QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF SECURITIES EXCHANGE ACT OF 1934 |
(State or other jurisdiction of incorporation or organization) |
(IRS Employer Identification No.) |
(Address of Principal Executive Offices) |
(Zip Code) |
Title of each class |
Trading symbol |
Name of each exchange on which registered |
||
“ |
Accelerated Filer ☐ |
|
Non-accelerated Filer ☐ |
Smaller Reporting Company |
Emerging Growth Company |
PART I |
FINANCIAL INFORMATION |
|
ITEM 1: |
Financial Statements: |
|
Condensed Consolidated Balance Sheets as of March 31, 2021 and December 31, 2020 (unaudited) (as revised) |
3 |
|
Condensed Consolidated Statements of Operations for the three months ended March 31, 2021 and 2020 (unaudited) (as revised) |
4 |
|
Condensed Consolidated Statements of Comprehensive Loss for the three months ended March 31, 2021 and 2020 (unaudited) (as revised) |
5 |
|
Condensed Consolidated Statements of Stockholders’ Equity for the three months ended March 31, 2021 and 2020 (unaudited) (as revised) |
6 |
|
Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2021 and 2020 (unaudited) (as revised) |
7 |
|
Notes to Condensed Consolidated Financial Statements (unaudited) |
8 |
|
ITEM 2: |
Management’s Discussion and Analysis of Financial Condition and Results of Operations: |
|
Overview |
28 |
|
Results of Operations |
31 |
|
Liquidity and Capital Resources |
36 |
|
ITEM 3: |
Quantitative and Qualitative Disclosures about Market Risk |
38 |
ITEM 4: |
Controls and Procedures |
38 |
PART II |
OTHER INFORMATION |
38 |
ITEM 1: |
Legal Proceedings |
38 |
ITEM 1A: |
Risk Factors |
39 |
ITEM 2: |
Unregistered Sales of Equity Securities and Use of Proceeds |
56 |
ITEM 3: |
Default upon Senior Securities |
56 |
ITEM 4: |
Mine Safety Disclosures |
56 |
ITEM 5: |
Other Information |
56 |
ITEM 6: |
Exhibits |
56 |
SIGNATURES |
58 |
|
March 31, 2021 |
December 31, 2020 |
|||||||
(as revised*) |
||||||||
ASSETS |
||||||||
Current assets: |
||||||||
Cash and cash equivalents |
$ |
$ |
||||||
Short-term investments |
||||||||
Contracts receivable |
||||||||
Inventories |
||||||||
Other current assets |
||||||||
Total current assets |
||||||||
Property, plant and equipment, net |
||||||||
Patents, net |
||||||||
Deposits and other assets |
||||||||
Total assets |
$ |
$ |
||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY |
||||||||
Current liabilities: |
||||||||
Accounts payable |
$ |
$ |
||||||
Accrued compensation |
||||||||
Accrued liabilities |
||||||||
Income taxes payable |
||||||||
Current portion of |
||||||||
Current portion of long-term obligations |
||||||||
Current portion of deferred contract revenue |
||||||||
Total current liabilities |
||||||||
Long-term deferred contract revenue |
||||||||
Long-term obligations, less current portion |
||||||||
Long-term mortgage debt |
||||||||
Total liabilities |
||||||||
Stockholders’ equity: |
||||||||
Common stock, $ |
||||||||
Additional paid-in capital |
||||||||
Accumulated other comprehensive loss |
( |
) |
( |
) |
||||
Accumulated deficit |
( |
) |
( |
) |
||||
Total stockholders’ equity |
||||||||
Total liabilities and stockholders’ equity |
$ |
$ |
||||||
| * | We revised our 2020 amounts to reflect the simplified convertible instruments accounting guidance, which we adopted retrospectively. Refer to Note 2, Significant Accounting Policies, for further information. |
Three Months Ended March 31, |
||||||||
2021 |
2020 |
|||||||
(as revised*) |
||||||||
Revenue: |
||||||||
Commercial revenue: |
||||||||
SPINRAZA royalties |
$ |
$ |
||||||
TEGSEDI and WAYLIVRA revenue, net |
||||||||
Licensing and other royalty revenue |
||||||||
Total commercial revenue |
||||||||
Research and development revenue under collaborative agreements |
||||||||
Total revenue |
||||||||
Expenses: |
||||||||
Cost of sales |
||||||||
Research, development and patent |
||||||||
Selling, general and administrative |
||||||||
Total operating expenses |
||||||||
Loss from operations |
( |
) |
( |
) |
||||
Other income (expense): |
||||||||
Investment income |
||||||||
Interest expense |
( |
) |
( |
) |
||||
Other income (expenses) |
( |
) |
||||||
Loss before income tax (expense) benefit |
( |
) |
( |
) |
||||
Income tax (expense) benefit |
( |
) |
||||||
Net loss |
( |
) |
( |
) |
||||
Net loss attributable to noncontrolling interest in Akcea Therapeutics, Inc. |
||||||||
Net loss attributable to Ionis Pharmaceuticals, Inc. common stockholders |
$ |
( |
) |
$ |
( |
) |
||
Basic and diluted net loss per share |
$ |
( |
) |
$ |
( |
) |
||
Shares used in computing basic and diluted net loss per share |
||||||||
| * | We revised our 2020 amounts to reflect the simplified convertible instruments accounting guidance, which we adopted retrospectively. Refer to Note 2, Significant Accounting Policies, for further information. |
Three Months Ended March 31, |
||||||||
2021 |
2020 |
|||||||
(as revised*) |
||||||||
Net loss |
$ |
( |
) |
$ |
( |
) |
||
Unrealized losses on debt securities, net of tax |
( |
) |
( |
) |
||||
Currency translation adjustment |
( |
) |
||||||
Comprehensive loss |
( |
) |
( |
) |
||||
Comprehensive loss attributable to noncontrolling interest in Akcea Therapeutics, Inc. |
( |
) |
||||||
Comprehensive loss attributable to Ionis Pharmaceuticals, Inc. common stockholders |
$ |
( |
) |
$ |
( |
) |
||
| * | We revised our 2020 amounts to reflect the simplified convertible instruments accounting guidance, which we adopted retrospectively. Refer to Note 2, Significant Accounting Policies, for further information. |
Common Stock |
Additional |
Accumulated Other |
Accumulated |
Total Ionis Stockholders’ |
Noncontrolling Interest in Akcea |
Total Stockholders’ |
||||||||||||||||||||||||||
Description |
Shares |
Amount |
Paid in Capital |
Comprehensive Loss |
Deficit |
Equity |
Therapeutics, Inc. |
Equity |
||||||||||||||||||||||||
Balance at December 31, 2019 (as revised*) |
$ |
$ |
$ |
( |
) |
$ |
( |
) |
$ |
$ |
$ |
|||||||||||||||||||||
Net loss |
— |
( |
) |
( |
) |
( |
) |
|||||||||||||||||||||||||
Change in unrealized losses, net of tax |
— |
( |
) |
( |
) |
( |
) |
|||||||||||||||||||||||||
Foreign currency translation |
— |
|||||||||||||||||||||||||||||||
Issuance of common stock in connection with employee stock plans |
||||||||||||||||||||||||||||||||
Repurchases and retirements of common stock |
( |
) |
( |
) |
( |
) |
( |
) |
( |
) |
||||||||||||||||||||||
Stock-based compensation expense |
— |
|||||||||||||||||||||||||||||||
Payments of tax withholdings related to vesting of employee stock awards and exercise of employee stock options |
( |
) |
( |
) |
( |
) |
( |
) |
||||||||||||||||||||||||
Noncontrolling interest in Akcea Therapeutics, Inc |
— |
( |
) |
( |
) |
( |
) |
( |
) |
|||||||||||||||||||||||
Balance at March 31, 2020 (as revised*) |
$ |
$ |
$ |
( |
) |
$ |
( |
) |
$ |
$ |
$ |
|||||||||||||||||||||
Balance at December 31, 2020 (as revised*) |
$ |
$ |
$ |
( |
) |
$ |
( |
) |
$ |
$ |
$ |
|||||||||||||||||||||
Net loss |
— |
( |
) |
( |
) |
( |
) |
|||||||||||||||||||||||||
Change in unrealized loss, net of tax |
— |
( |
) |
( |
) |
( |
) |
|||||||||||||||||||||||||
Foreign currency translation |
— |
( |
) |
( |
) |
( |
) |
|||||||||||||||||||||||||
Issuance of common stock in connection with employee stock plans |
||||||||||||||||||||||||||||||||
Stock-based compensation expense |
— |
|||||||||||||||||||||||||||||||
Payments of tax withholdings related to vesting of employee stock awards and exercise of employee stock options |
( |
) |
( |
) |
( |
) |
( |
) |
||||||||||||||||||||||||
Balance at March 31, 2021 |
$ |
$ |
$ |
( |
) |
$ |
( |
) |
$ |
$ |
$ |
|||||||||||||||||||||
| * | We revised our 2019 and 2020 amounts to reflect the simplified convertible instruments accounting guidance, which we adopted retrospectively. Refer to Note 2, Significant Accounting Policies, for further information. |
Three Months Ended March 31, |
||||||||
2021 |
2020 |
|||||||
(as revised*) |
||||||||
Operating activities: |
||||||||
Net loss |
$ |
( |
) |
$ |
( |
) |
||
Adjustments to reconcile net loss to net cash used in operating activities: |
||||||||
Depreciation |
||||||||
Amortization of right-of-use operating lease assets |
||||||||
Amortization of patents |
||||||||
Amortization of premium (discount) on investments, net |
||||||||
Amortization of debt issuance costs |
||||||||
Stock-based compensation expense |
||||||||
Gain on investments |
( |
) |
( |
) |
||||
Non-cash losses related to patents |
||||||||
Provision for deferred income taxes |
( |
) |
||||||
Changes in operating assets and liabilities: |
||||||||
Contracts receivable |
||||||||
Inventories |
( |
) |
( |
) |
||||
Other current and long-term assets |
||||||||
Income taxes payable |
( |
) |
||||||
Accounts payable |
( |
) |
||||||
Accrued compensation |
( |
) |
( |
) |
||||
Accrued liabilities and other current liabilities |
( |
) |
( |
) |
||||
Deferred contract revenue |
( |
) |
( |
) |
||||
Net cash used in operating activities |
( |
) |
( |
) |
||||
Investing activities: |
||||||||
Purchases of short-term investments |
( |
) |
( |
) |
||||
Proceeds from sale of short-term investments |
||||||||
Purchases of property, plant and equipment |
( |
) |
( |
) |
||||
Acquisition of licenses and other assets, net |
( |
) |
( |
) |
||||
Net cash provided by (used in) investing activities |
( |
) |
||||||
Financing activities: |
||||||||
Proceeds from equity, net |
||||||||
Payments of tax withholdings related to vesting of employee stock awards and exercise of employee stock options |
( |
) |
( |
) |
||||
Repurchases and retirements of common stock |
( |
) |
||||||
Net cash used in financing activities |
( |
) |
( |
) |
||||
Effects of exchange rates on cash |
( |
) |
||||||
Net increase (decrease) in cash and cash equivalents |
( |
) |
||||||
Cash and cash equivalents at beginning of period |
||||||||
Cash and cash equivalents at end of period |
$ |
$ |
||||||
Supplemental disclosures of cash flow information: |
||||||||
Interest paid |
$ |
$ |
||||||
Income taxes paid |
$ |
$ |
||||||
Supplemental disclosures of non-cash investing and financing activities: |
||||||||
Amounts accrued for capital and patent expenditures |
$ |
$ |
||||||
| * | We revised our 2020 amounts to reflect the simplified convertible instruments accounting guidance, which we adopted retrospectively. Refer to Note 2, Significant Accounting Policies, for further information. |
| 1. | Identify the contract |
| ● | We and our partner approved the contract and we are both committed to perform our obligations; |
| ● | We have identified our rights, our partner’s rights and the payment terms; |
| ● | We have concluded that the contract has commercial substance, meaning that the risk, timing, or amount of our future cash flows is expected to change as a result of the contract; and |
| ● | We believe collectability of the consideration is probable. |
| 2. | Identify the performance obligations |
| 3. | Determine the transaction price |
| 4. | Allocate the transaction price |
| ● | Estimated future product sales; |
| ● | Estimated royalties we may receive from future product sales; |
| ● | Estimated contractual milestone payments we may receive; |
| ● | Expenses we expect to incur; |
| ● | Estimated income taxes; and |
| ● | A discount rate. |
| ● | The number of internal hours we estimate we will spend performing these services; |
| ● | The estimated cost of work we will perform; |
| ● | The estimated cost of work that we will contract with third parties to perform; and |
| ● | The estimated cost of API we will use. |
| 5. | Recognize revenue |
| 1) | If the additional goods and/or services are distinct from the other performance obligations in the original agreement; and |
| 2) | If the goods and/or services are sold at a stand-alone selling price. |
| ● | Whether the agreements were negotiated together with a single objective; |
| ● | Whether the amount of consideration in one contract depends on the price or performance of the other agreement; or |
| ● | Whether the goods and/or services promised under the agreements are a single performance obligation. |
March 31, 2021 |
December 31, 2020 |
|||||||
Raw materials: |
||||||||
Raw materials- clinical |
$ |
$ |
||||||
Raw materials- commercial |
||||||||
Total raw materials |
||||||||
Work in process |
||||||||
Finished goods |
||||||||
Total inventory |
$ |
$ |
||||||
Three months ended March 31, 2020 |
Weighted Average Shares Owned in Akcea |
Akcea’s Net Loss Per Share |
Basic Net Loss Per Share Calculation (as revised*) |
|||||||||
Ionis’ portion of Akcea’s net loss |
$ |
( |
) |
$ |
( |
) |
||||||
Akcea’s net loss attributable to our ownership |
$ |
( |
) |
|||||||||
Ionis’ stand-alone net loss |
( |
) |
||||||||||
Net loss available to Ionis common stockholders |
$ |
( |
) |
|||||||||
Weighted average shares outstanding |
||||||||||||
Basic net loss per share |
$ |
( |
) |
|||||||||
| * | We revised our 2020 amounts to reflect the simplified convertible instruments accounting guidance, which we adopted retrospectively. Refer to Note 2, Significant Accounting Policies, for further information. |
| ● |
| ● | Note hedges related to the |
| ● |
| ● | Dilutive stock options; |
| ● | Unvested restricted stock units, or RSUs; |
| ● | Unvested performance restricted stock units, or PRSUs; and |
| ● | Employee Stock Purchase Plan, or ESPP. |
December 31, 2020 |
||||||||||||
As Previously Reported |
ASU 2020-06 Adjustment |
As Revised |
||||||||||
1 percent convertible senior notes |
$ |
$ |
$ |
|||||||||
0.125 percent convertible senior notes |
$ |
$ |
$ |
|||||||||
Additional paid-in-capital |
$ |
$ |
( |
) |
$ |
|||||||
Accumulated deficit |
$ |
( |
) |
$ |
$ |
( |
) |
|||||
Three Months Ended March 31, 2020 |
||||||||||||
As Previously Reported |
ASU 2020-06 Adjustment |
As Revised |
||||||||||
Interest expense |
$ |
( |
) |
$ |
$ |
( |
) |
|||||
Loss before income tax benefit |
$ |
( |
) |
$ |
$ |
( |
) |
|||||
Income tax benefit |
$ |
$ |
( |
) |
$ |
|||||||
Net loss |
$ |
( |
) |
$ |
$ |
( |
) |
|||||
Net loss attributable to Ionis Pharmaceuticals, Inc. common stockholders |
$ |
( |
) |
$ |
$ |
( |
) |
|||||
Basic and diluted net loss per share |
$ |
( |
) |
$ |
$ |
( |
) |
|||||
December 31, 2020 |
||||||||||||
As Previously Reported |
ASU 2020-06 Adjustment |
As Revised |
||||||||||
Additional paid-in-capital |
$ |
$ |
( |
) |
$ |
|||||||
Accumulated deficit |
$ |
( |
) |
$ |
$ |
( |
) |
|||||
Total stockholders' equity |
$ |
$ |
( |
) |
$ |
|||||||
December 31, 2019 |
||||||||||||
As Previously Reported |
ASU 2020-06 Adjustment |
As Revised |
||||||||||
Additional paid-in-capital |
$ |
$ |
( |
) |
$ |
|||||||
Accumulated deficit |
$ |
( |
) |
$ |
$ |
( |
) |
|||||
Total stockholders' equity |
$ |
$ |
( |
) |
$ |
|||||||
Three Months Ended March 31, |
||||||||
2021 |
2020 |
|||||||
Risk-free interest rate |
% |
% |
||||||
Dividend yield |
% |
% |
||||||
Volatility |
% |
% |
||||||
Expected life |
||||||||
Three Months Ended March 31, |
||||||||
2021 |
2020 |
|||||||
Risk-free interest rate |
% |
% |
||||||
Dividend yield |
% |
% |
||||||
Volatility |
% |
% |
||||||
Expected life |
||||||||
Three Months Ended March 31, |
||||||||
2021 |
2020 |
|||||||
Cost of sales |
$ |
$ |
||||||
Research, development and patent expense |
||||||||
Selling, general and administrative expense |
||||||||
Total |
$ |
$ |
||||||
% |
||||
After |
% |
|||
After |
% |
|||
Total |
% |
Gross Unrealized |
Estimated |
|||||||||||||||
March 31, 2021 |
Cost (1) |
Gains |
Losses |
Fair Value |
||||||||||||
Available-for-sale securities: |
||||||||||||||||
Corporate debt securities (2) |
$ |
$ |
$ |
( |
) |
$ |
||||||||||
Debt securities issued by U.S. government agencies |
( |
) |
||||||||||||||
Debt securities issued by the U.S. Treasury (2) |
||||||||||||||||
Debt securities issued by states of the U.S. and political subdivisions of the states |
( |
) |
||||||||||||||
Other municipal debt securities |
( |
) |
||||||||||||||
Total securities with a maturity of one year or less |
( |
) |
||||||||||||||
Corporate debt securities |
( |
) |
||||||||||||||
Debt securities issued by U.S. government agencies |
( |
) |
||||||||||||||
Debt securities issued by the U.S. Treasury |
( |
) |
||||||||||||||
Debt securities issued by states of the U.S. and political subdivisions of the states |
( |
) |
||||||||||||||
Other municipal debt |
( |
) |
||||||||||||||
Total securities with a maturity of more than one year |
( |
) |
||||||||||||||
Total available-for-sale securities |
$ |
$ |
$ |
( |
) |
$ |
||||||||||
Equity securities: |
||||||||||||||||
Total equity securities included in other current assets (3) |
$ |
$ |
$ |
( |
) |
$ |
||||||||||
Total equity securities included in deposits and other assets (4) |
||||||||||||||||
Total equity securities |
( |
) |
||||||||||||||
Total available-for-sale and equity securities |
$ |
$ |
$ |
( |
) |
$ |
||||||||||
Gross Unrealized |
Estimated |
|||||||||||||||
December 31, 2020 |
Cost (1) |
Gains |
Losses |
Fair Value |
||||||||||||
Available-for-sale securities: |
||||||||||||||||
Corporate debt securities (2) |
$ |
$ |
$ |
( |
) |
$ |
||||||||||
Debt securities issued by U.S. government agencies |
( |
) |
||||||||||||||
Debt securities issued by the U.S. Treasury (2) |
( |
) |
||||||||||||||
Debt securities issued by states of the U.S. and political subdivisions of the states |
( |
) |
||||||||||||||
Other municipal debt securities |
( |
) |
||||||||||||||
Total securities with a maturity of one year or less |
( |
) |
||||||||||||||
Corporate debt securities |
( |
) |
||||||||||||||
Debt securities issued by U.S. government agencies |
( |
) |
||||||||||||||
Debt securities issued by the U.S. Treasury |
( |
) |
||||||||||||||
Debt securities issued by states of the U.S. and political subdivisions of the states |
( |
) |
||||||||||||||
Other municipal debt securities |
||||||||||||||||
Total securities with a maturity of more than one year |
( |
) |
||||||||||||||
Total available-for-sale securities |
$ |
$ |
$ |
( |
) |
$ |
||||||||||
Equity securities: |
||||||||||||||||
Total equity securities included in other current assets (3) |
$ |
$ |
$ |
( |
) |
$ |
||||||||||
Total equity securities included in deposits and other assets (4) |
||||||||||||||||
Total equity securities |
( |
) |
||||||||||||||
Total available-for-sale and equity securities |
$ |
$ |
$ |
( |
) |
$ |
||||||||||
| (1) |
| (2) |
| (3) |
| (4) |
Number of Investments |
Estimated Fair Value |
Unrealized Losses |
||||||||||
Corporate debt securities |
