10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

Form 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended September 30, 2018

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 001-38137

Akcea Therapeutics, Inc.

(Exact name of Registrant as specified in its charter)

Delaware	47-2608175
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification No.)

22 Boston Wharf Road, 9^th Floor, Boston, MA 02210

(Address of principal executive offices, including zip code)

617-207-0202

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act:

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☐
		Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☒

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12(b)-2 of the Securities Exchange Act of 1934). Yes ☐ No ☒

The number of shares of common stock outstanding as of October 31, 2018 was 89,210,927.

AKCEA THERAPEUTICS, INC.

FORM 10-Q

INDEX

PART I	FINANCIAL INFORMATION
Item 1.	Financial Statements (unaudited):
	Condensed Consolidated Balance Sheets as of September 30, 2018 and December 31, 2017 (as revised)	3
	Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2018 and 2017 (as revised)	4
	Condensed Consolidated Statements of Comprehensive Loss for the three and nine months ended September 30, 2018 and 2017 (as revised)	5
	Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2018 and 2017 (as revised)	6
	Notes to Condensed Consolidated Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations:	24
	Overview	24
	Results of Operations	30
	Liquidity and Capital Resources	32
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	35
Item 4.	Controls and Procedures	35
PART II	OTHER INFORMATION
Item 1.	Legal Proceedings	37
Item 1A	Risk Factors	37
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	64
Item 3.	Defaults Upon Senior Securities	64
Item 4.	Mine Safety Disclosures	64
Item 5.	Other Information	64
Item 6.	Exhibits	65
Signatures		66

TRADEMARKS

"Akcea," the Akcea logo, and other trademarks or service marks of Akcea Therapeutics, Inc. appearing in this Report are the property of Akcea Therapeutics, Inc. This Report contains additional trade names, trademarks and service marks of others, which are the property of their respective owners. Solely for convenience, trademarks and trade names referred to in this Report may appear without the ® or TM symbols.

2

AKCEA THERAPEUTICS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share data)

(Unaudited)

	September 30, 2018			December 31, 2017
				(as revised)
ASSETS
Current assets:
Cash and cash equivalents	$	116,206		$	58,367
Short-term investments		204,109			201,763
Contract receivable		636			5,413
Other current assets		8,397			1,302
Total current assets		329,348			266,845
Property, plant and equipment, net		5,757			77
Licenses, net		40,969			1,221
Deposits and other assets		3,054			661
Total assets	$	379,128		$	268,804
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	3,071		$	2,381
Payable to Ionis Pharmaceuticals, Inc.		23,888			14,365
Accrued compensation		8,848			4,083
Accrued liabilities		21,151			7,570
Current portion of deferred revenue		32,347			58,192
Other current liabilities		1,295			1,875
Total current liabilities		90,600			88,466
Long-term portion of deferred rent		4,653			12
Long-term portion of deferred revenue		2,464			12,501
Total liabilities		97,717			100,979
Stockholders’ equity:
Common stock, $0.001 par value; 125,000,000 and 100,000,000 shares authorized    at September 30, 2018 and December 31, 2017, respectively; 87,471,330 and    66,541,629 shares issued and outstanding at September 30, 2018 and December 31,    2017, respectively		87			67
Additional paid-in capital		733,098			464,430
Accumulated other comprehensive loss		(289	)		(451	)
Accumulated deficit		(451,485	)		(296,221	)
Total stockholders’ equity		281,411			167,825
Total liabilities and stockholders’ equity	$	379,128		$	268,804

See accompanying notes.

3

AKCEA THERAPEUTICS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except for share and per share data)

(Unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2018			2017			2018			2017
				(as revised)						(as revised)
Revenue:
Licensing revenue	$	12,000		$	—		$	12,000		$	—
Research and development revenue under collaborative    agreement		7,241			9,906			42,670			21,712
Total revenue		19,241			9,906			54,670			21,712
Expenses:
Cost of sales - product		1,043			—			1,043			—
Cost of sales - intangible asset amortization		701			—			701			—
Cost of license		7,200			—			7,200			—
Research and development		29,381			17,640			96,808			100,921
Selling, general and administrative		45,924			8,373			107,676			19,963
Total expenses		84,249			26,013			213,428			120,884
Loss from operations		(65,008	)		(16,107	)		(158,758	)		(99,172	)
Other income (expense):
Investment income		1,675			687			4,089			994
Interest expense		—			(224	)		—			(1,731	)
Other income (expense)		(25	)		73			(148	)		124
Loss before income tax expense		(63,358	)		(15,571	)		(154,817	)		(99,785	)
Income tax expense		(233	)		(2,066	)		(447	)		(2,066	)
Net loss	$	(63,591	)	$	(17,637	)	$	(155,264	)	$	(101,851	)
Net loss per share of preferred stock, basic and diluted	$	—		$	(0.01	)	$	—		$	(2.16	)
Weighted-average shares of preferred stock outstanding, basic and    diluted		—			5,651,323			—			21,055,031
Net loss per share of common stock owned by Ionis, basic and    diluted	$	(0.73	)	$	(0.33	)	$	(1.93	)	$	(3.12	)
Weighted-average shares of common stock outstanding owned by    Ionis, basic and diluted		65,538,467			36,555,903			57,346,539			12,319,205
Net loss per share of common stock owned by others, basic and    diluted	$	(0.73	)	$	(0.33	)	$	(2.07	)	$	(3.12	)
Weighted-average shares of common stock outstanding owned by    others, basic and diluted		21,671,415			16,966,712			21,446,813			5,717,720

See accompanying notes.

4

AKCEA THERAPEUTICS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(in thousands)

(Unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2018			2017			2018			2017
				(as revised)						(as revised)
Net loss	$	(63,591	)	$	(17,637	)	$	(155,264	)	$	(101,851	)
Unrealized gains (losses) on investments, net of tax		37			(86	)		143			(113	)
Currency translation adjustment		(29	)		(52	)		19			(88	)
Comprehensive loss	$	(63,583	)	$	(17,775	)	$	(155,102	)	$	(102,052	)

See accompanying notes.

5

AKCEA THERAPEUTICS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

	Nine Months Ended September 30,
	2018			2017
				(as revised)
Operating activities:
Net loss	$	(155,264	)	$	(101,851	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation		109			82
Amortization of licenses		815			89
Amortization of premium on investments, net		197			312
Non-cash sublicensing expense		—			33,394
Non-cash interest expense for line of credit with Ionis Pharmaceuticals, Inc.		—			1,731
Stock-based compensation expense		31,239			11,814
Changes in operating assets and liabilities:
Contracts receivable		4,777			(500	)
Other current and long-term assets		(7,104	)		(1,160	)
Accounts payable		300			897
Payable to Ionis Pharmaceuticals, Inc.		9,198			(48,248	)
Accrued compensation		4,765			(198	)
Deferred rent		1,018			(5	)
Accrued liabilities		12,219			2,382
Income taxes payable		(553	)		2,049
Deferred revenue		(35,882	)		87,540
Net cash used in operating activities		(134,166	)		(11,672	)
Investing activities:
Purchases of short-term investments		(105,091	)		(219,179	)
Proceeds from sale of short-term investments		138,580			42,988
Purchase of property, plant and equipment		(116	)		(9	)
Net cash provided by (used in) investing activities		33,373			(176,200	)
Financing activities:
Proceeds from exercise of common stock options and employee stock purchase    plan issuances		5,141			—
Proceeds from issuance of common stock, net of underwriters' discount		—			135,438
Proceeds from sale of common stock to Novartis in private placement		—			50,000
Proceeds from line of credit from Ionis Pharmaceuticals, Inc.		—			106,000
Net proceeds from issuance of common stock to Ionis in connection with TTR    License Agreement		155,856			—
Offering costs paid		—			(1,057	)
Net cash provided by financing activities		160,997			290,381
Effect of exchange rates on cash		19			—
Net increase in cash and cash equivalents		60,223			102,509
Cash, cash equivalents and restricted cash at beginning of period		58,367			7,857
Cash, cash equivalents and restricted cash at end of period	$	118,590		$	110,366
Supplemental disclosures of non-cash investing and financing activities:
Unpaid deferred offering costs	$	—		$	638
Conversion of line of credit from Ionis Pharmaceuticals, Inc. into common stock	$	—		$	107,731
Purchase of property, plant and equipment included in accounts payable    and accrued liability	$	1,752		$	—
Purchase of property, plant and equipment included in long-term    deferred rent liability	$	3,596		$	—
Purchase of property, plant and equipment included in payable to Ionis Pharmaceuticals	$	325		$	—
Acquisition of research and development licenses and milestone payments	$	40,563		$	—

6

The following table presents the line items and amounts of cash, cash equivalents and restricted cash reported within the condensed consolidated balance sheets:

	September 30,
	2018		2017
Cash and cash equivalents	$	116,206	$	110,366
Restricted cash included in deposits and other assets		2,384		—
Total cash, cash equivalents and restricted cash	$	118,590	$	110,366

See accompanying notes.

7

AKCEA THERAPEUTICS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2018

(Unaudited)

1. Basis of Presentation and Organization

The accompanying condensed consolidated financial statements are unaudited and have been prepared in conformity with accounting principles generally accepted in the United States of America, or U.S. GAAP. Certain amounts in the prior period financial statements have been revised to conform to the presentation of the current period financial statements. See Note 2, Summary of Significant Accounting Policies, for a discussion of these revisions to prior period financial statements made in connection with our adoption of the new revenue recognition guidance retroactive to January 1, 2017.

The condensed consolidated financial statements include the accounts of Akcea Therapeutics, Inc. ("we," "our," and "us") and our wholly owned subsidiaries. All intercompany transactions and balances were eliminated in consolidation. We included all normal recurring adjustments in the financial statements, which we considered necessary for a fair presentation of our financial position and our operating results and cash flows for the interim periods ended September 30, 2018 and 2017. 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 included in our Annual Report on Form 10-K for the year ended December 31, 2017.

We were incorporated in Delaware in December 2014. We were organized by Ionis Pharmaceuticals, Inc., or Ionis, to focus on developing and commercializing drugs to treat patients with rare and serious diseases. On July 19, 2017, we completed our initial public offering, or IPO. As of September 30, 2018, Ionis owned approximately 75% of our common stock and is our majority shareholder. Prior to our IPO, we were wholly owned by Ionis.

In accordance with Accounting Standard Codification, or ASC, 205-40, Going Concern, we evaluated whether there are conditions and events, considered in the aggregate, that raise substantial doubt about our ability to continue as a going concern within one year after the date that the condensed consolidated financial statements are issued. As of September 30, 2018, we had an accumulated deficit of $451.5 million. During the three and nine months ended September 30, 2018, we incurred a loss of $63.6 million and $155.3 million, respectively, and during the nine months ended September 30, 2018, we used $134.2 million of cash in operations. We expect to continue to generate operating losses and negative operating cash flows for the foreseeable future. The transition to profitability is dependent upon the successful development, approval, and commercialization of our products and product candidates and the achievement of a level of revenues adequate to support our cost structure.  We believe that our currently available funds of $320.3 million as of September 30, 2018, in addition to cash expected to be generated from sales of our products, one of which has been approved in the U.S., the EU and Canada, will be sufficient to fund our operations through at least the next 12 months from the issuance of this Quarterly Report on Form 10-Q.  Management’s belief with respect to its ability to fund operations is based on estimates that are subject to risks and uncertainties.   If actual results are different from management’s estimates, we may need to seek additional funding or delay, limit, reduce or terminate our product development or future commercialization efforts or grant rights to develop and commercialize our drugs even if we would otherwise prefer to develop and commercialize the drugs ourselves.

2. Summary of Significant Accounting Policies

The accounting policies followed in the preparation of the interim condensed consolidated financial statements are consistent in all material respects with those presented in Note 1 to our financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2017, except as noted below with respect to our revenue recognition accounting policy.

Use of Estimates

The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires our management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates.

8

Translation of Foreign Currency

For our foreign subsidiaries that report in a functional currency other than U.S. dollars, we translate their assets and liabilities into U.S. dollars using the exchange rate at the balance sheet date. We translate revenue and expenses at the monthly average exchange rates for the period. We translate transactions in our capital accounts at the historic exchange rate in effect at the date of the transaction. We include foreign currency translation adjustments as a component of accumulated other comprehensive loss within the condensed consolidated statements of comprehensive loss.

Revenue Recognition

In May 2014, the Financial Accounting Standards Board, or FASB, issued Accounting Standards Update, or ASU, No. 2014-09, which amended the guidance for accounting for revenue from contracts with customers. This ASU superseded the revenue recognition requirements in ASC Topic 605, Revenue Recognition, or Topic 605, and created a new Topic 606, Revenue from Contracts with Customers, or Topic 606. Under Topic 606, an entity recognizes revenue when its customer obtains control of promised goods or services in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services.

To determine revenue recognition for arrangements that an entity determines are within the scope of Topic 606, the entity performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation. At contract inception, once the contract is determined to be within the scope of Topic 606, we assess the goods or services promised within each contract and determine those that are performance obligations, then assess whether each promised good or service is distinct. When we offer options for additional goods or services, such as an option to license a drug in the future or for additional goods or services to be provided in the future, we evaluate whether such options are material rights that should be treated as additional performance obligations. We typically have not concluded that the option to license a drug or the options for additional goods or services that may be requested in the future under our collaboration agreement are material rights as the amounts attributable to such options represent standalone selling price, and therefore no consideration is allocated to these items at the inception of an agreement. When a partner exercises its option to license a drug or requests the additional goods or services, a new performance obligation is created for that item. Once performance obligations are identified, we then recognize as revenue the amount of the transaction price that we allocated to the respective performance obligation when (or as) each performance obligation is satisfied, either at a point in time or over time. If the performance obligation is satisfied over time, we recognize revenue based on the use of an output or input method. As of September 30, 2018, we have two revenue streams: our strategic collaboration, option and license agreement, or collaboration agreement, with Novartis Pharma AG, or Novartis, which we entered into in January 2017, and our collaboration and license agreement with PTC Therapeutics International Limited, or PTC Therapeutics, which we entered into in August 2018. For a complete discussion of the accounting for our revenue streams, see Note 4, Strategic Collaboration with Novartis and Note 6, PTC License Agreement with PTC Therapeutics.

Effective January 1, 2018, we adopted Topic 606 using the full retrospective transition method. Under this method, we revised our consolidated financial statements for prior period amounts including the interim periods included in this Report on Form 10-Q, as if Topic 606 had been effective for such periods. The references “as revised” used herein refer to revisions of amounts originally reported for the three and nine months ended September 30, 2017 and as of December 31, 2017 as a result of our adoption of Topic 606.

Impact of Adoption

As a result of adopting Topic 606 on January 1, 2018, we revised our comparative financial statements for the prior years as if Topic 606 had been effective for that period. On September 18, 2018, we filed a Current Report on Form 8-K to present recast consolidated financial statements for each of the three years ended December 31, 2015, 2016 and 2017, to reflect our adoption of the new accounting standard for revenue recognition set forth in Topic 606. The financial information recast in the Form 8-K was originally filed with the SEC in our Annual Report on Form 10-K for the fiscal year ended December 31, 2017, which was filed with the SEC on February 28, 2018. Under Topic 605, we recognized revenue over time on a straight-line basis. Under Topic 606, we recognize revenue using the input method based on the total cost of performing services over time. As a result, the following financial statement line items for fiscal year 2017 were affected.

9

Condensed Consolidated Balance Sheets

	December 31, 2017 (in thousands)
	As Revised Under Topic 606			As Originally Reported Under Topic 605			Effect of Change
Current portion of deferred revenue	$	58,192		$	50,579		$	7,613
Long-term portion of deferred revenue		12,501			8,306			4,195
Accumulated deficit	$	(296,221	)	$	(284,413	)	$	(11,808	)

Condensed Consolidated Statements of Operations and Comprehensive Loss

	Three Months Ended September 30, 2017 (in thousands, except per share data)
	As Revised Under Topic 606			As Originally Reported Under Topic 605			Effect of Change
Research and development revenue under collaborative    agreement	$	9,906		$	13,449		$	(3,543	)
Loss from operations		(16,107	)		(12,564	)		(3,543	)
Net loss		(17,637	)		(14,094	)		(3,543	)
Net loss per share of preferred stock, basic and diluted		(0.01	)		0.05			(0.06	)
Net loss per share of common stock owned by Ionis, basic    and diluted		(0.33	)		(0.27	)		(0.06	)
Net loss per share of common stock owned by others, basic    and diluted	$	(0.33	)		(0.27	)	$	(0.06	)

	Nine Months Ended September 30, 2017 (in thousands, except per share data)
	As Revised Under Topic 606			As Originally Reported Under Topic 605			Effect of Change
Research and development revenue under collaborative    agreement	$	21,712		$	37,173		$	(15,461	)
Loss from operations		(99,172	)		(83,711	)		(15,461	)
Net loss		(101,851	)		(86,390	)		(15,461	)
Net loss per share of preferred stock, basic and diluted		(2.16	)		(1.77	)		(0.39	)
Net loss per share of common stock owned by Ionis, basic    and diluted		(3.12	)		(2.72	)		(0.40	)
Net loss per share of common stock owned by others, basic    and diluted	$	(3.12	)		(2.72	)	$	(0.40	)

Condensed Consolidated Statement of Cash Flows

	Nine Months Ended September 30, 2017 (in thousands)
	As Revised Under Topic 606			As Originally Reported Under Topic 605			Effect of Change
Net loss	$	(101,851	)	$	(86,390	)	$	(15,461	)
Adjustments to reconcile net loss to net cash used in    operating activities:
Deferred revenues		87,540			72,079			15,461
Cash, cash equivalents and restricted cash at beginning    of period		7,857			7,857			—
Cash, cash equivalents and restricted at end of period	$	110,366		$	110,366		$	—

10

Inventory

Prior to the regulatory approval of our product candidates, we incur expenses for the manufacturing of drug product that could potentially be available to support the commercial launch of our products. Until the first reporting period when regulatory approval has been received or is otherwise considered probable, we record all such costs as research and development expense.

For inventory related costs incurred subsequent to July 1, 2018, we will reflect these amounts as inventory on our condensed consolidated balance sheets at the lower of cost or market value under the first-in, first-out, or FIFO, basis. We will periodically analyze our inventory levels, and write down inventory that has become obsolete, inventory that has a cost basis in excess of its estimated realizable value and inventory in excess of expected sales requirements as cost of product sales. The determination of whether inventory costs will be realizable requires estimates by our management and if actual market conditions are less favorable than projected by our management, additional write-downs of inventory may be required which would be recorded as a cost of product sales in the condensed consolidated statements of operations.

At September 30, 2018 our physical inventory for TEGSEDI was produced prior to when we obtained regulatory approval and accordingly had no cost basis as we recorded the related costs as research and development expense in prior periods.

Intangible Assets

We obtained exclusive licenses from Ionis for specific patents that Ionis owns and maintains related to our drug pipeline. We recorded our licenses from Ionis as a capital contribution using the carryover basis of Ionis' historical cost for the related patents. We are amortizing our capitalized licenses over their estimated useful life, which is the term of the underlying individual patents owned by Ionis.

In addition, we maintain definite-lived intangible assets related to regulatory milestone payments made to Ionis that are recoverable through future cash flows from approved products, which are capitalized as license intangible assets. These assets are amortized over their remaining useful lives, which are generally estimated to be the remaining patent life. If our estimate of the product’s useful life is shorter than the remaining patent life, then the shorter period is used. Intangible assets are amortized using the economic consumption method if anticipated future revenues can be reasonably estimated. The straight-line method is used when future revenues cannot be reasonably estimated. Amortization expense is recorded as a component of cost of sales to the extent the underlying license is commercialized or research and development prior to its commercialization in the condensed consolidated statements of operations.

Cost of Product Sales

As a result of receiving marketing authorization, or MA, approval for TEGSEDI from the European Commission, or EC, in July 2018, we began recording all TEGSEDI related expenses as cost of product sales starting in July 2018. Cost of product sales consists of manufacturing costs, transportation and freight, and indirect overhead costs associated with the manufacturing and distribution of TEGSEDI. Cost of product sales may also include period costs related to certain manufacturing services and inventory adjustment charges. Additionally, we expensed a significant portion of the cost of producing TEGSEDI that we will use in the commercial launch as research and development expense prior to the regulatory approval of TEGSEDI.

New Accounting Pronouncements - Recently Issued

In February 2016, the FASB issued amended accounting guidance related to lease accounting, which requires us to record all leases with a term longer than one year on our balance sheet. When we record leases on our balance sheet under the new guidance, we will record a liability with a value equal to the present value of payments we will make over the life of the lease and an asset representing the underlying leased asset. The new accounting guidance requires us to determine if any lease we have is an operating or financing lease. We will record expense for an operating type lease on a straight-line basis as an operating expense and we will record expense for a financing type lease as interest expense. The new lease standard is effective for annual and interim periods beginning after December 15, 2018, with early adoption permitted. This standard allows for a modified retrospective application and is effective for the first quarter of 2019. Entities may apply the modified retrospective approach (1) retrospectively to each prior reporting period presented in the financial statements with the cumulative effect adjustment recognized at the beginning of the earliest comparative period presented or (2) retrospectively at the beginning of the period of adoption (January 1, 2019) through a cumulative-effect adjustment. We are currently assessing the impact that adoption of this guidance will have on our consolidated financial statements and disclosures.

11

In June 2016, the FASB issued guidance that changes the measurement of credit losses for most financial assets and certain other instruments. If we have credit losses, this updated guidance requires us to record allowances for these instruments under a new expected credit loss model. This model requires us to estimate the expected credit loss of an instrument over its lifetime, which represents the portion of the amortized cost basis that 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 impact it will have on our consolidated financial statements and disclosures.

In February 2018, the FASB issued updated guidance for reclassification of tax effects from accumulated other comprehensive income (loss). The updated guidance gives entities an option to reclassify the stranded tax effects resulting from changes due to the Tax Act from accumulated other comprehensive income (loss) to retained earnings. The updated guidance is effective for all entities for fiscal years beginning after December 31, 2018, and interim periods within those fiscal years. Early adoption is permitted and adoption is optional. We are currently assessing the impact this updated guidance could have on our consolidated financial statements and the timing of potential adoption.

In June 2018, the FASB issued updated guidance to simplify the accounting for stock-based compensation expense for non-employees. We adopted this guidance in the second quarter of 2018. We have not granted stock options to non-employees as of September 30, 2018 and therefore this new guidance has no impact on our consolidated financial statements.

In August 2018, the FASB updated its disclosure requirements related to Level 1, 2 and 3 fair value measurements. The update included deletion and modification of certain disclosure requirements and additional disclosure related to Level 3 measurements.  The guidance is effective for fiscal years beginning after December 15, 2019 and early adoption is permitted. We anticipate we will adopt this updated guidance on January 1, 2019 and we do not expect it to have a significant impact on our disclosures.

In August 2018, the FASB issued clarifying guidance on how to account for implementation costs related to hosted cloud-servicing arrangements. The primary change is to include any arrangement in which the customer accesses or uses software but does not take possession of the software when assessing for the capitalization of implementation costs of internal use software. Qualified costs are to be capitalized and amortized over the service period and they need to be expensed in the same line item as the service expense and recognized on the balance sheet in the same category as amounts prepaid for the hosted cloud-servicing arrangements generally as an other asset. Cash flows related to the capitalized implementation costs should be presented consistent with the presentation of cash flows for the fees related to hosted cloud-servicing arrangements. The update can be applied either retrospectively or prospectively to all implementation costs incurred after the date of adoption. The updated guidance is effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. Early adoption is permitted in any interim period. We are currently assessing the effects this updated guidance could have on our consolidated financial statements and timing of potential adoption.

3. Investments and Fair Value Measurements

Investments

The following is a summary of our investments at September 30, 2018 and December 31, 2017 (in thousands):

			Gross Unrealized					Estimated
September 30, 2018	Cost		Gains		Losses			Fair Value
Available-for-sale securities:
Corporate debt securities	$	90,527	$	—	$	(104	)	$	90,423
Debt securities issued by U.S. government agencies		97,545		—		(74	)		97,471
Total securities with a maturity of one year or less		188,072		—		(178	)		187,894
Corporate debt securities		2,910		—		(5	)		2,905
Debt securities issued by U.S. government agencies		13,322		—		(12	)		13,310
Total securities with a maturity of one to two years		16,232		—		(17	)		16,215
Total available-for-sale securities	$	204,304	$	—	$	(195	)	$	204,109

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			Gross Unrealized					Estimated
December 31, 2017	Cost		Gains		Losses			Fair Value
Available-for-sale securities:
Corporate debt securities	$	132,434	$	—	$	(206	)	$	132,228
Debt securities issued by U.S. government agencies		38,135		—		(59	)		38,076
Total securities with a maturity of one year or less		170,569		—		(265	)		170,304
Corporate debt securities		8,267		—		(35	)		8,232
Debt securities issued by U.S. government agencies		23,264		—		(37	)		23,227
Total securities with a maturity of one to two years		31,531		—		(72	)		31,459
Total available-for-sale securities	$	202,100	$	—	$	(337	)	$	201,763

We recorded unrealized losses related to the securities listed above as of September 30, 2018 and December 31, 2017. We believe that the decline in value of these securities is temporary and primarily related to the change in market interest rates since purchase. We believe it is more likely than not that we will be able to hold our debt securities to maturity. Therefore, we anticipate a full recovery of the amortized cost basis of our debt securities at maturity.

All of our available-for-sale securities are available to us for use in our current operations. As a result, we categorized 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.

Fair Value Measurements

We use a three-tier fair value hierarchy to prioritize the inputs used in our fair value measurements. These tiers include: Level 1, defined as observable inputs such as quoted prices in active markets for identical assets, which includes our money market funds and treasury securities classified as available-for-sale securities; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable, which includes our fixed income securities and commercial paper classified as available-for-sale securities; and Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring us to develop our own assumptions. We have not historically held any investments or other instruments as Level 3. We recognize transfers between levels of the fair value hierarchy on the date of the event or change in circumstances that caused the transfer.

The following tables present the investments we held at September 30, 2018 and December 31, 2017 that are regularly measured and carried at fair value. The table segregates each security by the level within the fair value hierarchy of the valuation techniques we utilized to determine the respective securities' fair value (in thousands):

	At September 30, 2018		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)
Money market funds (1)	$	104,931	$	104,931	$	—
Corporate debt securities (2)		95,329		—		95,329
Debt securities issued by U.S. government agencies (3)		110,780		—		110,780
Total	$	311,040	$	104,931	$	206,109

	At December 31, 2017		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)
Money market funds (1)	$	48,430	$	48,430	$	—
Corporate debt securities (3)		140,460		—		140,460
Debt securities issued by U.S. government agencies (3)		61,303		—		61,303
Total	$	250,193	$	48,430	$	201,763

(1) Included in cash and cash equivalents on our condensed consolidated balance sheets.

(2) At September 30, 2018, $2.0 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.

(3) Included in short-term investments on our condensed consolidated balance sheets.

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We did not have any Level 3 investments or other instruments atSeptember 30, 2018 and December 31, 2017. During the nine months ended September 30, 2018 and the year ended December 31, 2017, there were no transfers between Level 1 and Level 2 investments.

4. Strategic Collaboration with Novartis

In January 2017, we initiated a strategic collaboration with Novartis for the development and commercialization of AKCEA-APO(a)-L_Rx and AKCEA-APOCIII-L_Rx. Under the Novartis collaboration, Novartis has an exclusive option to further develop and commercialize these drugs. We are responsible for completing a Phase 2 program, conducting an end-of-Phase 2 meeting with the United States Food and Drug Administration, or FDA, and providing initial quantities of the active pharmaceutical ingredient, or API, for each drug. On September 24, 2018 Akcea and Ionis announced positive top-line results from the Phase 2 study of AKCEA-APO(a)-L_Rx. If Novartis exercises an option for one of these drugs, Novartis will be responsible for all further global development, regulatory and co-commercialization activities and costs for such drug.

We received a $75.0 million upfront payment in the first quarter of 2017, of which we retained $60.0 million and we paid Ionis $15.0 million as a sublicense fee under our Cardiometabolic License Agreement with Ionis. If Novartis exercises its option for a drug, Novartis will pay us a license fee equal to $150.0 million for each drug licensed by Novartis. In addition, for AKCEA-APO(a)-L_Rx, we are eligible to receive up to $600.0 million in milestone payments, including $25.0 million for the achievement of a development milestone, up to $290.0 million for the achievement of regulatory milestones and up to $285.0 million for the achievement of commercialization milestones. In addition, for AKCEA-APOCIII-L_Rx, we are eligible to receive up to $530.0 million in milestone payments, including $25.0 million for the achievement of a development milestone, up to $240.0 million for the achievement of regulatory milestones and up to $265.0 million for the achievement of commercialization milestones. We will earn the next milestone payment of $25.0 million under this collaboration if Novartis advances the Phase 3 study for either drug. We are also eligible to receive tiered royalties in the mid-teens to low twenty percent range on net sales of AKCEA-APO(a)-L_Rx and AKCEA-APOCIII-L_Rx. Novartis will reduce these royalties upon the expiration of certain patents or if a generic competitor negatively impacts the product in a specific country. We will pay 50% of these license fees, milestone payments and royalties to Ionis as a sublicense fee. We plan to co-commercialize through our specialized sales force any licensed drug commercialized by Novartis in selected markets, under terms and conditions that we plan to negotiate with Novartis in the future.

At commencement of our strategic collaboration, we identified the following four distinct performance obligations:

• Development activities for AKCEA-APO(a)-L_Rx;

• Development activities for AKCEA-APOCIII-L_Rx;

• API for AKCEA-APO(a)-L_Rx; and

• API for AKCEA-APOCIII-L_Rx.

The development activities and the supply of API are distinct because Novartis or another third party could provide these items without our assistance.

We determined the transaction price for the Novartis collaboration was $108.4 million, comprised of the following:

• $75.0 million from the upfront payment we received;

• $28.4 million for the premium paid by Novartis, which represents the excess of the fair value Ionis received from Novartis' purchase of Ionis' stock at a premium in the first quarter of 2017; and

• $5.0 million for the premium Novartis would have paid to purchase Ionis' stock if we did not complete our IPO within 15 months of the inception of the agreement.

We are recognizing the $75.0 million upfront payment plus the premium paid by Novartis from its purchase of Ionis’ stock and the premium associated with Novartis’ obligation to purchase Ionis’ stock if we did not complete our IPO because we are the party providing the services and API under the collaboration agreement.

None of the options or development or regulatory milestone payments under this agreement have been included in the transaction price as all payments are fully constrained. As part of our evaluation of the constraint, we considered numerous factors, including the fact that achievement of the milestones is outside of our control and contingent upon the success of our clinical trials, Novartis’ efforts, and the receipt of regulatory approval. We will re-evaluate the transaction price, including estimated variable consideration included in the transaction price and all constrained amounts, in each reporting period and as uncertain events are resolved or other changes in circumstances occur.

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Based on the distinct performance obligations under the Novartis collaboration, we allocated the $108.4 million transaction price based on relative stand-alone selling prices of each of our performance obligations as follows:

• $64.0 million for development services for AKCEA-APO(a)-L_Rx;

• $40.1 million for development services for AKCEA-APOCIII-L_Rx;

• $1.5 million for the delivery of AKCEA-APO(a)-L_Rx API; and

• $2.8 million for the delivery of AKCEA-APOCIII-L_Rx API.

We are recognizing revenue related to each of our performance obligations as follows:

• We will satisfy the development services performance obligation for AKCEA-APO(a)-L_Rx as the research and development services are performed. We expect a significant portion of the research and development services to be completed by December 2018 with the remainder by the end of March 2019. We recognize revenue related to research and development services performed using an input method by calculating costs incurred at each period end relative to total costs expected to be incurred;

• We will satisfy the development services performance obligation for AKCEA-APOCIII-L_Rx as the research and development services are performed. We expect a significant portion of the research and development services to be completed by the end of June 2019 with the remainder by the end of 2019. We recognize revenue related to research and development services performed using an input method by calculating costs incurred at each period end relative to total costs expected to be incurred;

• We recognized the amount attributed to the AKCEA-APO(a)-L_Rx API supply when we delivered API to Novartis in 2017; and

• We recognized the amount attributed to the AKCEA-APOCIII-L_Rx API supply when we delivered API to Novartis in May 2018.

Additionally, we and Ionis entered into a stock purchase agreement, or SPA, with Novartis. Under the SPA, in July 2017, Novartis purchased $50.0 million of our common stock in a separate private placement concurrent with the completion of our IPO at a price per share equal to the IPO price. Our IPO is discussed in Note 10, Initial Public Offering.

During the three and nine months ended September 30, 2018, we earned revenue of $7.2 million and $42.7 million, respectively, from our strategic collaboration with Novartis, representing 100% of our research and development revenue. In comparison, we earned revenue of $9.9 million and $21.7 million for the same periods in 2017 (as revised). During the three and nine months ended September 30, 2018, we recognized $6.8 million and $36.5 million of revenue from amounts that were in our beginning deferred revenue balance. Our consolidated balance sheet at September 30, 2018 and December 31, 2017 (as revised) included deferred revenue of $34.8 million and $70.7 million, respectively, related to our strategic collaboration with Novartis.

5. License Agreements and Services Agreement with Ionis

In December 2015, we entered into a development, commercialization and license agreement related to our cardiometabolic franchise and a services agreement with Ionis.  In March 2018, we entered into a new development, commercialization, collaboration and license agreement related to our TTR franchise and amended the services agreement previously in place with Ionis.  The following sections summarize these related party agreements with Ionis.

Cardiometabolic Development, Commercialization and License Agreement

Our development, commercialization and license agreement, or Cardiometabolic License Agreement, with Ionis granted exclusive rights to us to develop and commercialize WAYLIVRA, AKCEA-APO(a)-L_Rx, AKCEA-APOCIII-L_Rx, and AKCEA-ANGPTL3-L_Rx, which are collectively referred to as the Lipid Drugs. Ionis granted us an exclusive license to certain patents to develop and commercialize products containing the Lipid Drugs. Ionis also granted us a non-exclusive license to the Ionis antisense platform technology for us to develop and commercialize products containing the Lipid Drugs. Ionis also granted us non-exclusive rights under its manufacturing technology to manufacture the Lipid Drugs in our own facility or at a contract manufacturer. As a part of this agreement both companies agreed not to work with any other parties to develop or commercialize other RNA-targeting drugs that are designed to inhibit any of the Lipid Drug targets so long as we are developing or commercializing the Lipid Drugs.

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We and Ionis share development responsibilities for the Lipid Drugs. We pay Ionis for the research and development expenses it incurs on our behalf, which include both external and internal expenses. External research and development expenses include costs for contract research organizations, or CROs, costs to conduct nonclinical and clinical studies on our drugs, costs to acquire and evaluate clinical study data, such as investigator grants, patient screening fees and laboratory work, and fees paid to consultants. Internal research and development expenses include costs for the work that Ionis' research and development employees perform for us. Ionis charges us a full-time equivalent rate that covers personnel-related expenses, including salaries and benefits, plus an allocation of facility-related expenses, including rent, utilities, insurance and property taxes, for those development employees who work either directly or indirectly on the development of our drugs. We also pay Ionis for the API and drug product we use in our nonclinical and clinical studies for all of our drugs. Ionis manufactures the API for us and charges us a price per gram consistent with the price Ionis charges its pharmaceutical partners, which includes the cost for direct materials, direct labor and overhead required to manufacture the API. If we need the API filled in vials for our clinical studies and Ionis contracts with a third party to perform this work, Ionis will charge us for the resulting cost.

As we commercialize each of the Lipid Drugs, we will pay Ionis royalties from the mid-teens to the mid-twenty percent range on sales related to the Lipid Drugs that we sell. If we sell a Lipid Drug for a Rare Disease Indication (defined in the agreement as less than 500,000 patients worldwide or an indication that required a Phase 3 program of less than 1,000 patients and less than two years of treatment), we will pay a higher royalty rate to Ionis than if we sell a Lipid Drug for a Broad Disease Patient Population (defined in the agreement as more than 500,000 patients worldwide or an indication that required a Phase 3 program of 1,000 or more patients and two or more years of treatment). Other than with respect to the drugs licensed to Novartis under the collaboration agreement, if our annual sales reach $500.0 million, $1.0 billion and $2.0 billion, we will be obligated to pay Ionis sales milestones in the amount of $50.0 million for each sales milestone reached by each Lipid Drug. If and when triggered, we will pay Ionis each of these sales milestones over the subsequent 12 quarters in equal payments.

We may terminate this agreement if Ionis is in material breach of the agreement. Ionis may terminate this agreement if we are in material breach of the agreement. In each circumstance the party that is in breach will have an opportunity to cure the breach prior to the other party terminating this agreement.

In the first quarter of 2017, we entered into letter agreements with Ionis to reflect the agreed upon payment terms with respect to the upfront option payment that we received from Novartis and to allocate the premium that Novartis paid for Ionis' common stock in connection with our strategic collaboration with Novartis. For additional detail regarding our strategic collaboration with Novartis, see Note 4, Strategic Collaboration with Novartis.

TTR Development, Commercialization, Collaboration and License Agreement

On April 17, 2018, our stockholders, other than Ionis and its affiliates, approved the development, commercialization, collaboration and license agreement, or TTR License Agreement, and a stock purchase agreement, or Ionis SPA, with Ionis, our majority shareholder which was entered into on March 14, 2018. In addition, in connection with these agreements, we entered into an amended and restated services agreement, or Amended Services Agreement, and an amended and restated investor rights agreement, or Amended Investor Rights Agreement, with Ionis.

We determined that the TTR License Agreement and Ionis SPA included provisions which required the approval of the agreements by our stockholders other than Ionis and its affiliates, which we deemed was not perfunctory in nature, therefore, we concluded that the approved date of the agreements for accounting purposes was April 17, 2018, the date on which such approval was received and the closing of the agreements took place.

In accordance with the terms and provisions of the TTR License Agreement, we received rights to:

• commercialize TEGSEDI following receipt of regulatory approval and perform certain other non-commercial activities with respect to TEGSEDI, in each case, in accordance with a global strategic plan;

• partner on the completion of all pivotal studies, of a follow-on drug to TEGSEDI, AKCEA-TTR-L_Rx and perform other non-commercial activities with respect to AKCEA-TTR-L_Rx;

• commercialize AKCEA-TTR-L_Rx following receipt of regulatory approval in accordance with a global strategic plan;

• share in profits and losses with respect to TEGSEDI and AKCEA-TTR-L_Rx;

• manufacture (including through a third party) each product following receipt of regulatory approval for such product; and

• sublicense the development and commercialization of either product to third parties or affiliates, with the consent of Ionis.

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As consideration for the grant of rights under the TTR License Agreement, we paid an upfront licensing fee of $150.0 million, which was paid through the issuance of 8 million shares of our common stock priced by reference to a trading average at the time of execution of the agreements. In addition, we are obligated to make milestone payments to Ionis in connection with the achievement of certain development, regulatory and commercialization events. These milestone payments include up to $110.0 million, if all TEGSEDI regulatory approval milestones are met; up to $145.0 million, if all AKCEA-TTR-L_Rx regulatory milestones are met; and a total of $1.3 billion, in the form of seven milestone payments, if all sales milestones for the combined products are met. We can elect to pay each milestone payment in cash or shares of our common stock and Ionis may require payment in shares of common stock up until the achievement of the milestone event for aggregate worldwide annual net sales of $750.0 million for the products. Subsequent to the achievement of the milestone event for aggregate worldwide annual net sales of $750.0 million, all subsequent milestone payments must be paid in cash.

Under the TTR License Agreement, we and Ionis also agreed to share TEGSEDI and AKCEA-TTR-L_Rx profits and losses as follows: for TEGSEDI, beginning on the earlier of (i) the first day of the quarter after receipt of regulatory approval of TEGSEDI in the United States, or (ii) January 1, 2019, the parties will share profits and losses from the development and commercialization of TEGSEDI (A) on a 60/40 basis (60% to Ionis and 40% to us) through the end of the quarter in which the first commercial sale of AKCEA-TTR-L_Rx occurs, and (B) on a 50/50 basis commencing on the first day of the first quarter thereafter; and for AKCEA-TTR-L_Rx, beginning January 1, 2018, the parties will share all profits and losses from the development and commercialization of AKCEA-TTR-L_Rx on a 50/50 basis.

The TTR License Agreement will remain in effect until the expiration of all included payment obligations, or unless earlier terminated. The TTR License Agreement can be terminated by mutual consent of us and Ionis, by either us or Ionis upon certain events, by either party upon material breach, or by Akcea for convenience upon providing 90 days written notice to Ionis. Upon termination all rights received under the TTR License Agreement will terminate.

To support the commercialization of TEGSEDI and AKCEA-TTR-L_Rx, Ionis purchased 10.7 million shares of our common stock for $200 million.

In connection with the licensing transaction, we amended our Certificate of Incorporation to increase our authorized shares of common stock from 100,000,000 shares to 125,000,000 shares.

We determined that the upfront accounting for the TTR License Agreement should follow the accounting guidance for common control transactions given the nature of the relationship between us and Ionis, including the fact that Ionis maintains a controlling ownership position in us.

In addition, we assessed the identifiable assets that were acquired under the terms of the TTR License Agreement, including the licensed rights to TEGSEDI and AKCEA-TTR-L_Rx, certain batches of TEGSEDI materials, the transfer of a minimal number of employees from Ionis to us and certain manufacturing and clinical research agreements. We concluded that the licensed rights represented a group of similar identifiable assets and that substantially all of the fair value of the acquisition resides in the licensed rights. As such, we concluded that the acquired assets did not meet the definition of a business and that we should account for the TTR License Agreement as an asset acquisition under common control guidance. Accordingly, we recorded the carrying value of the licensed rights held by Ionis of $0.6 million as an intangible asset at the date of acquisition and will amortize the amount over the remaining patent life.  

In connection with the transaction, we also purchased $4.7 million of commercial TEGSEDI inventory held by Ionis. Prospectively we will be responsible for the procurement of all additional inventory. The inventory did not have a carrying value on the books of Ionis at the time of the acquisition. As such, in accordance with the accounting guidance for common control transactions above, we recorded the purchase of this inventory as a reduction of additional paid in capital. This amount represented a cash distribution to Ionis, therefore, we have included this distribution as a distribution to Ionis for purposes of loss per share and we have applied the two–class method as discussed in Note 9, Basic and Diluted Net Loss Per Share.

We also determined that the TTR License Agreement represented a collaboration arrangement as defined by ASC 808. Prior to April 1, 2018, Ionis was responsible for all costs associated with TEGSEDI and for the period from April 1, 2018 to December 31, 2018, we are responsible for all costs associated with TEGSEDI. We and Ionis share all costs associated with AKCEA-TTR-L_Rx from January 1, 2018 forward on a 50/50 basis. We recorded $3.1 million paid to Ionis for costs related to the period prior to the closing of the TTR license agreement to equity, as these amounts were previously expensed in the financial statements of Ionis.  This amount also represents a cash distribution to Ionis and was included as an adjustment to the net loss attributable to Ionis for purposes of applying the two-class method for loss per share as discussed in Note 8, Basic and Diluted Net Loss Per Share. Any amounts paid to or received from Ionis subsequent to the closing of the TTR License Agreement will be recorded to expense based on the underlying nature of the activities.

During the three and nine months ended September 30, 2018, we recorded $6.4 million and $18.3 million, respectively, as a component of research and development expense related to the TTR License Agreement.

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In addition, on July 11, 2018, we received marketing authorization, or MA, approval for TEGSEDI from the European Commission, or EC, for the treatment of stage 1 or stage 2 polyneuropathy in adult patients with hereditary transthyretin amyloidosis, or hATTR amyloidosis, in the European Union, or EU. As a result of the MA approval in the EU, on August 3, 2018, we issued 1,597,571 shares of our common stock to Ionis as payment of the $40.0 million regulatory milestone for TEGSEDI, increasing Ionis’ ownership percentage to slightly above 75 percent. As a result of the marketing authorization in the EU, we capitalized this regulatory milestone payment as a license intangible asset on our condensed consolidated balance sheets as the amount in expected to be recoverable through future cash flows. The milestone payment is being amortized to cost of sales on a straight-line basis over its expected useful life of approximately 13 years from the date of the regulatory milestone achievement. Amortization expense for the TTR EU milestone payment was $0.7 million for the three and nine months ended September 30, 2018.

Services Agreement

We originally entered into a services agreement with Ionis in December 2015 in conjunction with the Cardiometabolic License Agreement. We entered into the Amended Services Agreement with Ionis in April 2018 in conjunction with the TTR License Agreement (collectively, the service agreements). The primary purpose of the Amended Services Agreement was to allow for the expansion of general and administrative services provided to us by Ionis to cover the TEGSEDI and AKCEA-TTR-L_Rx products under terms substantially similar to the prior services agreement.

Our services agreement with Ionis is designed to be flexible to adjust for our increasing capabilities in various functions. Under the services agreement, Ionis provides us certain services, including, without limitation, general and administrative support services and development support services. Ionis allocated a certain percentage of personnel to perform the services that it provides to us based on its good faith estimate of the required services. We pay Ionis for these allocated costs, which reflect the Ionis full-time equivalent, or FTE, rate for the applicable personnel, plus out-of-pocket expenses, such as occupancy costs, associated with the FTEs allocated to providing us these services. We do not pay a mark-up or profit on the external or internal expenses Ionis bills to us. Ionis invoices us quarterly for all amounts due under the services agreement and payments are due within 30 days of the receipt of an invoice.

In addition, as long as Ionis continues to consolidate our financials, we will comply with Ionis' policies and procedures and internal controls. As long as we are consolidated into Ionis' financial statements under U.S. GAAP, we may continue to access the following services from Ionis:

• investor relations services,

• human resources and personnel services,

• risk management and insurance services,

• tax related services,

• corporate record keeping services,

• financial and accounting services,

• credit services, and

• COO/CFO/CBO oversight.

However, if we wanted to provide the foregoing services internally, and doing so would not negatively impact Ionis' internal controls and procedures for financial reporting, we can negotiate in good faith with Ionis for a reduced scope of services related to the aforementioned services. When Ionis determines it should no longer consolidate our financials, we may mutually agree with Ionis in writing to extend the term of this arrangement in six-month increments.

We can establish our own benefits programs or continue to use Ionis' benefits, however we must provide Ionis a minimum advance notice to opt-out of using Ionis' benefits. We do not currently plan to establish our own benefits programs at this time or in the near future.

As of September 30, 2018 and December 31, 2017, we owed Ionis $23.9 million and $14.4 million, respectively.

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The following table summarizes the amounts included in our operating expenses that were generated by transactions with Ionis for the following periods (in thousands):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2018			2017			2018			2017
Services performed by Ionis	$	3,192		$	1,906		$	11,182		$	7,861
Active pharmaceutical ingredient manufactured by Ionis		—			—			5,229			6,013
Commercial inventory manufactured by Ionis		—			—			5,996			—
Sublicensing expenses		7,200			—			7,200			48,394
Out-of-pocket expenses paid by Ionis		15,850			7,595			38,866			24,784
Total charges generated by transactions with Ionis		26,242			9,501			68,473			87,052
Payable balance to Ionis at the beginning of the period		27,137			11,244			14,365			24,355
Less: total amounts paid to Ionis during the period		(29,491	)		(11,244	)		(58,017	)		(68,512	)
Less: receivable from Ionis		—			—			(933	)		—
Less: non-cash sublicensing expenses		—			—			—			(33,394	)
Total amount payable to Ionis at period end	$	23,888		$	9,501		$	23,888		$	9,501

6. Collaboration and License Agreement with PTC Therapeutics

In August 2018, we entered into a collaboration and license agreement with PTC Therapeutics, or the PTC License Agreement, to commercialize TEGSEDI and WAYLIVRA in Latin America and certain Caribbean countries, or the PTC Territory.

We received a $12.0 million upfront payment from PTC Therapeutics related to TEGSEDI in the third quarter of 2018 upon execution of the PTC License Agreement, of which we paid Ionis $7.2 million as a sub-license royalty related to the TTR License Agreement. If WAYLIVRA is approved by the FDA or EMA, PTC Therapeutics will pay us $6.0 million. In addition, we are eligible to receive up to $8.0 million for the achievement of regulatory milestones and royalties in the mid-twenty percent range on net sales of TEGSEDI and WAYLIVRA in the PTC Territory. PTC Therapeutics’ obligation to pay royalties to us begins on the earlier of 12 months after the first commercial sale of a product in Brazil or the date that PTC Therapeutics recognized revenue of at least $10 million in the PTC Territory. PTC Therapeutics will reduce these royalties upon the expiration of certain patents or if a generic competitor negatively impacts the market share of the product in the PTC Territory.  Milestone payments and royalties that we are eligible to receive from PTC Therapeutics for TEGSEDI will be split 60% to Ionis and 40% to Akcea. All WAYLIVRA milestone payments and royalties that we are eligible to receive from PTC will be split 50/50 with Ionis. PTC Therapeutics is solely responsible for the commercialization of the products in the PTC Territory at its sole cost and expense, including the pursuit and maintenance of applicable regulatory approvals. Unless earlier terminated, the PTC License Agreement will continue in effect until the date on which the royalty term and all payment obligations with respect to all products in all countries in the PTC Territory have expired.

At the commencement of the PTC License Agreement, we identified two performance obligation, consisting of the transfer of (1) the license to TEGSEDI and related know-how and (2) the license to WAYLIVRA and related know-how, both of which were satisfied during the third quarter of 2018. In addition, we identified a customer option related to PTC Therapeutics option to purchase supply of product from us for its development and commercial needs. The option to purchase supply from us will be subject to a supply agreement to be negotiated in the fourth quarter of 2018. We considered the manufacturing capabilities of PTC Therapeutics and the fact that manufacturing services are not proprietary and can be provided by other vendors, to conclude that the licenses have stand-alone functionality and are distinct.  Further, the customer options for manufacturing of product is expected to be priced similar to other manufacturing options with similar customers and is therefore not considered a material right. As there were no remaining unsatisfied performance obligations as of September 30, 2018, the $12.0 million upfront payment was recognized as license revenue upon contract execution in the third quarter of 2018. None of the regulatory milestones have been included in the transaction price, as all milestones were fully constrained.  As part of our evaluation of the constraint, we considered numerous factors, including that regulatory approvals are not within our control and accordingly the related milestones are fully constrained and excluded from the arrangement consideration until such regulatory approvals are received. Any consideration related to sales-based royalties will be recognized when the related sales occur.

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7. Stock-Based Compensation

Stock Plans

2015 Equity Incentive Plan

The 2015 Plan provides for the grant of incentive stock options, or ISOs, non-statutory stock options, or NSOs, restricted stock awards, restricted stock unit awards and stock appreciation rights. In December 2017 and April 2018, our board of directors and our stockholders, respectively, approved an additional amendment to our 2015 Equity Incentive Plan to increase the number of shares of common stock reserved for issuance thereunder to 13,500,000 shares of common stock.

As of September 30, 2018, the aggregate number of shares of common stock that may be issued pursuant to stock awards under the 2015 Plan was 13,500,000 and we had 1,998,659 shares available for future issuance under the 2015 Plan. During the three and nine months ended September 30, 2018, we granted to employees and directors options to purchase 428,400 and 4,643,292 shares of common stock, respectively. We granted 20,894 restricted stock units awards during the three and nine months ended September 30, 2018. At September 30, 2018 a total of 11,457,463 options were outstanding, of which 4,019,273 were exercisable, and 43,878 restricted stock unit awards were outstanding.

2017 Employee Stock Purchase Plan

The number of shares of common stock that may be issued under the Employee Stock Purchase Plan, or ESPP, will automatically increase on the first day of each calendar year through (and including) January 1, 2027 in an amount equal to the lesser of (i) 1% of the total number of shares of Common Stock outstanding on December 31st of the preceding calendar year, and (ii) 500,000 shares of Common Stock. On January 1, 2018, 500,000 shares of common stock were added to the ESPP.

As of September 30, 2018, the aggregate number of shares of common stock reserved under the 2017 ESPP was 1,000,000 and we had 968,449 shares available for future issuance under the 2017 ESPP. During the three and nine months ended September 30, 2018, 15,819 shares and 31,551 shares, respectively, were issued under our 2017 ESPP. At September 30, 2018, accrued liabilities included $0.2 million of ESPP contributions related to our current enrollment period for which the related shares will be issued on January 2, 2019.

Stock-Based Compensation

The following table summarizes stock-based compensation expense for the three and nine months ended September 30, 2018 and 2017 (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2018		2017		2018		2017
Research and development expenses	$	2,313	$	2,353	$	6,868	$	5,873
Selling, general and administrative expenses		10,417		2,339		24,371		5,941
Total	$	12,730	$	4,692	$	31,239	$	11,814

8. Accumulated Other Comprehensive Loss

The following table summarizes changes in accumulated other comprehensive loss (in thousands):

	2018
Balance, as of December 31, 2017	$	(451	)
Unrealized gains on investments, net of tax (1)		143
Currency translation adjustment		19
Net other comprehensive income		162
Balance, as of September 30, 2018	$	(289	)

(1) There was no tax benefit for other comprehensive income (loss) for the nine months ended September 30, 2018.

9. Basic and Diluted Net Loss Per Share

We issued 28,884,540 shares of Series A convertible preferred stock in December 2015. The Series A convertible preferred stock converted into common stock in conjunction with the IPO in July 2017. As a result there were 66,541,629 shares of common

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stock issued and outstanding and there were no longer any outstanding shares of Series A convertible preferred stock. We determined that the Series A convertible preferred stock was in substance common stock during the period that it was outstanding because the Series A convertible preferred stock was the lowest form of subordinated equity outstanding during that period and this class of stock would have been required to absorb the losses of the Company. Accordingly, we are using the two-class method for computing EPS.

In connection with the TTR License Agreement completed on April 17, 2018 with Ionis, we made distributions to Ionis representing the consideration to be paid in cash provided to Ionis in excess of the carrying value of the related assets acquired. These distributions are treated as dividends to Ionis; therefore, we have applied the two-class method loss per share to reflect the allocation of these distributions to the participating Ionis common shares.

The two-class method is an earnings allocation formula that determines loss per share for each class of common stock and participating security according to dividends declared (or accumulated) and participation rights in undistributed earnings. For the purposes of calculating loss per share under the two-class method, we have allocated the net loss between the Series A convertible preferred stock, common stock owned by Ionis and common stock owned by others.

Basic loss per share for each class of stock is computed by dividing total distributable losses applicable to Series A convertible preferred stock, common stock owned by Ionis and common stock owned by others, including the 6% cumulative dividend contractually due to Series A convertible preferred shareholders, by the weighted-average of preferred and common shares outstanding during the requisite period. The cumulative preferred stock dividend was not paid upon completion of the IPO because the IPO was not a liquidation event or a change in control. Prior to the IPO, the 6% cumulative Series A convertible preferred stock dividend was considered as required under the two-class method regardless of whether those dividends were actually distributed.

The following table summarizes the distributable losses for the three and nine months ended September 30, 2018 and 2017 (in thousands):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2018			2017			2018			2017
Net loss	$	(63,591	)	$	(17,637	)	$	(155,264	)	$	(101,851	)
Preferred stock dividend		—			(1,791	)		—			(20,100	)
Distribution to Ionis		—			—			(7,792	)		—
Distributable losses	$	(63,591	)	$	(19,428	)	$	(163,056	)	$	(121,951	)

The following table summarizes the reconciliation of weighted-average shares outstanding used in the calculation of basic loss per share for the three and nine months ended September 30, 2018 and 2017:

	Three Months Ended September 30,				Nine Months Ended September 30,
Determination of shares:	2018		2017		2018		2017
Weighted-average preferred shares outstanding		—		5,651,323		—		21,055,031
Weighted-average common shares outstanding owned    by Ionis		65,538,467		36,555,903		57,346,539		12,319,205
Weighted-average common shares outstanding owned    by others		21,671,415		16,966,712		21,446,813		5,717,720
Total weighted-average shares outstanding		87,209,882		59,173,938		78,793,352		39,091,956

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The following table summarizes the calculation of basic loss per share for thethree and nine months ended September 30, 2018 and 2017(in thousands, except per share amounts):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2018			2017			2018			2017
Losses attributable to preferred shares	$	—		$	(1,855	)	$	—		$	(65,683	)
Less: Assumed dividend to preferred shares		—			1,791			—			20,100
Income (losses) allocated to preferred shares		—			(64	)		—			(45,583	)
Weighted-average preferred shares outstanding		—			5,651,323			—			21,055,031
Basic loss per preferred share	$	—		$	(0.01	)	$	—		$	(2.16	)
Losses allocated to Ionis	$	(47,789	)	$	(12,002	)	$	(118,674	)	$	(38,431	)
Plus: Distribution to Ionis		—			—			7,792			—
Losses available to Ionis	$	(47,789	)	$	(12,002	)	$	(110,882	)	$	(38,431	)
Weighted-average common shares outstanding owned    by Ionis		65,538,467			36,555,903			57,346,539			12,319,205
Basic loss per common share owned by Ionis	$	(0.73	)	$	(0.33	)	$	(1.93	)	$	(3.12	)
Losses allocated to common shares owned by others	$	(15,802	)	$	(5,571	)	$	(44,382	)	$	(17,837	)
Weighted-average common shares outstanding owned    by others		21,671,415			16,966,712			21,446,813			5,717,720
Basic loss per common share owned by others	$	(0.73	)	$	(0.33	)	$	(2.07	)	$	(3.12	)

For the three and nine months ended September 30, 2018 and 2017, 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:

• Options to purchase common stock;

• Unvested restricted stock units; and

• Employee Stock Purchase Plan.

10. Initial Public Offering

On July 19, 2017, we completed our IPO. Total net proceeds were $182.3 million, including the following:

• $132.3 million from the sale of 17,968,750 shares of our common stock in our IPO of which $25 million was invested by Ionis; and

• $50.0 million from the purchase of 6,250,000 shares by Novartis in a concurrent private placement.

In addition, both of the following occurred in connection with the completion of our IPO on July 19, 2017:

• the conversion of all outstanding shares of Series A convertible preferred stock into 28,884,540 shares of our common stock; and

• the conversion of $106.0 million of outstanding principal plus accrued interest from the line of credit with Ionis into 13,438,339 shares of common stock.

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11. Commitments and Contingencies

Operating Lease

On April 5, 2018, we entered into an operating lease agreement with MEPT Seaport 13 Stillings LLC, or MEPT, for 30,175 square feet of office space located in Boston, Massachusetts for our new corporate headquarters. The commencement date of the lease was August 15, 2018 and the initial term of the lease is 123 months with one five-year renewal option. We took occupancy of the office space in Boston, Massachusetts in September 2018. Minimum annual lease payments under this lease are $0.3 million in 2018, and future annual lease payments under this lease are $2.2 million in 2019, $2.3 million in 2020, $2.3 million in 2021, $2.3 million in 2022, and $14.2 million thereafter. MEPT is providing us with a three-month free rent period, which commenced on August 15, 2018, and a tenant improvement allowance up to $3.8 million. We provided MEPT with a letter of credit to secure our obligations under the lease in the initial amount of $2.4 million, to be reduced to $1.8 million on the third anniversary of the rent commencement date and to $1.2 million on the fifth anniversary of the rent commencement date if we meet certain conditions set forth in the lease at each such time. This balance is included in deposits and other assets on the accompanying condensed consolidated balance sheets.

12. Restructuring

On September 6, 2018, we enacted a plan to reorganize our workforce to better align with the immediate needs of our business, the Reorganization Plan, following the August 27, 2018 announcement of the FDA’s issuance of a Complete Response Letter for our New Drug Application for WAYLIVRA. In connection with the Reorganization Plan, we reduced our workforce by approximately 12%. The Reorganization Plan was approved by our board of directors on September 2, 2018, and affected employees were informed on September 6, 2018. The Reorganization Plan impacted U.S. team members primarily from the WAYLIVRA field team and functions focused principally on WAYLIVRA.

During the three and nine months ended September 30, 2018, we recorded $1.9 million of restructuring-related costs in operating expense, including employee severance, benefits and related costs. In addition, we also recorded $0.4 million of non-cash stock option modifications expenses related to the Reorganization Plan for the three and nine months ended September 30, 2018. We do not expect to incur any additional significant costs associated with this reorganization.

The following table summarizes the restructuring costs by category for the periods indicated (in thousands):

	Three and Nine Months Ended September 30, 2018
	Cash		Non-Cash		Total
Research and development	$	327	$	209	$	536
General and administrative		1,562		200		1,762
	$	1,889	$	409	$	2,298

The following table summarizes the restructuring reserve included in accrued compensation for the periods indicated (in thousands):

	Nine Months Ended September 30, 2018
Restructuring reserve beginning balance	$	—
Restructuring expenses incurred during period		1,889
Amounts paid during the period		(200	)
Restructuring reserve ending balance	$	1,689

13. Subsequent Events

TTR License Agreement Regulatory Milestone

On October 5, 2018, we received regulatory approval for TEGSEDI from the FDA for the treatment of the polyneuropathy of hereditary transthyretin-mediated amyloidosis in adults in the United States. As a result of the regulatory approval in the United States, on October 17, 2018 we issued 1,671,849 shares of our common stock to Ionis as payment of the $50.0 million regulatory milestone for TEGSEDI, increasing Ionis’ ownership percentage to 76 percent.

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ITEM 2 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

In this Report on Form 10-Q, unless the context requires otherwise, “Akcea,” “Company,” “we,” “our,” and “us,” means Akcea Therapeutics, Inc. and our subsidiaries.

