Significant Accounting Policies (Tables)

3 Months Ended

Mar. 31, 2018

Significant Accounting Policies [Abstract]

Adjustments Made to Adopt New Revenue Accounting Guidance

The following table summarizes the adjustments we were required to make to revenue we originally reported at March 31, 2017 to adopt Topic 606 (in thousands):

	Three Months Ended March 31, 2017
	As Previously Reported under Topic 605		Topic 606 Adjustment			As Revised
Revenue:
Commercial revenue:
SPINRAZA royalties	$	5,211	$	—		$	5,211
Licensing and other royalty revenue		3,547		(957	)		2,590
Total commercial revenue		8,758		(957	)		7,801
Research and development revenue under collaborative agreements		101,546		6,453			107,999
Total revenue	$	110,304	$	5,496		$	115,800

The following table summarizes the adjustments we were required to make to our deferred revenue amounts to adopt Topic 606 (in thousands):

	At December 31, 2017
	As Previously Reported under Topic 605			Topic 606 Adjustment			As Revised
Current portion of deferred revenue		$	106,465		$	18,871		$	125,336
Long-term portion of deferred revenue			72,708			35,318			108,026
Total		$	179,173		$	54,189		$	233,362

Basic Net Loss per Share

Our basic net loss per share for the three months ended March 31, 2018, was calculated as follows (in thousands, except per share amounts):

Three months ended March 31, 2018	Weighted Average Shares Owned in Akcea		Akcea’s Net Income (Loss) Per Share			Ionis’ Portion of Akcea’s Net Loss
Common shares		45,448	$	(0.44	)	$	(19,997	)
Akcea’s net loss attributable to our ownership						$	(19,997	)
Ionis’ stand-alone net income							18,785
Net loss available to Ionis common stockholders						$	(1,212	)
Weighted average shares outstanding							125,330
Basic net loss per share						$	(0.01	)

Basic and Diluted Net Income Per Share

For the three months ended March 31, 2017, we owned 100 percent of Akcea. As a result, we did not have to adjust our earnings per share calculation. 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 those periods. Diluted common equivalent shares for the three months ended March 31, 2017 consisted of the following (in thousands except per share amounts):

Three months ended March 31, 2017	Income (Numerator)		Shares (Denominator)		Per-Share Amount
Net income available to Ionis common stockholders	$	8,964		122,861	$	0.07
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 Ionis common stockholders	$	8,964		124,972	$	0.07

Changes in Accumulated Other Comprehensive Income (Loss)

Accumulated other comprehensive loss is primarily comprised of unrealized gains and losses on investments, net of taxes and adjustments we made to reclassify realized gains and losses on investments from other accumulated comprehensive income (loss) to our condensed consolidated statement of operations. The following table summarizes changes in accumulated other comprehensive income (loss) for the three months ended March 31, 2018 and 2017 (in thousands):

	Three Months Ended March 31,
	2018			2017
Beginning balance accumulated other comprehensive loss	$	(31,759	)	$	(30,358	)
Unrealized gains (losses) on securities, net of tax (1)		(1,530	)		266
Amounts reclassified from accumulated other comprehensive income (2)		—			(374	)
Currency translation adjustment		55			6
Net current period other comprehensive loss		(1,475	)		(102	)
Ending balance accumulated other comprehensive loss	$	(33,234	)	$	(30,460	)

(1) There was no tax benefit for other comprehensive loss for the three months ended March 31, 2018 and 2017.

(2) Amounts are included in investment income on our condensed consolidated statement of operations.

Weighted-Average Assumptions for Stock Options

We use the Black-Scholes model to estimate the fair value of stock options granted and stock purchase rights under our ESPP. The expected term of stock options granted represents the period of time that we expect them to be outstanding. We estimate the expected term of options granted based on historical exercise patterns. For the three months ended March 31, 2018 and 2017, we used the following weighted-average assumptions in our Black-Scholes calculations:

Employee Stock Options:

	Three Months Ended March 31,
	2018		2017
Risk-free interest rate		2.2%		1.8%
Dividend yield		0.0%		0.0%
Volatility		63.2%		66.3%
Expected life		4.6 years		4.5 years

Weighted-Average Assumptions for ESPP

ESPP:

	Three Months Ended March 31,
	2018		2017
Risk-free interest rate		1.6%		0.7%
Dividend yield		0.0%		0.0%
Volatility		44.4%		66.5%
Expected life		6 months		6 months

Stock-Based Compensation Expense

The following table summarizes stock-based compensation expense for the three months ended March 31, 2018 and 2017 (in thousands). Our non-cash stock-based compensation expense includes $6.4 million and $3.2 million of stock-based compensation expense for Akcea employees for the three months ended March 31, 2018 and 2017, respectively.

	Three Months Ended March 31,
	2018			2017
Research, development and patent		$	19,682		$	16,122
Selling, general and administrative			8,769			4,790
Total		$	28,451		$	20,912