$ |
$ |
( |
) |
||||||||
Debt securities issued by U.S. government agencies |
( |
) |
||||||||||
Debt securities issued by the U.S. Treasury |
( |
) |
||||||||||
Debt securities issued by states of the U.S. and political subdivisions of the states |
( |
) |
||||||||||
Other municipal debt securities |
( |
) |
||||||||||
Total temporarily impaired securities |
$ |
$ |
( |
) |
||||||||
At March 31, 2021 |
Quoted Prices in Active Markets (Level 1) |
Significant Other Observable Inputs (Level 2) |
||||||||||
Cash equivalents (1) |
$ |
$ |
$ |
|||||||||
Corporate debt securities (2) |
||||||||||||
Debt securities issued by U.S. government agencies (3) |
||||||||||||
Debt securities issued by the U.S. Treasury (3) |
||||||||||||
Debt securities issued by states of the U.S. and political subdivisions of the states (3) |
||||||||||||
Other municipal debt securities (3) |
||||||||||||
Investment in ProQR Therapeutics N.V. (4) |
||||||||||||
Total |
$ |
$ |
$ |
|||||||||
At December 31, 2020 |
Quoted Prices in Active Markets (Level 1) |
Significant Other Observable Inputs (Level 2) |
||||||||||
Cash equivalents (1) |
$ |
$ |
$ |
|||||||||
Corporate debt securities (2) |
||||||||||||
Debt securities issued by U.S. government agencies (3) |
||||||||||||
Debt securities issued by the U.S. Treasury (5) |
||||||||||||
Debt securities issued by states of the U.S. and political subdivisions of the states (3) |
||||||||||||
Other municipal debt securities (3) |
||||||||||||
Investment in ProQR Therapeutics N.V. (4) |
||||||||||||
Total |
$ |
$ |
$ |
|||||||||
| (1) |
| (2) |
| (3) |
| (4) |
| (5) |
Three Months Ended March 31, |
||||||||
2021 |
2020 |
|||||||
SPINRAZA royalties (commercial revenue) |
$ |
$ |
||||||
R&D revenue |
||||||||
Total revenue from our relationship with Biogen |
$ |
$ |
||||||
Percentage of total revenue |
% |
% |
||||||
Outstanding principal balance |
$ |
|||
Maturity date |
||||
Interest rate |
||||
Conversion price per share |
$ |
|||
Effective conversion price per share with call spread |
$ |
|||
Total shares of common stock subject to conversion |
||||
Outstanding principal balance |
$ |
|||
Maturity date |
||||
Interest rate |
||||
Conversion price per share |
$ |
|||
Effective conversion price per share with call spread |
$ |
|||
Total shares of common stock subject to conversion |
||||
Unamortized debt issuance costs |
$ |
|||
Outstanding principal balance |
$ |
|||
Maturity date |
||||
Interest rate |
||||
Conversion price per share |
$ |
|||
Total shares of common stock subject to conversion |
||||
Unamortized debt issuance costs |
$ |
|||
Severance and Retention Expenses |
||||
Total estimated expenses |
$ |
|||
Expenses incurred in the three months ended December 31, 2020 |
||||
Expenses incurred in the three months ended March 31, 2021 |
||||
Remaining estimated expenses to be recognized through October 2021 |
$ |
|||
Three Months Ended March 31, 2021 |
||||
Research, development and patent expenses |
$ |
|||
Selling, general and administrative expenses |
||||
Total |
$ |
|||
Three Months Ended March 31, 2021 |
||||
Beginning balance |
$ |
|||
Amounts expensed during the period |
||||
Reserve adjustments during the period |
( |
) |
||
Net amount expensed during the period |
||||
Amounts paid during the period |
( |
) |
||
Ending balance |
$ |
|||
Severance and Retention Expenses |
||||
Total estimated expenses |
$ |
|||
Expenses incurred in the three months ended December 31, 2020 |
||||
Expenses incurred in the three months ended March 31, 2021 |
||||
Remaining estimated expenses through October 2021 |
$ |
|||
Three Months Ended March 31, 2021 |
||||
Research, development and patent expenses |
$ |
|||
Selling, general and administrative expenses |
||||
Total |
$ |
|||
Three Months Ended March 31, 2021 |
||||
Beginning balance |
$ |
|||
Amounts expensed during the period |
||||
Reserve adjustments during the period |
( |
) |
||
Net amount expensed during the period |
||||
Amounts paid during the period |
( |
) |
||
Ending balance |
$ |
|||
| ITEM 2 | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
| ● | Tofersen: Biogen completed enrollment in the VALOR Phase 3 study in patients with SOD1-ALS in December 2020 |
| ● | IONIS-TTR-LRx: Enrollment is ongoing in both the NEURO-TTRansform and the CARDIO-TTRansform Phase 3 studies |
| ● | IONIS-APOCIII-LRx: Enrollment is ongoing in the BALANCE Phase 3 study in patients with FCS |
| ● | Pelacarsen: Enrollment is ongoing in Novartis Pharma AG’s Lp(a)HORIZON Phase 3 cardiovascular outcome study |
| ● | ION363: We recently initiated a Phase 3 study in patients with FUS-ALS, the most common cause of juvenile-onset ALS |
Three Months Ended March 31, |
||||||||
2021 |
2020 |
|||||||
(as revised*) |
||||||||
Total revenue |
$ |
111.6 |
$ |
133.4 |
||||
Total operating expenses |
$ |
203.6 |
$ |
194.5 |
||||
Loss from operations |
$ |
(92.0 |
) |
$ |
(61.1 |
) |
||
Net loss |
$ |
(89.9 |
) |
$ |
(49.9 |
) |
||
| * | We revised our 2020 amounts to reflect the simplified convertible instruments accounting guidance, which we adopted retrospectively. Refer to Note 2, Significant Accounting Policies, for further information. |
| ● | SPINRAZA: a global foundation-of-care for the treatment of SMA patients of all ages |
| o | $521 million in worldwide sales in the first quarter |
| o | More than 11,000 patients worldwide were on therapy at the end of the first quarter across post-marketing, expanded access and clinical trial settings |
| o | Higher-dose SPINRAZA demonstrated safety and tolerability consistent with the currently approved dose in the open-label safety cohort of the DEVOTE study, enabling enrollment in the blinded, pivotal cohort to get underway |
| ● | TEGSEDI and WAYLIVRA: important medicines approved for the treatment of patients with severe rare diseases |
| o | Completed the transition of European operations to Sobi and expanded the distribution agreement to include North American TEGSEDI operations |
| ● | Phase 3 Pipeline: growing and positioned for 12 or more products on the market in 2026 |
| o | Advanced ION363 into a Phase 3 study in patients with FUS-ALS |
| o | Advanced tofersen into the Phase 3 ATLAS study in presymptomatic SOD1-ALS patients |
| o | Roche reported tominersen data related to the dosing halt in the Phase 3 program |
| ● | Mid-stage Pipeline: advancing multiple medicines with potential to change the standard of care for patients with severe diseases |
| o | Reported positive topline IONIS-PKK-LRx results in patients with hereditary angioedema |
| o | Advanced ION373 into the Phase 2 portion of a pivotal study in patients with Alexander disease |
| o | Advanced the IONIS-AGT-LRx development program: |
| ◾ | Reported positive Phase 2 data in JACC: Basic to Translational Science |
| ◾ | Advanced into a Phase 2b study in patients with hypertension uncontrolled with three or more antihypertensive medications |
| ◾ | Advanced into a Phase 2 study in patients with chronic heart failure with reduced injection fraction |
| o | Advanced the ongoing Phase 2 study of ION541 in patients with ALS regardless of family history, resulting in a $10 million payment from Biogen |
| ● | Assessing the propriety of revenue recognition and associated deferred revenue; |
| ● | Determining the appropriate cost estimates for unbilled preclinical studies and clinical development activities; and |
Three Months Ended March 31, |
||||||||
2021 |
2020 |
|||||||
Revenue: |
||||||||
Commercial revenue: |
||||||||
SPINRAZA royalties |
$ |
60.0 |
$ |
66.0 |
||||
TEGSEDI and WAYLIVRA revenue, net |
19.8 |
15.2 |
||||||
Licensing and other royalty revenue |
4.6 |
2.8 |
||||||
Total commercial revenue |
84.4 |
84.0 |
||||||
R&D revenue: |
||||||||
Amortization from upfront payments |
20.1 |
21.1 |
||||||
Milestone payments |
5.2 |
23.1 |
||||||
Other services |
1.9 |
5.2 |
||||||
Total R&D revenue |
27.2 |
49.4 |
||||||
Total revenue |
$ |
111.6 |
$ |
133.4 |
||||
Three Months Ended March 31, |
||||||||
2021 |
2020 |
|||||||
Operating expenses, excluding non-cash compensation expense related to equity awards |
$ |
159.0 |
$ |
153.7 |
||||
Restructuring expenses |
6.7 |
— |
||||||
Non-cash compensation expense related to equity awards |
37.9 |
40.8 |
||||||
Total operating expenses |
$ |
203.6 |
$ |
194.5 |
||||
Three Months Ended March 31, |
||||||||
2021 |
2020 |
|||||||
Cost of sales, excluding non-cash compensation expense related to equity awards |
$ |
2.4 |
$ |
2.3 |
||||
Non-cash compensation expense related to equity awards |
0.2 |
0.2 |
||||||
Total cost of sales |
$ |
2.6 |
$ |
2.5 |
||||
Three Months Ended March 31, |
||||||||
2021 |
2020 |
|||||||
Research, development and patent expenses, excluding non-cash compensation expense related to equity awards |
$ |
111.3 |
$ |
91.4 |
||||
Restructuring expenses |
2.6 |
— |
||||||
Non-cash compensation expense related to equity awards |
25.9 |
25.6 |
||||||
Total research, development and patent expenses |
$ |
139.8 |
$ |
117.0 |
||||
Three Months Ended March 31, |
||||||||
2021 |
2020 |
|||||||
Antisense drug discovery expenses, excluding non-cash compensation expense related to equity awards |
$ |
26.6 |
$ |
18.4 |
||||
Non-cash compensation expense related to equity awards |
6.3 |
6.3 |
||||||
Total antisense drug discovery expenses |
$ |
32.9 |
$ |
24.7 |
||||
Three Months Ended March 31, |
||||||||
2021 |
2020 |
|||||||
TEGSEDI |
$ |
1.8 |
$ |
4.3 |
||||
WAYLIVRA |
0.6 |
1.0 |
||||||
IONIS-TTR-LRx |
13.3 |
5.9 |
||||||
IONIS-APOCIII-LRx |
1.4 |
0.8 |
||||||
ION363 |
2.1 |
— |
||||||
Other antisense development projects |
20.3 |
21.0 |
||||||
Development overhead expenses |
22.5 |
17.9 |
||||||
Restructuring expenses |
2.3 |
— |
||||||
Total antisense drug development, excluding non-cash compensation expense related to equity awards |
64.3 |
50.9 |
||||||
Non-cash compensation expense related to equity awards |
12.4 |
11.8 |
||||||
Total antisense drug development expenses |
$ |
76.7 |
$ |
62.7 |
||||
Three Months Ended March 31, |
||||||||
2021 |
2020 |
|||||||
Manufacturing and development chemistry expenses, excluding non-cash compensation expense related to equity awards |
$ |
11.8 |
$ |
12.0 |
||||
Restructuring expenses |
0.3 |
— |
||||||
Non-cash compensation expense related to equity awards |
3.1 |
2.8 |
||||||
Total manufacturing and development chemistry expenses |
$ |
15.2 |
$ |
14.8 |
||||
Three Months Ended March 31, |
||||||||
2021 |
2020 |
|||||||
Personnel costs |
$ |
4.3 |
$ |
3.8 |
||||
Occupancy |
3.2 |
2.4 |
||||||
Patent expenses |
0.8 |
0.7 |
||||||
Insurance |
0.8 |
0.6 |
||||||
Computer software and licenses |
0.5 |
0.6 |
||||||
Other |
1.3 |
2.0 |
||||||
Total R&D support expenses, excluding non-cash compensation expense related to equity awards |
10.9 |
10.1 |
||||||
Non-cash compensation expense related to equity awards |
4.1 |
4.6 |
||||||
Total R&D support expenses |
$ |
15.0 |
$ |
14.7 |
||||
Three Months Ended March 31, |
||||||||
2021 |
2020 |
|||||||
Selling, general and administrative expenses, excluding non-cash compensation expense related to equity awards |
$ |
45.3 |
$ |
60.0 |
||||
Restructuring expenses |
4.1 |
— |
||||||
Total selling, general and administrative expenses, excluding non-cash compensation related to equity awards |
49.4 |
60.0 |
||||||
Non-cash compensation expense related to equity awards |
11.8 |
15.0 |
||||||
Total selling, general and administrative expenses |
$ |
61.2 |
$ |
75.0 |
||||
Three Months Ended March 31, |
||||||||
2021 |
2020 |
|||||||
(as revised*) |
||||||||
Convertible notes: |
||||||||
Non-cash amortization of debt issuance costs |
$ |
0.9 |
$ |
0.7 |
||||
Interest expense payable in cash |
0.9 |
0.9 |
||||||
Interest on mortgage for primary R&D and manufacturing facilities |
0.6 |
0.6 |
||||||
Total interest expense |
$ |
2.4 |
$ |
2.2 |
||||
| * | We revised our 2020 amounts to reflect the simplified convertible instruments accounting guidance, which we adopted retrospectively. Refer to Note 2, Significant Accounting Policies, for further information. |
Contractual Obligations |
Payments Due by Period (in millions) |
|||||||||||
(selected balances described below) |
Total |
Less than 1 year |
More than 1 year |
|||||||||
0.125% Notes (principal and interest payable) |
$ |
551.6 |
$ |
0.7 |
$ |
550.9 |
||||||
1% Notes (principal and interest payable)* |
313.0 |
313.0 |
— |
|||||||||
Building mortgage payments |
75.5 |
2.4 |
73.1 |
|||||||||
Operating leases |
22.4 |
3.3 |
19.1 |
|||||||||
Other obligations (principal and interest payable) |
0.9 |
0.1 |
0.8 |
|||||||||
Total |
$ |
963.4 |
$ |
319.5 |
$ |
643.9 |
||||||
| * | In April 2021, we repurchased $247.9 million in aggregate principal amount of our 1% Notes in privately negotiated transactions. As a result, in April 2021, the remaining principal outstanding for our 1% Notes was $62.0 million. As a result of the repurchase, we reclassified the repurchased portion of our 1% Notes from current to non-current liabilities on our condensed consolidated balance sheet as of March 31, 2021 because we replaced this portion of our outstanding debt with long-term debt. |
| ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
| ITEM 4. | CONTROLS AND PROCEDURES |
| ITEM 1. | LEGAL PROCEEDINGS |
| ITEM 1A. | RISK FACTORS |
| ● | the impact on our operations and financial condition from the effects of the current COVID-19 pandemic; |
| ● | our ability to generate substantial revenue from the sale of our medicines; |
| ● | our and our partners’ ability to compete effectively; |
| ● | the availability of adequate coverage and payment rates for our medicines; |
| ● | our ability to successfully manufacture our medicines; |
| ● | our ability to successfully develop and obtain marketing approvals for our medicines; |
| ● | our ability to secure and maintain effective corporate partnerships; |
| ● | our ability to sustain cash flows and achieve consistent profitability; |
| ● | our ability to protect our intellectual property; |
| ● | our ability to maintain the effectiveness of our personnel; and |
| ● | the other factors set forth below. |
| ● | we have experienced some impact on clinical site initiation and patient enrollment due to restrictions imposed as a result of the COVID-19 Pandemic; |
| o | For example, in March 2020, we instituted a temporary suspension of enrollment for new subjects in our Phase 3 studies of IONIS-TTR-LRx based on advice from our trial advisory committee; however, enrollment has resumed. |
| ● | some patients have not been able to meet protocol requirements, as quarantines have impeded patient movement and interrupted healthcare services; |
| ● | we have experienced some delays in site initiations due to principle investigators and site staff focusing on |
| ● | we have experienced some delays in necessary interactions with regulators, ethics committees and other |
| ● | receipt and scope of marketing authorizations; |
| ● | establishment and demonstration in the medical and patient community of the efficacy and safety of our medicines and their potential advantages over competing products; |
| ● | cost and effectiveness of our medicines compared to other available therapies; |
| ● | patient convenience of the dosing regimen for our medicines; and |
| ● | reimbursement policies of government and third-party payers. |
| ● | priced lower than our medicines; |
| ● | reimbursed more favorably by government and other third-party payers than our medicines; |
| ● | safer than our medicines; |
| ● | more effective than our medicines; or |
| ● | more convenient to use than our medicines. |
| ● | Onasemnogene abeparvovec and risdiplam compete with SPINRAZA; |
| ● | Patisiran, tafamidis and tafamidis meglumine compete with TEGSEDI; |
| ● | Vutrisiran and acoramidis could compete with TEGSEDI and IONIS-TTR-LRx; |
| ● | ARO-APOC3, lomitapide and gemcabene could compete with WAYLIVRA and IONIS-APOCIII-LRx; and |
| ● | Arimoclomol, ultomiris, mastinib and trehalose could compete with tofersen and ION363. |
| ● | in the U.S., TEGSEDI’s label contains a boxed warning for thrombocytopenia and glomerulonephritis; |
| ● | TEGSEDI requires periodic blood and urine monitoring; and |
| ● | in the U.S., TEGSEDI is available only through a REMS program. |
| ● | fund our development activities for SPINRAZA; |
| ● | seek and obtain regulatory approvals for SPINRAZA; and |
| ● | successfully commercialize SPINRAZA. |
| ● | In April 2021, we entered into a distribution agreement with Sobi to commercialize TEGSEDI in the U.S. and Canada; |
| ● | In December 2020, we entered into a distribution agreement with Sobi to commercialize TEGSEDI and WAYLIVRA in Europe; and |
| ● | In August 2018, we granted PTC the exclusive right to commercialize TEGSEDI and WAYLIVRA in Latin America and certain Caribbean countries. |
| ● | such authorities may disagree with the design or implementation of our clinical studies; |
| ● | we or our partners may be unable to demonstrate to the satisfaction of the FDA or other regulatory authorities that a medicine is safe and effective for any indication; |
| ● | such authorities may not accept clinical data from studies conducted at clinical facilities that have deficient clinical practices or that are in countries where the standard of care is potentially different from the U.S.; |
| ● | we or our partners may be unable to demonstrate that our medicine’s clinical and other benefits outweigh its safety risks to support approval; |
| ● | such authorities may disagree with the interpretation of data from preclinical or clinical studies; |
| ● | such authorities may find deficiencies in the manufacturing processes or facilities of third-party manufacturers who manufacture clinical and commercial supplies for our medicines, or may delay the inspection of such facilities due to restrictions related to the COVID-19 Pandemic; and |
| ● | the approval policies or regulations of such authorities or their prior guidance to us or our partners during clinical development may significantly change in a manner rendering our clinical data insufficient for approval. |
| ● | the clinical study may produce negative or inconclusive results; |
| ● | regulators may require that we hold, suspend or terminate clinical research for noncompliance with regulatory requirements; |
| ● | we, our partners, the FDA or foreign regulatory authorities could suspend or terminate a clinical study due to adverse side effects of a medicine on subjects or lack of efficacy in the trial; |
