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Quarterly Financial Data (Unaudited)
12 Months Ended
Dec. 31, 2017
Quarterly Financial Data (Unaudited) [Abstract]  
Quarterly Financial Data (Unaudited)
10. Quarterly Financial Data (Unaudited)

The following financial information reflects all normal recurring adjustments, which are, in the opinion of management, necessary for a fair statement of the results of the interim periods. Summarized quarterly data for the years ended December 31, 2017 and 2016 are as follows (in thousands, except per share data).

2017 Quarters
 
First
Quarter
  
Second
Quarter
  
Third
Quarter
  
Fourth
Quarter
 
Revenue
 
$
110,304
  
$
104,152
  
$
120,911
  
$
172,299
 
Operating expenses
 
$
96,315
  
$
105,823
  
$
107,002
  
$
173,992
 
Income (loss) from operations
 
$
13,989
  
$
(1,671
)
 
$
13,909
  
$
(1,693
)
Net income (loss)
 
$
3,468
  
$
(11,206
)
 
$
(4,896
)
 
$
(4,662
)
Net income (loss) attributable to Ionis Pharmaceuticals, Inc. common stockholders
 
$
3,468
  
$
(11,206
)
 
$
(976
)
 
$
2,744
 
Basic net income (loss) per share (1) (2)
 
$
0.03
  
$
(0.09
)
 
$
0.00
  
$
0.02
 
Diluted net income (loss) per share (1) (3)
 
$
0.03
  
$
(0.09
)
 
$
0.00
  
$
0.02
 

2016 Quarters
 
First
Quarter
  
Second
Quarter
  
Third
Quarter
  
Fourth
Quarter
 
Revenue
 
$
36,874
  
$
38,470
  
$
110,927
  
$
160,349
 
Operating expenses
 
$
91,526
  
$
87,397
  
$
94,819
  
$
119,194
 
Income (loss) from operations
 
$
(54,652
)
 
$
(48,927
)
 
$
16,108
  
$
41,155
 
Net income (loss)
 
$
(62,917
)
 
$
(56,855
)
 
$
7,351
  
$
25,865
 
Basic net income (loss) per share (1)
 
$
(0.52
)
 
$
(0.47
)
 
$
0.06
  
$
0.21
 
Diluted net income (loss) per share (1) (4) (5)
 
$
(0.52
)
 
$
(0.47
)
 
$
0.06
  
$
0.21
 


(1)
We computed net income (loss) per share independently for each of the quarters presented. Therefore, the sum of the quarterly net income (loss) per share will not necessarily equal the total for the year.

(2)
As discussed in Note 1, Organization and Significant Accounting Policies, we compute basic net income (loss) per share by dividing the total net income (loss) attributable to our common stockholders by our weighted-average number of common shares outstanding during the period. The calculation of total net income (loss) attributable to our common stockholders for the three months ended December 31, 2017 and September 30, 2017 considered our net income for Ionis on a stand-alone basis plus our share of Akcea’s net loss for the periods. To calculate the portion of Akcea’s net loss attributable to our ownership, we multiplied Akcea’s income (loss) per share by the weighted average shares we owned in Akcea during the period.

Our basic net income (loss) per share for the three months ended December 31, 2017, was calculated as follows (in thousands, except per share amounts):

Three Months Ended December 31, 2017
 
Weighted
Average Shares
Owned in Akcea
  
Akcea’s
Net Loss
Per Share
  
Ionis’
Portion of
Akcea’s Net Loss
 
          
Common shares
  
45,448
  
$
(0.35
)
 
$
(15,955
)
Akcea’s net loss attributable to our ownership
         
$
(15,955
)
Ionis’ stand-alone net income
          
18,672
 
Net income available to Ionis common stockholders
         
$
2,717
 
Weighted average shares outstanding
          
124,818
 
Basic net income per share
         
$
0.02
 

For the three months ended December 31, 2017, we had net income available to Ionis common stockholders. As a result, we computed diluted net income per share using the weighted-average number of common shares and dilutive common equivalent shares outstanding during those periods. Diluted common equivalent shares for the three months ended December 31, 2017 consisted of the following (in thousands except per share amounts):

Three Months Ended December 31, 2017
 
Income
(Numerator)
  
Shares
(Denominator)
  
Per-Share
Amount
 
          
Income available to common shareholders
 
$
2,717
   
124,818
  
$
0.02
 
Effect of dilutive securities:
            
Shares issuable upon exercise of stock options
  
   
1,532
     
Shares issuable upon restricted stock award issuance
  
   
507
     
Shares issuable related to our ESPP
  
   
5
     
Income available to common shareholders, plus assumed conversions
 
$
2,717
   
126,862
  
$
0.02
 

For the three months ended December 31, 2017, the calculation excluded the 1 percent and 2¾ percent notes because the effect on diluted earnings per share was anti-dilutive.

