Organization and Significant Accounting Policies (Tables)

12 Months Ended

Dec. 31, 2018

Organization and Significant Accounting Policies [Abstract]

Our basic net income per share for 2018, was calculated as follows (in thousands, except per share amounts):

Year 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		59,812	$	(2.74	)	$	(163,938	)
Akcea’s net loss attributable to our ownership						$	(163,938	)
Ionis’ stand-alone net income							440,806
Net income available to Ionis common stockholders						$	276,868
Weighted average shares outstanding							132,320
Basic net income per share						$	2.09

We calculated our basic net income per share for 2017 as follows (in thousands, except per share amounts):

Year 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		20,669	$	(3.08	)	$	(63,638	)
Preferred shares		15,748		(1.80	)		(28,346	)
Akcea’s net loss attributable to our ownership						$	(91,984	)
Ionis’ stand-alone net income							110,776
Net income available to Ionis common stockholders						$	18,792
Weighted average shares outstanding							124,016
Basic net income per share						$	0.15

Basic and Diluted Net Income Per Share

We calculated our diluted net income per share for 2018 as follows (in thousands except per share amounts):

Year Ended December 31, 2018	Income (Numerator)		Shares (Denominator)		Per-Share Amount
Net income available to Ionis common stockholders	$	276,868		132,320	$	2.09
Effect of dilutive securities:
Shares issuable upon exercise of stock options		—		1,216
Shares issuable upon restricted stock award issuance		—		514
Shares issuable related to our ESPP		—		6
Income available to Ionis common stockholders, plus assumed conversions	$	276,868		134,056	$	2.07

We calculated our diluted net income per share for 2017 as follows (in thousands except per share amounts):

Year Ended December 31, 2017	Income (Numerator)		Shares (Denominator)		Per-Share Amount
Net income available to Ionis common stockholders	$	18,792		124,016	$	0.15
Effect of dilutive securities:
Shares issuable upon exercise of stock options		—		1,619
Shares issuable upon restricted stock award issuance		—		459
Shares issuable related to our ESPP		—		4
Income available to Ionis common stockholders, plus assumed conversions	$	18,792		126,098	$	0.15

Adjustments Made to Adopt New Revenue Accounting Guidance

The following tables summarize the adjustments we were required to make to amounts we originally reported in 2017 and 2016 to adopt Topic 606 (in thousands, except per share amounts):

Consolidated Balance Sheet

	At December 31, 2017
	As Previously Reported under Topic 605			Topic 606 Adjustment			As Revised
Current portion of deferred contract revenue	$	106,465		$	18,871		$	125,336
Long-term portion of deferred contract revenue	$	72,708		$	35,318		$	108,026
Accumulated deficit	$	(1,187,398	)	$	(53,636	)	$	(1,241,034	)
Noncontrolling interest in Akcea Therapeutics, Inc.	$	87,847		$	(3,580	)	$	84,267
Total stockholders’ equity	$	418,719		$	(53,439	)	$	365,280

Consolidated Statements of Operations

	Year Ended December 31, 2017
	As Previously Reported under Topic 605			Topic 606 Adjustment			As Revised
Revenue:
Commercial revenue:
SPINRAZA royalties	$	112,540		$	-		$	112,540
Licensing and other royalty revenue		9,519			(2,045	)		7,474
Total commercial revenue		122,059			(2,045	)		120,014
Research and development revenue under collaborative agreements		385,607			8,558			394,165
Total revenue	$	507,666		$	6,513		$	514,179
Income from operations	$	24,534		$	6,513		$	31,047
Net income (loss)	$	(17,296	)	$	6,513		$	(10,783	)
Net income (loss) attributable to Ionis Pharmaceuticals, Inc. common stockholders	$	(5,970	)	$	6,316		$	346
Net income per share, basic and diluted	$	0.08		$	0.07		$	0.15

	Year Ended December 31, 2016
	As Previously Reported under Topic 605			Topic 606 Adjustment		As Revised
Revenue:
Commercial revenue:
SPINRAZA royalties	$	883		$	—	$	883
Licensing and other royalty revenue		19,839			2,045		21,884
Total commercial revenue		20,722			2,045		22,767
Research and development revenue under collaborative agreements		325,898			24,111		350,009
Total revenue	$	346,620		$	26,156	$	372,776
Income (loss) from operations	$	(46,316	)	$	26,156	$	(20,160	)
Net income (loss)	$	(86,556	)	$	26,156	$	(60,400	)
Net income (loss) attributable to Ionis Pharmaceuticals, Inc. common stockholders	$	(86,556	)	$	26,156	$	(60,400	)
Net income (loss) per share, basic and diluted	$	(0.72	)	$	0.22	$	(0.50	)

Consolidated Statements of Cash Flows

	Year Ended December 31, 2017
	As Previously Reported under Topic 605			Topic 606 Adjustment			As Revised
Net income (loss)	$	(17,296	)	$	6,513		$	(10,783	)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Deferred contract revenue	$	36,695		$	(6,513	)	$	30,182
Cash and cash equivalents at beginning of year	$	84,685		$	—		$	84,685
Cash and cash equivalents at end of year	$	129,630		$	—		$	129,630