| ● | we, or our partners, may decide, or regulators may require us, to conduct additional preclinical testing or clinical studies; |
| ● | enrollment in our clinical studies may be slower than we anticipate; |
| ● | we or our partners, including our independent clinical investigators, contract research organizations and other third-party service providers on which we rely, may not identify, recruit and train suitable clinical investigators at a sufficient number of study sites or timely enroll a sufficient number of study subjects in the clinical study; |
| ● | the institutional review board for a prospective site might withhold or delay its approval for the study; |
| ● | enrollment in our clinical studies may be slower than we anticipate; |
| ● | people who enroll in the clinical study may later drop out due to adverse events, a perception they are not benefiting from participating in the study, fatigue with the clinical study process or personal issues; |
| ● | a clinical study site may deviate from the protocol for the study; |
| ● | the cost of our clinical studies may be greater than we anticipate; |
| ● | our partners may decide not to exercise any existing options to license and conduct additional clinical studies for our medicines; and |
| ● | the supply or quality of our medicines or other materials necessary to conduct our clinical studies may be insufficient, inadequate or delayed. |
| ● | Roche for development and funding of tominersen; |
| ● | Novartis for development and funding of pelacarsen; and |
| ● | Biogen for development and funding of tofersen. |
| ● | conduct clinical studies; |
| ● | seek and obtain marketing authorizations; and |
| ● | manufacture, market and sell our medicines. |
| ● | pursue alternative technologies or develop alternative products that may be competitive with the medicine that is part of the collaboration with us; |
| ● | pursue higher-priority programs or change the focus of its own development programs; or |
| ● | choose to devote fewer resources to our medicines than it does for its own medicines. |
| ● | successful commercialization of SPINRAZA, TEGSEDI and WAYLIVRA; |
| ● | additional marketing approvals for WAYLIVRA and TEGSEDI; |
| ● | the profile and launch timing of our medicines, including TEGSEDI and WAYLIVRA; |
| ● | changes in existing collaborative relationships and our ability to establish and maintain additional collaborative arrangements; |
| ● | continued scientific progress in our research, drug discovery and development programs; |
| ● | the size of our programs and progress with preclinical and clinical studies; |
| ● | the time and costs involved in obtaining marketing authorizations; and |
| ● | competing technological and market developments, including the introduction by others of new therapies that address our markets. |
| ● | failure to successfully manage relationships with partners, customers, distributors and suppliers; |
| ● | disruptions to Akcea’s commercial operations; |
| ● | potential incompatibility of technologies and systems; |
| ● | failure to leverage the capabilities of the combined company quickly and effectively; |
| ● | potential difficulties integrating and harmonizing business systems and processes; |
| ● | tax benefits of the combined structure may not be available or in the expected amounts; and |
| ● | the loss of key employees. |
| ● | interruption of our research, development and manufacturing efforts; |
| ● | injury to our employees and others; |
| ● | environmental damage resulting in costly clean up; and |
| ● | liabilities under federal, state and local laws and regulations governing health and human safety, as well as the use, storage, handling and disposal of these materials and resultant waste products. |
| ● | compliance with differing or unexpected regulatory requirements for our medicines and foreign employees; |
| ● | complexities associated with managing multiple payer reimbursement regimes, government payers or patient self-pay systems; |
| ● | difficulties in staffing and managing foreign operations; |
| ● | in certain circumstances, increased dependence on the commercialization efforts and regulatory compliance of third-party distributors or strategic partners; |
| ● | foreign government taxes, regulations and permit requirements; |
| ● | U.S. and foreign government tariffs, trade restrictions, price and exchange controls and other regulatory requirements; |
| ● | anti-corruption laws, including the Foreign Corrupt Practices Act, or the FCPA, and its equivalent in foreign jurisdictions; |
| ● | economic weakness, including inflation, natural disasters, war, events of terrorism, political instability or public health issues or pandemics, such as the current COVID-19 Pandemic, in particular foreign countries or globally; |
| ● | fluctuations in currency exchange rates, which could result in increased operating expenses and reduced revenue, and other obligations related to doing business in another country; |
| ● | compliance with tax, employment, privacy, immigration and labor laws, regulations and restrictions for employees living or traveling abroad; |
| ● | workforce uncertainty in countries where labor unrest is more common than in the U.S.; and |
| ● | changes in diplomatic and trade relationships. |
| ITEM 2. | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS |
| ITEM 3. | DEFAULT UPON SENIOR SECURITIES |
| ITEM 4. | MINE SAFETY DISCLOSURES |
| ITEM 5. | OTHER INFORMATION |
| ITEM 6. | EXHIBITS |
| a. | Exhibits |
Exhibit Number |
Description of Document |
|
Amended and Restated Bylaws, filed as an exhibit to Registrant’s Form 8-K filed with the SEC on March 29, 2021 and incorporated herein by reference. |
||
10.1 |
Letter agreement dated October 21, 2020 to the License Agreement by and among Akcea Therapeutics, Inc. and Pfizer Inc. dated October 4, 2019. Portions of this exhibit have been omitted because they are both (i) not material and (ii) would be competitively harmful if publicly disclosed. |
|
10.2 |
Board Compensation Policy. |
|
Code of Ethics, filed as an exhibit to Registrant’s Form 8-K filed with the SEC on March 29, 2021 and incorporated herein by reference. |
||
31.1 |
Certification by Chief Executive Officer pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as amended. |
|
31.2 |
Certification by Chief Financial Officer pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as amended. |
|
32.1* |
Certification Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
|
101 |
The following financial statements from the Ionis Pharmaceuticals, Inc. Quarterly Report on Form 10-Q for the quarter ended March 31, 2021, formatted in Inline Extensible Business Reporting Language (iXBRL): (i) condensed consolidated balance sheets, (ii) condensed consolidated statements of operations, (iii) condensed consolidated statements of comprehensive income (loss), (iv) condensed consolidated statements of stockholders’ equity, (v) condensed consolidated statements of cash flows and (vi) notes to condensed consolidated financial statements (detail tagged). |
|
104 |
Cover Page Interactive Data File (formatted in iXBRL and included in exhibit 101). |
| * | This certification is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section, nor shall it be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended. |
Signatures |
Title |
Date |
||
/s/ BRETT P. MONIA |
Director and Chief Executive Officer |
|||
Brett P. Monia, Ph.D. |
(Principal executive officer) |
May 5, 2021 |
||
/s/ ELIZABETH L. HOUGEN |
Executive Vice President, Finance and Chief Financial Officer |
|||
Elizabeth L. Hougen |
(Principal financial and accounting officer) |
May 5, 2021 |
| Re: |
AKCEA-ANGPTL3-LRx License Agreement
|
|
October 21, 2020
|
|
Page 2
|
|
October 21, 2020
|
|
Page 3
|
|
Cash Compensation
|
|
|
Board Member (base retainer)
|
$60,000(1)
|
|
Non-Executive Chairman of the Board (additional)
|
$40,000
|
|
Independent Lead Director (additional)
|
$40,000
|
|
Committee Chair (additional):
|
|
|
-Audit
|
$24,000 |
|
-Commercial Compliance
|
$10,000 |
|
-Compensation
|
$20,000
|
|
-Finance
|
$20,000 |
|
-Nominating, Governance and Review
|
$20,000 |
|
-Science/Medical
|
$20,000 |
|
Committee Member (additional):
|
|
|
-Audit
|
$12,000 |
|
-Commercial Compliance
|
$5,000 |
|
-Compensation
|
$10,000 |
|
-Finance
|
$10,000 |
|
-Nominating, Governance and Review
|
$10,000 |
|
-Science/Medical
|
$10,000 |
| (1) |
Before March 31, 2024 this annual base cash retainer for each non-employee Director (not including fees for Non-Executive Chair, Independent Lead Director, Committee Chair or Committee Member) is limited to a
maximum of $70,000 per year.
|
|
Type of Grant
|
Number of Shares*
|
|
Initial Stock Option Grant
|
24,000
|
|
Initial Restricted Stock Unit Grant
|
10,667
|
|
Annual Stock Option Grant
|
12,000
|
|
Annual Restricted Stock Unit Grant
|
5,333
|
| 1. | I have reviewed this Quarterly Report on Form 10-Q of Ionis Pharmaceuticals, Inc.; |
| 2. | Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; |
| 3. | Based on my knowledge, the condensed consolidated financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, condensed consolidated results of operations and condensed consolidated cash flows of the registrant as of, and for, the periods presented in this quarterly report; |
| 4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
| a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
| b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
| c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
| d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions): |
| a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
| b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Dated: May 5, 2021 | |
/s/ BRETT P. MONIA | |
Brett P. Monia, Ph.D. | |
Chief Executive Officer |
| 1. | I have reviewed this Quarterly Report on Form 10-Q of Ionis Pharmaceuticals, Inc.; |
| 2. | Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; |
| 3. | Based on my knowledge, the condensed consolidated financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, condensed consolidated results of operations and condensed consolidated cash flows of the registrant as of, and for, the periods presented in this quarterly report; |
| 4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
| a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
| b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
| c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
| d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions): |
| a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
| b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
/s/ ELIZABETH L. HOUGEN | |
Elizabeth L. Hougen | |
Chief Financial Officer |
| 1. | The Company’s Quarterly Report on Form 10-Q for the period ended March 31, 2021, to which this Certification is attached as Exhibit 32.1 (the “Periodic Report”), fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934, as amended; and |
| 2. | The information contained in the Periodic Report fairly presents, in all material respects, the financial condition of the Company at the end of the period covered by the Periodic Report and the results of operations of the Company for the period covered by the Periodic Report. |
/s/ BRETT P. MONIA | /s/ ELIZABETH L. HOUGEN | |
Brett P. Monia, Ph.D. | Elizabeth L. Hougen | |
Chief Executive Officer | Chief Financial Officer |
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares |
Mar. 31, 2021 |
Dec. 31, 2020 |
|---|---|---|
| Stockholders' equity: | ||
| Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
| Common stock, shares authorized (in shares) | 300,000,000 | 300,000,000 |
| Common stock, shares issued (in shares) | 140,924,356 | 140,365,594 |
| Common stock, shares outstanding (in shares) | 140,924,356 | 140,365,594 |
| 0.125 Percent Convertible Senior Notes [Member] | ||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||
| Interest rate on convertible senior notes | 0.125% | 0.125% |
| 1 Percent Convertible Senior Notes [Member] | ||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||
| Interest rate on convertible senior notes | 1.00% | 1.00% |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS - USD ($) $ in Thousands |
3 Months Ended | |
|---|---|---|
Mar. 31, 2021 |
Mar. 31, 2020 |
|
| CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS [Abstract] | ||
| Net loss | $ (89,869) | $ (49,882) |
| Unrealized losses on debt securities, net of tax | (3,006) | (1,954) |
| Currency translation adjustment | (126) | 9 |
| Comprehensive loss | (93,001) | (51,827) |
| Comprehensive loss attributable to noncontrolling interest in Akcea Therapeutics, Inc. | 0 | (10,254) |
| Comprehensive loss attributable to Ionis Pharmaceuticals, Inc. common stockholders | $ (93,001) | $ (41,573) |
Basis of Presentation |
3 Months Ended |
|---|---|
Mar. 31, 2021 | |
| Basis of Presentation [Abstract] | |
| Basis of Presentation |
1. Basis of Presentation
We prepared the unaudited interim condensed consolidated financial statements for the three months ended March 31, 2021 and 2020 on the same basis as the audited financial statements for the year ended December 31, 2020, with the exception of our retrospective adoption of Accounting Standards Update, or ASU, 2020-06, which simplifies the accounting for convertible debt instruments. See Note 2, Significant Accounting Polices, Convertible Debt, for details of our adoption of this guidance. We included all normal recurring adjustments in the financial statements, which we considered necessary for a fair presentation of our financial position at such dates and our operating results and cash flows for those periods. Our operating results for the interim periods may not be indicative of what our operating results will be for the entire year. For more complete financial information, these financial statements, and notes thereto, should be read in conjunction with the audited financial statements for the year ended December 31, 2020 included in our Annual Report on Form 10-K filed with the Securities and Exchange Commission, or SEC.
In our condensed consolidated financial statements, we included the accounts of Ionis Pharmaceuticals, Inc. and the consolidated results of our wholly owned subsidiary, Akcea Therapeutics, Inc. and its wholly owned subsidiaries (“we”, “us” or “our”). We formed Akcea in December 2014. In July 2017, Akcea completed an initial public offering, or IPO, which reduced our ownership of Akcea’s common stock below 100 percent. In October 2020, we acquired the shares of Akcea’s common stock we did not own. We will refer to this transaction as the Akcea Acquisition throughout the remainder of this document. We reflected changes in our ownership percentage in our financial statements as an adjustment to noncontrolling interest in the period the change occurred.
|
Significant Accounting Policies |
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| Significant Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Significant Accounting Policies |
2. Significant Accounting Policies
Revenue Recognition
Our Revenue Sources
We generally recognize revenue when we have satisfied all contractual obligations and are reasonably assured of collecting the resulting receivable. We are often entitled to bill our customers and receive payment from our customers in advance of recognizing the revenue. In the instances in which we have received payment from our customers in advance of recognizing revenue, we include the amounts in deferred revenue on our condensed consolidated balance sheet.
Commercial Revenue: SPINRAZA royalties and Licensing and other royalty revenue
We earn commercial revenue primarily in the form of royalty payments on net sales of SPINRAZA. We will also recognize as commercial revenue sales milestone payments and royalties we earn under our other partnerships.
Commercial Revenue: TEGSEDI and WAYLIVRA revenue, net
In the United States, or U.S., through the first quarter of 2021, we sold TEGSEDI through an exclusive distribution agreement with a third-party logistics company, or 3PL, that took title to TEGSEDI. The 3PL was our sole customer in the U.S. The 3PL then distributed TEGSEDI to a specialty pharmacy and a specialty distributor, which we collectively refer to as wholesalers, who then distributed TEGSEDI to health care providers and patients. In Europe, through 2020, we sold TEGSEDI and WAYLIVRA to hospitals and pharmacies, which were our customers, using 3PLs as distributors. In January 2021, we began commercializing TEGSEDI and WAYLIVRA in Europe through a distribution agreement with Swedish Orphan Biovitrum AB, or Sobi. In April 2021, we expanded our distribution agreement with Sobi to also include commercializing TEGSEDI in North America. Under our agreements, we are responsible for supplying finished goods inventory to Sobi and Sobi is responsible for selling each medicine to the end customer. As a result of these agreements, we earn a distribution fee on net sales from Sobi for each medicine.
Under our collaboration agreement with PTC, PTC is responsible for commercializing TEGSEDI and WAYLIVRA in Latin America and Caribbean countries.
Research and development revenue under collaborative agreements
We often enter into collaboration agreements to license and sell our technology on an exclusive or non-exclusive basis. Our collaboration agreements typically contain multiple elements, or performance obligations, including technology licenses or options to obtain technology licenses, research and development, or R&D, services, and manufacturing services.
See Note 5, Collaborative Arrangements and Licensing Agreements, for collaborations with substantive changes that occurred in 2021. Additionally, see Note 6, Collaborative Arrangements and Licensing Agreements, in our audited financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2020 for a summary of each of our material collaborative agreements.
Steps to Recognize Revenue
We use a five-step process to determine the amount of revenue we should recognize and when we should recognize it. The five-step process is as follows:
Accounting rules require us to first determine if we have a contract with our partner, including confirming that we have met each of the following criteria:
We next identify our performance obligations, which represent the distinct goods and services we are required to provide under the contract. We typically have only one performance obligation at the inception of a contract, which is to perform R&D services.
