maximum amount of payments receivable for regulatory milestones | 150,000 | 150,000 | ||||
Milestone payments earned | 11,500 | |||||
SPINRAZA [Member] | Minimum [Member] | ||||||
Collaborative Arrangement and Licensing Agreement [Abstract] | ||||||
Cumulative payments received | 235,000 | 235,000 | ||||
SPINRAZA [Member] | Maximum [Member] | ||||||
Collaborative Arrangement and Licensing Agreement [Abstract] | ||||||
Next prospective milestone | $ 60,000 | $ 60,000 |
Collaborative Arrangements an34
Collaborative Arrangements and Licensing Agreements, Strategic Partnership - Biogen (Neurology) (Details) $ in Thousands | 1 Months Ended | 3 Months Ended | 9 Months Ended | |||
Feb. 29, 2016USD ($) | Dec. 31, 2012USD ($)TargetProgram | Sep. 30, 2016USD ($) | Sep. 30, 2015USD ($) | Sep. 30, 2016USD ($) | Sep. 30, 2015USD ($) | |
Collaborative Arrangement and Licensing Agreement [Abstract] | ||||||
Revenue earned | $ 110,927 | $ 49,121 | $ 186,272 | $ 232,133 | ||
Neurology [Member] | ||||||
Collaborative Arrangement and Licensing Agreement [Abstract] | ||||||
Number of targets | Target | 3 | |||||
Number of programs under which drugs are to be developed and commercialized | Program | 3 | |||||
Upfront payment recorded as deferred revenue | $ 30,000 | |||||
Maximum amount of payment receivable per program | 259,000 | 259,000 | ||||
Maximum amount of payments receivable per drug or program for development milestones | 59,000 | 59,000 | ||||
Maximum amount of payments receivable per drug or program for regulatory milestones | 130,000 | 130,000 | ||||
Cumulative payments received | 43,000 | 43,000 | ||||
Next prospective milestone | 10,000 | 10,000 | ||||
Neurology [Member] | IONIS-BIIB4 [Member] | ||||||
Collaborative Arrangement and Licensing Agreement [Abstract] | ||||||
Milestone payment earned | $ 3,000 | |||||
Collaboration Agreements [Member] | ||||||
Collaborative Arrangement and Licensing Agreement [Abstract] | ||||||
Revenue earned | 90,200 | $ 18,100 | 120,900 | $ 75,100 | ||
Deferred revenue | $ 73,100 | $ 73,100 | ||||
Collaboration Agreements [Member] | Revenue [Member] | Strategic Partner [Member] | ||||||
Collaborative Arrangement and Licensing Agreement [Abstract] | ||||||
Concentration percentage | 81.00% | 37.00% | 65.00% | 32.00% |
Collaborative Arrangements an35
Collaborative Arrangements and Licensing Agreements, Research, Development and Commercialization Partners - GSK (Details) $ in Thousands | 1 Months Ended | 3 Months Ended | 9 Months Ended | |||
Mar. 31, 2010USD ($) | Sep. 30, 2016USD ($) | Mar. 31, 2016USD ($) | Sep. 30, 2015USD ($) | Sep. 30, 2016USD ($)Drug | Sep. 30, 2015USD ($) | |
Collaborative Arrangement and Licensing Agreement [Abstract] | ||||||
Revenue earned | $ 110,927 | $ 49,121 | $ 186,272 | $ 232,133 | ||
Agreement Entered into in March 2010 [Member] | ||||||
Collaborative Arrangement and Licensing Agreement [Abstract] | ||||||
Number of drugs currently in development | Drug | 5 | |||||
Upfront payment recorded as deferred revenue | $ 38,000 | |||||
Minimum amount of payments receivable | 1,000,000 | $ 1,000,000 | ||||
Maximum amount of payments receivable for development milestones | 168,500 | 168,500 | ||||
Maximum amount of payments receivable for regulatory milestones | 363,500 | 363,500 | ||||
Maximum amount of payments receivable for commercialization milestones | 338,000 | 338,000 | ||||
Revenue earned | 1,200 | $ 1,600 | 8,200 | $ 22,400 | ||
Deferred revenue | $ 4,700 | $ 4,700 | ||||
Agreement Entered into in March 2010 [Member] | Revenue [Member] | Strategic Partner [Member] | ||||||
Collaborative Arrangement and Licensing Agreement [Abstract] | ||||||
