Segment Information and Concentration of Business Risk

9 Months Ended

Sep. 30, 2016

Segment Information and Concentration of Business Risk [Abstract]

Segment Information and Concentration of Business Risk

7. Segment Information and Concentration of Business Risk

We have two reportable segments Ionis Core and Akcea Therapeutics, our wholly owned subsidiary. Segment income (loss) from operations includes revenue less operating expenses attributable to each segment.

In our Ionis Core segment we are exploiting a novel drug discovery platform we created to generate a broad pipeline of first-in-class or best-in-class drugs for us and our partners. Our Ionis Core segment generates revenue from a multifaceted partnering strategy.

We formed Akcea to develop and commercialize drugs for patients with serious cardiometabolic diseases caused by lipid disorders. Moving our lipid drugs into a company that we own and control ensures that our core focus at Ionis remains on innovation while allowing us to maintain control over and retain more value from our lipid drugs. To date, Akcea has not earned any revenue.

The following table shows our segment revenue and income (loss) from operations for the three and nine months ended September 30, 2016 and September 30, 2015 (in thousands), respectively.

Three Months Ended September 30, 2016	Ionis Core		Akcea Therapeutics			Elimination of Intercompany Activity			Total
Revenue:
Research and development	$	112,761	$	—		$	(3,848	)	$	108,913
Licensing and royalty		2,014		—			—			2,014
Total segment revenue	$	114,775	$	—			(3,848	)	$	110,927
Income (loss) from operations	$	36,328	$	(20,250	)	$	30		$	16,108

Three Months Ended September 30, 2015	Ionis Core			Akcea Therapeutics			Elimination of Intercompany Activity			Total
Revenue:
Research and development	$	50,511		$	—		$	(1,593	)	$	48,918
Licensing and royalty		203			—			—			203
Total segment revenue	$	50,714		$	—			(1,593	)	$	49,121
Loss from operations	$	(35,067	)	$	(13,101	)	$	30		$	(48,138	)

Nine Months Ended September 30, 2016	Ionis Core			Akcea Therapeutics			Elimination of Intercompany Activity			Total
Revenue:
Research and development	$	170,431		$	—		$	(3,848	)	$	166,583
Licensing and royalty		19,689			—			—			19,689
Total segment revenue	$	190,120		$	—		$	(3,848	)	$	186,272
Loss from operations	$	(36,465	)	$	(51,096	)	$	90		$	(87,471	)

Nine Months Ended September 30, 2015	Ionis Core		Akcea Therapeutics			Elimination of Intercompany Activity			Total
Revenue:
Research and development	$	232,062	$	—		$	(1,593	)	$	230,469
Licensing and royalty		1,664		—			—			1,664
Total segment revenue	$	233,726	$	—		$	(1,593	)	$	232,133
Loss from operations	$	16,323	$	(29,054	)	$	(90	)	$	(12,821	)

The following table shows our total assets by segment at September 30, 2016 and December 31, 2015 (in thousands), respectively.

Total Assets	Ionis Core		Akcea Therapeutics		Elimination of Intercompany Activity			Total
September 30, 2016	$	931,231	$	62,009	$	(149,654	)	$	843,586
December 31, 2015	$	994,191	$	66,068	$	(112,359	)	$	947,900

We have historically funded our operations from collaborations with corporate partners and a relatively small number of partners have accounted for a significant percentage of our revenue. Revenue from significant partners, which is defined as ten percent or more of our total revenue, was as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2016		2015		2016		2015
Partner A		81 %		37 %		65 %		32 %
Partner B		11 %		4 %		9 %		3 %
Partner C		2 %		49 %		3 %		12 %
Partner D		0 %		2 %		3 %		40 %
Partner E		1 %		3 %		4 %		10 %

Contracts receivables from one significant partner comprised approximately 95 percent of our contracts receivables at September 30, 2016. Contracts receivables from two significant partners comprised approximately 99 percent of our contracts receivables at December 31, 2015.