Often we enter into a collaboration agreement in which we provide our partner with an option to license a medicine in the future. We may also provide our partner with an option to request that we provide additional goods or services in the future, such as active pharmaceutical ingredient, or API. We evaluate whether these options are material rights at the inception of the agreement. If we determine an option is a material right, we will consider the option a separate performance obligation. Historically, we have concluded that the options we grant to license a medicine in the future or to provide additional goods and services as requested by our partner are not material rights because these items are contingent upon future events that may not occur and are not priced at a significant discount. When a partner exercises its option to license a medicine or requests additional goods or services, then we identify a new performance obligation for that item.
In some cases, we deliver a license at the start of an agreement. If we determine that our partner has full use of the license and we do not have any additional material performance obligations related to the license after delivery, then we consider the license to be a separate performance obligation.
We then determine the transaction price by reviewing the amount of consideration we are eligible to earn under the collaboration agreement, including any variable consideration. Under our collaboration agreements, consideration typically includes fixed consideration in the form of an upfront payment and variable consideration in the form of potential milestone payments, license fees and royalties. At the start of an agreement, our transaction price usually consists of only the upfront payment. We do not typically include any payments we may receive in the future in our initial transaction price because the payments are not probable and are contingent on certain future events. We reassess the total transaction price at each reporting period to determine if we should include additional payments in the transaction price.
Milestone payments are our most common type of variable consideration. We recognize milestone payments using the most likely amount method because we will either receive the milestone payment or we will not, which makes the potential milestone payment a binary event. The most likely amount method requires us to determine the likelihood of earning the milestone payment. We include a milestone payment in the transaction price once it is probable we will achieve the milestone event. Most often, we do not consider our milestone payments probable until we or our partner achieve the milestone event because the majority of our milestone payments are contingent upon events that are not within our control and/ or are usually based on scientific progress which is inherently uncertain. For example, in the fourth quarter of 2020, we earned a $20 million milestone payment from AstraZeneca when AstraZeneca initiated a Phase 2b study for ION449, our medicine in development targeting PCSK9 to lower LDL-cholesterol. We did not consider the milestone payment probable until AstraZeneca achieved the milestone event because advancing ION449 was contingent on AstraZeneca initiating a Phase 2b study and was not within our control. We recognized the milestone payment in full in the period the milestone event was achieved because we did not have any remaining performance obligations related to the milestone payment.
Next, we allocate the transaction price to each of our performance obligations. When we have to allocate the transaction price to more than one performance obligation, we make estimates of the relative stand-alone selling price of each performance obligation because we do not typically sell our goods or services on a stand-alone basis. We then allocate the transaction price to each performance obligation based on the relative stand-alone selling price. We do not reallocate the transaction price after the start of an agreement to reflect subsequent changes in stand-alone selling prices.
We may engage a third party, independent valuation specialist to assist us with determining a stand-alone selling price for collaborations in which we deliver a license at the start of an agreement. We estimate the stand-alone selling price of these licenses using valuation methodologies, such as the relief from royalty method. Under this method, we estimate the amount of income, net of taxes, for the license. We then discount the projected income to present value. The significant inputs we use to determine the projected income of a license could include:
We typically estimate the selling price of R&D services by using our internal estimates of the cost to perform the specific services. The significant inputs we use to determine the selling price of our R&D services include:
For purposes of determining the stand-alone selling price of the R&D services we perform and the API we will deliver, accounting guidance requires us to include a markup for a reasonable profit margin.
We recognize revenue in one of two ways, over time or at a point in time. We recognize revenue over time when we are executing on our performance obligation over time and our partner receives benefit over time. For example, we recognize revenue over time when we provide R&D services. We recognize revenue at a point in time when our partner receives full use of an item at a specific point in time. For example, we recognize revenue at a point in time when we deliver a license or API to a partner.
For R&D services that we recognize over time, we measure our progress using an input method. The input methods we use are based on the effort we expend or costs we incur toward the satisfaction of our performance obligation. We estimate the amount of effort we expend, including the time we estimate it will take us to complete the activities, or costs we incur in a given period, relative to the estimated total effort or costs to satisfy the performance obligation. This results in a percentage that we multiply by the transaction price to determine the amount of revenue we recognize each period. This approach requires us to make numerous estimates and use significant judgement. If our estimates or judgements change over the course of the collaboration, they may affect the timing and amount of revenue that we recognize in the current and future periods.
The following are examples of when we typically recognize revenue based on the types of payments we receive.
Commercial Revenue: SPINRAZA royalties and Licensing and other royalty revenue
We recognize royalty revenue, including royalties from SPINRAZA sales, in the period in which the counterparty sells the related product and recognizes the related revenue, which in certain cases may require us to estimate our royalty revenue.
Commercial Revenue: TEGSEDI and WAYLIVRA revenue, net
Prior to our distribution agreement with Sobi, we recognized TEGSEDI and WAYLIVRA commercial revenue in the period when our customer obtained control of our products, which occurred at a point in time upon transfer of title to the customer. We classified payments to customers or other parties in the distribution channel for services that were distinct and priced at fair value as selling, general and administrative, or SG&A, expenses in our condensed consolidated statements of operations. We classified payments to customers or other parties in the distribution channel that did not meet those criteria as a reduction of revenue, as discussed further below. We excluded from revenues taxes collected from customers relating to TEGSEDI and WAYLIVRA commercial revenue and remitted these amounts to governmental authorities.
Under our distribution agreement with Sobi we concluded that our performance obligation is to supply finished goods inventory to Sobi. This performance obligation is a series of distinct activities that are substantially the same because we transfer title using the same criteria each time we ship inventory to Sobi. Therefore, we recognize as revenue the price Sobi pays us for the inventory when we deliver the finished goods inventory to Sobi. We also recognize distribution fee revenue based on Sobi’s net sales of TEGSEDI and WAYLIVRA. Additionally, Sobi does not generally have a right of return.
Reserves for TEGSEDI and WAYLIVRA commercial revenue
Prior to our distribution agreement with Sobi, we recorded TEGSEDI and WAYLIVRA commercial revenue at our net sales price, or transaction price. We included in our transaction price estimated reserves for discounts, returns, chargebacks, rebates and other allowances that we offered within contracts between us and our customers, wholesalers, distributors, health care providers and other indirect customers. We estimated our reserves using the amounts we have earned or we could claim on the associated sales. We classified our reserves as a reduction of accounts receivable when we were not required to make a payment or as a current liability when we were required to make a payment. In certain cases, our estimates included a range of possible outcomes that were probability weighted for relevant factors such as our historical experience, current contractual and statutory requirements, specific known market events and trends, industry data and forecasted customer buying and payment patterns. Overall, our reserves reflected our best estimates under the terms of our respective contracts. When calculating our reserves and related TEGSEDI and WAYLIVRA commercial revenue, we only recognized amounts to the extent that we considered it probable that we would not have to reverse a significant amount of the cumulative sales we previously recognized in a future period. The actual amounts we receive may ultimately differ from our reserve estimates. If actual amounts in the future vary from our estimates, we will adjust these estimates, which would affect our net TEGSEDI and WAYLIVRA revenue in the corresponding period. See our revenue recognition policy in Note 1, Organization and Significant Accounting Policies, of our audited financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2020 for additional details regarding how we accounted for the reserves related to TEDSEDI and WAYLIVIRA product sales.
Under our distribution agreement with Sobi, Sobi is financially responsible for any applicable reserves.
Research and development revenue under collaboration agreements:
Upfront payments
When we enter into a collaboration agreement with an upfront payment, we typically record the entire upfront payment as deferred revenue if our only performance obligation is for R&D services we will provide in the future. We amortize the upfront payment into revenue as we perform the R&D services. For example, under our collaboration agreement with Roche to develop IONIS-FB-LRx for the treatment of complement-mediated diseases, we received a $75 million upfront payment in the fourth quarter of 2018. We allocated the upfront payment to our single performance obligation, R&D services. We are amortizing the $75 million upfront payment using an input method over the estimated period of time we are providing R&D services.
Milestone payments
We are required to include additional consideration in the transaction price when it is probable. We typically include milestone payments for R&D services in the transaction price when they are achieved. We include these milestone payments when they are achieved because typically there is considerable uncertainty in the research and development processes that trigger these payments. Similarly, we include approval milestone payments in the transaction price once the medicine is approved by the applicable regulatory agency. We will recognize sales-based milestone payments in the period in which we achieve the milestone under the sales-based royalty exception allowed under accounting rules.
We recognize milestone payments that relate to an ongoing performance obligation over our period of performance. For example, in the fourth quarter of 2020, we achieved a $7.5 million milestone payment from Biogen when we advanced a target under our 2018 strategic collaboration. We added this payment to the transaction price and allocated it to our R&D services performance obligation. We are recognizing revenue related to this milestone payment over our estimated period of performance.
Conversely, we recognize in full those milestone payments that we earn based on our partners’ activities when our partner achieves the milestone event and we do not have a performance obligation. For example, in the third quarter of 2020, we recognized $18 million in milestone payments when Biogen initiated a Phase 1/2 trial for ION464, our medicine in development targeting alpha-synuclein to treat patients with multiple system atrophy. We concluded that the milestone payments were not related to our R&D services performance obligation. Therefore, we recognized the milestone payments in full in the third quarter of 2020.
License fees
We generally recognize as revenue the total amount we determine to be the relative stand-alone selling price of a license when we deliver the license to our partner. This is because our partner has full use of the license and we do not have any additional performance obligations related to the license after delivery. For example, in the fourth quarter of 2020, we earned a $30 million license fee from AstraZeneca when AstraZeneca licensed ION455, an investigational medicine in development to treat nonalcoholic steatohepatitis, or NASH.
Sublicense fees
We recognize sublicense fee revenue in the period in which a party, who has already licensed our technology, further licenses the technology to another party because we do not have any performance obligations related to the sublicense.
Amendments to Agreements
From time to time we amend our collaboration agreements. When this occurs, we are required to assess the following items to determine the accounting for the amendment:
If we conclude the goods and/or services in the amendment are distinct from the performance obligations in the original agreement and at a stand-alone selling price, we account for the amendment as a separate agreement. If we conclude the goods and/or services are not distinct and are sold at a stand-alone selling price, we then assess whether the remaining goods or services are distinct from those already provided. If the goods and/or services are distinct from what we have already provided, then we allocate the remaining transaction price from the original agreement and the additional transaction price from the amendment to the remaining goods and/or services. If the goods and/or services are not distinct from what we have already provided, we update the transaction price for our single performance obligation and recognize any change in our estimated revenue as a cumulative adjustment.
For example, in May 2015, we entered into an exclusive license agreement with Bayer to develop and commercialize IONIS-FXIRx for the prevention of thrombosis. As part of the agreement, Bayer paid us a $100 million upfront payment. At the onset of the agreement, we were responsible for completing a Phase 2 study of IONIS-FXIRx in people with end-stage renal disease on hemodialysis and for providing an initial supply of API. In February 2017, we amended our agreement with Bayer to advance IONIS-FXIRx and to initiate development of IONIS-FXI-LRx, which Bayer licensed. As part of the 2017 amendment, Bayer paid us $75 million. We are also eligible to receive milestone payments and tiered royalties on gross margins of IONIS-FXIRx and IONIS-FXI-LRx. Under the 2017 amendment, we concluded we had a new agreement with three performance obligations. These performance obligations were to deliver the license of IONIS-FXI-LRx, to provide R&D services and to deliver API. We allocated the $75 million transaction price to these performance obligations. Refer to Note 6, Collaborative Arrangements and Licensing Agreements, in our audited financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2020 for further discussion of the Bayer collaboration.
Multiple agreements
From time to time, we may enter into separate agreements at or near the same time with the same partner. We evaluate such agreements to determine whether we should account for them individually as distinct arrangements or whether the separate agreements should be combined and accounted for together. We evaluate the following to determine the accounting for the agreements:
Our evaluation involves significant judgment to determine whether a group of agreements might be so closely related that accounting guidance requires us to account for them as a combined arrangement.
For example, in the second quarter of 2018, we entered into two separate agreements with Biogen at the same time: a new strategic neurology collaboration agreement and a stock purchase agreement, or SPA. We evaluated the Biogen agreements to determine whether we should treat the agreements separately or combine them. We considered that the agreements were negotiated concurrently and in contemplation of one another. Based on these facts and circumstances, we concluded that we should evaluate the provisions of the agreements on a combined basis.
Contracts Receivable
Our contracts receivable balance represents the amounts we have billed our partners or customers and that are due to us unconditionally for goods we have delivered or services we have performed. When we bill our partners or customers with payment terms based on the passage of time, we consider the contracts receivable to be unconditional. We typically receive payment within of billing our partner or customer.
As of March 31, 2021, approximately 46.8 percent of our contracts receivables were from three significant customers. As of December 31, 2020, approximately 99.5 percent of our contracts receivables were from two significant customers.
Unbilled SPINRAZA Royalties
Our unbilled SPINRAZA royalties represent our right to receive consideration from Biogen in advance of when we are eligible to bill Biogen for SPINRAZA royalties. We include these unbilled amounts in other current assets on our condensed consolidated balance sheet.
Deferred Revenue
We are often entitled to bill our customers and receive payment from our customers in advance of our obligation to provide services or transfer goods to our partners. In these instances, we include the amounts in deferred revenue on our condensed consolidated balance sheet. During the three months ended March 31, 2021 and 2020, we recognized $26.0 million and $28.0 million of revenue from amounts that were in our beginning deferred revenue balance for each respective period. For further discussion, refer to our revenue recognition policy above.
Cost of Sales
Our cost of sales includes manufacturing costs, transportation and freight costs and indirect overhead costs associated with the manufacturing and distribution of our products. We also may include certain period costs related to manufacturing services and inventory adjustments in cost of sales.
Cash, Cash Equivalents and Investments
We consider all liquid investments with maturities of three months or less when we purchase them to be cash equivalents. Our short-term investments have initial maturities of greater than three months from date of purchase. We classify our short-term debt investments as “available-for-sale” and carry them at fair market value based upon prices on the last day of the fiscal period for identical or similar items. We record unrealized gains and losses on debt securities as a separate component of comprehensive income (loss) and include net realized gains and losses in gain (loss) on investments in our condensed consolidated statement of operations. We use the specific identification method to determine the cost of securities sold.
We also have equity investments of less than 20 percent ownership in publicly and privately held biotechnology companies that we received as part of a technology license or partner agreement. At March 31, 2021, we held equity investments in two publicly held companies, ProQR Therapeutics N.V., or ProQR, and Antisense Therapeutics Limited, or ATL. We also held equity investments in seven privately held companies, Aro Biotherapeutics, Atlantic Pharmaceuticals Limited, Dynacure SAS, Empirico, Inc., Flamingo Therapeutics BV, Seventh Sense Biosystems and Suzhou-Ribo Life Science Co, Ltd.
We are required to measure and record our equity investments at fair value and to recognize the changes in fair value in our condensed consolidated statement of operations. We account for our equity investments in privately held companies at their cost minus impairments, plus or minus changes resulting from observable price changes in orderly transactions for the identical or similar investment of the same issuer. For example, during the second and fourth quarters of 2020, we revalued our investments in three privately held companies, Dynacure, Suzhou-Ribo and Aro Biotherapeutics because the companies sold additional equity securities that were similar to the equity we own. These observable price changes resulted in us recognizing a $6.3 million gain on our investment in Dynacure, a $3.0 million gain on our investment in Suzhou-Ribo and a $5.5 million gain on our investment in Aro Biotherapeutics in our condensed consolidated statement of operations during 2020 because the sales were at higher prices compared to our recorded value.
Inventory Valuation
We reflect our inventory on our condensed consolidated balance sheet at the lower of cost or net realizable value under the first-in, first-out method, or FIFO. We capitalize the costs of raw materials that we purchase for use in producing our medicines because until we use these raw materials, they have alternative future uses, which we refer to as clinical raw materials. We include in inventory raw material costs for medicines that we manufacture for our partners under contractual terms and that we use primarily in our clinical development activities and drug products. We can use each of our raw materials in multiple products and, as a result, each raw material has future economic value independent of the development status of any single medicine. For example, if one of our medicines failed, we could use the raw materials for that medicine to manufacture our other medicines. We expense these costs as R&D expenses when we begin to manufacture API for a particular medicine if the medicine has not been approved for marketing by a regulatory agency.
We obtained the first regulatory approval for TEGSEDI in July 2018 and for WAYLIVRA in May 2019. At March 31, 2021, our physical inventory for TEGSEDI and WAYLIVRA included API that we produced prior to when we obtained regulatory approval. As such, this API has no cost basis as we had previously expensed the costs as R&D expenses.
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 recorded an insignificant amount of inventory write-offs for the three months ended March 31, 2021 and 2020.
Our inventory consisted of the following (in thousands):
Leases
We determine if an arrangement contains a lease at inception. We currently only have operating leases. We recognize a right-of-use operating lease asset and associated short- and long-term operating lease liability on our condensed consolidated balance sheet for operating leases greater than one year. Our right-of-use assets represent our right to use an underlying asset for the lease term and our lease liabilities represent our obligation to make lease payments arising from the lease arrangement. We recognize our right-of-use operating lease assets and lease liabilities based on the present value of the future minimum lease payments we will pay over the lease term. We determine the lease term at the inception of each lease, and in certain cases our lease term could include renewal options if we concluded we were reasonably certain that we will exercise the renewal option. When we exercise a lease option that was not previously included in the initial lease term, we reassess our right-of-use asset and lease liabilities for the new lease term.
As our current leases do not provide an interest rate implicit in the lease, we used our incremental borrowing rate, based on the information available on the date we adopted Topic 842 (January 2019), as of the lease inception date or at the lease option extension date in determining the present value of future payments. We recognize rent expense for our minimum lease payments on a straight-line basis over the expected term of our lease. We recognize period expenses, such as common area maintenance expenses, in the period we incur the expense.
Research, Development and Patent Expenses
Our research and development expenses include wages, benefits, facilities, supplies, external services, clinical trial and manufacturing costs and other expenses that are directly related to our research and development operations. We expense research and development costs as we incur them. When we make payments for research and development services prior to the services being rendered, we record those amounts as prepaid assets on our condensed consolidated balance sheet and we expense them as the services are provided.
We capitalize costs consisting principally of outside legal costs and filing fees related to obtaining patents. We amortize patent costs over the useful life of the patent, beginning with the date the U.S. Patent and Trademark Office, or foreign equivalent, issues the patent. We review our capitalized patent costs regularly to ensure that they include costs for patents and patent applications that have future value. When we identify patents and patent applications that we are not actively pursuing, we write off any associated costs.
Income Taxes
We account for income taxes using the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in our financial statements or tax returns. In addition, deferred tax assets are recorded for the future benefit of utilizing net operating losses and research and development credit carryforwards. We record a valuation allowance when necessary to reduce our net deferred tax assets to the amount we expect to realize.
