Significant Accounting Policies (Tables)

9 Months Ended

Sep. 30, 2020

Significant Accounting Policies [Abstract]

Inventory

We review our inventory periodically and reduce the carrying value of items we consider to be slow moving or obsolete to their estimated net realizable value based on forecasted demand compared to quantities on hand. We consider several factors in estimating the net realizable value, including shelf life of our inventory, alternative uses for our medicines in development and historical write-offs. We did not record any material inventory write-offs for the nine months ended September 30, 2020. Total inventory was $22.2 million and $18.2 million as of September 30, 2020 and December 31, 2019, respectively, and consisted of the following (in thousands):

	September 30, 2020		December 31, 2019
Raw materials:
Raw materials- clinical	$	9,294	$	9,363
Raw materials- commercial		8,582		6,520
Total raw materials		17,876		15,883
Work in process		3,346		2,039
Finished goods		950		258
Total inventory	$	22,172	$	18,180

Basic Net Income per Share

Our basic net loss per share for the three months ended September 30, 2020, was calculated as follows (in thousands, except per share amounts):

Three months ended September 30, 2020	Weighted Average Shares Owned in Akcea		Akcea’s Net Loss Per Share			Basic Net Loss Per Share Calculation
Ionis’ portion of Akcea’s net loss		77,095	$	(0.49	)	$	(37,822	)
Akcea’s net loss attributable to our ownership						$	(37,822	)
Ionis’ stand-alone net income							6,774
Net loss available to Ionis common stockholders						$	(31,048	)
Weighted average shares outstanding							139,708
Basic net loss per share						$	(0.22	)

Our basic net loss per share for the nine months ended September 30, 2020, was calculated as follows (in thousands, except per share amounts):

Nine months ended September 30, 2020	Weighted Average Shares Owned in Akcea		Akcea’s Net Loss Per Share			Basic Net Loss Per Share Calculation
Ionis’ portion of Akcea’s net loss		77,095	$	(1.40	)	$	(108,176	)
Akcea’s net loss attributable to our ownership						$	(108,176	)
Ionis’ stand-alone net loss							(3,049	)
Net loss available to Ionis common stockholders						$	(111,225	)
Weighted average shares outstanding							139,497
Basic net loss per share						$	(0.80	)

Our basic net income per share for the three months ended September 30, 2019, was calculated as follows (in thousands, except per share amounts):

Three months ended September 30, 2019	Weighted Average Shares Owned in Akcea		Akcea’s Net Income Per Share			Basic Net Income Per Share Calculation
Ionis’ portion of Akcea’s net loss		70,221	$	(0.34	)	$	(23,772	)
Akcea’s net loss attributable to our ownership						$	(23,772	)
Ionis’ stand-alone net income							49,930
Net income available to Ionis common stockholders						$	26,158
Weighted average shares outstanding							140,551
Basic net income per share						$	0.19

Our basic net income per share for the nine months ended September 30, 2019, was calculated as follows (in thousands, except per share amounts):

Nine months ended September 30, 2019	Weighted Average Shares Owned in Akcea		Akcea’s Net Loss Per Share			Basic Net Income Per Share Calculation
Ionis’ portion of Akcea’s net loss		69,681	$	(0.40	)	$	(28,174	)
Akcea’s net loss attributable to our ownership						$	(28,174	)
Ionis’ stand-alone net income							140,938
Net income available to Ionis common stockholders						$	112,764
Weighted average shares outstanding							139,800
Basic net income per share						$	0.81

Basic and Diluted Net Income Per Share

We calculated our diluted net income per share for the three months ended September 30, 2019 as follows (in thousands except per share amounts):

Three Months Ended September 30, 2019	Income (Numerator)		Shares (Denominator)		Per-Share Amount
Net income available to Ionis common stockholders	$	26,158		140,551	$	0.19
Effect of dilutive securities:
Shares issuable upon exercise of stock options		—		1,993
Shares issuable upon restricted stock award issuance		—		844
Shares issuable related to our Employee Stock Purchase Plan		—		20
Income available to Ionis common stockholders	$	26,158		143,408	$	0.18

We calculated our diluted net income per share for the nine months ended September 30, 2019 as follows (in thousands except per share amounts):

Nine months ended September 30, 2019	Income (Numerator)		Shares (Denominator)		Per-Share Amount
Net income available to Ionis common stockholders	$	112,764		139,800	$	0.81
Effect of dilutive securities:
Shares issuable upon exercise of stock options		—		2,208
Shares issuable upon restricted stock award issuance		—		793
Shares issuable related to our Employee Stock Purchase Plan		—		20
Income available to Ionis common stockholders	$	112,764		142,821	$	0.79

Significant Accounting Policies [Abstract]

Weighted-Average Assumptions for Stock Options

Ionis Employee Stock Options:

	Nine Months Ended September 30,
	2020			2019
Risk-free interest rate		1.5	%		2.3	%
Dividend yield		0.0	%		0.0	%
Volatility		58.8	%		60.3	%
Expected life	4.7 years			4.6 years

Ionis Board of Director Stock Options:

	Nine Months Ended September 30,
	2020			2019
Risk-free interest rate		0.5	%		1.9	%
Dividend yield		0.0	%		0.0	%
Volatility		57.6	%		60.7	%
Expected life	6.7 years			6.6 years

Weighted-Average Assumptions for ESPP

Ionis ESPP:

	Nine Months Ended September 30,
	2020			2019
Risk-free interest rate		0.8	%		2.4	%
Dividend yield		0.0	%		0.0	%
Volatility		47.9	%		45.6	%
Expected life	6 months			6 months

Stock-Based Compensation Expense

The following table summarizes stock-based compensation expense for the three and nine months ended September 30, 2020 and 2019 (in thousands). Our non-cash stock-based compensation expense included $13.8 million and $37.2 million of stock-based compensation expense for Akcea employees for the three and nine months ended September 30, 2020, respectively, compared to $(3.5) million and $29.5 million for the same periods in 2019. In the third quarter of 2019, three Akcea executive officers terminated their employment and entered into separation agreements with Akcea. As a result, in the third quarter of 2019, Akcea reversed $19.1 million of stock-based compensation expense it had previously recognized related to the executive officers’ stock options and RSUs that were no longer going to vest.

	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
Cost of products sold	$	315	$	127	$	902	$	383
Research, development and patent		25,359		23,744		76,931		71,935
Selling, general and administrative		20,171		255		57,244		39,246
Total non-cash stock-based compensation expense	$	45,845	$	24,126	$	135,077	$	111,564

Akcea [Member]

Significant Accounting Policies [Abstract]

Weighted-Average Assumptions for Stock Options

Akcea Employee Stock Options:

	Nine Months Ended September 30,
	2020			2019
Risk-free interest rate		1.1	%		2.3	%
Dividend yield		0.0	%		0.0	%
Volatility		75.0	%		75.6	%
Expected life	6.1 years			6.1 years

Akcea Board of Directors Stock Options:

	Nine Months Ended September 30,
	2020			2019
Risk-free interest rate		0.8	%		1.8	%
Dividend yield		0.0	%		0.0	%
Volatility		75.3	%		73.8	%
Expected life	5.7 years			6.3 years

Weighted-Average Assumptions for ESPP

Akcea ESPP:

	Nine Months Ended September 30,
	2020			2019
Risk-free interest rate		1.0	%		2.4	%
Dividend yield		0.0	%		0.0	%
Volatility		71.9	%		60.0	%
Expected life	6 months			6 months