Concentration percentage | 1.00% | 3.00% | 4.00% | 10.00% | ||
Agreement Entered into in March 2010 [Member] | Minimum [Member] | ||||||
Collaborative Arrangement and Licensing Agreement [Abstract] | ||||||
Cumulative payments received | $ 154,000 | $ 154,000 | ||||
Agreement Entered into in March 2010 [Member] | Maximum [Member] | ||||||
Collaborative Arrangement and Licensing Agreement [Abstract] | ||||||
Next prospective milestone | 1,500 | 1,500 | ||||
Agreement Entered into in March 2010 [Member] | IONIS-TTR [Member] | ||||||
Collaborative Arrangement and Licensing Agreement [Abstract] | ||||||
Cumulative payments received | $ 60,000 | $ 60,000 | ||||
Agreement Entered into in March 2010 [Member] | IONIS-HBV, IONIS-HBV-L, IONIS-GSK4-L, and IONIS-RHO-2.5 [Member] | ||||||
Collaborative Arrangement and Licensing Agreement [Abstract] | ||||||
Number of drugs currently in development | Drug | 4 | |||||
Agreement Entered into in March 2010 [Member] | IONIS-HBV and IONIS-HBV-L [Member] | ||||||
Collaborative Arrangement and Licensing Agreement [Abstract] | ||||||
Number of drugs currently in development | Drug | 2 | |||||
Agreement Entered into in March 2010 [Member] | IONIS-HBV-L [Member] | ||||||
Collaborative Arrangement and Licensing Agreement [Abstract] | ||||||
Milestone payment earned | $ 1,500 |
Collaborative Arrangements an36
Collaborative Arrangements and Licensing Agreements, Research, Development and Commercialization Partners - Janssen Biotech, Inc. (Details) $ in Thousands | 1 Months Ended | 3 Months Ended | 9 Months Ended | |||
Jul. 31, 2016USD ($) | Dec. 31, 2014USD ($) | Sep. 30, 2016USD ($) | Sep. 30, 2015USD ($) | Sep. 30, 2016USD ($)Program | Sep. 30, 2015USD ($) | |
Collaborative Arrangement and Licensing Agreement [Abstract] | ||||||
Revenue earned | $ 110,927 | $ 49,121 | $ 186,272 | $ 232,133 | ||
Janssen [Member] | ||||||
Collaborative Arrangement and Licensing Agreement [Abstract] | ||||||
Revenue earned | 10,000 | |||||
Agreement Entered Into in December 2014 [Member] | ||||||
Collaborative Arrangement and Licensing Agreement [Abstract] | ||||||
Number of programs under which drugs are to be developed and commercialized | Program | 3 | |||||
Upfront payment recorded as deferred revenue | $ 35,000 | |||||
Maximum amount of payments receivable for license fees and substantive milestones | 800,000 | $ 800,000 | ||||
Maximum amount of payments receivable for development milestones | 175,000 | 175,000 | ||||
Maximum amount of payments receivable for regulatory milestones | 420,000 | 420,000 | ||||
Maximum amount of payments receivable for commercialization milestones | 180,000 | 180,000 | ||||
Cumulative payments received | 47,000 | 47,000 | ||||
License fee received | $ 10,000 | |||||
Revenue earned | 12,200 | $ 2,200 | 16,600 | $ 6,600 | ||
Next prospective milestone | 5,000 | 5,000 | ||||
Deferred revenue | $ 21,600 | $ 21,600 | ||||
Agreement Entered Into in December 2014 [Member] | Revenue [Member] | Strategic Partner [Member] | ||||||
Collaborative Arrangement and Licensing Agreement [Abstract] | ||||||
Concentration percentage | 11.00% | 4.00% | 9.00% | 3.00% |
Collaborative Arrangements an37
Collaborative Arrangements and Licensing Agreements, Research, Development and Commercialization Partners - Kastle Therapeutics (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | May 31, 2016 | |
Collaborative Arrangement and Licensing Agreement [Abstract] | |||||
Revenue earned | $ 110,927 | $ 49,121 | $ 186,272 | $ 232,133 | |
Kynamro [Member] | |||||
Collaborative Arrangement and Licensing Agreement [Abstract] | |||||