Forward-Looking Statements

In addition to historical information contained in this Report on Form 10-Q, this Report includes forward-looking statements regarding our financial position, outlook and our business, and the therapeutic and commercial potential of TEGSEDI^TM (inotersen), WAYLIVRA^TM (volanesorsen) and our other products in development. Any statement describing our goals, expectations, financial or other projections, intentions or beliefs, is a forward-looking statement and should be considered an at-risk statement. Words such as “may,” “could,” “should,” “would,” “believe,” “expect,” “expectation,” “anticipate,” “estimate,” “intend,” “seeks,” “plan,” “project,” “continue,” “predict,” “will,” “should,” and other words or expressions of similar meaning are intended by us to identify forward-looking statements, although not all forward-looking statements contain these identifying words. Such statements are subject to certain risks and uncertainties, particularly those inherent in the process of discovering, developing and commercializing drugs that are safe and effective for use as human therapeutics and building of a business around such drugs and obtaining regulatory approvals and the timing thereof. Our forward-looking statements also involve assumptions that, if they never materialize or prove correct, could cause our results to differ materially from those expressed or implied by such forward-looking statements. Although our forward-looking statements reflect the good faith judgment of our management, these statements are based only on facts and factors currently known by us. As a result, you are cautioned not to rely on these forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those identified in this Quarterly Report on Form 10-Q and those discussed in the section titled “Risk Factors” set forth in Part II, Item 1A of this Quarterly Report on Form 10-Q and in our other Securities and Exchange Commission, or SEC, filings. You should not rely upon forward-looking statements as predictions of future events. Furthermore, such forward-looking statements speak only as of the date of this Report. Except as required by law, we undertake no obligation to update any forward-looking statements to reflect events or circumstances after the date of such statements.

The following discussion and analysis should be read in conjunction with (1) our financial statements and accompanying notes included in this Quarterly Report on Form 10-Q, (2) the audited financial statements and accompanying notes thereto and the related Management's Discussion and Analysis of Financial Condition and Results of Operations for the fiscal year ended December 31, 2017, which are contained in our Annual Report on the Form 10-K for the fiscal year ended on December 31, 2017, or the Recast Financials, filed on February 28, 2018 with the SEC and (3) the unaudited financial statements and accompanying notes thereto and the related Management's Discussion and Analysis of Financial Condition and Results of Operations for the fiscal year ended December 31, 2017, which are contained in our Current Report on the Form 8-K for the fiscal year ended on December 31, 2017 filed on September 18, 2018 with the SEC. The Recast Financials present consolidated financial statements for each of the three years ended December 31, 2015, 2016 and 2017, recast to reflect our adoption of the new accounting standard for revenue recognition set forth in Topic 606.

OVERVIEW

We are a biopharmaceutical company focused on developing and commercializing drugs to treat patients with rare and serious diseases with leading-edge, RNA-targeted medicines. Our priority is to bring transformative medicines to patients by driving clinical program execution, understanding patient and physician needs, preparing the market, creating market access, and commercializing our products on a global basis. As an affiliate of Ionis Pharmaceuticals, Inc., or Ionis, we have a robust portfolio of development-, registration- and commercial-stage drugs covering multiple targets and diseases using antisense therapeutics. Our immediate focus is on the commercial launch of TEGSEDI in the Unites States, or U.S., the European Union, or EU, and Canada. We estimate that there are approximately 50,000 patients globally with hereditary transthyretin-mediated amyloidosis, or hATTR amyloidosis, the majority of whom have symptoms of polyneuropathy. We are also focused on regulatory discussions for WAYLIVRA in the U.S., EU and Canada for the treatment of familial chylomicronemia syndrome, or FCS.

TEGSEDI is the world’s first subcutaneous, RNA-targeted therapeutic that substantially reduces the production of transthyretin, or TTR protein. Importantly, TEGSEDI is Akcea’s first commercially approved drug, and our launch activities are underway in three regions: the U.S., the EU and Canada. To further support the hATTR amyloidosis community, Akcea and Ambry Genetics Corporation, or Ambry, a Konica Minolta company, launched hATTR Compass™ in the U.S. and Canada, a no-cost, confidential genetic testing and genetic counseling program for people with suspected hATTR amyloidosis. This program is intended to empower people with accurate genetic information, so they can make informed decisions about their healthcare.

We obtained TEGSEDI and AKCEA-TTR-L_Rx, the ligand conjugated antisense, or LICA, drug in development for TTR, under an exclusive license from Ionis. With the licensing agreement, we have expanded our efforts to treat people with serious and under-served rare diseases focusing on transthyretin amyloidosis, or ATTR amyloidosis, and cardiometabolic diseases.

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ATTR

TEGSEDI is an antisense drug designed to reduce the production TTR protein. In patients with hATTR amyloidosis, a severe, rare and fatal genetic disease, both the hereditary and wild-type, or wt, TTR protein builds up as fibrils in tissues, such as the peripheral nerves, heart, gastrointestinal system, eyes, kidneys, central nervous system, thyroid and bone marrow. The presence of TTR fibrils interferes with the normal functions of these tissues. The progressive accumulation of TTR amyloid deposits in these tissues and organs leads to sensory, motor and autonomic dysfunction often having debilitating effects on multiple aspects of a patient’s life and eventually leads to death.

TEGSEDI is now approved in three markets: the U.S., EU and Canada. On October 5, 2018, we received FDA approval for TEGSEDI for the treatment of the polyneuropathy of hATTR amyloidosis in adults. On October 3, 2018, TEGSEDI was approved by Health Canada for the treatment of stage 1 or stage 2 polyneuropathy in adult patients with hATTR amyloidosis. And on July 11, 2018, TEGSEDI received marketing authorization, or MA, approval from the European Commission, or EC, for the treatment of stage 1 or stage 2 polyneuropathy in adult patients with hATTR amyloidosis. We estimate that there are approximately 50,000 patients globally with hATTR amyloidosis, the majority of whom have symptoms of polyneuropathy.

TEGSEDI was discovered and developed by Ionis Pharmaceuticals and was licensed by us in April 2018. In addition to TEGSEDI, we and Ionis are developing AKCEA-TTR-L_Rx for hereditary and wild-type forms of transthyretin amyloidosis, or ATTR amyloidosis, and are planning to begin clinical development of this program prior to the end of 2018.

Cardiometabolic

Our lipid/cardiometabolic drugs, WAYLIVRA, AKCEA-APO(a)-L_Rx, AKCEA-ANGPTL3-L_Rx and AKCEA-APOCIII-L_Rx, are all based on antisense technology developed by Ionis. We are focused on regulatory discussions for WAYLIVRA the U.S., EU and Canada for the treatment of people with FCS. On May 10, 2018, the FDA’s Endocrinologic and Metabolic Drugs Advisory Committee voted to support approval of WAYLIVRA for the treatment of people with FCS. On August 27, 2018, we and Ionis announced that we received a Complete Response Letter from the Division of Metabolism and Endocrinology Products of the FDA regarding the New Drug Application for WAYLIVRA. The FDA did not cite any new concerns beyond those described in the advisory committee briefing book, in which the main areas of focus were the dosing schedule and management of thrombocytopenia. We continue to feel strongly that WAYLIVRA demonstrates a favorable benefit/risk profile in people with FCS, as was reflected in the positive outcome from the Advisory Committee meeting. We received a preliminary notification of a Notice of Noncompliance withdrawal letter, or NON-W, from Health Canada for WAYLIVRA. We and Ionis are engaged with the FDA and plan to work with Health Canada to confirm a path forward for WAYLIVRA. Active regulatory discussions in the EU are ongoing.

FCS is a severe and rare lipid disorder characterized by extremely elevated levels of triglycerides. FCS has life-threatening consequences such as acute pancreatitis and the lives of patients with this disease are impacted daily by the associated symptoms. In our clinical program, we have observed consistent and substantial (>70%) decreases in triglycerides and improvements in other manifestations of FCS, including pancreatitis attacks and abdominal pain. We believe the safety and efficacy data from the WAYLIVRA program demonstrate a favorable risk-benefit profile for patients with FCS. WAYLIVRA is also in Phase 3 clinical development for the treatment of familial partial lipodystrophy, or FPL. Our other three lipid/cardiometabolic drugs are currently in Phase 2 clinical development.

Commercial Preparation

We are continuing to build our global infrastructure as we begin to commercialize TEGSEDI and prepare to commercialize WAYLIVRA, and we have commercial teams in place in the U.S. and Canada for TEGSEDI and in the United Kingdom, or UK and the Nordic region, France, Germany and Italy for TEGSEDI and WAYLIVRA. In addition, in August 2018, we entered into a licensing agreement with PTC Therapeutics International Limited, or PTC Therapeutics, to commercialize TEGSEDI and WAYLIVRA in Latin America and certain Caribbean countries. A key element of our commercial strategy is to provide the specialized, patient-centric support required to successfully address rare disease patient populations. We believe our focus on treating patients with inadequately addressed rare and serious diseases will allow us to partner efficiently and effectively with the specialized medical community that supports these underserved patient communities.

To maximize the commercial potential of two of the drugs in our pipeline, we initiated a strategic collaboration with Novartis Pharma AG, or Novartis, in January 2017 for the development and commercialization of AKCEA-APO(a)-L_Rx and AKCEA-APOCIII-L_Rx. We believe Novartis brings significant resources and expertise to the collaboration that can accelerate our ability to deliver these potential therapies to the large populations of patients who have high cardiovascular risk due to inadequately treated lipid disorders. As part of our collaboration, we received $75.0 million in an upfront option payment, of which we retained $60.0 million and paid $15.0 million to Ionis as a sublicense fee. On September 24, 2018, Akcea and Ionis announced positive top-line results from the Phase 2 study of AKCEA-APO(a)-L_Rx. Additional data will be presented as a late-breaking clinical trial presentation at American Heart Association annual meeting on November 10, 2018. We are planning to have an end-of-Phase 2 meeting with the FDA before the end of this year. Under our agreement with Novartis, after we complete Phase 2 development of each of AKCEA-APO(a)-L_Rx and

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AKCEA-APOCIII-L_Rx (data planned for 2019), and if, on a drug-by-drug basis, Novartis exercises its option to license a drug and pays us the $150.0 million license fee to do so, Novartis would conduct and pay for a Phase 3 cardiovascular outcome study in high-risk patients and, if approved, commercialize each such licensed drug worldwide. Novartis will have 60 days following the end of the applicable end of Phase 2 meeting to exercise its option for each of these drugs. We plan to co-commercialize any licensed drugs commercialized by Novartis in selected markets, under terms and conditions that we plan to negotiate with Novartis in the future, through the specialized sales force we are building to commercialize TEGSEDI. Overall, we are eligible to receive license fees, milestone payments and royalties on sales of each drug Novartis licenses, if and when, it meets the development, regulatory and sales milestones specified in our agreement. We will share any license fees, milestone payments and royalties equally with Ionis.

Our strategic collaboration with Novartis has a potential aggregate transaction value of over $1.0 billion, plus royalties, which we would generally be required to share equally with Ionis. The calculation of potential aggregate transaction value assumes that Novartis licenses, successfully develops and achieves regulatory approval for both AKCEA-APO(a)-L_Rx and AKCEA-APOCIII-L_Rx in the U.S., EU and Japan, and that Novartis achieves pre-specified sales targets with respect to both drugs. In addition, to the upfront payment that we have received, for AKCEA-APO(a)-L_Rx we are eligible to receive up to $600.0 million in milestone payments, including $25.0 million for the achievement of a development milestone, up to $290.0 million for the achievement of regulatory milestones and up to $285.0 million for the achievement of commercialization milestones. In addition, for AKCEA-APOCIII-L_Rx we are eligible to receive up to $530.0 million in milestone payments, including $25.0 million for the achievement of a development milestone, up to $240.0 million for the achievement of regulatory milestones and up to $265.0 million for the achievement of commercialization milestones. We are also eligible to receive tiered royalties in the mid-teens to low twenty percent range on net sales of AKCEA-APO(a)-L_Rx and AKCEA-APOCIII-L_Rx, and Novartis will reduce these royalties upon the expiration of certain patents or if a generic competitor negatively impacts the product in a specific country. We will pay 50% of these license fees, milestone payments and royalties to Ionis as a sublicense fee. See Note 4, Strategic Collaboration with Novartis, to our consolidated financial statements for additional information.

We began recognizing revenue under the collaboration with Novartis upon its initiation. Our revenue for the first nine months of 2018 was $54.7 million. Our net losses have resulted from costs incurred in developing TEGSEDI, WAYLIVRA and the other drugs in our pipeline, preparing to commercialize TEGSEDI and WAYLIVRA, and general and administrative activities associated with our operations. We expect to begin generating product revenue from TEGSEDI drug sales beginning in the fourth quarter of 2018. We expect to continue to incur significant expenses and increasing operating losses for the foreseeable future as we commercialize TEGSEDI, seek regulatory approval for WAYLIVRA and continue to develop our pipeline. We expect to incur significant expenses to continue to build the infrastructure to support commercialization, including manufacturing, marketing, sales and distribution functions. Further, we expect to incur additional costs associated with operating as a public company and in building our internal resources to become less reliant on Ionis.

As of September 30, 2018, we had cash, cash equivalents and investments of $320.3 million. We have funded our operating activities through a $100.0 million cash contribution that we received from Ionis in 2015, $75.0 million from initiating our collaboration with Novartis that we received in the first quarter of 2017 and $106.0 million in drawdowns under our line of credit with Ionis that we received in the first and second quarters of 2017. In July 2017, we completed our IPO and raised $182.3 million in net proceeds from the IPO including the $50 million Novartis concurrent private placement. In April 2018, we completed a licensing transaction with Ionis to commercialize TEGSEDI. In conjunction with this transaction, Ionis purchased 10.7 million shares of our common stock for $200 million. As a result of the MA approval for TEGSEDI in the EU, on August 3, 2018 we issued 1,597,571 shares of our common stock to Ionis as payment of the $40.0 million regulatory milestone for TEGSEDI, and as a result of the regulatory approval for TEGSEDI in the United States, on October 17, 2018 we issued 1,671,849 shares of our common stock to Ionis as payment of the $50.0 million regulatory milestone for TEGSEDI. These two common stock issuances to Ionis increased Ionis’ ownership percentage in our company to 76 percent. See Note 5, License Agreements and Services Agreement with Ionis, to our condensed consolidated financial statements included in this Form 10-Q for more information about our TTR licensing agreement with Ionis. We plan to use our cash, cash equivalents and investments on hand as of September 30, 2018 to further our commercialization efforts of TEGSEDI and WAYLIVRA and continue the advancement of our pipeline drugs.

We expect that our cash, cash equivalents and investments of $320.3 million as of September 30, 2018 will be sufficient to fund our operating expenses and capital expenditure requirements for at least the next 12 months from issuance of these financial statements. However, we expect to raise additional funding in the future to continue developing the drugs in our pipeline and to commercialize TEGSEDI, or any other approved drug, including WAYLIVRA. We may seek to obtain additional financing in the future through the issuance of our common stock, through other equity or debt financings or through collaborations or partnerships with other companies. We may not be able to raise additional capital on terms acceptable to us, or at all, and any failure to raise capital as and when needed could compromise our ability to execute on our business plan.

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Our Relationship with Ionis

Ionis formed Akcea as a wholly owned subsidiary to complete development of and commercialize Ionis’ drugs to treat lipid disorders. We began business operations in January 2015. We licensed our cardiometabolic franchise from Ionis at the beginning of 2015. Prior to licensing these drugs, Ionis’ employees performed all of the development, regulatory and manufacturing activities for these drugs either themselves or through third-party providers. As such, Ionis incurred all of the expenses associated with these activities and reported them in its consolidated financial statements. TEGSEDI and AKCEA-TTR-L_Rx were licensed from Ionis in April 2018. Prior to then, Ionis had been advancing these drugs in development and incurring the expenses for those activities. Under our license agreements with Ionis, Ionis continued and is continuing to conduct development, regulatory or manufacturing activities for our drugs and to charge us for this work. As of September 30, 2018, Ionis owns approximately 75 percent of our outstanding stock.

Critical Accounting Policies

The accounting policies followed in the preparation of our interim condensed consolidated financial statements appearing at the beginning of this Quarterly Report on Form 10-Q are consistent in all material respects with those included in Note 1 of our Annual Report on the Form 10-K for the fiscal year ended on December 31, 2017, except as updated below.

Revenue Recognition

In May 2014, the Financial Accounting Standards Board, or FASB, issued Accounting Standards Update, or ASU, No. 2014-09, which amended the guidance for accounting for revenue from contracts with customers. This ASU superseded the revenue recognition requirements in ASC Topic 605, Revenue Recognition, or Topic 605, and created a new Topic 606, Revenue from Contracts with Customers, or Topic 606. Under Topic 606, an entity recognizes revenue when its customer obtains control of promised goods or services in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services.

To determine revenue recognition for arrangements that an entity determines are within the scope of Topic 606, the entity performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation. At contract inception, once the contract is determined to be within the scope of Topic 606, we assess the goods or services promised within each contract and determine those that are performance obligations, then assess whether each promised good or service is distinct. When we offer options for additional goods or services, such as an option to license a drug in the future or for additional goods or services to be provided in the future, we evaluate whether such options are material rights that should be treated as additional performance obligations. We typically have not concluded that the option to license a drug or the options for additional goods or services that may be requested in the future under our collaboration agreement are material rights as the amounts attributable to such options represent standalone selling price, and therefore no consideration is allocated to these items at the inception of an agreement. When a partner exercises its option to license a drug or requests the additional goods or services, a new performance obligation is created for that item. Once performance obligations are identified, we then recognize as revenue the amount of the transaction price that we allocated to the respective performance obligation when (or as) each performance obligation is satisfied, either at a point in time or over time. If the performance obligation is satisfied over time, we recognize revenue based on the use of an output or input method. Through September 30, 2018, we have two revenue streams: our strategic collaboration, option and license agreement, or collaboration agreement, with Novartis Pharma AG, or Novartis, which we entered into in January 2017 and our collaboration and license agreement with PTC Therapeutics International Limited, or PTC Therapeutics, which we entered into in August 2018. For a complete discussion of the accounting for our revenue streams, see Note 4, Strategic Collaboration with Novartis and Note 6, PTC License Agreement with PTC Therapeutics.

Effective January 1, 2018, we adopted Topic 606 using the full retrospective transition method. Under this method, we revised our consolidated financial statements for prior period amounts, including the interim periods included in this Report on Form 10-Q, as if Topic 606 had been effective for such periods. The references “as revised” used throughout this Form 10-Q refer to revisions of amounts originally reported for the three and nine months ended September 30, 2017 and as of December 31, 2017 as a result of our adoption of Topic 606.

Impact of Adoption

As a result of adopting Topic 606 on January 1, 2018, we revised our comparative financial statements for the prior years as if Topic 606 had been effective for that period. On September 18, 2018, we filed a Current Report on Form 8-K to present recast consolidated financial statements for each of the three years ended December 31, 2015, 2016 and 2017, to reflect our adoption of the new accounting standard for revenue recognition set forth in Topic 606. The financial information recast in the Form 8-K was originally filed with the SEC in our Annual Report on Form 10-K for the fiscal year ended December 31, 2017, which was filed with the SEC on February 28, 2018. Under Topic 605, we recognized revenue over time on a straight-line basis. Under Topic 606, we recognize revenue using the input method based on the total cost of performing services over time. As a result, the following financial statement line items for fiscal year 2017 were affected.

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Condensed Consolidated Balance Sheets

	December 31, 2017 (in thousands)
	As Revised Under Topic 606			As Originally Reported Under Topic 605			Effect of Change
Current portion of deferred revenue	$	58,192		$	50,579		$	7,613
Long-term portion of deferred revenue		12,501			8,306			4,195
Accumulated deficit	$	(296,221	)	$	(284,413	)	$	(11,808	)

	Three Months Ended September 30, 2017 (in thousands, except per share data)
	As Revised Under Topic 606			As Originally Reported Under Topic 605			Effect of Change
Research and development revenue under collaborative    agreement	$	9,906		$	13,449		$	(3,543	)
Loss from operations		(16,107	)		(12,564	)		(3,543	)
Net loss		(17,637	)		(14,094	)		(3,543	)
Net loss per share of preferred stock, basic and diluted		(0.01	)		0.05			(0.06	)
Net loss per share of common stock owned by Ionis, basic    and diluted		(0.33	)		(0.27	)		(0.06	)
Net loss per share of common stock owned by others, basic    and diluted	$	(0.33	)		(0.27	)	$	(0.06	)

Condensed Consolidated Statements of Operations and Comprehensive Loss

	Nine Months Ended September 30, 2017 (in thousands, except per share data)
	As Revised Under Topic 606			As Originally Reported Under Topic 605			Effect of Change
Research and development revenue under collaborative    agreement	$	21,712		$	37,173		$	(15,461	)
Loss from operations		(99,172	)		(83,711	)		(15,461	)
Net loss		(101,851	)		(86,390	)		(15,461	)
Net loss per share of preferred stock, basic and diluted		(2.16	)		(1.77	)		(0.39	)
Net loss per share of common stock owned by Ionis, basic    and diluted		(3.12	)		(2.72	)		(0.40	)
Net loss per share of common stock owned by others, basic    and diluted	$	(3.12	)		(2.72	)	$	(0.40	)

Condensed Consolidated Statement of Cash Flows

	Nine Months Ended September 30, 2017 (in thousands)
	As Revised Under Topic 606			As Originally Reported Under Topic 605			Effect of Change
Net loss	$	(101,851	)	$	(86,390	)	$	(15,461	)
Adjustments to reconcile net loss to net cash used in    operating activities:
Deferred revenues		87,540			72,079			15,461
Cash, cash equivalents and restricted cash at beginning    of period		7,857			7,857			—
Cash, cash equivalents and restricted at end of period	$	110,366		$	110,366		$	—

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Inventory

Prior to the regulatory approval of our product candidates, we incur expenses for the manufacturing of drug product that could potentially be available to support the commercial launch of our products. Until the first reporting period when regulatory approval has been received or is otherwise considered probable, we record all such costs as research and development expense.

For inventory related costs incurred subsequent to July 1, 2018, we will reflect these amounts as inventory on our condensed consolidated balance sheets at the lower of cost or market value under the first-in, first-out, or FIFO, basis. We will periodically analyze our inventory levels, and write down inventory that has become obsolete, inventory that has a cost basis in excess of its estimated realizable value and inventory in excess of expected sales requirements as cost of product sales. The determination of whether inventory costs will be realizable requires estimates by our management and if actual market conditions are less favorable than projected by our management, additional write-downs of inventory may be required which would be recorded as a cost of product sales in the condensed consolidated statements of operations.

At September 30, 2018 our physical inventory for TEGSEDI was produced prior to when we obtained regulatory approval and accordingly had no cost basis as we recorded the related costs as research and development expense in prior periods.

Intangible Assets

We obtained exclusive licenses from Ionis for specific patents that Ionis owns and maintains related to our drug pipeline. We recorded our licenses from Ionis as a capital contribution using the carryover basis of Ionis' historical cost for the related patents. We are amortizing our capitalized licenses over their estimated useful life, which is the term of the underlying individual patents owned by Ionis.

In addition, we maintain definite-lived intangible assets related to regulatory milestone payments made to Ionis that are recoverable through future cash flows from approved products, which are capitalized as license intangible assets. These assets are amortized over their remaining useful lives, which are generally estimated to be the remaining patent life. If our estimate of the product’s useful life is shorter than the remaining patent life, then the shorter period is used. Intangible assets are amortized using the economic consumption method if anticipated future revenues can be reasonably estimated. The straight-line method is used when future revenues cannot be reasonably estimated. Amortization expense is recorded as a component of cost of sales to the extent the underlying license is commercialized or research and development prior to its commercialization in the condensed consolidated statements of operations.

Cost of Product Sales

As a result of receiving marketing authorization, or MA, approval for TEGSEDI from the European Commission, or EC, in July 2018, we began recording all TEGSEDI related expenses as cost of product sales starting in July 2018. Cost of product sales consists of manufacturing costs, transportation and freight, and indirect overhead costs associated with the manufacturing and distribution of TEGSEDI. Cost of product sales may also include period costs related to certain manufacturing services and inventory adjustment charges. Additionally, we expensed a significant portion of the cost of producing TEGSEDI that we will use in the commercial launch as research and development expense prior to the regulatory approval of TEGSEDI.

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RESULTS OF OPERATIONS

In order to analyze and compare our results of operations to other similar companies, we believe it is important to exclude non-cash stock-based compensation expense related to equity awards from our expenses. We believe non-cash stock-based compensation expense is not indicative of our operating results or cash flows from our operations. Further, we internally evaluate the performance of our operations excluding it.

Comparison of the Three Months Ended September 30, 2018 and 2017

The following table sets forth our revenues and expenses for the periods presented (in thousands):

	Three Months Ended September 30,
	2018			2017
Revenue:
Licensing revenue	$	12,000		$	—
Research and development revenue under collaboration agreement		7,241			9,906
Total revenue		19,241			9,906
Expenses:
Cost of sales - product		1,043			—
Cost of sales - intangible asset amortization		701			—
Cost of license		7,200			—
Research and development		27,068			15,287
Selling, general and administrative		35,507			6,034
Total expenses, excluding non-cash stock based compensation expense		71,519			21,321
Non-cash stock compensation expense		12,730			4,692
Total expenses		84,249			26,013
Loss from operations	$	(65,008	)	$	(16,107	)

Licensing revenue. Licensing revenue of $12.0 million for the three months ended September 30, 2018 relates to the upfront payment received from PTC Therapeutics related to our PTC License Agreement entered into in August 2018.

Research and development revenue. For the three months ended September 30, 2018, we recognized $7.2 million compared to $9.9 million for the three months ended September 30, 2017 (as revised), in research and development revenue from our collaboration with Novartis. The decrease in research and development revenue is primarily the result of level of efforts related to activities for our AKCEA-APO(a)-L_Rx and AKCEA-APOCIII-L_Rx  programs.

Cost of sales – product. Cost of sales – product expense of $1.0 million for the three months ended September 30, 2018 consists of period costs associated with the manufacturing of TEGSEDI.

Cost of sales – intangible asset amortization. Cost of sales expense – intangible asset amortization of $0.7 million for the three months ended September 30, 2018 consist of amortization of intangible assets recorded as a result of the achievement of the TEGSEDI European regulatory milestone paid to Ionis with the issuance of 1,597,571 of our common stock shares.

Cost of license. Cost of license of $7.2 million for the three months ended September 30, 2018 consists of TTR sub-license expense due to Ionis related to the upfront payment received as part of the licensing agreement entered with PTC Therapeutics in August 2018.

Research and development expenses. Research and development expenses were $27.1 million for the three months ended September 30, 2018 compared to $15.3 million for the same period in 2017. Our increase in research and development expenses was primarily due to development activities related to TEGSEDI, end of study activities related to AKCEA APO(a)-L_Rx as the clinical study finished data collection and reported topline results, and activities related to our Phase 2b studies for AKCEA APOCIII-L_Rx and AKCEA-ANGPTL3-L_Rx which were initiated in the first quarter of 2018. This increase was offset by a decrease in development activities for WAYLIVRA. All amounts exclude non-cash stock-based compensation expense related to equity awards.

Selling, general and administrative expenses. Selling, general and administrative expenses were $35.5 million for the three months ended September 30, 2018 compared to $6.0 million for the same period in 2017. Our general and administrative expenses increased due to the ongoing buildout of our commercial organization and advancement of pre-commercialization and commercialization activities necessary to launch TEGSEDI in the U.S., the EU and Canada, and WAYLIVRA, if approved for

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marketing in the EU as well as one-time expense incurred associated with the reorganization plan enacted in the U.S. as a result of the Complete Response Letter for our New Drug Application for WAYLIVRA. All amounts exclude non-cash stock-based compensation expense related to equity awards.

Investment income. Investment income for the three months ended September 30, 2018 totaled $1.7 million compared to $0.7 million for the same period in 2017. The increase in investment income was primarily due to a higher average investment balance and an increase in the interest rates on high quality debt and U.S. government agencies investments during 2018 compared to 2017.

Interest expense. Interest expense is comprised entirely of interest incurred under our line of credit agreement with Ionis. We incurred no interest expense during the three months ended September 30, 2018. Interest expense for the three months ended September 30, 2017 totaled $0.2 million. The outstanding principal and accrued interest under our line of credit converted into 13,438,339 shares of our common stock in connection with the closing of our IPO in July 2017 and we no longer have access to this line of credit following the closing of our IPO.

Net Loss and Net Loss Per Share

Net loss for the three months ended September 30, 2018 was $63.6 million compared to $17.6 million for the same period in 2017 (as revised). We incurred a higher net loss for the three months ended September 30, 2018 compared to the three months ended September 30, 2017 primarily due to the development and pre-commercialization and commercial activities for TEGSEDI, the increase in expenses related to pre-commercialization and development activities for WAYLIVRA and our other drugs, the one-time expense associated with the reorganization plan enacted in the U.S. as a result of the Complete Response Letter for our New Drug Application for WAYLIVRA, and the ongoing global expansion of our company. Basic and diluted net loss per preferred share for the three months ended September 30, 2017 (as revised) was $0.01. We had no outstanding preferred shares at September 30, 2018. Basic and diluted net loss per common share owned by Ionis and owned by others for the three months ended September 30, 2018 was $0.73. Basic and diluted net loss per common share owned by Ionis and owned by others for the three months ended September 30, 2017 was $0.33.

Comparison of the Nine Months Ended September 30, 2018 and 2017

The following table sets forth our revenues and expenses for the periods presented (in thousands):

	Nine Months Ended September 30,
	2018			2017
Revenue:
Licensing revenue	$	12,000		$	—
Research and development revenue under collaboration agreement	$	42,670		$	21,712
Total revenue		54,670			21,712
Expenses:
Cost of sales - product		1,043			—
Cost of sales - intangible asset amortization		701			—
Cost of license		7,200			—
Research and development		89,940			95,048
Selling, general and administrative		83,305			14,022
Total expenses, excluding non-cash stock based compensation expense		182,189			109,070
Non-cash stock compensation expense		31,239			11,814
Total expenses		213,428			120,884
Loss from operations	$	(158,758	)	$	(99,172	)

Licensing revenue. Licensing revenue of $12.0 million for the nine months ended September 30, 2018 relates to the upfront payment received from PTC Therapeutics related to our PTC License Agreement entered into in August 2018.

Research and development revenue. For the nine months ended September 30, 2018, we recognized $42.7 million compared to $21.7 million for the nine months ended September 30, 2017 (as revised), in research and development revenue from our collaboration with Novartis. The increase in revenue is consistent with an increase in research and development activities for AKCEA-APO(a)-L_Rx, for which we completed patient enrollment in our Phase 2b study in the first quarter of 2018, and increased research and development activities for AKCEA-APOCIII-L_Rx, for which we initiated patient enrollment in our Phase 2b study in the first quarter of 2018.

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Cost of sales – product. Cost of sales – product expense of $1.0 million for the nine months ended September 30, 2018 consists of period costs associated with the manufacturing of TEGSEDI.

Cost of sales – intangible asset amortization. Cost of sales expense – Intangible Asset Amortization of $0.7 million for the nine months ended September 30, 2018 consists of amortization of intangible assets recorded as a result of the achievement of the TEGSEDI European regulatory milestone paid to Ionis with the issuance of 1,597,571 of our common stock shares.

Cost of license. Cost of license of $7.2 million for the nine months ended September 30, 2018 consists of TTR sub-license expense due to Ionis related to the upfront payment received as part of the licensing agreement entered with PTC Therapeutics in August 2018.

Research and development expenses. Research and development expenses were $89.9 million for the nine months ended September 30, 2018 compared to $95.0 million for the same period in 2017. Our decrease in research and development expenses was primarily due to sublicensing expenses related to our collaboration with Novartis, which we incurred in the first quarter of 2017, the majority of which were non-cash. This decrease was offset in part by an increase related to development activities during the first nine months of 2018 primarily associated with the acquisition of TEGSEDI in the beginning of the second quarter, completion of enrollment in our Phase 2b study for AKCEA-APO(a)-L_Rx in the first quarter of 2018, which enrolled more than the planned 270 patients, and initiation of our Phase 2b studies for AKCEA-APOCIII-L_Rx and AKCEA-ANGPTL3-L_Rx, also in the first quarter of 2018. All amounts exclude non-cash stock-based compensation expense related to equity awards.

Selling, general and administrative expenses. Selling, general and administrative expenses were $83.3 million for the nine months ended September 30, 2018 compared to $14.0 million for the same period in 2017. Our selling, general and administrative expenses increased due to the ongoing buildout of our commercial organization and advancement of pre-commercialization and commercialization activities necessary to launch TEGSEDI in the U.S., the EU and Canada, and WAYLIVRA, if approved for marketing in the EU as well as one-time expense incurred associated with the reorganization plan enacted in the U.S. as a result of the Complete Response Letter for our New Drug Application for WAYLIVRA. All amounts exclude non-cash stock-based compensation expense related to equity awards.

Investment income. Investment income for the nine months ended September 30, 2018 totaled $4.1 million compared to $1.0 million for the same period in 2017. The increase in investment income was primarily due to a higher average investment balance and an increase in the interest rates on high quality debt and U.S. government agencies investments during 2018 compared to 2017.

Interest expense. Interest expense is comprised entirely of interest incurred under our line of credit agreement with Ionis. We incurred no interest expense during the nine months ended September 30, 2018. Interest expense for the nine months ended September 30, 2017 totaled $1.7 million. The outstanding principal and accrued interest under our line of credit converted into 13,438,339 shares of our common stock in connection with the closing of our IPO in July 2017 and we no longer have access to this line of credit following the closing of our IPO.

Net Loss and Net Loss Per Share

Net loss for the nine months ended September 30, 2018 was $155.3 million compared to $101.9 million for the same period in 2017 (as revised). We incurred a higher net loss for the nine months ended September 30, 2018 compared to the nine months ended September 30, 2017 primarily due to development and commercial activities associated with TEGSEDI, which was acquired in the second quarter of 2018, and the expenses related to pre-commercialization and development activities for WAYLIVRA and our other drugs, the one-time expense associated with the reorganization plan enacted in the U.S. as a result of the Complete Response Letter for our New Drug Application for WAYLIVRA, and the ongoing global expansion of our company. Basic and diluted net loss per preferred share for the nine months ended September 30, 2017 (as revised) was $2.16. We had no outstanding preferred shares at September 30, 2018. Basic and diluted net loss per common share owned by Ionis and owned by others for the nine months ended September 30, 2018 was $1.93 and $2.07, respectively. Basic and diluted net loss per common share owned by Ionis and owned by others for the nine months ended September 30, 2017 was $3.12.

LIQUIDITY AND CAPITAL RESOURCES

At September 30, 2018, we had cash, cash equivalents and investments of $320.3 million and accumulated deficit of $451.5 million.

We have funded our operating activities through a $100.0 million cash contribution that we received from Ionis in 2015, $75.0 million from initiating our collaboration with Novartis that we received in the first quarter of 2017 and $106.0 million in drawdowns under our line of credit with Ionis that we received in the first and second quarters of 2017. Our borrowings under our line of credit agreement with Ionis converted into shares of our common stock at the IPO price in connection with the closing of our IPO in July

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2017. We no longer have access to the line of credit. Additionally, in July 2017 we received $182.3 million in net proceeds from our IPO, including $25.0 million Ionis invested in our IPO and the Novartis concurrent private placement of $50 million.

In April 2018, the stockholders other than Ionis and its affiliates approved the development, commercialization, collaboration and license agreement, or TTR License Agreement, pursuant to which we acquired an exclusive license from Ionis to TEGSEDI and AKCEA-TTR-L_Rx and a stock purchase agreement, or Ionis SPA, with Ionis, our majority shareholder, which we entered into on March 14, 2018. To support our commercialization of TEGSEDI and AKCEA-TTR-L_Rx, Ionis purchased 10.7 million shares of our common stock for $200 million.

At September 30, 2018, we had working capital of $238.7 million compared to working capital of $178.4 million at December 31, 2017. Working capital increased in 2018 primarily due to the increase in our cash, cash equivalents and investments related to the sales of 10.7 million shares of our common stock to Ionis for $200.0 million as part of the TTR transaction noted above. As of September 30, 2018, our outstanding payable to Ionis was $23.9 million under the Amended Services Agreement.

TEGSEDI is approved in the U.S., EU and Canada and we are now beginning our commercialization efforts in these three regions. We expect to begin generating product revenue from TEGSEDI drug sales beginning in the fourth quarter of 2018. We anticipate that we will continue to incur losses for the foreseeable future, and losses may continue to increase as we develop, seek regulatory approval for, and begin to commercialize our other pipeline drugs. We are subject to all of the risks incident in developing and commercializing new drugs and we may encounter unforeseen expenses, difficulties, complications, delays and other unknown factors that may adversely affect our business.

Future Funding Requirements

We expect to raise additional funding in the future to continue developing the drugs in our pipeline and to expand our commercial efforts for TEGSEDI, which has been approved in the U.S., the EU and Canada, and WAYLIVRA. We expect that our cash, cash equivalents and investments of $320.3 million as of September 30, 2018, will be sufficient to fund our operating expenses and capital expenditure requirements for at least the next 12 months from issuance of these financial statements. Until such time, if ever, as we can generate substantial product revenue, we may finance our cash needs through additional financing in the future through the issuance of our common stock, through other equity or debt financings or through collaborations or partnerships with other companies. In any event, we may not generate significant revenue from product sales prior to the use of our existing cash, cash equivalents and investments. We do not have any committed external source of funds. Additional capital may not be available on reasonable terms, if at all. To the extent that we raise additional capital through the sale of stock or convertible debt securities, the ownership interest of our stockholders will be diluted and the terms of these securities may include liquidation or other preferences that adversely affect the rights of our common stockholders. Debt financing, if available, may involve agreements that include increased fixed payment obligations and covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures, declaring dividends, selling or licensing intellectual property rights and other operating restrictions that could adversely affect our ability to conduct our business. If we raise additional funds through collaborations or licensing arrangements with third parties, we may have to relinquish valuable rights to our drugs or grant licenses on terms that may not be favorable to us. If we cannot raise additional funds through stock offerings or debt financings when needed, we may be required to delay, limit, reduce or terminate our product development or future commercialization efforts or grant rights to develop and commercialize our drugs even if we would otherwise prefer to develop and commercialize the drugs ourselves.

Our forecast of the period of time through which our financial resources will be adequate to support our operations involves risks and uncertainties, and actual results could vary as a result of a number of factors. We have based this estimate on assumptions that may prove to be wrong and we could use our available capital resources sooner than we currently expect. The amount and timing of future funding requirements, both near- and long-term, will depend on many factors, including, but not limited to:

• the design, initiation, progress, size, timing, costs and results of our clinical and nonclinical studies;

• the outcome, timing and cost of regulatory approvals by the FDA and comparable foreign regulatory authorities, including the potential for the FDA or comparable foreign regulatory authorities to require that we perform more studies than, or evaluate clinical endpoints other than, those that we currently expect;

• the number and characteristics of drugs that we may pursue;

• our need to expand our development activities, including our need and ability to hire additional employees;

• the effect of competing technological and market developments;

• the cost of establishing sales, marketing, manufacturing and distribution capabilities for our drugs;

• our strategic collaborators' success in developing and commercializing our drugs;

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• our need to add infrastructure, implement internal systems and hire additional employees to operate as a public company; and

• the revenue, if any, generated from commercial sales of our drugs for which we receive marketing authorization, which may be affected by market conditions, including obtaining coverage and adequate reimbursement of our drugs from third-party payors, including government programs and managed care organizations, and competition within the therapeutic class to which our drugs are assigned.

If we cannot expand our operations or otherwise capitalize on our business opportunities because we lack sufficient capital, our business, financial condition and results of operations could be materially adversely affected.

Contractual Obligations and Commitments

On April 5, 2018, we entered into an operating lease agreement with MEPT Seaport 13 Stillings LLC, or MEPT, for 30,175 square feet of office space located in Boston, Massachusetts for our new corporate headquarters. The commencement date of the lease was August 15, 2018 and the initial term of the lease is 123 months with one five-year renewal option. We took occupancy of the office space in Boston, Massachusetts in September 2018. Minimum annual lease payments under this lease are $0.3 million in 2018, and future annual lease payments under this lease are $2.2 million in 2019, $2.3 million in 2020, $2.3 million in 2021, $2.3 million in 2022, and $14.2 million thereafter. MEPT is providing us with a three-month free rent period, which commenced on August 15, 2018, and a tenant improvement allowance up to $3.8 million. We provided MEPT with a letter of credit to secure our obligations under the lease in the initial amount of $2.4 million, to be reduced to $1.8 million on the third anniversary of the rent commencement date and to $1.2 million on the fifth anniversary of the rent commencement date if we meet certain conditions set forth in the lease at each such time. This balance is included in deposits and other assets on the accompanying condensed consolidated balance sheets.

Also in April 2018, the stockholders other than Ionis and its affiliates approved the development, commercialization, collaboration and license agreement, or TTR License Agreement, and a stock purchase agreement, or Ionis SPA, with Ionis, our majority shareholder, which we entered into on March 14, 2018. As part of the licensing transaction, we will be obligated to make milestone payments to Ionis in connection with the achievement of certain development, regulatory and commercialization events. These milestone payments include up to $110.0 million, if all TEGSEDI approval milestones are met; up to $145.0 million, if all AKCEA-TTR-L_Rx milestones are met; and up to $1.3 billion, if all sales milestones for the combined products are met. We can elect to pay each milestone payment in cash or shares of our common stock and Ionis may require payment in shares of common stock. Subsequent to the achievement of the milestone event for aggregate worldwide annual net sales of $750 million for the products, all subsequent milestone payments must be paid in cash.

On July 11, 2018, we received marketing authorization, or MA, approval for TEGSEDI from the European Commission, or EC, for the treatment of stage 1 or stage 2 polyneuropathy in adult patients with hereditary transthyretin amyloidosis, or hATTR amyloidosis, in the European Union, or EU. As a result of the MA approval in the EU, on August 3, 2018 we issued 1,597,571 shares of our common stock to Ionis as payment of the $40.0 million regulatory milestone for TEGSEDI, increasing Ionis’ ownership percentage to slightly above 75 percent as of September 30, 2018.

On October 5, 2018, we received regulatory approval for TEGSEDI from the FDA for the treatment of the polyneuropathy of hereditary transthyretin-mediated amyloidosis in adults in the United States. As a result of the regulatory approval in the United States, on October 17, 2018 we issued 1,671,849 shares of our common stock to Ionis as payment of the $50.0 million regulatory milestone for TEGSEDI, increasing Ionis’ ownership percentage to 76 percent.

Other than the above, there were no material changes to our contractual obligations and commitments described under Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the fiscal year ended December 31, 2017, as filed with the SEC on February 28, 2018.

Recently Issued Accounting Pronouncements

We describe the recently issued accounting pronouncements that apply to us in Note 2, Summary of Significant Accounting Policies, to our condensed consolidated financial statements.

Off-balance Sheet Arrangements

We did not have any off-balance sheet arrangements during the period presented, as defined in the rules and regulations of the SEC.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market risk represents the risk of loss that may impact our financial position due to adverse changes in financial market prices and rates. Our market risk exposure is primarily the result of fluctuations in interest rates and foreign exchange rates as well as, to a lesser extent, inflation.

Interest Rate Risk

We are exposed to changes in interest rates primarily from our investments in certain marketable securities. We place our cash equivalents and investments with reputable financial institutions. We primarily invest our excess cash in commercial paper and debt instruments of the U.S. Treasury, financial institutions, corporations, and U.S. government agencies with strong credit ratings and an investment grade rating at or above A-1, P-1 or F-1 by Moody's, Standard & Poor's, or Fitch, respectively. As of September 30, 2018, we had cash, cash equivalents and investments of $320.3 million.

We have established guidelines relative to diversification and maturities that are designed to maintain safety and liquidity. We periodically review and modify these guidelines to maximize trends in yields and interest rates without compromising safety and liquidity. We typically hold our investments for the duration of the term of the respective instrument. We do not utilize derivative financial instruments, derivative commodity instruments or other market risk sensitive instruments, positions or transactions to manage exposure to interest rate changes. A hypothetical 10% change in interest rates during any of the periods presented would not have had a material impact on our financial statements.

Foreign Currency Exchange Risk

Our results of operations are subject to foreign currency exchange rate fluctuations as we have foreign subsidiaries with functional currencies other than the U.S. dollar. We translate our subsidiaries’ functional currencies to our reporting currency, the U.S. dollar. As a result, our financial position, results of operations and cash flows can be affected by market fluctuations in foreign currency to U.S. dollar exchange rates, which are difficult to predict. A hypothetical 10% change in foreign exchange rates during any of the periods presented would not have had a material impact on our consolidated financial statements. Our business strategy incorporates potentially significant international expansion, particularly with the approval of TEGSEDI^TM (inotersen) in the EU and Canada and our efforts to obtain approval of WAYLIVRA^TM (volanesorsen) in the EU, therefore we expect that the impact of foreign currency exchange rate fluctuations may become more substantial in the future.

Inflation Risk

We do not believe that inflation has had a material effect on our business, financial condition or results of operations. If our costs were to become subject to significant inflationary pressures, we may not be able to fully offset such higher costs through price increases. Our inability or failure to do so could harm our business, financial condition and results of operations.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information we are required to disclose in our Exchange Act of 1934, as amended, or the Exchange Act, reports is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. We design and evaluate our disclosure controls and procedures recognizing that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance and not absolute assurance of achieving the desired control objectives.

As of our most recently completed fiscal year and as of the end of the period covered by this Quarterly Report on Form 10-Q, we carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer. Based on our evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of September 30, 2018. There have been no significant changes in our internal controls or in other factors that could significantly affect internal controls subsequent to September 30, 2018.

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We also performed an evaluation of any change in our internal control over financial reporting that occurred during our last fiscal quarter and that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. We implemented internal controls to ensure we adequately evaluated our contracts and properly assessed the impact of the new revenue recognition accounting guidance we adopted on January 1, 2018 reflected in our financial statements. We conducted this evaluation under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer. That evaluation did not identify any significant changes in our internal control over financial reporting that occurred during our latest fiscal quarter and that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Inherent Limitations on Effectiveness of Controls

Our management, including our Chief Executive Officer and Chief Financial Officer, believes that our disclosure controls and procedures and internal control over financial reporting are designed to provide reasonable assurance of achieving their objectives and are effective at the reasonable assurance level. However, our management does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. These inherent limitations include the realities that judgments in decision making can be faulty, and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people or by management override of the controls. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

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PART II — OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

From time to time, we may be involved in various claims and legal proceedings relating to claims arising out of our operations. We are not currently a party to any legal proceedings that, in the opinion of our management, are likely to have a material adverse effect on our business. Regardless of outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources and other factors.

ITEM 1A. RISK FACTORS

Investing in our securities involves a high degree of risk. You should consider carefully the following information about the risks described below, together with the other information contained in this Report and in our other public filings in evaluating our business. If any of the following risks actually occur, our business could be materially harmed, and our financial condition and results of operations could be materially and adversely affected. As a result, the trading price of our securities could decline, and you might lose all or part of your investment. The risks and uncertainties described below are not the only ones we face. Additional risks and uncertainties not presently known to us or that we currently believe to be immaterial may also adversely affect our business. The risk factors set forth below with an asterisk (*) next to the title are new risk factors or risk factors containing changes, which may be material, from the risk factors previously disclosed in Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2017.

Risks Related to Our Financial Condition and Need for Additional Capital

*We have a limited operating history and may never become profitable.

Ionis Pharmaceuticals, Inc., or Ionis, incorporated us as a Delaware corporation in December 2014, and we have operated as an affiliate of Ionis since that time. As such, we have limited experience as a company, and no experience operating independently from Ionis, and have not yet demonstrated that we can successfully overcome many of the risks and uncertainties frequently encountered in new and rapidly evolving fields, particularly the biotechnology and pharmaceutical fields.

As a company, we have limited experience commercializing products. Our ability to generate substantial revenue and achieve profitability depends on our ability, alone or with strategic partners, to successfully develop our drugs, and obtain the regulatory approvals necessary to commercialize our drugs, including TEGSEDI ^TM (inotersen), WAYLIVRA^TM (volanesorsen), AKCEA-APO(a)-L_Rx, AKCEA-TTR-L_Rx and our other drugs in development. We anticipate receiving our first revenue from product sales in 2018. Even if we achieve profitability in the future, we may not sustain profitability in subsequent periods. Our ability to generate revenue from product sales depends heavily on our and our current and future strategic partners' success in:

• completing clinical development of WAYLIVRA for additional indications and nonclinical and clinical development of AKCEA-APO(a)-L_Rx, AKCEA-TTR-L_Rx, AKCEA-ANGPTL3-L_Rx and AKCEA-APOCIII-L_Rx;

• seeking and obtaining regulatory and marketing authorization for our drugs, including TEGSEDI, WAYLIVRA, AKCEA-APO(a)-L_Rx and our other drugs in development;

• managing supply and manufacturing relationships with third parties that can provide the amount and quality of products and services we need to continue to develop and, if approved, commercialize TEGSEDI, WAYLIVRA, AKCEA-APO(a)-L_Rx, AKCEA-TTR-L_Rx and our other drugs in development;

• launching and commercializing TEGSEDI, WAYLIVRA, AKCEA-ANGPTL3-L_Rx, AKCEA-TTR-L_Rx by managing a sales, marketing and distribution infrastructure;

• launching and co-commercializing AKCEA-APO(a)-L_Rx and AKCEA-APOCIII-L_Rx through our collaboration with Novartis Pharma AG, or Novartis, under terms that we plan to negotiate with Novartis in the future;

• educating physicians about our target patient populations, including the polyneuropathy of hereditary transthyretin-mediated amyloidosis in adult patients in the United States, stage 1 or stage 2 polyneuropathy in adult patients with hereditary TTR Amyloidosis (hATTR) in the EU or Canada, patients with familial chylomicronemia syndrome, or FCS, and patients with familial partial lipodystrophy, or FPL;

• obtaining market acceptance of TEGSEDI, WAYLIVRA, AKCEA-APO(a)-L_Rx, AKCEA-TTR-L_Rx and our other drugs in development as viable treatment options;

• obtaining and maintaining adequate coverage and reimbursement from third-party payors for TEGSEDI, WAYLIVRA, AKCEA-APO(a)-L_Rx, AKCEA-TTR-L_Rx and our other drugs in development;

• addressing any competing technological and market developments;

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• negotiating favorable terms in any partnership, licensing or other arrangements into which we may enter;

• maintaining, protecting and expanding our portfolio of intellectual property rights, including patents, product trademarks and know-how;

• developing and commercializing TEGSEDI, WAYLIVRA, AKCEA-ANGPTL3-L_Rx, AKCEA-TTR-L_Rx and our other drugs in development without infringing others' intellectual property rights; and

• attracting, hiring and retaining qualified personnel.

We may not successfully develop any products, generate product revenue or achieve profitability. If we cannot achieve or maintain profitability, it would depress the market price of our common stock and could impair our ability to raise capital, expand our business, diversify our product offerings or continue our operations. If the market price of our common stock declined, you could lose all or part of your investment.

*We have incurred losses since our inception.

Because drug development requires substantial lead-time and funding prior to commercialization, we have incurred expenses while generating limited revenue from our operating activities since our formation. Our net losses were $63.6 million and $17.6 million for the nine months ended September 30, 2018 and September 30, 2017, respectively (as revised). As of September 30, 2018, we had an accumulated deficit of approximately $451.5 million. Most of the losses resulted from costs incurred in connection with our development programs and from general and administrative costs associated with our operations. We expect to incur additional operating losses for the foreseeable future, and these losses may increase if we cannot generate substantial revenue.

*We will require substantial additional funding to achieve our goals. If we fail to obtain timely funding, we may need to curtail or abandon some of our programs.

All of our drugs are undergoing clinical studies. All of our drug programs, except TEGSEDI in the United States, EU, and Canada, will require additional nonclinical and/or clinical testing and/or marketing authorization prior to commercialization. We will need to spend significant additional resources to conduct these activities. Our expenses could increase beyond expectations if the U.S. Food and Drug Administration, or FDA, the European Medicines Agency, or EMA, or other regulatory authorities require us to perform clinical studies and other studies in addition to those that we currently anticipate. As of September 30, 2018, we had cash, cash equivalents and investments equal to $320.3 million. Our operating expenses were $213.4 million and $120.9 million for the nine months ended September 30, 2018 and September 30, 2017, respectively.

Prior to our IPO, we funded our operating activities through a $100.0 million cash contribution we received from Ionis in 2015, $75.0 million that we received from initiating our collaboration with Novartis and $106.0 million in drawdowns under our line of credit with Ionis. The line of credit converted to our common stock when we closed our IPO. We no longer have access to the line of credit following the closing of our IPO and we do not have any firm commitment from Ionis to fund our cash flow deficits or provide other direct or indirect financial assistance to us. Additionally, in July 2017 we received $182.3 million in net proceeds from our IPO including $25.0 million that Ionis invested in our IPO and the Novartis concurrent private placement of $50 million. In April 2018, we received $200.0 million from the common stock we issued in connection with the licensing transaction with Ionis discussed in Note 5, Development, Commercialization and License Agreements and Services Agreement with Ionis, to our condensed consolidated financial statements included in this Form 10-Q. We expect that we will need to raise additional funding to continue developing the drugs in our pipeline and to seek regulatory approval for and to commercialize TEGSEDI, WAYLIVRA and other drugs in our pipeline.

We have received marketing authorization approval of TEGSEDI from the FDA for the treatment of the polyneuropathy of hATTR in adult patients in the United States, from the European Commission, or EC, and from Health Canada for the treatment of stage 1 or stage 2 polyneuropathy in adult patients with hATTR, and we will incur significant costs to commercialize TEGSEDI. Even if we obtain marketing authorizations to sell WAYLIVRA, AKCEA-APO(a)-L_Rx or AKCEA-TTR-L_Rx, we will incur significant costs to commercialize the approved product. Even if we generate revenue from the sale of any approved products, we may not become profitable and would need to obtain additional funding to continue operations.

Risks Related to Clinical Development, Regulatory Review and Approval of Our Drugs

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

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

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If any of our drugs in clinical studies, including WAYLIVRA, AKCEA-APO(a)-L_Rx, AKCEA-TTR-L_Rx and our other drugs in development, do not show sufficient safety and efficacy in patients with the targeted indication, it would negatively affect our development and commercialization goals for the drug and we would have expended significant resources with little or no benefit to us.

*Even if our drugs are successful in preclinical and earlier-stage clinical studies, the drugs may not be successful in later-stage clinical studies.

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

• the clinical study may produce negative or inconclusive results;

• regulators may require that we hold, suspend or terminate clinical research for noncompliance with regulatory requirements;

• we, our partners, the FDA or foreign regulatory authorities could suspend or terminate a clinical study due to adverse side effects of a drug on people in the study;

• we or our partners may decide, or regulators may require us, to conduct additional preclinical testing or clinical studies;

• we or our partners may not identify, recruit and train suitable clinical investigators at a sufficient number of study sites;

• the institutional review board for a prospective site might withhold or delay its approval for the study;

• enrollment in our clinical studies may be slower than we anticipate;

• patients who enroll in the clinical study may later drop out due to adverse events, a perception they are not benefiting from participating in the study, fatigue with the clinical study process or personal issues;

• a clinical study site may deviate from the protocol for the study;

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

• we or our partners may require additional capital to fund the clinical study; and

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

In addition, WAYLIVRA and AKCEA-APOCIII-LRx have the same mechanism of action, TEGSEDI and AKCEA-TTR-LRx, also have the same mechanism of action and all of our current drugs, including WAYLIVRA, AKCEA-APO(a)-LRx, AKCEA-ANGPTL3-LRx and AKCEA-APOCIII-LRx, are chemically similar to each other and the drugs Ionis and other companies are developing separately. As a result, a safety observation we, Ionis or other companies encounter with one of our or their drugs could have or be perceived by a regulatory authority to have an impact on a different drug we are developing. This could cause the FDA and other regulators to ask questions or take actions that could harm or delay our ability to develop and commercialize our drugs or increase our costs. For example, the FDA or other regulatory agencies could request, among other things, any of the following regarding one of our drugs: additional information or commitments before we can start or continue a clinical study, protocol amendments, increased safety monitoring, additional product labeling information, and post-approval commitments. Similarly, we have an ongoing Phase 3 study of WAYLIVRA in patients with FPL, an ongoing open label extension study of WAYLIVRA in patients with FCS and an open label extension study of TEGSEDI in patients with hATTR, and an early access program, or EAP, for both WAYLIVRA and TEGSEDI. Adverse events or results from these studies or the EAPs could negatively impact our pending or future marketing approval applications for WAYLIVRA and TEGSEDI in patients with FCS or hATTR amyloidosis or the commercial opportunity for WAYLIVRA or TEGSEDI. We received a CRL from the FDA regarding the new drug application for WAYLIVRA in which the FDA determined that the safety concerns identified with WAYLIVRA in our clinical development program outweighed the expected benefits of triglyceride lowering in patients with FCS. We also received a preliminary notification of a Notice of Noncompliance withdrawal letter, or Non-W, from Health Canada for WAYLIVRA. We and Ionis are engaged with the FDA and plan to work with Health Canada to confirm a path forward for WAYLIVRA. As a result, we will need to submit additional data to FDA and may need to  conduct additional clinical studies before obtaining marketing authorization, which in turn could delay or prevent us from generating any revenue or profit from the sale of WAYLIVRA. The regulatory authorities and Europe could have a similar response to the pending marketing authorization application.

Any failure or delay in the clinical studies for any of our drugs in development could reduce the commercial potential or viability of our drugs.

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*We may not have appropriately designed the planned and ongoing clinical studies for WAYLIVRA, AKCEA-APO(a)-L_Rx, AKCEA-TTR-L_Rx and our other drugs in development to support submission of a marketing application to the FDA and foreign regulatory authorities or demonstrate safety or efficacy at the level required by the FDA and foreign regulatory authorities for product approval.

We recently completed a Phase 3 clinical program for WAYLIVRA for the treatment of FCS and have an ongoing Phase 3 study of WAYLIVRA in patients with FPL. We are also conducting or plan to conduct additional clinical studies for AKCEA-TTR-L_Rx AKCEA-APO(a)-L_Rx, AKCEA-ANGPTL3-L_Rx and AKCEA-APOCIII-L_Rx.

Even if we achieve positive results on the endpoints for these clinical studies or any future clinical studies, the FDA or foreign regulatory authorities may believe the clinical studies do not show the appropriate balance of safety and efficacy in the indication being sought or may interpret the data differently than we do, and deem the results insufficient to demonstrate the appropriate balance of safety and efficacy at the level required for product approval. For example, we received a CRL from the FDA regarding the new drug application for WAYLIVRA in which the FDA determined that the safety concerns identified with WAYLIVRA in our clinical development program outweighed the expected benefits of triglyceride lowering in patients with FCS. We also received a preliminary notification of a Notice of Noncompliance withdrawal letter, or Non-W, from Health Canada for WAYLIVRA. We and Ionis are engaged with the FDA and plan to work with Health Canada to confirm a path forward for WAYLIVRA. As a result, we will need to submit additional data to the FDA and may need to conduct additional clinical studies before obtaining marketing authorization, which in turn could delay or prevent us from generating any revenue or profit from the sale of WAYLIVRA. The regulatory authorities Europe could have a similar response to the pending marketing authorization application. These risks are more likely to occur since we are developing our drugs against therapeutic targets or to treat diseases in which there is little or no clinical experience. In addition, these risks may be more likely to occur for WAYLIVRA since there were some patients in the Phase 3 program that experienced serious platelet events (grade 4 thrombocytopenia), a condition in which the patient has very low platelet levels, and additional patients experienced other adverse events in the program, including patients who discontinued participation in the APPROACH study due to platelet count declines. We believe that the enhanced monitoring we have implemented to support early detection and management of these issues can help manage these safety issues so that patients can continue treatment. Since implementation of the enhanced monitoring, serious platelet events have been infrequent.

We may make modifications to the clinical study protocols or designs of our ongoing clinical studies that delay enrollment or completion of such clinical studies and could delay regulatory approval of WAYLIVRA and our other drugs in development. Any failure to obtain approval for WAYLIVRA, AKCEA-APO(a)-L_Rx, AKCEA-TTR-L_Rx and our other drugs in development on the timeline that we currently anticipate, or at all, would have a material and adverse impact on our business, prospects, financial condition and results of operations and could cause our stock price to decline.

*Clinical studies for either WAYLIVRA, AKCEA-APO(a)-L_Rx, AKCEA-TTR-L_Rxor our other drugs may not demonstrate safety or efficacy at the level required by the FDA and foreign regulatory authorities for product approval.

The EMA is currently reviewing our application for regulatory approval for WAYLIVRA. We and Ionis intend to conduct clinical studies for AKCEA-TTR-L_Rx.