We evaluate our deferred tax assets regularly to determine whether adjustments to the valuation allowance are appropriate due to changes in facts or circumstances, such as changes in expected future pre-tax earnings, tax law, interactions with taxing authorities and developments in case law. In making this evaluation, we rely on our recent history of pre-tax earnings. Our material assumptions are our forecasts of future pre-tax earnings and the nature and timing of future deductions and income represented by the deferred tax assets and liabilities, all of which involve the exercise of significant judgment.
We assessed our valuation allowance requirements and recorded a valuation allowance against all of Ionis’ U.S. federal net deferred tax assets in the fourth quarter of 2020, due to uncertainties related to our ability to realize the tax benefits associated with these assets. We based our determination largely on Akcea rejoining the Ionis U.S. consolidated federal tax group in the fourth quarter of 2020. Due to Akcea’s historical and projected financial statement losses, and the negative impact we expect this to have on Ionis’ consolidated taxable income, there is uncertainty of generating sufficient consolidated pre-tax income in future periods to realize the Ionis deferred tax benefits. We also expect that Ionis’ pre-tax income in future periods may be lower due to increased research and development expenses associated with our pipeline of wholly owned medicines. We continue to maintain a valuation allowance against all our consolidated U.S. federal and state net deferred tax assets.
Long-lived Assets
We evaluate long-lived assets, which include property, plant and equipment and patent costs, for impairment on at least a quarterly basis and whenever events or changes in circumstances indicate that we may not be able to recover the carrying amount of such assets.
Use of Estimates
We prepare our condensed consolidated financial statements in conformity with accounting principles generally accepted in the U.S. that require us to make estimates and assumptions that affect the amounts reported in our condensed consolidated financial statements and accompanying notes. Actual results could differ from our estimates.
Basic and Diluted Net Loss Per Share
Basic net loss per share
In the first quarter of 2021, we computed basic net loss per share by dividing our net loss by our weighted-average number of common shares outstanding during the period. For the first quarter of 2021, we did not have to consider Akcea results separately in our calculation because we owned 100 percent of Akcea for the entire period. Our basic net loss per share for the three months ended March 31, 2021 was $0.64.
In the first quarter of 2020, prior to the Akcea Acquisition, we calculated our net loss for Ionis on a stand-alone basis plus our share of Akcea’s net loss for the period to determine our total net loss attributable to our common stockholders. To calculate the portion of Akcea’s net loss attributable to our ownership, we multiplied Akcea’s net loss per share by the weighted average shares we owned in Akcea during the period. As a result of this calculation, our total net loss available to Ionis common stockholders for the calculation of net loss per share is different than our net loss attributable to Ionis Pharmaceuticals, Inc. common stockholders in the condensed consolidated statements of operations.
Our basic net loss per share for the three months ended March 31, 2020, was calculated as follows (in thousands, except per share amounts):
Diluted net loss per share
For the three months ended March 31, 2021 and 2020, we incurred a net loss; therefore, we did not include dilutive common equivalent shares in the computation of diluted net loss per share because the effect would have been anti-dilutive. Common stock from the following would have had an anti-dilutive effect on net loss per share:
Additionally as of March 31, 2021, we had warrants related to our 0.125 percent convertible senior notes outstanding. We will include the shares issuable under these warrants in our calculation of diluted earnings per share when the average market price per share of our common stock for the reporting period exceeds the strike price of the warrants.
Convertible Debt
Adoption of ASU 2020-06
In August 2020, the FASB issued ASU 2020-06, which simplifies the accounting for convertible debt instruments, amends the guidance on derivative scope exceptions for contracts in an entity’s own equity, and modifies the guidance on diluted earnings per share calculations. We adopted ASU 2020-06 on January 1, 2021 under the full retrospective approach, which required us to revise our prior period financial statements. This guidance impacted our accounting for outstanding convertible debt. As of March 31, 2021, we had two outstanding convertible notes, our 0.125 percent senior convertible notes, or 0.125% Notes, which mature in December 2024, and our 1 percent senior convertible notes, or 1% Notes, which mature in November 2021.
The updated guidance eliminates the cash conversion accounting model we previously followed in Accounting Standard Codification, or ASC, 470-20, which required us to separate each of our convertible debt instruments at issuance into two units of accounting, a liability component, based on our nonconvertible debt borrowing rate at issuance, and an equity component. Under ASU 2020-06, we now account for each of our convertible debt instruments as a single unit of accounting, a liability, because we concluded that the conversion features do not require bifurcation as a derivative under ASC 815-15 and our convertible debt instruments were not issued at a substantial premium. Since we adopted ASU 2020-06 using the full retrospective approach, we were required to apply the guidance to all convertible debt instruments we had outstanding as of January 1, 2019. We recomputed the basis of each convertible debt instrument as if we accounted for each as a single unit of accounting at issuance. This update included recalculating the amortization of debt issuance costs using an updated effective interest rate. As a result of adopting ASU 2020-06, we recorded a cumulative adjustment to decrease our additional paid in capital and our accumulated deficit at January 1, 2019. We have updated these financial statements to reflect the cumulative adjustment for the periods presented. We have labeled our prior period financial statements “as revised” to indicate the change required under the new accounting guidance. Below is a summary of the change in our balance sheet at December 31, 2020 and statement of operations from our first quarter 2020 under the ASC 470-20 legacy guidance compared to the new ASU 2020-06 guidance we adopted:
The following table summarizes the adjustments we made to the condensed consolidated balance sheet we originally reported at December 31, 2020 to adopt ASU 2020-06 (in thousands):
Under ASU 2020-06, our revised ending balances for our 1% Notes and 0.125% Notes as of December 31, 2020 represent the principal balance of each convertible debt instrument less debt issuance costs. Additionally, because we have deferred tax assets related to our convertible debt instruments, we also adjusted these amounts as part of our adoption of ASU 2020-06. However, because we have a full valuation allowance on our deferred tax assets, there was no impact to our condensed consolidated balance sheet related to our deferred tax assets.
The following table summarizes the adjustments we made to the condensed consolidated statement of operations we originally reported at March 31, 2020 to adopt ASU 2020-06 (in thousands):
Under ASU 2020-06, our revised interest expense is lower as we are no longer recording non-cash interest expense related to a debt discount. This decrease was partially offset by the increase in interest expense related to the amortization of debt issuance costs because we no longer allocate a portion of our debt issuance costs to stockholders’ equity at issuance. Instead, the entire debt issuance costs were recorded as a contra-liability on our condensed consolidated balance sheet at issuance and we are amortizing them over the contractual term using an updated effective interest rate. Our updated effective interest rates for our 1% Notes and 0.125% Notes were 1.4 percent and 0.5 percent, respectively.
The following tables summarize the adjustments we made to our condensed consolidated statements of stockholders’ equity we originally reported at December 31, 2020 and 2019 to adopt ASU 2020-06 (in thousands):
Call Spread
In conjunction with the issuance of our 0.125% Notes in December 2019, we entered into a call spread transaction, which was comprised of purchasing note hedges and selling warrants. We account for the note hedges and warrants as separate freestanding financial instruments and treat each instrument as a separate unit of accounting. We determined that the note hedges and warrants do not meet the definition of a liability using the guidance contained in ASC Topic 480, therefore we account for the note hedges and warrants using the Derivatives and Hedging – Contracts in Entity’s Own Equity accounting guidance contained in ASC Topic 815. We determined that the note hedges and warrants meet the definition of a derivative, are indexed to our stock and meet the criteria to be classified in shareholders’ equity. We recorded the aggregate amount paid for the note hedges and the aggregate amount received for the warrants as additional paid-in capital in our condensed consolidated balance sheet. We reassess our ability to continue to classify the note hedges and warrants in shareholders’ equity at each reporting period.
Segment Information
In 2021, we began operating as a single segment, Ionis operations, because our chief decision maker reviews operating results on an aggregate basis and manages our operations as a single operating segment. Previously, we had operated as two operating segments, Ionis Core and Akcea Therapeutics. In October 2020, we acquired the remaining common stock of Akcea that we did not own and fully integrated Akcea’s operations into ours as of January 1, 2021.
Stock-based Compensation Expense
We measure stock-based compensation expense for equity-classified awards, principally related to stock options, RSUs, and stock purchase rights under our ESPP based on the estimated fair value of the award on the date of grant. We recognize the value of the portion of the award that we ultimately expect to vest as stock-based compensation expense over the requisite service period in our condensed consolidated statements of operations. We reduce stock-based compensation expense for estimated forfeitures at the time of grant and revise in subsequent periods if actual forfeitures differ from those estimates. We use the Black-Scholes model to estimate the fair value of stock options granted and stock purchase rights under our ESPP.
On the grant date, we use our stock price and assumptions regarding a number of variables to determine the estimated fair value of stock-based payment awards. These variables include, but are not limited to, our expected stock price volatility over the term of the awards, and actual and projected employee stock option exercise behaviors.
We recognize compensation expense for stock options granted, RSUs, PRSUs and stock purchase rights under the ESPP using the accelerated multiple-option approach. Under the accelerated multiple-option approach (also known as the graded-vesting method), we recognize compensation expense over the requisite service period for each separately vesting tranche of the award as though the award were in substance multiple awards, which results in the expense being front-loaded over the vesting period.
In December 2020, we amended and restated the Akcea 2015 equity plan, including renaming the plan as the Ionis Pharmaceuticals, Inc. 2020 Equity Incentive Plan, or 2020 Plan. As a result, all employees are now under an Ionis stock plan and subject to the same Black-Scholes assumptions. During the three months ended March 31, 2021 and 2020, we did not grant any stock options or RSUs to our Board of Directors. For the three months ended March 31, 2021 and 2020, we used the following weighted-average assumptions in our Black-Scholes calculations:
Employee Stock Options:
ESPP:
RSU’s:
The fair value of RSUs is based on the market price of our common stock on the date of grant. The RSUs we have granted to employees vest annually over a four-year period. The RSUs we granted to our board of directors prior to June 2020 vest annually over a four-year period. RSUs granted after June 2020 to our board of directors fully vest after one year. The weighted-average grant date fair value of RSUs granted to employees for the three months ended March 31, 2021 was $62.02 per share.
PRSU’s:
Beginning in 2020, we added performance-based restricted stock units, or PRSU, awards to the compensation for our Chief Executive Officer, Dr. Brett Monia. Under the terms of the grants, of the PRSUs may vest at the end of three separate performance periods spread over the three years following the date of grant (i.e., the one-year period commencing on the date of grant and ending on the first anniversary of the date of grant; the two-year period commencing on the date of grant and ending on the second anniversary of the date of grant; and the three-year period commencing on the date of grant and ending on the third anniversary of the date of grant) based on our relative total shareholder return, or TSR, as compared to a peer group of companies, and as measured, in each case, at the end of the applicable performance period. Under the terms of the grants no number of PRSUs is guaranteed to vest and the actual number of PRSUs that will vest at the end of each performance period may be anywhere from zero percentto 150 percent of the target number depending on our relative TSR.
We determined the fair value of Dr. Monia’s PRSUs using a Monte Carlo model because the performance target is based on our relative TSR, which represents a market condition. We are recognizing the grant date fair value of these awards as stock-based compensation expense using the accelerated multiple-option approach over the vesting period. The weighted-average grant date fair value of PRSUs granted to Dr. Monia for the three months ended March 31, 2021 was $77.17 per share.
The following table summarizes stock-based compensation expense for the three months ended March 31, 2021 and 2020 (in thousands).
As of March 31, 2021, total unrecognized estimated non-cash stock-based compensation expense related to non-vested stock options, RSUs and PRSUs was $101.8 million, $109.6 million and $3.8 million, respectively. Our actual expenses may differ from these estimates because we will adjust our unrecognized non-cash stock-based compensation expense for future forfeitures. We expect to recognize the cost of non-cash stock-based compensation expense related to our non-vested stock options, RSUs and PRSUs over a weighted average amortization period of 1.4 years, 1.8 years and 1.7 years, respectively.
Impact of Recently Issued Accounting Standards
As disclosed in the “Convertible Debt” policy above within this footnote, we adopted the simplified accounting for convertible debt instrument guidance (ASU 2020-06) on January 1, 2021. Refer to the section above for the impact of adoption. We do not expect any other recently issued accounting standards to have a material impact to our financial results.
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| Investments [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Investments |
3. Investments
The following table summarizes the contract maturity of the available-for-sale securities we held as of March 31, 2021:
As illustrated above, at March 31, 2021, 87 percent of our available-for-sale securities had a maturity of less than two years.
All of our available-for-sale securities are available to us for use in our current operations. As a result, we categorize all of these securities as current assets even though the stated maturity of some individual securities may be one year or more beyond the balance sheet date.
We invest in available-for-sale securities with strong credit ratings and an investment grade rating at or above A-1, P-1 or F-1 by Standard & Poor’s, or S&P, Moody’s or Fitch, respectively.
At March 31, 2021, we had an ownership interest of less than 20 percent in seven private companies and two public companies with which we conduct business. The privately held companies are Aro Biotherapeutics, Atlantic Pharmaceuticals Limited, Dynacure SAS, Empirico, Inc., Flamingo Therapeutics BV, Seventh Sense Biosystems and Suzhou Ribo Life Science Co, Ltd. The publicly traded companies are Antisense Therapeutics Ltd. and ProQR Therapeutics N.V.
The following is a summary of our investments (in thousands):
The following is a summary of our investments we consider to be temporarily impaired at March 31, 2021 (in thousands). All of these investments have less than 12 months of temporary impairment. We believe that the decline in value of these securities is temporary and is primarily related to the change in market interest rates since purchase. We believe it is more likely than not that we will be able to hold our debt securities to maturity. Therefore, we anticipate full recovery of our debt securities’ amortized cost basis at maturity.
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Fair Value Measurements |
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| Fair Value Measurements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Fair Value Measurements |
4. Fair Value Measurements
We use a three-tier fair value hierarchy to prioritize the inputs used in our fair value measurements. These tiers include: Level 1, defined as observable inputs such as quoted prices in active markets for identical assets, which includes our money market funds and treasury securities classified as available-for-sale securities and our investment in equity securities in publicly held biotechnology companies; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable, which includes our fixed income securities and commercial paper classified as available-for-sale securities; and Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring us to develop our own assumptions. We classify most of our securities as Level 2. We obtain the fair value of our Level 2 investments from our custodian bank or from a professional pricing service. We validate the fair value of our Level 2 investments by understanding the pricing model used by the custodian banks or professional pricing service provider and comparing that fair value to the fair value based on observable market prices.
The following tables present the major security types we held at March 31, 2021 and December 31, 2020 that we regularly measure and carry at fair value. As of March 31, 2021 and December 31, 2020, we did not have any investments that we valued using Level 3 inputs. The following tables segregate each security type by the level within the fair value hierarchy of the valuation techniques we utilized to determine the respective securities’ fair value (in thousands):
The following footnotes reference lines on our condensed consolidated balance sheet:
Convertible Notes
Our 1% Notes and 0.125% Notes had a fair value of $314.6 million and $527.3 million at March 31, 2021, respectively. We determine the fair value of our notes based on quoted market prices for these notes, which are Level 2 measurements because the notes do not trade regularly.
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Collaborative Arrangements and Licensing Agreements |
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Mar. 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Collaborative Arrangements and Licensing Agreements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Collaborative Arrangements and Licensing Agreements |
5. Collaborative Arrangements and Licensing Agreements
Below, we have included our Biogen collaboration, which is our only collaboration with substantive changes during 2021 from those included in Note 6 of our audited financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2020.
Strategic Partnership
Biogen
We have several strategic collaborations with Biogen focused on using antisense technology to advance the treatment of neurological disorders. These collaborations combine our expertise in creating antisense medicines with Biogen’s expertise in developing therapies for neurological disorders. We developed and licensed to Biogen SPINRAZA, our approved medicine to treat people with spinal muscular atrophy, or SMA. We and Biogen are currently developing eight investigational medicines to treat neurodegenerative diseases under these collaborations, including medicines in development to treat people with ALS, Alzheimer’s disease and Parkinson’s disease. In addition to these medicines, our collaborations with Biogen include a substantial research pipeline that addresses a broad range of neurological diseases. From inception through March 31, 2021, we have received $2.9 billion from our Biogen collaborations.
During the three months ended March 31, 2021 and 2020, we earned the following revenue from our relationship with Biogen (in millions, except percentage amounts):
Our condensed consolidated balance sheet at March 31, 2021 and December 31, 2020 included deferred revenue of $447.7 million and $465.8 million, respectively, related to our relationship with Biogen.
During the first three months of 2021, we did not have any changes to our performance obligations, transaction price or the timing in which we expect to recognize revenue under our Biogen collaborations.
In April 2021, we achieved a $10 million milestone payment from Biogen when Biogen advanced ION541, an investigational medicine targeting ataxin 2 to treat patients with ALS. We will achieve the next payment of $8 million if Biogen advances one of the medicines under our 2013 strategic neurology collaboration.
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Convertible Debt |
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| Convertible Debt [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Convertible Debt |
6. Convertible Debt
0 Percent Convertible Senior Notes and Call Spread
In April 2021, we completed a $632.5 million offering of convertible senior notes. We used a portion of the net proceeds from the issuance of the 0 percent convertible senior notes, or 0% Notes, to repurchase $247.9 million in principal of our 1% Notes for $257.0 million.
Following the closing of the debt transaction in April 2021, we had the following 0% Notes outstanding (amounts in millions except interest rate and price per share data):
In conjunction with the April 2021 offering, we entered into a call spread transaction, which was comprised of purchasing note hedges and selling warrants, to minimize the impact of potential economic dilution upon conversion of our 0% Notes by increasing the effective conversion price on our 0% Notes. We increased our effective conversion price to $76.39 with the same number of underlying shares as our 0% Notes. The call spread cost us $46.9 million, of which $136.7 million was for the note hedge purchase, offset by $89.8 million we received for selling the warrants. Similar to our 0% Notes, our note hedges are subject to adjustment. Additionally, our note hedges are exercisable upon conversion of the 0% Notes. The note hedges will expire upon maturity of the 0% Notes, or April 2026. The note hedges and warrants are separate transactions and are not part of the terms of our 0% Notes. The holders of the 0% Notes do not have any rights with respect to the note hedges and warrants.