Prior to Akcea’s IPO, we owned Akcea series A convertible preferred stock, which included a six percent cumulative dividend. Upon completion of Akcea’s IPO in July 2017, our preferred stock was converted into common stock on a 1:1 basis. The preferred stock dividend was not paid at the IPO because it was not a liquidation event or a change in control. During the three months ended September 30, 2017, Akcea used a two-class method to compute its net income (loss) per share because it had both common and preferred shares outstanding during the periods. The two-class method required Akcea to calculate its net income (loss) per share for each class of stock by dividing total distributable losses applicable to preferred and common stock, including the six percent cumulative dividend contractually due to series A convertible preferred shareholders, by the weighted-average of preferred and common shares outstanding during the requisite period. Since Akcea used the two-class method, accounting rules required us to include our portion of Akcea's net income (loss) per share for both Akcea's common and preferred shares which we owned in our calculation of basic and diluted net income (loss) per share for three months ended September 30, 2017. As a result of this calculation, our total net income (loss) available to Ionis common stockholders for the calculation of net income (loss) per share is different than net income (loss) attributable to Ionis Pharmaceuticals, Inc. common stockholders in the consolidated statements of operations.

Our basic net income (loss) per share for the three months ended September 30, 2017, was calculated as follows (in thousands, except per share amounts):

Three Months Ended September 30, 2017
 
Weighted
Average Shares
Owned in Akcea
  
Akcea’s
Net Income (Loss)
Per Share
  
Ionis’
Portion of
Akcea’s Net Loss
 
          
Common shares
  
36,556
  
$
(0.27
)
 
$
(9,870
)
Preferred shares
  
5,651
   
0.05
   
283
 
Akcea’s net loss attributable to our ownership
         
$
(9,587
)
Ionis’ stand-alone net income
          
9,168
 
Net loss available to Ionis common stockholders
         
$
(419
)
Weighted average shares outstanding
          
124,370
 
Basic net income per share
         
$
0.00
 

(3)
For the three months ended March 31, 2017 we had net income. As a result, we computed diluted net income per share using the weighted-average number of common shares and dilutive common equivalent shares outstanding during the period. Diluted common equivalent shares for the three months ended March 31, 2017 consisted of the following (in thousands):

Three Months Ended March 31, 2017
 
Income
(Numerator)
  
Shares
(Denominator)
  
Per-Share
Amount
 
          
Income available to common shareholders
 
$
3,468
   
122,861
  
$
0.03
 
Effect of dilutive securities:
            
Shares issuable upon exercise of stock options
  
   
1,674
     
Shares issuable upon restricted stock award issuance
  
   
377
     
Shares issuable related to our ESPP
  
   
60
     
Income available to common shareholders, plus assumed conversions
 
$
3,468
   
124,972
  
$
0.03
 

For the three months ended March 31, 2017, the calculation excludes the 1 percent and 2¾ percent notes because the effect on diluted earnings per share was anti-dilutive.

(4)
For the three months ended December 31, 2016, we had net income. As a result, we computed diluted net income per share using the weighted-average number of common shares and dilutive common equivalent shares outstanding during the period. Diluted common equivalent shares for the three months ended December 31, 2016 consisted of the following (in thousands):

Three Months Ended December 31, 2016
 
Income
(Numerator)
  
Shares
(Denominator)
  
Per-Share
Amount
 
 
         
Income available to common shareholders
 
$
25,865
   
121,340
  
$
0.21
 
Effect of diluted securities:
            
Shares issuable upon exercise of stock options
  
   
2,189
     
Shares issuable upon restricted stock award issuance
  
   
403
     
Shares issuable related to our ESPP
  
   
21
     
Income available to common shareholders, plus assumed conversions
 
$
25,865
   
123,953
  
$
0.21
 

For the three months ended December 31, 2016, the calculation excludes the 1 percent and 2¾ percent notes because the effect on diluted earnings per share would be anti-dilutive.

(5)
For the three months ended September 30, 2016, we had net income. As a result, we computed diluted net income per share using the weighted-average number of common shares and dilutive common equivalent shares outstanding during the period. Diluted common equivalent shares for the three months ended September 30, 2016 consisted of the following (in thousands):

Three Months Ended September 30, 2016
 
Income
(Numerator)
  
Shares
(Denominator)
  
Per-Share
Amount
 
 
         
Income available to common shareholders
 
$
7,351
   
120,989
  
$
0.06
 
Effect of diluted securities:
            
Shares issuable upon exercise of stock options
  
   
2,129
     
Shares issuable upon restricted stock award issuance
  
   
202
     
Shares issuable related to our ESPP
  
   
58
     
Income available to common shareholders, plus assumed conversions
 
$
7,351
   
123,378
  
$
0.06
 

For the three months ended September 30, 2016, the calculation excludes the 1 percent and 2¾ percent notes because the effect on diluted earnings per share would be anti-dilutive.