Even if positive results on the endpoints for the clinical studies are achieved, the FDA or foreign regulatory authorities may believe the clinical studies do not show the appropriate balance of safety and efficacy in the indication being sought or may interpret the data differently than we do, and may deem the results insufficient to demonstrate the appropriate balance of safety and efficacy at the level required for product approval. For example, we received a CRL from the FDA regarding the new drug application for WAYLIVRA in which the FDA determined that the safety concerns identified with WAYLIVRA in our clinical development program outweighed the expected benefits of triglyceride lowering in patients with FCS. We also received a preliminary notification of a Notice of Noncompliance withdrawal letter, or Non-W, from Health Canada for WAYLIVRA. We and Ionis are engaged with the FDA and plan to work with Health Canada to confirm a path forward for WAYLIVRA. As a result, we will need to submit additional data to FDA and may need to conduct additional clinical studies before obtaining marketing authorization, which in turn could delay or prevent us from generating any revenue or profit from the sale of WAYLIVRA. The regulatory authorities in Europe could have a similar response to the pending marketing authorization application. As an additional example, the foreign regulatory authorities could claim that we have not tested WAYLIVRA, AKCEA-APO(a)-LRx or AKCEA-TTR-LRx in a sufficient number of patients to demonstrate that the drug is safe and effective in patients with other indications to support an application for marketing authorization for the applicable indication. In such a case, we may need to conduct additional clinical studies before obtaining marketing authorization, which would be expensive and delay the development and commercialization of the drug.

Any failure to obtain approvals for WAYLIVRA in other important markets outside of the United States and Canada, including the EU, on the timeline that we currently anticipate, or at all, would have a material and adverse impact on our business, prospects, financial condition and results of operations and could cause our stock price to decline.

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*If we or our partners fail to obtain regulatory approval for our drugs, including WAYLIVRA, AKCEA-APO(a)-L_Rx, AKCEA-TTR-L_Rx and our other drugs in development, or additional approvals for TEGSEDI, we or our partners cannot sell them in the applicable markets.

We cannot guarantee that any of our drugs, including WAYLIVRA, AKCEA-APO(a)-L_Rx, AKCEA-TTR-L_Rx and our other drugs in development, will be safe and effective, or will be approved or receive additional approvals for commercialization. We and our partners must conduct time-consuming, extensive and costly clinical studies to demonstrate the safety and efficacy of each of our drugs, including WAYLIVRA, AKCEA-APO(a)-L_Rx, AKCEA-TTR-L_Rx and our other drugs in development, before they can be approved, or receive additional approvals, for sale. We and our partners must conduct these studies in compliance with FDA regulations and with comparable regulations in other countries.

We or our partners may not obtain necessary regulatory approvals on a timely basis, if at all, for any of our drugs. It is possible that regulatory authorities will not approve TEGSEDI in additional markets or any of our other drugs, including WAYLIVRA, AKCEA-APO(a)-L_Rx, AKCEA-TTR-L_Rx and our other drugs in development, for marketing. If the FDA or another regulatory authority believes that we or our partners have not sufficiently demonstrated the safety or efficacy of any of our drugs, including WAYLIVRA, AKCEA-APO(a)-L_Rx, AKCEA-TTR-L_Rx and our other drugs in development, the authority will not approve the specific drug or will require additional studies, which can be time consuming and expensive and which will delay or harm our ability to successfully commercialize the drug. For example, we received a CRL from the FDA regarding the new drug application for WAYLIVRA in which the FDA determined that the safety concerns identified with WAYLIVRA in our clinical development program outweighed the expected benefits of triglyceride lowering in patients with FCS. We also received a preliminary notification of a Notice of Noncompliance withdrawal letter, or Non-W, from Health Canada for WAYLIVRA. We and Ionis are engaged with the FDA and plan to work with Health Canada to confirm a path forward for WAYLIVRA. As a result, we will need to submit additional data to FDA and may need to conduct additional clinical studies before obtaining marketing authorization, which in turn could delay or prevent us from generating any revenue or profit from the sale of WAYLIVRA. The regulatory authority in Europe could have a similar response to the pending marketing authorization.

The FDA or other comparable foreign regulatory authorities can delay, limit or deny approval of a drug for many reasons, including:

• such authorities may disagree with the design or implementation of our clinical studies;

• we or our partners may be unable to demonstrate to the satisfaction of the FDA or other regulatory authorities that a drug is safe and effective for any indication;

• such authorities may not accept clinical data from studies conducted at clinical facilities that have deficient clinical practices or that are in countries where the standard of care is potentially different from the United States;

• we or our partners may be unable to demonstrate that our drug's clinical and other benefits outweigh its safety risks to support approval;

• such authorities may disagree with the interpretation of data from preclinical or clinical studies;

• such authorities may find deficiencies in the manufacturing processes or facilities of third-party manufacturers who manufacture clinical and commercial supplies for our drugs; and

• the approval policies or regulations of such authorities or their prior guidance to us or our partners during clinical development may significantly change in a manner rendering our clinical data insufficient for approval.

Failure to successfully develop WAYLIVRA, AKCEA-APO(a)-L_Rx, AKCEA-TTR-L_Rx and our other drugs in development, or to receive marketing authorization for these drugs in important markets or delays in these authorizations would prevent or delay the commercial launch of the drug, and, as a result, would negatively affect our ability to generate revenue.

*We may not be able to benefit from orphan drug designation for WAYLIVRA, TEGSEDI or any of our other drugs.

The FDA and EMA have granted orphan drug designation to WAYLIVRA for the treatment of patients with FCS. The EMA has granted orphan drug designation to WAYLIVRA for the treatment of patients with FPL and we are in the process of applying for orphan drug status for FPL in the United States.

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In the United States, under the Orphan Drug Act, the FDA may designate a drug as an orphan drug if it is intended to treat a rare disease or condition, which is generally defined as a patient population of fewer than 200,000 individuals in the United States. Orphan drug designation does not convey any advantage in, or shorten the duration of, the regulatory review and approval process, but it can provide financial incentives, such as tax advantages and user-fee waivers, as well as longer regulatory exclusivity periods.

We may lose orphan drug exclusivity if the FDA determines that the request for designation was materially defective or if we cannot assure sufficient quantity of the applicable drug to meet the needs of patients with the rare disease or condition.

Even if we maintain orphan drug exclusivity for WAYLIVRA or TEGSEDI or obtain orphan drug exclusivity for our other drugs, the exclusivity may not effectively protect the drug from competition because regulatory authorities still may authorize different drugs for the same condition.

*We may expend our limited resources to pursue a particular drug or indication and fail to capitalize on drugs or indications that may be more profitable or for which there is a greater likelihood of success.

We will dedicate a substantial amount of our resources to commercialize TEGSEDI and support the continued development of AKCEA-TTR-L_Rx. In addition, we may dedicate a substantial amount of our resources to develop and seek regulatory approval for WAYLIVRA to treat patients with FCS and FPL. As a result, we may forego or delay pursuit of opportunities with our other drugs or for other indications that later prove to have greater commercial potential. Our resource allocation decisions may cause us to fail to capitalize on viable commercial drugs or profitable market opportunities. Our spending on current and future research and development programs and drugs for specific indications may not yield any commercially viable drugs.

*Our drugs, including TEGSEDI, WAYLIVRA, AKCEA-APO(a)-L_Rx, AKCEA-TTR-L_Rx and our other drugs in development, could be subject to regulatory limitations following approval.

Following approval of a drug, we and our partners must comply with comprehensive government regulations regarding the manufacture, marketing and distribution of drug products. Promotional communications regarding prescription drugs must be consistent with the information in the product's approved labeling. We and our partners may not obtain the labeling claims necessary or desirable to successfully commercialize, if approved, our drug products, including WAYLIVRA, TEGSEDI, AKCEA-APO(a)-L_Rx, AKCEA-TTR-L_Rx and our other drugs in development.

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

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

•TEGSEDI requires periodic blood and urine monitoring, and

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

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

In addition, if we or others identify side effects after any of our drug products are on the market, if manufacturing problems occur subsequent to regulatory approval, or if we, our manufacturers or our partners fail to comply with regulatory requirements, we or our partners could be subject to:

• changes to the product label;

• restrictions on the marketing of a product;

• restrictions on product distribution;

• restrictions on such products' manufacturing processes;

• requirements to conduct post-marketing clinical studies;

• Untitled or Warning Letters;

• withdrawal of the products from the market;

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• refusal to approve pending applications or supplements to approved applications that we submit;

• recall of products;

• fines, restitution or disgorgement of profits or revenue;

• suspension or withdrawal of regulatory approvals;

• refusal to permit the import or export of our products;

• product seizure;

• injunctions;

• restrictions on our ability to conduct clinical studies, including full or partial clinical holds on ongoing or planned clinical studies; or

• imposition of civil or criminal penalties.

Any one or a combination of these events could prevent us from achieving or maintaining market acceptance of the affected drug product or could substantially increase the costs and expenses of commercializing such drug product, which in turn could delay or prevent us from generating any revenue or profit from the sale of the drug product.

*The development and commercialization of TEGSEDI and WAYLIVRA may place strain on our management team’s time and attention and may divert our management team’s attention from our other existing products.

Although we have personnel with experience commercializing drugs, we ourselves have limited experience commercializing products. During 2018, we plan to commercially launch TEGSEDI and, if regulatory approval is obtained, WAYLIVRA. The commercial launches of the products will require significant efforts and the devotion of substantial resources, as we will need to finalize regulatory submissions, manage the manufacturing of sufficient quantities of product to support long-term commercial sales and integrate, optimize or maintain, as applicable, the global sales, marketing, medical, for each of WAYLIVRA and TEGSEDI, and patient support infrastructure, which may place pressure on the management team’s time and attention. These efforts may also divert the attention of the management team from our other business operations, such as the development or commercialization of our other pipeline products, including AKCEA-APO(a)-L_Rx, AKCEA-TTR-L_Rx, AKCEA-ANGPTL3-L_Rx and AKCEA-APOCIII-L_Rx. As a result, our business, results of operations, financial condition and prospects for future growth could be adversely impacted and the market price of our common stock may decline.

Risks Related to Commercialization of Our Drugs

*If we cannot effectively manage our marketing and sales capabilities or enter into agreements with third parties to market and sell our drug products, we may not generate product revenue.

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

Even though certain members of our management team and other employees have significant experience commercializing drug products, as a company we have limited experience marketing, selling or distributing drug products, and there are significant risks involved in building and managing a commercial infrastructure. It will be expensive and time consuming for us to maintain our own sales forces and related compliance protocols to market TEGSEDI and WAYLIVRA. We may never successfully optimize or manage this capability and any failure could delay or preclude the TEGSEDI and WAYLIVRA launch. We and our partners, if any, will have to compete with other companies to recruit, hire, train, manage and retain marketing and sales personnel. As a result of our receipt of a CRL from the FDA regarding the new drug application for WAYLIVRA, on September 6, 2018, we enacted a plan to reorganize our workforce to better align with the immediate needs of our business. In connection with this reorganization plan, we reduced our workforce by approximately 12%. If WAYLIVRA is subsequently approved in the United States, we will again need to increase our operations and expand our use of third-party contractors.

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We have incurred expenses preparing to launch, and launching, TEGSEDI in the EU, Canada and the U.S., and to integrate and manage the marketing and sales infrastructure. If regulatory requirements or other factors cause the commercial launch of TEGSEDI to be less successful than expected in important markets, we would incur additional expenses for having invested in these capabilities prior to realizing any significant revenue from sales of TEGSEDI. Our sales force and marketing teams may not successfully commercialize TEGSEDI.

We will incur expenses prior to the launch of WAYLIVRA to integrate and manage the marketing and sales infrastructure. If regulatory requirements or other factors cause a delay in the commercial launch of WAYLIVRA, we would incur additional expenses for having invested in these capabilities earlier than required and prior to realizing any revenue from sales of WAYLIVRA. Our sales force and marketing teams may not successfully commercialize WAYLIVRA. As a result of our receipt of a CRL from the FDA regarding the new drug application for WAYLIVRA, on September 6, 2018, we enacted a plan to reorganize our workforce to better align with the immediate needs of our business. In connection with this reorganization plan, we reduced our workforce by approximately 12% and incurred expenses of $2.3 million associated with the reorganization plan.

To the extent we decide to rely on third parties to commercialize TEGSEDI or WAYLIVRA in a particular geographic market, we may receive less revenue than if we commercialized TEGSEDI or WAYLIVRA by ourselves. For example, in August 2018, we granted PTC Therapeutics International Limited, or PTC Therapeutics, the exclusive right to commercialize TEGSEDI and WAYLIVRA in Latin America and certain Caribbean countries, and will rely on PTC Therapeutics to commercialize TEGSEDI and WAYLIVRA in those geographic markets. Further we would have less control over the sales efforts of any other third parties, including PTC Therapeutics, involved in commercializing TEGSEDI or WAYLIVRA.

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

*We plan to rely on third-party specialty channels to distribute TEGSEDI, WAYLIVRA and our other drugs to patients. If we cannot effectively manage this distribution process, it could harm or delay the commercial launch and sales of TEGSEDI, WAYLIVRA and our other drugs in development.

We and our strategic partners have contracted with, and will rely on, third-party specialty pharmacies to distribute TEGSEDI, WAYLIVRA, and our other drugs to patients. A specialty pharmacy is a pharmacy that specializes in dispensing medications for complex or chronic conditions, a process that requires a high level of patient education and ongoing management. Our management team will need to devote a significant amount of its attention to optimizing and managing this distribution network. If we cannot effectively optimize and manage this distribution process, the commercial launch and sales of TEGSEDI, WAYLIVRA, AKCEA-APO(a)-L_Rx and AKCEA-TTR-L_Rx will be delayed or less successful, which would harm our results of operations.

In addition, the use of specialty pharmacies involves certain risks, including, but not limited to, risks that these organizations will:

• not provide us with accurate or timely information regarding their inventories, the number of patients who are using our drugs or complaints regarding our drugs;

• not effectively sell or support TEGSEDI, WAYLIVRA, AKCEA-APO(a)-L_Rx, AKCEA-TTR-L_Rx or our other drugs;

• reduce or discontinue their efforts to sell or support TEGSEDI, WAYLIVRA, AKCEA-APO(a)-L_Rx, AKCEA-TTR-L_Rx or our other drugs;

• not devote the resources necessary to sell TEGSEDI, WAYLIVRA, AKCEA-APO(a)-L_Rx, AKCEA-TTR-L_Rx or our other drugs in the volumes and within the time frames that we expect;

• not satisfy financial obligations to us or others; or

• cease operations.

Any such events may result in decreased sales and lower revenue, which could have a material adverse effect on our business, prospects, financial condition and results of operations.

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*If the market does not accept our drugs, including TEGSEDI, WAYLIVRA, AKCEA-TTR-L_Rx and our other drugs in development, we are not likely to generate substantial product revenue or become profitable.

Even though we have obtained marketing authorization approval from the FDA, the EC and Health Canada for TEGSEDI, and if we or our strategic partners obtain a marketing authorization for WAYLIVRA, AKCEA-TTR-L_Rx and our other drugs in development, our success will depend upon the medical community, patients and third-party payors accepting our drugs as medically useful, cost-effective, safe and convenient. Even if the FDA or foreign regulatory authorities authorize our drugs for commercialization, doctors may not prescribe our drugs to treat patients. We and our partners may not successfully commercialize additional drugs.

Additionally, in many of the markets where we or our partners may sell our drugs in the future, if we cannot agree with the government or other third-party payors regarding the price we can charge for our drugs, then we may not be able to sell our drugs in that market. Similarly, cost control initiatives by governments or third-party payors could decrease the price received for our drugs or increase patient coinsurance to a level that makes commercializing TEGSEDI, WAYLIVRA, AKCEA-APO(a)-L_Rx, AKCEA-TTR-L_Rx and our other drugs in development economically unviable.

The degree of market acceptance for TEGSEDI, WAYLIVRA, AKCEA-APO(a)-L_Rx, AKCEA-TTR-L_Rx and our other drugs in development depends upon a number of factors, including the:

• receipt and scope of marketing authorizations;

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

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

• patient convenience of the dosing regimen for our drugs; and

• reimbursement by government and third-party payors.

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

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

*The patient populations suffering from FCS and FPL are small and have not been established with precision. If the actual number of patients is smaller than we estimate, or if we cannot raise awareness of these diseases and diagnosis is not improved, our revenue and ability to achieve profitability may be adversely affected.

We estimate there are 3,000 to 5,000 FCS patients and an additional 3,000 to 5,000 FPL patients globally. Our estimates of the sizes of the patient populations are based on published studies as well as internal analyses. If the results of these studies or our analyses of them do not accurately reflect the number of patients with FCS and FPL, our assessment of the market potential for WAYLIVRA may be inaccurate, making it difficult or impossible for us to meet our revenue goals, or to obtain and maintain profitability. In addition, as is the case with most orphan diseases, if we cannot successfully raise awareness of these diseases and improve diagnosis, it will be more difficult or impossible to achieve profitability.

In addition, since the patient populations for FCS and FPL are small, the per-patient drug pricing must be priced appropriately in order to recover our development and manufacturing costs, fund adequate patient support programs and achieve profitability. For these initial indications, we may not maintain or obtain sufficient sales volume at a price that justifies our product development efforts and our sales and marketing and manufacturing expenses.

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*The patient population suffering from hATTR amyloidosis is small and has not been established with precision. If the actual number of patients is smaller than we estimate, or if we cannot raise awareness of the disease and diagnosis is not improved, our revenue and ability to achieve profitability from either TEGSEDI or AKCEA-TTR-L_Rx may be adversely affected.

Our estimate of the sizes of the patient populations are based on published studies as well as internal analyses. If the results of these studies or our analyses of them do not accurately reflect the number of patients with hATTR amyloidosis, our assessment of the market potential for either TEGSEDI or AKCEA-TTR-L_Rx may be inaccurate, making it difficult or impossible for us to meet our revenue goals, or to obtain and maintain profitability. In addition, as is the case with most orphan diseases, if we cannot successfully raise awareness of these diseases and improve diagnosis, it will be more difficult or impossible to achieve profitability. For these initial indications, we may not maintain or obtain sufficient sales volume at a price that justifies our product development efforts and our sales and marketing and manufacturing expenses.

*If we or our partners fail to compete effectively, WAYLIVRA, TEGSEDI and our other drugs in development will not contribute significant revenue.

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

• safer than our drugs;

• more effective than our drugs;

• priced lower than our drugs;

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

• more convenient to use than our drugs.

These competitive developments could make our drugs, including WAYLIVRA, TEGSEDI, AKCEA-APO(a)-L_Rx, AKCEA-TTR-L_Rx and our other drugs in development, obsolete or non-competitive. Further, all of our drugs are delivered by injection, which may render them less attractive to patients than non-injectable products offered by our current or future competitors.

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

There are several pharmaceutical and biotechnology companies engaged in the development or commercialization of products against targets that are also targets of drugs in our development pipeline. For example, if approved, WAYLIVRA could face competition from drugs like metreleptin. Metreleptin, produced by Novelion Therapeutics, Inc., is currently approved for use in generalized lipodystrophy patients. In September 2016, Arrowhead Pharmaceuticals, Inc. and Amgen Inc. announced a license and collaboration for development of Arrowhead's preclinical program which uses an RNAi conjugated with a GalNAc for the same target as AKCEA-APO(a)-L_Rx. AKCEA-APOCIII-L_Rx may compete with gemcabene, an oral small molecule that reduces apoC-III, that Gemphire Therapeutics, Inc. is developing to treat patients with triglycerides above 500 mg/dL. As an additional example, TEGSEDI could face competition from drugs like patisiran and ALN-TTRsc02 in development by Alnylam, tafamidis commercialized in Europe and in development by Pfizer and tolcapone in development by SOM Biotech, the generic drug diflunisal, and AG10 in development by Eidos. For example, patisiran is approved in the United States and Europe for a similar and broader indication as TEGSEDI. AG10, which recently began its Phase 2 dose-finding study in May, is an orally administered TTR tetramer stabilizer for ATTR amyloidosis. If WAYLIVRA, TEGSEDI or the other drugs in our pipeline cannot compete effectively with these and other products with common or similar indications to the drugs in our pipeline, we may not be able to generate substantial revenue from our product sales.

*If government or other third-party payors fail to provide adequate coverage and payment rates for TEGSEDI, WAYLIVRA, AKCEA-APO(a)-L_Rx, AKCEA-TTR-L_Rx and our other drugs in development, our revenue and prospects for profitability will be limited.

In both domestic and foreign markets, sales of our future products will depend in part upon the availability of coverage and reimbursement from third-party payors. The majority of patients in the United States who would fit within our target patient populations for our drugs have their healthcare supported by a combination of Medicare coverage, other government health programs such as Medicaid, managed care providers, private health insurers and other organizations. Coverage decisions may depend upon clinical and economic standards that disfavor new drug products when more established or lower cost therapeutic alternatives are

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already available or subsequently become available. Assuming coverage is approved, the resulting reimbursement payment rates might not be enough to make our drugs affordable. Accordingly, TEGSEDI and, if approved, WAYLIVRA, AKCEA-APO(a)-L_Rx, AKCEA-TTR-L_Rx and our other drugs in development, will face competition from other therapies and drugs for limited financial resources. We may need to conduct post-marketing studies to demonstrate the cost-effectiveness of any future products to satisfy third-party payors. These studies might require us to commit a significant amount of management time and financial and other resources. Third-party payors may never consider our future products as cost-effective. Adequate third-party coverage and reimbursement might not be available to enable us to maintain price levels sufficient to realize an appropriate return on investment in product development.

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

If we are found in violation of federal or state "fraud and abuse" laws or other healthcare laws and regulations, we may be required to pay a penalty and/or be suspended from participation in federal or state healthcare programs, which may adversely affect our business, financial condition and results of operation.

We may be subject to various federal and state laws pertaining to healthcare "fraud and abuse," including anti-kickback laws and false claims laws. Anti-kickback laws, among other things, make it illegal for a prescription drug manufacturer to pay, or offer to pay, a healthcare provider to refer, purchase or prescribe a particular drug. Due to the breadth of the statutory and regulatory provisions, it is possible that government authorities and others might challenge our practices under anti-kickback or other fraud and abuse laws. Moreover, recent healthcare reform legislation has strengthened these laws. In addition, false claims laws prohibit anyone from knowingly and willingly presenting, or causing to be presented for payment, to government third-party payors, including Medicare and Medicaid claims for reimbursed drugs that are false or fraudulent, claims for items or services not provided as claimed, or claims for medically unnecessary items or services. Our activities relating to the sale and marketing of our products may be subject to scrutiny under these laws. If we violated fraud and abuse laws, we could face a combination of:

• criminal and civil sanctions, including fines and civil monetary penalties;

• the possibility of exclusion from federal healthcare programs, including Medicare and Medicaid; and

• corporate integrity agreements, which could impose rigorous operational and monitoring requirements on us.

Given the significant penalties and fines that the government can impose on companies and individuals if convicted, allegations of violations often result in settlements even if the company or individual being investigated admits no wrongdoing. Settlements often include significant civil sanctions, including fines and civil monetary penalties, and corporate integrity agreements. If the government were to allege or convict us or our executive officers of violating these laws, our business could be harmed. In addition, private individuals may bring similar actions under the False Claims Act. Our activities could be subject to challenge for the reasons discussed above and due to the broad scope of these laws and the increasing focus on these laws by law enforcement authorities. To the extent we have access to protected health information we could be subject to federal and state health information privacy and security laws, including without limitation, the Health Insurance Portability and Accountability Act of 1996, or HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act, which governs the conduct of certain electronic healthcare transactions and protects the security and privacy of protected health information. State health information privacy and security laws in certain circumstances are more stringent than HIPAA and many of the state laws differ from each other in significant ways and may not have the same effect, thus complicating compliance. Our failure to comply with applicable federal and state health information privacy and security laws could subject us to significant fines and multi-year corrective action plans. Once we have a commercialized drug in the U.S., we will be required to report annually to Centers for Medicare and Medicaid Services certain information related to payments and other transfers of value we may provide to physicians and teaching hospitals. Further, an increasing number of state laws require manufacturers to make reports to states on pricing and marketing information. Many of these laws are unclear as to what is required to comply with the laws. Given the lack of clarity in laws and their implementation, our reporting actions could be subject to the penalty provisions of the pertinent state authorities.

Similar rigid restrictions related to anti-kickbacks and promoting and marketing medicinal products apply in the European Union and other countries. Authorities in these countries strictly enforce these restrictions. Even in those countries where we will not be directly responsible for promoting and marketing our products, inappropriate activity by any of our international commercialization partners we may have could harm us.

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Risks Related to Dependence on Third Parties

We plan to substantially depend on our collaboration with Novartis to develop and commercialize AKCEA-APO(a)-L_Rx and AKCEA-APOCIII-L_Rx.

We have granted Novartis an exclusive option to exclusively license each of AKCEA-APO(a)-L_Rx and AKCEA-APOCIII-L_Rx pursuant to our strategic collaboration, option and license agreement with Novartis_. We plan to substantially depend on Novartis to further develop and commercialize these drugs. We initiated this collaboration primarily to have Novartis:

• conduct the cardiovascular outcome studies that are likely to be required for approval of AKCEA-APO(a)-L_Rx and AKCEA-APOCIII-L_Rx;

• seek and obtain regulatory approvals for AKCEA-APO(a)-L_Rx and AKCEA-APOCIII-L_Rx; and

• globally commercialize AKCEA-APO(a)-L_Rx and AKCEA-APOCIII-L_Rx.

If Novartis exercises its option to license one or both of these drugs, we would rely on Novartis to further develop, obtain regulatory approvals for, and commercialize the licensed drug. In general, we cannot control the amount and timing of resources that Novartis devotes to our strategic collaboration. If Novartis fails to use commercially reasonable efforts to further develop, obtain regulatory approvals for, or commercialize these drugs, or if Novartis' efforts are not effective, our business may be negatively affected. Novartis could pursue other technologies or develop other drugs either on its own or in collaboration with others to treat the same diseases as we and Novartis plan to treat with AKCEA-APO(a)-L_Rx or AKCEA-APOCIII-L_Rx. Novartis could pursue these technologies and develop these other drugs at the same time as it is developing or commercializing AKCEA-APO(a)-L_Rx or AKCEA-APOCIII-L_Rx, and Novartis is not required to inform us of such activities.

Our strategic collaboration with Novartis may not continue for various reasons. Novartis can terminate our agreement at any time and is under no obligation to exercise the options we granted them. If Novartis does not exercise its option, or following option exercise stops developing or commercializing a drug, we will have to seek additional sources for funding and may have to delay or reduce our development and commercialization plans for AKCEA-APO(a)-L_Rx or AKCEA-APOCIII-L_Rx.

In addition, if Novartis exercises its option to license AKCEA-APO(a)-L_Rx or AKCEA-APOCIII-L_Rx, Novartis would be responsible for the long-term supply of drug substance and finished drug product for the licensed drug.

Our strategic collaboration with Novartis may not result in the successful commercialization of AKCEA-APO(a)-L_Rx or AKCEA-APOCIII-L_Rx. If Novartis does not successfully develop, manufacture or commercialize AKCEA-APO(a)-L_Rx or AKCEA-APOCIII-L_Rx, we may receive limited or no revenues for these drugs.

*We plan to substantially depend on our collaboration with PTC Therapeutics to commercialize TEGSEDI and WAYLIVRA in Latin America and certain Caribbean countries.

In August 2018, we granted PTC Therapeutics International Limited the exclusive right to commercialize TEGSEDI and WAYLIVRA in Latin America and certain Caribbean countries. We plan to substantially depend on PTC to commercialize these drugs in those geographic markets.

In general, we cannot control the amount and timing of resources that PTC devotes to our strategic collaboration. If PTC fails to use commercially reasonable efforts to obtain regulatory approvals for, or commercialize these drugs, or if PTC’s efforts are not effective, our business may be negatively affected. PTC could pursue other technologies or develop other drugs either on its own or in collaboration with others to treat the same diseases as we and PTC plan to treat with TEGSEDI and WAYLIVRA. PTC could pursue these technologies and develop these other drugs at the same time as it is developing or commercializing TEGSEDI and WAYLIVRA, and PTC is not required to inform us of such activities.

Our strategic collaboration with PTC may not continue for various reasons. If PTC stops commercializing a drug, we will have to seek additional sources for funding and may have to delay or reduce our commercialization plans for TEGSEDI and WAYLIVRA in Latin America or certain Caribbean countries.

Our strategic collaboration with PTC may not result in the successful commercialization of TEGSEDI or WAYLIVRA in Latin America or certain Caribbean countries. If PTC does not successfully commercialize TEGSEDI or WAYLIVRA, we may receive limited or no revenues for these drugs in Latin America or certain Caribbean countries.

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*AKCEA-APOCIII-L_Rx and AKCEA-ANGPTL3-L_Rx may compete with WAYLIVRA, which could reduce our expected revenues for WAYLIVRA.

WAYLIVRA and AKCEA-APOCIII-L_Rx both inhibit the production of the same protein. We believe the enhancements we incorporated into AKCEA-APOCIII-L_Rx can provide greater patient convenience by allowing for significantly lower doses and less frequent administration compared to WAYLIVRA. As such, if Novartis exercises its option and successfully commercializes AKCEA-APOCIII-L_Rx while we are commercializing WAYLIVRA, to the extent physicians and patients elect to use AKCEA-APOCIII-L_Rx instead of WAYLIVRA, it will reduce the revenue we derive from WAYLIVRA. In addition, while AKCEA-ANGPTL3-L_Rx and WAYLIVRA use different mechanisms of action, if AKCEA-ANGPTL3-L_Rx can effectively lower triglyceride levels in FCS patients, it may likewise reduce the revenue we derive from WAYLIVRA.

*If we cannot manufacture our drugs or contract with a third party to manufacture our drugs at costs that allow us to charge competitive prices to buyers, we will not be able to operate profitably.

To successfully commercialize TEGSEDI and, if approved, WAYLIVRA, AKCEA-APO(a)-L_Rx, AKCEA-TTR-L_Rx and our other drugs in development, we will need to optimize and manage large-scale commercial manufacturing capabilities either on our own or through a third-party manufacturer. In addition, as our drug development pipeline matures, we will have a greater need for clinical study and commercial manufacturing capacity. We have no direct experience manufacturing pharmaceutical products of the chemical class represented by our drugs, called oligonucleotides, on a commercial scale for the systemic administration of a drug. We currently rely and expect to rely for the foreseeable future on Ionis' manufacturing capacity and efficiency and the capacity and efficiency of third parties to produce our oligonucleotide drugs, and our business could be negatively affected if Ionis and these third parties ceased to provide us with this capability for any reason. In addition, there are a small number of suppliers for certain raw materials that we use to manufacture our drugs, and some of these suppliers will need to increase their scale of production to meet our projected needs for commercial manufacturing. Further, if we cannot continue to acquire raw materials from these suppliers on commercially reasonable terms or at all, we may be required to find alternative suppliers, which could be expensive and time consuming and negatively affect our ability to develop or commercialize our drugs in a timely manner or at all. We may not be able to manufacture our drugs at a cost or in quantities necessary to make commercially successful products.

We do not have long-term supply agreements for our drugs. We cannot guarantee that we will have a steady supply of drug to complete clinical studies, make registration batches for approval or satisfy market demand if commercialized at prices that are commercially acceptable. In addition, if we need to change manufacturers for any reason, we will need to verify that the new manufacturer maintains facilities and procedures that comply with quality standards and with all applicable regulations and guidelines. The delays associated with verifying a new manufacturer could negatively affect our ability to develop drugs in a timely manner or within budget.

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

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

We depend on Ionis and independent clinical investigators, contract research organizations and other third-party service providers to conduct the clinical studies for our drugs and expect to continue to do so in the future. For example, we use clinical research organizations for the clinical studies for WAYLIVRA, AKCEA-APO(a)-L_Rx, AKCEA-TTR-L_Rx and our other drugs in development. We rely heavily on these parties for successful execution of our clinical studies, but do not control many aspects of their activities. For example, the investigators are not our employees. However, we are responsible for ensuring that these third parties conduct each of our clinical studies in accordance with the general investigational plan, approved protocols for the study and applicable regulations. Ionis and third parties may not complete activities on schedule or may not conduct our clinical studies in accordance with regulatory requirements or our stated protocols. The failure of these parties to carry out their obligations or a termination of our relationship with these third parties could delay or prevent the development, marketing authorization and commercialization of our drugs, including authorizations for WAYLIVRA, AKCEA-APO(a)-L_Rx, AKCEA-TTR-L_Rx and our other drugs in development.

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*We may seek to form additional partnerships in the future with respect to WAYLIVRA, and our other drugs in development, and we may not realize the benefits of such partnerships.

Although we intend to develop and commercialize WAYLIVRA for patients with FCS and FPL ourselves, we may form partnerships, create joint ventures or collaborations or enter into licensing arrangements with third parties for the development and commercialization of our drugs in development. For example, we have granted PTC an exclusive license to commercialize WAYLIVRA in Latin America and certain Caribbean countries. We face significant competition in seeking appropriate strategic partners and the negotiation process is time-consuming and complex. Any delays in entering into new strategic partnership agreements related to our drugs could delay the development and commercialization of our drugs and reduce their competitiveness even if they reach the market. Moreover, we may not be successful in our efforts to establish other strategic partnerships or other collaborative arrangements for any additional drugs because the potential partner may consider that our development pipeline is not advanced enough to justify a collaborative effort, or that WAYLIVRA and our other drugs in development do not have the requisite potential to demonstrate safety and efficacy in the target populations in other geographic markets. In addition, we will need to mutually agree with Ionis on the terms of any additional sublicenses to a third party for WAYLIVRA and our other drugs in development. If we cannot mutually agree on terms for a sublicense to a third party or if Ionis does not agree to a sublicense at all, it could delay our ability to develop and commercialize WAYLIVRA and our other drugs in development. Even if we are successful in establishing such a strategic partnership or collaboration, we cannot be certain that, following such a strategic transaction or collaboration, we will be able to progress the development and commercialization of the applicable drugs as envisioned, or that we will achieve the revenue that would justify such transaction. If we do not accurately evaluate the commercial potential or target market for a particular drug, we may relinquish valuable rights to that drug through future collaboration, licensing or other arrangements in cases in which it would have been more advantageous for us to retain sole development and commercialization rights.

Risks Related to Our Relationship with Ionis

*Ionis controls the direction of our business, and the concentrated ownership of our common stock will prevent you and other stockholders from influencing significant decisions.

After the issuance of 1,597,571 additional shares of our common stock to Ionis on August 3, 2018 in connection with the achievement of the TEGSEDI regulatory milestone in the EU, and the issuance of 1,671,849 additional shares of our common stock to Ionis on October 17, 2018 in connection with the achievement of the TEGSEDI regulatory milestone in the U.S., Ionis owns 67,383,965 shares of our common stock, or approximately 76 percent, of the economic interest and voting power of our outstanding common stock, which ownership will be expected to increase further if we achieve certain milestone events and pay the associated milestone payment in shares of common stock pursuant to the payment election. As long as Ionis beneficially controls a majority of the voting power of our outstanding common stock, it will generally be able to determine the outcome of all corporate actions requiring stockholder approval, including the election and removal of directors. Even if Ionis were to control less than a majority of the voting power of our outstanding common stock, it may influence the outcome of such corporate actions so long as it owns a significant portion of our common stock. If Ionis continues to hold its shares of our common stock, it could remain our controlling stockholder for an extended period of time or indefinitely.

The licensing transaction with Ionis and the common stock issuance in connection with the achievement of the TEGSEDI regulatory milestone has increased Ionis’ ownership percentage, and this increase, along with Ionis’ increased reliance on Akcea as a commercialization partner, given that Akcea could now be commercializing at least two Ionis-developed products (WAYLIVRA and TEGSEDI), may increase the length of time during which Ionis will control us. As a general matter, the TEGSEDI license agreement and the related Investor Rights Agreement increased Ionis’ control over our affairs. In addition, our TEGSEDI licensing agreement requires Ionis’ consent to the budget related to the commercialization of TEGSEDI and AKCEA-TTR-L_Rx.

Ionis' interests may not be the same as, or may conflict with, the interests of our other stockholders. You will not be able to affect the outcome of any stockholder vote while Ionis controls the majority of the voting power of our outstanding common stock. As a result, Ionis can control, directly or indirectly and subject to applicable law, all matters affecting us, including:

• any determination with respect to our business strategy and policies, including the appointment and removal of officers and directors;

• any determinations with respect to mergers, business combinations or disposition of assets;

• our financing and dividend policy;

• compensation and benefit programs and other human resources policy decisions;

• termination of, changes to or determinations under our existing license agreements and services agreement with Ionis;

• changes to any other agreements that may adversely affect us; and

• determinations with respect to our tax returns.

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Because Ionis' interests may differ from ours or yours, actions that Ionis takes with respect to us, as our controlling stockholder, may not be favorable to us or you.

*As a “controlled company” under the marketplace rules of the Nasdaq Stock Market, we may rely on exemptions from certain corporate governance requirements that provide protection to stockholders of companies that are subject to such requirements.

Ionis beneficially owns more than 50% of the voting power of our outstanding common stock. As a result, we are a “controlled company” under the marketplace rules of the Nasdaq Stock Market, or Nasdaq, and eligible to rely on exemptions from Nasdaq corporate governance requirements generally obligating listed companies to maintain:

• A board of directors having a majority of independent directors;

• A compensation committee composed entirely of independent directors that approves the compensation payable to the company’s chief executive officer and other executive officers; and

• A nominating committee composed entirely of independent directors that nominates candidates for election to the board of directors, or that recommends such candidates for nomination by the board of directors (or obligating the listed company to cause a majority of the board’s independent directors to exercise this oversight of director nominations).

Currently, a majority of our board is made up of independent directors. As a controlled company, we have and in the future may avail ourselves of some of these exemptions. Accordingly, our stockholders may not have the same protections afforded to stockholders of companies that are subject to the Nasdaq corporate governance requirements described above.

If Ionis sells a controlling interest in our company to a third party in a private transaction, you may not realize a change of control premium on shares of our common stock, and we may become subject to the control of a presently unknown third party.

Ionis owns a significant equity interest in our company. This means that Ionis could choose to sell some or all of its shares of our common stock in a privately negotiated transaction, which, if sufficient in size, could result in a change of control of our company.

Ionis' ability to privately sell its shares of our common stock, with no requirement for a concurrent offer to be made to acquire your shares of our common stock, could prevent you from realizing any change of control premium on your shares of our common stock that may otherwise accrue to Ionis on its private sale of our common stock. Additionally, if Ionis privately sells its significant equity interest in our company, we may become subject to the control of a presently unknown third party. Such third party may have conflicts of interest with those of other stockholders. In addition, if Ionis sells a controlling interest in our company to a third party, such a sale could negatively impact or accelerate any future indebtedness we may incur, and negatively impact any other commercial agreements and relationships, all of which may adversely affect our ability to run our business as described herein and may have a material adverse effect on our operating results and financial condition.

*Certain of our directors and officers may have actual or potential conflicts of interest because of their positions with Ionis.

Damien McDevitt, Chief Business Officer for Ionis, and B. Lynne Parshall, Senior Strategic Advisor and board member for Ionis, serve on our board of directors and retain their positions or engagements with Ionis. In addition, these individuals own Ionis equity and Ionis equity awards. Ionis common stock, options to purchase Ionis common stock and other Ionis equity awards represent a significant portion of these individuals' net worth. Their position at Ionis and the ownership of any Ionis equity or equity awards creates, or may create the appearance of, conflicts of interest when we ask these individuals to make decisions that could have different implications for Ionis than the decisions have for us. In addition, our certificate of incorporation provides for the allocation of certain corporate opportunities between us and Ionis. Under these provisions, neither Ionis or its other affiliates, nor any of their officers, directors, agents or stockholders, will have any obligation to present to us certain corporate opportunities. For example, a director of our company who also serves as a director, officer or employee of Ionis or any of its other affiliates may present to Ionis certain acquisitions, in-licenses, potential development programs or other opportunities that may be complementary to our business and, as a result, such opportunities may not be available to us. To the extent attractive corporate opportunities are allocated to Ionis or its other affiliates instead of to us, we may not be able to benefit from these opportunities.

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*The resources Ionis provides us under the license agreements and the services agreement may not be sufficient for us to operate as a standalone company, and we may experience difficulty in separating our resources from Ionis.

Because we have not operated separately from Ionis in the past, we may have difficulty doing so. We will need to acquire resources in addition to, and eventually in lieu of, those provided by Ionis to our company, and may also face difficulty in separating our resources from Ionis' resources and integrating newly acquired resources into our business. In addition, Ionis may prioritize its own research, development, manufacturing and other needs ahead of the services Ionis has agreed to provide us, or Ionis employees who conduct services for us may prioritize Ionis' interests over our interests. Our business, financial condition and results of operations could be harmed if we have difficulty operating as a standalone company, fail to acquire resources that prove to be important to our operations or incur unexpected costs in separating our resources from Ionis' resources or integrating newly acquired resources.

*We may not realize the benefits of the licensing transaction with Ionis if we are unable to successfully transition, integrate and support the development and commercialization of TEGSEDI and AKCEA-TTR-L_Rx.

As a result of the licensing transaction with Ionis, we need to successfully transition, integrate and support the assets we acquired related to the commercialization and development of TEGSEDI and AKCEA-TTR-L_Rx if we are to realize any of the potential benefits of the licensing transaction. The failure to meet these integration challenges, including the addition of TEGSEDI commercial team and other employees from Ionis and the coordination across geographies between our headquarters in Massachusetts and our commercialization team in other locations, including major global markets, could seriously harm our results of operations. Our failure to implement an orderly integration could result in failure of, or delays in, the development or commercialization of TEGSEDI and AKCEA-TTR-L_Rx. Such failure or delay could adversely impact our business, results of operations, financial condition and prospects for future growth.

We will incur incremental costs as a standalone company.

Ionis currently performs or supports many important corporate functions for our company. Our consolidated financial statements reflect charges for these services on an allocation basis. Under our services agreement with Ionis we can use these Ionis services for a fixed term established on a service-by-service basis. However, we generally will have the right to terminate a service earlier if we give notice to Ionis. Partial reduction in the provision of any service requires Ionis' consent. In addition, either party will be able to terminate the agreement due to a material breach of the other party, upon prior written notice, subject to limited cure periods.

We will pay Ionis mutually agreed upon fees for these services, based on Ionis' costs of providing the services. Since we negotiated the services agreement in the context of a parent subsidiary relationship, the terms of the agreement, including the fees charged for the services, may be higher or lower than those that would be agreed to by parties bargaining at arm's length for similar services and may be higher or lower than the costs reflected in the allocations in our historical consolidated financial statements. Ionis will pass third party costs through to us at Ionis' cost. In addition, while Ionis provides us these services, our operational flexibility to modify or implement changes with respect to such services or the amounts we pay for them will be limited.

We may not be able to replace these services or enter into appropriate third-party agreements on terms and conditions, including cost, comparable to those that we will receive from Ionis under our services agreement. Additionally, after the agreement terminates, we may not sustain the services at the same levels or obtain the same benefits as when we were receiving such services and benefits from Ionis. When we begin to operate these functions separately, if we do not have our own adequate systems and business functions in place, or cannot obtain them from other providers, we may not operate our business effectively or at comparable costs, and our business may suffer. In addition, we have historically received informal support from Ionis, which may not be addressed in our services agreement. The level of this informal support will diminish and could end in the future.

*We may not be able to fully realize the expected benefits of our license agreements with Ionis.

We have development, commercialization and license agreements with Ionis pursuant to which, subject to certain restrictions, we and Ionis will share development responsibilities for WAYLIVRA, TEGSEDI, AKCEA-APO(a)-L_Rx, AKCEA-TTR-L_Rx and our other drugs in development. We are paying for research and development costs and reimbursing Ionis for Ionis' employees supporting our development activities. Until we build or acquire our own capabilities to replace those Ionis is providing to us, particularly development, regulatory and manufacturing services, we will be heavily dependent on Ionis.

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While we and Ionis intend the license agreements, on the whole, to bolster our capabilities, certain terms of the license agreements and the other related agreements with Ionis may limit our ability to achieve the expected benefits of these transactions, including:

• a Joint Steering Committee, or JSC, having equal membership from us and Ionis, sets the development strategy for our drugs by mutual agreement. A Regulatory Sub-committee, established by the JSC and having equal membership from our company and Ionis, will set the regulatory strategy for each of our drugs by mutual agreement. If the JSC or the Regulatory Sub-committee cannot come to a mutual agreement, then this could delay our ability to develop and commercialize TEGSEDI, AKCEA-APO(a)-L_Rx, AKCEA-TTR-L_Rx and our other drugs in development. In the event of a disagreement at the JSC related to TEGSEDI or AKCEA-TTR-L_Rx, Ionis has final decision-making authority on decisions relating to development matters, Akcea has final decision making authority on decision relating to commercial matters, and the holder of the regulatory approvals for a product in a country has final decision making authority for regulatory affairs;

• we will need to mutually agree with Ionis on the terms of any additional sublicense to a third party for WAYLIVRA and AKCEA-ANGPTL-L_Rx, and will need to obtain Ionis’ consent prior to granting any sublicense to a third party for TEGSEDI or AKCEA-TTR-L_Rx. If we cannot mutually agree on terms for a sublicense to a third party or if Ionis does not consent to a sublicense at all, it could delay or prevent our ability to develop and commercialize our drugs;

• we will need to obtain Ionis’ approval to in-license a product, acquire a product or acquire another company, until the time Ionis ceases to hold at least 50% of our outstanding capital stock; and

• there is nothing in our agreements with Ionis to prevent Ionis from developing and commercializing drugs targeting RNAs that are not apoC-III, Apo(a) or ANGPTL3 to pursue the same indications we are pursuing with our drugs.

Each of the foregoing terms and Ionis' other rights under the license agreements, could limit our ability to realize the expected benefits of the license agreements or otherwise limit our ability to pursue transactions or development efforts other stockholders may view as beneficial. Further, if Ionis does not continue to own a significant portion of our equity, Ionis' incentive to help us would be diminished. If we fail to achieve the expected benefits of our agreements with Ionis, it may be more difficult, time consuming or expensive for us to develop and commercialize WAYLIVRA, TEGSEDI, AKCEA-APO(a)-L_Rx, AKCEA-TTR-L_Rx and our other drugs in development, or may result in our drugs being later to market than those of our competitors or prevent them from ever getting to market. If these events cause delays in new product development we could lose the first in class products in a given therapeutic area.

Risks Related to Our Intellectual Property

*If we breach our obligations under any of our license agreements with Ionis, we could lose our rights to WAYLIVRA, TEGSEDI, AKCEA-TTR-L_Rx and our other drugs in development.

We obtained our rights to WAYLIVRA, TEGSEDI, AKCEA-TTR-L_Rx and our other drugs in development under our license agreements with Ionis. If we breach our obligations under these license agreements and, as a result, Ionis subsequently exercises its right to terminate it, we generally would not be able to continue to develop or commercialize TEGSEDI, WAYLIVRA, AKCEA-TTR-L_Rx and our other drugs in development that incorporate Ionis' intellectual property, and Ionis would receive a royalty-free, nonexclusive license to our improvements to those programs, meaning we would lose the benefits of our investment in these programs. If we breach our obligations under the license agreement with respect to AKCEA-APO(a)-L_Rx or AKCEA-APOCIII-L_Rx and, as a result, Ionis exercises its right to terminate it, then our strategic collaboration with Novartis would convert into a direct strategic collaboration between Novartis and Ionis, and Ionis would receive all of the revenue and other benefits associated with that strategic collaboration. Similarly, if we breach our obligations under the license agreement with respect to TEGSEDI or AKCEA-TTR-L_Rx and, as a result, Ionis exercises its right to terminate it, then our strategic collaboration with PTC in Latin America and certain Caribbean countries would convert into a direct strategic collaboration between PTC and Ionis, and Ionis would receive all of the revenue and other benefits associated with that strategic collaboration.

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

Our success depends to a significant degree upon whether we can continue to secure and maintain intellectual property rights that protect TEGSEDI, WAYLIVRA, AKCEA-APO(a)-L_Rx, AKCEA-TTR-L_Rx and our other drugs in development. However, patents may not issue from any of our pending patent applications in the United States or in other countries and we may not be able to obtain, maintain or enforce our owned or licensed patents and other intellectual property rights which could impact our ability to compete effectively. In addition, the scope of any of our owned or licensed patents may not be sufficiently broad to provide us with a competitive advantage. Furthermore, other parties may successfully challenge, invalidate or circumvent our issued patents or patents licensed to us so that our patent rights do not create an effective competitive barrier or revenue source.

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Composition of matter patents on the active pharmaceutical ingredient for a product are generally considered to be the strongest form of intellectual property protection for pharmaceutical products, as such patents provide protection without regard to any method of use. Our WAYLIVRA patent portfolio currently includes:

• issued patent claims to the specific antisense sequence and chemical composition of WAYLIVRA in the United States, Australia, and Europe;

• issued patent claims in the United States and Australia drawn to the use of antisense compounds complementary to an active region of human apoC-III messenger ribonucleic acid, including the site targeted by WAYLIVRA;

• additional patent applications designed to protect the WAYLIVRA composition in Canada; and

• additional methods of use in jurisdictions worldwide for WAYLIVRA.

The natural term of the issued U.S. patent covering the WAYLIVRA composition of matter will expire in 2023, but we plan to seek to extend the U.S. patent expiration beyond 2023 based upon the development and regulatory review period in the United States. The natural term of the granted European and Australian patents covering WAYLIVRA will expire in 2024, but we plan to seek to extend each of these patents beyond 2024 based upon the development and regulatory review periods in Europe and Australia.

The natural term of the last expiring issued U.S. patent covering the composition of matter of TEGSEDI will expire in 2031. Patents issued in other countries will have the same natural term. We plan to seek to extend the term of one patent covering TEGSEDI in the U.S., if approved, and any other jurisdictions where such extension is available, based upon the development and regulatory review periods for TEGSEDI and in accordance with applicable laws.

We cannot be certain that the U.S. Patent and Trademark Office, or U.S. PTO, and courts in the United States or the patent offices and courts in foreign countries will consider the claims in our owned or licensed patents and applications covering WAYLIVRA, TEGSEDI, AKCEA-APO(a)-L_Rx, AKCEA-TTR-L_Rx and our other drugs in development as patentable. Method-of-use patents protect the use of a product for the specified method. This type of patent does not prevent a competitor from making and marketing a product that is identical to our product for an indication that is outside the scope of the patented method. Moreover, even if competitors do not actively promote their product for our targeted indications, physicians may prescribe these products off-label. Although off-label prescriptions may infringe or contribute to the infringement of method-of-use patents, the practice is common and such infringement is difficult to prevent, including through legal action.

If we or any licensor partner loses or cannot obtain patent protection for TEGSEDI, WAYLIVRA, AKCEA-APO(a)-L_Rx, AKCEA-TTR-L_Rx or our other drugs in development it could have a material adverse impact on our business.

Intellectual property litigation could cause us to spend substantial resources and prevent us from pursuing our programs.

From time to time we may have to defend our intellectual property rights. If we are involved in an intellectual property dispute, we may need to litigate to defend our rights or assert them against others. Disputes can involve arbitration, litigation or proceedings declared by the U.S. PTO or the International Trade Commission or foreign patent authorities. Even if resolved in our favor, litigation or other legal proceedings relating to intellectual property claims may cause us to incur significant expenses, and could distract our technical and management personnel from their normal responsibilities. In addition, there could be public announcements of the results of hearings, motions or other interim proceedings or developments and if securities analysts or investors perceive these results to be negative, it could have a substantial adverse effect on the price of our common stock. Such litigation or proceedings could substantially increase our operating losses and reduce the resources available for development activities or any future sales, marketing or distribution activities. We may not have sufficient financial or other resources to adequately conduct such litigation or proceedings. Some of our competitors may be able to sustain the costs of such litigation or proceedings more effectively than we can because of their greater financial resources and more mature and developed intellectual property portfolios.

*Third parties may initiate legal proceedings alleging that we are infringing their intellectual property rights, the outcome of which would be uncertain and could have a material adverse effect on the success of our business.

Our commercial success depends upon our ability and the ability of our strategic partners to develop, manufacture, market and sell our drugs and use our proprietary technologies without infringing the proprietary rights and intellectual property of third parties. Extensive litigation regarding patents and other intellectual property rights is common in the biotechnology and pharmaceutical industries. We may in the future become party to, or threatened with, adversarial proceedings or litigation regarding intellectual property rights with respect to our drugs and technology, including interference, derivation, reexamination, post-grant review, opposition, cancellation or similar proceedings before the U.S. PTO or its foreign counterparts.

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Third parties may assert infringement claims against us based on existing patents or patents that may be granted in the future. For example, a potential competitor was recently issued a patent which they have broadly characterized in their most recent annual report on Form 10-K as being directed to single-stranded antisense polynucleotide molecules capable of inhibiting expression of the human transthyretin gene, and having certain combinations of structural features. This third party has also attempted to broadly characterize certain other patents that they hold. While we believe that we would have substantial defenses in the event this competitor brought a claim against us with respect to TEGSEDI or AKCEA-TTR-L_Rx, patent litigation is inherently uncertain, involves substantial cost and is a distraction to management. Moreover, our stock price may be impacted by the existence of or developments during a litigation, even developments that are preliminary in nature.

We may not be aware of all such intellectual property rights potentially relating to our drugs and their uses. If a third party claims that WAYLIVRA, TEGSEDI, AKCEA-APO(a)-L_Rx, AKCEA-TTR-L_Rx, our other drugs in development or our technology infringe its patents or other intellectual property rights, we or our partners may have to discontinue an important product or product line, alter our products and processes, pay license fees or cease certain activities. We may not be able to obtain a license to needed intellectual property on favorable terms, if at all. There are many patents issued or applied for in the biotechnology industry, and we may not be aware of patents or patent applications held by others that relate to our business. This is especially true since patent applications in the United States are filed confidentially for the first 18 months. Moreover, the validity and breadth of biotechnology patents involve complex legal and factual questions for which important legal issues remain. Thus, we do not know with certainty that our drugs or our intended commercialization thereof, does and will not infringe or otherwise violate any third party's intellectual property.

*We will not seek to protect our intellectual property rights in all jurisdictions throughout the world and we may not be able to adequately enforce our intellectual property rights even in the jurisdictions where we seek protection.

Filing, prosecuting and defending patents on our drugs in all countries and jurisdictions throughout the world would be prohibitively expensive, and our intellectual property rights in some countries outside the United States could be less extensive than those we could obtain in the United States. In addition, the laws of some foreign countries do not protect intellectual property rights to the same extent as laws in the United States. Consequently, we may not be able to prevent third parties from practicing our inventions in all countries outside the United States, or from selling or importing products made using our inventions in and into the United States or other jurisdictions.

Competitors may use our technologies in jurisdictions where we do not pursue and obtain patent protection to develop their own products. In addition, competitors may export otherwise infringing products to territories where we have patent protection, but enforcement is not as strong as that in the United States. These products may compete with our products and our patent rights or other intellectual property rights may not be effective or sufficient to prevent them from competing. Even if we pursue and obtain issued patents in particular jurisdictions, our patent claims or other intellectual property rights may not be effective or sufficient to prevent third parties from so competing.

The laws of some foreign countries do not protect intellectual property rights to the same extent as the laws of the United States. Many companies have encountered significant problems in protecting and defending intellectual property rights in certain foreign jurisdictions. The legal systems of some countries, particularly developing countries, do not favor the enforcement of patents and other intellectual property protection, especially those relating to biotechnology. This could make it difficult for us to stop competitors from infringing our patent rights or misappropriating our other intellectual property rights. For example, many foreign countries have compulsory licensing laws under which a patent owner must grant licenses to third parties. In addition, many countries limit our right to enforce our patent rights against third parties, including government agencies or government contractors. In these countries, patents may provide limited or no benefit. We must ultimately seek patent protection on a country-by-country basis, which is an expensive and time-consuming process with uncertain outcomes. Accordingly, we may choose not to seek patent protection in certain countries, and we will not have the benefit of patent protection in such countries.

In addition, proceedings to enforce our patent rights in foreign jurisdictions could result in substantial costs and divert our efforts and attention from other aspects of our business, could put our patent rights at risk of being invalidated or interpreted narrowly, could put our owned or licensed patent applications at risk of not issuing and could provoke third parties to assert claims against us. We may not prevail in any lawsuits that we initiate and the damages or other remedies awarded, if any, may not be commercially meaningful. Accordingly, our efforts to enforce our intellectual property rights around the world may be inadequate to obtain a significant commercial advantage from the intellectual property that we develop or license.

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*If we do not obtain additional protection under the Hatch-Waxman Amendments and similar foreign legislation by extending the patent protection for TEGSEDI, WAYLIVRA, AKCEA-APO(a)-L_Rx, AKCEA-TTR-L_Rx, and our other drugs in development, our business may be materially harmed.

Depending upon the timing, duration and specifics of the first FDA marketing authorization of TEGSEDI, WAYLIVRA, AKCEA-APO(a)-L_Rx, AKCEA-TTR-L_Rx, and our other drugs in development, a United States patent that we own or license may be eligible for limited patent term restoration under the Drug Price Competition and Patent Term Restoration Act of 1984, referred to as the Hatch-Waxman Amendments. The Hatch-Waxman Amendments allow the owner of an approved product to extend patent protection for up to five years as compensation for patent term lost during product development and the FDA regulatory review process. During this period of extension, the scope of protection is limited to the approved product and approved uses.

Although we plan on seeking patent term restoration for our products, we may not succeed if, for example, we fail to apply within applicable deadlines, fail to apply prior to expiration of relevant patents or otherwise fail to satisfy applicable requirements. Moreover, the applicable time period or the scope of patent protection afforded could be less than we request. If we cannot obtain patent term restoration or the term of any such patent restoration is less than we request, our competitors may enter the market and compete against us sooner than we anticipate, and our ability to generate revenue could be materially adversely affected.

Changes in United States patent law could diminish the value of patents in general, thereby impairing our ability to protect our products.

Recent United States Supreme Court rulings have narrowed the scope of patent protection available in certain circumstances and weakened the rights of patent owners in certain situations. In addition to increasing uncertainty with regard to our ability to obtain patents in the future, this combination of events has created uncertainty with respect to the value of patents, once obtained. Depending on decisions by the United States Congress, the federal courts, and the U.S. PTO, the laws and regulations governing patents could change in unpredictable ways that would weaken our ability to obtain new patents or to enforce our existing patents and patents that we might obtain in the future.

If we and our partners do not adequately protect the trademarks and trade names for our products, then we and our partners may not be able to build name recognition in our markets of interest and our business may be adversely affected.

Our competitors or other third parties may challenge, infringe or circumvent the trademarks or trade names for our products. We and our partners may not be able to protect these trademarks and trade names. In addition, if the trademarks or trade names for one of our products infringe the rights of others, we or our partners may be forced to stop using the trademarks or trade names, which we need for name recognition in our markets of interest. If we cannot establish name recognition based on our trademarks and trade names, we and our partners may not be able to compete effectively and our business may be adversely affected.

Intellectual property rights do not necessarily address all potential threats to our competitive advantage.

The degree of future protection afforded by our intellectual property rights is uncertain because intellectual property rights have limitations, and may not adequately protect our business, or permit us to maintain our competitive advantage. The following examples are illustrative:

• others may make compounds that are similar to our drugs but that are not covered by the claims of the patents that we own or have exclusively licensed;

• we, or our license partners or current or future strategic partners, might not have been the first to make the inventions covered by the issued patent or pending patent application that we own or have exclusively licensed;

• we, or our license partners or current or future strategic partners, might not have been the first to file patent applications covering our inventions;

• others may independently develop similar or alternative technologies or duplicate any of our technologies without infringing our intellectual property rights;

• our pending licensed patent applications or those that we own in the future may not lead to issued patents;

• issued patents that we hold rights to may be held invalid or unenforceable, including as a result of legal challenges by our competitors;

• our competitors might conduct research and development activities in countries where we do not have patent rights and then use the information learned from such activities to develop competitive products for sale in our major commercial markets;

• we may not develop additional proprietary technologies that are patentable; and

• the patents of others may have an adverse effect on our business.

Should any of these events occur, they could significantly harm our business, results of operations and prospects.

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Risks Related to Our Business and Industry

*We will need to significantly increase the size of our organization, and we may experience difficulties in managing growth.

We are currently a small company. To commercialize TEGSEDI and our other drugs in development that we are responsible for commercializing, we will need to increase our operations and expand our use of third-party contractors. We plan to continue to build our compliance, financial and operating infrastructure to ensure the maintenance of a well-managed company including hiring additional staff within our regulatory, clinical and medical affairs groups and an in-house commercial organization initially focused on marketing and selling TEGSEDI and, if approved, WAYLIVRA. We have added a significant number of new employees to our sales and marketing capability to commercialize TEGSEDI.

We may also anticipate needs for growth that do not materialize. For example, in anticipation of WAYLIVRA’s potential approval, we added a significant number of new employees to our sales and marketing capability to develop WAYLIVRA in the second half of 2017. However, as a result of our receipt of a complete response letter, or CRL, from the FDA regarding the new drug application for WAYLIVRA, on September 6, 2018, we enacted a plan to reorganize our workforce to better align with the immediate needs of our business. In connection with this reorganization plan, we reduced our workforce by approximately 12%. If WAYLIVRA is subsequently approved in the United States, we will again need to increase our operations and expand our use of third-party contractors. We cannot  assure you that we will not build out our compliance, financial or operating infrastructure again in anticipation of developments that do not occur or that occur later than we anticipate.