Maximum amount of payments receivable | 95,000 | 95,000 | |||
Upfront payment | $ 15,000 | ||||
Next potential payment | 10,000 | 10,000 | |||
Maximum amount of payments receivable for commercialization milestones | $ 70,000 | $ 70,000 | |||
Ownership interest percentage | 10.00% | 10.00% | |||
Royalty percentage on sales earned by Sanofi Genzyme | 3.00% | ||||
Percentage of non-royalty cash payments received from Kastle earned by Sanofi Genzyme | 3.00% | ||||
Revenue earned | $ 15,000 | ||||
Kynamro [Member] | Revenue [Member] | Strategic Partner [Member] | |||||
Collaborative Arrangement and Licensing Agreement [Abstract] | |||||
Concentration percentage | 8.00% |
Segment Information and Conce38
Segment Information and Concentration of Business Risk, Segment Information (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2016USD ($) | Sep. 30, 2015USD ($) | Sep. 30, 2016USD ($)Segment | Sep. 30, 2015USD ($) | Dec. 31, 2015USD ($) | |
Segment Information and Concentration of Business Risk [Abstract] | |||||
Number of reportable segments | Segment | 2 | ||||
Revenue [Abstract] | |||||
Research and development | $ 108,913 | $ 48,918 | $ 166,583 | $ 230,469 | |
Licensing and royalty | 2,014 | 203 | 19,689 | 1,664 | |
Total revenue | 110,927 | 49,121 | 186,272 | 232,133 | |
Income (loss) from operations | 16,108 | (48,138) | (87,471) | (12,821) | |
Total assets | 843,586 | 843,586 | $ 947,900 | ||
Operating Segments [Member] | Ionis Core [Member] | |||||
Revenue [Abstract] | |||||
Research and development | 112,761 | 50,511 | 170,431 | 232,062 | |
Licensing and royalty | 2,014 | 203 | 19,689 | 1,664 | |
Total revenue | 114,775 | 50,714 | 190,120 | 233,726 | |
Income (loss) from operations | 36,328 | (35,067) | (36,465) | 16,323 | |
Total assets | 931,231 | 931,231 | 994,191 | ||
Operating Segments [Member] | Akcea Therapeutics [Member] | |||||
Revenue [Abstract] | |||||
Research and development | 0 | 0 | 0 | 0 | |
Licensing and royalty | 0 | 0 | 0 | 0 | |
Total revenue | 0 | 0 | 0 | 0 | |
Income (loss) from operations | (20,250) | (13,101) | (51,096) | (29,054) | |
Total assets | 62,009 | 62,009 | 66,068 | ||
Elimination of Intercompany Activity [Member] | |||||
Revenue [Abstract] | |||||
Research and development | (3,848) | (1,593) | (3,848) | (1,593) | |
Licensing and royalty | 0 | 0 | 0 | 0 | |
Total revenue | (3,848) | (1,593) | (3,848) | (1,593) | |
Income (loss) from operations | 30 | $ 30 | 90 | $ (90) | |
Total assets | $ (149,654) | $ (149,654) | $ (112,359) |
Segment Information and Conce39
Segment Information and Concentration of Business Risk, Concentration of Business Risk (Details) - Partner | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | Dec. 31, 2015 | |
Revenue [Member] | Partner A [Member] | |||||
Significant Partners [Abstract] | |||||
Concentration percentage | 81.00% | 37.00% | 65.00% | 32.00% | |
Revenue [Member] | Partner B [Member] | |||||
Significant Partners [Abstract] | |||||
Concentration percentage | 11.00% | 4.00% | 9.00% | 3.00% | |
Revenue [Member] | Partner C [Member] | |||||
Significant Partners [Abstract] | |||||
Concentration percentage | 2.00% | 49.00% | 3.00% | 12.00% | |
Revenue [Member] | Partner D [Member] | |||||
Significant Partners [Abstract] | |||||
Concentration percentage | 0.00% | 2.00% | 3.00% | 40.00% | |
Revenue [Member] | Partner E [Member] | |||||
Significant Partners [Abstract] | |||||
Concentration percentage | 1.00% | 3.00% | 4.00% | 10.00% | |
Contracts Receivables [Member] | Significant Partners [Member] | |||||
Significant Partners [Abstract] | |||||
Concentration percentage | 95.00% | 99.00% | |||
Number of significant partners | 1 | 2 |