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, 2018 and 2017 are as follows (in thousands, except per share data).

2018 Quarters	First Quarter			Second Quarter			Third Quarter			Fourth Quarter
Revenue	$	144,419		$	117,747		$	145,395		$	192,113
Operating expenses	$	147,720		$	168,028		$	163,967		$	181,331
Income (loss) from operations	$	(3,301	)	$	(50,281	)	$	(18,572	)	$	10,782
Net income (loss)	$	(10,812	)	$	(56,573	)	$	(20,365	)	$	302,735
Net income (loss) attributable to Ionis Pharmaceuticals, Inc. common stockholders	$	(1,420	)	$	(40,358	)	$	(4,559	)	$	320,078
Basic net income (loss) per share (1) (2)	$	(0.01	)	$	(0.29	)	$	(0.03	)	$	2.32
Diluted net income (loss) per share (1) (3)	$	(0.01	)	$	(0.29	)	$	(0.03	)	$	2.21

2017 Quarters (as revised)	First Quarter		Second Quarter			Third Quarter			Fourth Quarter
Revenue	$	115,800	$	112,273		$	118,314		$	167,792
Operating expenses	$	96,315	$	105,823		$	107,002		$	173,992
Income (loss) from operations	$	19,485	$	6,450		$	11,312		$	(6,200	)
Net income (loss)	$	8,964	$	(3,085	)	$	(7,493	)	$	(9,169	)
Net income (loss) attributable to Ionis Pharmaceutical, Inc. common stockholders		8,964		(3,085	)		(2,611	)		(2,922	)
Basic net income (loss) per share (1) (2)	$	0.07	$	(0.02	)	$	(0.02	)	$	(0.03	)
Diluted net income (loss) per share (1) (3)	$	0.07	$	(0.02	)	$	(0.02	)	$	(0.03	)

(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. Our basic net income (loss) per share calculation for each of the quarters in 2018 and for the third and fourth quarters of 2017 considered our net income for Ionis on a stand-alone basis plus our share of Akcea’s net loss for the period. To calculate the portion of Akcea’s net loss attributable to our ownership, we multiplied Akcea’s loss per share by the weighted average shares we owned in Akcea during the period. 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 each quarter in 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	)

Three Months Ended June 30, 2018	Weighted Average Shares Owned in Akcea		Akcea’s Net Income (Loss) Per Share			Ionis’ Portion of Akcea’s Net Loss

Common shares		60,832	$	(0.72	)	$	(43,814	)
Akcea’s net loss attributable to our ownership						$	(43,814	)
Ionis’ stand-alone net income							5,882
Net loss available to Ionis common stockholders						$	(37,932	)
Weighted average shares outstanding							128,712
Basic net loss per share						$	(0.29	)
Three Months Ended September 30, 2018	Weighted Average Shares Owned in Akcea		Akcea’s Net Income (Loss) Per Share			Ionis’ Portion of Akcea’s Net Loss

Common shares		65,538	$	(0.73	)	$	(47,789	)
Akcea’s net loss attributable to our ownership						$	(47,789	)
Ionis’ stand-alone net income							43,226
Net loss available to Ionis common stockholders						$	(4,563	)
Weighted average shares outstanding							137,346
Basic net loss per share						$	(0.03	)

Three Months Ended December 31, 2018	Weighted Average Shares Owned in Akcea		Akcea’s Net Income (Loss) Per Share			Ionis’ Portion of Akcea’s Net Loss

Common shares		67,130	$	(0.79	)	$	(53,219	)
Akcea’s net loss attributable to our ownership						$	(53,219	)
Ionis’ stand-alone net income							372,913
Net income available to Ionis common stockholders						$	319,694
Weighted average shares outstanding							137,699
Basic net income per share						$	2.32

Prior to Akcea’s IPO in July 2017, 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 the IPO 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 that we owned in our calculation of basic and diluted net income (loss) per share for the three months ended September 30, 2017.

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 Loss Per Share			Ionis’ Portion of Akcea’s Net Loss

Common shares		36,556	$	(0.33	)	$	(12,063	)
Preferred shares		5,651		(0.01	)		(57	)
Akcea’s net loss attributable to our ownership						$	(12,120	)
Ionis’ stand-alone net income							10,144
Net loss available to Ionis common stockholders						$	(1,976	)
Weighted average shares outstanding							124,370
Basic net loss per share						$	(0.02	)

Our basic net income (loss) per share for the three months ended December 30, 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	$	(0.30	)	$	(13,634	)
Akcea’s net loss attributable to our ownership						$	(13,634	)
Ionis’ stand-alone net income							10,510
Net loss available to Ionis common stockholders						$	(3,124	)
Weighted average shares outstanding							124,818
Basic net loss per share						$	(0.03	)

(3)

For the three months ended December 31, 2018, 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, 2018 consisted of the following (in thousands except per share amounts):

Three Months Ended December 31, 2018	Income (Numerator)		Shares (Denominator)		Per-Share Amount

Net income available to Ionis common stockholders	$	319,694		137,699		2.32
Effect of dilutive securities:
Shares issuable upon exercise of stock options		—		1,254
Shares issuable upon restricted stock award issuance		—		636
Shares issuable related to our ESPP		—		7
Shares issuable related to our 1 percent convertible notes		10,745		10,260
Income available to Ionis common stockholders, plus assumed conversions	$	330,439		149,856		2.21

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

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