The current and future growth will impose significant added responsibilities on our management, including the need to maintain, integrate, optimize and manage additional employees. In addition, to meet our obligations as a public company, we will need to increase our general and administrative capabilities. Our current management, personnel and systems may not be adequate to support this growth. Our future financial performance and our ability to commercialize our drugs and to compete effectively will depend, in part, on our ability to manage any future growth effectively. To that end, we must be able to:

• manage the manufacturing of our drugs for clinical and commercial use;

• integrate current and additional management, administrative, financial and sales and marketing personnel;

• optimize and manage a marketing and sales infrastructure;

• maintain personnel necessary to effectively commercialize TEGSEDI and, if approved, WAYLIVRA and our other drugs in development;

• manage our clinical studies and the regulatory process effectively;

• develop our administrative, accounting and management information systems and controls; and

• hire and train additional qualified personnel.

Our staff, financial resources, systems, procedures or controls may be inadequate to support our operations and our management may be unable to successfully manage future market opportunities or our relationships with customers and other third parties.

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

For planning purposes, we estimate and may disclose the timing of a variety of clinical, regulatory and other milestones, such as when we anticipate a certain drug will enter into clinical trials, when we anticipate completing a clinical study, when we anticipate filing an application for marketing authorization, or when we or our partners plan to commercially launch a drug. We base our estimates on present facts and a variety of assumptions. Many underlying assumptions are outside of our control. If we do not achieve milestones in accordance with our or our investors' or securities analysts' expectations, including milestones related to WAYLIVRA, TEGSEDI, AKCEA-APO(a)-L_Rx, AKCEA-TTR-L_Rx and our other drugs in development, the price of our securities could decrease.

The loss of key personnel, or if we cannot attract and retain highly skilled personnel, could make it more difficult to run our business and reduce our likelihood of success.

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

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

Our business exposes us to potential product liability risks that are inherent in the testing, manufacturing, marketing and sale of therapeutic products, including potential product liability claims related to TEGSEDI, WAYLIVRA, AKCEA-APO(a)-L_Rx, AKCEA-TTR-L_Rx and our other drugs in development. We have clinical study insurance coverage and commercial product liability insurance coverage. In addition, Novartis has agreed to indemnify us against specific claims arising from Novartis' development and commercialization of AKCEA-APO(a)-L_Rx and AKCEA-APOCIII-L_Rx, and PTC has agreed to indemnify us against specific claims arising from PTC’s commercialization of TEGSEDI and WAYLIVRA in Latin America and certain Caribbean countries. However, this insurance coverage and indemnities may not be adequate to cover claims against us. Insurance may not be available to us at an acceptable cost, if at all. Regardless of their merit or eventual outcome, products liability claims may result in decreased demand for our drug products, injury to our reputation, withdrawal of clinical study volunteers and loss of revenue. Thus, whether or not we are insured or indemnified, a product liability claim or product recall may result in losses that could be material.

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

Our development and manufacturing activities involve the use of potentially harmful biological materials as well as materials, chemicals and various radioactive compounds that could be hazardous to human health and safety or the environment. We cannot completely eliminate the risk of contamination, which could cause:

• interruption of our development, manufacturing and distribution efforts;

• injury to our employees and others;

• environmental damage resulting in costly clean up; and

• liabilities under federal, state and local laws and regulations governing health and human safety, as well as the use, storage, handling and disposal of these materials and resultant waste products.

In such an event, we may be held liable for any resulting damages, and any liability could exceed our resources. Although we carry insurance in amounts and types that we consider commercially reasonable, we do not have insurance coverage for losses relating to an interruption of our development, manufacturing or commercialization efforts caused by contamination, and the coverage or coverage limits of our insurance policies may not be adequate. If our losses exceed our insurance coverage, our financial condition would be adversely affected.

*A variety of risks associated with operating our business and marketing our drugs internationally could materially adversely affect our business.

In addition to our U.S. operations, we are commercializing TEGSEDI in Europe and Canada and, following approval, plan to establish operations to commercialize our products in other countries globally. We face risks associated with our current and planned international operations, including possible unfavorable regulatory, pricing and reimbursement, political, tax and labor conditions, which could harm our business. Because we have international operations we are subject to numerous risks associated with international business activities, including:

• compliance with differing or unexpected regulatory requirements for our drugs and foreign employees;

• complexities associated with managing multiple payor reimbursement regimes, government payors or patient self-pay systems;

• difficulties in staffing and managing foreign operations;

• in certain circumstances, increased dependence on the commercialization efforts and regulatory compliance of third-party distributors or strategic partners;

• foreign government taxes, regulations and permit requirements;

• U.S. and foreign government tariffs, trade restrictions, price and exchange controls and other regulatory requirements;

• anti-corruption laws, including the Foreign Corrupt Practices Act, or the FCPA, and its equivalent in foreign jurisdictions;

• economic weakness, including inflation, natural disasters, war, events of terrorism or political instability in particular foreign countries;

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• fluctuations in currency exchange rates, which could result in increased operating expenses and reduced revenue, and other obligations related to doing business in another country;

• compliance with tax, employment, privacy, immigration and labor laws, regulations and restrictions for employees living or traveling abroad;

• workforce uncertainty in countries where labor unrest is more common than in the United States; and

• changes in diplomatic and trade relationships.

The UK's anticipated exit from the European Union could increase these risks.

Our business activities outside of the United States are subject to the FCPA and similar anti-bribery or anti-corruption laws, regulations or rules of other countries in which we operate, including the U.K.'s Bribery Act 2010. In many other countries, the healthcare providers who prescribe pharmaceuticals are employed by their government, and the purchasers of pharmaceuticals are government entities; therefore, any dealings with these prescribers and purchasers may be subject to regulation under the FCPA. There is no certainty that all employees and third-party business partners (including our distributors, wholesalers, agents, contractors and other partners) will comply with anti-bribery laws. In particular, we do not control the actions of manufacturers and other third-party agents, although we may be liable for their actions. Violation of these laws may result in civil or criminal sanctions, which could include monetary fines, criminal penalties, and disgorgement of past profits, which could have a material adverse impact on our business and financial condition.

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

We currently rely on Ionis to manufacture our clinical supplies in a manufacturing facility located in Carlsbad, California and third party contract manufacturing organizations to manufacture active pharmaceutical ingredient and finished drug product for TEGSEDI. The facilities and the equipment required to develop and manufacture our drugs would be costly to replace and could require substantial lead time to repair or replace. Natural or man-made disasters, including, without limitation, earthquakes, floods, fires and acts of terrorism may harm these facilities. If a disaster affects these facilities, our and our partners' development and commercialization efforts would be delayed. Although we possess insurance for damage to our property and the disruption of our business from casualties, this insurance may not be sufficient to cover all of our potential losses and may not continue to be available to us on acceptable terms, or at all. In addition, a shutdown of the U.S. government, including the FDA could harm or delay our development and commercialization activities.

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

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

Risks Related to Our Common Stock

We are an "emerging growth company" and as a result of the reduced disclosure and governance requirements applicable to emerging growth companies, our common stock may be less attractive to investors.

We are an "emerging growth company," as defined in the JOBS Act, and we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not "emerging growth companies" including, but not limited to, the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. We cannot predict if investors will find our common stock less attractive if we choose to rely on these exemptions. If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and our stock price may be more volatile.

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*An active public trading market for our common stock may not be sustained.

Prior to the completion of our IPO in July 2017, no public market for our common stock existed. An active public trading market for our common stock may not be sustained. The lack of an active market may impair your ability to sell your shares at the time you wish to sell them or at a price that you consider reasonable. The lack of an active market may also reduce the fair value of your shares. An inactive market may also impair our ability to raise capital to continue to fund operations by selling shares. Additionally, as of October 31, 2018, Ionis owns approximately 76 percent of our outstanding common stock. Ionis intends to hold its shares of our common stock for the foreseeable future, which could reduce the public market for our stock.

*The market price for our common stock may be volatile, which could contribute to the loss of your investment.

Fluctuations in the price of our common stock could contribute to the loss of all or part of your investment. There has been a public market for our common stock for a limited period of time. The trading price of our common stock is likely to be highly volatile and could be subject to wide fluctuations in response to various factors, some of which are beyond our control. Any of the factors listed below could have a material adverse effect on your investment in our common stock and our common stock may trade at prices significantly below your purchase price. In such circumstances the trading price of our common stock may not recover and may experience a further decline.

Factors affecting the trading price of our common stock may include:

• our failure to effectively develop and commercialize TEGSEDI, WAYLIVRA and our other drugs in development;

• Novartis' failure to exercise its option and/or effectively develop and commercialize AKCEA-APO(a)-L_Rx and AKCEA-APOCIII-L_Rx to the extent it exercises its option to license those drugs from us;

• PTC’s failure to effectively commercialize TEGSEDI or WAYLIVRA in Latin America and certain Caribbean countries;

• changes in the market's expectations about our operating results;

• adverse results or delays in preclinical or clinical studies;

• our decision to initiate a clinical study, not to initiate a clinical study or to terminate an existing clinical study;

• adverse regulatory decisions, including failure to receive additional regulatory approvals for TEGSEDI, or regulatory approval for WAYLIVRA, AKCEA-APO(a)-L_Rx, AKCEA-TTR-L_Rx and our other drugs in development;

• success or failure of competitive products or antisense drugs more generally;

• adverse developments concerning our manufacturers or our strategic partnerships;

• inability to obtain adequate product supply for any drug for clinical studies or commercial sale or inability to do so at acceptable prices;

• the termination of a strategic partnership or the inability to establish additional strategic partnerships;

• unanticipated serious safety concerns related to the use of TEGSEDI, WAYLIVRA, AKCEA-APO(a)-L_Rx, AKCEA-TTR-L_Rx and our other drugs in development;

• adverse safety or other clinical results, such as those that have occurred in the past or that may occur in the future, related to drugs being developed by Ionis or other companies that are or may be perceived to be similar to our drugs;

• our ability to effectively manage our growth;

• the size and growth, if any, of the targeted market;

• our operating results do not meet the expectation of securities analysts or investors in a particular period;

• actual or anticipated fluctuations in our quarterly financial results or the quarterly financial results of companies perceived to be similar to us;

• securities analysts do not publish reports about us or our business or publish negative reports;

• changes in financial estimates and recommendations by securities analysts concerning our company, our market opportunity, or the biotechnology and pharmaceutical industries in general;

• operating and stock price performance of other companies that investors deem comparable to us;

• overall performance of the equity markets;

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• announcements by us or our competitors of acquisitions, new drugs or programs, significant contracts, commercial relationships or capital commitments;

• our and our strategic partners' ability to successfully market TEGSEDI, WAYLIVRA, AKCEA-APO(a)-L_Rx, AKCEA-TTR-L_Rx and our other drugs in development;

• changes in laws and regulations affecting our business, including but not limited to clinical study requirements for approvals;

• disputes or other developments relating to proprietary rights, including patents, litigation matters and our ability to obtain and maintain patent protection for TEGSEDI, WAYLIVRA, AKCEA-APO(a)-L_Rx, AKCEA-TTR-L_Rx and our other drugs in development;

• commencement of, or involvement in, litigation involving our company, our general industry, or both;

• changes in our capital structure, such as future issuances of securities or the incurrence of additional debt;

• the volume of shares of our common stock available for public sale;

• additions or departures of key scientific or management personnel;

• any major change in our board or management;

• changes in accounting practices;

• ineffectiveness of our internal control over financial reporting;

• significant changes in our relationship with Ionis;

• sales of substantial amounts of common stock by our directors, executive officers or significant stockholders or the perception that such sales could occur; and

• general economic and political conditions such as recessions, interest rates, fuel prices, elections, drug pricing policies, international currency fluctuations and acts of war or terrorism.

Broad market and industry factors may materially harm the market price of our common stock irrespective of our operating performance. The stock market in general, and NASDAQ and the market for biotechnology companies in particular, have experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of the particular companies affected. The trading prices and valuations of these stocks, and of ours, may not be predictable. A loss of investor confidence in the market for biotechnology or pharmaceutical stocks or the stocks of other companies which investors perceive to be similar to us, the opportunities in the biotechnology and pharmaceutical market or the stock market in general, could depress our stock price regardless of our business, prospects, financial conditions or results of operations.

* Sales of a substantial number of shares of our common stock by our existing stockholders in the public market may cause our stock price to decline.

Sales of our common stock in the public market, or the perception that these sales may occur, could cause the market price of our common stock to decline. Novartis has agreed that it will not sell any of its shares until the earlier of January 5, 2020 or six months after we stop developing a drug under our agreement with Novartis. Thereafter, Novartis may only sell a limited number of shares each day. In addition, Ionis owns 67,383,965 shares, or approximately 76 percent, of our common stock. While the shares of common stock held by Ionis are eligible for sale in the public market, any sales by Ionis will be subject to volume limitations under Rule 144 under the Securities Act of 1933, as amended, or the Securities Act. In addition, 9,000,000 shares of common stock that are either subject to outstanding options or reserved for future issuance under our employee benefit plans are eligible for sale in the public market to the extent permitted by the provisions of various vesting schedules, the lock-up agreements and Rule 144 and Rule 701 under the Securities Act. To the extent the holders of these shares sell them into the market or our stockholders believe these sales might occur, the market price of our common stock could decline.

We cannot predict with certainty whether or when Ionis will sell a substantial number of shares of our common stock. Ionis' sale of a substantial number of shares, or a perception that such sales could occur, could significantly reduce the market price of our common stock.

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We do not expect to pay any cash dividends for the foreseeable future.

You should not rely on an investment in our common stock to provide dividend income. We do not anticipate that we will pay any cash dividends to holders of our common stock in the foreseeable future. Instead, we plan to retain any earnings to maintain and expand our operations. Accordingly, investors must rely on sales of their common stock after price appreciation, which may never occur, as the only way to realize any return on their investment. As a result, investors seeking cash dividends should not purchase our common stock.

The United States recently passed a comprehensive tax reform bill that could adversely affect our financial performance.

On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cut and Jobs Act of 2017, or the Tax Act. The Tax Act makes broad and complex changes to the U.S. tax code. The changes include, but are not limited to, reduction of the corporate tax rate from 35% to 21%, limitation of the tax deduction for interest expense, limitation on the utilization of net operating losses to 80% of taxable income and elimination of net operating loss carrybacks, a mandatory one-time transition tax on certain unrepatriated earnings of foreign subsidiaries, introduction of bonus depreciation that allows for full expensing of qualified property, and modifying or repealing many business tax deductions and credits. Notwithstanding the reduction in the corporate income tax rate, the overall impact of the new federal tax law is uncertain, and our financial performance could be adversely affected. In addition, it is uncertain if, and to what extent various states will conform to the new tax law and foreign countries may react by adopting tax legislation or taking other actions that could adversely affect our business.

Uncertainties in the interpretation and application of the 2017 Tax Cuts and Jobs Act could materially affect our tax obligations, effective tax rate and operating results.

The Tax Act was enacted on December 22, 2017 and significantly affected U.S. tax law by changing how the U.S. imposes income tax on multinational corporations. The U.S. Department of Treasury has broad authority to issue regulations and interpretative guidance that may significantly impact our tax obligations, effective tax rate and our results of operations. The Tax Act will likely be subject to ongoing technical guidance and accounting interpretation, which we will continue to monitor and assess. It is not possible to fully measure the potential impact on our business, prospects or results of operations at this time.

We could be subject to additional tax liabilities.

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

We could be subject to securities class action litigation.

In the past, securities class action litigation has often been brought against a company following a decline in the market price of its securities. This risk is especially relevant for us because biotechnology companies have experienced significant stock price volatility in recent years. If we face such litigation, it could result in substantial costs and a diversion of management's attention and resources, which could harm our business.

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Provisions in our amended and restated certificate of incorporation, our amended and restated bylaws and Delaware law may have anti-takeover effects that could discourage an acquisition of us by others, even if an acquisition would be beneficial to our stockholders, and may prevent attempts by our stockholders to replace or remove our current management.

Our amended and restated certificate of incorporation, amended and restated bylaws and Delaware law contain provisions that may have the effect of delaying or preventing a change in control of us or changes in our management. Our amended and restated certificate of incorporation and bylaws include provisions that:

• authorize "blank check" preferred stock, which could be issued by our board of directors without stockholder approval and may contain voting, liquidation, dividend and other rights superior to our common stock;

• specify that only board of directors or holders of greater than 10% of our common stock can call special meetings of our stockholders;

• prohibit stockholder action by written consent once Ionis no longer holds a majority of our voting power;

• establish an advance notice procedure for stockholder approvals to be brought before an annual meeting of our stockholders, including proposed nominations of persons for election to our board of directors;

• provide that a majority of directors then in office, even though less than a quorum, may fill vacancies on our board of directors;

• specify that no stockholder is permitted to cumulate votes at any election of directors;

• expressly authorize our board of directors to modify, alter or repeal our amended and restated bylaws; and

• require supermajority votes of the holders of our common stock to amend specified provisions of our amended and restated certificate of incorporation and amended and restated bylaws.

These provisions, alone or together, could delay or prevent hostile takeovers and changes in control or changes in our management. Further, Novartis has agreed that until Novartis holds less than 7.5% of our outstanding common stock, Novartis will vote the Novartis Private Placement Shares consistent with the recommendation of our board of directors. Although Novartis has retained the right to vote the Novartis Private Placement Shares in its sole discretion in connection with certain enumerated matters, including any transaction which would result in our change of control, our agreement with Novartis may nevertheless delay or prevent changes in our management or board of directors.

In addition, because we are incorporated in the State of Delaware, we are governed by the provisions of Section 203 of the Delaware General Corporation Law, which limits the ability of stockholders owning in excess of 15% of our outstanding voting stock to merge or combine with us.

Any provision of our amended and restated certificate of incorporation or amended and restated bylaws or Delaware law that has the effect of delaying or deterring a change in control could limit your opportunity to receive a premium for your shares of our common stock, and could also affect the price that some investors are willing to pay for our common stock.

Our bylaws designate the Court of Chancery of the State of Delaware and federal court within the State of Delaware as the exclusive forum for certain types of actions and proceedings that our stockholders may initiate, which could limit our stockholders' ability to obtain a favorable judicial forum for disputes with us or our directors, officers or employees.

Our bylaws provide that, subject to limited exceptions, the Court of Chancery of the State of Delaware and federal court within the State of Delaware will be exclusive forums for any:

• derivative action or proceeding brought on our behalf;

• action asserting a claim of breach of a fiduciary duty owed by any of our directors, officers or other employees to us or our stockholders;

• action asserting a claim against us arising pursuant to any provision of the Delaware General Corporation Law, our amended and restated certificate of incorporation or our amended and restated bylaws; or

• other action asserting a claim against us that is governed by the internal affairs doctrine.

Any person or entity purchasing or otherwise acquiring any interest in shares of our capital stock shall be deemed to have notice of and to have consented to the provisions of our bylaws described above. This choice of forum provision may limit a stockholder's ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers or other employees, which may discourage such lawsuits against us and our directors, officers and employees. Alternatively, if a court were to find these provisions of our amended and restated certificate of incorporation inapplicable to, or unenforceable in respect of, one or more of the specified types of actions or proceedings, we may incur additional costs associated with resolving such matters in other jurisdictions, which could adversely affect our business and financial condition.

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ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

(a) Recent Sales of Unregistered Equity Securities

On July 11, 2018, we received marketing authorization approval for TEGSEDI from the European Commission for the treatment of stage 1 or stage 2 polyneuropathy in adult patients with hATTR amyloidosis in the EU. As a result of the marketing approval in the EU, on August 3, 2018 we issued 1,597,571 shares of our common stock to Ionis in a private placement as payment of the $40.0 million regulatory milestone for TEGSEDI, increasing Ionis’ ownership percentage to slightly above 75 percent. The securities were offered and sold in a private placement exempt from the registration requirements of the Securities Act under Section 4(a)(2) of the Securities Act and Rule 506 thereunder.

On October 5, 2018, we received regulatory approval for TEGSEDI from the FDA for the treatment of the polyneuropathy of hereditary transthyretin-mediated amyloidosis in adults in the United States. As a result of the regulatory approval in the United States, on October 17, 2018 we issued 1,671,849 shares of our common stock to Ionis in a private placement as payment of the $50.0 million regulatory milestone for TEGSEDI, increasing Ionis’ ownership percentage to 76 percent. The securities were offered and sold in a private placement exempt from the registration requirements of the Securities Act under Section 4(a)(2) of the Securities Act and Rule 506 thereunder.

Except as previously disclosed in Exchange Act reports, we did not issue or sell any other unregistered equity securities during the period covered by this Report.

(b) Use of Proceeds

On July 19, 2017, we closed our initial public offering of 17,968,750 shares of common stock at an offering price of $8.00 per share, resulting in gross proceeds to us of approximately $143.8 million. All of the shares issued and sold in our initial public offering were registered under the Securities Act pursuant to a registration statement on Form S-1 (File No. 333-216949), which was declared effective by the SEC on July 13, 2017. Cowen and Company, LLC, Stifel, Nicolaus & Company, Incorporated and Wells Fargo Securities, LLC acted as joint book-running managers for our initial public offering and BMO Capital Markets Corp. acted as lead manager for our initial public offering. The offering commenced on June 20, 2017 and did not terminate before all of the securities registered in the registration statement were sold.

The net proceeds to us, after deducting underwriting discounts and commissions of approximately $8.4 million and offering expenses of approximately $3.1 million, were approximately $132.3 million. No offering expenses were paid directly or indirectly to any of our directors or officers (or their associates) or persons owning ten percent or more of any class of our equity securities or to any other affiliates. There has been no material change in the planned use of proceeds from our initial public offering from those disclosed in the final prospectus for our initial public offering dated as of on July 13, 2017 and filed with the SEC pursuant to Rule 424(b)(4).

As of September 30, 2018, all of the expenses incurred in connection with our initial public offering had been paid.

(c) Issuer Purchase of Equity Securities

None.

ITEM 3. DEFAULT UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

Not Applicable.

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ITEM 6. EXHIBITS

a. Exhibits

Exhibit Number	Description of Document
3.1(1)	Amended and Restated Certificate of Incorporation of Akcea Therapeutics, Inc., as amended to date
3.2(2)	Amended and Restated Bylaws of Akcea Therapeutics, Inc.
4.1(3)	Amended and Restated Investor Rights Agreement, dated March 14, 2018, by and between Akcea Therapeutics, Inc. and Ionis Pharmaceuticals, Inc.
10.1**	Collaboration and License Agreement dated August 1, 2018 by and between Akcea Therapeutics, Inc. and PTC Therapeutics International Limited
31.1	Certification by Chief Executive Officer pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as amended
31.2	Certification by Chief Financial Officer pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as amended
32.1*	Certification Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101	The following financial statements from the Akcea Therapeutics, Inc. Quarterly Report on Form 10-Q for the quarter ended September 30, 2018, formatted in Extensive Business Reporting Language (XBRL): (i) condensed consolidated balance sheets, (ii) condensed consolidated statements of operations, (iii) condensed consolidated statements of comprehensive loss, (iv) condensed consolidated statements of cash flows and (v) notes to condensed consolidated financial statements (detail tagged).
*	This certification is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section, nor shall it be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended.
**	Confidential treatment has been requested with respect to certain portions of this exhibit. Omitted portion have been filed separately with the Securities and Exchange Commission.

(1) Previously filed as Exhibit 3.1 to the Registrant’s Quarterly Report on Form 10-Q (File No. 001-38137), filed with the Securities and Exchange Commission on May 7, 2018, and incorporated herein by reference.

(2) Previously filed as Exhibit 3.2 to the Registrant’s Current Report on Form 8-K (File No. 001-38137), filed with the Securities and Exchange Commission on July 19, 2017, and incorporated herein by reference.

(3) Previously filed as Exhibit 4.1 to the Registrant’s Current Report on Form 8-K (File No. 001-38137), filed with the Securities and Exchange Commission on March 15, 2018, and incorporated herein by reference.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Report to be signed on its behalf by the undersigned thereunto duly authorized.

AKCEA THERAPEUTICS, INC.

Signatures	Title	Date
/s/ PAULA SOTEROPOULOS	Chief Executive Officer
Paula Soteropoulos	(on behalf of the Registrant and in her capacity as principal executive officer)	November 6, 2018
/s/ MICHAEL MACLEAN	Chief Financial Officer
Michael MacLean	(on behalf of the Registrant and in his capacity as principal financial and accounting officer)	November 6, 2018

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EX-10.1

Exhibit 10.1

Execution Copy

Akcea Therapeutics, Inc.

requests that the marked portions of the exhibit be granted

confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

COLLABORATION AND LICENSE

AGREEMENT

By and between

PTC THERAPEUTICS INTERNATIONAL LIMITED

AND

AKCEA THERAPEUTICS, INC.

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TABLE OF CONTENTS

			Page
ARTICLE 1		DEFINITIONS	1
ARTICLE 2		DEVELOPMENT; REGULATORY STRATEGY; KNOW-HOW TRANSFER	17
	2.1	Product Development	17
	2.2	Akcea Progress Reports on Development Activities	18
	2.3	PTC Progress Reports on Regulatory Activities	18
	2.4	Regulatory Strategy	18
	2.5	Transfer of Regulatory Filings and Regulatory Approvals	19
	2.6	Interactions with Regulatory Authorities	19
	2.7	Technology Transfer	20
	2.8	Conversion of NEURO-TTR OLE Study	20
	2.9	Class Generic Claims for Products	20
ARTICLE 3		COMMERCIALIZATION	21
	3.1	Diligence	21
	3.2	PTC Commercialization Plan	21
	3.3	Patient Safety	21
	3.4	Pricing and Reimbursement	21
	3.5	Advertising and Promotional Materials	22
	3.6	Packaging and Labeling	22
	3.7	Trademarks	22
	3.8	Patient Assistance Programs	23
	3.9	Adverse Event Reporting; Global Safety Database	23
	3.10	Cross Territory Sales	24
ARTICLE 4		MANUFACTURING	25
	4.1	Supply Agreement	25
ARTICLE 5		MANAGEMENT OF THE COLLABORATION	26
	5.1	Joint Steering Committee and Subcommittees	26
	5.2	Formation and Dissolution of Subcommittee(s)	27
	5.3	Meetings	27
	5.4	Decision-Making	28
	5.5	Alliance Managers	29
	5.6	Authority	29
ARTICLE 6		GRANT OF LICENSES	29
	6.1	License Grant	29
	6.2	In-License Agreements	29
	6.3	Effect of Termination on Sublicenses	30
	6.4	PTC’s Sublicensing Rights	31

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	6.5	Licenses to Akcea	31
	6.6	No Other Rights	31
	6.7	Section 365(n) of the Bankruptcy Code	31
ARTICLE 7		EXCLUSIVITY; RIGHT OF FIRST NEGOTIATION	32
	7.1	Exclusivity	32
	7.2	Right of First Negotiation; Inotersen Buy-Out	32
ARTICLE 8		GENERAL PROVISIONS RELATING TO COLLABORATION	34
	8.1	Compliance	34
	8.2	Subcontracting	35
	8.3	Records and Audits	35
ARTICLE 9		INITIAL FEE; MILESTONES AND ROYALTIES; PAYMENTS	35
	9.1	Initial Fee	35
	9.2	Regulatory Milestone Payments	35
	9.3	Royalties	35
	9.4	Royalty Period	36
	9.5	Royalty Adjustments – Comparable Third Party Product Competition; Compulsory Licensing	36
	9.6	Limits on Deductions	36
	9.7	Reports; Payment of Royalty	36
	9.8	Accounting	36
	9.9	Methods of Payments	37
	9.10	Taxes	37
	9.11	Currency Exchange	37
ARTICLE 10		INTELLECTUAL PROPERTY RIGHTS	38
	10.1	Ownership of Inventions; Disclosure	38
	10.2	Patent Prosecution	39
	10.3	Enforcement and Defense	40
	10.4	Infringement Claimed by Third Parties	42
	10.5	Marking	42
ARTICLE 11		CONFIDENTIALITY	42
	11.1	Confidentiality; Exceptions	42
	11.2	Authorized Disclosure	43
	11.3	Press Release; Disclosure of Agreement	43
	11.4	Publications	45
	11.5	Remedies	45
	11.6	Acknowledgment	45
ARTICLE 12		REPRESENTATIONS AND WARRANTIES	46
	12.1	Representations and Warranties of Both Parties	46
	12.2	Representations, Warranties and Covenants, as applicable, of Akcea	46

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	12.3	Covenants of Akcea	49
	12.4	Covenants of PTC	50
	12.5	Disclaimer	50
ARTICLE 13		INDEMNIFICATION; INSURANCE	50
	13.1	Indemnification by PTC	50
	13.2	Indemnification by Akcea	50
	13.3	Procedure	51
	13.4	Insurance	51
	13.5	Limitation of Liability	52
ARTICLE 14		TERM AND TERMINATION	52
	14.1	Term	52
	14.2	Termination	52
	14.3	Effects of Termination	52
	14.4	Accrued Rights; Surviving Provisions of the Agreement	54
ARTICLE 15		MISCELLANEOUS	54
	15.1	Governing Law	54
	15.2	Dispute Resolution	54
	15.3	Assignment	55
	15.4	Performance by Affiliates	56
	15.5	Force Majeure	56
	15.6	Notices	57
	15.7	Export Clause	58
	15.8	Waiver	58
	15.9	Severability	58
	15.10	Entire Agreement	58
	15.11	Independent Contractors	59
	15.12	Headings; Construction; Interpretation	59
	15.13	Books and Records	59
	15.14	Further Actions	59
	15.15	Parties in Interest	59
	15.16	Counterparts	60

Schedules

Schedule 1.4 – Akcea Core Technology Patent Rights

Schedule 1.8 – Akcea Manufacturing Patent Rights

Schedule 1.13 – Akcea Product-Specific Patent Rights

Schedule 1.39 – Existing In-License Agreements

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Confidential

This COLLABORATION AND LICENSE AGREEMENT (the “Agreement”) is entered into and made effective as of August 1, 2018 (the “Effective Date”), by and between PTC Therapeutics International Limited, an Irish corporation, having its principal place of business at 5^th Floor, 3 Grand Plaza, Grand Canal Street Upper,Dublin 4, IrelandD04 EE70 (“PTC”), and Akcea Therapeutics, Inc., a Delaware corporation, having its principal place of business at 55 Cambridge Parkway, Suite 100, Cambridge, MA 02142 (“Akcea”).  PTC and Akcea shall be referred to herein individually as a “Party” and collectively as the “Parties”.

RECITALS

WHEREAS, PTC and Akcea are biopharmaceutical companies focused on developing, manufacturing and commercializing drugs for rare diseases on a global basis;

WHEREAS, PTC is a wholly-owned indirect subsidiary of PTC Therapeutics, Inc., a Delaware corporation (“PTC Parent”);

WHEREAS, Akcea has in-licensed certain worldwide rights from its Affiliate (as defined below) Ionis Pharmaceuticals (as defined below) to develop, manufacture and commercialize inotersen (proposed to be marketed as TEGSEDI^TM) and volanesorsen (proposed to be marketed as WAYLIVRA^TM);

WHEREAS, Ionis Pharmaceuticals is currently seeking regulatory approval for inotersen and volanesorsen and intends to assign its Regulatory Filings and Regulatory Approvals (each, as defined below) to Akcea;

WHEREAS, Akcea and PTC desire to engage in a collaborative effort with respect to the development and commercialization of inotersen and volanesorsen by PTC in the PTC Territory (as defined below) and by Akcea in the rest of the world outside of the PTC Territory;

WHEREAS, Akcea also wishes to grant to PTC, and PTC wishes to obtain, certain rights of first negotiation with regard to the commercialization in the PTC Territory of AKCEA-TTR-L_Rx, a follow-on product to inotersen.  

NOW, THEREFORE, in consideration of the premises and mutual covenants herein contained, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:  

ARTICLE 1
DEFINITIONS

As used in this Agreement, the following terms will have the meanings set forth below:

1.1“Affiliate” means any Person that, directly or indirectly through one or more intermediaries, controls, is controlled by or is under common control with a Party to this Agreement, regardless of whether such Affiliate is or becomes an Affiliate on or after the Effective Date.  A Person shall be deemed to “control” another Person if it (a) owns, directly or indirectly, beneficially or legally, more than fifty percent (50%) of the outstanding voting securities or capital

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stock of such other Person, or has other comparable ownership interest with respect to any Person other than a corporation; or (b) has the power, whether pursuant to contract, ownership of securities or otherwise, to direct the management and policies of such other Person.  For the avoidance of doubt, Ionis Pharmaceuticals and Akcea shall constitute an “Affiliate” of each other for purposes of this Agreement and PTC and PTC Parent shall constitute an “Affiliate” of each other for purposes of this Agreement.

1.2“Akcea Core Technology IP” means the Akcea Core Technology Know-How and the Akcea Core Technology Patent Rights.

1.3“Akcea Core Technology Know-How” means all Know-How Controlled by Akcea or its Affiliates on the Effective Date or at any time during the Term that (a) is necessary to Develop or Commercialize a Product and (b) relates generally to oligonucleotides including Conjugate Technology, other than Know-How specifically relating to a Product (including Akcea Product-Specific Know-How) or Know-How specifically relating to methods and materials used in the synthesis or analysis of a Product regardless of sequence or chemical modification.

1.4“Akcea Core Technology Patent Rights” means all Patent Rights Controlled by Akcea or its Affiliates on the Effective Date or at any time during the Term that (a) is necessary to Develop or Commercialize a Product, and (b) claims subject matter generally applicable to oligonucleotides including Conjugate Technology, other than Akcea Product-Specific Patent Rights or Patent Rights that claim methods and materials used in the synthesis or analysis of a Product regardless of sequence or chemical modification. The Akcea Core Technology Patent Rights as of the Effective Date are set forth on Schedule 1.4 attached hereto.

1.5“Akcea IP” means the Akcea Core Technology IP, the Akcea Manufacturing IP and the Akcea Product-Specific IP.

1.6“Akcea Manufacturing IP” means the Akcea Manufacturing and Analytical Know-How and the Akcea Manufacturing Patent Rights.

1.7“Akcea Manufacturing and Analytical Know-How” means Know-How that relates to the synthesis or analysis of a Product regardless of sequence or chemical modification Controlled by Akcea or its Affiliates on the Effective Date or at any time during the Term.

1.8“Akcea Manufacturing Patent Rights” means the Patent Rights that claim Akcea Manufacturing and Analytical Know-How. The Akcea Manufacturing Patent Rights as of the Effective Date are set forth on Schedule 1.8 attached hereto.

1.9“Akcea Patent Rights” means, collectively, the Akcea Core Technology Patent Rights, the Akcea Manufacturing Patent Rights and the Akcea Product-Specific Patent Rights.

1.10“Akcea Product Positioning and Branding Strategy” means Akcea’s positioning and branding strategy for a Product.

1.11“Akcea Product-Specific IP” means the Akcea Product-Specific Know-How and the Akcea Product-Specific Patent Rights.

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1.12“Akcea Product-Specific Know-How”means all Know-How Controlled by Akcea or its Affiliates on the Effective Date or at any time during the Term necessary to Develop or Commercialize a Product or disclosed by Akcea to PTC and, in each case specifically relates to (a) the composition of matter of a Product or (b) methods of using a Product as a prophylactic or therapeutic; provided, however, Know-How Controlled by Akcea or any of its Affiliates that (i) consists of subject matter applicable to oligonucleotide compounds or products in general or (ii) relates to an oligonucleotide compound that does not specifically modulate expression of a Target via the binding, partially or wholly, of such compound to RNA that encodes a Target, will not be considered Akcea Product-Specific Know-How, and in the case of (i) and (ii), such Know-How will be considered Akcea Core Technology Know-How.

1.13“Akcea Product-Specific Patent Rights” means all Patent Rights Controlled by Akcea or its Affiliates on the Effective Date or at any time during the Term Covering (a) the composition of matter of a Product, (b) methods of using a Product, or (c) an oligonucleotide compound that specifically modulates expression of a Target via the binding, partially or wholly, of such compound to RNA that encodes a Target; provided, however, that Patent Rights Controlled by Akcea or any of its Affiliates to the extent that such Patent Rights include any claims that are directed to (i) subject matter applicable to oligonucleotide compounds or products in general or (ii) an oligonucleotide compound that does not specifically modulate expression of a Target via the binding, partially or wholly, of such compound to RNA that encodes a Target, will not be considered Akcea Product-Specific Patents, and in the case of (i) and (ii), such claims in such Patent Rights will be considered Akcea Core Technology Patents. The Akcea Product-Specific Patent Rights as of the Effective Date are set forth on Schedule 1.13 attached hereto.

1.14“Akcea Territory” means the entire world, excluding the PTC Territory.

1.15“AKCEA-TTR-L_Rx” means:

(i) the compound known as AKCEA 682884 having the following sequence and chemistry: [***]; and/or

(ii) any oligonucleotide compound (other than [***] and [***]) designed to modulate expression of TTR via the binding, partially or wholly, of such compound to the RNA that encodes TTR, that is determined after [***] (but prior to the [***]) by Ionis Pharmaceuticals’ research management committee as ready to start the pharmacokinetic and toxicology studies required to meet the requirements for filing an IND.

1.16“AKCEA-TTR-L_Rx Pivotal Clinical Trial” means the first Phase 3 Clinical Trial (or the first clinical study that is intended to be a pivotal clinical study and on the basis of which Regulatory Approval Application would be filed) conducted by Ionis Pharmaceuticals and/or Akcea in accordance with the applicable Ionis Pharmaceuticals/Akcea License Agreement, as further described on Schedule 1.16 attached hereto.

1.17“ANVISA” means the Brazilian Health Regulatory Agency (Agência Nacional de Vigilância Sanitária) and any successor entity with similar responsibility thereto.

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1.18“API” means the bulk active pharmaceutical ingredient manufactured in accordance with cGMP (unless expressly stated otherwise) for a Product. The quantity of API will be the as-is gross mass of the API after lyophilization (i.e., including such amounts of water, impurities, salt, heavy metals, etc. within the limits set forth in the API specifications).

1.19“APOC3” means the gene target apolipoprotein C3 (GenBank accession # NM_000040; Gene ID: 345) or any alternative splice variants, mutants, polymorphisms and fragments thereof.

1.20“Business Day” means any day, other than Saturday, Sunday, or any statutory holiday or bank holiday in the United States.  

1.21“Calendar Quarter” means a period of three (3) consecutive months ending on the last day of March, June, September, or December, respectively.  

1.22“Calendar Year” means a period of twelve (12) consecutive months beginning on January 1 and ending on December 31.  

1.23“Change of Control” means, with respect to a Party (a) the acquisition of beneficial ownership, directly or indirectly, by any Third Party of securities or other voting interest of such Party representing a majority or more of the combined voting power of such Party’s then outstanding securities or other voting interests, (b) any merger, reorganization, consolidation or business combination involving such Party with a Third Party that results in the holders of beneficial ownership (other than by virtue of obtaining irrevocable proxies) of the voting securities or other voting interests of such Party (or, if applicable, the ultimate parent of such Party) immediately prior to such merger, reorganization, consolidation or business combination ceasing to hold beneficial ownership of more than fifty percent (50%) of the combined voting power of the surviving entity immediately after such merger, reorganization, consolidation or business combination, or (c) any sale, lease, exchange, contribution or other transfer to a Third Party (in one transaction or a series of related transactions) of all or substantially all of the assets of such Party to which this Agreement relates. The acquiring or combining Third Party in any of clause (a), (b) or (c), is referred to herein as the “Acquirer”.

1.24“Clinical Trial” means a Phase 1 Clinical Trial, Phase 2 Clinical Trial, Phase 3 Clinical Trial or any other study in which human subjects or patients are dosed with a drug, whether approved or investigational, including, for the avoidance of doubt, the AKCEA-TTR-L_Rx Pivotal Clinical Trial.  

1.25“Commercialization” and “Commercialize” means any and all activities undertaken relating to the marketing, obtaining pricing and reimbursement approvals, post-marketing commitments, promotion (including advertising, detailing or continuing medical education), any other offering for sale or any sale of a product, including any distribution, importation, exportation or transport of a product for sales purposes. “Commercialization” shall not include Development or Manufacturing.

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1.26“Commercially Reasonable Efforts” means, with respect to the efforts to be expended by a Party with respect to an agreed objective, such reasonable, diligent, and good faith efforts as such Party would normally use to accomplish a similar objective for its own internally developed product that is of similar market potential at a similar stage in its Development, Commercialization or product life, taking into account all relevant factors, including (a) the potential profitability of the product, (b) the costs and risks of Developing, Manufacturing, having Manufactured, using and Commercializing the product, (c) scientific, safety and regulatory concerns, (d) product profile, (e) the competitiveness of the marketplace and (f) the proprietary position of the product.  “Commercially Reasonable Efforts” shall be determined on a country-by-country or market-by-market basis (as most applicable) for a particular product, and it is anticipated that the level of effort will change over time, including to reflect changes in the status of the product and the countries (or markets) involved.  For the avoidance of doubt, where a Party has an obligation to use Commercially Reasonable Efforts, the efforts of such Party and its Affiliates, subcontractors and Sublicensees shall be considered in determining whether such Party has satisfied such obligation.

1.27“Comparable Third Party Product” means, with respect to a Product in any country in the PTC Territory, any pharmaceutical product sold by a Third Party not authorized by or on behalf of PTC, its Affiliates or Sublicensees in such a country, that:  

(a)contains, as an active pharmaceutical ingredient, the same compound as the Compound contained in the applicable Product; and

(b)is approved by the applicable Regulatory Authority for sale in such country.

1.28“Comparable Third Party Product Competition” means, with respect to a Product in any country in the PTC Territory in a given Calendar Quarter, that, during such Calendar Quarter:

(a)one or more Comparable Third Party Product(s) is commercially available in such country; and

(b)such Comparable Third Party Product(s) have a market share of [***] percent ([***]%) or more of the aggregate market in such country of such Product and the Comparable Third Party Product(s) (based on sales of units of such Product and such Comparable Third Party Product(s), as reported by IMS International, or if such data are not available, such other reliable data source as reasonably agreed by the Parties in writing).

1.29“Compound” means any of inotersen or volanesorsen.

1.30“Compounds” means inotersen and volanesorsen.

1.31“Conjugate Technology” means chemistry designed to enhance targeting or uptake of antisense drugs to specific tissues and cells. Conjugate Technology includes N-acetylgalactosamine (GalNAc) ligand conjugates capable of binding to the asialoglycoprotein receptor (ASGP-R) and enhancing the targeting or uptake of antisense drugs to the liver.

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1.32“Control” or “Controlled” means possession of the ability to grant a license or sublicense hereunder without violating the terms of any agreement with any Third Party (or Ionis with respect to the rights obtained from Ionis under the Ionis Pharmaceuticals/Akcea License Agreements); provided, however, that if a Party has a right to grant a license or sublicense with respect to an item of intellectual property to the other Party only upon payment of compensation (including milestones or royalties) to a Third Party, then the first Party will be deemed to have “Control” of the relevant item of intellectual property only if the other Party agrees to bear such compensation owed to such Third Party. For purposes of clarity, the foregoing proviso shall not apply to Ionis Pharmaceuticals or to payments made by Akcea to Ionis Pharmaceuticals under the Ionis Pharmaceuticals/Akcea License Agreement.  Notwithstanding anything to the contrary under this Agreement, with respect to any Third Party that later becomes an Affiliate of Akcea after the Effective Date (including a Third Party acquirer), no intellectual property of such Third Party will be included in the licenses granted hereunder by virtue of such Third Party becoming an Affiliate of Akcea, except to the extent that intellectual property of such Affiliate is utilized by Akcea in the Development, Manufacture or Commercialization of Products.

1.33“Cover” or “Covered” or “Covering” means, with respect to a Patent Right and a Product, that, but for rights granted to a Person under such Patent Right the act of making, using, or selling of such Product by such Person would infringe a Valid Claim included in such Patent Right, or in the case of a Patent Right that is a patent application, would infringe a Valid Claim in such patent application if it were to issue as a patent. If Akcea assigns an Akcea Product-Specific Patent Right to PTC, then such Patent Right will still be considered an Akcea Product-Specific Patent Right hereunder and a Product will be deemed “Covered” by such Akcea Product-Specific Patent Right for purposes of this Agreement.

1.34“Develop” or “Development” means clinical research and development activities commencing with IND-enabling studies, including drug metabolism and pharmacokinetics, translational research, toxicology, pharmacology toxicology studies, statistical analysis and report writing, formulation development and optimization, Clinical Trials, regulatory affairs (including preparation for a Regulatory Approval Application submission and other submission-related activities), product approval and registration activities, and all other activities necessary to conduct IND-enabling studies or seek, obtain and maintain Regulatory Approval. “Development” shall not include Commercialization or Manufacturing.

1.35“Dollars” or “$” means the legal tender of the U.S.

1.36“Drug Product” means any drug product containing API as an active ingredient in finished bulk form or in packaged and labeled form.

1.37“EMA” means the European Medicines Agency, and any successor entity thereto.  

1.38“Executive Officers” means the President, or his or her designee, in the case of Akcea, and the Chief Operating Officer, or his or her designee, in the case of PTC.

1.39“Existing In-License Agreements” means the Ionis Pharmaceuticals/Akcea License Agreements and those other Akcea in-licenses set forth on Schedule 1.39 attached hereto.

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1.40“Exploit” or “Exploitation” means to make, have made, import, use, sell, or offer for sale, Develop, Manufacture or Commercialize.

1.41“FDA” means the U.S. Food and Drug Administration, and any successor entity thereto.  

1.42 “First Commercial Sale” means, with respect to a Product, the first sale for which revenue has been recognized by PTC or its Affiliates or Sublicensees for use or consumption by the general public of such Product in any country in the PTC Territory for which all Regulatory Approvals and pricing or reimbursement approvals that are legally required in order to sell such Product in such country have been granted; in each case provided however that the following shall not constitute a First Commercial Sale:

(a)any sale to an Affiliate or Sublicensee unless the Affiliate or Sublicense is the last entity in the distribution chain of the Product;

(b)any use of such Product in Clinical Trials, non-clinical Development activities or other Development activities with respect to such Product by or on behalf of a Party, or disposal or transfer of such Product for a bona fide charitable purpose; and

(c)any transfer for non-clinical or clinical studies, patient-assistance programs, charitable donations or compassionate use purposes.

For clarity, a “First Commercial Sale” of a Product in a country may be made by PTC or its Affiliates or Sublicensees pursuant to any approvals that may be granted pursuant to any order, requirement, directive, decree, mandate, legal action or judicial process or other legal process of any court or other Governmental Authority of competent jurisdiction in any country in the PTC Territory.

1.43“Future In-License Agreement” means any agreement between Akcea (or, subject to Section 15.3, any of its Affiliates), on the one hand, and a Third Party, on the other hand, pursuant to which Akcea or any of its Affiliates acquires Control of any Know-How or Patent Right that would be Akcea IP.

1.44“Good Clinical Practices” or “cGCP” means (a) the then-current standards, practices, procedures and regulatory requirements promulgated or endorsed by the FDA and its applicable foreign counterparts and (b) the guidelines adopted by the International Conference on Harmonization (“ICH”), titled “Guidance for Industry E6 Good Clinical Practice: Consolidated Guidance” (or any successor document), as each may be updated from time to time.

1.45“Good Laboratory Practices” or “cGLP” means the then-current good laboratory practice standards promulgated or endorsed by the FDA, as defined in U.S. 21 C.F.R. Part 58, and such comparable regulatory standards in those applicable jurisdictions outside of the United States.

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1.46“Good Manufacturing Practices” or “cGMP” means (a) the then-current good manufacturing practices and standards promulgated or endorsed by the FDA, as provided for in the Current Good Manufacturing Practice Regulations of the U.S. Code of Federal Regulations Title 21 (21 C.F.R. §§210 and 211), and such comparable regulatory standards in those applicable jurisdictions outside of the United States, and (b) the guidelines adopted by the ICH, titled, “Good Manufacturing Practice Guide for Active Ingredients, Q7”.

1.47“Governmental Authority” means any multinational, federal, national, state, provincial, local or other entity, office, commission, bureau, agency, political subdivision, instrumentality, branch, department, authority, board, court, arbitral or other tribunal exercising executive, judicial, legislative, police, regulatory, administrative or taxing authority or functions of any nature pertaining to government.

1.48“In-License Agreement” means (a) any Existing In-License Agreement, and (b) any Future In-License Agreement; in each case of (a) and (b), as amended from time to time.

1.49“IND” means an investigational new drug application submitted to the FDA pursuant to Part 312 of Title 21 of the U.S. Code of Federal Regulations, including any amendments thereto. References herein to IND shall include, to the extent applicable, any comparable filing(s) outside the U.S. for the investigation of any product in any other country or group of countries.  

1.50“inotersen” means the compound having the following sequence and chemistry: 5′-^MeU^MeC^MeU^MeUGGTTA^MeCATGAAA^MeU^MeC^MeC^MeC- 3.′  The underlined residues are 2’-O-(2-methoxyethyl) nucleosides (2’-MOE nucleosides).  The residues are arranged so that there are five 2’-MOE nucleosides at the 5′ and 3′-ends of the molecule flanking a gap of ten 2′-deoxynucleosides.  The cytosine and uracil bases are methylated at the 5-position. MeU and T have the same nucleobase structure and the choice for the symbol depends on whether the sugar is 2′-deoxy-D-ribose or D-ribose. Each of the 19 internucleoside linkages is a phosphorothioate linkage. Inotersen does not include any product containing Conjugate Technology.

1.51“Invention” or “Invented” means the result or act of invention as determined in accordance with US patent laws.

1.52“Ionis Pharmaceuticals/Akcea License Agreements” means the following agreements: (a) the Development, Commercialization and License Agreement, dated as of December 18, 2015, between Ionis Pharmaceuticals (f/k/a Isis Pharmaceuticals, Inc.) and Akcea, as amended from time to time; and (b) the Development, Commercialization, Collaboration, and License Agreement, dated as of March 14, 2018, between Ionis Pharmaceuticals and Akcea, as amended from time to time.

1.53“Ionis Pharmaceuticals” means Ionis Pharmaceuticals, Inc., a Delaware corporation, having its principal place of business at 2855 Gazelle Court, Carlsbad, CA 92010.

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1.54“Know‑How” means all unpatented information, know-how and data, including trade secrets, inventions (whether patentable or not), discoveries, methods, specifications, processes, expertise, technology, other non-clinical, pre-clinical and clinical data, documentation and results (including pharmacological, toxicological, biological, chemical, physical, safety and manufacturing data and results), analytical and quality control data and results, Regulatory Filings and other technical information.  “Know-How” excludes in any event any Patent Rights.

1.55“Law” means any law, statute, rule, regulation, order, judgment or ordinance having the effect of law of any federal, national, multinational, state, provincial, county, city or other political subdivision.

1.56“Manufacture” or “Manufacturing” means all activities related to the manufacturing of an active pharmaceutical ingredient or product, including test method development and stability testing, formulation, process development, manufacturing scale-up, manufacturing for use in non-clinical and clinical studies, manufacturing for commercial sale, packaging, release of product, quality assurance/quality control development, quality control testing (including in-process, in-process release and stability testing) and release of product or any component or ingredient thereof, and regulatory activities related to all of the foregoing. “Manufacturing” shall not include Development or Commercialization.

1.57“NDA” means a New Drug Application (as more fully described in 21 C.F.R. 314.50 et seq. or its successor regulation) and all amendments and supplements thereto filed with the FDA, or any equivalent filing, in a country or regulatory jurisdiction other than the United States.

1.58 “Net Sales” means with respect to any Product, the gross amount invoiced by PTC, any of its Affiliates and or any Sublicensee (each, a “Selling Party”) to a Third Party (including a customer, distributor, wholesaler or end user) for sales or distribution of such Product, less the following deductions as calculated in accordance with the applicable Accounting Standard as consistently applied:

1.58.1normal trade, cash, quantity and other customary discounts actually given to customers in the ordinary course of business;

1.58.2rebates, credits and allowances given by reason of rejections returns, damaged or defective product or recalls;

1.58.3government-mandated rebates and any other compulsory payments, credits, adjustments and rebates actually paid or deducted;

1.58.4[***] percent ([***]%) of all price adjustments, allowances, credits, chargeback payments, discounts, rebates, fees and reimbursements or similar payments granted or made to wholesalers, distributors or other trade customers (the “Specific Discounts”); provided, however, the total deduction allowed for such Specific Discounts shall be capped at [***] percent ([***]%) of the ex-factory sales price for the applicable Product;

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1.58.5price adjustments, allowances, credits, chargeback payments, discounts, rebates, free of charge concessions, fees and reimbursements or similar payments granted or made to managed care organizations, group purchasing organizations or other buying groups, pharmacy benefit management companies, health maintenance organizations and any other providers of health insurance coverage, health care organizations or other health care institutions (including hospitals), health care administrators, patient assistance or other similar programs, or to federal state/provincial, local and other governments, including their agencies (but in all cases excluding Specific Discounts, which shall solely be governed by the preceding subsection);

1.58.6reasonable and customary freight, shipping, insurance and other transportation expenses, if actually borne by the applicable Selling Party without reimbursement from any Third Party; and

1.58.7sales, value-added, excise taxes, tariffs and duties, and other taxes and government charges directly related to the sale, delivery or use of such Product (but not including taxes assessed against the net income derived from such sale.)

If non-monetary consideration is received for any Product, Net Sales will be calculated based on the average price charged for such Product during the preceding Calendar Quarter in the relevant country, or in the absence of such sales, the fair market value of the Product, as determined by the Parties in good faith.  

Furthermore, Net Sales shall not include use or transfer of a Product free of charge by PTC, its Affiliates and/or its Sublicensees for non-clinical or clinical studies, patient-assistance programs, charitable donations or compassionate use.

Resales or sales of a Product made in good faith between or among PTC, any of its Affiliates or any Sublicensee shall not be included in the calculation of Net Sales as long as, with respect to such resales or sales, the first sale thereafter to a non-Sublicensee Third Party is included in the calculation of Net Sales.

PTC and Akcea agree that any reasonable definition of “Net Sales” customarily used in drug discovery, development or commercialization licensing or collaboration contracts that is agreed to by PTC (or an Acquirer or assignee) and a sublicensee with respect to royalties payable to PTC from such sublicensee in an arms-length transaction under a particular sublicense will replace the definition of Net Sales in this Agreement and will be used in calculating the royalty payment to Akcea on sales of Products sold pursuant to such sublicense and due under this Agreement, for so long as the same definition of net sales is used to calculate the royalty payable from the applicable sublicensee to PTC.

For the avoidance of doubt, and notwithstanding any provision to the contrary in this Agreement, sales of a Product made in connection with any order, requirement, directive, decree, mandate, legal action or judicial process or other legal process of any court or other Governmental Authority of competent jurisdiction in the PTC Territory shall be included in the calculation of Net Sales.

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1.59“Patent Right”means (a) patents, patent applications, and similar government-issued rights protecting inventions in any country or jurisdiction however denominated, (b) all priority applications, divisionals, continuations, substitutions, continuations-in-part of and similar applications claiming priority to any of the foregoing, and (c) all patents and similar government-issued rights protecting inventions issuing on any of the foregoing applications, together with all registrations, reissues, renewals, re-examinations, confirmations, supplementary protection certificates, and extensions of any of (a), (b), or (c).

1.60“Permitted Licenses” means (1) licenses granted by Akcea or its Affiliates before or after the Effective Date to any Third Party under the Akcea Core Technology Patent Rights, the Akcea Manufacturing and Analytical Patent Rights, or the Akcea Manufacturing and Analytical Know-How (but not under the Akcea Product-Specific Patent Rights) to (a) use oligonucleotides (or supply oligonucleotides to end users) solely to conduct pre-clinical research, or (b) enable such Third Party to manufacture or formulate oligonucleotides, where (i) such Third Party is primarily engaged in providing contract manufacturing or services and is not primarily engaged in drug discovery, development or commercialization of therapeutics; and (ii) neither Akcea nor its Affiliates assists such Third Party to identify, discover or make a Product; and (2) material transfer agreements with academic collaborators or non-profit institutions solely to conduct non-commercial research.

1.61“Permitted Sublicensee” means any Third Party distributor, logistics provider or other Third Party providers in support of Manufacturing or Commercialization of Compounds and/or Products in the applicable Territory.

1.62“Person” means any individual, partnership, joint venture, limited liability company, corporation, firm, trust, association, unincorporated organization, Governmental Authority, or any other entity not specifically listed in this Section 1.61.  

1.63“Phase 1 Clinical Trial” means a human clinical trial (or a portion of a human clinical trial) of a product in any country, the principal purpose of which is a preliminary determination of safety in healthy individuals or patients, that would satisfy the requirements of 21 C.F.R. 312.21(a), or a similar clinical study prescribed by the relevant Regulatory Authorities in a country other than the United States.  

1.64“Phase 2 Clinical Trial” means a human clinical trial (or a portion of a human clinical trial) of a product in any country that would satisfy the requirements of 21 C.F.R. 312.21(b) and whose design is intended to explore a variety of doses, dose response, and duration of effect, and to generate initial evidence of clinical safety and activity in a target patient population, or a similar clinical study prescribed by the relevant Regulatory Authorities in a country other than the United States.  

1.65“Phase 3 Clinical Trial” means a human clinical trial (or a portion of a human clinical trial) of a product in any country that would satisfy the requirements of 21 C.F.R. 312.21(c) and whose design is intended to (a) establish that the product is safe and efficacious for its intended use, (b) define warnings, precautions and adverse reactions that are associated with the product in the dosage range to be prescribed, and (c) support Regulatory Approval for such product.  

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1.66“Phase 4 Clinical Trial” means a human clinical trial of a product that (a) is not required for receipt of Regulatory Approval for a country but which may be useful in providing additional drug profile data in support of such Regulatory Approval (whether the trial is commenced prior to or after receipt of such Regulatory Approval), or (b) is required, requested or advised by a Regulatory Authority as a condition of, or in connection with, obtaining or maintaining a Regulatory Approval (whether the trial is commenced prior to or after receipt of such Regulatory Approval). Phase 4 Clinical Trials may include trials or studies conducted in support of pricing/reimbursement, epidemiological studies, modeling and pharmacoeconomic studies, post-marketing surveillance studies, investigator sponsored clinical trials and health economics studies.

1.67“Prior Agreements” means the agreements listed on Schedule 7.1.2 attached hereto.

1.68“Product” means any product containing either (a) inotersen, or (b) volanesorsen, in each case in their forms as they exist on the Effective Date, alone or in combination with one or more other active ingredients in any and all dosage forms and strengths and delivery modes. For the avoidance of doubt, AKCEA-TTR-L_Rx is not a “Product” under this Agreement.

1.69“Prosecution and Maintenance” or “Prosecute and Maintain”  means, with regard to a Patent Right, the preparation, filing, prosecution and maintenance of such Patent Right, as well as re-examinations, reissues, appeals, and requests for patent term adjustments and patent term extensions with respect to such Patent Right, together with the initiation or defense of interferences, the initiation or defense of oppositions and other similar proceedings with respect to the particular Patent Right, and any appeals therefrom.  For clarification, “Prosecution and Maintenance” or “Prosecute and Maintain” shall not include any other enforcement actions taken with respect to a Patent Right.

1.70“PTC Background Know-How” means Know-How that is (a) Controlled by PTC on the Effective Date or thereafter during the Term, (b) arises outside of the activities conducted under this Agreement, (c) is disclosed or used by PTC in connection with the conduct of the Exploitation of Compounds or Products hereunder, and (d) is necessary or reasonably useful for the Exploitation of Compounds or Products in the PTC Territory.

1.71“PTC Background Patent Rights” means those Patent Rights Controlled by PTC or any of its Affiliates on the Effective Date or thereafter during the Term that Cover PTC Background Know-How.

1.72“PTC IP” means the PTC Background Know-How, the PTC Background Patent Rights, the PTC Product-Specific Patent Rights and the PTC Product-Specific Know-How.

1.73“PTC Patent Rights” means the PTC Background Patent Rights and the PTC Product-Specific Patent Rights.

1.74“PTC Product-Specific IP” means the PTC Product-Specific Know-How and the PTC Product-Specific Patent Rights.

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1.75“PTC Product-Specific Know-How”means all Know-How Controlled by PTC or its Affiliates on the Effective Date or at any time during the Term necessary to Develop or Commercialize a Product or disclosed by Akcea to PTC and, in each case, specifically relates to (a) the composition of matter of a Product or (b) methods of using a Product as a prophylactic or therapeutic; provided, however, Know-How Controlled by PTC or any of its Affiliates that (i) consists of subject matter applicable to oligonucleotide compounds or products in general or (ii) relates to an oligonucleotide compound that does not specifically modulate expression of a Target via the binding, partially or wholly, of such compound to RNA that encodes a Target, will not be considered PTC Product-Specific Know-How.

1.76“PTC Product-Specific Patent Rights” means all Patent Rights Controlled by PTC or its Affiliates on the Effective Date or at any time during the Term Covering (a) the composition of matter of a Product, (b) methods of using a Product, or (c) an oligonucleotide compound that specifically modulates expression of a Target via the binding, partially or wholly, of such compound to RNA that encodes a Target; provided, however, that Patent Rights Controlled by PTC or any of its Affiliates to the extent that such Patent Rights include any claims that are directed to (i) subject matter applicable to oligonucleotide compounds or products in general or (ii) an oligonucleotide compound that does not specifically modulate expression of a Target via the binding, partially or wholly, of such compound to RNA that encodes a Target, will not be considered PTC Product-Specific Patent Rights..

1.77“PTC Territory” means Latin America and the Caribbean, using the United Nations M49 standard definition for that region, but excluding the following countries and territories: Anguilla, Aruba, Bahamas, Barbados, Bonaire, Sint Eustatius and Saba, British Virgin Islands, Cayman Islands, Curaçao, Guadeloupe, Martinique, Montserrat, Puerto Rico, Saint Barthélemy, Saint Martin (French Part), Sint Maarten (Dutch part), Turks and Caicos Islands, United States Virgin Islands, Bouvet Island, Falkland Islands (Malvinas), French Guiana, South Georgia and the South Sandwich Islands.

