Basic and Diluted Net Loss Per Share

6 Months Ended

Jun. 30, 2020

11.	Basic and Diluted Net Loss Per Share

In the first quarter of 2019, we purchased inventory from Ionis and the amount paid to Ionis was in excess of Ionis’ carrying value of the related assets acquired. In accordance with accounting guidance for common control transactions, this distribution was treated as a dividend to Ionis; therefore, we have applied the two-class method of net loss per share to reflect the allocation of this distribution to the participating Ionis common shares.

The two-class method is an earnings allocation formula that determines net 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 net loss per share under the two-class method, we have allocated the net loss between common stock owned by Ionis and common stock owned by others.

Basic net loss per share for each class of stock is computed by dividing total distributable losses applicable to common stock owned by Ionis and common stock owned by others by the weighted-average number of common shares outstanding during the requisite period.

The following table summarizes the distributable losses for the three and six months ended June 30, 2020 and 2019 (in thousands):

	Three Months Ended June 30,						Six Months Ended June 30,
	2020			2019			2020			2019
Net loss	$	(49,577	)	$	(37,323	)	$	(92,427	)	$	(10,136	)
Distributions to Ionis		—			—			—			(13,492	)
Distributable losses	$	(49,577	)	$	(37,323	)	$	(92,427	)	$	(23,628	)

The following table summarizes the reconciliation of weighted-average shares outstanding used in the calculation of basic loss per share for the three and six months ended June 30, 2020 and 2019:

	Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019
Determination of shares:
Weighted-average common shares outstanding owned by Ionis		77,094,682		70,221,338		77,094,682		69,406,181
Weighted-average common shares outstanding owned by others		24,381,592		22,573,900		24,195,990		22,351,368
Total weighted-average common shares outstanding		101,476,274		92,795,238		101,290,672		91,757,549

The following table summarizes the calculation of basic loss per share for the three and six months ended June 30, 2020 and 2019 (in thousands, except share and per share amounts):

	Three Months Ended June 30,						Six Months Ended June 30,
	2020			2019			2020			2019
Losses allocated to Ionis	$	(37,665	)	$	(28,244	)	$	(70,348	)	$	(17,872	)
Plus: Distribution to Ionis		—			—			—			13,492
Losses available to Ionis	$	(37,665	)	$	(28,244	)	$	(70,348	)	$	(4,380	)
Weighted-average common shares outstanding owned by Ionis		77,094,682			70,221,338			77,094,682			69,406,181
Basic loss per common share owned by Ionis	$	(0.49	)	$	(0.40	)	$	(0.91	)	$	(0.06	)

Losses allocated to common shares owned by others	$	(11,912	)	$	(9,079	)	$	(22,079	)	$	(5,756	)
Weighted-average common shares outstanding owned by others		24,381,592			22,573,900			24,195,990			22,351,368
Basic loss per common share owned by others	$	(0.49	)	$	(0.40	)	$	(0.91	)	$	(0.26	)

For the three and six months ended June 30, 2020 and June 30, 2019 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 RSUs; and

•

Employee Stock Purchase Plan.