0.125 Percent Convertible Senior Notes and Call Spread
At March 31, 2021, we had the following 0.125% Notes outstanding with interest payable semi-annually (amounts in millions except interest rate and price per share data):
In conjunction with the issuance of our 0.125% Notes in December 2019, we entered into a call spread transaction, which was comprised of purchasing note hedges and selling warrants, to minimize the impact of potential economic dilution upon conversion of our 0.125% Notes by increasing the effective conversion price on our 0.125% Notes. We increased our effective conversion price to $123.38 with the same number of underlying shares as our 0.125% Notes. The call spread cost us $52.6 million, of which $108.7 million was for the note hedge purchase, offset by $56.1 million we received for selling the warrants. Similar to our 0.125% Notes, our note hedges are subject to adjustment. Additionally, our note hedges are exercisable upon conversion of the 0.125% Notes. The note hedges will expire upon maturity of the 0.125% Notes, or December 2024. The note hedges and warrants are separate transactions and are not part of the terms of our 0.125% Notes. The holders of the 0.125% Notes do not have any rights with respect to the note hedges and warrants.
We recorded the amount paid for the note hedges and the amount received for the warrants in additional paid-in capital in our condensed consolidated balance sheet. See our Call Spread accounting policy in Note 2, Significant Accounting Policies, in the Notes to the Condensed Consolidated Financial Statements. We reassess our ability to continue to classify the note hedges and warrants in shareholders’ equity at each reporting period.
1 Percent Convertible Senior Notes
At March 31, 2021, we had the following 1% Notes outstanding with interest payable semi-annually (amounts in millions except interest rate and price per share data):
In April 2021, we repurchased $247.9 million in aggregate principal amount of our 1% Notes in privately negotiated transactions. As a result, in April 2021, the remaining principal outstanding for our 1% Notes was $62.0 million, resulting in 0.9 million shares of common stock subject to conversion. As a result of the repurchase, we reclassified the repurchased portion of our 1% Notes from current to non-current liabilities on our condensed consolidated balance sheet as of March 31, 2021 because we replaced this portion of our outstanding debt with long-term debt.
Other Terms of Convertible Senior Notes
The 0%, 0.125% and 1% Notes are convertible under certain conditions, at the option of the note holders. We can settle conversions of the notes, at our election, in cash, shares of our common stock or a combination of both. We may not redeem the notes prior to maturity, and we do not have to provide a sinking fund for them. Holders of the notes may require us to purchase some or all of their notes upon the occurrence of certain fundamental changes, as set forth in the indentures governing the notes, at a purchase price equal to 100 percent of the principal amount of the notes to be purchased, plus any accrued and unpaid interest.
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Severance and Retention Costs |
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| Severance and Retention Costs [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Severance and Retention Costs |
7. Severance and Retention Costs
Akcea Acquisition
As a result of the Akcea Acquisition in October 2020, we began recognizing severance and retention expenses in the fourth quarter of 2020. The following table summarizes our total estimated severance and retention expenses related to the Akcea Acquisition (in millions):
The following table summarizes our severance and retention expenses related to the Akcea Acquisition that we recognized during the three months ended March 31, 2021 (in millions):
The following table summarizes the severance and retention reserve amounts related to the Akcea Acquisition that we included in accrued compensation for the period indicated (in millions):
The reserve adjustments during the period primarily related to forfeitures of severance and retention payments as a result of employee terminations before they earned the amounts.
Restructured European Operations
As a result of restructuring our European operations, or Restructured European Operations, in December 2020, we began recognizing severance and retention expenses in the fourth quarter of 2020. The following table summarizes our total severance and retention expenses related to our Restructured European Operations (in millions):
The following table summarizes the severance and retention expenses related to our Restructured European Operations that we recognized during the three months ended March 31, 2021 (in millions):
The following table summarizes the severance and retention reserve amounts related to our Restructured European operations that we included in accrued compensation for the periods indicated (in millions):
The reserve adjustments during the period primarily related to tax expense adjustments.
Restructured North American TEGSEDI Operations
In April 2021, we entered into a distribution agreement with Sobi for TEGSEDI in North America. Under the terms of the distribution agreement, we will retain the marketing authorizations for TEGSEDI in the U.S. and Canada. We will continue to supply commercial product to Sobi and manage regulatory and manufacturing processes, as well as relationships with key opinion leaders. We will also continue to lead the TEGSEDI global commercial strategy. Sobi will otherwise have responsibility for commercializing TEGSEDI in the U.S. and Canada and will assume these activities by August 2021.
In connection with restructuring our North American TEGSEDI operations, or Restructured North American TEGSEDI Operations, we enacted a plan to reorganize our Akcea workforce in North America to better align with the needs of our business, or the Reorganization Plan, and to focus on our wholly owned pipeline. Under the Reorganization Plan, we expect to incur restructuring charges in the range of $11 million to $14 million principally in the second quarter of 2021.
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Basis of Presentation (Policies) |
3 Months Ended |
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Mar. 31, 2021 | |
| Basis of Presentation [Abstract] | |
| Basis of Presentation |
We prepared the unaudited interim condensed consolidated financial statements for the three months ended March 31, 2021 and 2020 on the same basis as the audited financial statements for the year ended December 31, 2020, with the exception of our retrospective adoption of Accounting Standards Update, or ASU, 2020-06, which simplifies the accounting for convertible debt instruments. See Note 2, Significant Accounting Polices, Convertible Debt, for details of our adoption of this guidance. We included all normal recurring adjustments in the financial statements, which we considered necessary for a fair presentation of our financial position at such dates and our operating results and cash flows for those periods. Our operating results for the interim periods may not be indicative of what our operating results will be for the entire year. For more complete financial information, these financial statements, and notes thereto, should be read in conjunction with the audited financial statements for the year ended December 31, 2020 included in our Annual Report on Form 10-K filed with the Securities and Exchange Commission, or SEC.
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| Consolidation |
In our condensed consolidated financial statements, we included the accounts of Ionis Pharmaceuticals, Inc. and the consolidated results of our wholly owned subsidiary, Akcea Therapeutics, Inc. and its wholly owned subsidiaries (“we”, “us” or “our”). We formed Akcea in December 2014. In July 2017, Akcea completed an initial public offering, or IPO, which reduced our ownership of Akcea’s common stock below 100 percent. In October 2020, we acquired the shares of Akcea’s common stock we did not own. We will refer to this transaction as the Akcea Acquisition throughout the remainder of this document. We reflected changes in our ownership percentage in our financial statements as an adjustment to noncontrolling interest in the period the change occurred.
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Significant Accounting Policies (Policies) |
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| Significant Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Revenue Recognition |
Revenue Recognition
Our Revenue Sources
We generally recognize revenue when we have satisfied all contractual obligations and are reasonably assured of collecting the resulting receivable. We are often entitled to bill our customers and receive payment from our customers in advance of recognizing the revenue. In the instances in which we have received payment from our customers in advance of recognizing revenue, we include the amounts in deferred revenue on our condensed consolidated balance sheet.
Commercial Revenue: SPINRAZA royalties and Licensing and other royalty revenue
We earn commercial revenue primarily in the form of royalty payments on net sales of SPINRAZA. We will also recognize as commercial revenue sales milestone payments and royalties we earn under our other partnerships.
Commercial Revenue: TEGSEDI and WAYLIVRA revenue, net
In the United States, or U.S., through the first quarter of 2021, we sold TEGSEDI through an exclusive distribution agreement with a third-party logistics company, or 3PL, that took title to TEGSEDI. The 3PL was our sole customer in the U.S. The 3PL then distributed TEGSEDI to a specialty pharmacy and a specialty distributor, which we collectively refer to as wholesalers, who then distributed TEGSEDI to health care providers and patients. In Europe, through 2020, we sold TEGSEDI and WAYLIVRA to hospitals and pharmacies, which were our customers, using 3PLs as distributors. In January 2021, we began commercializing TEGSEDI and WAYLIVRA in Europe through a distribution agreement with Swedish Orphan Biovitrum AB, or Sobi. In April 2021, we expanded our distribution agreement with Sobi to also include commercializing TEGSEDI in North America. Under our agreements, we are responsible for supplying finished goods inventory to Sobi and Sobi is responsible for selling each medicine to the end customer. As a result of these agreements, we earn a distribution fee on net sales from Sobi for each medicine.
Under our collaboration agreement with PTC, PTC is responsible for commercializing TEGSEDI and WAYLIVRA in Latin America and Caribbean countries.
Research and development revenue under collaborative agreements
We often enter into collaboration agreements to license and sell our technology on an exclusive or non-exclusive basis. Our collaboration agreements typically contain multiple elements, or performance obligations, including technology licenses or options to obtain technology licenses, research and development, or R&D, services, and manufacturing services.
See Note 5, Collaborative Arrangements and Licensing Agreements, for collaborations with substantive changes that occurred in 2021. Additionally, see Note 6, Collaborative Arrangements and Licensing Agreements, in our audited financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2020 for a summary of each of our material collaborative agreements.
Steps to Recognize Revenue
We use a five-step process to determine the amount of revenue we should recognize and when we should recognize it. The five-step process is as follows:
Accounting rules require us to first determine if we have a contract with our partner, including confirming that we have met each of the following criteria:
We next identify our performance obligations, which represent the distinct goods and services we are required to provide under the contract. We typically have only one performance obligation at the inception of a contract, which is to perform R&D services.
Often we enter into a collaboration agreement in which we provide our partner with an option to license a medicine in the future. We may also provide our partner with an option to request that we provide additional goods or services in the future, such as active pharmaceutical ingredient, or API. We evaluate whether these options are material rights at the inception of the agreement. If we determine an option is a material right, we will consider the option a separate performance obligation. Historically, we have concluded that the options we grant to license a medicine in the future or to provide additional goods and services as requested by our partner are not material rights because these items are contingent upon future events that may not occur and are not priced at a significant discount. When a partner exercises its option to license a medicine or requests additional goods or services, then we identify a new performance obligation for that item.
In some cases, we deliver a license at the start of an agreement. If we determine that our partner has full use of the license and we do not have any additional material performance obligations related to the license after delivery, then we consider the license to be a separate performance obligation.
We then determine the transaction price by reviewing the amount of consideration we are eligible to earn under the collaboration agreement, including any variable consideration. Under our collaboration agreements, consideration typically includes fixed consideration in the form of an upfront payment and variable consideration in the form of potential milestone payments, license fees and royalties. At the start of an agreement, our transaction price usually consists of only the upfront payment. We do not typically include any payments we may receive in the future in our initial transaction price because the payments are not probable and are contingent on certain future events. We reassess the total transaction price at each reporting period to determine if we should include additional payments in the transaction price.
Milestone payments are our most common type of variable consideration. We recognize milestone payments using the most likely amount method because we will either receive the milestone payment or we will not, which makes the potential milestone payment a binary event. The most likely amount method requires us to determine the likelihood of earning the milestone payment. We include a milestone payment in the transaction price once it is probable we will achieve the milestone event. Most often, we do not consider our milestone payments probable until we or our partner achieve the milestone event because the majority of our milestone payments are contingent upon events that are not within our control and/ or are usually based on scientific progress which is inherently uncertain. For example, in the fourth quarter of 2020, we earned a $20 million milestone payment from AstraZeneca when AstraZeneca initiated a Phase 2b study for ION449, our medicine in development targeting PCSK9 to lower LDL-cholesterol. We did not consider the milestone payment probable until AstraZeneca achieved the milestone event because advancing ION449 was contingent on AstraZeneca initiating a Phase 2b study and was not within our control. We recognized the milestone payment in full in the period the milestone event was achieved because we did not have any remaining performance obligations related to the milestone payment.
Next, we allocate the transaction price to each of our performance obligations. When we have to allocate the transaction price to more than one performance obligation, we make estimates of the relative stand-alone selling price of each performance obligation because we do not typically sell our goods or services on a stand-alone basis. We then allocate the transaction price to each performance obligation based on the relative stand-alone selling price. We do not reallocate the transaction price after the start of an agreement to reflect subsequent changes in stand-alone selling prices.
We may engage a third party, independent valuation specialist to assist us with determining a stand-alone selling price for collaborations in which we deliver a license at the start of an agreement. We estimate the stand-alone selling price of these licenses using valuation methodologies, such as the relief from royalty method. Under this method, we estimate the amount of income, net of taxes, for the license. We then discount the projected income to present value. The significant inputs we use to determine the projected income of a license could include:
We typically estimate the selling price of R&D services by using our internal estimates of the cost to perform the specific services. The significant inputs we use to determine the selling price of our R&D services include:
For purposes of determining the stand-alone selling price of the R&D services we perform and the API we will deliver, accounting guidance requires us to include a markup for a reasonable profit margin.
We recognize revenue in one of two ways, over time or at a point in time. We recognize revenue over time when we are executing on our performance obligation over time and our partner receives benefit over time. For example, we recognize revenue over time when we provide R&D services. We recognize revenue at a point in time when our partner receives full use of an item at a specific point in time. For example, we recognize revenue at a point in time when we deliver a license or API to a partner.
For R&D services that we recognize over time, we measure our progress using an input method. The input methods we use are based on the effort we expend or costs we incur toward the satisfaction of our performance obligation. We estimate the amount of effort we expend, including the time we estimate it will take us to complete the activities, or costs we incur in a given period, relative to the estimated total effort or costs to satisfy the performance obligation. This results in a percentage that we multiply by the transaction price to determine the amount of revenue we recognize each period. This approach requires us to make numerous estimates and use significant judgement. If our estimates or judgements change over the course of the collaboration, they may affect the timing and amount of revenue that we recognize in the current and future periods.
The following are examples of when we typically recognize revenue based on the types of payments we receive.
Commercial Revenue: SPINRAZA royalties and Licensing and other royalty revenue
We recognize royalty revenue, including royalties from SPINRAZA sales, in the period in which the counterparty sells the related product and recognizes the related revenue, which in certain cases may require us to estimate our royalty revenue.
Commercial Revenue: TEGSEDI and WAYLIVRA revenue, net
Prior to our distribution agreement with Sobi, we recognized TEGSEDI and WAYLIVRA commercial revenue in the period when our customer obtained control of our products, which occurred at a point in time upon transfer of title to the customer. We classified payments to customers or other parties in the distribution channel for services that were distinct and priced at fair value as selling, general and administrative, or SG&A, expenses in our condensed consolidated statements of operations. We classified payments to customers or other parties in the distribution channel that did not meet those criteria as a reduction of revenue, as discussed further below. We excluded from revenues taxes collected from customers relating to TEGSEDI and WAYLIVRA commercial revenue and remitted these amounts to governmental authorities.
Under our distribution agreement with Sobi we concluded that our performance obligation is to supply finished goods inventory to Sobi. This performance obligation is a series of distinct activities that are substantially the same because we transfer title using the same criteria each time we ship inventory to Sobi. Therefore, we recognize as revenue the price Sobi pays us for the inventory when we deliver the finished goods inventory to Sobi. We also recognize distribution fee revenue based on Sobi’s net sales of TEGSEDI and WAYLIVRA. Additionally, Sobi does not generally have a right of return.
Reserves for TEGSEDI and WAYLIVRA commercial revenue
Prior to our distribution agreement with Sobi, we recorded TEGSEDI and WAYLIVRA commercial revenue at our net sales price, or transaction price. We included in our transaction price estimated reserves for discounts, returns, chargebacks, rebates and other allowances that we offered within contracts between us and our customers, wholesalers, distributors, health care providers and other indirect customers. We estimated our reserves using the amounts we have earned or we could claim on the associated sales. We classified our reserves as a reduction of accounts receivable when we were not required to make a payment or as a current liability when we were required to make a payment. In certain cases, our estimates included a range of possible outcomes that were probability weighted for relevant factors such as our historical experience, current contractual and statutory requirements, specific known market events and trends, industry data and forecasted customer buying and payment patterns. Overall, our reserves reflected our best estimates under the terms of our respective contracts. When calculating our reserves and related TEGSEDI and WAYLIVRA commercial revenue, we only recognized amounts to the extent that we considered it probable that we would not have to reverse a significant amount of the cumulative sales we previously recognized in a future period. The actual amounts we receive may ultimately differ from our reserve estimates. If actual amounts in the future vary from our estimates, we will adjust these estimates, which would affect our net TEGSEDI and WAYLIVRA revenue in the corresponding period. See our revenue recognition policy in Note 1, Organization and Significant Accounting Policies, of our audited financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2020 for additional details regarding how we accounted for the reserves related to TEDSEDI and WAYLIVIRA product sales.
Under our distribution agreement with Sobi, Sobi is financially responsible for any applicable reserves.
Research and development revenue under collaboration agreements:
Upfront payments
When we enter into a collaboration agreement with an upfront payment, we typically record the entire upfront payment as deferred revenue if our only performance obligation is for R&D services we will provide in the future. We amortize the upfront payment into revenue as we perform the R&D services. For example, under our collaboration agreement with Roche to develop IONIS-FB-LRx for the treatment of complement-mediated diseases, we received a $75 million upfront payment in the fourth quarter of 2018. We allocated the upfront payment to our single performance obligation, R&D services. We are amortizing the $75 million upfront payment using an input method over the estimated period of time we are providing R&D services.
Milestone payments
We are required to include additional consideration in the transaction price when it is probable. We typically include milestone payments for R&D services in the transaction price when they are achieved. We include these milestone payments when they are achieved because typically there is considerable uncertainty in the research and development processes that trigger these payments. Similarly, we include approval milestone payments in the transaction price once the medicine is approved by the applicable regulatory agency. We will recognize sales-based milestone payments in the period in which we achieve the milestone under the sales-based royalty exception allowed under accounting rules.
We recognize milestone payments that relate to an ongoing performance obligation over our period of performance. For example, in the fourth quarter of 2020, we achieved a $7.5 million milestone payment from Biogen when we advanced a target under our 2018 strategic collaboration. We added this payment to the transaction price and allocated it to our R&D services performance obligation. We are recognizing revenue related to this milestone payment over our estimated period of performance.
Conversely, we recognize in full those milestone payments that we earn based on our partners’ activities when our partner achieves the milestone event and we do not have a performance obligation. For example, in the third quarter of 2020, we recognized $18 million in milestone payments when Biogen initiated a Phase 1/2 trial for ION464, our medicine in development targeting alpha-synuclein to treat patients with multiple system atrophy. We concluded that the milestone payments were not related to our R&D services performance obligation. Therefore, we recognized the milestone payments in full in the third quarter of 2020.
License fees
We generally recognize as revenue the total amount we determine to be the relative stand-alone selling price of a license when we deliver the license to our partner. This is because our partner has full use of the license and we do not have any additional performance obligations related to the license after delivery. For example, in the fourth quarter of 2020, we earned a $30 million license fee from AstraZeneca when AstraZeneca licensed ION455, an investigational medicine in development to treat nonalcoholic steatohepatitis, or NASH.