1.78“Regulatory Approval” means the approval of the applicable Regulatory Authority necessary for the marketing and sale of a product in a given country, excluding any pricing and reimbursement approvals that may be required, and including the expansion or modification of the label for additional indications or uses.

1.79“Regulatory Approval Application” means (a) an NDA, or (b) any other application to seek Regulatory Approval of a product in any country, as defined in applicable Laws and filed with the relevant Regulatory Authorities of such country.

1.80“Regulatory Authority” means the FDA in the United States, ANVISA in Brazil or any Governmental Authority in another country in the Territory that holds responsibility for granting Regulatory Approval for a product in such country and any successor(s) thereto.  

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1.81“Regulatory Exclusivity” means any exclusive marketing rights or data exclusivity rights conferred by any Regulatory Authority with respect to any Product that precludes the use of any clinical data collected and filed for such Product for the benefit of any Regulatory Approval for a generic or biosimilar product (for any use), including orphan or pediatric exclusivity where applicable.

1.82“Regulatory Filing” means, with respect to a product, any documentation comprising or relating to or supporting any filing or application with any Regulatory Authority with respect to such product, or its use or potential use, including any document submitted to any Regulatory Authority, including any IND, any drug master files, any Regulatory Approval Application and any correspondence with any Regulatory Authority with respect to such product (including minutes of any meetings, telephone conferences or discussions with any Regulatory Authority).

1.83“Royalty Trigger Date” means, on a Product-by-Product basis, the earlier to occur with respect to a Product of (a) the date that is twelve (12) months after the First Commercial Sale of such Product in Brazil; or (b) the date in which PTC or its Affiliates or Sublicensees have recognized revenue of ten million U.S. Dollars ($10,000,000) or more in cumulative Net Sales of such Product in the PTC Territory.

1.84“Target” means (a) in the case of inotersen, TTR; and (b) in the case of volanesorsen, APOC3.

1.85“Territory” means, as the context requires, either (a) the PTC Territory or the Akcea Territory, or (b) the PTC Territory and the Akcea Territory together.  

1.86“Third Party” means any Person that is neither a Party nor an Affiliate of a Party.  

1.87“Trademark” means trademarks, service marks, certification marks, trade dress, internet domain names, trade names, identifying symbols, designs, product names, company names, slogans, logos or insignia, whether registered or unregistered, and all common law rights, applications and registrations therefor, and all goodwill associated therewith.

1.88“TTR” means the gene target, transthyretin (GenBank accession # NM_000371; Gene ID: 7276), or any alternative splice variants, mutants, polymorphisms, and fragments thereof.

1.89“United States” or “U.S.”  means the United States of America and all of its territories and possessions.  

1.90“Valid Claim”  means a claim of a Patent Right that (a) in the case of any granted, unexpired United States Patent Right or foreign Patent Right, will not have been donated to the public, disclaimed, or held invalid or unenforceable by a court of competent jurisdiction in an unappealed or unappealable decision, or (b) in the case of any United States or foreign patent application, is being prosecuted in good faith and will not have been permanently cancelled, withdrawn, or abandoned, provided that (i) no more than [***] years have passed since the earliest date of filing for such application in the United States (unless and until such claim is granted), and (ii) no more than [***] years have passed since the earliest date of filing for such application outside of the United States (unless and until such claim is granted).

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1.91“volanesorsen”means the compound known as ISIS 304801 having the following sequence and chemistry: 5′-AG^MeC^MeU^MeU^MeCTTGT^MeC^MeCAG^MeC^MeU^MeU^MeUA^MeU-3′. The underlined residues are 2'-O-(2-methoxyethyl) nucleosides (2'-MOE nucleosides). The residues are arranged so that there are five 2'-MOE nucleosides at the 5' and 3' ends of the molecule flanking a gap of ten 2'-deoxynucleosides. The cytosine and uracil bases are methylated at the 5-position. Each of the 19 internucleoside linkages is a phosphorothioate diester linkage.Volanesorsen does not include any product containing Conjugate Technology.

1.92Additional Definitions.  Each of the following definitions is set forth in the section of this Agreement indicated below:

Definition:	Section:
Acquirer	1.23
Acquired Third Party	15.3.4
Agreement	Preamble
Akcea	Preamble
Akcea Core Technology Patent Rights	10.1.3
Akcea Indemnified Parties	13.1
Akcea Invention	10.1.2
Akcea-Owned Categories	10.1.3
Akcea Proposed Transaction Entity Alliance Manager	7.2.4 5.5
CMO	4.1
Committee	5.2.1
Competitive Infringement	10.3.1
Compulsory Third Party Product	9.5.
Confidential Information	11.1
Cross-Territory Sales	3.10.2
Cross-Territory Sales Notice	3.10.2
Cross-Territory Sales Report	3.10.3
Defense Proceeding	10.2.1(a)
Disclosing Party	11.1
Dispute	15.2
Distributing Party	3.10.2
eCTD	2.5.3
Effective Date	Preamble
Evaluation Package	7.2.1
Exclusive License	6.1.1
Existing Confidentiality Agreement	11.1.4
Expiration of the ROFN Right	7.2.1
Final Offer	7.2.3(b)
FPL	7.1
GAAP	15.13
ICH	1.41
Inbound Licensor	6.2.1
Incremental Tax Cost	15.3.1

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Definition:	Section:
Indemnified Party	13.3
Indemnifying Party	13.3
Initial Fee	9.1
Inotersen Buy-Out	7.2.3(a)
Inotersen Buy-Out Option	7.2.3
Inotersen FMV	7.2.3(a)
Ionis Internal ASO Safety Database	3.9.3
Ionis Pharmaceuticals/Akcea Product Regulatory Strategy	2.4.1
JAMS	15.2
Joint Invention	10.1.2
JSC	5.1.1
JSC Evaluation Presentation	7.2.1
Losses	13.1
Market Share Loss Percentage	9.5
Milestone Payment	9.2
Non-Exclusive License	6.1.2
Parties	Preamble
Party	Preamble
Pre-Existing Affiliates	15.3.3
Product Regulatory Strategy	2.4.2
Product Trademark	3.7.1
Promotional Materials	3.5
Proposed Transaction	7.2.1
PTC	Preamble
PTC Commercialization Plan	3.2
PTC Commercialization Targets	3.2
PTC Indemnified Parties	13.2
PTC Invention	10.1.2
PTC Parent	Recitals
Receiving Party	11.1
ROFN Right	7.2.1
Royalty Rate	9.3
Royalty Term	9.4
Securities Acts	11.3.3
SDEA	3.9.2
Selected Final Offer	7.2.3(c)
Selling Party	1.58
Specific Discounts	1.58.4
Subcommittee	5.2
Sublicense	6.4
Sublicensee	6.4
Supply Agreement	4.1
Term	14.1
Third Party Claims	13.1

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Definition:	Section:
Valuation Expert	7.2.3(b)
Valuation Notice	7.2.3(b)

ARTICLE 2
DEVELOPMENT; REGULATORY STRATEGY; KNOW-HOW TRANSFER

2.1Product Development.  

2.1.1As between Akcea and PTC, in the Akcea Territory, Akcea is solely responsible for the Development activities relating to the Products and AKCEA-TTR-L_Rx in accordance with the terms of the Ionis Pharmaceuticals/Akcea License Agreements, the Strategic Plans and Transition Plans (each as defined therein) and any Regulatory (as defined therein) strategies contemplated under the Ionis Pharmaceuticals/Akcea License Agreements.  As between Akcea and PTC, all costs and expenses incurred by or on behalf of Akcea in the performance of such Development activities shall be borne solely by Akcea.

2.1.2Akcea shall promptly notify PTC (but in any case within [***]) of any Material Changes (as defined in the Ionis Pharmaceuticals/Akcea License Agreements) to the Strategic Plans and any material changes to the Transition Plans that have been approved pursuant to the Ionis Pharmaceuticals/Akcea License Agreements that may affect the Development of the Products in the PTC Territory.  

2.1.3Akcea shall consult with PTC in good faith regarding (a) the conduct and implementation of Akcea’s activities under the Strategic Plans and the Transition Plans relating to the Development of the Products in the PTC Territory, and (b) any Material Change (as defined in the Ionis Pharmaceutical/Akcea License Agreements) prior to their implementation. If any such activities are solely related to the Development of the Products in the PTC Territory, then the Parties will mutually agree to a budget for such activities, and the costs of such activities under such mutually agreed budget will be borne by PTC.

2.1.4Akcea shall invite PTC to appoint a representative to attend, and such PTC representative shall be permitted to attend, any portions of any JSC or other Subcommittee meetings that are held pursuant to the Ionis Pharmaceuticals/Akcea License Agreements that relate to the Development of any of the Products in the PTC Territory.

2.1.5PTC will conduct any Phase 4 Clinical Trials that are required or requested in writing by a Regulatory Authority in a country in the PTC Territory as a condition of, or in connection with, obtaining or maintaining Regulatory Approval in such country (whether such Phase 4 Clinical Trial is commenced prior to or after receipt of such Regulatory Approval) or as otherwise determined by PTC to conduct.  As between Akcea and PTC, all costs and expenses incurred by or on behalf of PTC in the performance of any such Phase 4 Clinical Trials shall be borne solely by PTC.

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2.2Akcea Progress Reports on Development Activities.  PTC shall reasonably assist Akcea with the preparation of any progress updates to be provided to Ionis Pharmaceuticals with respect to the Development of the Products in the PTC Territory as required under the Ionis Pharmaceuticals/Akcea License Agreements. Akcea shall provide to the JSC a progress update regarding any regulatory activities related to a Product that occurred since the last update provided by Akcea to the JSC, including as to timing of obtaining Regulatory Approval for a Product in any country and any events that have occurred or information that has been obtained by Ionis Pharmaceuticals or Akcea relevant to the timing or the likelihood of obtaining Regulatory Approval in any country.

2.3PTC Progress Reports on Regulatory Activities. PTC shall provide to the JSC a progress update regarding any regulatory activities related to a Product that occurred since the last update provided by PTC to the JSC, including as to timing of obtaining Regulatory Approval for a Product in any country and any events that have occurred or information that has been obtained by PTC relevant to the timing or the likelihood of obtaining Regulatory Approval in any country in the PTC Territory.

2.4Regulatory Strategy.  

2.4.1All detailed plans for coordination and preparation of Regulatory Filings and Regulatory Approval Applications for market approval for the Products that have been agreed to by Ionis Pharmaceuticals and Akcea pursuant to the Ionis Pharmaceuticals/Akcea License Agreements as of the Effective Date have been disclosed by Akcea to PTC in writing or via the electronic data room hosted in connection with the transactions contemplated hereunder (the “Ionis Pharmaceuticals/Akcea Product Regulatory Strategy”). After the Effective Date, except to the extent required by a Regulatory Authority in a country in the Akcea Territory or as set forth in Section 2.4.2, Akcea may not make any changes to the Ionis Pharmaceuticals/Akcea Product Regulatory Strategy that would have a material adverse effect on the timing or likelihood of obtaining Regulatory Approval in a country in the PTC Territory.

2.4.2The Parties shall cooperate in good faith to develop a written regulatory strategy for each Product in the PTC Territory for review and approval by the JSC (each, a “Product Regulatory Strategy”). Each Product Regulatory Strategy shall address (a) the activities and the allocation between the Parties of the pre-launch activities to be undertaken by each Party in preparation for the commercial launch of a Product in any country within the PTC Territory; (b) the timeline for the transition of any regulatory responsibilities (including, subject to Section 3.4, pricing and reimbursement approval responsibilities) by Akcea and/or Ionis Pharmaceuticals and their applicable Affiliates to PTC; and (c) the timeline for the assignment and transfer of all Regulatory Approvals, Regulatory Filings and/or any pricing and reimbursement approvals, held by Akcea and/or Ionis Pharmaceuticals with respect to any country in the PTC Territory to PTC in accordance with Section 2.5. By [***] of each Calendar Year, the Parties shall submit an updated version of the Product Regulatory Strategy for such Calendar Year to the JSC for review and approval. Once the JSC has approved a Product Regulatory Strategy, each Party will use Commercially Reasonable Efforts to execute its respective tasks and responsibilities within the time frames set forth in such Product Regulatory Strategy. Each Party will bear its own costs and expenses associated with any activities that such Party performs in support of the implementation of such Product Regulatory Strategy.

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2.5Transfer of Regulatory Filings and Regulatory Approvals.

2.5.1Within thirty (30) days after the Effective Date, Akcea shall, with respect to each country in the PTC Territory, assign and transfer to PTC the ownership and sponsorship of such Regulatory Approval and any pricing and reimbursement approvals held in its or any of its Affiliate’s or sublicensee’s name in such country, to the extent any exist and to the extent consistent with applicable Law, and provide PTC with copies of all Regulatory Filings relating to the Products in the PTC Territory, including all reports, correspondence and conversation logs and all pre-clinical and clinical data and results related thereto.  Thereafter, PTC shall prepare, file and maintain all Regulatory Filings and Regulatory Approvals for the applicable Product in such country.  Akcea shall further appoint, and ensure that Ionis Pharmaceuticals and its other Affiliates and sublicensees appoint, PTC as their agent for all matters relating to such Products and Compounds involving Regulatory Authorities in the PTC Territory until all Regulatory Approvals, Regulatory Filings, and any pricing and reimbursement approvals held in its or its Affiliate’s or sublicensee’s name have been transferred to PTC.  In addition, Akcea shall ensure that PTC shall have access to all data contained or referenced in Regulatory Approvals and Regulatory Filings in the Akcea Territory that are reasonably necessary for the Exploitation of the Compounds and the Products in the PTC Territory.  

2.5.2Each Party shall own and maintain in its possession all Regulatory Filings and Regulatory Approvals for the Products in its respective Territory.  

2.5.3In addition, within thirty (30) days after the Effective Date, Akcea shall provide to PTC a copy in an appropriate electronic format of all sections of the electronic common technical document (“eCTD”) modules that relate to each of the Products in the Territory that have been agreed to by Akcea and Ionis Pharmaceuticals pursuant to the Ionis Pharmaceuticals/Akcea License Agreements.  PTC may use such eCTD to obtain Regulatory Approvals for the Products in the PTC Territory.

2.6Interactions with Regulatory Authorities.

2.6.1After the Effective Date, PTC shall be responsible for, and shall take the lead with respect to, all meetings, communications and other interactions with all of the Regulatory Authorities in the PTC Territory, and will deliver, or cause to be delivered, to Akcea for its review copies of all documents and communications received from Regulatory Authorities in the PTC Territory, and, to the extent practicable under the relevant circumstances (e.g., accelerated timeframes for responses or impromptu calls by regulators) will provide Akcea with a reasonable opportunity to review and comment on any such communications and related materials received by or to be submitted to any such Regulatory Authority (and PTC will not unreasonably refuse to implement any reasonable suggestions made by Akcea to such communications or materials).  To the extent practicable under the relevant circumstances, Akcea (or, at Akcea’s request, Ionis Pharmaceuticals) will have the right to attend, and PTC will provide Akcea with written notice of and an invitation to, any meeting PTC has formally scheduled or has definitive plans to hold with a Regulatory Authority relating to a Product in the PTC Territory; provided, however, that should Akcea be unable to attend a meeting, PTC will provide a summary of the meeting reasonably promptly thereafter. Following the first meeting with a Regulatory Authority attended by Akcea

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or Ionis (which Akcea and Ionis will bear its own costs to attend), PTC will reimburse Akcea’s and Ionis’ reasonable travel costs associated with such attendance at any such meetings with Regulatory Authorities if Akcea or Ionis declined to attend such meeting after being provided notice by PTC and either (i) PTC indicated PTC would like Akcea and/or Ionis to attend nonetheless, or (ii) a Regulatory Authority formally requires Akcea or Ionis to attend such meeting.

2.6.2As soon as reasonably practicable, Akcea will deliver, or cause to be delivered, to PTC for its review copies of all important documents and communications received from Regulatory Authorities in Major Market (as defined in the Ionis Pharmaceuticals/Akcea License Agreements) countries that impact the Development and Commercialization of any of the Products in the PTC Territory.

2.7Technology Transfer.  Akcea will promptly deliver, or cause to be delivered, to PTC or one or more of PTC’s designated Affiliates copies of all Know-How in Akcea’s and Ionis Pharmaceutical’s possession related to the Products in the PTC Territory that has not previously been provided to PTC for use solely in accordance with the licenses granted to PTC under Section 6.1.

2.8Conversion of NEURO-TTR OLE Study.  As soon as reasonably practicable, Akcea will use Commercially Reasonable Efforts to coordinate with PTC to convert all patients in the PTC Territory in the Phase 3 NEURO-TTR OLE study to a Phase 4 Clinical Trial, and PTC will use Commercially Reasonable Efforts to conduct such Phase 4 Clinical Trial, will be responsible for all costs related to such Phase 4 Clinical Trial in the PTC Territory, and PTC will not administer, or permit the administration of, inotersen in such Phase 4 Clinical Trial without a mutually agreed patient monitoring plan. PTC will also assume responsibility for the planning, conduct and expense of any new investigator-initiated studies or post-approval studies in the PTC Territory (e.g., Phase 4 Clinical Trial) mutually agreed to by the Parties. Akcea shall remain responsible for all [***] related to the Phase 3 NEURO-TTR OLE study through [***], after which, provided that Akcea has used Commercially Reasonable Efforts to coordinate with PTC to convert all patients in the PTC Territory in the Phase 3 NEURO-TTR OLE study to a Phase 4 Clinical Trial, PTC will be solely responsible for such [***] in the PTC Territory; provided, further, however, that if, by [***], PTC is unable to convert all patients in the PTC Territory in the Phase 3 NEURO-TTR OLE study to a Phase 4 Clinical Trial due to a delay caused by ANVISA, then the Parties will [***] the obligation to [***] in the PTC Territory until the earlier of (i) the conclusion of such delay, and (ii) [***], after which time PTC will be solely responsible for such [***] in the PTC Territory.

2.9Class Generic Claims for Products. To the extent PTC intends to make any claims in a Product label or regulatory filing for a Product in the PTC Territory that are class generic to antisense oligonucleotides, Ionis’ generation 2.0 or 2.5 chemistry platform(s), or Conjugate Technology, PTC will provide Akcea with such proposed claims for Akcea’s review and will [***] for such class generic claims in such label or regulatory filing.

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ARTICLE 3
COMMERCIALIZATION

3.1Diligence.  Subject to Akcea’s compliance with Section 2.5, PTC shall be solely responsible for, and shall use Commercially Reasonable Efforts to, Commercialize the Product in the PTC Territory at its sole cost and expense, including the pursuit and maintenance of applicable Regulatory Approvals in the PTC Territory and Commercialization of the Products in accordance with the PTC Commercialization Plan. In accordance with the Ionis Pharmaceuticals/Akcea License Agreements, as between Akcea and PTC, Akcea shall be solely responsible for Commercializing the Products in the Akcea Territory at its sole cost and expense, including the pursuit and maintenance of applicable Regulatory Approvals in the Akcea Territory. Each Party shall be solely responsible at its own cost and expense for the Commercialization of the Products in their respective Territory, including the conduct of any post-marketing commitments or studies.

3.2PTC Commercialization Plan. Within [***] after the receipt of Regulatory Approval for a Product in the PTC Territory, and thereafter within [***] after [***] of each Calendar Year, PTC shall submit to the JSC a written plan that summarizes (a) the status of its Commercialization activities with respect to the Products conducted during the immediately prior Calendar Year, and (b) a list of high-level, specific performance targets for the then-current Calendar Year for each of the Products that are currently in Commercialization in the PTC Territory, for review and approval by the JSC (such performance targets, the “PTC Commercialization Targets” and each such plan, a “PTC Commercialization Plan”). The initial PTC Commercialization Plan will be mutually agreed to by the Parties within [***] after the Effective Date, and will include, among other important Commercial matters, (i) pre-launch, launch, and subsequent Commercialization activities for each Product (which may include, as appropriate at any given time based on the stage of Commercialization, market access strategy, messaging, branding, pricing, a regulatory plan, advertising, education, publication planning, marketing, compliance, and field force training), (ii) key decisions and timelines for Commercialization activities, (iii) key strategies and tactics for implementing those activities, and (iv) a safety section that includes a robust patient monitoring plan. In addition, at each meeting of the JSC, PTC will provide to the JSC a progress update on PTC’s performance of activities related to each Product under the PTC Commercialization Plan (including an update regarding the progress of any named patient or other similar programs), which progress update may take the form of a PowerPoint presentation. For clarity, the performance targets set forth in a PTC Commercialization Plan [***]; provided, however, that if PTC fails to achieve a performance target then [***].

3.3Patient Safety. For the avoidance of doubt, the Parties acknowledge and agree that, for each Product, PTC will not administer, or permit the administration of, such Product in the PTC Territory until the Parties have mutually agreed on the initial patient monitoring plan described in Section 3.2(iv).

3.4Pricing and Reimbursement.  Notwithstanding anything to the contrary set forth in this Agreement, PTC and its Affiliates and Sublicensees shall take the lead in, and be responsible for, all pricing and reimbursement approval proceedings, discount and rebate strategies and other economic arrangements relating to the Products in the PTC Territory.  Akcea shall assist PTC in

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obtaining pricing and reimbursement approvals in the PTC Territory, including, if required by applicable Law, to submit any pricing and reimbursement approval applications or other Regulatory Filings in Akcea and/or Ionis Pharmaceuticals’ name(s) as reasonably requested by PTC. For the avoidance of doubt, Akcea or Ionis Pharmaceuticals shall be responsible for all pricing and reimbursement approval proceedings, discount and rebate decisions and other economic arrangements relating to the Products in the Akcea Territory.

3.5Advertising and Promotional Materials.  PTC shall develop all sales, promotion and advertising materials relating to the Products (“Promotional Materials”) for use in the PTC Territory, which shall be consistent with the Akcea Product Positioning and Branding Strategy and compliant with applicable Laws and the provisions of the applicable Regulatory Approvals.  Akcea shall provide reasonably promptly after the Effective Date and thereafter on a regular basis from time to time marketing, commercialization, medical education, and medical information materials to be adapted by PTC for use in the PTC Territory, and Akcea shall have the right to review the adapted materials and any new materials developed by PTC to ensure that they are consistent in message and quality with the materials being used in the Akcea Territory (and PTC shall not unreasonably refuse to implement material comments or input that Akcea provides with regard to such materials). Akcea shall in good faith consider any comments or input that PTC may have with regard to adapting the Akcea Product Positioning and Branding Strategy for use in the PTC Territory.  Copies of all Promotional Materials used by PTC in the PTC Territory will be archived by PTC in accordance with applicable local Law.

3.6Packaging and Labeling. PTC and its Affiliates or Sublicensees shall be solely responsible for all finished packaging and labeling of the Product to be sold or otherwise distributed in the PTC Territory in accordance with the Akcea Product Positioning and Branding Strategy and specifications for the Product set forth in the applicable Supply Agreement and the Quality Agreement, at PTC’s sole cost and expense.

3.7Trademarks.  

3.7.1Trademarks. The trademark under which each Product shall be marketed in the PTC Territory shall be determined by the JSC (each a “Product Trademark”). To the extent possible, the same Trademark(s) will be used for the Commercialization of a Product throughout the Territory. PTC shall register the Product Trademarks in the PTC Territory, shall be the exclusive owner of the Product Trademarks in the PTC Territory and, subject to Section 14.3.7, shall take all such actions as are required to continue and maintain in full force and effect and defend in the PTC Territory the Product Trademarks and related registrations, in each case at its sole cost and expense. Akcea shall register the Product Trademarks in the Akcea Territory in its sole discretion, shall be the exclusive owner of the Product Trademarks in the Akcea Territory, and shall be responsible for the filing, prosecution, defense and maintenance before all trademark offices in the Akcea Territory of the Product Trademarks applicable to the Product, in each case at its sole cost and expense. The Parties shall reasonably consult with each other with respect to matters relating to the Product Trademarks. To the extent any Product Trademarks specific to the brand names TEGSEDI (for inotersen) and WAYLIVRA (for volanesorsen) are registered or are the subject of pending applications for registration by Akcea as of the Effective Date in the PTC Territory, Akcea will use commercially reasonable efforts to transition those registrations or

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applications to PTC pursuant to a mutually-agreed timeline, following which PTC will be responsible for the prosecution, defense and maintenance before all trademark offices in the PTC Territory of such Product Trademarks, in each case at PTC’s sole cost and expense. In addition, to the extent either Party uses Product-specific URLs, those URLs will be owned and maintained by the respective Party in that party’s Territory, in each case at such Party’s sole cost and expense, and to the extent any URLs specific to the brand names TEGSEDI (for inotersen) and WAYLIVRA (for volanesorsen) are owned by Akcea as of the Effective Date in the PTC Territory, Akcea will use commercially reasonable efforts to transition those URLs to PTC pursuant to a mutually-agreed timeline. The Parties shall reasonably consult with each other with respect to matters relating to Product-specific URLs.

3.7.2Trademark Licenses.  Subject to the terms and conditions of this Agreement, each Party hereby grants to the other Party a license to use the Product Trademarks for the packaging, marketing, sale and promotion of the applicable Product in accordance with the terms of this Agreement and with trademark usage guidelines to be developed by the JSC.

3.8Patient Assistance Programs.  PTC shall be solely responsible for the conduct of any expanded access, early access, free-of-charge and other programs with respect to the Products in the PTC Territory.  PTC shall be responsible for ensuring that such programs shall be consistent with any global safety monitoring standards provided by Akcea to the JSC and approved by the JSC for use in the PTC Territory.

3.9Adverse Event Reporting; Global Safety Database.

3.9.1PTC shall be responsible for reporting all adverse drug experiences associated with the Products in the PTC Territory to applicable Regulatory Authorities.  Akcea shall be responsible for reporting all adverse drug experiences associated with the Products in the Akcea Territory to applicable Regulatory Authorities. Akcea shall also be responsible for establishing, holding and maintaining the global safety database for the Compounds and the Products in the Territory.  

3.9.2Within [***] after the Effective Date, the Parties shall enter into a mutually-agreed safety data exchange agreement (the “SDEA”), which agreement shall provide for the exchange by the Parties of any information of which a Party becomes aware concerning any adverse event experienced by a subject or patient being administered any Product, whether or not such adverse event is determined to be attributable to any Compound or Product, including any such information received by either Party from any Third Party (subject to receipt of any required consents from such Third Party).  It is understood that each Party and its Affiliates and licensees or sublicensees shall have the right to disclose such information if such disclosure is reasonably necessary to comply with applicable Laws as well as requirements of any applicable Regulatory Authority.

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3.9.3Ionis’ Internal Antisense Safety Database.

(a)Ionis Pharmaceuticals maintains an internal database that includes information regarding the tolerability of its drug compounds, individually and as a class, including information discovered during pre-clinical and clinical development (the “Ionis Internal ASO Safety Database”). In an effort to maximize understanding of the safety profile and pharmacokinetics of Ionis’ and Akcea’s compounds, PTC will cooperate in connection with populating the Ionis Internal ASO Safety Database. To the extent collected by PTC and in the form in which PTC uses/stores such information for its own purposes, PTC will provide Akcea with information concerning toxicology, pharmacokinetics, safety pharmacology study(ies), serious adverse events and other safety information related to each Product as soon as practicable following the date such information is available to PTC (but not later than [***] after PTC’s receipt of such information). In connection with any reported serious adverse event, PTC will provide Akcea all serious adverse event reports, including initial, interim, follow-up, amended, and final reports. In addition, with respect to a Product, PTC will provide Akcea with copies of Annual safety updates filed with each IND and the safety sections of any final Clinical Study reports within [***] following the date such information is filed or is available to PTC, as applicable. Furthermore, PTC will promptly provide Akcea with any supporting data and answer any follow-up questions reasonably requested by Akcea. All such information disclosed by PTC to Akcea will be PTC Confidential Information; provided, however, that such PTC Confidential Information may be disclosed (i) by Akcea to Ionis to satisfy Akcea’s obligations to Ionis under the Ionis Pharmaceuticals/Akcea License Agreements, (ii) by Akcea and/or Ionis to Ionis’ other partners if such information is regarding class generic properties of oligonucleotides, or (ii) to any Third Party, in each case, so long as Akcea or Ionis does not disclose the identity of a Product or PTC. PTC will deliver all such information to Akcea for the Ionis Internal ASO Safety Database to Akcea Therapeutics, Inc., 22 Boston Wharf Road, Boston, Massachusetts 02210, Attention: Chief Medical Officer (or to such other address/contact designated in writing by Akcea). PTC will also cause its Affiliates and Sublicensees to comply with this Section 3.9.3(a).

3.9.4From time to time, Akcea and Ionis will utilize the information in the Ionis Internal ASO Safety Database to conduct analyses to keep Ionis and Akcea, and their respective partners, informed regarding class generic properties of ASOs, including with respect to safety. As such, if and when Ionis or Akcea identifies safety or other related issues that may be relevant to a Product (including any potential class-related toxicity), Akcea will promptly inform PTC of such issues and, if requested, provide the data supporting Akcea’s conclusions.

3.10Cross Territory Sales.

3.10.1Each Party shall use Commercially Reasonable Efforts (consistent with any applicable Law) to obligate its sublicensees, distributors or wholesalers to not deliver or cause to be delivered Product outside such Party’s Territory and to not sell any Product to a purchaser if in either case such sublicensees, distributors or wholesalers know, or have reason to believe, that such purchaser intends to remove such Product from such Party’s Territory for the purpose of sales or use by patients of Product in the other Party’s Territory.

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3.10.2If either Party becomes aware that (i) a Product distributed and sold by a Party (the “Distributing Party”), its Affiliates, sublicensees, distributors or wholesalers is imported, distributed or sold in or to a country in the other Party’s Territory (“Cross-Territory Sales”), and (ii) such Cross-Territory Sales (calculated by reference to the other Party’s relevant average selling price(s), adjusted for different dosages) in such country in any calendar year reach or exceed [***] percent ([***]%) of the aggregate Net Sales (with such net sales by Akcea, its Affiliates or licensees determined in the same manner as Net Sales hereunder, mutatis mutandis) of the applicable Product in such country during the same period, then such Distributing Party shall promptly notify the other Party (the “Cross-Territory Sales Notice”).

3.10.3Within [***] after receipt or delivery, as the case may be, of such Cross-Territory Sales Notice, the Distributing Party shall prepare and submit to the other Party a written plan providing in reasonable detail the commercially reasonable steps and actions the Distributing Party, its Affiliates and its sublicensees, wholesalers and distributors shall take (consistent with any applicable Law) to prevent or limit the continued entry of Products into the other Party’s Territory from the Distributing Party’s Territory (the “Cross-Territory Sales Report”) and present such report to the JSC for review and comment.  From and after the JSC’s adoption of such report, amended as the JSC may decide, the Distributing Party shall (a) use Commercially Reasonable Efforts (consistent with any applicable Laws) to implement the measures specified in such Cross-Territory Sales Report, (b) monitor and evaluate compliance with the requirements of the Cross-Territory Sales Report, and (c) assess, on a regular basis and in no event less often than [***], whether the conduct of the activities required by the Cross-Territory Sales Report have been successful in preventing or limiting the entry of Products from the Distributing Party’s Territory into the other Party’s Territory; provided that so long as the Distributing Party is in compliance with Sections 3.10.1 and 3.10.3(a)-(c), the failure of the measures specified in the applicable Cross-Territory Sales Report to actually prevent or limit the entry of Product from the Distributing Party’s Territory into the other Party’s Territory shall not be considered a material breach of this Agreement.

ARTICLE 4
MANUFACTURING

4.1Supply Agreement.  Within [***] after the Effective Date, the Parties shall negotiate in good faith a manufacturing and supply agreement (the “Supply Agreement”) that sets forth mutually agreed terms and conditions under which Akcea and/or Ionis Pharmaceuticals, as applicable, will manufacture and supply, or cause to be manufactured and supplied by one or more Third Parties selected by Akcea, Drug Product for the Products to PTC, in quantities reasonably sufficient to support Commercialization of the Products by PTC and its Affiliates and Sublicensees in the PTC Territory through [***]. Akcea will sell to PTC, and PTC will purchase from Akcea, such Drug Product under the Supply Agreement in accordance with a mutually agreed forecast and supply schedule. Notwithstanding anything to the contrary set forth in this Section 4.1, PTC shall have the right, and Akcea shall in good faith support PTC, to enter into one or more supply agreement(s) for the supply of API and/or Drug Product for one (1) or more of the Products directly with Akcea’s or its Affiliate’s contract manufacturing organization(s) (“CMO(s)”).

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ARTICLE 5MANAGEMENT OF THE COLLABORATION

5.1Joint Steering Committee and Subcommittees.  

5.1.1The Parties hereby establish the Joint Steering Committee (the “JSC”) to serve as the high-level oversight and decision-making body for the activities to be conducted by the Parties pursuant to this Agreement, as more fully described in this ARTICLE 5.  The Parties anticipate that the JSC will not be involved in day-to-day implementation of the activities under this Agreement, but shall serve as the high-level oversight and decision-making body during the Term of this Agreement.  The JSC may establish subcommittees as set forth in Section 5.2.

5.1.2Responsibilities.  The JSC shall perform the following functions, subject to the final decision-making authority of the respective Parties as set forth in Section 5.4:

(a)review the progress reports submitted by Akcea pursuant to Section 2.2 on the status of Development activities conducted by Akcea and Ionis Pharmaceuticals and the timing and likelihood of obtaining Regulatory Approval in any country within the PTC Territory;

(b)review and approve the Product Regulatory Strategy for each Product in the PTC Territory developed by the Parties pursuant to Section 2.4.2 and each annual update thereto;

(c)review the PTC Commercialization Plan submitted by PTC each Calendar Year pursuant to Section 3.2;

(d)review and approve the Product Trademark to be used in connection with the Commercialization of such Product in the PTC Territory, and develop any trademark usage guidelines relating to each such Product Trademark, it being understood that each party shall independently make the decisions set forth in Section 7;

(e)serve as a forum for discussions on market access, reimbursement and pricing strategy globally;

(f)review and approve global safety monitoring standards provided by Akcea; and

(g)review and approve the PTC Commercialization Targets for a Calendar Year as set forth in the PTC Commercialization Plan submitted by PTC to the JSC as set forth in Section 3.2.

For clarity, the JSC shall not have any authority beyond the specific matters set forth in this Section 5.1.2, and in particular shall not have any power to amend or modify the terms of this Agreement or waive a Party’s compliance with this Agreement.  

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5.2Formation and Dissolution of Subcommittee(s).  The JSC may in its discretion, establish subcommittees from time to time to handle specific matters within the scope of the JSC’s area of authority and responsibility (each, a “Subcommittee”), and no Subcommittee’s authority and responsibility may be greater than that of the JSC itself.  Each Subcommittee shall have such authority and responsibility as determined by the JSC from time to time, and decisions and recommendations of any Subcommittee shall be made in accordance with Section 5.4. The JSC shall determine when each Subcommittee it forms shall be dissolved.

5.2.1Membership.  Each of the JSC and each Subcommittee (each, a “Committee”) shall be composed of an equal number of representatives appointed by each of Akcea and PTC.  Each Committee shall be comprised of [***] representatives of each Party, or such other number as agreed upon by such Committee which may be less in number for any Subcommittee.  Each individual appointed by a Party as a representative to a Committee shall be an employee of such Party, except that Akcea may appoint no more than [***]from Ionis Pharmaceuticals as one of its representatives to the JSC. Either Party may replace any or all of its Committee representatives at any time upon written notice to the other Party which notice may be given by e-mail sent to the other Party’s co-chairperson of such Committee.  Each Committee shall be co-chaired by one designated representative of each Party, which in the case of Akcea, may not be a representative from Ionis Pharmaceuticals.  Any member of a Committee may designate a substitute to attend and perform the functions of that member at any meeting of such Committee, subject to Akcea’s requirement to appoint no more than [***] of its representatives from Ionis Pharmaceuticals and subject to the other requirements set forth in this Section 5.2.1. Notwithstanding the foregoing, each Party shall ensure at all times during the existence of a Committee, its representatives on such Committee are appropriate in terms of seniority, experience, expertise and decision-making authority.

5.3Meetings.  

5.3.1The co-chairpersons shall be responsible, with respect to their Committee for (a) calling meetings; (b) preparing and circulating an agenda in advance of each meeting; provided, that the co-chairpersons shall include any agenda items proposed by either Party on such agenda; (c) ensuring that all decision-making is carried out in accordance with the voting and dispute resolution mechanisms set forth in this Agreement; and (d) preparing and issuing minutes of each meeting within [***] (or such shorter time as is agreed by the relevant Committee) thereafter.  The location of regularly scheduled meetings shall alternate between Akcea’s offices located in Cambridge, Massachusetts, and PTC’s offices located in Dublin, Ireland, unless otherwise agreed by such Committee.  Such Committee may also determine that a meeting will instead be held telephonically, by video conference or by any other media.  For the avoidance of doubt, each Party may designate the same individual as a representative on more than one Committee, except that Akcea may not appoint a representative from Ionis Pharmaceuticals to any Committee other than the JSC.  Each representative of a Party on a Committee shall be subject to confidentiality obligations no less stringent than those set forth in ARTICLE 11.  Each Party will bear all expenses it incurs in regard to participating in all meetings of each Committee, including all travel and living expenses.

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5.3.2The JSC shall meet at least [***], and more or less frequently as the Parties mutually deem appropriate, on such dates and at such places and times as provided herein or as the Parties shall agree.  

5.4Decision-Making.  

(a)Escalation to JSC. Except as otherwise provided herein, all decisions of each Committee shall be made by consensus, with all of a Party’s voting members collectively having one (1) vote.  Decisions of each Committee shall be made by unanimous vote.  If a Committee other than the JSC is incapable of reaching unanimous agreement on a matter before it within [***], the matter shall be referred to the JSC for resolution.  If the JSC is incapable of reaching unanimous agreement on a matter before it within [***], the matter shall be resolved in accordance with Section 5.4(b) (and, if applicable, Section 5.4(c)).

(b)Escalation to the Executive Officers. If the JSC cannot agree on a matter within [***] after it has met and attempted to reach such decision, then either Party may, by written notice to the other, have such issue referred to the Executive Officers for resolution.  The Parties’ respective Executive Officers shall meet within [***] after such matter is referred to them and shall negotiate in good faith to resolve the matter.  

(c)Escalation to the Parties. If the Executive Officers are unable to resolve the matter within [***] after the matter is referred to them, then the issue shall be finally resolved as follows:

(i)PTC shall have final decision-making authority with respect to any disputes solely affecting [***], except for the determination as to whether (y) [***], or (z) [***];

(ii)Akcea shall have final decision-making authority with respect to whether [***];

(iii)while the JSC shall serve as the forum for the Parties for discussions on market access, reimbursement and pricing strategy globally, notwithstanding anything to the contrary set forth herein, each Party shall have sole authority with regard to setting pricing and reimbursement policies for each Product in their respective Territory but shall take into account the global impact of these decisions; and

(iv)with respect to any other dispute not specifically falling under Section 5.4(c)(i) – 5.4(c)(iii) above, neither Party shall have final decision-making authority with respect to such dispute.

provided, however, that (y) in no event shall any Committee or any Party alone have the power or authority to (1) amend this Agreement, (2) determine that a Party has fulfilled its obligations under Agreement or that the other Party has breached this Agreement, (3) make a decision that expressly requires the mutual agreement of the Parties or (4) require any Party to perform any act that such Party reasonably believes to be inconsistent with any Law.  Any decision made by the Executive Officers in accordance with Section 5.4(b) or by a Party in accordance with this Section 5.4(c) shall be considered a decision made by the JSC.

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5.5Alliance Managers.  Promptly after the Effective Date, each Party shall appoint an individual (who may not be a then-current member of the JSC or, in the case of Akcea, a representative of Ionis Pharmaceuticals) to act as alliance manager for such Party (each, an “Alliance Manager”).  Each Alliance Manager shall thereafter be permitted to attend meetings of the JSC as a nonvoting observer, subject to the confidentiality provisions of ARTICLE 11.  The Alliance Managers shall be the primary point of contact for the Parties regarding the activities contemplated by this Agreement.  The Alliance Managers shall also be responsible for assisting the JSC in performing its oversight responsibilities.  The name and contact information for each Party’s Alliance Manager, as well as any replacement chosen by such Party, in its sole discretion, from time to time, shall be promptly provided to the other Party in accordance with Section 15.6.

5.6Authority.  In furtherance thereof, each Party will retain the rights, powers and discretion granted to it under this Agreement and no such rights, powers or discretion will be delegated to or vested in the JSC or any other Subcommittee unless such delegation or vesting of rights is expressly provided for in this Agreement or the Parties expressly so agree in writing.

ARTICLE 6
GRANT OF LICENSES

6.1License Grant.  Subject to the terms and conditions of this Agreement, Akcea grants to PTC, and PTC accepts:

6.1.1an exclusive (even as to Akcea and its Affiliates, including Ionis Pharmaceuticals), royalty-bearing, non-transferable (except in accordance with Section 15.3), sublicensable (subject to Section 6.4) license under the Akcea Product-Specific IP to Exploit the Compounds and the Products in the PTC Territory (the “Exclusive License”); and

6.1.2a non-exclusive, royalty-bearing, non-transferable (except in accordance with Section 15.3), sublicensable (subject to Section 6.4) license under the Akcea Core Technology IP and Akcea Manufacturing IP to (a) Exploit the Compounds and the Products in the PTC Territory, and (b) Manufacture the Compounds and the Products in the Territory to the extent provided in the Supply Agreement and Section 4.1 (the “Non-Exclusive License”).

Notwithstanding anything to the contrary set forth herein, until the date of payment in full of the Initial Fee by PTC, the license grants to PTC with respect to Compounds and Products containing volanesorsen may not be exercised by PTC, provided that (a) the obligations of the Parties under ARTICLE 7 shall remain in full force and effect; and (b) neither Akcea, Ionis Pharmaceuticals, nor any of their Affiliates shall otherwise encumber the Products, Compounds or the Akcea IP relating to volanesorsen.

6.2In-License Agreements.  

6.2.1PTC acknowledges and agrees that the rights, licenses and sublicenses granted by Akcea to PTC in this Agreement are subject to the terms of the In-License Agreements, the scope of the licenses granted to Akcea or the applicable Affiliate thereunder and the rights granted to or retained by Ionis Pharmaceuticals, the Third Party counterparties, and any other Third Parties (each, an “Inbound Licensor”) set forth therein. Akcea has, prior to the Effective Date, provided PTC with a true and complete copy of each Existing In-License Agreement.

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6.2.2If, after the Effective Date, Akcea or any of its Affiliates enters into a Future In-License Agreement with a Third Party pursuant to which Akcea (or, subject to Section 15.3, any of its Affiliates) obtains Control over a Third Party’s Know-How or Patent Right that is necessary for the Exploitation of a Product in the PTC Territory, such Third Party’s Know-How or Patent Rights shall be included in the license granted to PTC under Section 6.1.1 and considered Akcea IP hereunderif PTC agrees in writing to pay Akcea any and all costs arising under such Future In-License Agreement as they apply to such Product in the PTC Territory.Akcea shall provide PTC with a true and complete copy of each of any Future In-License Agreement promptly after such Future In-License Agreement has been fully executed and delivered by the parties thereto.

6.2.3PTC covenants to Akcea to comply with, and to cause its Affiliates and Sublicensees to comply with, the terms and conditions of the In-License Agreements.  To the extent there is a conflict between any of the terms of any In-License Agreement and the rights granted to PTC hereunder (including with respect to any sublicensing rights, diligence obligations, Prosecution and Maintenance, enforcement and defense rights), the terms of such In-License Agreement shall control with respect to the Know-How and Patent Rights owned or controlled by, or subject to the rights of, such Inbound Licensor under such In-License Agreement.    

6.2.4The Parties acknowledge that the terms of any In-License Agreement may be subject to interpretation.  The Parties shall cooperate with each other in good faith to support each other in complying with each other’s obligations under each In-License Agreement.  Without limitation to the foregoing, the Parties shall, from time to time, upon the reasonable request of either Party, discuss the terms of any applicable In-License Agreement and agree upon, to the extent reasonably possible, a consistent interpretation of the terms of such In-License Agreement in order to, as fully as possible, allow each Party to comply with the terms of such In-License Agreement. If a Party believes an interpretation is or may be incorrect, such Party shall share such conclusion or information with the other Party, subject to any confidentiality obligations owed by Akcea to the relevant Inbound Licensor, and the Parties shall discuss such conclusion or information.  

6.2.5Without limiting the foregoing, PTC shall prepare and deliver to Akcea any additional reports required under the applicable In-License Agreements of Akcea, in each case (a) sufficiently in advance to reasonably enable Akcea to comply with its obligations under the applicable In-License Agreements, and (b) to the extent that Akcea provides reasonable notice to PTC regarding any such report and the requirements thereto.

6.3Effect of Termination on Sublicenses.  If any In-License Agreement terminates for any reason PTC will, from the effective date of such termination, automatically become a direct licensee of the Inbound Licensor with respect to the rights sublicensed to PTC by Akcea; so long as (i) PTC is not in material breach of this Agreement, (ii) PTC agrees in writing to comply with all of the terms of this Agreement to the extent applicable to the rights originally sublicensed to it by Akcea, and (iii) PTC agrees to pay directly to the applicable Inbound Licensor PTC’s payment under this Agreement to the extent applicable to the rights sublicensed to it by Akcea. Akcea agrees that it will confirm clause (i) of the foregoing in writing at the request and for the benefit of PTC.  Without limiting the generality of the foregoing and in furtherance thereof, contemporaneous with the execution of this Agreement, as of the Effective Date, Ionis Pharmaceuticals has executed and delivered to PTC a written acknowledgement and consent in the form mutually agreed by the Parties.

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6.4PTC’s Sublicensing Rights. PTC may grant and authorize sublicenses under the rights granted to it under Section 6.1 to any of its Affiliates and to any Third Parties that are Permitted Sublicensees (each such Affiliate or Permitted Sublicensees, a “Sublicensee”).  PTC shall provide Akcea with a fully-executed copy of any agreement (redacted as necessary to protect confidential or commercially sensitive information that is not necessary for Akcea to determine PTC’s compliance with this Agreement or for Akcea to comply with the In-License Agreements) reflecting any such sublicense promptly (but no later than [***]) after the execution thereof (a “Sublicense”). PTC assumes full responsibility, and shall remain primarily liable, for causing the performance of all obligations of each of its Sublicensees, and will itself pay and account to Akcea for all payments due under this Agreement by reason of operation of any such Sublicense.  Each Sublicense must be consistent with, and require itsSublicensee to meet, all applicable obligations and requirements of the In-License Agreements.

6.5Licenses to Akcea.  Subject to the terms and conditions of this Agreement, PTC hereby grants to Akcea, and Akcea accepts, a non-exclusive, royalty-free, non-transferable (except in accordance with Section 15.3), sublicensable (only to Permitted Sublicensees) license under the PTC Product-Specific IP to Exploit any products anywhere in the world, except that such license shall not apply to the Exploitation of any Products in the PTC Territory being Exploited by PTC or its Affiliates or Sublicensees. Akcea assumes full responsibility, and shall remain primarily liable, for causing the performance of all obligations of each of its Sublicensees.  Each Sublicense must be consistent with, and require its Sublicensee to meet, all applicable obligations and requirements of the In-License Agreements.

6.6No Other Rights.  Except as otherwise expressly provided in this Agreement, under no circumstances shall a Party, as a result of this Agreement, obtain any ownership interest, license right or other right in any Know-How, Patent Rights or other intellectual property rights of the other Party or any of its Affiliates, including items owned, controlled, developed or acquired by the other Party or any of its Affiliates, or provided by the other Party to the first Party at any time pursuant to this Agreement.  

6.7Section 365(n) of the Bankruptcy Code.  All rights and licenses granted under or pursuant to this Agreement by a Party to the other, including those set forth in Section 6.1 and 6.4, are and shall otherwise be deemed to be, for purposes of Section 365(n) of the U.S. Bankruptcy Code or any foreign counterpart thereto, licenses of right to “intellectual property” as defined under Section 101 of the U.S. Bankruptcy Code or any foreign counterpart thereto.The Parties agree that the Parties shall retain and may fully exercise all of their rights and elections under the U.S. Bankruptcy Code and any foreign counterpart thereto. All payments to be made by PTC under this Agreement or any ancillary agreement (such as any supply agreement), including the Initial Fee, milestone payments and royalties, shall be considered “royalties” for purposes of Section 365(n) of the U.S. Bankruptcy Code.

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ARTICLE 7EXCLUSIVITY; RIGHT OF FIRST NEGOTIATION

7.1Exclusivity.  

7.1.1Exclusivity Covenants. Except in the performance of its obligations or exercise of its rights under this Agreement and except as set forth in Section 7.1.2 or Section 7.2, subject to the terms of this Agreement, neither Party nor any of its respective Affiliates shall, either alone or with or for any Third Party, work independently or for or with any Third Party (including the grant of any license to any Third Party) with respect to the Commercialization in the PTC Territory of an oligonucleotide that is designed to bind to the RNA that encodes TTR, from the Effective Date until, on a country-by-country basis in the PTC Territory, [***].

7.1.2Limitations and Exceptions to Akcea’s Exclusivity Covenants. Notwithstanding anything to the contrary in this Agreement, Akcea’s practice of the following will not violate Section 7.1.1:

(a)Any activities pursuant to the Prior Agreements as in effect on the Effective Date;

(b)The granting of, or performance of obligations under, Permitted Licenses;

(c)The exercise of Akcea’s rights under Section 7.2; and

(d)Subject to Section 7.2, the Commercialization of AKCEA-TTR-L_Rx in the PTC Territory.

7.2Right of First Negotiation; Inotersen Buy-Out.  

7.2.1During the Term and subject to the terms of this Agreement, Akcea hereby grants to PTC a right of first negotiation (the “ROFN Right”) to Commercialize AKCEA-TTR-L_Rx on an exclusive basis in the PTC Territory (the “Proposed Transaction”). Akcea and Ionis shall not enter into any agreement or grant any license to AKCEA-TTR-L_Rx inconsistent with the provisions of this Section 7.2. As soon as reasonably practicable following completion of the [***], Akcea shall prepare and provide to PTC a data package containing at a minimum [***] (the “Evaluation Package”) and shall make a presentation to the JSC that covers at a minimum [***] (the “JSC Evaluation Presentation”). Both Parties shall require appropriate internal and external experts reasonably necessary to present and evaluate the Evaluation Package and JSC Evaluation Presentation to attend such JSC meeting, and such JSC meeting shall allow sufficient time for the experts to engage in a robust question and answer session. Within [***] after the later of Akcea’s delivery of the Evaluation Package and JSC Evaluation Presentation, PTC shall indicate to Akcea in writing whether it wishes to enter into the Proposed Transaction and, if PTC indicates that it wishes to enter into the Proposed Transaction, the Parties shall negotiate in good faith mutually agreeable terms pursuant to which the Parties would enter into such Proposed Transaction, including agreement on an upfront fee and regulatory milestone payments commensurate with the value of AKCEA-TTR-L_Rx at such time, provided that the royalty rate for AKCEA-TTR-L_Rx shall

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be the same as the royalty rate and royalty termfor inotersen under Section 9.3. If either (a) PTC indicates it does not wish to enter into such Proposed Transaction, (b) PTC fails to indicate its interest within such [***]period or (c) PTC indicates it wishes to enter into such Proposed Transaction but the Parties fail to execute a definitive agreement with respect to such Proposed Transaction within[***] after Akcea’s receipt of PTC’s indication of interest, then the ROFN Right shall expire (the “Expiration of the ROFN Right”).

7.2.2Within [***] after the Expiration of the ROFN Right, Akcea shall notify PTC whether Akcea, Ionis Pharmaceuticals and/or one of their respective Affiliates plans (a) [***], or (b) [***].  If Akcea fails to notify PTC within such [***] period, then Akcea shall automatically be deemed to have exercised the Inotersen Buy-Out Option, in which case the procedures set forth in Sections 7.2.3(a) – (d) shall apply.

7.2.3If Akcea either (i) gives PTC notice pursuant to Section 7.2.2(a) that [***], or (ii) fails to provide any notice to PTC within the [***] period provided in Section 7.2.2, then PTC may by written notice to Akcea within [***] thereafter exercise its option for Akcea to purchase back PTC’s rights to inotersen (the “Inotersen Buy-Out Option”), in which case the following procedure shall apply:

(a)the Parties shall meet to discuss in good faith a written amendment to this Agreement pursuant to which Akcea would make a one-time payment to PTC based on the [***], taking into account, among other relevant factors, [***] (the “Inotersen FMV”) in exchange for the [***] and the [***] (the “Inotersen Buy-Out”).

(b)If the Parties cannot agree upon and execute such an amendment within [***] after Akcea has exercised the Inotersen Buy-Out Option, then within [***] after the expiration of such [***] period, each Party shall provide the other Party in writing with such Party’s last best offer with respect to the Inotersen FMV and the terms and conditions of the Inotersen Buy-Out in writing (each, a “Final Offer).  If the Parties cannot promptly choose one Party’s Final Offer to apply to the Inotersen Buy-Out, then either Party shall at any time have the right, upon written notice to the other Party (a “Valuation Notice”), to engage one (1) independent, impartial and neutral Third Party valuation expert (a “Valuation Expert”) to determine which Party’s Final Offer shall apply to the Inotersen Buy-Out.  The Valuation Expert shall be mutually agreed to by the Parties; provided that if the Parties cannot agree on one (1) Valuation Expert within [***] after a Party provides the other party with a Valuation Notice, then each Party shall select one (1) Third Party Valuation Expert and those two (2) Third Party Valuation Experts will select the one (1) Valuation Expert within [***] thereafter, which one (1) Valuation Expert selected shall determine which Party’s Final Offer shall apply to the Inotersen Buy-Out; provided further that any selected Valuation Expert shall not be a current or former employee, officer, director, consultant or subcontractor of either Party or any of its Affiliates.  The Parties shall use their best efforts to cooperate in good faith and cause the Valuation Expert to be retained as soon as possible after the selection of such Valuation Expert after a Party provides the other Party with a Valuation Notice.  

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(c)Each Party shall submit to the Valuation Expert and the other Party (i) the Final Offer such Party provided to the other Party pursuant to clause (b) above and such information concerning the Inotersen FMV as such Party may deem appropriate, within [***]after the retention of the Valuation Expert, and (ii) such other information as may be requested by the Valuation Expert within [***]after such request.  Any such information provided to the Valuation Expert by a Party shall be simultaneously provided to the other Party. The Valuation Expert shall determine the Inotersen FMV and the terms and conditions of the Inotersen Buy-Out within [***] after its receipt of the Final Offer by selecting one (1) or the other of the two (2) Final Offers submitted by the Parties (such selected Final Offer, the “Selected Final Offer”), which determination shall take into account, among other relevant factors, [***]. The Valuation Expert’s determination will be final and shall serve as the only terms and conditions for the Inotersen Buy-Out. The Valuation Expert shall promptly notify the Parties of such Selected Final Offer in writing. Upon such notification, unless Akcea provides written notice to PTC underSection 7.2.3(d) below, the Parties shall in good faith promptly perform the terms and conditions of the Selected Final Offer.

(d)Notwithstanding the foregoing, if the Valuation Expert selects PTC’s Final Offer as the Selected Final Offer, then within [***] after the date the Valuation Expert notifies the Parties of such Selected Final Offer, Akcea may provide written notice to PTC that Akcea does not desire to consummate the Inotersen Buy-Out under the terms and conditions of the Selected Final Offer. If Akcea provides such a written notice to PTC within such [***] period, then (i) Akcea will have no obligation to consummate the Inotersen Buy-Out under the terms and conditions of the Selected Final Offer, and (ii) unless otherwise mutually agreed to by the Parties in writing, neither Akcea, Ionis Pharmaceuticals nor any of their respective Affiliates will sell AKCEA-TTR-L_Rx in the PTC Territory during the Royalty Term for inotersen.

7.2.4If Akcea, Ionis Pharmaceuticals and/or one of their respective Affiliates (as the case may be, an “Akcea Proposed Transaction Entity”) elects to enter into a Proposed Transaction with a Third Party, then such Akcea Proposed Transaction Entity will have the right, but not the obligation, to enter into such a Proposed Transaction, provided that the terms of such a Proposed Transaction entered into by such Akcea Proposed Transaction Entity within [***] after the Expiration of the ROFN Right must be [***]. Akcea shall provide an unredacted copy of the fully-executed agreement that the Akcea Proposed Transaction Entity enters into with such Third Party for the Proposed Transaction, so that PTC may verify that Akcea has complied with this Section 7.2.4. After the [***] anniversary of the Expiration of the ROFN Right, an Akcea Proposed Transaction Entity will have the right, but not the obligation, to enter into a Proposed Transaction on any terms (including on terms that are [***]), in Akcea’s sole discretion.  

ARTICLE 8
GENERAL PROVISIONS RELATING TO COLLABORATION

8.1Compliance.  All Development, Manufacturing and Commercialization activities conducted by a Party under this Agreement shall be conducted in compliance with applicable Laws, including cGMP, cGLP and cGCP.  

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8.2Subcontracting.  Each Party shall have the right to engage Affiliates or Third Party subcontractors to perform certain of its obligations under this Agreement at its sole discretion.  Any Affiliate or Third Party subcontractor to be engaged by a Party to perform a Party’s obligations set forth in this Agreement shall meet the qualifications typically required by such Party for the performance of work similar in scope and complexity to the subcontracted activity; provided that, any Party engaging an Affiliate or Third Party subcontractor hereunder shall remain principally responsible and obligated for such activities.  In addition, each Party engaging a subcontractor with respect to its obligations shall in all cases use commercially reasonable efforts to retain or obtain exclusive Control of any and all Know-How, Patent Rights or other intellectual property created by such subcontractor directly related to such subcontracted activity.

8.3Records and Audits.  Each Party shall, and shall require its Affiliates and subcontractors to, maintain materially complete, current and accurate hard and electronic (as applicable) copies of records of all work conducted pursuant to its Development, Manufacturing and Commercialization activities under this Agreement, and all results, data, developments and Know-How made in conducting such activities.  Such records shall accurately reflect all such work done and results achieved in sufficient detail and in good scientific manner appropriate for applicable patent and regulatory purposes.  

ARTICLE 9
INITIAL FEE; MILESTONES AND ROYALTIES; PAYMENTS

9.1Initial Fee.  In partial consideration for the rights and licenses granted to PTC hereunder, PTC shall pay to Akcea a total amount of eighteen million U.S. Dollars ($18,000,000) in the following manner (together, the “Initial Fee”):

9.1.1A non-refundable, non-creditable, irrevocable payment of twelve million U.S. Dollars ($12,000,000) within ten (10) Business Days after the Effective Date.

9.1.2A non-refundable, non-creditable, irrevocable payment of six million U.S. Dollars ($6,000,000) to be paid within thirty (30) days of receipt of Regulatory Approval from the FDA or the EMA of volanesorsen.

9.2Regulatory Milestone Payments.  In further consideration for the rights and licenses granted to PTC hereunder, on a Product-by-Product basis, PTC shall pay Akcea a non-refundable, non-creditable, irrevocable milestone payment of four million U.S. Dollars ($4,000,000) upon the first achievement for each such Product of receipt of Regulatory Approval from ANVISA (each, a “Milestone Payment”). PTC shall pay each Milestone Payment within thirty (30) days after receipt by PTC of formal written notice from ANVISA has granted Regulatory Approval for a Product for Brazil. For purposes of clarity, the maximum aggregate payments under this Section 9.2 shall be eight million U.S. dollars ($8,000,000).

9.3Royalties.  In further consideration of the licenses and other rights granted to PTC, on a country-by-country and Product-by-Product basis, during the Royalty Term, PTC shall pay to Akcea royalties in respect of Net Sales of such Product by PTC, its Affiliates and Sublicensees in the PTC Territory at a royalty rate of [***] percent ([***]%) of Net Sales (the “Royalty Rate”).

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9.4Royalty Period. PTC’s obligation to pay Akcea the royalties under Section 9.3above with respect to a Product will continue on a country-by-country and Product-by-Product basis from the Royalty Trigger Datefor such Product and willterminate upon the later of:  (a) the date of expiration, invalidation or abandonment of the last Valid Claim within the Akcea Patent Rights Covering such Product in the country in which such Product is made, used or sold; (b) ten (10) years from the First Commercial Sale of such Productin Brazil; and (c) expiration of Regulatory Exclusivity for such Product in such country (the applicable “Royalty Term”).

9.5Royalty Adjustments – Comparable Third Party Product Competition; Compulsory Licensing.  If, on a Product-by-Product, country-by-country and Calendar Quarter-by-Calendar Quarter basis, (a) Comparable Third Party Product Competition is present with respect to such Product in a country in the PTC Territory during such Calendar Quarter; or (b) a court or other Governmental Authority of competent jurisdiction requires PTC or any of its Affiliates or Sublicensees to grant a compulsory license to a Third Party permitting such Third Party to Commercialize such Product in such country (such Product when sold by such Third Party under subsection (a) or (b), a “Compulsory Third Party Product”), and such Compulsory Third Party Product(s) has a market share of [***] percent ([***]%) or more of the aggregate market in such country of the applicable Product (such market share percentage, the “Market Share Loss Percentage”), then, subject to Section 9.6, the royalty rate under Section 9.3 used to calculate the payment of royalties payable with respect to Net Sales of such Product pursuant to Section 9.3 in such country during such Calendar Quarter shall be reduced by an amount equal to the actual Market Share Loss Percentage. For example, if the Market Share Loss Percentage in a given country in the PTC Territory is [***]%, then the royalty rate under Section 9.3 used to calculate the payment of royalties payable with respect to Net Sales of such Product pursuant to Section 9.3 in such country during such Calendar Quarter shall be reduced by [***]% to a royalty rate of [***]% [***].