	Year Ended December 31, 2016
	As Previously Reported under Topic 605			Topic 606 Adjustment			As Revised
Net income (loss)	$	(86,556	)	$	26,156		$	(60,400	)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Deferred contract revenue	$	(59,150	)	$	(26,156	)	$	(85,306	)
Cash and cash equivalents at beginning of year	$	128,797		$	—		$	128,797
Cash and cash equivalents at end of year	$	84,685		$	—		$	84,685

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 contract revenue	$	106,465	$	18,871	$	125,336
Long-term portion of deferred contract revenue		72,708		35,318		108,026
Total deferred revenue	$	179,173	$	54,189	$	233,362

Amortization Expense for Patents

Based on our existing patents, we estimate amortization expense related to patents in each of the next five years to be the following:

Years Ending December 31,	Amortization (in millions)
2019	$	1.7
2020	$	1.6
2021	$	1.5
2022	$	1.4
2023	$	1.3

Accrued Liabilities

Our accrued liabilities consisted of the following (in thousands):

	December 31,
	2018		2017
Clinical expenses	$	22,125	$	16,347
In-licensing expenses		12,298		33,790
Other miscellaneous expenses		13,938		16,481
Total accrued liabilities	$	48,361	$	66,618

Property, Plant and Equipment

We carry our property, plant and equipment at cost and depreciate it on the straight-line method over its estimated useful life, which consists of the following (in thousands):

	Estimated Useful Lives		December 31,
	(in years)		2018			2017
Computer software, laboratory, manufacturing and other equipment	3 to 10		$	53,496		$	66,558
Building, building improvements and building systems	15 to 40			97,528			92,770
Land improvements		20		2,853			2,853
Leasehold improvements	5 to 15			18,981			26,748
Furniture and fixtures	5 to 10			6,283			6,161
				179,141			195,090
Less accumulated depreciation				(61,474	)		(87,676	)
				117,667			107,414
Land				14,493			14,493
Total			$	132,160		$	121,907

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 loss to our Consolidated Statement of Operations. The following table summarizes changes in accumulated other comprehensive loss for the years ended December 31, 2018, 2017 and 2016 (in thousands):

	Year Ended December 31,
	2018			2017			2016
Beginning balance accumulated other comprehensive loss	$	(31,759	)	$	(30,358	)	$	(13,565	)
Unrealized losses on securities, net of tax (1)		(280	)		(960	)		(17,219	)
Amounts reclassified from accumulated other comprehensive loss		—			(374	)		447
Currency translation adjustment		23			(67	)		(21	)
Net other comprehensive loss for the period		(257	)		(1,401	)		(16,793	)
Ending balance accumulated other comprehensive loss	$	(32,016	)	$	(31,759	)	$	(30,358	)

(1)	A tax benefit of $0.3 million was included in other comprehensive loss for the year ended December 31, 2018. There was no tax benefit or expense for other comprehensive loss for the years ended December 31, 2017 or 2016.

Assets Measured at Fair Value on a Recurring Basis

	At December 31, 2018		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Cash equivalents (1)	$	146,281	$	146,281	$	—	$	—
Corporate debt securities (2)		1,252,960		—		1,252,960		—
Debt securities issued by U.S. government agencies (3)		276,612		—		276,612		—
Debt securities issued by the U.S. Treasury (4)		260,154		260,154		—		—
Debt securities issued by states of the U.S. and political subdivisions of the states (3)		79,942		—		79,942		—
Investment in ProQR Therapeutics N.V. (5)		1,349		—		—		1,349
Total	$	2,017,298	$	406,435	$	1,609,514	$	1,349

	At December 31, 2017		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)
Cash equivalents (1)	$	86,262	$	86,262	$	—
Corporate debt securities (6)		647,461		—		647,461
Debt securities issued by U.S. government agencies (3)		136,325		—		136,325
Debt securities issued by the U.S. Treasury (3)		30,818		30,818		—
Debt securities issued by states of the U.S. and political subdivisions of the states (7)		93,932		—		93,932
Total	$	994,798	$	117,080	$	877,718

(1)	Included in cash and cash equivalents on our consolidated balance sheet.

(2)	$50.2 million included in cash and cash equivalents on our consolidated balance sheet, with the difference included in short-term investments on our consolidated balance sheet.

(3)	Included in short-term investments on our consolidated balance sheet.

(4)	$14.2 million included in cash and cash equivalents on our consolidated balance sheet, with the difference included in short-term investments on our consolidated balance sheet.

(5)	Included in other current assets on our consolidated balance sheet.

(6)	$11.9 million included in cash and cash equivalents on our consolidated balance sheet, with the difference included in short-term investments on our consolidated balance sheet.

(7)	$3.5 million included in cash and cash equivalents on our consolidated balance sheet, with the difference included in short-term investments on our consolidated balance sheet.

Reconciliation of Assets Measured at Fair Value on a Recurring Basis Using Significant Unobservable Inputs (Level 3)

The following is a reconciliation of the potential premium we would have received if Akcea had not completed its IPO, measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for 2017 (in thousands):

	Year Ended December 31, 2017
Beginning balance of Level 3 instruments	$	—
Value of the potential premium we will receive from Novartis at inception of the SPA (January 2017)		5,035
Write-off of premium to other expenses		(5,035	)
Ending balance of Level 3 instruments	$	—