Sublicense fees
We recognize sublicense fee revenue in the period in which a party, who has already licensed our technology, further licenses the technology to another party because we do not have any performance obligations related to the sublicense.
Amendments to Agreements
From time to time we amend our collaboration agreements. When this occurs, we are required to assess the following items to determine the accounting for the amendment:
If we conclude the goods and/or services in the amendment are distinct from the performance obligations in the original agreement and at a stand-alone selling price, we account for the amendment as a separate agreement. If we conclude the goods and/or services are not distinct and are sold at a stand-alone selling price, we then assess whether the remaining goods or services are distinct from those already provided. If the goods and/or services are distinct from what we have already provided, then we allocate the remaining transaction price from the original agreement and the additional transaction price from the amendment to the remaining goods and/or services. If the goods and/or services are not distinct from what we have already provided, we update the transaction price for our single performance obligation and recognize any change in our estimated revenue as a cumulative adjustment.
For example, in May 2015, we entered into an exclusive license agreement with Bayer to develop and commercialize IONIS-FXIRx for the prevention of thrombosis. As part of the agreement, Bayer paid us a $100 million upfront payment. At the onset of the agreement, we were responsible for completing a Phase 2 study of IONIS-FXIRx in people with end-stage renal disease on hemodialysis and for providing an initial supply of API. In February 2017, we amended our agreement with Bayer to advance IONIS-FXIRx and to initiate development of IONIS-FXI-LRx, which Bayer licensed. As part of the 2017 amendment, Bayer paid us $75 million. We are also eligible to receive milestone payments and tiered royalties on gross margins of IONIS-FXIRx and IONIS-FXI-LRx. Under the 2017 amendment, we concluded we had a new agreement with three performance obligations. These performance obligations were to deliver the license of IONIS-FXI-LRx, to provide R&D services and to deliver API. We allocated the $75 million transaction price to these performance obligations. Refer to Note 6, Collaborative Arrangements and Licensing Agreements, in our audited financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2020 for further discussion of the Bayer collaboration.
Multiple agreements
From time to time, we may enter into separate agreements at or near the same time with the same partner. We evaluate such agreements to determine whether we should account for them individually as distinct arrangements or whether the separate agreements should be combined and accounted for together. We evaluate the following to determine the accounting for the agreements:
Our evaluation involves significant judgment to determine whether a group of agreements might be so closely related that accounting guidance requires us to account for them as a combined arrangement.
For example, in the second quarter of 2018, we entered into two separate agreements with Biogen at the same time: a new strategic neurology collaboration agreement and a stock purchase agreement, or SPA. We evaluated the Biogen agreements to determine whether we should treat the agreements separately or combine them. We considered that the agreements were negotiated concurrently and in contemplation of one another. Based on these facts and circumstances, we concluded that we should evaluate the provisions of the agreements on a combined basis.
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| Contracts Receivable |
Contracts Receivable
Our contracts receivable balance represents the amounts we have billed our partners or customers and that are due to us unconditionally for goods we have delivered or services we have performed. When we bill our partners or customers with payment terms based on the passage of time, we consider the contracts receivable to be unconditional. We typically receive payment within of billing our partner or customer.
As of March 31, 2021, approximately 46.8 percent of our contracts receivables were from three significant customers. As of December 31, 2020, approximately 99.5 percent of our contracts receivables were from two significant customers.
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| Unbilled SPINRAZA Royalties |
Unbilled SPINRAZA Royalties
Our unbilled SPINRAZA royalties represent our right to receive consideration from Biogen in advance of when we are eligible to bill Biogen for SPINRAZA royalties. We include these unbilled amounts in other current assets on our condensed consolidated balance sheet.
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| Deferred Revenue |
Deferred Revenue
We are often entitled to bill our customers and receive payment from our customers in advance of our obligation to provide services or transfer goods to our partners. In these instances, we include the amounts in deferred revenue on our condensed consolidated balance sheet. During the three months ended March 31, 2021 and 2020, we recognized $26.0 million and $28.0 million of revenue from amounts that were in our beginning deferred revenue balance for each respective period. For further discussion, refer to our revenue recognition policy above.
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| Cost of Sales |
Cost of Sales
Our cost of sales includes manufacturing costs, transportation and freight costs and indirect overhead costs associated with the manufacturing and distribution of our products. We also may include certain period costs related to manufacturing services and inventory adjustments in cost of sales.
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| Cash, Cash Equivalents and Investments |
Cash, Cash Equivalents and Investments
We consider all liquid investments with maturities of three months or less when we purchase them to be cash equivalents. Our short-term investments have initial maturities of greater than three months from date of purchase. We classify our short-term debt investments as “available-for-sale” and carry them at fair market value based upon prices on the last day of the fiscal period for identical or similar items. We record unrealized gains and losses on debt securities as a separate component of comprehensive income (loss) and include net realized gains and losses in gain (loss) on investments in our condensed consolidated statement of operations. We use the specific identification method to determine the cost of securities sold.
We also have equity investments of less than 20 percent ownership in publicly and privately held biotechnology companies that we received as part of a technology license or partner agreement. At March 31, 2021, we held equity investments in two publicly held companies, ProQR Therapeutics N.V., or ProQR, and Antisense Therapeutics Limited, or ATL. We also held equity investments in seven privately held companies, Aro Biotherapeutics, Atlantic Pharmaceuticals Limited, Dynacure SAS, Empirico, Inc., Flamingo Therapeutics BV, Seventh Sense Biosystems and Suzhou-Ribo Life Science Co, Ltd.
We are required to measure and record our equity investments at fair value and to recognize the changes in fair value in our condensed consolidated statement of operations. We account for our equity investments in privately held companies at their cost minus impairments, plus or minus changes resulting from observable price changes in orderly transactions for the identical or similar investment of the same issuer. For example, during the second and fourth quarters of 2020, we revalued our investments in three privately held companies, Dynacure, Suzhou-Ribo and Aro Biotherapeutics because the companies sold additional equity securities that were similar to the equity we own. These observable price changes resulted in us recognizing a $6.3 million gain on our investment in Dynacure, a $3.0 million gain on our investment in Suzhou-Ribo and a $5.5 million gain on our investment in Aro Biotherapeutics in our condensed consolidated statement of operations during 2020 because the sales were at higher prices compared to our recorded value.
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| Inventory Valuation |
Inventory Valuation
We reflect our inventory on our condensed consolidated balance sheet at the lower of cost or net realizable value under the first-in, first-out method, or FIFO. We capitalize the costs of raw materials that we purchase for use in producing our medicines because until we use these raw materials, they have alternative future uses, which we refer to as clinical raw materials. We include in inventory raw material costs for medicines that we manufacture for our partners under contractual terms and that we use primarily in our clinical development activities and drug products. We can use each of our raw materials in multiple products and, as a result, each raw material has future economic value independent of the development status of any single medicine. For example, if one of our medicines failed, we could use the raw materials for that medicine to manufacture our other medicines. We expense these costs as R&D expenses when we begin to manufacture API for a particular medicine if the medicine has not been approved for marketing by a regulatory agency.
We obtained the first regulatory approval for TEGSEDI in July 2018 and for WAYLIVRA in May 2019. At March 31, 2021, our physical inventory for TEGSEDI and WAYLIVRA included API that we produced prior to when we obtained regulatory approval. As such, this API has no cost basis as we had previously expensed the costs as R&D expenses.
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 recorded an insignificant amount of inventory write-offs for the three months ended March 31, 2021 and 2020.
Our inventory consisted of the following (in thousands):
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| Leases |
Leases
We determine if an arrangement contains a lease at inception. We currently only have operating leases. We recognize a right-of-use operating lease asset and associated short- and long-term operating lease liability on our condensed consolidated balance sheet for operating leases greater than one year. Our right-of-use assets represent our right to use an underlying asset for the lease term and our lease liabilities represent our obligation to make lease payments arising from the lease arrangement. We recognize our right-of-use operating lease assets and lease liabilities based on the present value of the future minimum lease payments we will pay over the lease term. We determine the lease term at the inception of each lease, and in certain cases our lease term could include renewal options if we concluded we were reasonably certain that we will exercise the renewal option. When we exercise a lease option that was not previously included in the initial lease term, we reassess our right-of-use asset and lease liabilities for the new lease term.
As our current leases do not provide an interest rate implicit in the lease, we used our incremental borrowing rate, based on the information available on the date we adopted Topic 842 (January 2019), as of the lease inception date or at the lease option extension date in determining the present value of future payments. We recognize rent expense for our minimum lease payments on a straight-line basis over the expected term of our lease. We recognize period expenses, such as common area maintenance expenses, in the period we incur the expense.
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| Research and Development Expenses |
Our research and development expenses include wages, benefits, facilities, supplies, external services, clinical trial and manufacturing costs and other expenses that are directly related to our research and development operations. We expense research and development costs as we incur them. When we make payments for research and development services prior to the services being rendered, we record those amounts as prepaid assets on our condensed consolidated balance sheet and we expense them as the services are provided.
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| Patent Expenses |
We capitalize costs consisting principally of outside legal costs and filing fees related to obtaining patents. We amortize patent costs over the useful life of the patent, beginning with the date the U.S. Patent and Trademark Office, or foreign equivalent, issues the patent. We review our capitalized patent costs regularly to ensure that they include costs for patents and patent applications that have future value. When we identify patents and patent applications that we are not actively pursuing, we write off any associated costs.
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| Income Taxes |
Income Taxes
We account for income taxes using the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in our financial statements or tax returns. In addition, deferred tax assets are recorded for the future benefit of utilizing net operating losses and research and development credit carryforwards. We record a valuation allowance when necessary to reduce our net deferred tax assets to the amount we expect to realize.
We evaluate our deferred tax assets regularly to determine whether adjustments to the valuation allowance are appropriate due to changes in facts or circumstances, such as changes in expected future pre-tax earnings, tax law, interactions with taxing authorities and developments in case law. In making this evaluation, we rely on our recent history of pre-tax earnings. Our material assumptions are our forecasts of future pre-tax earnings and the nature and timing of future deductions and income represented by the deferred tax assets and liabilities, all of which involve the exercise of significant judgment.
We assessed our valuation allowance requirements and recorded a valuation allowance against all of Ionis’ U.S. federal net deferred tax assets in the fourth quarter of 2020, due to uncertainties related to our ability to realize the tax benefits associated with these assets. We based our determination largely on Akcea rejoining the Ionis U.S. consolidated federal tax group in the fourth quarter of 2020. Due to Akcea’s historical and projected financial statement losses, and the negative impact we expect this to have on Ionis’ consolidated taxable income, there is uncertainty of generating sufficient consolidated pre-tax income in future periods to realize the Ionis deferred tax benefits. We also expect that Ionis’ pre-tax income in future periods may be lower due to increased research and development expenses associated with our pipeline of wholly owned medicines. We continue to maintain a valuation allowance against all our consolidated U.S. federal and state net deferred tax assets.
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| Long-Lived Assets |
Long-lived Assets
We evaluate long-lived assets, which include property, plant and equipment and patent costs, for impairment on at least a quarterly basis and whenever events or changes in circumstances indicate that we may not be able to recover the carrying amount of such assets.
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| Use of Estimates |
Use of Estimates
We prepare our condensed consolidated financial statements in conformity with accounting principles generally accepted in the U.S. that require us to make estimates and assumptions that affect the amounts reported in our condensed consolidated financial statements and accompanying notes. Actual results could differ from our estimates.
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| Basic and Diluted Net Loss per Share |
Basic and Diluted Net Loss Per Share
Basic net loss per share
In the first quarter of 2021, we computed basic net loss per share by dividing our net loss by our weighted-average number of common shares outstanding during the period. For the first quarter of 2021, we did not have to consider Akcea results separately in our calculation because we owned 100 percent of Akcea for the entire period. Our basic net loss per share for the three months ended March 31, 2021 was $0.64.
In the first quarter of 2020, prior to the Akcea Acquisition, we calculated our net loss for Ionis on a stand-alone basis plus our share of Akcea’s net loss for the period to determine our total net loss attributable to our common stockholders. To calculate the portion of Akcea’s net loss attributable to our ownership, we multiplied Akcea’s net loss per share by the weighted average shares we owned in Akcea during the period. As a result of this calculation, our total net loss available to Ionis common stockholders for the calculation of net loss per share is different than our net loss attributable to Ionis Pharmaceuticals, Inc. common stockholders in the condensed consolidated statements of operations.
Our basic net loss per share for the three months ended March 31, 2020, was calculated as follows (in thousands, except per share amounts):
Diluted net loss per share
For the three months ended March 31, 2021 and 2020, we incurred a net loss; therefore, we did not include dilutive common equivalent shares in the computation of diluted net loss per share because the effect would have been anti-dilutive. Common stock from the following would have had an anti-dilutive effect on net loss per share:
Additionally as of March 31, 2021, we had warrants related to our 0.125 percent convertible senior notes outstanding. We will include the shares issuable under these warrants in our calculation of diluted earnings per share when the average market price per share of our common stock for the reporting period exceeds the strike price of the warrants.
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| Convertible Debt |
Convertible Debt
Adoption of ASU 2020-06
In August 2020, the FASB issued ASU 2020-06, which simplifies the accounting for convertible debt instruments, amends the guidance on derivative scope exceptions for contracts in an entity’s own equity, and modifies the guidance on diluted earnings per share calculations. We adopted ASU 2020-06 on January 1, 2021 under the full retrospective approach, which required us to revise our prior period financial statements. This guidance impacted our accounting for outstanding convertible debt. As of March 31, 2021, we had two outstanding convertible notes, our 0.125 percent senior convertible notes, or 0.125% Notes, which mature in December 2024, and our 1 percent senior convertible notes, or 1% Notes, which mature in November 2021.
The updated guidance eliminates the cash conversion accounting model we previously followed in Accounting Standard Codification, or ASC, 470-20, which required us to separate each of our convertible debt instruments at issuance into two units of accounting, a liability component, based on our nonconvertible debt borrowing rate at issuance, and an equity component. Under ASU 2020-06, we now account for each of our convertible debt instruments as a single unit of accounting, a liability, because we concluded that the conversion features do not require bifurcation as a derivative under ASC 815-15 and our convertible debt instruments were not issued at a substantial premium. Since we adopted ASU 2020-06 using the full retrospective approach, we were required to apply the guidance to all convertible debt instruments we had outstanding as of January 1, 2019. We recomputed the basis of each convertible debt instrument as if we accounted for each as a single unit of accounting at issuance. This update included recalculating the amortization of debt issuance costs using an updated effective interest rate. As a result of adopting ASU 2020-06, we recorded a cumulative adjustment to decrease our additional paid in capital and our accumulated deficit at January 1, 2019. We have updated these financial statements to reflect the cumulative adjustment for the periods presented. We have labeled our prior period financial statements “as revised” to indicate the change required under the new accounting guidance. Below is a summary of the change in our balance sheet at December 31, 2020 and statement of operations from our first quarter 2020 under the ASC 470-20 legacy guidance compared to the new ASU 2020-06 guidance we adopted:
The following table summarizes the adjustments we made to the condensed consolidated balance sheet we originally reported at December 31, 2020 to adopt ASU 2020-06 (in thousands):
Under ASU 2020-06, our revised ending balances for our 1% Notes and 0.125% Notes as of December 31, 2020 represent the principal balance of each convertible debt instrument less debt issuance costs. Additionally, because we have deferred tax assets related to our convertible debt instruments, we also adjusted these amounts as part of our adoption of ASU 2020-06. However, because we have a full valuation allowance on our deferred tax assets, there was no impact to our condensed consolidated balance sheet related to our deferred tax assets.
The following table summarizes the adjustments we made to the condensed consolidated statement of operations we originally reported at March 31, 2020 to adopt ASU 2020-06 (in thousands):
Under ASU 2020-06, our revised interest expense is lower as we are no longer recording non-cash interest expense related to a debt discount. This decrease was partially offset by the increase in interest expense related to the amortization of debt issuance costs because we no longer allocate a portion of our debt issuance costs to stockholders’ equity at issuance. Instead, the entire debt issuance costs were recorded as a contra-liability on our condensed consolidated balance sheet at issuance and we are amortizing them over the contractual term using an updated effective interest rate. Our updated effective interest rates for our 1% Notes and 0.125% Notes were 1.4 percent and 0.5 percent, respectively.
The following tables summarize the adjustments we made to our condensed consolidated statements of stockholders’ equity we originally reported at December 31, 2020 and 2019 to adopt ASU 2020-06 (in thousands):
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| Call Spread |
Call Spread
In conjunction with the issuance of our 0.125% Notes in December 2019, we entered into a call spread transaction, which was comprised of purchasing note hedges and selling warrants. We account for the note hedges and warrants as separate freestanding financial instruments and treat each instrument as a separate unit of accounting. We determined that the note hedges and warrants do not meet the definition of a liability using the guidance contained in ASC Topic 480, therefore we account for the note hedges and warrants using the Derivatives and Hedging – Contracts in Entity’s Own Equity accounting guidance contained in ASC Topic 815. We determined that the note hedges and warrants meet the definition of a derivative, are indexed to our stock and meet the criteria to be classified in shareholders’ equity. We recorded the aggregate amount paid for the note hedges and the aggregate amount received for the warrants as additional paid-in capital in our condensed consolidated balance sheet. We reassess our ability to continue to classify the note hedges and warrants in shareholders’ equity at each reporting period.
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| Segment Information |
Segment Information
In 2021, we began operating as a single segment, Ionis operations, because our chief decision maker reviews operating results on an aggregate basis and manages our operations as a single operating segment. Previously, we had operated as two operating segments, Ionis Core and Akcea Therapeutics. In October 2020, we acquired the remaining common stock of Akcea that we did not own and fully integrated Akcea’s operations into ours as of January 1, 2021.
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| Stock-Based Compensation Expense |
Stock-based Compensation Expense
We measure stock-based compensation expense for equity-classified awards, principally related to stock options, RSUs, and stock purchase rights under our ESPP based on the estimated fair value of the award on the date of grant. We recognize the value of the portion of the award that we ultimately expect to vest as stock-based compensation expense over the requisite service period in our condensed consolidated statements of operations. We reduce stock-based compensation expense for estimated forfeitures at the time of grant and revise in subsequent periods if actual forfeitures differ from those estimates. We use the Black-Scholes model to estimate the fair value of stock options granted and stock purchase rights under our ESPP.
On the grant date, we use our stock price and assumptions regarding a number of variables to determine the estimated fair value of stock-based payment awards. These variables include, but are not limited to, our expected stock price volatility over the term of the awards, and actual and projected employee stock option exercise behaviors.