9.6Limits on Deductions.  In no event shall the cumulative effect of the adjustment set forth in Section 9.5 (in the order in which the event triggering such reduction occurs) reduce the royalties payable to Akcea pursuant to Section 9.3 to less than [***] percent ([***]%) of the amounts that would otherwise have been payable with respect to the applicable Product in the applicable country in the applicable Calendar Quarter, as determined pursuant to Section 9.3. Credits for adjustments pursuant to this Section 9.6 not exhausted in any Calendar Quarter may be carried into future Calendar Quarters, subject to the preceding sentence.

9.7Reports; Payment of Royalty. During the Term, following the First Commercial Sale of any Product in any country in the Territory, PTC shall furnish to Akcea a written report within [***] after the end of each of the first three (3) Calendar Quarters during a Calendar Year and [***] of the final Calendar Quarter of such Calendar Year showing, on a Product-by-Product and country-by-country basis, the Net Sales of each Product in each country of the PTC Territory and the royalties payable under this Agreement.Royalties with respect to Net Sales of Products shall be due and payable on the date such royalty report is due. In addition, beginning with the Calendar Quarter in which the First Commercial Sale for a Product is made and for each Calendar Quarter thereafter, within [***] following the end of each such Calendar Quarter, PTC will provide Akcea a preliminary non-binding report estimating the total Net Sales of, and royalties payable to Akcea for Products projected for such Calendar Quarter.    

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9.8Accounting.

9.8.1PTC agrees to keep, and to require its Affiliates and Sublicensees to keep, full, clear and accurate records for a minimum period of [***] years after the relevant payment is owed pursuant to this Agreement, setting forth the sales and other disposition of Products sold or otherwise disposed of, in sufficient detail to enable royalties and compensation payable to Akcea hereunder to be determined.  

9.8.2PTC further agrees, upon not less than [***] prior written notice, to permit, and to require its Affiliates and Sublicensees to permit, such books and records relating to such Products to be examined by an independent accounting firm selected by Akcea and reasonably acceptable to PTC for the purpose of verifying reports provided (or required to be provided) by PTC under this ARTICLE 9.  Such audit shall not be performed more frequently than [***] period, and shall be conducted under appropriate confidentiality provisions, for the sole purpose of verifying the accuracy and completeness of all financial, accounting and numerical information and calculations provided under this Agreement. The independent accounting firm shall only share the results of the audit, not the underlying records, with Akcea.

9.8.3Such examination is to be made at the expense of Akcea, except if the results of the audit reveal an underpayment of royalties, milestones or other payments to Akcea under this Agreement, of [***] percent ([***]%) or more, then the reasonable fees and expenses for such examination shall be paid by PTC.  

9.9Methods of Payments.  All payments due from one Party to the other Party under this Agreement shall be paid in Dollars by wire transfer to a bank in the United States designated in writing by the payee.  

9.10Taxes.  

9.10.1Subject to Section 9.10.2, each Party shall be solely responsible for the payment of all taxes imposed on its share of income arising directly or indirectly from the activities of the Parties under this Agreement.

9.10.2In the event that PTC is required to withhold any tax to be paid to, or held for the benefit of, the tax or revenue authorities in any country in the Territory regarding any payment to Akcea, such amount shall be deducted from the payment to be made by PTC and paid over to the relevant authorities. PTC shall promptly notify Akcea of such requirement and shall take reasonable and lawful actions requested by Akcea to avoid or minimize any such withholding.  PTC shall promptly furnish Akcea with copies of any tax receipts or other documentation evidencing the fact and amount of such withholding. Each Party shall cooperate with the other Party in seeking reductions in, or exemptions from, any such withholding under any applicable tax treaty.  Akcea shall use commercially reasonable efforts to provide documentation in support of any available reduction in, or exemption from, any such withholding.

9.10.3The provisions of this Section 9.10 are to be read in conjunction with the provisions of Section 15.3 below.

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9.11Currency Exchange.  Notwithstanding anything to the contrary in the Agreement, the Parties agree that PTC may use any generally accepted exchange rate methodology that PTC uses for all or substantially all of its global operations for the purposes of any currency conversions required in connection with the calculation of royalty payments to Akcea pursuant to the Agreement. Akcea acknowledges that PTC currently uses European Central Bank rates applied on a monthly basis and agrees that this methodology is acceptable for purposes the calculation of royalty payments to Akcea pursuant to the Agreement.

ARTICLE 10
INTELLECTUAL PROPERTY RIGHTS

10.1Ownership of Inventions; Disclosure.

10.1.1Existing IP.  Nothing in this Agreement shall affect Akcea’s ownership of the Akcea IP existing as of the Effective Date or PTC’s ownership of PTC IP existing as of the Effective Date, which in each case shall remain owned by the Party having such rights.

10.1.2Ownership.  Except as set forth in Section 10.1.3, (a) title to all Know-How discovered, developed, invented or created solely by employees or agents of Akcea in the course of activities conducted pursuant to this Agreement and any Patent Rights that claim or cover such Know-How shall be owned by Akcea (each, an “Akcea Invention”); (b) title to all Know-How discovered, developed, invented or created solely by employees or agents of PTC in the course of activities conducted pursuant to this Agreement and any Patent Rights that claim or cover such Know-How shall be owned by PTC (each, a “PTC Invention”); and (c) title to all Know-How discovered, developed, invented or created jointly by employees or agents of PTC and Akcea in the course of activities conducted pursuant to this Agreement and any Patent Rights that claim or cover such Know-How shall be owned jointly by PTC and Akcea (each, a “Joint Invention”).   Inventorship of inventions made pursuant to this Agreement shall be determined in accordance with the patent laws of the United States. Except as otherwise expressly provided in this Agreement, each Party may (subject to the exclusivity provisions of this Agreement and Section 6.5) practice, grant licenses under, and transfer (subject to the terms and conditions of this Agreement and Section 6.5) any Joint Invention, neither Party shall have any obligation to account to the other for profits, or to obtain any approval of the other Party to license or exploit any Joint Invention, by reason of joint ownership thereof, and each Party hereby waives any right it may have under the laws of any jurisdiction to require any such consent or accounting.  

10.1.3Exceptions.  Notwithstanding Section 10.1.2 and anything to the contrary set forth in this Agreement, Akcea shall exclusively own any Akcea Invention, PTC Invention or Joint Invention that would constitute an Akcea Core Technology Patent Right or Akcea Core Technology Know-How hereunder (regardless of inventorship by Akcea or PTC) (the “Akcea-Owned Categories”).  PTC, on behalf of itself and its Affiliates, hereby assigns, and to the extent such present assignment is not possible, agrees to assign, to Akcea all right, title and interest in and to such PTC Inventions and Joint Inventions that fall within the Akcea-Owned Categories, and all intellectual property rights therein, which such PTC Inventions or Joint Inventions shall thereafter be deemed to be “Akcea Core Technology Patent Rights” or “Akcea Core Technology Know-How” for purposes of this Agreement.

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10.2Patent Prosecution.

10.2.1Akcea Patent Rights.  

(a)Akcea shall be responsible, at its sole cost and expense, and shall have the exclusive right, but not the obligation, for Prosecuting and Maintaining the Akcea Core Technology Patent Rights, the Akcea Manufacturing Patent Rights and the Akcea Product-Specific Patent Rights. In addition, Akcea shall be responsible, and shall have the exclusive right, but not the obligation, for conducting any opposition, reexamination request, nullity action, interference, or other attack upon the validity, title or enforceability of the Akcea Core Technology Patent Rights, the Akcea Manufacturing Patent Rights and the Akcea Product-Specific Patent Rights (each, a “Defense Proceeding”) in the Akcea Territory and the PTC Territory. The cost of any such Defense Proceeding of the Akcea Product-Specific Patent Rights in the PTC Territory will be shared equally by Akcea and PTC.

(b)With respect to the PTC Territory, Akcea shall (i) provide PTC with copies of the text of the applications for any Akcea Product-Specific Patent Right Covering a Product as soon as practicable but at least [***] before filing, except for urgent filings, in which case Akcea shall provide copies as soon as practicable before, simultaneously with or immediately after filing; (ii) provide PTC with a copy of each submission made to and material document received from a patent authority, court or other tribunal regarding any such Akcea Product-Specific Patent Right reasonably promptly after making such filing or receiving such material document, including a copy of each application as filed together with notice of its filing date and application number; (iii) keep PTC advised of the status of all material communications, actual and prospective filings or submissions regarding any such Akcea Product-Specific Patent Right and, as soon as practicable except for urgent filings and submissions, give PTC copies of any such material communications, filings and submissions proposed to be sent to any patent authority or judicial body; and (iv) consider in good faith and reasonably incorporate PTC’s comments on the material communications, filings and submissions for any such Akcea Product-Specific Patent Right.  

(c)Akcea shall notify PTC as to any decision to abandon, to cease Prosecution and Maintenance of, or not to continue to pay the expenses of Prosecution and Maintenance of, any such Akcea Product-Specific Patent Right Covering a Product in any country in the PTC Territory in which it was filed.  Akcea will provide such notice as soon as practicable prior to any filing or payment due date, or any other due date that requires action, in connection with such Akcea Product-Specific Patent Right. Thereafter, PTC may, upon written notice to Akcea, in Akcea’s name and at PTC’s sole cost and expense, control the Prosecution and Maintenance of such Akcea Product-Specific Patent Right in the PTC Territory.

10.2.2PTC Patent Rights.  PTC shall be responsible, at its sole cost and expense, and shall have the exclusive right, but not the obligation, in the PTC Territory, (a) for Prosecuting and Maintaining the PTC Product-Specific Patent Rights, and (b) for conducting Defense Proceedings relating thereto.

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10.2.3Cooperation.  Each Party shall reasonably cooperate with and assist the other Party in connection with the activities of such Party under this Section 10.2 upon the reasonable request of the other Party, including by making scientists and scientific records reasonably available and the execution of all such documents and instruments and the performance of such acts as may be reasonably necessary in order to permit the other Party to continue any Prosecution or Maintenance of such Patent Rights.  

10.3Enforcement and Defense.  

10.3.1Notice.  If any Party learns of an infringement or threatened infringement by a Third Party with respect to any Akcea Patent Right or PTC Patent Right, including actual or alleged infringement under 35 USC §271(e)(2) or any foreign equivalent that is or would be competitive with a Compound or Product (“Competitive Infringement”), such Party shall promptly notify the other Party and shall provide such other Party with available evidence of such Competitive Infringement.

10.3.2Actions.

(a)If any Akcea Product-Specific Patent Right Covering a Product is infringed by a Third Party in any country in the PTC Territory, then Akcea shall have the first right, but not the obligation, to institute, prosecute, and control any action or proceeding with respect to such infringement of such Patent Right, by counsel of its own choice. If in any such proceeding brought by Akcea, PTC is required to join for standing purposes or in order for Akcea to commence or continue any such proceeding, then PTC shall join such proceeding, at Akcea’s expense, and shall be represented in such proceeding by counsel of PTC’s choice at Akcea’s expense.

(b)If Akcea does not bring an infringement action pursuant to Section 10.3.2(a) within [***] after receipt of notice of the existence of an infringement (or in cases where there is a relevant statutory period during which an infringement action must be commenced or in which any material rights may be lost that would expire prior to the expiration of such [***] period, [***] prior to the expiration of such relevant statutory period), Akcea and PTC shall meet and discuss Akcea’s reasons for not initiating a lawsuit or otherwise making or prosecuting a claim.  If after having given due consideration to Akcea’s reasons, PTC desires to initiate a lawsuit or otherwise make or prosecute a claim of infringement, PTC shall so notify Akcea and PTC may thereafter institute, prosecute, and control such action at its sole cost and expense.  If in any such proceeding Akcea is required to join for standing purposes or in order for PTC (or an Inbound Licensor) to commence or continue any such proceeding, then Akcea shall join such proceeding, at PTC’s expense, and shall be represented in such proceeding by counsel of Akcea’s choice at PTC’s expense.

(c)Any exercise by PTC of the right to bring an infringement action shall be subject to and consistent with the terms of all applicable In-License Agreements; provided that, if, under the terms of an applicable In-License Agreement, Akcea has an applicable enforcement right that it cannot delegate to PTC then, at PTC’s request and expense, Akcea shall use commercially reasonable efforts to exercise such rights in such infringement action as directed by PTC.

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(d)The Party initiating the suit shall have the sole and exclusive right to elect counsel for any suit initiated by it pursuant to this ARTICLE 10; provided that, with respect to anAkceaProduct-Specific Patent RightCovering a Product, such counsel is reasonably acceptable to the other Party.

(e)Each Party agrees to cooperate fully in any action under this Section 10.3.2 that is controlled by the other Party, including executing legal papers and cooperating in the prosecution as may be reasonably requested by the controlling Party, all at the controlling Party’s expense.

(f)PTC shall have the sole right, but not the obligation, to institute, prosecute and control any action or proceeding with respect to any infringement of PTC Patent Rights.

(g)Unless otherwise agreed by the Parties in writing, the amount of any recovery from a proceeding brought under this Section 10.3.2 shall first be applied to the out-of-pocket costs of such action by the Party prosecuting the applicable action, and any remaining recovery amount shall be allocated first to the Inbound Licensor pursuant to the applicable In-License Agreement, if applicable, and then, of the remaining amount, (i) any recovery for a proceeding brought with respect to an Akcea Product-Specific Patent Right Covering a Product shall be shared equally by the Parties, (ii) any recovery for a proceeding brought with respect to an Akcea Patent Right other than an Akcea Product-Specific Patent Right Covering a Product shall be retained by Akcea, (iii) any recovery for a proceeding brought with respect to a PTC Product-Specific Patent Right shall be shared by the Parties such that PTC will receive [***] percent ([***]%) of any such recovery and Akcea will receive [***] percent ([***]%) of any such recovery, and (iv) any recovery for a proceeding brought with respect to a PTC Patent Right other than a PTC Product-Specific Patent Right shall be retained by PTC.  If, in connection with a proceeding brought under this Section 10.3.2 with respect to an Akcea Product-Specific Patent Right Covering a Product, an Inbound Licensor is entitled to a portion of any recovery that is greater than the portion of the recovery payable, after costs, to Akcea, the Parties will meet and agree in good faith on an alternative sharing of such recovery to that set forth in the immediately preceding sentence that takes into account the amounts payable to the applicable Inbound Licensor and results in an equitable allocation of the remaining amounts to PTC and Akcea after payment of such amounts to the applicable Inbound Licensor.

10.3.3Defense. With respect to any defense or declaratory judgment actions relating to or other attack upon valid title or enforcement of an Akcea Patent Right or PTC Patent Right, including any Defense Proceeding but excluding any Prosecution or Maintenance and any such action or attack is in connection with any counterclaim brought in actions subject to Section 10.3.2, the Party with responsibility for the Prosecution and Maintenance of such Patent Right shall have the first right, but not the obligation, to assume the defense thereof at its sole cost and expense. With respect to any Defense Proceeding relating to an Akcea Product-Specific Patent Right Covering a Product, (a) if Akcea defends such Patent Right, PTC shall have the right, at its sole cost and expense, to join any such defense with counsel of its choice, and (b) if Akcea declines to assume the defense of any such Patent Right, then PTC shall have the right, but not the obligation, to assume the defense thereof at its sole cost and expense.  Each Party agrees to render such reasonable assistance as the defending Party may request, at the defending Party’s expense, with respect to actions brought pursuant to Section 10.3.2.

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10.4Infringement Claimed by Third Parties.

10.4.1If a Third Party commences, or threatens to commence, any proceeding against a Party alleging infringement of such Third Party’s intellectual property by the Exploitation by a Party, its Affiliates, subcontractors or sublicensees of any Compound or Product, the Party against whom such proceeding is threatened or commenced shall give prompt notice to the other Party.

10.4.2Unless the Party against whom such proceeding is filed seeks indemnification for a claim covered pursuant to ARTICLE 13, such Party shall control the defense and settlement of any such proceeding at its own cost.

10.5Marking.  PTC and its Affiliates and Sublicensees shall mark each Product in such a manner to conform with the patent laws and practice of any country in which such Product is Manufactured or sold or to which such Product is shipped to ensure maximum enforceability of Patent Rights in such country.

ARTICLE 11
CONFIDENTIALITY

11.1Confidentiality; Exceptions.  Except to the extent expressly authorized by this Agreement or otherwise agreed in writing, the Parties agree that the receiving Party (the “Receiving Party”) shall keep confidential and shall not publish or otherwise disclose or use for any purpose other than as provided for in this Agreement any Know-How or other confidential and proprietary information and materials, patentable or otherwise, in any form (written, oral, photographic, electronic, magnetic, or otherwise) that is disclosed to it by the other Party (the “Disclosing Party”), including trade secrets, Know-How, inventions or discoveries, proprietary information, formulae, processes, techniques and information relating to the Disclosing Party’s past, present or future marketing, financial, or Exploitation activities of any product or potential product or useful technology of the Disclosing Party or the pricing thereof (collectively, “Confidential Information”), except to the extent that it can be established by the Receiving Party that such Confidential Information:

11.1.1was in the lawful knowledge and possession of the Receiving Party prior to the time it was first disclosed to the Receiving Party by the Disclosing Party, or was otherwise developed independently by the Receiving Party without reference to any of the Disclosing Party’s Confidential Information, as evidenced by written records kept in the ordinary course of business, or other documentary proof of actual use by the Receiving Party;

11.1.2was generally available to the public or otherwise part of the public domain at the time of its first disclosure to the Receiving Party by the Disclosing Party;

11.1.3became generally available to the public or otherwise part of the public domain after its disclosure to the Receiving Party by the Disclosing Party and other than through any act or omission of the Receiving Party in breach of this Agreement or the Existing Confidentiality Agreement; or

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11.1.4was disclosed to the Receiving Party, other than under an obligation of confidentiality, by a Third Party who had no obligation to the Disclosing Party not to disclose such information to others.

For the avoidance of doubt, any information obtained by Akcea from PTC, either directly from PTC or by virtue of Akcea’s relationship with Ionis Pharmaceuticals, that was considered “Confidential Information” as defined by and pursuant to the Mutual Confidential Disclosure Agreement between Ionis Pharmaceuticals and PTC, dated November 17, 2017 (and as amended from time to time), the “Existing Confidentiality Agreement”, as of the Effective Date of this Agreement shall be considered Confidential Information of PTC under this Agreement, subject to the provisions of this Article 11.  

11.2Authorized Disclosure.  Except as expressly provided otherwise in this Agreement, a Receiving Party may use and disclose Confidential Information of the Disclosing Party as follows:  (a) to the extent required to those of its employees, agents and representatives who reasonably need to know such Confidential Information in order to advise or assist the Receiving Party in connection with the performance of its obligations or rights granted or reserved in this Agreement and under appropriate confidentiality provisions no less protective of the Disclosing Party than those set forth in this Agreement; (b) as required by applicable Law; provided, however, that if a Receiving Party is required by Law to make any such disclosure of a Disclosing Party’s Confidential Information it will, except where impracticable, give reasonable advance notice to the Disclosing Party of such disclosure requirement, limit disclosure to only the Confidential Information requested to be disclosed and, if requested by the Disclosing Party, cooperate with the Disclosing Party to secure confidential treatment of such Confidential Information required to be disclosed; (c) in communication with existing or prospective investors, lenders, professional advisors, acquirers, merger partners, subcontractors, licensees or Inbound Licensors on a need to know basis, in each case under appropriate confidentiality provisions substantially equivalent to those of this Agreement, except that with respect to any disclosure to an Inbound Licensor, PTC acknowledges that the relevant Inbound Licensor is obligated to retain any information provided to it in confidence only as required pursuant to the terms of the applicable In-License Agreement; or (d) to the extent mutually agreed to in writing by the Parties.  The confidentiality and non-use obligations set forth under this Agreement shall survive the termination or expiration of this Agreement for a period of [***].

11.3Press Release; Disclosure of Agreement.  

11.3.1On or promptly after the Effective Date, the Parties shall jointly issue a press release of the execution of this Agreement in the form mutually agreed by the Parties.  Subject to Sections 11.3.2 and 11.4, neither Party may issue any subsequent press release or other public disclosure regarding this Agreement or its terms or the Parties’ activities hereunder, or any results or data arising hereunder, except (a) with the other Party’s prior consent, or (b) for any disclosure that is reasonably necessary in that Party’s sole discretion to comply with applicable securities exchange listing requirements or other applicable Laws. Each Party shall provide to the other Party a copy of any public announcement regarding this Agreement or the subject matter hereof (including any filing with the United States Securities and Exchange Commission (or any stock exchange, including Nasdaq, or any similar regulatory agency in any country other than the United

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States)), as practicable under the circumstances, reasonably prior to its scheduled release.  Each Party shall have the right to expeditiously review and recommend changes to any such announcement, and, except as otherwise required by securities exchange listing requirements or applicable Law, the Party whose announcement has been reviewed shall remove any Confidential Information of the reviewing Party that the reviewing Party reasonably deems to be inappropriate for disclosure and shall give due consideration to any reasonable comments by the reviewing Party relating to such announcement, including the provisions of this Agreement for which confidential treatment should be sought.  At the request of either Party, the other Party will reasonably consider in good faith whether a press release or other public disclosure described in this Section 11.3.1 should be a joint release by both Parties and, in such a case, the Parties will use good faith efforts to mutually agree on the content of any such joint release. Notwithstanding the foregoing, to the extent information regarding this Agreement has already been publicly disclosed, each Party (other than a Party that had caused such information to become publicly disclosed in breach of this ARTICLE 11) may subsequently disclose the same information to the public without the consent of the other Party.

11.3.2Each Party shall be permitted to disclose the terms of this Agreement, in each case under appropriate confidentiality provisions substantially equivalent to those of this Agreement, to any existing or prospective investors, lenders, professional advisors, acquirers, merger partners, subcontractors, licensees or Inbound Licensors, except that, with respect to any disclosure to an Inbound Licensor that is not Ionis Pharmaceuticals, PTC acknowledges that the relevant Inbound Licensor is obligated to retain any information provided to it in confidence only as required pursuant to the terms of the applicable In-License Agreement.

11.3.3If either Party proposes to file with the Securities and Exchange Commission or the securities regulators of any state or other jurisdiction a registration statement, periodic report, or any other disclosure document which describes or refers to this Agreement under the Securities Act of 1933, as amended, the Securities Exchange Act, of 1934, as amended, or any other applicable securities Law (collectively, the “Securities Acts”), such Party will notify the other Party of such intention and will provide such other Party with a copy of relevant portions of the proposed filing not less than [***] prior to such filing, and will seek to obtain confidential treatment of any information concerning the Agreement that such other Party requests be kept confidential (except to the extent advised by counsel that confidential treatment is not available for such information), and will only disclose Confidential Information which it is advised by counsel is legally required to be disclosed.  No such notice will be required under this Section 11.3.3 if the substance of the description of or reference to this Agreement contained in the proposed filing has been included in any previous filing made by either Party hereunder or otherwise approved by the other Party.  For clarity, the Parties hereby acknowledge and agree that each Party may file this Agreement under the Securities Acts in the United States and that the Parties shall each use reasonable efforts to obtain confidential treatment for mutually agreed upon portions of this Agreement.

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11.4Publications.  Neither Party nor its Affiliates shall publish or publicly disclose the scientific results of any of the activities conducted by the other Party under this Agreement without the prior written consent of the other Party, except as expressly permitted in this Section 11.4.  The Parties recognize that it may be useful or required to publish or publicly disclose the results of Exploitation activities conducted hereunder, and each Party (and its Affiliates and sublicensees) shall be free to publish or publicly disclose such results, including on its clinical trials registry or on a government-sponsored database such as www.clinicaltrials.gov, subject to the prior review by the other Party for patentability and protection of its Confidential Information as described in this Section 11.4.  The Party that desires to publish such results shall provide the other Party with a copy of such proposed abstract, manuscript, or presentation no less than [***] in the case of abstracts) prior to its intended submission for publication. The reviewing Party shall respond in writing promptly and in no event later than [***] in the case of abstracts)after receipt of the proposed material, with one or more of the following:  (a) comments on the proposed material, which the publishing Party shall consider in good faith, (b) a specific statement of concern, based upon the need to seek patent protection or to block publication if the reviewing Party determines that the proposed disclosure contains or describes intellectual property that should be maintained as a trade secret to protect a Compound or a Product or any Exploitation activities conducted under this Agreement, or (c) an identification of the reviewing Party’s Confidential Information that is contained in the material reviewed.  In the event of concern over patent protection or whether maintaining a trade secret would be a priority, the publishing Party agrees not to submit such publication or to make such presentation that contains such information until the reviewing Party is given a reasonable period of time, and in no event more than [***], to seek patent protection for any material in such publication or presentation which it believes is patentable or to resolve any other issues; provided, however, that the publishing Party shall abandon such proposed publication or presentation if the reviewing Party reasonably determines in good faith that maintaining such information as a trade secret is a commercially-reasonable priority. Any Confidential Information of the reviewing Party shall, if requested by the reviewing Party, be removed.

11.5Remedies.  Each Party shall be entitled to seek, in addition to any other right or remedy it may have, at Law or in equity, a temporary injunction, without the posting of any bond or other security, enjoining or restraining the other Party from any violation or threatened violation of this ARTICLE 11.  

11.6Acknowledgment. PTC will acknowledge in any press release, public presentation, or publication regarding a Product and intended for or reasonably likely to be the subject of broad distribution that such Product is under license from Akcea and Akcea’s stock ticker symbol (e.g., NASDAQ: AKCA). Akcea and Ionis may include any Product in any description of Akcea’s and Ionis' drug pipeline. To the extent permitted by Applicable Law, PTC will include the words “Discovered and developed by Ionis Pharmaceuticals and under license from Akcea Therapeutics” in relevant scientific, medical and other Product-related communications to the extent such communications address the research, discovery or commercialization of a Product. Notwithstanding the foregoing, PTC shall have no obligation to include such attribution language in any of the following: (a) communications or materials where such inclusion would be prohibited by Applicable Law or applicable Third Party institutional, corporate, or other policies; (b) communications that PTC does not control, such as publications with non-PTC lead authors; or (c) materials primarily focused on or directed to patients, or other materials in which PTC branding is not prominently featured, provided that, in each case, PTC will use reasonable efforts to have such attribution language included in any such communication, consistent with the efforts that PTC uses to have statements regarding its own contributions to the Product included in such communication.

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ARTICLE 12
REPRESENTATIONS AND WARRANTIES

12.1Representations and Warranties of Both Parties.  Each Party hereby represents and warrants to the other Party, as of the Effective Date, that:

12.1.1such Party is duly organized, validly existing and in good standing under the Laws of the jurisdiction of its incorporation and has full corporate power and authority to enter into this Agreement and to carry out the provisions hereof;

12.1.2such Party has taken all necessary action on its part to authorize the execution and delivery of this Agreement and the performance of its obligations hereunder;

12.1.3this Agreement has been duly executed and delivered on behalf of such Party, and constitutes a legal, valid, binding obligation, enforceable against it in accordance with the terms hereof;

12.1.4the execution, delivery and performance of this Agreement by such Party does not conflict with any agreement or any provision thereof, or any instrument or understanding, oral or written, to which it is a party or by which it is bound, nor violate any law or regulation of any court, governmental body or administrative or other agency having jurisdiction over such Party;

12.1.5no government authorization, consent, approval, license, exemption of or filing or registration with any court or governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign, under any applicable Laws currently in effect, is or will be necessary for, or in connection with, the transaction contemplated by this Agreement or any other agreement or instrument executed in connection herewith, or for the performance by it of its obligations under this Agreement and such other agreements, except as may be required to conduct Clinical Trials, to Manufacture Compounds or Products, or to seek or obtain Regulatory Approvals; and

12.1.6Such Party is not debarred under the United States Federal Food, Drug and Cosmetic Act or comparable Applicable Laws and it does not, and will not during the Term, employ or use the services of any person or entity that is debarred, in connection with the Development, Manufacture or Commercialization of the Products.  If either Party becomes aware of the debarment or threatened debarment of any person or entity providing services to such Party, including the Party itself and its Affiliates or Sublicensees, which directly or indirectly relate to activities under this Agreement, the other Party will be immediately notified in writing.

12.2Representations, Warranties and Covenants, as applicable, of Akcea.  Akcea hereby represents, warrants, and covenants to PTC, as of the Effective Date that:

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12.2.1Akcea has all rights, authorizations and consents necessary to grant all rights and licenses it purports to grant to PTC with respect to the Akcea IP under this Agreement, and has obtained the prior written consent of Ionis Pharmaceuticals as required under the Ionis Pharmaceuticals/Akcea License Agreements with respect to the grant of such rights and licenses.

12.2.2It has sufficient legal or beneficial title and ownership or right to license (or sublicense as the case may be) with respect to the Akcea IP as is necessary to fulfill its obligations under this Agreement and to grant the licenses (or sublicenses as the case may be) to PTC pursuant to this Agreement.

12.2.3To the best of its knowledge, no actions, suits, claims, disputes, or proceedings concerning the Akcea IP licensed hereunder are currently pending or are threatened in writing, that if determined adversely to Akcea or Ionis Pharmaceuticals, as applicable, would have an adverse effect on Akcea’s ability to grant the licenses (or sublicenses as the case may be) to PTC, or perform its obligations, under this Agreement, or that would have an adverse effect on or would impair PTC’s right to practice under the licenses (or sublicenses as the case may be) granted under this Agreement by Akcea to PTC.

12.2.4All employees and contractors of Akcea and Ionis Pharmaceuticals, as applicable, that are inventors of any of the inventions claimed in the Akcea Patent Rights and that have performed Development or Manufacturing activities on behalf of Akcea or Ionis Pharmaceuticals or their respective Affiliates, as applicable, have entered into written agreements pursuant to which such Persons are obligated to assign all rights, title, and interests in and to any such inventions developed by them, whether or not patentable, to Akcea, Ionis Pharmaceuticals or such Affiliate, respectively, as the sole owner thereof.

12.2.5To the best of its knowledge, there are no additional licenses (beyond those granted to PTC under this Agreement) under any intellectual property owned or Controlled by Akcea, Ionis Pharmaceuticals or their respective Affiliates that would be required in order for PTC to Develop, Manufacture, or Commercialize the Products in the PTC Territory.

12.2.6The Akcea IP constitutes all of the Patent Rights and Know-How Controlled by Akcea that are necessary to Develop, Manufacture, and Commercialize the Compounds and the Products as contemplated under this Agreement. Neither Akcea nor Ionis Pharmaceuticals has previously assigned, transferred, conveyed, or otherwise encumbered its rights, title, or interests in or to the Akcea IP in a manner that conflicts with any rights granted to PTC hereunder with respect to the Products.

12.2.7Schedule 1.4 (Akcea Core Technology Patent Rights), Schedule 1.8 (Akcea Manufacturing Patent Rights ), and Schedule 1.13 (Akcea Product-Specific Patent Rights), set forth true, correct, and complete lists of all Akcea Core Technology Patent Rights, all Akcea Product-Specific Patent Rights, and Akcea Manufacturing Patent Rights, respectively, and indicates whether each such Patent Right is owned by Akcea or licensed by Akcea from a Third Party and if so, identifies the licensor or sublicensor from which the Patent Right is licensed. Akcea Controls such Patent Rights and is entitled to grant all rights and licenses (or sublicenses, as the case may be) under such Patent Rights that it purports to grant to Akcea under this Agreement.

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12.2.8To the best of its knowledge, (i) there is no fact or circumstance known by Akcea that would cause Akcea to reasonably conclude that any Akcea Patent Right is invalid or unenforceable; (ii) there is no fact or circumstance known by Akcea that would cause Akcea to reasonably conclude the inventorship of each Akcea Patent Right is not properly identified on each patent; and (iii) all official fees, maintenance fees, and annuities for the Akcea Patent Rights have been paid and all administrative procedures with governmental agencies have been completed. None of the Akcea Patent Rights is currently involved in any interference, reissue, re-examination, inter partes review, cancellation, or opposition proceeding and neither Akcea, Ionis Pharmaceuticals nor any of their respective Affiliates, has received any written notice from any Person or has knowledge of such actual or threatened proceeding.

12.2.9Akcea has set forth on Schedule 1.39 (Existing In-License Agreements) a true, correct, and complete lists of all agreements pursuant to which a Third Party has granted Akcea a license under any Know-How or Patent Rights that is necessary to Develop, Manufacture, or Commercialize the Compounds or the Products in the Territory, and all such Patents and Know-How are Controlled by Akcea and included in the Akcea IP. All Existing In-License Agreements are in full force and effect, and Akcea has provided PTC with true and complete copies of each such Existing In-License Agreements and all amendments thereto. Neither Akcea nor, to the best its knowledge, the counterparty to an Existing In-License Agreement is in default with respect to a material obligation under such Existing In-License Agreement, and neither such party has claimed or has grounds upon which to claim that the other party is in default with respect to a material obligation under any Existing In-License Agreement.

12.2.10To the best of its knowledge, (i) no issued patent owned by a Third Party will be infringed by the Development, Manufacture (as manufactured by Akcea, Ionis Pharmaceuticals or their respective contract manufacturing organizations (CMOs)), or Commercialization of the Compounds and Products as contemplated by this Agreement in the Territory, and (ii) Akcea, Ionis Pharmaceuticals and their respective Affiliates have not misappropriated any Third Party’s Know-How in the course of the Development and Manufacture of the Compounds or the Products.  

12.2.11 All Regulatory Approval Applications, and other material regulatory submissions made with any Regulatory Authority relating to the Development, Manufacture, marketing, distribution, or sale of the Products have been provided to PTC in an appropriate electronic format prior to the Effective Date. Except as otherwise disclosed by Akcea to PTC via the electronic data room hosted in connection with the transactions contemplated hereunder, neither Akcea, Ionis Pharmaceuticals nor any of their respective Affiliates or licensees has received any written notice or allegation from any Regulatory Authority regarding (i) any actual, alleged, possible, or potential violation of or failure to comply with any Applicable Law, or (ii) any actual, proposed, or potential revocation, withdrawal, suspension, cancellation, termination, or modification of any regulatory filing for the Products, and to Akcea’s knowledge there is no reasonable basis for any such notice or allegation.

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12.2.12All Development of the Compounds and the Products has been conducted, in all material respects, in accordance with all applicable Law. There is no legal proceeding pending or, to Akcea’ knowledge, threatened, by any Regulatory Authority to suspend, investigate, or terminate Development of any Compound or Product.

12.2.13 To the best of Akcea’s knowledge, true, complete and correct copies of all material information with respect to the safety and efficacy of the Compounds and/or the Products have been provided to PTC.

12.3Covenants of Akcea.  From and after the Effective Date through the expiration or earlier termination of this Agreement, Akcea hereby covenants to PTC that, except as expressly permitted under this Agreement:

12.3.1Updates to Schedules. Upon PTC’s reasonable written request (such request not to be submitted to Akcea more than [***]), Akcea will promptly update Schedule 1.4 (Akcea Core Technology Patent Rights), Schedule 1.8 (Akcea Manufacturing Patent Rights) and Schedule 1.13 (Akcea Product-Specific Patent Rights), and submit such amended Schedules to PTC.

12.3.2In-Licenses.  Akcea and its Affiliates, as applicable, will at all times have obtained the necessary consents from the Inbound Licensors under the In-License Agreements to enter into this Agreement and to grant the licenses to PTC hereunder, and shall provide to PTC, upon PTC’s request, written evidence of same.  Akcea will not, and will cause its Affiliates not to amend, modify, terminate, or waive any rights under any Existing In-License Agreement or Future In-License Agreement in a manner that would adversely affect PTC’s rights or obligations under this Agreement without PTC’s prior written consent.  Akcea will not, and will cause its Affiliates not to, commit any acts or permit the occurrence of any omissions that would cause or result in the termination of any Existing In-License Agreement or Future In-License Agreement in its entirety or with respect to any rights under such agreement for which such termination would adversely affect PTC’s rights or obligations under this Agreement. Akcea will notify PTC in writing within [***] after any such termination of any Existing In-License Agreement or Future In-License Agreement.

12.3.3Conflicting Agreements.  Akcea will not enter into any agreement or other obligation with any Third Party, or amend an existing agreement with a Third Party, in each case, that restricts, limits, encumbers, or conflicts with the rights granted to PTC under this Agreement.

12.3.4Assignment of Inventions.  Akcea shall ensure that all employees and contractors of Akcea and/or Ionis Pharmaceuticals performing Development activities under the Ionis Pharmaceuticals/Akcea License Agreements or this Agreement on behalf of PTC will be obligated to assign all rights, title, and interests in and to any inventions developed by them, whether or not patentable, to Akcea, Ionis Pharmaceuticals or such Affiliate, respectively, as the sole owner thereof.

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12.4Covenants of PTC. From and after the Effective Date through the expiration or earlier termination of this Agreement, PTC hereby covenants to Akcea that, except as expressly permitted under this Agreement, PTC shall ensure that all employees and contractors of PTC performing Development or Commercial activities under this Agreement on behalf of PTC will be obligated to assign all rights, title, and interests in and to any inventions developed by them, whether or not patentable, to PTC or its Affiliate, respectively, as the sole owner thereof.

12.5Disclaimer.  EXCEPT AS OTHERWISE EXPRESSLY SET FORTH IN THIS AGREEMENT, NEITHER PARTY MAKES ANY REPRESENTATION OR EXTENDS ANY WARRANTY OF ANY KIND, EITHER EXPRESS OR IMPLIED, INCLUDING ANY WARRANTY THAT ANY PATENTS ARE VALID OR ENFORCEABLE, AND EXPRESSLY DISCLAIMS ALL IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE AND NONINFRINGEMENT.  

ARTICLE 13
INDEMNIFICATION; INSURANCE

13.1Indemnification by PTC.  PTC shall defend, and indemnify and hold harmless, Akcea and its Affiliates and their respective directors, officers, employees, subcontractors, agents and representatives (collectively, the “Akcea Indemnified Parties”), from and against any and all liabilities, damages, losses, costs and expenses, including the reasonable fees of attorneys (collectively, “Losses”), to the extent arising out of or resulting from any Third Party suits, claims, actions, proceedings or demands (“Third Party Claims”) to the extent based upon:

13.1.1any breach of any representation, warranty or covenant made by PTC in this Agreement;

13.1.2the Development, Manufacture, Commercialization or other Exploitation of a Compound or Product by PTC or its Affiliates or its Sublicensees in the PTC Territory; or

13.1.3the gross negligence, recklessness, or willful misconduct by PTC or any of the PTC Indemnified Parties;

provided that, in the case of each of Sections 13.1.1-13.1.3 above, PTC shall not be obliged to so defend, and indemnify and hold harmless, the Akcea Indemnified Parties for any Claims to the extent that Akcea has an obligation to indemnify the PTC Indemnified Parties under Section 13.2.

13.2Indemnification by Akcea.  Akcea shall defend, and indemnify and hold harmless, PTC and its Affiliates and Sublicensees and their respective directors, officers, employees, subcontractors, agents and representatives (collectively, the “PTC Indemnified Parties”), from and against any and all Losses, to the extent arising out of or resulting from any Third Party Claims to the extent based upon:

13.2.1any breach of any representation, warranty or covenant made by Akcea in this Agreement;

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13.2.2the Development, Manufacture,Commercialization or other Exploitationof a Compound or Product by Akcea, Ionis Pharmaceuticals ortheir respective Affiliates or Sublicensees; or

13.2.3the gross negligence, recklessness, or willful misconduct by Akcea or any of the Akcea Indemnified Parties;

provided that, in the case of each of Sections 13.2.1-13.2.3 above, Akcea shall not be obliged to so defend, and indemnify and hold harmless, the PTC Indemnified Parties for any Claims to the extent that PTC has an obligation to indemnify the Akcea Indemnified Parties under Section 13.1.

13.3Procedure.  A Person entitled to indemnification under this ARTICLE 13 (an “Indemnified Party”) shall give prompt written notification to the Person from whom indemnification is sought (the “Indemnifying Party”) of the commencement of any Third Party Claim for which indemnification may be sought or, if earlier, upon the assertion of any such Third Party Claim (it being understood and agreed, however, that the failure by an Indemnified Party to give notice of a Third Party Claim as provided in this Section 13.3 shall not relieve the Indemnifying Party of its indemnification obligation under this Agreement except and only to the extent that such Indemnifying Party is actually damaged as a result of such failure to give notice).  Within [***] after delivery of such notification, the Indemnifying Party may, upon written notice thereof to the Indemnified Party, assume control of the defense of such Third Party Claim with counsel reasonably satisfactory to the Indemnified Party. If the Indemnifying Party does not assume control of such defense, the Indemnified Party shall control such defense and, without limiting the Indemnifying Party’s indemnification obligations, the Indemnifying Party shall reimburse the Indemnified Party for all costs and expenses, including attorney fees, incurred by the Indemnified Party in defending itself within [***] after receipt of any invoice therefor from the Indemnified Party. The Party not controlling such defense may participate therein at its own expense; provided that, if the Indemnifying Party assumes control of such defense and the Indemnified Party in good faith concludes, based on advice from counsel, that the Indemnifying Party and the Indemnified Party have conflicting interests with respect to such Third Party Claim, the Indemnifying Party shall be responsible for the reasonable fees and expenses of counsel to the Indemnified Party in connection therewith.  The Party controlling such defense shall keep the other Party advised of the status of such Third Party Claim and the defense thereof and shall consider recommendations made by the other Party with respect thereto.  The Indemnified Party shall not agree to any settlement of such Third Party Claim without the prior written consent of the Indemnifying Party, which shall not be unreasonably withheld, delayed or conditioned. The Indemnifying Party shall not, without the prior written consent of the Indemnified Party, agree to any settlement of such Third Party Claim or consent to any judgment in respect thereof that does not include a complete and unconditional release of the Indemnified Party from all liability with respect thereto, that imposes any liability or obligation on the Indemnified Party or that acknowledges fault by the Indemnified Party.

13.4Insurance.  Each Party shall maintain, at its own cost, insurance against liability and other risks associated with its activities and obligations under this Agreement, including its Development, Manufacturing, Commercialization and other Exploitation activities, as applicable, and its indemnification obligations hereunder, in such amounts, subject to such deductibles and on such terms as are reasonable for a company such as such Party for the activities to be conducted by it under this Agreement.  Each Party shall promptly furnish to the other Party evidence of such insurance upon request.  

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13.5Limitation of Liability.  EXCEPT FOR (A) A BREACH OFSECTION 7.1.1, (B) A BREACH OF ARTICLE 11,(C) CLAIMS OF A THIRD PARTY THAT ARE SUBJECT TO INDEMNIFICATION UNDER THIS ARTICLE 13, OR (D) A BREACH OF SECTION14.3.1,NEITHER AKCEA NOR PTC, NOR ANY OF THEIR RESPECTIVE AFFILIATES, LICENSORS, LICENSEES OR SUBLICENSEES, WILL BE LIABLE TO THE OTHER PARTY, ITS AFFILIATES OR SUBLICENSEES FOR ANY INDIRECT, INCIDENTAL, CONSEQUENTIAL, SPECIAL OR PUNITIVE DAMAGES OR LOST PROFITS OR ROYALTIES, LOST DATA OR COST OF PROCUREMENT OF SUBSTITUTE GOODS OR SERVICES, WHETHER LIABILITY IS ASSERTED IN CONTRACT, TORT (INCLUDING NEGLIGENCE AND STRICT PRODUCT LIABILITY), INDEMNITY OR CONTRIBUTION, AND IRRESPECTIVE OF WHETHER THAT PARTY OR ANY REPRESENTATIVE OF THAT PARTY HAS BEEN ADVISED OF, OR OTHERWISE MIGHT HAVE ANTICIPATED THE POSSIBILITY OF, ANY SUCH LOSS OR DAMAGE.

ARTICLE 14
TERM AND TERMINATION

14.1Term.  This Agreement shall commence as of the Effective Date and, unless terminated earlier, this Agreement shall continue in full force and effect until the expiration of the last to expire Royalty Term with respect to all Products in all countries in the PTC Territory (the “Term”).

14.2Termination.  This Agreement may be terminated at any time upon written notice by either Party if the other Party is in material breach of its obligations hereunder and has not cured such breach within thirty (30) days in the case of a payment breach, or within sixty (60) days in the case of all other breaches, after the non-breaching Party has provided written notice to the breaching Party of such breach.   

14.3Effects of Termination. Without limiting any other legal or equitable remedies that either Party may have, if this Agreement expires or is terminated for any reason then the following shall occur:

14.3.1the license grants to PTC shall terminate immediately, and PTC, its Affiliates and Sublicensees will cease selling the applicable Products; provided, however, that (i) PTC may sell existing inventory for up to [***], and (ii) Akcea may elect in its sole discretion to have PTC continue to sell the applicable Products as part of any orderly transition of contemplated by the provisions of this Section 14.3;

14.3.2PTC shall, and hereby does, grant to Akcea a perpetual, irrevocable, transferable, sublicensable (through multiple tiers) license under the PTC IP to Exploit Compounds and Products in the PTC Territory; such license shall be exclusive with respect to the PTC Product-Specific IP and nonexclusive with respect to the PTC Background Know-How and the PTC Background Patent Rights, and shall be royalty-free and fully-paid-up with respect to any Compound or Product;

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14.3.3if Akcea so requests, and to the extent permitted under the relevant agreement at the time of termination, PTC shall transfer to Akcea any agreements between PTC or any of its Affiliates, on the one hand, and any Affiliate or Third Party, on the other hand, to the extent relating to the Exploitation of any Compound or Product in the Territory to which PTC or any of its Affiliates is a party, subject to any required consents of such Third Party, which PTC shall use commercially reasonable efforts to obtain promptly;

14.3.4PTC shall provide to Akcea a fair and accurate description of the status of the Exploitation of such Compounds and Products in the Territory through the effective date of termination or expiration;

14.3.5PTC shall promptly transfer to Akcea or Akcea’s designee (i) possession and ownership of all Regulatory Filings, Regulatory Approvals and pricing and reimbursement approvals relating to the Exploitation of the Compounds and Products, (ii) copies of all data, reports, records and materials, and other sales and marketing related information in PTC’s possession or Control to the extent that such data, reports, records, materials or other information relate to the Exploitation of any of such Compounds and Products, including all non-clinical and clinical data relating to any of such Compounds and Products, and customer lists and customer contact information and all adverse event or other safety data in the possession or Control of PTC, any of its Affiliates or any Sublicensee; provided that PTC shall use commercially reasonable efforts to obtain for Akcea the right to access all such data, reports, records, materials, and other sales and marketing related information, and (iii) all records and materials containing Confidential Information of Akcea.PTC shall further appoint, and ensure that its Affiliates and the Sublicensees appoint, Akcea as the agent for PTC, its Affiliates and the Sublicensees for all matters relating to such Products and Compounds involving Regulatory Authorities in the Territory until all Regulatory Approvals and other Regulatory Filings have been transferred to Akcea or its designee;

14.3.6if the effective date of termination or expiration is after the First Commercial Sale of a Product in any country in the PTC Territory, then PTC shall appoint Akcea or its designee as the exclusive distributor of the Product in the Territory and grant Akcea the right to appoint sub-distributors, until such time as all Regulatory Approvals and pricing and reimbursement approvals in the Territory have been transferred to Akcea or its designee;

14.3.7PTC shall promptly transfer and assign to Akcea all of PTC’s, its Affiliates’ and any Sublicensee’s rights, title and interests in and to all Product Trademarks used in the Commercialization of such Compounds and Products (but not any house marks of such Person or any trademark containing the word “PTC” owned by PTC or any of its Affiliates or any Sublicensee);

14.3.8PTC shall, upon Akcea’s written request, transfer to Akcea any inventory of such Compounds and Products owned or controlled by PTC, any of its Affiliates or any Sublicensee as of the termination date at the actual price paid by PTC, such Affiliate or such Sublicensee for such supply;

14.3.9PTC shall provide any other assistance reasonably requested by Akcea for the purpose of allowing Akcea or its designee to proceed expeditiously with the Exploitation of the Compounds and Products in the Territory; and

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14.3.10PTC shall, and shall ensure that its Affiliates and the Sublicensees shall, execute all documents and take all such further actions as may be reasonably requested by Akcea in order to give effect to the foregoing clauses.

14.4Accrued Rights; Surviving Provisions of the Agreement.  

14.4.1Termination or expiration of this Agreement for any reason shall be without prejudice to any rights that shall have accrued to the benefit of any Party prior to such termination or expiration, including the payment obligations under ARTICLE 9 hereof, and any and all damages or remedies arising from any breach hereunder.  Such termination or expiration shall not relieve any Party from obligations which are expressly indicated to survive expiration or termination of this Agreement.  

14.4.2The provisions of ARTICLE 1 (Definitions), ARTICLE 11 (Confidentiality), ARTICLE 13 (Indemnification; Insurance), ARTICLE 14 (Term and Termination) and ARTICLE 15 (Miscellaneous) and Section 6.3 (Effect of Termination on Sublicenses), Section 6.5 (Licenses to Akcea), Section 6.6 (No Other Rights), Section 6.7 (Section 365(n) of the Bankruptcy Code), Section 9.8 (Accounting), Section 9.10 (Taxes), Section 9.11 (Currency Exchange), Section 10.1 (Ownership of Inventions: Disclosure), and Section 12.5 (Disclaimer) shall survive the termination of this Agreement in its entirety or expiration of this Agreement for any reason, in accordance with their respective terms and conditions, and for the duration stated, and where no duration is stated, shall survive indefinitely.

ARTICLE 15
MISCELLANEOUS

15.1Governing Law.  This Agreement and any dispute arising from the performance or breach hereof shall be governed by and construed and enforced in accordance with the Laws of the State of New York without reference to conflicts of laws principles; provided that with respect to matters involving the enforcement of intellectual property rights, the Laws of the applicable country shall apply. The provisions of the United Nations Convention on Contracts for the International Sale of Goods shall not apply to this Agreement or any subject matter hereof.

15.2Dispute Resolution. The Parties agree to attempt in good faith to promptly resolve any dispute, controversy, or claim (“Dispute”) arising out of or relating to this Agreement through negotiations between the Parties before resorting to other remedies available to them.  If the Parties are unable to resolve the Dispute and any Party wishes to pursue its rights relating to such Dispute, then, except as otherwise expressly provided in this Agreement, the relevant Party shall first submit the dispute to mediation within [***] after written notice by one Party to the other demanding non-binding mediation. Each of the Parties hereby agrees that any mediation shall be handled by a mediator appointed by Judicial Arbitration and Mediation Services, Inc. (“JAMS”) in New York, New York, United States. All parties to any mediated Dispute shall share the costs of the mediation equally, except that each party to the Dispute shall bear its own costs and expenses, including attorney’s fees, witness fees, travel expenses, and preparation costs. If the Dispute is not resolved through mediation, the Dispute shall be submitted to arbitration in New York, New York by a single arbitrator; provided, that if any Party that is a party to the Dispute cannot agree on a single arbitrator within [***] of the submission to arbitration, the matter shall be submitted to JAMS in

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New York, New York for arbitration before a single arbitrator from the JAMS list, and pursuant to the JAMS Comprehensive Arbitration Rules and Procedures. All parties to any arbitrated Dispute shall share the costs of the arbitration equally, except that a party to the Dispute shall bear its own costs and expenses, including attorney’s fees, witness fees, travel expenses, and preparation costs. Every aspect of the arbitration, including the award, shall be treated as confidential information. The arbitrator’s award shall be final and binding upon the Parties that are party to the Dispute, and judgment upon the award may be entered in any state or federal court of competent jurisdiction in New York State, or application may be made to such court for a judicial acceptance of the award and an enforcement as the law of such jurisdiction may require or allow. Nothing herein shall restrict the ability of any Party to provide factual testimony during such proceedings. Notwithstanding the foregoing, any Party may seek an injunction or other equitable relief pending arbitration from any federal or state court of competent jurisdiction in New York State. The forbearance to enforce an agreement to arbitrate shall not constitute a waiver of any rights under this Agreement except to the extent stated in this Agreement.

15.3Assignment.  

15.3.1This Agreement may not be assigned or otherwise transferred, nor may any right or obligation hereunder be assigned or transferred, by either Party without the written consent of the other Party; provided, however, that either Party may, without the other Party’s written consent, assign this Agreement and its rights and obligations hereunder in whole or in part to (a) an Affiliate; or (b) the Acquirer in the context of a Change of Control; provided, further if PTC transfers or assigns this Agreement to one of its Affiliates that is incorporated in a jurisdiction that does not have a Bilateral Income Tax Treaty with the United States or in a jurisdiction where a Bilateral Income Tax Treaty requires withholding taxes on any payment described in this Agreement, then PTC (or such Affiliate), will increase (i.e., “gross up”) any payment due Akcea under ARTICLE 9 for the Incremental Tax Cost such that Akcea receives the amount Akcea would have otherwise received under ARTICLE 9 but for PTC’s transfer or assignment. Any purported assignment in violation of this Section 15.3.1 shall be void.

The “Incremental Tax Cost” will equal the amount of IRC Sec 901 (or successor provision) taxes withheld under ARTICLE 9 in each year in which such tax is paid and Akcea cannot obtain a corresponding cash benefit from the foreign tax credit, grossed up by the applicable withholding tax rate based on a payment to a United States Person (unless the actual applicable treaty is lower, in which case the lower withholding tax rate will be used) to equal the pre withholding tax payment.

To the extent Akcea utilizes a [***] in any year, Akcea will [***] PTC an amount equal to (i) [***]% of the [***] or (ii) [***] Akcea resulting from the [***], which [***] will be calculated as the [***]. To assist PTC in determining when a [***] from Akcea pursuant to the foregoing sentence, beginning with the first Annual tax return for the year in which PTC [***] (i.e., “[***]”) payment under this Section 15.3.1, and each year thereafter (including, for clarity, all years in which Akcea [***] or [***]), Akcea will provide PTC with Akcea’s Annual tax returns (federal and state) and, in years in which Akcea utilizes the [***], supporting documentation for such [***]. Notwithstanding the foregoing, if any increase in the applicable withholding tax is in any way a result of the transfer or assignment by Akcea of any intellectual property or a portion of the rights under this license outside of the United States, PTC will not be obligated to [***] any [***] to the extent such transfer or assignment by Akcea caused such increase in the withholding tax.

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15.3.2In the case of PTC, an Acquirer of PTCmust certify to Akceawithin [***] after the closing date of the Change of Control transaction, its intent to continue the Commercialization of the Compounds and the Products in accordance with the PTC Commercialization Plan.  In the case of Akcea, an Acquirer of Akcea must certify to PTC within [***] after the closing date of the Change of Control transaction, its intent to continue the Commercialization of the Compounds and the Products in accordance with the then-current commercialization plan under the Ionis Pharmaceuticals/Akcea License Agreements. The Acquirer and the other Party may enter into a written agreement containing additional provisions to ensure that such Change of Control does not delay the receipt of Regulatory Approval or Commercialization of the Compounds and the Products in the PTC Territory.

15.3.3Each Party agrees that, notwithstanding any provision of this Agreement to the contrary, if a Party undergoes a Change of Control, no Patent Right, Know-How or other intellectual property or other proprietary rights that were not Controlled prior to such Change of Control by such Party or by any of its Affiliates who were its Affiliates prior to such Change of Control (such Party’s “Pre-Existing Affiliates”) will be deemed Controlled by such Party or its Affiliates for purposes of this Agreement after such Change of Control.

15.3.4No Reach-Through. Notwithstanding anything to the contrary set forth herein, but subject to the Exclusive License and the reserved rights under Sections 6.1 and 6.5, (a) in the event of a Change of Control of a Party, this Agreement shall not be deemed to prevent or prohibit the Acquirer or any of its Affiliates (other than such Party and its Pre-Existing Affiliates) from Exploiting any compounds or products in the PTC Territory (other than the Party and its Pre-Existing Affiliates) or granting any Third Party any right or licenses to do so; and (b) in the event that Akcea acquires (whether by way of merger, acquisition, purchase of all or substantially all of the relevant business or assets, or otherwise) a Third Party (the “Acquired Third Party”), this Agreement shall not be deemed to prevent or prohibit the Acquired Third Party from Exploiting any compounds or products in the PTC Territory or from granting any Third Party any right or license to do so.

15.4Performance by Affiliates.  Each Party hereby acknowledges and agrees that it shall be responsible for the full and timely performance as and when due under, and observance of all the covenants, terms, conditions and agreements set forth in this, Agreement by its Affiliate(s).  

15.5Force Majeure.  No Party shall be held liable or responsible to the other Party nor be deemed to be in default under, or in breach of any provision of, this Agreement for failure or delay in fulfilling or performing any obligation (other than a payment obligation) of this Agreement when such failure or delay is due to force majeure.  For purposes of this Agreement, force majeure is defined as any cause beyond the control of the affected Party and without the fault or negligence of such Party, which may include acts of God; material changes in Law; war; civil commotion; destruction of production facilities or materials by fire, flood, earthquake, explosion or storm; labor disturbances; epidemic; and failure of public utilities or common carriers.  In such event the Party affected by such force majeure shall immediately notify the other Party of such inability and of the period for which such inability is expected to continue.  The Party giving such notice shall thereupon be excused from such of its obligations under this Agreement as it is thereby disabled from performing for so long as it is so disabled for up to a maximum of [***], after which time the Parties shall promptly meet to discuss in good faith how to best proceed in a manner that maintains and abides by the Agreement.  To the extent possible, each Party shall use reasonable efforts to minimize the duration of any force majeure.  

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15.6Notices.  Any notice or request required or permitted to be given under or in connection with this Agreement shall be deemed to have been sufficiently given if in writing and personally delivered or sent by certified mail (return receipt requested), facsimile transmission (receipt verified), or overnight express courier service (signature required), prepaid, to the Party for which such notice is intended, at the address set forth for such Party below:

If to PTC,

addressed to: PTC Therapeutics International Limited

5^th Floor

3 Grand Canal Plaza

Grand Canal Street Upper

Dublin 4

D04 EE70

Attention:  Legal Department

Telephone:+ 353-1-906-8700

Email: [***]

with a copy to: Wilmer Cutler Pickering Hale and Dorr LLP

7 World Trade Center

250 Greenwich Street

New York, NY 10007

Attention:  Steven D. Singer

Telephone:212-295-6307

Facsimile: 212-230-8888

If to Akcea,

addressed to: Akcea Therapeutics, Inc.

22 Boston Wharf Road

Boston, Massachusetts 02210

Attention: Chief Executive Officer

Telephone:617-217-0202

Facsimile: [***]

with a copy to: Akcea Therapeutics, Inc.

22 Boston Wharf Road

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Boston, Massachusetts 02210

Attention: Vice President, Legal

Telephone:[***]

Email: [***]

or to such other address for such Party as it shall have specified by like notice to the other Party, provided that notices of a change of address shall be effective only upon receipt thereof.  If delivered personally or by facsimile transmission, the date of delivery shall be deemed to be the date on which such notice or request was given.  If sent by overnight express courier service, the date of delivery shall be deemed to be the next Business Day after such notice or request was deposited with such service.  If sent by certified mail, the date of delivery shall be deemed to be the third (3rd) Business Day after such notice or request was deposited with the U.S. Postal Service.  

15.7Export Clause.  Each Party acknowledges that the Laws of the United States restrict the export and re-export of commodities and technical data of United States origin. Each Party agrees that it will not export or re-export restricted commodities or the technical data of the other Party in any form without the appropriate United States and foreign government licenses.  

15.8Waiver.  Neither Party may waive or release any of its rights or interests in this Agreement except in writing.  The failure of either Party to assert a right hereunder or to insist upon compliance with any term of this Agreement shall not constitute a waiver of that right or excuse a similar subsequent failure to perform any such term or condition.  No waiver by either Party of any condition or term in any one or more instances shall be construed as a continuing waiver of such condition or term or of another condition or term except to the extent set forth in writing.  

15.9Severability.  If any provision hereof should be invalid, illegal or unenforceable in any jurisdiction, the Parties shall negotiate in good faith a valid, legal and enforceable substitute provision that most nearly reflects the original intent of the Parties and all other provisions hereof shall remain in full force and effect in such jurisdiction and shall be liberally construed in order to carry out the intentions of the Parties as nearly as may be possible.  Such invalidity, illegality or unenforceability shall not affect the validity, legality or enforceability of such provision in any other jurisdiction.  

15.10Entire Agreement. This Agreement, together with the Schedules hereto, set forth all the covenants, promises, agreements, warranties, representations, conditions and understandings between the Parties and supersede and terminate all prior agreements and understanding between the Parties. In particular, and without limitation, this Agreement supersedes and replaces any and all term sheets relating to the transactions contemplated by this Agreement and exchanged between the Parties prior to the Effective Date.  There are no covenants, promises, agreements, warranties, representations, conditions or understandings, either oral or written, between the Parties other than as set forth herein.  No subsequent alteration, amendment, change or addition to this Agreement shall be binding upon the Parties unless reduced to writing and signed by the respective authorized officers of the Parties.  

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15.11Independent Contractors. Nothing herein shall be construed to create any relationship of employer and employee, agent and principal, partnership or joint venture between the Parties.  Each Party is an independent contractor.  Neither Party shall assume, either directly or indirectly, any liability of or for the other Party.  Neither Party shall have the authority to bind or obligate the other Party and neither Party shall represent that it has such authority.

15.12Headings; Construction; Interpretation. Headings and any table of contents used herein are for convenience only and shall not in any way affect the construction of or be taken into consideration in interpreting this Agreement.  The terms of this Agreement represent the results of negotiations between the Parties and their representatives, each of which has been represented by counsel of its own choosing, and neither of which has acted under duress or compulsion, whether legal, economic or otherwise. Accordingly, the terms of this Agreement shall be interpreted and construed in accordance with their usual and customary meanings, and each of the Parties hereby waives the application in connection with the interpretation and construction of this Agreement of any rule of Law to the effect that ambiguous or conflicting terms or provisions contained in this Agreement shall be interpreted or construed against the Party whose attorney prepared the executed draft or any earlier draft of this Agreement. Any reference in this Agreement to an Article, Section, subsection, paragraph, clause or Schedule shall be deemed to be a reference to any Article, Section, subsection, paragraph, clause or Schedule, of or to, as the case may be, this Agreement.  Except where the context otherwise requires, (a) any definition of or reference to any agreement, instrument or other document refers to such agreement, instrument other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein or therein), (b) any reference to any Law refers to such Law includes all rules and regulations thereunder and any successor Law, in each case as from time to time enacted, repealed or amended, (c) the words “herein,” “hereof” and “hereunder,” and words of similar import, refer to this Agreement in its entirety and not to any particular provision hereof, (d) the words “include,” “includes,” “including” shall be deemed to be followed by the phrase “but not limited to,” “without limitation” or words of similar import, (e) the word “or” is used in the inclusive sense (and/or), (f) words in the singular or plural form include the plural and singular form, respectively, (g) references to any gender refer to each other gender, (h) references to a particular Person include such Person’s successors and assigns to the extent not prohibited by this Agreement, and (i) a capitalized term not defined herein but reflecting a different part of speech than a capitalized term which is defined herein shall be interpreted in a correlative manner.

15.13Books and Records. Any financial books and records to be maintained under this Agreement by a Party or its Affiliates or Sublicensees shall be maintained in accordance with U.S. generally accepted accounting principles (“GAAP”) or International Financial Reporting Standards, as applicable.  

15.14Further Actions. Each Party shall execute, acknowledge and deliver such further instruments, and do all such other acts, as may be necessary or appropriate in order to carry out the expressly stated purposes and the clear intent of this Agreement.  

15.15Parties in Interest. All of the terms and provisions of this Agreement shall be binding upon, and shall inure to the benefit of and be enforceable by the parties hereto and their respective successors, heirs, administrators and permitted assigns.  

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15.16Counterparts. This Agreement may be signed in counterparts, each and every one of which shall be deemed an original, notwithstanding variations in format or file designation which may result from the electronic transmission, storage and printing of copies from separate computers or printers.  Facsimile signatures and signatures transmitted via PDF shall be treated as original signatures.

[Signature page to follow]

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IN WITNESS WHEREOF, and intending to be legally bound hereby, the Parties have caused this Agreement to be executed by their duly authorized representatives as of the Effective Date.  

Akcea Therapeutics, Inc.
By:	/s/ Paula Soteropoulos
	Name: Paula Soteropoulos
	Title: Chief Executive Officer
PTC Therapeutics International Limited
By:	/s/ Adrian Haigh
	Name: Adrian Haigh
	Title: Director

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Schedule 1.4

Akcea Core Technology Patent Rights

[***]

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Schedule 1.8

Akcea Manufacturing Patent Rights

[***]

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Schedule 1.13

Akcea Product-Specific Patent Rights

inotersen

[***]

volanesorsen

[***]

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Schedule 1.39

Existing In-License Agreements

[***]

In each case, only if (and to the extent) a Product under this Agreement incorporates technology that is in-licensed by Akcea or Ionis Pharmaceuticals under such agreement.

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EX-31.1

Exhibit 31.1

CERTIFICATION PURSUANT TO

RULES 13a-14(a) AND 15d-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934,

AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Paula Soteropoulos, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Akcea Therapeutics, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Dated: November 6, 2018	By:	/s/ Paula Soteropoulos
		Paula Soteropoulos
		Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION PURSUANT TO

RULES 13a-14(a) AND 15d-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934,

AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Michael MacLean, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Akcea Therapeutics, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Dated: November 6, 2018	By:	/s/ Michael MacLean
		Michael MacLean
		Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, Paula Soteropoulos, the Chief Executive Officer of Akcea Therapeutics, Inc., (the “Company”), and Michael MacLean, the Chief Financial Officer of the Company, each hereby certifies that, to the best of his or her knowledge:

(1) The Company’s Quarterly Report on Form 10-Q for the period ended September 30, 2018, to which this Certification is attached as Exhibit 32.1 (the “Periodic Report”), fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934, as amended; and

(2) The information contained in the Periodic Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: November 6, 2018

By:	/s/ Paula Soteropoulos	By:	/s/ Michael MacLean
	Paula Soteropoulos		Michael MacLean
	Chief Executive Officer		Chief Financial Officer

A signed original of this written statement required by Section 906 has been provided to Akcea Therapeutics, Inc. and will be retained by Akcea Therapeutics, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

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Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2018	Oct. 31, 2018
Document And Entity Information [Abstract]
Entity Registrant Name	AKCEA THERAPEUTICS, INC.
Entity Central Index Key	0001662524
Document Type	10-Q
Document Period End Date	Sep. 30, 2018
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Filer Category	Non-accelerated Filer
Entity Common Stock, Shares Outstanding		89,210,927
Document Fiscal Year Focus	2018
Document Fiscal Period Focus	Q3
Entity Small Business	false
Entity Emerging Growth Company	true
Entity Ex Transition Period	true

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CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($) $ in Thousands	Sep. 30, 2018	Dec. 31, 2017
Current assets:
Cash and cash equivalents	$ 116,206	$ 58,367
Short-term investments	204,109	201,763
Contract receivable	636	5,413
Other current assets	8,397	1,302
Total current assets	329,348	266,845
Property, plant and equipment, net	5,757	77
Licenses, net	40,969	1,221
Deposits and other assets	3,054	661
Total assets	379,128	268,804
Current liabilities:
Accounts payable	3,071	2,381
Payable to Ionis Pharmaceuticals, Inc.	23,888	14,365
Accrued compensation	8,848	4,083
Accrued liabilities	21,151	7,570
Current portion of deferred revenue	32,347	58,192
Other current liabilities	1,295	1,875
Total current liabilities	90,600	88,466
Long-term portion of deferred rent	4,653	12
Long-term portion of deferred revenue	2,464	12,501
Total liabilities	97,717	100,979
Stockholders’ equity:
Common stock, $0.001 par value; 125,000,000 and 100,000,000 shares authorized at September 30, 2018 and December 31, 2017, respectively; 87,471,330 and 66,541,629 shares issued and outstanding at September 30, 2018 and December 31, 2017, respectively	87	67
Additional paid-in capital	733,098	464,430
Accumulated other comprehensive loss	(289)	(451)
Accumulated deficit	(451,485)	(296,221)
Total stockholders’ equity	281,411	167,825
Total liabilities and stockholders’ equity	$ 379,128	$ 268,804

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CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - $ / shares	Sep. 30, 2018	Dec. 31, 2017
Stockholders’ equity:
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock, shares authorized (in shares)	125,000,000	100,000,000
Common stock, shares issued (in shares)	87,471,330	66,541,629
Common stock, shares outstanding (in shares)	87,471,330	66,541,629

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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Revenue:
Revenue	$ 19,241	$ 9,906	$ 54,670	$ 21,712
Expenses:
Cost of sales - intangible asset amortization	701		701
Research and development	29,381	17,640	96,808	100,921
Selling, general and administrative	45,924	8,373	107,676	19,963
Total expenses	84,249	26,013	213,428	120,884
Loss from operations	(65,008)	(16,107)	(158,758)	(99,172)
Other income (expense):
Investment income	1,675	687	4,089	994
Interest expense		(224)		(1,731)
Other income (expense)	(25)	73	(148)	124
Loss before income tax expense	(63,358)	(15,571)	(154,817)	(99,785)
Income tax expense	(233)	(2,066)	(447)	(2,066)
Net loss	(63,591)	(17,637)	(155,264)	(101,851)
Preferred Stock [Member]
Other income (expense):
Net loss	0	$ (64)	0	$ (45,583)
Net loss per share, basic and diluted (in dollars per share)		$ (0.01)		$ (2.16)
Weighted-average shares outstanding, basic and diluted (in shares)		5,651,323		21,055,031
Common Stock [Member] | Ionis [Member]
Other income (expense):
Net loss	$ (47,789)	$ (12,002)	$ (110,882)	$ (38,431)
Net loss per share, basic and diluted (in dollars per share)	$ (0.73)	$ (0.33)	$ (1.93)	$ (3.12)
Weighted-average shares outstanding, basic and diluted (in shares)	65,538,467	36,555,903	57,346,539	12,319,205
Common Stock [Member] | Others [Member]
Other income (expense):
Net loss per share, basic and diluted (in dollars per share)	$ (0.73)	$ (0.33)	$ (2.07)	$ (3.12)
Weighted-average shares outstanding, basic and diluted (in shares)	21,671,415	16,966,712	21,446,813	5,717,720
Licensing [Member]
Revenue:
Revenue	$ 12,000		$ 12,000
Expenses:
Cost of product/license	7,200		7,200
Research and Development Revenue Under Collaborative Agreement [Member]
Revenue:
Revenue	7,241	$ 9,906	42,670	$ 21,712
Product [Member]
Expenses:
Cost of product/license	$ 1,043		$ 1,043

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CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (Unaudited) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Statement Of Income And Comprehensive Income [Abstract]
Net loss	$ (63,591)	$ (17,637)	$ (155,264)	$ (101,851)
Unrealized gains (losses) on investments, net of tax	37	(86)	143	(113)
Currency translation adjustment	(29)	(52)	19	(88)
Comprehensive loss	$ (63,583)	$ (17,775)	$ (155,102)	$ (102,052)

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017
Operating activities:
Net loss	$ (155,264)	$ (101,851)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation	109	82
Amortization of licenses	815	89
Amortization of premium on investments, net	197	312
Non-cash sublicensing expense	0	33,394
Non-cash interest expense for line of credit with Ionis Pharmaceuticals, Inc.	0	1,731
Stock-based compensation expense	31,239	11,814
Changes in operating assets and liabilities:
Contracts receivable	4,777	(500)
Other current and long-term assets	(7,104)	(1,160)
Accounts payable	300	897
Payable to Ionis Pharmaceuticals, Inc.	9,198	(48,248)
Accrued compensation	4,765	(198)
Deferred rent	1,018	(5)
Accrued liabilities	12,219	2,382
Income taxes payable	(553)	2,049
Deferred revenue	(35,882)	87,540
Net cash used in operating activities	(134,166)	(11,672)
Investing activities:
Purchases of short-term investments	(105,091)	(219,179)
Proceeds from sale of short-term investments	138,580	42,988
Purchase of property, plant and equipment	(116)	(9)
Net cash provided by (used in) investing activities	33,373	(176,200)
Financing activities:
Proceeds from exercise of common stock options and employee stock purchase plan issuances	5,141	0
Proceeds from issuance of common stock, net of underwriters' discount	0	135,438
Proceeds from sale of common stock to Novartis in private placement	0	50,000
Proceeds from line of credit from Ionis Pharmaceuticals, Inc.	0	106,000
Net proceeds from issuance of common stock to Ionis in connection with TTR License Agreement	155,856	0
Offering costs paid	0	(1,057)
Net cash provided by financing activities	160,997	290,381
Effect of exchange rates on cash	19	0
Net increase in cash and cash equivalents	60,223	102,509
Cash, cash equivalents and restricted cash at beginning of period	58,367	7,857
Cash, cash equivalents and restricted cash at end of period	118,590	110,366
Supplemental disclosures of non-cash investing and financing activities:
Unpaid deferred offering costs	0	638
Conversion of line of credit from Ionis Pharmaceuticals, Inc. into common stock	0	107,731
Purchase of property, plant and equipment included in accounts payable and accrued liability	1,752	0
Purchase of property, plant and equipment included in long-term deferred rent liability	3,596	0
Acquisition of research and development licenses and milestone payments	40,563	0
Cash, cash equivalents and restricted cash reported within the condensed consolidated balance sheets:
Cash and cash equivalents	116,206	110,366
Restricted cash included in deposits and other assets	2,384	0
Cash, cash equivalents and restricted cash at end of period	118,590	110,366
Ionis [Member]
Supplemental disclosures of non-cash investing and financing activities:
Purchase of property, plant and equipment included in accounts payable and accrued liability	$ 325	$ 0

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Basis of Presentation and Organization

9 Months Ended

Sep. 30, 2018

Organization Consolidation And Presentation Of Financial Statements [Abstract]

Basis of Presentation and Organization

1. Basis of Presentation and Organization

The accompanying condensed consolidated financial statements are unaudited and have been prepared in conformity with accounting principles generally accepted in the United States of America, or U.S. GAAP. Certain amounts in the prior period financial statements have been revised to conform to the presentation of the current period financial statements. See Note 2, Summary of Significant Accounting Policies, for a discussion of these revisions to prior period financial statements made in connection with our adoption of the new revenue recognition guidance retroactive to January 1, 2017.

The condensed consolidated financial statements include the accounts of Akcea Therapeutics, Inc. ("we," "our," and "us") and our wholly owned subsidiaries. All intercompany transactions and balances were eliminated in consolidation. We included all normal recurring adjustments in the financial statements, which we considered necessary for a fair presentation of our financial position and our operating results and cash flows for the interim periods ended September 30, 2018 and 2017. 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 included in our Annual Report on Form 10-K for the year ended December 31, 2017.

We were incorporated in Delaware in December 2014. We were organized by Ionis Pharmaceuticals, Inc., or Ionis, to focus on developing and commercializing drugs to treat patients with rare and serious diseases. On July 19, 2017, we completed our initial public offering, or IPO. As of September 30, 2018, Ionis owned approximately 75% of our common stock and is our majority shareholder. Prior to our IPO, we were wholly owned by Ionis.

In accordance with Accounting Standard Codification, or ASC, 205-40, Going Concern, we evaluated whether there are conditions and events, considered in the aggregate, that raise substantial doubt about our ability to continue as a going concern within one year after the date that the condensed consolidated financial statements are issued. As of September 30, 2018, we had an accumulated deficit of $451.5 million. During the three and nine months ended September 30, 2018, we incurred a loss of $63.6 million and $155.3 million, respectively, and during the nine months ended September 30, 2018, we used $134.2 million of cash in operations. We expect to continue to generate operating losses and negative operating cash flows for the foreseeable future. The transition to profitability is dependent upon the successful development, approval, and commercialization of our products and product candidates and the achievement of a level of revenues adequate to support our cost structure.  We believe that our currently available funds of $320.3 million as of September 30, 2018, in addition to cash expected to be generated from sales of our products, one of which has been approved in the U.S., the EU and Canada, will be sufficient to fund our operations through at least the next 12 months from the issuance of this Quarterly Report on Form 10-Q.  Management’s belief with respect to its ability to fund operations is based on estimates that are subject to risks and uncertainties.   If actual results are different from management’s estimates, we may need to seek additional funding or delay, limit, reduce or terminate our product development or future commercialization efforts or grant rights to develop and commercialize our drugs even if we would otherwise prefer to develop and commercialize the drugs ourselves.

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Summary of Significant Accounting Policies

9 Months Ended

Sep. 30, 2018

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

2. Summary of Significant Accounting Policies

The accounting policies followed in the preparation of the interim condensed consolidated financial statements are consistent in all material respects with those presented in Note 1 to our financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2017, except as noted below with respect to our revenue recognition accounting policy.

Use of Estimates

The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires our management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates.

Translation of Foreign Currency

For our foreign subsidiaries that report in a functional currency other than U.S. dollars, we translate their assets and liabilities into U.S. dollars using the exchange rate at the balance sheet date. We translate revenue and expenses at the monthly average exchange rates for the period. We translate transactions in our capital accounts at the historic exchange rate in effect at the date of the transaction. We include foreign currency translation adjustments as a component of accumulated other comprehensive loss within the condensed consolidated statements of comprehensive loss.

Revenue Recognition

In May 2014, the Financial Accounting Standards Board, or FASB, issued Accounting Standards Update, or ASU, No. 2014-09, which amended the guidance for accounting for revenue from contracts with customers. This ASU superseded the revenue recognition requirements in ASC Topic 605, Revenue Recognition, or Topic 605, and created a new Topic 606, Revenue from Contracts with Customers, or Topic 606. Under Topic 606, an entity recognizes revenue when its customer obtains control of promised goods or services in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services.

To determine revenue recognition for arrangements that an entity determines are within the scope of Topic 606, the entity performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation. At contract inception, once the contract is determined to be within the scope of Topic 606, we assess the goods or services promised within each contract and determine those that are performance obligations, then assess whether each promised good or service is distinct. When we offer options for additional goods or services, such as an option to license a drug in the future or for additional goods or services to be provided in the future, we evaluate whether such options are material rights that should be treated as additional performance obligations. We typically have not concluded that the option to license a drug or the options for additional goods or services that may be requested in the future under our collaboration agreement are material rights as the amounts attributable to such options represent standalone selling price, and therefore no consideration is allocated to these items at the inception of an agreement. When a partner exercises its option to license a drug or requests the additional goods or services, a new performance obligation is created for that item. Once performance obligations are identified, we then recognize as revenue the amount of the transaction price that we allocated to the respective performance obligation when (or as) each performance obligation is satisfied, either at a point in time or over time. If the performance obligation is satisfied over time, we recognize revenue based on the use of an output or input method. As of September 30, 2018, we have two revenue streams: our strategic collaboration, option and license agreement, or collaboration agreement, with Novartis Pharma AG, or Novartis, which we entered into in January 2017, and our collaboration and license agreement with PTC Therapeutics International Limited, or PTC Therapeutics, which we entered into in August 2018. For a complete discussion of the accounting for our revenue streams, see Note 4, Strategic Collaboration with Novartis and Note 6, PTC License Agreement with PTC Therapeutics.

Effective January 1, 2018, we adopted Topic 606 using the full retrospective transition method. Under this method, we revised our consolidated financial statements for prior period amounts including the interim periods included in this Report on Form 10-Q, as if Topic 606 had been effective for such periods. The references “as revised” used herein refer to revisions of amounts originally reported for the three and nine months ended September 30, 2017 and as of December 31, 2017 as a result of our adoption of Topic 606.

Impact of Adoption

As a result of adopting Topic 606 on January 1, 2018, we revised our comparative financial statements for the prior years as if Topic 606 had been effective for that period. On September 18, 2018, we filed a Current Report on Form 8-K to present recast consolidated financial statements for each of the three years ended December 31, 2015, 2016 and 2017, to reflect our adoption of the new accounting standard for revenue recognition set forth in Topic 606. The financial information recast in the Form 8-K was originally filed with the SEC in our Annual Report on Form 10-K for the fiscal year ended December 31, 2017, which was filed with the SEC on February 28, 2018. Under Topic 605, we recognized revenue over time on a straight-line basis. Under Topic 606, we recognize revenue using the input method based on the total cost of performing services over time. As a result, the following financial statement line items for fiscal year 2017 were affected.

Condensed Consolidated Balance Sheets

	December 31, 2017 (in thousands)
	As Revised Under Topic 606			As Originally Reported Under Topic 605			Effect of Change
Current portion of deferred revenue	$	58,192		$	50,579		$	7,613
Long-term portion of deferred revenue		12,501			8,306			4,195
Accumulated deficit	$	(296,221	)	$	(284,413	)	$	(11,808	)

Condensed Consolidated Statements of Operations and Comprehensive Loss

	Three Months Ended September 30, 2017 (in thousands, except per share data)
	As Revised Under Topic 606			As Originally Reported Under Topic 605			Effect of Change
Research and development revenue under collaborative    agreement	$	9,906		$	13,449		$	(3,543	)
Loss from operations		(16,107	)		(12,564	)		(3,543	)
Net loss		(17,637	)		(14,094	)		(3,543	)
Net loss per share of preferred stock, basic and diluted		(0.01	)		0.05			(0.06	)
Net loss per share of common stock owned by Ionis, basic    and diluted		(0.33	)		(0.27	)		(0.06	)
Net loss per share of common stock owned by others, basic    and diluted	$	(0.33	)		(0.27	)	$	(0.06	)

	Nine Months Ended September 30, 2017 (in thousands, except per share data)
	As Revised Under Topic 606			As Originally Reported Under Topic 605			Effect of Change
Research and development revenue under collaborative    agreement	$	21,712		$	37,173		$	(15,461	)
Loss from operations		(99,172	)		(83,711	)		(15,461	)
Net loss		(101,851	)		(86,390	)		(15,461	)
Net loss per share of preferred stock, basic and diluted		(2.16	)		(1.77	)		(0.39	)
Net loss per share of common stock owned by Ionis, basic    and diluted		(3.12	)		(2.72	)		(0.40	)
Net loss per share of common stock owned by others, basic    and diluted	$	(3.12	)		(2.72	)	$	(0.40	)

Condensed Consolidated Statement of Cash Flows

	Nine Months Ended September 30, 2017 (in thousands)
	As Revised Under Topic 606			As Originally Reported Under Topic 605			Effect of Change
Net loss	$	(101,851	)	$	(86,390	)	$	(15,461	)
Adjustments to reconcile net loss to net cash used in    operating activities:
Deferred revenues		87,540			72,079			15,461
Cash, cash equivalents and restricted cash at beginning    of period		7,857			7,857			—
Cash, cash equivalents and restricted at end of period	$	110,366		$	110,366		$	—

Inventory

Prior to the regulatory approval of our product candidates, we incur expenses for the manufacturing of drug product that could potentially be available to support the commercial launch of our products. Until the first reporting period when regulatory approval has been received or is otherwise considered probable, we record all such costs as research and development expense.

For inventory related costs incurred subsequent to July 1, 2018, we will reflect these amounts as inventory on our condensed consolidated balance sheets at the lower of cost or market value under the first-in, first-out, or FIFO, basis. We will periodically analyze our inventory levels, and write down inventory that has become obsolete, inventory that has a cost basis in excess of its estimated realizable value and inventory in excess of expected sales requirements as cost of product sales. The determination of whether inventory costs will be realizable requires estimates by our management and if actual market conditions are less favorable than projected by our management, additional write-downs of inventory may be required which would be recorded as a cost of product sales in the condensed consolidated statements of operations.

At September 30, 2018 our physical inventory for TEGSEDI was produced prior to when we obtained regulatory approval and accordingly had no cost basis as we recorded the related costs as research and development expense in prior periods.

Intangible Assets

We obtained exclusive licenses from Ionis for specific patents that Ionis owns and maintains related to our drug pipeline. We recorded our licenses from Ionis as a capital contribution using the carryover basis of Ionis' historical cost for the related patents. We are amortizing our capitalized licenses over their estimated useful life, which is the term of the underlying individual patents owned by Ionis.

In addition, we maintain definite-lived intangible assets related to regulatory milestone payments made to Ionis that are recoverable through future cash flows from approved products, which are capitalized as license intangible assets. These assets are amortized over their remaining useful lives, which are generally estimated to be the remaining patent life. If our estimate of the product’s useful life is shorter than the remaining patent life, then the shorter period is used. Intangible assets are amortized using the economic consumption method if anticipated future revenues can be reasonably estimated. The straight-line method is used when future revenues cannot be reasonably estimated. Amortization expense is recorded as a component of cost of sales to the extent the underlying license is commercialized or research and development prior to its commercialization in the condensed consolidated statements of operations.

Cost of Product Sales

As a result of receiving marketing authorization, or MA, approval for TEGSEDI from the European Commission, or EC, in July 2018, we began recording all TEGSEDI related expenses as cost of product sales starting in July 2018. Cost of product sales consists of manufacturing costs, transportation and freight, and indirect overhead costs associated with the manufacturing and distribution of TEGSEDI. Cost of product sales may also include period costs related to certain manufacturing services and inventory adjustment charges. Additionally, we expensed a significant portion of the cost of producing TEGSEDI that we will use in the commercial launch as research and development expense prior to the regulatory approval of TEGSEDI.

New Accounting Pronouncements - Recently Issued

In February 2016, the FASB issued amended accounting guidance related to lease accounting, which requires us to record all leases with a term longer than one year on our balance sheet. When we record leases on our balance sheet under the new guidance, we will record a liability with a value equal to the present value of payments we will make over the life of the lease and an asset representing the underlying leased asset. The new accounting guidance requires us to determine if any lease we have is an operating or financing lease. We will record expense for an operating type lease on a straight-line basis as an operating expense and we will record expense for a financing type lease as interest expense. The new lease standard is effective for annual and interim periods beginning after December 15, 2018, with early adoption permitted. This standard allows for a modified retrospective application and is effective for the first quarter of 2019. Entities may apply the modified retrospective approach (1) retrospectively to each prior reporting period presented in the financial statements with the cumulative effect adjustment recognized at the beginning of the earliest comparative period presented or (2) retrospectively at the beginning of the period of adoption (January 1, 2019) through a cumulative-effect adjustment. We are currently assessing the impact that adoption of this guidance will have on our consolidated financial statements and disclosures.

In June 2016, the FASB issued guidance that changes the measurement of credit losses for most financial assets and certain other instruments. If we have credit losses, this updated guidance requires us to record allowances for these instruments under a new expected credit loss model. This model requires us to estimate the expected credit loss of an instrument over its lifetime, which represents the portion of the amortized cost basis that 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 impact it will have on our consolidated financial statements and disclosures.

In February 2018, the FASB issued updated guidance for reclassification of tax effects from accumulated other comprehensive income (loss). The updated guidance gives entities an option to reclassify the stranded tax effects resulting from changes due to the Tax Act from accumulated other comprehensive income (loss) to retained earnings. The updated guidance is effective for all entities for fiscal years beginning after December 31, 2018, and interim periods within those fiscal years. Early adoption is permitted and adoption is optional. We are currently assessing the impact this updated guidance could have on our consolidated financial statements and the timing of potential adoption.

In June 2018, the FASB issued updated guidance to simplify the accounting for stock-based compensation expense for non-employees. We adopted this guidance in the second quarter of 2018. We have not granted stock options to non-employees as of September 30, 2018 and therefore this new guidance has no impact on our consolidated financial statements.

In August 2018, the FASB updated its disclosure requirements related to Level 1, 2 and 3 fair value measurements. The update included deletion and modification of certain disclosure requirements and additional disclosure related to Level 3 measurements.  The guidance is effective for fiscal years beginning after December 15, 2019 and early adoption is permitted. We anticipate we will adopt this updated guidance on January 1, 2019 and we do not expect it to have a significant impact on our disclosures.

In August 2018, the FASB issued clarifying guidance on how to account for implementation costs related to hosted cloud-servicing arrangements. The primary change is to include any arrangement in which the customer accesses or uses software but does not take possession of the software when assessing for the capitalization of implementation costs of internal use software. Qualified costs are to be capitalized and amortized over the service period and they need to be expensed in the same line item as the service expense and recognized on the balance sheet in the same category as amounts prepaid for the hosted cloud-servicing arrangements generally as an other asset. Cash flows related to the capitalized implementation costs should be presented consistent with the presentation of cash flows for the fees related to hosted cloud-servicing arrangements. The update can be applied either retrospectively or prospectively to all implementation costs incurred after the date of adoption. The updated guidance is effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. Early adoption is permitted in any interim period. We are currently assessing the effects this updated guidance could have on our consolidated financial statements and timing of potential adoption.

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Investments and Fair Value Measurements

9 Months Ended

Sep. 30, 2018

Investments And Fair Value Measurements [Abstract]

Investments and Fair Value Measurements

3. Investments and Fair Value Measurements

Investments

The following is a summary of our investments at September 30, 2018 and December 31, 2017 (in thousands):

			Gross Unrealized					Estimated
September 30, 2018	Cost		Gains		Losses			Fair Value
Available-for-sale securities:
Corporate debt securities	$	90,527	$	—	$	(104	)	$	90,423
Debt securities issued by U.S. government agencies		97,545		—		(74	)		97,471
Total securities with a maturity of one year or less		188,072		—		(178	)		187,894
Corporate debt securities		2,910		—		(5	)		2,905
Debt securities issued by U.S. government agencies		13,322		—		(12	)		13,310
Total securities with a maturity of one to two years		16,232		—		(17	)		16,215
Total available-for-sale securities	$	204,304	$	—	$	(195	)	$	204,109

			Gross Unrealized					Estimated
December 31, 2017	Cost		Gains		Losses			Fair Value
Available-for-sale securities:
Corporate debt securities	$	132,434	$	—	$	(206	)	$	132,228
Debt securities issued by U.S. government agencies		38,135		—		(59	)		38,076
Total securities with a maturity of one year or less		170,569		—		(265	)		170,304
Corporate debt securities		8,267		—		(35	)		8,232
Debt securities issued by U.S. government agencies		23,264		—		(37	)		23,227
Total securities with a maturity of one to two years		31,531		—		(72	)		31,459
Total available-for-sale securities	$	202,100	$	—	$	(337	)	$	201,763

We recorded unrealized losses related to the securities listed above as of September 30, 2018 and December 31, 2017. We believe that the decline in value of these securities is temporary and primarily related to the change in market interest rates since purchase. We believe it is more likely than not that we will be able to hold our debt securities to maturity. Therefore, we anticipate a full recovery of the amortized cost basis of our debt securities at maturity.

All of our available-for-sale securities are available to us for use in our current operations. As a result, we categorized 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.

Fair Value Measurements

We use a three-tier fair value hierarchy to prioritize the inputs used in our fair value measurements. These tiers include: Level 1, defined as observable inputs such as quoted prices in active markets for identical assets, which includes our money market funds and treasury securities classified as available-for-sale securities; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable, which includes our fixed income securities and commercial paper classified as available-for-sale securities; and Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring us to develop our own assumptions. We have not historically held any investments or other instruments as Level 3. We recognize transfers between levels of the fair value hierarchy on the date of the event or change in circumstances that caused the transfer.

The following tables present the investments we held at September 30, 2018 and December 31, 2017 that are regularly measured and carried at fair value. The table segregates each security by the level within the fair value hierarchy of the valuation techniques we utilized to determine the respective securities' fair value (in thousands):

	At September 30, 2018		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)
Money market funds (1)	$	104,931	$	104,931	$	—
Corporate debt securities (2)		95,329		—		95,329
Debt securities issued by U.S. government agencies (3)		110,780		—		110,780
Total	$	311,040	$	104,931	$	206,109

	At December 31, 2017		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)
Money market funds (1)	$	48,430	$	48,430	$	—
Corporate debt securities (3)		140,460		—		140,460
Debt securities issued by U.S. government agencies (3)		61,303		—		61,303
Total	$	250,193	$	48,430	$	201,763

(1) Included in cash and cash equivalents on our condensed consolidated balance sheets.

(2) At September 30, 2018, $2.0 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.

(3) Included in short-term investments on our condensed consolidated balance sheets.

We did not have any Level 3 investments or other instruments at September 30, 2018 and December 31, 2017. During the nine months ended September 30, 2018 and the year ended December 31, 2017, there were no transfers between Level 1 and Level 2 investments.

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Strategic Collaboration with Novartis

9 Months Ended

Sep. 30, 2018

Strategic Collaboration With Novartis [Abstract]

Strategic Collaboration with Novartis

4. Strategic Collaboration with Novartis

In January 2017, we initiated a strategic collaboration with Novartis for the development and commercialization of AKCEA-APO(a)-L_Rx and AKCEA-APOCIII-L_Rx. Under the Novartis collaboration, Novartis has an exclusive option to further develop and commercialize these drugs. We are responsible for completing a Phase 2 program, conducting an end-of-Phase 2 meeting with the United States Food and Drug Administration, or FDA, and providing initial quantities of the active pharmaceutical ingredient, or API, for each drug. On September 24, 2018 Akcea and Ionis announced positive top-line results from the Phase 2 study of AKCEA-APO(a)-L_Rx. If Novartis exercises an option for one of these drugs, Novartis will be responsible for all further global development, regulatory and co-commercialization activities and costs for such drug.

We received a $75.0 million upfront payment in the first quarter of 2017, of which we retained $60.0 million and we paid Ionis $15.0 million as a sublicense fee under our Cardiometabolic License Agreement with Ionis. If Novartis exercises its option for a drug, Novartis will pay us a license fee equal to $150.0 million for each drug licensed by Novartis. In addition, for AKCEA-APO(a)-L_Rx, we are eligible to receive up to $600.0 million in milestone payments, including $25.0 million for the achievement of a development milestone, up to $290.0 million for the achievement of regulatory milestones and up to $285.0 million for the achievement of commercialization milestones. In addition, for AKCEA-APOCIII-L_Rx, we are eligible to receive up to $530.0 million in milestone payments, including $25.0 million for the achievement of a development milestone, up to $240.0 million for the achievement of regulatory milestones and up to $265.0 million for the achievement of commercialization milestones. We will earn the next milestone payment of $25.0 million under this collaboration if Novartis advances the Phase 3 study for either drug. We are also eligible to receive tiered royalties in the mid-teens to low twenty percent range on net sales of AKCEA-APO(a)-L_Rx and AKCEA-APOCIII-L_Rx. Novartis will reduce these royalties upon the expiration of certain patents or if a generic competitor negatively impacts the product in a specific country. We will pay 50% of these license fees, milestone payments and royalties to Ionis as a sublicense fee. We plan to co-commercialize through our specialized sales force any licensed drug commercialized by Novartis in selected markets, under terms and conditions that we plan to negotiate with Novartis in the future.

At commencement of our strategic collaboration, we identified the following four distinct performance obligations:

• Development activities for AKCEA-APO(a)-L_Rx;

• Development activities for AKCEA-APOCIII-L_Rx;

• API for AKCEA-APO(a)-L_Rx; and

• API for AKCEA-APOCIII-L_Rx.

The development activities and the supply of API are distinct because Novartis or another third party could provide these items without our assistance.

We determined the transaction price for the Novartis collaboration was $108.4 million, comprised of the following:

• $75.0 million from the upfront payment we received;

• $28.4 million for the premium paid by Novartis, which represents the excess of the fair value Ionis received from Novartis' purchase of Ionis' stock at a premium in the first quarter of 2017; and

• $5.0 million for the premium Novartis would have paid to purchase Ionis' stock if we did not complete our IPO within 15 months of the inception of the agreement.

We are recognizing the $75.0 million upfront payment plus the premium paid by Novartis from its purchase of Ionis’ stock and the premium associated with Novartis’ obligation to purchase Ionis’ stock if we did not complete our IPO because we are the party providing the services and API under the collaboration agreement.

None of the options or development or regulatory milestone payments under this agreement have been included in the transaction price as all payments are fully constrained. As part of our evaluation of the constraint, we considered numerous factors, including the fact that achievement of the milestones is outside of our control and contingent upon the success of our clinical trials, Novartis’ efforts, and the receipt of regulatory approval. We will re-evaluate the transaction price, including estimated variable consideration included in the transaction price and all constrained amounts, in each reporting period and as uncertain events are resolved or other changes in circumstances occur.

Based on the distinct performance obligations under the Novartis collaboration, we allocated the $108.4 million transaction price based on relative stand-alone selling prices of each of our performance obligations as follows:

• $64.0 million for development services for AKCEA-APO(a)-L_Rx;

• $40.1 million for development services for AKCEA-APOCIII-L_Rx;

• $1.5 million for the delivery of AKCEA-APO(a)-L_Rx API; and

• $2.8 million for the delivery of AKCEA-APOCIII-L_Rx API.

We are recognizing revenue related to each of our performance obligations as follows:

• We will satisfy the development services performance obligation for AKCEA-APO(a)-L_Rx as the research and development services are performed. We expect a significant portion of the research and development services to be completed by December 2018 with the remainder by the end of March 2019. We recognize revenue related to research and development services performed using an input method by calculating costs incurred at each period end relative to total costs expected to be incurred;

• We will satisfy the development services performance obligation for AKCEA-APOCIII-L_Rx as the research and development services are performed. We expect a significant portion of the research and development services to be completed by the end of June 2019 with the remainder by the end of 2019. We recognize revenue related to research and development services performed using an input method by calculating costs incurred at each period end relative to total costs expected to be incurred;

• We recognized the amount attributed to the AKCEA-APO(a)-L_Rx API supply when we delivered API to Novartis in 2017; and

• We recognized the amount attributed to the AKCEA-APOCIII-L_Rx API supply when we delivered API to Novartis in May 2018.

Additionally, we and Ionis entered into a stock purchase agreement, or SPA, with Novartis. Under the SPA, in July 2017, Novartis purchased $50.0 million of our common stock in a separate private placement concurrent with the completion of our IPO at a price per share equal to the IPO price. Our IPO is discussed in Note 10, Initial Public Offering.

During the three and nine months ended September 30, 2018, we earned revenue of $7.2 million and $42.7 million, respectively, from our strategic collaboration with Novartis, representing 100% of our research and development revenue. In comparison, we earned revenue of $9.9 million and $21.7 million for the same periods in 2017 (as revised). During the three and nine months ended September 30, 2018, we recognized $6.8 million and $36.5 million of revenue from amounts that were in our beginning deferred revenue balance. Our consolidated balance sheet at September 30, 2018 and December 31, 2017 (as revised) included deferred revenue of $34.8 million and $70.7 million, respectively, related to our strategic collaboration with Novartis.

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License Agreements and Services Agreement with Ionis

9 Months Ended

Sep. 30, 2018

Related Party Transactions [Abstract]

License Agreements and Services Agreement with Ionis

5. License Agreements and Services Agreement with Ionis

In December 2015, we entered into a development, commercialization and license agreement related to our cardiometabolic franchise and a services agreement with Ionis.  In March 2018, we entered into a new development, commercialization, collaboration and license agreement related to our TTR franchise and amended the services agreement previously in place with Ionis.  The following sections summarize these related party agreements with Ionis.

Cardiometabolic Development, Commercialization and License Agreement

Our development, commercialization and license agreement, or Cardiometabolic License Agreement, with Ionis granted exclusive rights to us to develop and commercialize WAYLIVRA, AKCEA-APO(a)-L_Rx, AKCEA-APOCIII-L_Rx, and AKCEA-ANGPTL3-L_Rx, which are collectively referred to as the Lipid Drugs. Ionis granted us an exclusive license to certain patents to develop and commercialize products containing the Lipid Drugs. Ionis also granted us a non-exclusive license to the Ionis antisense platform technology for us to develop and commercialize products containing the Lipid Drugs. Ionis also granted us non-exclusive rights under its manufacturing technology to manufacture the Lipid Drugs in our own facility or at a contract manufacturer. As a part of this agreement both companies agreed not to work with any other parties to develop or commercialize other RNA-targeting drugs that are designed to inhibit any of the Lipid Drug targets so long as we are developing or commercializing the Lipid Drugs.

We and Ionis share development responsibilities for the Lipid Drugs. We pay Ionis for the research and development expenses it incurs on our behalf, which include both external and internal expenses. External research and development expenses include costs for contract research organizations, or CROs, costs to conduct nonclinical and clinical studies on our drugs, costs to acquire and evaluate clinical study data, such as investigator grants, patient screening fees and laboratory work, and fees paid to consultants. Internal research and development expenses include costs for the work that Ionis' research and development employees perform for us. Ionis charges us a full-time equivalent rate that covers personnel-related expenses, including salaries and benefits, plus an allocation of facility-related expenses, including rent, utilities, insurance and property taxes, for those development employees who work either directly or indirectly on the development of our drugs. We also pay Ionis for the API and drug product we use in our nonclinical and clinical studies for all of our drugs. Ionis manufactures the API for us and charges us a price per gram consistent with the price Ionis charges its pharmaceutical partners, which includes the cost for direct materials, direct labor and overhead required to manufacture the API. If we need the API filled in vials for our clinical studies and Ionis contracts with a third party to perform this work, Ionis will charge us for the resulting cost.

As we commercialize each of the Lipid Drugs, we will pay Ionis royalties from the mid-teens to the mid-twenty percent range on sales related to the Lipid Drugs that we sell. If we sell a Lipid Drug for a Rare Disease Indication (defined in the agreement as less than 500,000 patients worldwide or an indication that required a Phase 3 program of less than 1,000 patients and less than two years of treatment), we will pay a higher royalty rate to Ionis than if we sell a Lipid Drug for a Broad Disease Patient Population (defined in the agreement as more than 500,000 patients worldwide or an indication that required a Phase 3 program of 1,000 or more patients and two or more years of treatment). Other than with respect to the drugs licensed to Novartis under the collaboration agreement, if our annual sales reach $500.0 million, $1.0 billion and $2.0 billion, we will be obligated to pay Ionis sales milestones in the amount of $50.0 million for each sales milestone reached by each Lipid Drug. If and when triggered, we will pay Ionis each of these sales milestones over the subsequent 12 quarters in equal payments.

We may terminate this agreement if Ionis is in material breach of the agreement. Ionis may terminate this agreement if we are in material breach of the agreement. In each circumstance the party that is in breach will have an opportunity to cure the breach prior to the other party terminating this agreement.

In the first quarter of 2017, we entered into letter agreements with Ionis to reflect the agreed upon payment terms with respect to the upfront option payment that we received from Novartis and to allocate the premium that Novartis paid for Ionis' common stock in connection with our strategic collaboration with Novartis. For additional detail regarding our strategic collaboration with Novartis, see Note 4, Strategic Collaboration with Novartis.

TTR Development, Commercialization, Collaboration and License Agreement

On April 17, 2018, our stockholders, other than Ionis and its affiliates, approved the development, commercialization, collaboration and license agreement, or TTR License Agreement, and a stock purchase agreement, or Ionis SPA, with Ionis, our majority shareholder which was entered into on March 14, 2018. In addition, in connection with these agreements, we entered into an amended and restated services agreement, or Amended Services Agreement, and an amended and restated investor rights agreement, or Amended Investor Rights Agreement, with Ionis.

We determined that the TTR License Agreement and Ionis SPA included provisions which required the approval of the agreements by our stockholders other than Ionis and its affiliates, which we deemed was not perfunctory in nature, therefore, we concluded that the approved date of the agreements for accounting purposes was April 17, 2018, the date on which such approval was received and the closing of the agreements took place.

In accordance with the terms and provisions of the TTR License Agreement, we received rights to:

• commercialize TEGSEDI following receipt of regulatory approval and perform certain other non-commercial activities with respect to TEGSEDI, in each case, in accordance with a global strategic plan;

• partner on the completion of all pivotal studies, of a follow-on drug to TEGSEDI, AKCEA-TTR-L_Rx and perform other non-commercial activities with respect to AKCEA-TTR-L_Rx;

• commercialize AKCEA-TTR-L_Rx following receipt of regulatory approval in accordance with a global strategic plan;

• share in profits and losses with respect to TEGSEDI and AKCEA-TTR-L_Rx;

• manufacture (including through a third party) each product following receipt of regulatory approval for such product; and

• sublicense the development and commercialization of either product to third parties or affiliates, with the consent of Ionis.

As consideration for the grant of rights under the TTR License Agreement, we paid an upfront licensing fee of $150.0 million, which was paid through the issuance of 8 million shares of our common stock priced by reference to a trading average at the time of execution of the agreements. In addition, we are obligated to make milestone payments to Ionis in connection with the achievement of certain development, regulatory and commercialization events. These milestone payments include up to $110.0 million, if all TEGSEDI regulatory approval milestones are met; up to $145.0 million, if all AKCEA-TTR-L_Rx regulatory milestones are met; and a total of $1.3 billion, in the form of seven milestone payments, if all sales milestones for the combined products are met. We can elect to pay each milestone payment in cash or shares of our common stock and Ionis may require payment in shares of common stock up until the achievement of the milestone event for aggregate worldwide annual net sales of $750.0 million for the products. Subsequent to the achievement of the milestone event for aggregate worldwide annual net sales of $750.0 million, all subsequent milestone payments must be paid in cash.

Under the TTR License Agreement, we and Ionis also agreed to share TEGSEDI and AKCEA-TTR-L_Rx profits and losses as follows: for TEGSEDI, beginning on the earlier of (i) the first day of the quarter after receipt of regulatory approval of TEGSEDI in the United States, or (ii) January 1, 2019, the parties will share profits and losses from the development and commercialization of TEGSEDI (A) on a 60/40 basis (60% to Ionis and 40% to us) through the end of the quarter in which the first commercial sale of AKCEA-TTR-L_Rx occurs, and (B) on a 50/50 basis commencing on the first day of the first quarter thereafter; and for AKCEA-TTR-L_Rx, beginning January 1, 2018, the parties will share all profits and losses from the development and commercialization of AKCEA-TTR-L_Rx on a 50/50 basis.

The TTR License Agreement will remain in effect until the expiration of all included payment obligations, or unless earlier terminated. The TTR License Agreement can be terminated by mutual consent of us and Ionis, by either us or Ionis upon certain events, by either party upon material breach, or by Akcea for convenience upon providing 90 days written notice to Ionis. Upon termination all rights received under the TTR License Agreement will terminate.

To support the commercialization of TEGSEDI and AKCEA-TTR-L_Rx, Ionis purchased 10.7 million shares of our common stock for $200 million.

In connection with the licensing transaction, we amended our Certificate of Incorporation to increase our authorized shares of common stock from 100,000,000 shares to 125,000,000 shares.

We determined that the upfront accounting for the TTR License Agreement should follow the accounting guidance for common control transactions given the nature of the relationship between us and Ionis, including the fact that Ionis maintains a controlling ownership position in us.

In addition, we assessed the identifiable assets that were acquired under the terms of the TTR License Agreement, including the licensed rights to TEGSEDI and AKCEA-TTR-L_Rx, certain batches of TEGSEDI materials, the transfer of a minimal number of employees from Ionis to us and certain manufacturing and clinical research agreements. We concluded that the licensed rights represented a group of similar identifiable assets and that substantially all of the fair value of the acquisition resides in the licensed rights. As such, we concluded that the acquired assets did not meet the definition of a business and that we should account for the TTR License Agreement as an asset acquisition under common control guidance. Accordingly, we recorded the carrying value of the licensed rights held by Ionis of $0.6 million as an intangible asset at the date of acquisition and will amortize the amount over the remaining patent life.  

In connection with the transaction, we also purchased $4.7 million of commercial TEGSEDI inventory held by Ionis. Prospectively we will be responsible for the procurement of all additional inventory. The inventory did not have a carrying value on the books of Ionis at the time of the acquisition. As such, in accordance with the accounting guidance for common control transactions above, we recorded the purchase of this inventory as a reduction of additional paid in capital. This amount represented a cash distribution to Ionis, therefore, we have included this distribution as a distribution to Ionis for purposes of loss per share and we have applied the two–class method as discussed in Note 9, Basic and Diluted Net Loss Per Share.

We also determined that the TTR License Agreement represented a collaboration arrangement as defined by ASC 808. Prior to April 1, 2018, Ionis was responsible for all costs associated with TEGSEDI and for the period from April 1, 2018 to December 31, 2018, we are responsible for all costs associated with TEGSEDI. We and Ionis share all costs associated with AKCEA-TTR-L_Rx from January 1, 2018 forward on a 50/50 basis. We recorded $3.1 million paid to Ionis for costs related to the period prior to the closing of the TTR license agreement to equity, as these amounts were previously expensed in the financial statements of Ionis.  This amount also represents a cash distribution to Ionis and was included as an adjustment to the net loss attributable to Ionis for purposes of applying the two-class method for loss per share as discussed in Note 8, Basic and Diluted Net Loss Per Share. Any amounts paid to or received from Ionis subsequent to the closing of the TTR License Agreement will be recorded to expense based on the underlying nature of the activities.

During the three and nine months ended September 30, 2018, we recorded $6.4 million and $18.3 million, respectively, as a component of research and development expense related to the TTR License Agreement.

In addition, on July 11, 2018, we received marketing authorization, or MA, approval for TEGSEDI from the European Commission, or EC, for the treatment of stage 1 or stage 2 polyneuropathy in adult patients with hereditary transthyretin amyloidosis, or hATTR amyloidosis, in the European Union, or EU. As a result of the MA approval in the EU, on August 3, 2018, we issued 1,597,571 shares of our common stock to Ionis as payment of the $40.0 million regulatory milestone for TEGSEDI, increasing Ionis’ ownership percentage to slightly above 75 percent. As a result of the marketing authorization in the EU, we capitalized this regulatory milestone payment as a license intangible asset on our condensed consolidated balance sheets as the amount in expected to be recoverable through future cash flows. The milestone payment is being amortized to cost of sales on a straight-line basis over its expected useful life of approximately 13 years from the date of the regulatory milestone achievement. Amortization expense for the TTR EU milestone payment was $0.7 million for the three and nine months ended September 30, 2018.

Services Agreement

We originally entered into a services agreement with Ionis in December 2015 in conjunction with the Cardiometabolic License Agreement. We entered into the Amended Services Agreement with Ionis in April 2018 in conjunction with the TTR License Agreement (collectively, the service agreements). The primary purpose of the Amended Services Agreement was to allow for the expansion of general and administrative services provided to us by Ionis to cover the TEGSEDI and AKCEA-TTR-L_Rx products under terms substantially similar to the prior services agreement.

Our services agreement with Ionis is designed to be flexible to adjust for our increasing capabilities in various functions. Under the services agreement, Ionis provides us certain services, including, without limitation, general and administrative support services and development support services. Ionis allocated a certain percentage of personnel to perform the services that it provides to us based on its good faith estimate of the required services. We pay Ionis for these allocated costs, which reflect the Ionis full-time equivalent, or FTE, rate for the applicable personnel, plus out-of-pocket expenses, such as occupancy costs, associated with the FTEs allocated to providing us these services. We do not pay a mark-up or profit on the external or internal expenses Ionis bills to us. Ionis invoices us quarterly for all amounts due under the services agreement and payments are due within 30 days of the receipt of an invoice.

In addition, as long as Ionis continues to consolidate our financials, we will comply with Ionis' policies and procedures and internal controls. As long as we are consolidated into Ionis' financial statements under U.S. GAAP, we may continue to access the following services from Ionis:

• investor relations services,

• human resources and personnel services,

• risk management and insurance services,

• tax related services,

• corporate record keeping services,

• financial and accounting services,

• credit services, and

• COO/CFO/CBO oversight.

However, if we wanted to provide the foregoing services internally, and doing so would not negatively impact Ionis' internal controls and procedures for financial reporting, we can negotiate in good faith with Ionis for a reduced scope of services related to the aforementioned services. When Ionis determines it should no longer consolidate our financials, we may mutually agree with Ionis in writing to extend the term of this arrangement in six-month increments.

We can establish our own benefits programs or continue to use Ionis' benefits, however we must provide Ionis a minimum advance notice to opt-out of using Ionis' benefits. We do not currently plan to establish our own benefits programs at this time or in the near future.

As of September 30, 2018 and December 31, 2017, we owed Ionis $23.9 million and $14.4 million, respectively.

The following table summarizes the amounts included in our operating expenses that were generated by transactions with Ionis for the following periods (in thousands):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2018			2017			2018			2017
Services performed by Ionis	$	3,192		$	1,906		$	11,182		$	7,861
Active pharmaceutical ingredient manufactured by Ionis		—			—			5,229			6,013
Commercial inventory manufactured by Ionis		—			—			5,996			—
Sublicensing expenses		7,200			—			7,200			48,394
Out-of-pocket expenses paid by Ionis		15,850			7,595			38,866			24,784
Total charges generated by transactions with Ionis		26,242			9,501			68,473			87,052
Payable balance to Ionis at the beginning of the period		27,137			11,244			14,365			24,355
Less: total amounts paid to Ionis during the period		(29,491	)		(11,244	)		(58,017	)		(68,512	)
Less: receivable from Ionis		—			—			(933	)		—
Less: non-cash sublicensing expenses		—			—			—			(33,394	)
Total amount payable to Ionis at period end	$	23,888		$	9,501		$	23,888		$	9,501

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Collaboration and License Agreement with PTC Therapeutics

9 Months Ended

Sep. 30, 2018

Collaboration And License Agreement [Abstract]

Collaboration and License Agreement with PTC Therapeutics

6. Collaboration and License Agreement with PTC Therapeutics

In August 2018, we entered into a collaboration and license agreement with PTC Therapeutics, or the PTC License Agreement, to commercialize TEGSEDI and WAYLIVRA in Latin America and certain Caribbean countries, or the PTC Territory.

We received a $12.0 million upfront payment from PTC Therapeutics related to TEGSEDI in the third quarter of 2018 upon execution of the PTC License Agreement, of which we paid Ionis $7.2 million as a sub-license royalty related to the TTR License Agreement. If WAYLIVRA is approved by the FDA or EMA, PTC Therapeutics will pay us $6.0 million. In addition, we are eligible to receive up to $8.0 million for the achievement of regulatory milestones and royalties in the mid-twenty percent range on net sales of TEGSEDI and WAYLIVRA in the PTC Territory. PTC Therapeutics’ obligation to pay royalties to us begins on the earlier of 12 months after the first commercial sale of a product in Brazil or the date that PTC Therapeutics recognized revenue of at least $10 million in the PTC Territory. PTC Therapeutics will reduce these royalties upon the expiration of certain patents or if a generic competitor negatively impacts the market share of the product in the PTC Territory.  Milestone payments and royalties that we are eligible to receive from PTC Therapeutics for TEGSEDI will be split 60% to Ionis and 40% to Akcea. All WAYLIVRA milestone payments and royalties that we are eligible to receive from PTC will be split 50/50 with Ionis. PTC Therapeutics is solely responsible for the commercialization of the products in the PTC Territory at its sole cost and expense, including the pursuit and maintenance of applicable regulatory approvals. Unless earlier terminated, the PTC License Agreement will continue in effect until the date on which the royalty term and all payment obligations with respect to all products in all countries in the PTC Territory have expired.

At the commencement of the PTC License Agreement, we identified two performance obligation, consisting of the transfer of (1) the license to TEGSEDI and related know-how and (2) the license to WAYLIVRA and related know-how, both of which were satisfied during the third quarter of 2018. In addition, we identified a customer option related to PTC Therapeutics option to purchase supply of product from us for its development and commercial needs. The option to purchase supply from us will be subject to a supply agreement to be negotiated in the fourth quarter of 2018. We considered the manufacturing capabilities of PTC Therapeutics and the fact that manufacturing services are not proprietary and can be provided by other vendors, to conclude that the licenses have stand-alone functionality and are distinct.  Further, the customer options for manufacturing of product is expected to be priced similar to other manufacturing options with similar customers and is therefore not considered a material right. As there were no remaining unsatisfied performance obligations as of September 30, 2018, the $12.0 million upfront payment was recognized as license revenue upon contract execution in the third quarter of 2018. None of the regulatory milestones have been included in the transaction price, as all milestones were fully constrained.  As part of our evaluation of the constraint, we considered numerous factors, including that regulatory approvals are not within our control and accordingly the related milestones are fully constrained and excluded from the arrangement consideration until such regulatory approvals are received. Any consideration related to sales-based royalties will be recognized when the related sales occur.

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Stock-Based Compensation

9 Months Ended

Sep. 30, 2018

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

Stock-Based Compensation

7. Stock-Based Compensation

Stock Plans

2015 Equity Incentive Plan

The 2015 Plan provides for the grant of incentive stock options, or ISOs, non-statutory stock options, or NSOs, restricted stock awards, restricted stock unit awards and stock appreciation rights. In December 2017 and April 2018, our board of directors and our stockholders, respectively, approved an additional amendment to our 2015 Equity Incentive Plan to increase the number of shares of common stock reserved for issuance thereunder to 13,500,000 shares of common stock.

As of September 30, 2018, the aggregate number of shares of common stock that may be issued pursuant to stock awards under the 2015 Plan was 13,500,000 and we had 1,998,659 shares available for future issuance under the 2015 Plan. During the three and nine months ended September 30, 2018, we granted to employees and directors options to purchase 428,400 and 4,643,292 shares of common stock, respectively. We granted 20,894 restricted stock units awards during the three and nine months ended September 30, 2018. At September 30, 2018 a total of 11,457,463 options were outstanding, of which 4,019,273 were exercisable, and 43,878 restricted stock unit awards were outstanding.

2017 Employee Stock Purchase Plan

The number of shares of common stock that may be issued under the Employee Stock Purchase Plan, or ESPP, will automatically increase on the first day of each calendar year through (and including) January 1, 2027 in an amount equal to the lesser of (i) 1% of the total number of shares of Common Stock outstanding on December 31st of the preceding calendar year, and (ii) 500,000 shares of Common Stock. On January 1, 2018, 500,000 shares of common stock were added to the ESPP.

As of September 30, 2018, the aggregate number of shares of common stock reserved under the 2017 ESPP was 1,000,000 and we had 968,449 shares available for future issuance under the 2017 ESPP. During the three and nine months ended September 30, 2018, 15,819 shares and 31,551 shares, respectively, were issued under our 2017 ESPP. At September 30, 2018, accrued liabilities included $0.2 million of ESPP contributions related to our current enrollment period for which the related shares will be issued on January 2, 2019.

Stock-Based Compensation

The following table summarizes stock-based compensation expense for the three and nine months ended September 30, 2018 and 2017 (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2018		2017		2018		2017
Research and development expenses	$	2,313	$	2,353	$	6,868	$	5,873
Selling, general and administrative expenses		10,417		2,339		24,371		5,941
Total	$	12,730	$	4,692	$	31,239	$	11,814

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Accumulated Other Comprehensive Loss

9 Months Ended

Sep. 30, 2018

Stockholders Equity Note [Abstract]

Accumulated Other Comprehensive Loss

8. Accumulated Other Comprehensive Loss

The following table summarizes changes in accumulated other comprehensive loss (in thousands):

	2018
Balance, as of December 31, 2017	$	(451	)
Unrealized gains on investments, net of tax (1)		143
Currency translation adjustment		19
Net other comprehensive income		162
Balance, as of September 30, 2018	$	(289	)

(1) There was no tax benefit for other comprehensive income (loss) for the nine months ended September 30, 2018.

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Basic and Diluted Net Loss Per Share

9 Months Ended

Sep. 30, 2018

Earnings Per Share [Abstract]

Basic and Diluted Net Loss Per Share

9. Basic and Diluted Net Loss Per Share

We issued 28,884,540 shares of Series A convertible preferred stock in December 2015. The Series A convertible preferred stock converted into common stock in conjunction with the IPO in July 2017. As a result there were 66,541,629 shares of common stock issued and outstanding and there were no longer any outstanding shares of Series A convertible preferred stock. We determined that the Series A convertible preferred stock was in substance common stock during the period that it was outstanding because the Series A convertible preferred stock was the lowest form of subordinated equity outstanding during that period and this class of stock would have been required to absorb the losses of the Company. Accordingly, we are using the two-class method for computing EPS.

In connection with the TTR License Agreement completed on April 17, 2018 with Ionis, we made distributions to Ionis representing the consideration to be paid in cash provided to Ionis in excess of the carrying value of the related assets acquired. These distributions are treated as dividends to Ionis; therefore, we have applied the two-class method loss per share to reflect the allocation of these distributions to the participating Ionis common shares.

The two-class method is an earnings allocation formula that determines loss per share for each class of common stock and participating security according to dividends declared (or accumulated) and participation rights in undistributed earnings. For the purposes of calculating loss per share under the two-class method, we have allocated the net loss between the Series A convertible preferred stock, common stock owned by Ionis and common stock owned by others.

Basic loss per share for each class of stock is computed by dividing total distributable losses applicable to Series A convertible preferred stock, common stock owned by Ionis and common stock owned by others, including the 6% cumulative dividend contractually due to Series A convertible preferred shareholders, by the weighted-average of preferred and common shares outstanding during the requisite period. The cumulative preferred stock dividend was not paid upon completion of the IPO because the IPO was not a liquidation event or a change in control. Prior to the IPO, the 6% cumulative Series A convertible preferred stock dividend was considered as required under the two-class method regardless of whether those dividends were actually distributed.

The following table summarizes the distributable losses for the three and nine months ended September 30, 2018 and 2017 (in thousands):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2018			2017			2018			2017
Net loss	$	(63,591	)	$	(17,637	)	$	(155,264	)	$	(101,851	)
Preferred stock dividend		—			(1,791	)		—			(20,100	)
Distribution to Ionis		—			—			(7,792	)		—
Distributable losses	$	(63,591	)	$	(19,428	)	$	(163,056	)	$	(121,951	)

The following table summarizes the reconciliation of weighted-average shares outstanding used in the calculation of basic loss per share for the three and nine months ended September 30, 2018 and 2017:

	Three Months Ended September 30,				Nine Months Ended September 30,
Determination of shares:	2018		2017		2018		2017
Weighted-average preferred shares outstanding		—		5,651,323		—		21,055,031
Weighted-average common shares outstanding owned    by Ionis		65,538,467		36,555,903		57,346,539		12,319,205
Weighted-average common shares outstanding owned    by others		21,671,415		16,966,712		21,446,813		5,717,720
Total weighted-average shares outstanding		87,209,882		59,173,938		78,793,352		39,091,956

The following table summarizes the calculation of basic loss per share for the three and nine months ended September 30, 2018 and 2017 (in thousands, except per share amounts):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2018			2017			2018			2017
Losses attributable to preferred shares	$	—		$	(1,855	)	$	—		$	(65,683	)
Less: Assumed dividend to preferred shares		—			1,791			—			20,100
Income (losses) allocated to preferred shares		—			(64	)		—			(45,583	)
Weighted-average preferred shares outstanding		—			5,651,323			—			21,055,031
Basic loss per preferred share	$	—		$	(0.01	)	$	—		$	(2.16	)
Losses allocated to Ionis	$	(47,789	)	$	(12,002	)	$	(118,674	)	$	(38,431	)
Plus: Distribution to Ionis		—			—			7,792			—
Losses available to Ionis	$	(47,789	)	$	(12,002	)	$	(110,882	)	$	(38,431	)
Weighted-average common shares outstanding owned    by Ionis		65,538,467			36,555,903			57,346,539			12,319,205
Basic loss per common share owned by Ionis	$	(0.73	)	$	(0.33	)	$	(1.93	)	$	(3.12	)
Losses allocated to common shares owned by others	$	(15,802	)	$	(5,571	)	$	(44,382	)	$	(17,837	)
Weighted-average common shares outstanding owned    by others		21,671,415			16,966,712			21,446,813			5,717,720
Basic loss per common share owned by others	$	(0.73	)	$	(0.33	)	$	(2.07	)	$	(3.12	)

For the three and nine months ended September 30, 2018 and 2017, 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:

• Options to purchase common stock;

• Unvested restricted stock units; and

• Employee Stock Purchase Plan.

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Initial Public Offering

9 Months Ended

Sep. 30, 2018

Initial Public Offering [Abstract]

Initial Public Offering

10. Initial Public Offering

On July 19, 2017, we completed our IPO. Total net proceeds were $182.3 million, including the following:

• $132.3 million from the sale of 17,968,750 shares of our common stock in our IPO of which $25 million was invested by Ionis; and

• $50.0 million from the purchase of 6,250,000 shares by Novartis in a concurrent private placement.

In addition, both of the following occurred in connection with the completion of our IPO on July 19, 2017:

• the conversion of all outstanding shares of Series A convertible preferred stock into 28,884,540 shares of our common stock; and

• the conversion of $106.0 million of outstanding principal plus accrued interest from the line of credit with Ionis into 13,438,339 shares of common stock.

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Commitments and Contingencies

9 Months Ended

Sep. 30, 2018

Commitments And Contingencies Disclosure [Abstract]

Commitments and Contingencies

11. Commitments and Contingencies

Operating Lease

On April 5, 2018, we entered into an operating lease agreement with MEPT Seaport 13 Stillings LLC, or MEPT, for 30,175 square feet of office space located in Boston, Massachusetts for our new corporate headquarters. The commencement date of the lease was August 15, 2018 and the initial term of the lease is 123 months with one five-year renewal option. We took occupancy of the office space in Boston, Massachusetts in September 2018. Minimum annual lease payments under this lease are $0.3 million in 2018, and future annual lease payments under this lease are $2.2 million in 2019, $2.3 million in 2020, $2.3 million in 2021, $2.3 million in 2022, and $14.2 million thereafter. MEPT is providing us with a three-month free rent period, which commenced on August 15, 2018, and a tenant improvement allowance up to $3.8 million. We provided MEPT with a letter of credit to secure our obligations under the lease in the initial amount of $2.4 million, to be reduced to $1.8 million on the third anniversary of the rent commencement date and to $1.2 million on the fifth anniversary of the rent commencement date if we meet certain conditions set forth in the lease at each such time. This balance is included in deposits and other assets on the accompanying condensed consolidated balance sheets.

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Restructuring

9 Months Ended

Sep. 30, 2018

Restructuring And Related Activities [Abstract]

Restructuring

12. Restructuring

On September 6, 2018, we enacted a plan to reorganize our workforce to better align with the immediate needs of our business, the Reorganization Plan, following the August 27, 2018 announcement of the FDA’s issuance of a Complete Response Letter for our New Drug Application for WAYLIVRA. In connection with the Reorganization Plan, we reduced our workforce by approximately 12%. The Reorganization Plan was approved by our board of directors on September 2, 2018, and affected employees were informed on September 6, 2018. The Reorganization Plan impacted U.S. team members primarily from the WAYLIVRA field team and functions focused principally on WAYLIVRA.

During the three and nine months ended September 30, 2018, we recorded $1.9 million of restructuring-related costs in operating expense, including employee severance, benefits and related costs. In addition, we also recorded $0.4 million of non-cash stock option modifications expenses related to the Reorganization Plan for the three and nine months ended September 30, 2018. We do not expect to incur any additional significant costs associated with this reorganization.

The following table summarizes the restructuring costs by category for the periods indicated (in thousands):

	Three and Nine Months Ended September 30, 2018
	Cash		Non-Cash		Total
Research and development	$	327	$	209	$	536
General and administrative		1,562		200		1,762
	$	1,889	$	409	$	2,298

The following table summarizes the restructuring reserve included in accrued compensation for the periods indicated (in thousands):

	Nine Months Ended September 30, 2018
Restructuring reserve beginning balance	$	—
Restructuring expenses incurred during period		1,889
Amounts paid during the period		(200	)
Restructuring reserve ending balance	$	1,689

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Subsequent Events

9 Months Ended

Sep. 30, 2018

Subsequent Events [Abstract]

Subsequent Events

13. Subsequent Events

TTR License Agreement Regulatory Milestone

On October 5, 2018, we received regulatory approval for TEGSEDI from the FDA for the treatment of the polyneuropathy of hereditary transthyretin-mediated amyloidosis in adults in the United States. As a result of the regulatory approval in the United States, on October 17, 2018 we issued 1,671,849 shares of our common stock to Ionis as payment of the $50.0 million regulatory milestone for TEGSEDI, increasing Ionis’ ownership percentage to 76 percent.

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Summary of Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2018

Accounting Policies [Abstract]

Use of Estimates

Use of Estimates

The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires our management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates.

Translation of Foreign Currency

Translation of Foreign Currency

For our foreign subsidiaries that report in a functional currency other than U.S. dollars, we translate their assets and liabilities into U.S. dollars using the exchange rate at the balance sheet date. We translate revenue and expenses at the monthly average exchange rates for the period. We translate transactions in our capital accounts at the historic exchange rate in effect at the date of the transaction. We include foreign currency translation adjustments as a component of accumulated other comprehensive loss within the condensed consolidated statements of comprehensive loss.

Revenue Recognition

Revenue Recognition

In May 2014, the Financial Accounting Standards Board, or FASB, issued Accounting Standards Update, or ASU, No. 2014-09, which amended the guidance for accounting for revenue from contracts with customers. This ASU superseded the revenue recognition requirements in ASC Topic 605, Revenue Recognition, or Topic 605, and created a new Topic 606, Revenue from Contracts with Customers, or Topic 606. Under Topic 606, an entity recognizes revenue when its customer obtains control of promised goods or services in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services.

To determine revenue recognition for arrangements that an entity determines are within the scope of Topic 606, the entity performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation. At contract inception, once the contract is determined to be within the scope of Topic 606, we assess the goods or services promised within each contract and determine those that are performance obligations, then assess whether each promised good or service is distinct. When we offer options for additional goods or services, such as an option to license a drug in the future or for additional goods or services to be provided in the future, we evaluate whether such options are material rights that should be treated as additional performance obligations. We typically have not concluded that the option to license a drug or the options for additional goods or services that may be requested in the future under our collaboration agreement are material rights as the amounts attributable to such options represent standalone selling price, and therefore no consideration is allocated to these items at the inception of an agreement. When a partner exercises its option to license a drug or requests the additional goods or services, a new performance obligation is created for that item. Once performance obligations are identified, we then recognize as revenue the amount of the transaction price that we allocated to the respective performance obligation when (or as) each performance obligation is satisfied, either at a point in time or over time. If the performance obligation is satisfied over time, we recognize revenue based on the use of an output or input method. As of September 30, 2018, we have two revenue streams: our strategic collaboration, option and license agreement, or collaboration agreement, with Novartis Pharma AG, or Novartis, which we entered into in January 2017, and our collaboration and license agreement with PTC Therapeutics International Limited, or PTC Therapeutics, which we entered into in August 2018. For a complete discussion of the accounting for our revenue streams, see Note 4, Strategic Collaboration with Novartis and Note 6, PTC License Agreement with PTC Therapeutics.

Effective January 1, 2018, we adopted Topic 606 using the full retrospective transition method. Under this method, we revised our consolidated financial statements for prior period amounts including the interim periods included in this Report on Form 10-Q, as if Topic 606 had been effective for such periods. The references “as revised” used herein refer to revisions of amounts originally reported for the three and nine months ended September 30, 2017 and as of December 31, 2017 as a result of our adoption of Topic 606.

Impact of Adoption

As a result of adopting Topic 606 on January 1, 2018, we revised our comparative financial statements for the prior years as if Topic 606 had been effective for that period. On September 18, 2018, we filed a Current Report on Form 8-K to present recast consolidated financial statements for each of the three years ended December 31, 2015, 2016 and 2017, to reflect our adoption of the new accounting standard for revenue recognition set forth in Topic 606. The financial information recast in the Form 8-K was originally filed with the SEC in our Annual Report on Form 10-K for the fiscal year ended December 31, 2017, which was filed with the SEC on February 28, 2018. Under Topic 605, we recognized revenue over time on a straight-line basis. Under Topic 606, we recognize revenue using the input method based on the total cost of performing services over time. As a result, the following financial statement line items for fiscal year 2017 were affected.

Condensed Consolidated Balance Sheets

	December 31, 2017 (in thousands)
	As Revised Under Topic 606			As Originally Reported Under Topic 605			Effect of Change
Current portion of deferred revenue	$	58,192		$	50,579		$	7,613
Long-term portion of deferred revenue		12,501			8,306			4,195
Accumulated deficit	$	(296,221	)	$	(284,413	)	$	(11,808	)

Condensed Consolidated Statements of Operations and Comprehensive Loss

	Three Months Ended September 30, 2017 (in thousands, except per share data)
	As Revised Under Topic 606			As Originally Reported Under Topic 605			Effect of Change
Research and development revenue under collaborative    agreement	$	9,906		$	13,449		$	(3,543	)
Loss from operations		(16,107	)		(12,564	)		(3,543	)
Net loss		(17,637	)		(14,094	)		(3,543	)
Net loss per share of preferred stock, basic and diluted		(0.01	)		0.05			(0.06	)
Net loss per share of common stock owned by Ionis, basic    and diluted		(0.33	)		(0.27	)		(0.06	)
Net loss per share of common stock owned by others, basic    and diluted	$	(0.33	)		(0.27	)	$	(0.06	)

	Nine Months Ended September 30, 2017 (in thousands, except per share data)
	As Revised Under Topic 606			As Originally Reported Under Topic 605			Effect of Change
Research and development revenue under collaborative    agreement	$	21,712		$	37,173		$	(15,461	)
Loss from operations		(99,172	)		(83,711	)		(15,461	)
Net loss		(101,851	)		(86,390	)		(15,461	)
Net loss per share of preferred stock, basic and diluted		(2.16	)		(1.77	)		(0.39	)
Net loss per share of common stock owned by Ionis, basic    and diluted		(3.12	)		(2.72	)		(0.40	)
Net loss per share of common stock owned by others, basic    and diluted	$	(3.12	)		(2.72	)	$	(0.40	)

Condensed Consolidated Statement of Cash Flows

	Nine Months Ended September 30, 2017 (in thousands)
	As Revised Under Topic 606			As Originally Reported Under Topic 605			Effect of Change
Net loss	$	(101,851	)	$	(86,390	)	$	(15,461	)
Adjustments to reconcile net loss to net cash used in    operating activities:
Deferred revenues		87,540			72,079			15,461
Cash, cash equivalents and restricted cash at beginning    of period		7,857			7,857			—
Cash, cash equivalents and restricted at end of period	$	110,366		$	110,366		$	—

Inventory

Inventory

Prior to the regulatory approval of our product candidates, we incur expenses for the manufacturing of drug product that could potentially be available to support the commercial launch of our products. Until the first reporting period when regulatory approval has been received or is otherwise considered probable, we record all such costs as research and development expense.

For inventory related costs incurred subsequent to July 1, 2018, we will reflect these amounts as inventory on our condensed consolidated balance sheets at the lower of cost or market value under the first-in, first-out, or FIFO, basis. We will periodically analyze our inventory levels, and write down inventory that has become obsolete, inventory that has a cost basis in excess of its estimated realizable value and inventory in excess of expected sales requirements as cost of product sales. The determination of whether inventory costs will be realizable requires estimates by our management and if actual market conditions are less favorable than projected by our management, additional write-downs of inventory may be required which would be recorded as a cost of product sales in the condensed consolidated statements of operations.

At September 30, 2018 our physical inventory for TEGSEDI was produced prior to when we obtained regulatory approval and accordingly had no cost basis as we recorded the related costs as research and development expense in prior periods.

Intangible Assets

Intangible Assets

We obtained exclusive licenses from Ionis for specific patents that Ionis owns and maintains related to our drug pipeline. We recorded our licenses from Ionis as a capital contribution using the carryover basis of Ionis' historical cost for the related patents. We are amortizing our capitalized licenses over their estimated useful life, which is the term of the underlying individual patents owned by Ionis.

In addition, we maintain definite-lived intangible assets related to regulatory milestone payments made to Ionis that are recoverable through future cash flows from approved products, which are capitalized as license intangible assets. These assets are amortized over their remaining useful lives, which are generally estimated to be the remaining patent life. If our estimate of the product’s useful life is shorter than the remaining patent life, then the shorter period is used. Intangible assets are amortized using the economic consumption method if anticipated future revenues can be reasonably estimated. The straight-line method is used when future revenues cannot be reasonably estimated. Amortization expense is recorded as a component of cost of sales to the extent the underlying license is commercialized or research and development prior to its commercialization in the condensed consolidated statements of operations.

Cost of Product Sales

Cost of Product Sales

As a result of receiving marketing authorization, or MA, approval for TEGSEDI from the European Commission, or EC, in July 2018, we began recording all TEGSEDI related expenses as cost of product sales starting in July 2018. Cost of product sales consists of manufacturing costs, transportation and freight, and indirect overhead costs associated with the manufacturing and distribution of TEGSEDI. Cost of product sales may also include period costs related to certain manufacturing services and inventory adjustment charges. Additionally, we expensed a significant portion of the cost of producing TEGSEDI that we will use in the commercial launch as research and development expense prior to the regulatory approval of TEGSEDI.

New Accounting Pronouncements - Recently Issued

New Accounting Pronouncements - Recently Issued

In February 2016, the FASB issued amended accounting guidance related to lease accounting, which requires us to record all leases with a term longer than one year on our balance sheet. When we record leases on our balance sheet under the new guidance, we will record a liability with a value equal to the present value of payments we will make over the life of the lease and an asset representing the underlying leased asset. The new accounting guidance requires us to determine if any lease we have is an operating or financing lease. We will record expense for an operating type lease on a straight-line basis as an operating expense and we will record expense for a financing type lease as interest expense. The new lease standard is effective for annual and interim periods beginning after December 15, 2018, with early adoption permitted. This standard allows for a modified retrospective application and is effective for the first quarter of 2019. Entities may apply the modified retrospective approach (1) retrospectively to each prior reporting period presented in the financial statements with the cumulative effect adjustment recognized at the beginning of the earliest comparative period presented or (2) retrospectively at the beginning of the period of adoption (January 1, 2019) through a cumulative-effect adjustment. We are currently assessing the impact that adoption of this guidance will have on our consolidated financial statements and disclosures.

In June 2016, the FASB issued guidance that changes the measurement of credit losses for most financial assets and certain other instruments. If we have credit losses, this updated guidance requires us to record allowances for these instruments under a new expected credit loss model. This model requires us to estimate the expected credit loss of an instrument over its lifetime, which represents the portion of the amortized cost basis that 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 impact it will have on our consolidated financial statements and disclosures.

In February 2018, the FASB issued updated guidance for reclassification of tax effects from accumulated other comprehensive income (loss). The updated guidance gives entities an option to reclassify the stranded tax effects resulting from changes due to the Tax Act from accumulated other comprehensive income (loss) to retained earnings. The updated guidance is effective for all entities for fiscal years beginning after December 31, 2018, and interim periods within those fiscal years. Early adoption is permitted and adoption is optional. We are currently assessing the impact this updated guidance could have on our consolidated financial statements and the timing of potential adoption.

In June 2018, the FASB issued updated guidance to simplify the accounting for stock-based compensation expense for non-employees. We adopted this guidance in the second quarter of 2018. We have not granted stock options to non-employees as of September 30, 2018 and therefore this new guidance has no impact on our consolidated financial statements.

In August 2018, the FASB updated its disclosure requirements related to Level 1, 2 and 3 fair value measurements. The update included deletion and modification of certain disclosure requirements and additional disclosure related to Level 3 measurements.  The guidance is effective for fiscal years beginning after December 15, 2019 and early adoption is permitted. We anticipate we will adopt this updated guidance on January 1, 2019 and we do not expect it to have a significant impact on our disclosures.

In August 2018, the FASB issued clarifying guidance on how to account for implementation costs related to hosted cloud-servicing arrangements. The primary change is to include any arrangement in which the customer accesses or uses software but does not take possession of the software when assessing for the capitalization of implementation costs of internal use software. Qualified costs are to be capitalized and amortized over the service period and they need to be expensed in the same line item as the service expense and recognized on the balance sheet in the same category as amounts prepaid for the hosted cloud-servicing arrangements generally as an other asset. Cash flows related to the capitalized implementation costs should be presented consistent with the presentation of cash flows for the fees related to hosted cloud-servicing arrangements. The update can be applied either retrospectively or prospectively to all implementation costs incurred after the date of adoption. The updated guidance is effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. Early adoption is permitted in any interim period. We are currently assessing the effects this updated guidance could have on our consolidated financial statements and timing of potential adoption.

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Summary of Significant Accounting Policies (Tables)

9 Months Ended

Sep. 30, 2018

Accounting Policies [Abstract]

Impact of Adoption of Topic 606

As a result, the following financial statement line items for fiscal year 2017 were affected.

Condensed Consolidated Balance Sheets

	December 31, 2017 (in thousands)
	As Revised Under Topic 606			As Originally Reported Under Topic 605			Effect of Change
Current portion of deferred revenue	$	58,192		$	50,579		$	7,613
Long-term portion of deferred revenue		12,501			8,306			4,195
Accumulated deficit	$	(296,221	)	$	(284,413	)	$	(11,808	)

Condensed Consolidated Statements of Operations and Comprehensive Loss

	Three Months Ended September 30, 2017 (in thousands, except per share data)
	As Revised Under Topic 606			As Originally Reported Under Topic 605			Effect of Change
Research and development revenue under collaborative    agreement	$	9,906		$	13,449		$	(3,543	)
Loss from operations		(16,107	)		(12,564	)		(3,543	)
Net loss		(17,637	)		(14,094	)		(3,543	)
Net loss per share of preferred stock, basic and diluted		(0.01	)		0.05			(0.06	)
Net loss per share of common stock owned by Ionis, basic    and diluted		(0.33	)		(0.27	)		(0.06	)
Net loss per share of common stock owned by others, basic    and diluted	$	(0.33	)		(0.27	)	$	(0.06	)

	Nine Months Ended September 30, 2017 (in thousands, except per share data)
	As Revised Under Topic 606			As Originally Reported Under Topic 605			Effect of Change
Research and development revenue under collaborative    agreement	$	21,712		$	37,173		$	(15,461	)
Loss from operations		(99,172	)		(83,711	)		(15,461	)
Net loss		(101,851	)		(86,390	)		(15,461	)
Net loss per share of preferred stock, basic and diluted		(2.16	)		(1.77	)		(0.39	)
Net loss per share of common stock owned by Ionis, basic    and diluted		(3.12	)		(2.72	)		(0.40	)
Net loss per share of common stock owned by others, basic    and diluted	$	(3.12	)		(2.72	)	$	(0.40	)

Condensed Consolidated Statement of Cash Flows

	Nine Months Ended September 30, 2017 (in thousands)
	As Revised Under Topic 606			As Originally Reported Under Topic 605			Effect of Change
Net loss	$	(101,851	)	$	(86,390	)	$	(15,461	)
Adjustments to reconcile net loss to net cash used in    operating activities:
Deferred revenues		87,540			72,079			15,461
Cash, cash equivalents and restricted cash at beginning    of period		7,857			7,857			—
Cash, cash equivalents and restricted at end of period	$	110,366		$	110,366		$	—

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Investments and Fair Value Measurements (Tables)

9 Months Ended

Sep. 30, 2018

Investments And Fair Value Measurements [Abstract]

Summary of Investments

The following is a summary of our investments at September 30, 2018 and December 31, 2017 (in thousands):

			Gross Unrealized					Estimated
September 30, 2018	Cost		Gains		Losses			Fair Value
Available-for-sale securities:
Corporate debt securities	$	90,527	$	—	$	(104	)	$	90,423
Debt securities issued by U.S. government agencies		97,545		—		(74	)		97,471
Total securities with a maturity of one year or less		188,072		—		(178	)		187,894
Corporate debt securities		2,910		—		(5	)		2,905
Debt securities issued by U.S. government agencies		13,322		—		(12	)		13,310
Total securities with a maturity of one to two years		16,232		—		(17	)		16,215
Total available-for-sale securities	$	204,304	$	—	$	(195	)	$	204,109

			Gross Unrealized					Estimated
December 31, 2017	Cost		Gains		Losses			Fair Value
Available-for-sale securities:
Corporate debt securities	$	132,434	$	—	$	(206	)	$	132,228
Debt securities issued by U.S. government agencies		38,135		—		(59	)		38,076
Total securities with a maturity of one year or less		170,569		—		(265	)		170,304
Corporate debt securities		8,267		—		(35	)		8,232
Debt securities issued by U.S. government agencies		23,264		—		(37	)		23,227
Total securities with a maturity of one to two years		31,531		—		(72	)		31,459
Total available-for-sale securities	$	202,100	$	—	$	(337	)	$	201,763

Assets Measured at Fair Value on a Recurring Basis

The following tables present the investments we held at September 30, 2018 and December 31, 2017 that are regularly measured and carried at fair value. The table segregates each security by the level within the fair value hierarchy of the valuation techniques we utilized to determine the respective securities' fair value (in thousands):

	At September 30, 2018		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)
Money market funds (1)	$	104,931	$	104,931	$	—
Corporate debt securities (2)		95,329		—		95,329
Debt securities issued by U.S. government agencies (3)		110,780		—		110,780
Total	$	311,040	$	104,931	$	206,109

	At December 31, 2017		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)
Money market funds (1)	$	48,430	$	48,430	$	—
Corporate debt securities (3)		140,460		—		140,460
Debt securities issued by U.S. government agencies (3)		61,303		—		61,303
Total	$	250,193	$	48,430	$	201,763

(1) Included in cash and cash equivalents on our condensed consolidated balance sheets.

(2) At September 30, 2018, $2.0 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.

(3) Included in short-term investments on our condensed consolidated balance sheets.

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License Agreements and Services Agreement with Ionis (Tables)

9 Months Ended

Sep. 30, 2018

Related Party Transactions [Abstract]

Operating Expenses Generated by Transactions with Ionis

The following table summarizes the amounts included in our operating expenses that were generated by transactions with Ionis for the following periods (in thousands):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2018			2017			2018			2017
Services performed by Ionis	$	3,192		$	1,906		$	11,182		$	7,861
Active pharmaceutical ingredient manufactured by Ionis		—			—			5,229			6,013
Commercial inventory manufactured by Ionis		—			—			5,996			—
Sublicensing expenses		7,200			—			7,200			48,394
Out-of-pocket expenses paid by Ionis		15,850			7,595			38,866			24,784
Total charges generated by transactions with Ionis		26,242			9,501			68,473			87,052
Payable balance to Ionis at the beginning of the period		27,137			11,244			14,365			24,355
Less: total amounts paid to Ionis during the period		(29,491	)		(11,244	)		(58,017	)		(68,512	)
Less: receivable from Ionis		—			—			(933	)		—
Less: non-cash sublicensing expenses		—			—			—			(33,394	)
Total amount payable to Ionis at period end	$	23,888		$	9,501		$	23,888		$	9,501

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Stock-Based Compensation (Tables)

9 Months Ended

Sep. 30, 2018

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

Stock-Based Compensation Expense

The following table summarizes stock-based compensation expense for the three and nine months ended September 30, 2018 and 2017 (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2018		2017		2018		2017
Research and development expenses	$	2,313	$	2,353	$	6,868	$	5,873
Selling, general and administrative expenses		10,417		2,339		24,371		5,941
Total	$	12,730	$	4,692	$	31,239	$	11,814

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Accumulated Other Comprehensive Loss (Tables)

9 Months Ended

Sep. 30, 2018

Stockholders Equity Note [Abstract]

Changes in Accumulated Other Comprehensive Loss

The following table summarizes changes in accumulated other comprehensive loss (in thousands):

	2018
Balance, as of December 31, 2017	$	(451	)
Unrealized gains on investments, net of tax (1)		143
Currency translation adjustment		19
Net other comprehensive income		162
Balance, as of September 30, 2018	$	(289	)

(1) There was no tax benefit for other comprehensive income (loss) for the nine months ended September 30, 2018.

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Basic and Diluted Net Loss Per Share (Tables)

9 Months Ended

Sep. 30, 2018

Earnings Per Share [Abstract]

Basic Loss Per Share

The following table summarizes the distributable losses for the three and nine months ended September 30, 2018 and 2017 (in thousands):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2018			2017			2018			2017
Net loss	$	(63,591	)	$	(17,637	)	$	(155,264	)	$	(101,851	)
Preferred stock dividend		—			(1,791	)		—			(20,100	)
Distribution to Ionis		—			—			(7,792	)		—
Distributable losses	$	(63,591	)	$	(19,428	)	$	(163,056	)	$	(121,951	)

The following table summarizes the reconciliation of weighted-average shares outstanding used in the calculation of basic loss per share for the three and nine months ended September 30, 2018 and 2017:

	Three Months Ended September 30,				Nine Months Ended September 30,
Determination of shares:	2018		2017		2018		2017
Weighted-average preferred shares outstanding		—		5,651,323		—		21,055,031
Weighted-average common shares outstanding owned    by Ionis		65,538,467		36,555,903		57,346,539		12,319,205
Weighted-average common shares outstanding owned    by others		21,671,415		16,966,712		21,446,813		5,717,720
Total weighted-average shares outstanding		87,209,882		59,173,938		78,793,352		39,091,956

The following table summarizes the calculation of basic loss per share for the three and nine months ended September 30, 2018 and 2017 (in thousands, except per share amounts):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2018			2017			2018			2017
Losses attributable to preferred shares	$	—		$	(1,855	)	$	—		$	(65,683	)
Less: Assumed dividend to preferred shares		—			1,791			—			20,100
Income (losses) allocated to preferred shares		—			(64	)		—			(45,583	)
Weighted-average preferred shares outstanding		—			5,651,323			—			21,055,031
Basic loss per preferred share	$	—		$	(0.01	)	$	—		$	(2.16	)
Losses allocated to Ionis	$	(47,789	)	$	(12,002	)	$	(118,674	)	$	(38,431	)
Plus: Distribution to Ionis		—			—			7,792			—
Losses available to Ionis	$	(47,789	)	$	(12,002	)	$	(110,882	)	$	(38,431	)
Weighted-average common shares outstanding owned    by Ionis		65,538,467			36,555,903			57,346,539			12,319,205
Basic loss per common share owned by Ionis	$	(0.73	)	$	(0.33	)	$	(1.93	)	$	(3.12	)
Losses allocated to common shares owned by others	$	(15,802	)	$	(5,571	)	$	(44,382	)	$	(17,837	)
Weighted-average common shares outstanding owned    by others		21,671,415			16,966,712			21,446,813			5,717,720
Basic loss per common share owned by others	$	(0.73	)	$	(0.33	)	$	(2.07	)	$	(3.12	)

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Restructuring (Tables)

9 Months Ended

Sep. 30, 2018

Restructuring And Related Activities [Abstract]

Summary of Restructuring Costs By Category

The following table summarizes the restructuring costs by category for the periods indicated (in thousands):

	Three and Nine Months Ended September 30, 2018
	Cash		Non-Cash		Total
Research and development	$	327	$	209	$	536
General and administrative		1,562		200		1,762
	$	1,889	$	409	$	2,298

Summary of Restructuring Reserve Included in Accrued Compensation

The following table summarizes the restructuring reserve included in accrued compensation for the periods indicated (in thousands):

	Nine Months Ended September 30, 2018
Restructuring reserve beginning balance	$	—
Restructuring expenses incurred during period		1,889
Amounts paid during the period		(200	)
Restructuring reserve ending balance	$	1,689

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Basis of Presentation and Organization (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017	Dec. 31, 2017
Basis of Presentation and Organization [Abstract]
Accumulated deficit	$ 451,485		$ 451,485		$ 296,221
Net loss	63,591	$ 17,637	155,264	$ 101,851
Net cash used in operating activities			134,166	$ 11,672
Cash, cash equivalents and short-term investments	$ 320,300		$ 320,300
Ionis [Member] | Akcea [Member]
Basis of Presentation and Organization [Abstract]
Ownership percentage by Ionis	75.00%		75.00%

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Summary of Significant Accounting Policies - Narratives (Details)	Sep. 30, 2018 RevenueStream
Summary of Significant Accounting Policies [Abstract]
Number of revenue streams	2

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Summary of Significant Accounting Policies - Condensed Consolidated Balance Sheets (Details) - USD ($) $ in Thousands	Sep. 30, 2018	Dec. 31, 2017
Condensed Consolidated Balance Sheets [Abstract]
Current portion of deferred revenue	$ 32,347	$ 58,192
Long-term portion of deferred revenue	2,464	12,501
Accumulated deficit	$ (451,485)	(296,221)
As Originally Reported Under Topic 605 [Member] | ASU 2014-09 [Member]
Condensed Consolidated Balance Sheets [Abstract]
Current portion of deferred revenue		50,579
Long-term portion of deferred revenue		8,306
Accumulated deficit		(284,413)
Effect of Change [Member] | ASU 2014-09 [Member]
Condensed Consolidated Balance Sheets [Abstract]
Current portion of deferred revenue		7,613
Long-term portion of deferred revenue		4,195
Accumulated deficit		$ (11,808)

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Summary of Significant Accounting Policies - Condensed Consolidated Statements of Operations and Comprehensive Loss (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Condensed Consolidated Statements of Operations and Comprehensive Loss [Abstract]
Revenue	$ 19,241	$ 9,906	$ 54,670	$ 21,712
Loss from operations	(65,008)	(16,107)	(158,758)	(99,172)
Net loss	(63,591)	(17,637)	(155,264)	(101,851)
Preferred Stock [Member]
Condensed Consolidated Statements of Operations and Comprehensive Loss [Abstract]
Net loss	0	$ (64)	0	$ (45,583)
Net loss per share, basic and diluted (in dollars per share)		$ (0.01)		$ (2.16)
Common Stock [Member] | Ionis [Member]
Condensed Consolidated Statements of Operations and Comprehensive Loss [Abstract]
Net loss	$ (47,789)	$ (12,002)	$ (110,882)	$ (38,431)
Net loss per share, basic and diluted (in dollars per share)	$ (0.73)	$ (0.33)	$ (1.93)	$ (3.12)
Common Stock [Member] | Others [Member]
Condensed Consolidated Statements of Operations and Comprehensive Loss [Abstract]
Net loss per share, basic and diluted (in dollars per share)	$ (0.73)	$ (0.33)	$ (2.07)	$ (3.12)
As Originally Reported Under Topic 605 [Member] | ASU 2014-09 [Member]
Condensed Consolidated Statements of Operations and Comprehensive Loss [Abstract]
Loss from operations		$ (12,564)		$ (83,711)
Net loss		$ (14,094)		$ (86,390)
As Originally Reported Under Topic 605 [Member] | ASU 2014-09 [Member] | Preferred Stock [Member]
Condensed Consolidated Statements of Operations and Comprehensive Loss [Abstract]
Net loss per share, basic and diluted (in dollars per share)		$ 0.05		$ (1.77)
As Originally Reported Under Topic 605 [Member] | ASU 2014-09 [Member] | Common Stock [Member] | Ionis [Member]
Condensed Consolidated Statements of Operations and Comprehensive Loss [Abstract]
Net loss per share, basic and diluted (in dollars per share)		(0.27)		(2.72)
As Originally Reported Under Topic 605 [Member] | ASU 2014-09 [Member] | Common Stock [Member] | Others [Member]
Condensed Consolidated Statements of Operations and Comprehensive Loss [Abstract]
Net loss per share, basic and diluted (in dollars per share)		$ (0.27)		$ (2.72)
Effect of Change [Member] | ASU 2014-09 [Member]
Condensed Consolidated Statements of Operations and Comprehensive Loss [Abstract]
Loss from operations		$ (3,543)		$ (15,461)
Net loss		$ (3,543)		$ (15,461)
Effect of Change [Member] | ASU 2014-09 [Member] | Preferred Stock [Member]
Condensed Consolidated Statements of Operations and Comprehensive Loss [Abstract]
Net loss per share, basic and diluted (in dollars per share)		$ (0.06)		$ (0.39)
Effect of Change [Member] | ASU 2014-09 [Member] | Common Stock [Member] | Ionis [Member]
Condensed Consolidated Statements of Operations and Comprehensive Loss [Abstract]
Net loss per share, basic and diluted (in dollars per share)		(0.06)		(0.40)
Effect of Change [Member] | ASU 2014-09 [Member] | Common Stock [Member] | Others [Member]
Condensed Consolidated Statements of Operations and Comprehensive Loss [Abstract]
Net loss per share, basic and diluted (in dollars per share)		$ (0.06)		$ (0.40)
Research and Development Under Collaborative Agreement [Member]
Condensed Consolidated Statements of Operations and Comprehensive Loss [Abstract]
Revenue	$ 7,241	$ 9,906	$ 42,670	$ 21,712
Research and Development Under Collaborative Agreement [Member] | As Originally Reported Under Topic 605 [Member] | ASU 2014-09 [Member]
Condensed Consolidated Statements of Operations and Comprehensive Loss [Abstract]
Revenue		13,449		37,173
Research and Development Under Collaborative Agreement [Member] | Effect of Change [Member] | ASU 2014-09 [Member]
Condensed Consolidated Statements of Operations and Comprehensive Loss [Abstract]
Revenue		$ (3,543)		$ (15,461)

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Summary of Significant Accounting Policies - Condensed Consolidated Statement of Cash Flows (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Condensed Consolidated Statement of Cash Flows [Abstract]
Net loss	$ (63,591)	$ (17,637)	$ (155,264)	$ (101,851)
Adjustments to reconcile net loss to net cash used in operating activities:
Deferred revenues			(35,882)	87,540
Cash, cash equivalents and restricted cash at beginning of period			58,367	7,857
Cash, cash equivalents and restricted at end of period	$ 116,206	110,366	$ 116,206	110,366
As Originally Reported Under Topic 605 [Member] | ASU 2014-09 [Member]
Condensed Consolidated Statement of Cash Flows [Abstract]
Net loss		(14,094)		(86,390)
Adjustments to reconcile net loss to net cash used in operating activities:
Deferred revenues				72,079
Cash, cash equivalents and restricted cash at beginning of period				7,857
Cash, cash equivalents and restricted at end of period		110,366		110,366
Effect of Change [Member] | ASU 2014-09 [Member]
Condensed Consolidated Statement of Cash Flows [Abstract]
Net loss		(3,543)		(15,461)
Adjustments to reconcile net loss to net cash used in operating activities:
Deferred revenues				15,461
Cash, cash equivalents and restricted cash at beginning of period				0
Cash, cash equivalents and restricted at end of period		$ 0		$ 0

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Investments and Fair Value Measurements - Summary of Investments (Details) - USD ($) $ in Thousands	Sep. 30, 2018	Dec. 31, 2017
Summary of Investments [Abstract]
Cost	$ 204,304	$ 202,100
Gross unrealized gains		0
Gross unrealized losses	(195)	(337)
Estimated fair value	204,109	201,763
Securities with Maturity of One Year or Less [Member]
Summary of Investments [Abstract]
Cost	188,072	170,569
Gross unrealized gains		0
Gross unrealized losses	(178)	(265)
Estimated fair value	187,894	170,304
Securities with Maturity of One to Two Years [Member]
Summary of Investments [Abstract]
Cost	16,232	31,531
Gross unrealized gains		0
Gross unrealized losses	(17)	(72)
Estimated fair value	16,215	31,459
Corporate Debt Securities [Member] | Securities with Maturity of One Year or Less [Member]
Summary of Investments [Abstract]
Cost	90,527	132,434
Gross unrealized gains		0
Gross unrealized losses	(104)	(206)
Estimated fair value	90,423	132,228
Corporate Debt Securities [Member] | Securities with Maturity of One to Two Years [Member]
Summary of Investments [Abstract]
Cost	2,910	8,267
Gross unrealized gains		0
Gross unrealized losses	(5)	(35)
Estimated fair value	2,905	8,232
Debt Securities Issued by U.S. Government Agencies [Member] | Securities with Maturity of One Year or Less [Member]
Summary of Investments [Abstract]
Cost	97,545	38,135
Gross unrealized gains		0
Gross unrealized losses	(74)	(59)
Estimated fair value	97,471	38,076
Debt Securities Issued by U.S. Government Agencies [Member] | Securities with Maturity of One to Two Years [Member]
Summary of Investments [Abstract]
Cost	13,322	23,264
Gross unrealized gains		0
Gross unrealized losses	(12)	(37)
Estimated fair value	$ 13,310	$ 23,227

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Investments and Fair Value Measurements - Fair Value Measurements (Details) - USD ($) $ in Thousands		Sep. 30, 2018	Dec. 31, 2017
Fair Value Measurements [Abstract]
Transfers from Level 1 to Level 2		$ 0	$ 0
Transfers from Level 2 to Level 1		0	0
Recurring Basis [Member]
Fair Value Measurements [Abstract]
Money market funds	[1]	104,931	48,430
Total		311,040	250,193
Recurring Basis [Member] | Corporate Debt Securities [Member]
Fair Value Measurements [Abstract]
Available-for-sale securities	[2]	95,329	140,460
Recurring Basis [Member] | Corporate Debt Securities [Member] | Cash and Cash Equivalents [Member]
Fair Value Measurements [Abstract]
Available-for-sale securities		2,000
Recurring Basis [Member] | Debt Securities Issued by U.S. Government Agencies [Member]
Fair Value Measurements [Abstract]
Available-for-sale securities	[3]	110,780	61,303
Recurring Basis [Member] | Quoted Prices in Active Markets (Level 1) [Member]
Fair Value Measurements [Abstract]
Money market funds	[1]	104,931	48,430
Total		104,931	48,430
Recurring Basis [Member] | Quoted Prices in Active Markets (Level 1) [Member] | Corporate Debt Securities [Member]
Fair Value Measurements [Abstract]
Available-for-sale securities	[2]		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	[3]		0
Recurring Basis [Member] | Significant Other Observable Inputs (Level 2) [Member]
Fair Value Measurements [Abstract]
Money market funds	[1]		0
Total		206,109	201,763
Recurring Basis [Member] | Significant Other Observable Inputs (Level 2) [Member] | Corporate Debt Securities [Member]
Fair Value Measurements [Abstract]
Available-for-sale securities	[2]	95,329	140,460
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	[3]	110,780	61,303
Recurring Basis [Member] | Significant Unobservable Inputs (Level 3) [Member]
Fair Value Measurements [Abstract]
Total		$ 0	$ 0

[1] Included in cash and cash equivalents on our condensed consolidated balance sheets.

[2] At September 30, 2018, $2.0 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.

[3] Included in short-term investments on our condensed consolidated balance sheets.

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Strategic Collaboration with Novartis (Details) $ in Thousands		1 Months Ended		3 Months Ended			9 Months Ended
	Jul. 19, 2017 USD ($)	Jul. 31, 2017 USD ($)	Jan. 31, 2017 Drug PerformanceObligation	Sep. 30, 2018 USD ($)	Sep. 30, 2017 USD ($)	Mar. 31, 2017 USD ($)	Sep. 30, 2018 USD ($)	Sep. 30, 2017 USD ($)	Dec. 31, 2017 USD ($)
Strategic Collaboration with Novartis [Abstract]
Proceeds from sale of common stock to Novartis in a private placement	$ 50,000						$ 0	$ 50,000
Revenue				$ 19,241	$ 9,906		54,670	21,712
Revenue recognized from deferred revenue				6,800			36,500
AKCEA-APO(a)-L [Member]
Strategic Collaboration with Novartis [Abstract]
Maximum amount of payments receivable for milestones				600,000			600,000
Maximum amount of payments receivable for development milestones				25,000			25,000
Maximum amount of payments receivable for regulatory milestones				290,000			290,000
Maximum amount of payments receivable for commercialization milestones				285,000			$ 285,000
Royalty percentage received on sales of drug							20.00%
AKCEA-APOCIII-L [Member]
Strategic Collaboration with Novartis [Abstract]
Maximum amount of payments receivable for milestones				530,000			$ 530,000
Maximum amount of payments receivable for development milestones				25,000			25,000
Maximum amount of payments receivable for regulatory milestones				240,000			240,000
Maximum amount of payments receivable for commercialization milestones				265,000			$ 265,000
Royalty percentage received on sales of drug							20.00%
Development Services for AKCEA-APO(a)-L [Member]
Strategic Collaboration with Novartis [Abstract]
Transaction price						$ 64,000
Development Services for AKCEA-APOCIII-L [Member]
Strategic Collaboration with Novartis [Abstract]
Transaction price						40,100
Delivery of AKCEA-APO(a)-L [Member]
Strategic Collaboration with Novartis [Abstract]
Transaction price						1,500
Delivery of AKCEA-APOCIII-L [Member]
Strategic Collaboration with Novartis [Abstract]
Transaction price						2,800
Research and Development Revenue Under Collaborative Agreement [Member]
Strategic Collaboration with Novartis [Abstract]
Revenue				7,241	9,906		$ 42,670	21,712
Novartis [Member]
Strategic Collaboration with Novartis [Abstract]
Upfront payment received						75,000
Portion of upfront payment retained						60,000
Portion of upfront payment paid as sublicense fee to Ionis						15,000
License fee receivable per drug				150,000			150,000
Next prospective milestone				25,000			$ 25,000
Percentage of license fees, milestone payments and royalties paid as sublicense fee to lonis							50.00%
Number of separate performance obligations | PerformanceObligation			4
Transaction price						108,400
Premium received on shares issued by lonis						28,400
Potential premium received if Ionis common stock is purchased in the future						$ 5,000
Number of months from inception of agreement for IPO to be completed							15 months
Proceeds from sale of common stock to Novartis in a private placement		$ 50,000
Deferred revenue				34,800			$ 34,800		$ 70,700
Novartis [Member] | Research and Development Revenue Under Collaborative Agreement [Member]
Strategic Collaboration with Novartis [Abstract]
Revenue				$ 7,200	$ 9,900		$ 42,700	$ 21,700
Novartis [Member] | Research and Development Revenue Under Collaborative Agreement [Member] | Revenue [Member] | Strategic Partner [Member]
Strategic Collaboration with Novartis [Abstract]
Concentration percentage				100.00%			100.00%
Novartis [Member] | Minimum [Member]
Strategic Collaboration with Novartis [Abstract]
Number of drugs with exclusive option that could be exercised | Drug			1

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License Agreements and Services Agreement with Ionis, Cardiometabolic Development, Commercialization and License Agreement (Details) - Ionis [Member] - Cardiometabolic Development, Commercialization and License Agreement [Member] $ in Millions	9 Months Ended
	Sep. 30, 2018 USD ($) Patient qtr
Development, Commercialization and License Agreement with Ionis [Abstract]
Royalty percentage paid on sales of lipid drug	20.00%
First annual sales threshold | $	$ 500.0
Second annual sales threshold | $	1,000.0
Third annual sales threshold | $	2,000.0
Sales milestone payment | $	$ 50.0
Number of quarters in which equal payments are made | qtr	12
Lipid Drug for Rare Disease Indication [Member] | Maximum [Member]
Development, Commercialization and License Agreement with Ionis [Abstract]
Number of patients worldwide | Patient	500,000
Number of patients for Phase 3 program | Patient	1,000
Number of years of treatment	2 years
Lipid Drug for a Broad Disease Patient Population [Member] | Minimum [Member]
Development, Commercialization and License Agreement with Ionis [Abstract]
Number of patients worldwide | Patient	500,000
Number of patients for Phase 3 program | Patient	1,000
Number of years of treatment	2 years

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License Agreements and Services Agreement with Ionis, TTR Development, Commercialization, Collaboration and License Agreement (Details) $ in Thousands			3 Months Ended		9 Months Ended
	Aug. 03, 2018 USD ($) shares	Apr. 17, 2018 USD ($) Milestone shares	Sep. 30, 2018 USD ($) shares	Sep. 30, 2017 USD ($)	Sep. 30, 2018 USD ($) shares	Sep. 30, 2017 USD ($)	Apr. 16, 2018 shares	Dec. 31, 2017 USD ($) shares
TTR Development, Commercialization, Collaboration and License Agreement [Abstract]
Stock purchased by Ionis					$ 0	$ 135,438
Common stock, shares authorized (in shares) | shares			125,000,000		125,000,000			100,000,000
Licenses, net			$ 40,969		$ 40,969			$ 1,221
Research and development expense			29,381	$ 17,640	96,808	$ 100,921
Amortization expense of milestone payment			701		701
TTR License Agreement [Member]
TTR Development, Commercialization, Collaboration and License Agreement [Abstract]
Research and development expense			6,400		$ 18,300
Ionis [Member]
TTR Development, Commercialization, Collaboration and License Agreement [Abstract]
Costs incurred by Ionis prior to closing of TTR Agreement		$ 3,100
Ionis [Member] | TTR License Agreement [Member]
TTR Development, Commercialization, Collaboration and License Agreement [Abstract]
Upfront licensing fee paid to Ionis		$ 150,000
Shares issued in consideration of upfront licensing fee (in shares) | shares		8,000,000
Number of sales milestones | Milestone		7
Annual worldwide net sales required for subsequent milestone payments to be paid in cash		$ 750,000
Percentage of profits and losses from development and commercialization of inotersen paid to Ionis, tier 1		60.00%
Percentage of profits and losses from development and commercialization of inotersen retained, tier 1		40.00%
Percentage of profits and losses from development and commercialization of inotersen paid to Ionis, tier 2		50.00%
Percentage of profits and losses from development and commercialization of inotersen retained, tier 2		50.00%
Percentage of profits and losses from development and commercialization of AKCEA-TTR-L paid to Ionis		50.00%
Percentage of profits and losses from development and commercialization of AKCEA-TTR-L retained		50.00%
Notice period for termination of agreement					90 days
Common stock shares issued to Ionis | shares		10,700,000
Stock purchased by Ionis		$ 200,000
Common stock, shares authorized (in shares) | shares		125,000,000					100,000,000
Licenses, net		$ 600
Commercial inotersen inventory acquired from Ionis		$ 4,700
Ionis [Member] | TTR License Agreement [Member] | Inotersen [Member]
TTR Development, Commercialization, Collaboration and License Agreement [Abstract]
Maximum amount of payments payable for milestones			110,000		$ 110,000
Ionis [Member] | TTR License Agreement [Member] | AKCEA-TTR-L [Member]
TTR Development, Commercialization, Collaboration and License Agreement [Abstract]
Maximum amount of payments payable for milestones			145,000		145,000
Ionis [Member] | TTR License Agreement [Member] | Inotersen and AKCEA-TTR-L [Member]
TTR Development, Commercialization, Collaboration and License Agreement [Abstract]
Maximum amount of payments payable for milestones			1,300,000		1,300,000
Ionis [Member] | TTR License Agreement [Member] | TEGSEDI [Member]
TTR Development, Commercialization, Collaboration and License Agreement [Abstract]
Common stock shares issued to Ionis | shares	1,597,571
Amount of regulatory milestone paid by issuing common stock	$ 40,000
Ownership percentage by Ionis	75.00%
Amortization expense of milestone payment			$ 700		$ 700
Ionis [Member] | TTR License Agreement [Member] | TEGSEDI [Member] | Milestone Payment [Member]
TTR Development, Commercialization, Collaboration and License Agreement [Abstract]
Useful life of milestone payment amortized to cost of sales					13 years

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License Agreements and Services Agreement with Ionis, Services Agreement (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Services Agreement with Ionis [Abstract]
Payment term after receipt of invoice			30 days
Term of extension for services agreement			6 months
Operating Expenses Generated by Transactions with Ionis [Abstract]
Payable balance to Ionis at the beginning of the period			$ 14,365
Total amount payable to Ionis at period end	$ 23,888		23,888
Ionis [Member] | Services Agreement [Member]
Operating Expenses Generated by Transactions with Ionis [Abstract]
Services performed by Ionis	3,192	$ 1,906	11,182	$ 7,861
Active pharmaceutical ingredient manufactured by Ionis		0	5,229	6,013
Commercial inventory manufactured by Ionis		0	5,996	0
Sublicensing expenses	7,200	0	7,200	48,394
Out-of-pocket expenses paid by Ionis	15,850	7,595	38,866	24,784
Total charges generated by transactions with Ionis	26,242	9,501	68,473	87,052
Payable balance to Ionis at the beginning of the period	27,137	11,244	14,365	24,355
Less: total amounts paid to Ionis during the period	(29,491)	(11,244)	(58,017)	(68,512)
Less: receivable from Ionis	(933)	0	(933)	0
Less: non-cash sublicensing expenses		0		(33,394)
Total amount payable to Ionis at period end	$ 23,888	$ 9,501	$ 23,888	$ 9,501

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Collaboration and License Agreement with PTC Therapeutics - Additional Information (Details)		3 Months Ended		9 Months Ended
	Aug. 01, 2018 USD ($)	Sep. 30, 2018 USD ($) PerformanceObligation	Sep. 30, 2017 USD ($)	Sep. 30, 2018 USD ($) PerformanceObligation	Sep. 30, 2017 USD ($)
Collaborative Arrangements And Noncollaborative Arrangement Transactions [Line Items]
Revenue		$ 19,241,000	$ 9,906,000	$ 54,670,000	$ 21,712,000
PTC Therapeutics [Member]
Collaborative Arrangements And Noncollaborative Arrangement Transactions [Line Items]
Revenue		12,000,000
Deferred revenue		$ 0		$ 0
Number of separate performance obligations | PerformanceObligation		2		2
PTC Therapeutics [Member] | Akcea [Member]
Collaborative Arrangements And Noncollaborative Arrangement Transactions [Line Items]
Upfront payment received	$ 12,000,000
Payment for sub-license royalty	7,200,000
Upfront payment to be paid on earlier of FDA or EMA approval of WAYLIVRA	6,000,000
Maximum amount of payments receivable per drug for regulatory milestones	$ 8,000,000
Period before PTC pays royalties on net sales of product after first commercial sale in Brazil	12 months
Minimum revenue recognized in Latin America by PTC before paying royalties	$ 10,000,000
PTC Therapeutics [Member] | TEGSEDI [Member] | Akcea [Member]
Collaborative Arrangements And Noncollaborative Arrangement Transactions [Line Items]
Milestone payments and royalties retained percentage	40.00%
PTC Therapeutics [Member] | TEGSEDI [Member] | Ionis [Member]
Collaborative Arrangements And Noncollaborative Arrangement Transactions [Line Items]
Milestone payments and royalties payable percentage	60.00%
PTC Therapeutics [Member] | WAYLIVRA [Member] | Ionis [Member]
Collaborative Arrangements And Noncollaborative Arrangement Transactions [Line Items]
Milestone payments and royalties payable percentage	50.00%

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Stock-Based Compensation - Stock Plans (Details) - USD ($) $ in Millions	3 Months Ended	9 Months Ended
	Sep. 30, 2018	Sep. 30, 2018	Apr. 30, 2018
Stock Plans [Abstract]
Accrued liability for contributions to employee stock purchase plan	$ 0.2	$ 0.2
2015 Equity Incentive Plan [Member]
Stock Plans [Abstract]
Number of shares of common stock reserved for issuance (in shares)			13,500,000
Number of shares authorized for issuance pursuant to stock awards (in shares)	13,500,000	13,500,000
2015 Equity Incentive Plan [Member] | Stock Options [Member]
Stock Plans [Abstract]
Number of shares available for future grant (in shares)	1,998,659	1,998,659
Options granted (in shares)	428,400	4,643,292
Options outstanding (in shares)	11,457,463	11,457,463
Options exercisable (in shares)	4,019,273	4,019,273
2015 Equity Incentive Plan [Member] | Restricted Stock [Member]
Stock Plans [Abstract]
Restricted stock awards granted (in shares)	20,894	20,894
2015 Equity Incentive Plan [Member] | Restricted Stock Unit [Member]
Stock Plans [Abstract]
Restricted stock units outstanding (in shares)	43,878	43,878
2017 Employee Stock Purchase Plan [Member]
Stock Plans [Abstract]
Number of shares of common stock reserved for issuance (in shares)	1,000,000	1,000,000
Percentage of shares outstanding used to calculate annual increase in number of shares that can be issued under ESPP		1.00%
Annual maximum increase in number of shares that can be issued under ESPP (in shares)		500,000
Number of shares available for future issuance (in shares)	968,449	968,449
Shares issued under ESPP (in shares)	15,819	31,551

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Stock-Based Compensation - Stock-Based Compensation Expense (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Stock-Based Compensation Expense [Abstract]
Stock-based compensation expense	$ 12,730	$ 4,692	$ 31,239	$ 11,814
Research and Development Expenses [Member]
Stock-Based Compensation Expense [Abstract]
Stock-based compensation expense	2,313	2,353	6,868	5,873
Selling, General and Administrative Expenses [Member]
Stock-Based Compensation Expense [Abstract]
Stock-based compensation expense	$ 10,417	$ 2,339	$ 24,371	$ 5,941

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Accumulated Other Comprehensive Loss (Details) $ in Thousands	9 Months Ended
	Sep. 30, 2018 USD ($)
Accumulated Other Comprehensive Loss [Roll Forward]
Beginning balance	$ 167,825
Net other comprehensive income	162
Ending balance	281,411
Tax benefit for other comprehensive income (loss)	0
Accumulated Other Comprehensive Loss [Member]
Accumulated Other Comprehensive Loss [Roll Forward]
Beginning balance	(451)
Ending balance	(289)
Unrealized Gains on Investments [Member]
Accumulated Other Comprehensive Loss [Roll Forward]
Other comprehensive income before reclassifications, net of tax	143	[1]
Currency Translation Adjustment [Member]
Accumulated Other Comprehensive Loss [Roll Forward]
Other comprehensive income before reclassifications, net of tax	$ 19

[1] There was no tax benefit for other comprehensive income (loss) for the nine months ended September 30, 2018

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Basic and Diluted Net Loss Per Share - Narratives (Details) - shares	9 Months Ended
	Sep. 30, 2018	Dec. 31, 2017	Jul. 31, 2017	Dec. 31, 2015
Earnings Per Share Basic [Line Items]
Common stock, shares issued (in shares)	87,471,330	66,541,629	66,541,629
Common stock, shares outstanding (in shares)	87,471,330	66,541,629	66,541,629
Series A Convertible Preferred Stock [Member]
Earnings Per Share Basic [Line Items]
Shares of Series A convertible preferred stock issued				28,884,540
Shares of Series A convertible preferred stock outstanding			0
Dividend rate	6.00%

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Basic and Diluted Net Loss Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Basic and Diluted Net Loss Per Share [Abstract]
Net loss	$ (63,591)	$ (17,637)	$ (155,264)	$ (101,851)
Preferred stock dividend	0	(1,791)	0	(20,100)
Distribution to Ionis	0	0	(7,792)	0
Distributable losses	(63,591)	(19,428)	(163,056)	(121,951)
Preferred Stock [Member]
Basic and Diluted Net Loss Per Share [Abstract]
Net loss	$ 0	$ (64)	$ 0	$ (45,583)
Weighted-average shares outstanding owned	0	5,651,323	0	21,055,031
Losses attributable to preferred shares	$ 0	$ (1,855)	$ 0	$ (65,683)
Basic loss per common share owned	$ 0	$ (0.01)	$ 0	$ (2.16)
Common Stock [Member]
Basic and Diluted Net Loss Per Share [Abstract]
Weighted-average shares outstanding owned	87,209,882	59,173,938	78,793,352	39,091,956
Common Stock [Member] | Ionis [Member]
Basic and Diluted Net Loss Per Share [Abstract]
Net loss	$ (47,789)	$ (12,002)	$ (110,882)	$ (38,431)
Distributable losses	$ (47,789)	$ (12,002)	$ (118,674)	$ (38,431)
Weighted-average shares outstanding owned	65,538,467	36,555,903	57,346,539	12,319,205
Basic loss per common share owned	$ (0.73)	$ (0.33)	$ (1.93)	$ (3.12)
Common Stock [Member] | Others [Member]
Basic and Diluted Net Loss Per Share [Abstract]
Distributable losses	$ (15,802)	$ (5,571)	$ (44,382)	$ (17,837)
Weighted-average shares outstanding owned	21,671,415	16,966,712	21,446,813	5,717,720
Basic loss per common share owned	$ (0.73)	$ (0.33)	$ (2.07)	$ (3.12)

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Initial Public Offering (Details) - USD ($) $ in Thousands		9 Months Ended
	Jul. 19, 2017	Sep. 30, 2018	Sep. 30, 2017
Initial Public Offering [Abstract]
Net proceeds from sale of common stock in IPO	$ 182,300
Gross proceeds from sale of common stock in IPO	132,300
Investment by Ionis	25,000
Proceeds from sale of common stock to Novartis in a private placement	$ 50,000	$ 0	$ 50,000
Shares issued upon conversion of Series A Convertible Preferred Stock (in shares)	28,884,540
Principal and accrued interest from line of credit converted	$ 106,000
Shares issued upon conversion of line of credit (in shares)	13,438,339
IPO [Member]
Initial Public Offering [Abstract]
Shares issued (in shares)	17,968,750
Private Placement [Member]
Initial Public Offering [Abstract]
Shares issued (in shares)	6,250,000

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Commitments and Contingencies (Details) - Office Space for Corporate Headquarters [Member] $ in Millions	Aug. 15, 2018 USD ($)	Sep. 30, 2018 USD ($)	Apr. 05, 2018 USD ($) ft² Option
Leases, Operating [Abstract]
Area of office space under lease agreement | ft²			30,175
Initial term of lease			123 months
Number of renewal options | Option			1
Term of renewal period			5 years
Annual lease payments due in 2018		$ 0.3
Annual lease payments due in 2019		2.2
Annual lease payments due in 2020		2.3
Annual lease payments due in 2021		2.3
Annual lease payments due in 2022		2.3
Annual lease payments due thereafter		$ 14.2
Period of free rent	3 months
Tenant improvement allowance	$ 3.8
Initial letter of credit to secure lease obligation			$ 2.4
Letter of credit to secure lease obligation on third anniversary of rent commencement date			1.8
Letter of credit to secure lease obligation on fifth anniversary of rent commencement date			$ 1.2

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Restructuring - Narratives (Details) - USD ($) $ in Thousands		3 Months Ended	9 Months Ended
	Sep. 06, 2018	Sep. 30, 2018	Sep. 30, 2018
Restructuring Costs [Abstract]
Percentage of reduction in workforce	12.00%
Restructuring-related costs		$ 1,900	$ 1,889
Non-cash stock option modification expenses		$ 400	$ 400

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Restructuring - Summary of Restructuring Costs By Category (Details) - USD ($) $ in Thousands	3 Months Ended	9 Months Ended
	Sep. 30, 2018	Sep. 30, 2018
Restructuring Costs [Abstract]
Restructuring charges, Cash	$ 1,900	$ 1,889
Restructuring charges, Non-cash		409
Restructuring charges, Total		2,298
Research and Development Expenses [Member]
Restructuring Costs [Abstract]
Restructuring charges, Cash		327
Restructuring charges, Non-cash		209
Restructuring charges, Total		536
General and Administrative Expenses [Member]
Restructuring Costs [Abstract]
Restructuring charges, Cash		1,562
Restructuring charges, Non-cash		200
Restructuring charges, Total		$ 1,762

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Restructuring - Summary of Restructuring Reserve Included in Accrued Compensation (Details) - USD ($) $ in Thousands	3 Months Ended	9 Months Ended
	Sep. 30, 2018	Sep. 30, 2018
Restructuring Reserve [Abstract]
Restructuring reserve beginning balance		$ 0
Restructuring-related costs	$ 1,900	1,889
Amounts paid during the period		(200)
Restructuring reserve ending balance	$ 1,689	$ 1,689

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Subsequent Events (Details) - Ionis [Member] - TTR License Agreement [Member] - USD ($) $ in Millions	Oct. 17, 2018	Aug. 03, 2018	Apr. 17, 2018
Subsequent Event [Line Items]
Common stock shares issued to Ionis			10,700,000
TEGSEDI [Member]
Subsequent Event [Line Items]
Common stock shares issued to Ionis		1,597,571
Amount of regulatory milestone paid by issuing common stock		$ 40.0
Ownership percentage by Ionis		75.00%
Subsequent Event [Member] | TEGSEDI [Member]
Subsequent Event [Line Items]
Common stock shares issued to Ionis	1,671,849
Amount of regulatory milestone paid by issuing common stock	$ 50.0
Ownership percentage by Ionis	76.00%