We recognize compensation expense for stock options granted, RSUs, PRSUs and stock purchase rights under the ESPP using the accelerated multiple-option approach. Under the accelerated multiple-option approach (also known as the graded-vesting method), we recognize compensation expense over the requisite service period for each separately vesting tranche of the award as though the award were in substance multiple awards, which results in the expense being front-loaded over the vesting period.
In December 2020, we amended and restated the Akcea 2015 equity plan, including renaming the plan as the Ionis Pharmaceuticals, Inc. 2020 Equity Incentive Plan, or 2020 Plan. As a result, all employees are now under an Ionis stock plan and subject to the same Black-Scholes assumptions. During the three months ended March 31, 2021 and 2020, we did not grant any stock options or RSUs to our Board of Directors. For the three months ended March 31, 2021 and 2020, we used the following weighted-average assumptions in our Black-Scholes calculations:
Employee Stock Options:
ESPP:
RSU’s:
The fair value of RSUs is based on the market price of our common stock on the date of grant. The RSUs we have granted to employees vest annually over a four-year period. The RSUs we granted to our board of directors prior to June 2020 vest annually over a four-year period. RSUs granted after June 2020 to our board of directors fully vest after one year. The weighted-average grant date fair value of RSUs granted to employees for the three months ended March 31, 2021 was $62.02 per share.
PRSU’s:
Beginning in 2020, we added performance-based restricted stock units, or PRSU, awards to the compensation for our Chief Executive Officer, Dr. Brett Monia. Under the terms of the grants, of the PRSUs may vest at the end of three separate performance periods spread over the three years following the date of grant (i.e., the one-year period commencing on the date of grant and ending on the first anniversary of the date of grant; the two-year period commencing on the date of grant and ending on the second anniversary of the date of grant; and the three-year period commencing on the date of grant and ending on the third anniversary of the date of grant) based on our relative total shareholder return, or TSR, as compared to a peer group of companies, and as measured, in each case, at the end of the applicable performance period. Under the terms of the grants no number of PRSUs is guaranteed to vest and the actual number of PRSUs that will vest at the end of each performance period may be anywhere from zero percentto 150 percent of the target number depending on our relative TSR.
We determined the fair value of Dr. Monia’s PRSUs using a Monte Carlo model because the performance target is based on our relative TSR, which represents a market condition. We are recognizing the grant date fair value of these awards as stock-based compensation expense using the accelerated multiple-option approach over the vesting period. The weighted-average grant date fair value of PRSUs granted to Dr. Monia for the three months ended March 31, 2021 was $77.17 per share.
The following table summarizes stock-based compensation expense for the three months ended March 31, 2021 and 2020 (in thousands).
As of March 31, 2021, total unrecognized estimated non-cash stock-based compensation expense related to non-vested stock options, RSUs and PRSUs was $101.8 million, $109.6 million and $3.8 million, respectively. Our actual expenses may differ from these estimates because we will adjust our unrecognized non-cash stock-based compensation expense for future forfeitures. We expect to recognize the cost of non-cash stock-based compensation expense related to our non-vested stock options, RSUs and PRSUs over a weighted average amortization period of 1.4 years, 1.8 years and 1.7 years, respectively.
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| Impact of Recently Issued Accounting Standards |
Impact of Recently Issued Accounting Standards
As disclosed in the “Convertible Debt” policy above within this footnote, we adopted the simplified accounting for convertible debt instrument guidance (ASU 2020-06) on January 1, 2021. Refer to the section above for the impact of adoption. We do not expect any other recently issued accounting standards to have a material impact to our financial results.
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Significant Accounting Policies (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| Significant Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Inventory |
Our inventory consisted of the following (in thousands):
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| Basic Net Loss per Share |
Our basic net loss per share for the three months ended March 31, 2020, was calculated as follows (in thousands, except per share amounts):
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| Adoption of ASU 2020-06 |
The following table summarizes the adjustments we made to the condensed consolidated balance sheet we originally reported at December 31, 2020 to adopt ASU 2020-06 (in thousands):
The following table summarizes the adjustments we made to the condensed consolidated statement of operations we originally reported at March 31, 2020 to adopt ASU 2020-06 (in thousands):
The following tables summarize the adjustments we made to our condensed consolidated statements of stockholders’ equity we originally reported at December 31, 2020 and 2019 to adopt ASU 2020-06 (in thousands):
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| Weighted-Average Assumptions for Stock Options |
Employee Stock Options:
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| Weighted-Average Assumptions for ESPP |
ESPP:
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| Stock-Based Compensation Expense |
The following table summarizes stock-based compensation expense for the three months ended March 31, 2021 and 2020 (in thousands).
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Investments (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| Investments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Contract Maturity of Available-for-Sale Securities |
The following table summarizes the contract maturity of the available-for-sale securities we held as of March 31, 2021:
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| Summary of Investments |
The following is a summary of our investments (in thousands):
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| Temporarily Impaired Investments |
The following is a summary of our investments we consider to be temporarily impaired at March 31, 2021 (in thousands). All of these investments have less than 12 months of temporary impairment. We believe that the decline in value of these securities is temporary and is primarily related to the change in market interest rates since purchase. We believe it is more likely than not that we will be able to hold our debt securities to maturity. Therefore, we anticipate full recovery of our debt securities’ amortized cost basis at maturity.
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Fair Value Measurements (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Fair Value Measurements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Assets Measured at Fair Value on a Recurring Basis |
The following tables present the major security types we held at March 31, 2021 and December 31, 2020 that we regularly measure and carry at fair value. As of March 31, 2021 and December 31, 2020, we did not have any investments that we valued using Level 3 inputs. The following tables segregate each security type by the level within the fair value hierarchy of the valuation techniques we utilized to determine the respective securities’ fair value (in thousands):
The following footnotes reference lines on our condensed consolidated balance sheet:
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Collaborative Arrangements and Licensing Agreements (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Biogen [Member] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Collaborative Arrangements and Licensing Agreements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Revenue from Collaborative Relationship |
During the three months ended March 31, 2021 and 2020, we earned the following revenue from our relationship with Biogen (in millions, except percentage amounts):
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Convertible Debt (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2021 | |||||||||||||||||||||||||||||||||||||||||
| 0% Convertible Senior Notes [Member] | |||||||||||||||||||||||||||||||||||||||||
| Convertible Notes [Abstract] | |||||||||||||||||||||||||||||||||||||||||
| Convertible Notes |
Following the closing of the debt transaction in April 2021, we had the following 0% Notes outstanding (amounts in millions except interest rate and price per share data):
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| 0.125% Convertible Senior Notes [Member] | |||||||||||||||||||||||||||||||||||||||||
| Convertible Notes [Abstract] | |||||||||||||||||||||||||||||||||||||||||
| Convertible Notes |
At March 31, 2021, we had the following 0.125% Notes outstanding with interest payable semi-annually (amounts in millions except interest rate and price per share data):
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| 1% Convertible Senior Notes [Member] | |||||||||||||||||||||||||||||||||||||||||
| Convertible Notes [Abstract] | |||||||||||||||||||||||||||||||||||||||||
| Convertible Notes |
At March 31, 2021, we had the following 1% Notes outstanding with interest payable semi-annually (amounts in millions except interest rate and price per share data):
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Severance and Retention Costs (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Akcea Acquisition [Member] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Severance and Retention Costs [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Severance and Retention Costs |
As a result of the Akcea Acquisition in October 2020, we began recognizing severance and retention expenses in the fourth quarter of 2020. The following table summarizes our total estimated severance and retention expenses related to the Akcea Acquisition (in millions):
The following table summarizes our severance and retention expenses related to the Akcea Acquisition that we recognized during the three months ended March 31, 2021 (in millions):
The following table summarizes the severance and retention reserve amounts related to the Akcea Acquisition that we included in accrued compensation for the period indicated (in millions):
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| Restructured European Operations [Member] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Severance and Retention Costs [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Severance and Retention Costs |
As a result of restructuring our European operations, or Restructured European Operations, in December 2020, we began recognizing severance and retention expenses in the fourth quarter of 2020. The following table summarizes our total severance and retention expenses related to our Restructured European Operations (in millions):
The following table summarizes the severance and retention expenses related to our Restructured European Operations that we recognized during the three months ended March 31, 2021 (in millions):
The following table summarizes the severance and retention reserve amounts related to our Restructured European operations that we included in accrued compensation for the periods indicated (in millions):
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Basis of Presentation (Details) - Akcea [Member] |
Mar. 31, 2021 |
Jul. 31, 2017 |
|---|---|---|
| Basis of Presentation [Abstract] | ||
| Percentage ownership | 100.00% | |
| Maximum [Member] | ||
| Basis of Presentation [Abstract] | ||
| Percentage ownership | 100.00% |
Significant Accounting Policies, Contracts Receivable (Details) - Partner |
3 Months Ended | 12 Months Ended |
|---|---|---|
Mar. 31, 2021 |
Dec. 31, 2020 |
|
| Contracts Receivable [Abstract] | ||
| Period of time after billing when payment is received | 3 months | |
| Significant Partners [Abstract] | ||
| Number of significant customers | 3 | 2 |
| Contracts Receivables [Member] | Credit Concentration [Member] | Three Significant Customers [Member] | ||
| Significant Partners [Abstract] | ||
| Concentration percentage | 46.80% | |
| Contracts Receivables [Member] | Credit Concentration [Member] | Two Significant Customers [Member] | ||
| Significant Partners [Abstract] | ||
| Concentration percentage | 99.50% |
Significant Accounting Policies, Deferred Revenue (Details) - USD ($) $ in Millions |
3 Months Ended | |
|---|---|---|
Mar. 31, 2021 |
Mar. 31, 2020 |
|
| Deferred Revenue [Abstract] | ||
| Revenue recognized from amounts in beginning deferred revenue balance | $ 26.0 | $ 28.0 |
Significant Accounting Policies, Cash, Cash Equivalents and Investments (Details) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
|
Mar. 31, 2021
USD ($)
Company
|
Jun. 30, 2020
USD ($)
|
Mar. 31, 2020
USD ($)
|
Dec. 31, 2020
Investment
|
|
| Cash, Cash Equivalents and Investments [Abstract] | ||||
| Number of publicly held companies in which there is an equity ownership interest of less than 20% | Company | 2 | |||
| Number of privately held companies in which there is an equity ownership interest of less than 20% | Company | 7 | |||
| Number of investments in privately held companies that were revalued | Investment | 3 | |||
| Gain on investment | $ 13 | $ 246 | ||
| Dynacure [Member] | ||||
| Cash, Cash Equivalents and Investments [Abstract] | ||||
| Gain on investment | $ 6,300 | |||
| Suzhou-Ribo [Member] | ||||
| Cash, Cash Equivalents and Investments [Abstract] | ||||
| Gain on investment | 3,000 | |||
| Aro Biotherapeutics [Member] | ||||
| Cash, Cash Equivalents and Investments [Abstract] | ||||
| Gain on investment | $ 5,500 | |||
Significant Accounting Policies, Inventory Valuation (Details) - USD ($) $ in Thousands |
Mar. 31, 2021 |
Dec. 31, 2020 |
|---|---|---|
| Inventory Valuation [Abstract] | ||
| Raw materials | $ 18,197 | $ 16,708 |
| Work in process | 2,096 | 2,252 |
| Finished goods | 1,906 | 3,005 |
| Total inventory | 22,199 | 21,965 |
| Clinical [Member] | ||
| Inventory Valuation [Abstract] | ||
| Raw materials | 10,695 | 9,206 |
| Commercial [Member] | ||
| Inventory Valuation [Abstract] | ||
| Raw materials | $ 7,502 | $ 7,502 |
Significant Accounting Policies, Segment Information (Details) |
3 Months Ended |
|---|---|
|
Mar. 31, 2021
Segment
| |
| Segment Information [Abstract] | |
| Number of operating segments | 2 |
Investments, Contract Maturity of Available-for-Sale Securities (Details) |
3 Months Ended |
|---|---|
|
Mar. 31, 2021
Company
| |
| Contract Maturity of Available-for-Sale Securities [Abstract] | |
| One year or less | 67.00% |
| After one year but within two years | 20.00% |
| After two years but within three and a half years | 13.00% |
| Total | 100.00% |
| Percentage of available-for-sale securities with a maturity of less than two years | 87.00% |
| Maximum contract maturity period, range 1 | 1 year |
| Maximum contract maturity period, range 2 | 2 years |
| Maximum contract maturity period, range 3 | 3 years 6 months |
| Ownership Interests in Private and Public Companies [Abstract] | |
| Number of privately held companies in which there is an equity ownership interest of less than 20% | 7 |
| Number of publicly held companies in which there is an equity ownership interest of less than 20% | 2 |
Investments, Investments Temporarily Impaired (Details) $ in Thousands |
Mar. 31, 2021
USD ($)
Investment
|
|---|---|
| Temporarily Impaired Investments [Abstract] | |
| Number of investments | Investment | 414 |
| Estimated fair value, less than 12 months of temporary impairment | $ 435,239 |
| Unrealized losses, less than 12 months of temporary impairment | $ (596) |
| Corporate Debt Securities [Member] | |
| Temporarily Impaired Investments [Abstract] | |
| Number of investments | Investment | 101 |
| Estimated fair value, less than 12 months of temporary impairment | $ 233,665 |
| Unrealized losses, less than 12 months of temporary impairment | $ (321) |
| Debt Securities Issued by U.S. Government Agencies [Member] | |
| Temporarily Impaired Investments [Abstract] | |
| Number of investments | Investment | 7 |
| Estimated fair value, less than 12 months of temporary impairment | $ 60,681 |
| Unrealized losses, less than 12 months of temporary impairment | $ (166) |
| Debt Securities Issued by the U.S. Treasury [Member] | |
| Temporarily Impaired Investments [Abstract] | |
| Number of investments | Investment | 6 |
| Estimated fair value, less than 12 months of temporary impairment | $ 52,838 |
| Unrealized losses, less than 12 months of temporary impairment | $ (35) |
| Debt Securities Issued by States of the U.S. and Political Subdivisions of the States [Member] | |
| Temporarily Impaired Investments [Abstract] | |
| Number of investments | Investment | 297 |
| Estimated fair value, less than 12 months of temporary impairment | $ 76,712 |
| Unrealized losses, less than 12 months of temporary impairment | $ (47) |
| Other Municipal Debt Securities [Member] | |
| Temporarily Impaired Investments [Abstract] | |
| Number of investments | Investment | 3 |
| Estimated fair value, less than 12 months of temporary impairment | $ 11,343 |
| Unrealized losses, less than 12 months of temporary impairment | $ (27) |
Fair Value Measurements (Details) - USD ($) $ in Thousands |
Mar. 31, 2021 |
Dec. 31, 2020 |
||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 1 Percent Convertible Senior Notes [Member] | ||||||||||||||
| Fair Value Measurements [Abstract] | ||||||||||||||
| Interest rate on convertible senior notes | 1.00% | 1.00% | ||||||||||||
| 0.125 Percent Convertible Senior Notes [Member] | ||||||||||||||
| Fair Value Measurements [Abstract] | ||||||||||||||
| Interest rate on convertible senior notes | 0.125% | 0.125% | ||||||||||||
| Significant Other Observable Inputs (Level 2) [Member] | 1 Percent Convertible Senior Notes [Member] | ||||||||||||||
| Fair Value Measurements [Abstract] | ||||||||||||||
| Fair value of convertible notes | $ 314,600 | |||||||||||||
| Significant Other Observable Inputs (Level 2) [Member] | 0.125 Percent Convertible Senior Notes [Member] | ||||||||||||||
| Fair Value Measurements [Abstract] | ||||||||||||||
| Fair value of convertible notes | 527,300 | |||||||||||||
| Recurring Basis [Member] | ||||||||||||||
| Fair Value Measurements [Abstract] | ||||||||||||||
| Cash equivalents | [1] | 372,050 | $ 221,125 | |||||||||||
| Investment in ProQR Therapeutics N.V. | [2] | 3,198 | 2,031 | |||||||||||
| Total | 1,791,086 | 1,745,363 | ||||||||||||
| Recurring Basis [Member] | Corporate Debt Securities [Member] | ||||||||||||||
| Fair Value Measurements [Abstract] | ||||||||||||||
| Available-for-sale securities | [3] | 776,776 | 846,315 | |||||||||||
| Recurring Basis [Member] | Corporate Debt Securities [Member] | Cash and Cash Equivalents [Member] | ||||||||||||||
| Fair Value Measurements [Abstract] | ||||||||||||||
| Available-for-sale securities | 10,000 | 10,000 | ||||||||||||
| Recurring Basis [Member] | Debt Securities Issued by U.S. Government Agencies [Member] | ||||||||||||||
| Fair Value Measurements [Abstract] | ||||||||||||||
| Available-for-sale securities | [4] | 177,563 | 174,861 | |||||||||||
| Recurring Basis [Member] | Debt Securities Issued by the U.S. Treasury [Member] | ||||||||||||||
| Fair Value Measurements [Abstract] | ||||||||||||||
| Available-for-sale securities | 293,611 | [4] | 358,497 | [5] | ||||||||||
| Recurring Basis [Member] | Debt Securities Issued by the U.S. Treasury [Member] | Cash and Cash Equivalents [Member] | ||||||||||||||
| Fair Value Measurements [Abstract] | ||||||||||||||
| Available-for-sale securities | 17,500 | |||||||||||||
| Recurring Basis [Member] | Debt Securities Issued by States of the U.S. and Political Subdivisions of the States [Member] | ||||||||||||||
| Fair Value Measurements [Abstract] | ||||||||||||||
| Available-for-sale securities | [4] | 156,545 | 136,309 | |||||||||||
| Recurring Basis [Member] | Other Municipal Debt Securities [Member] | ||||||||||||||
| Fair Value Measurements [Abstract] | ||||||||||||||
| Available-for-sale securities | [4] | 11,343 | 6,225 | |||||||||||
| Recurring Basis [Member] | Quoted Prices in Active Markets (Level 1) [Member] | ||||||||||||||
| Fair Value Measurements [Abstract] | ||||||||||||||
| Cash equivalents | 372,050 | 221,125 | ||||||||||||
| Investment in ProQR Therapeutics N.V. | 3,198 | 2,031 | ||||||||||||
| Total | 668,859 | 581,653 | ||||||||||||
| Recurring Basis [Member] | Quoted Prices in Active Markets (Level 1) [Member] | Corporate Debt Securities [Member] | ||||||||||||||
| Fair Value Measurements [Abstract] | ||||||||||||||
| Available-for-sale securities | 0 | 0 | ||||||||||||
| Recurring Basis [Member] | Quoted Prices in Active Markets (Level 1) [Member] | Debt Securities Issued by U.S. Government Agencies [Member] | ||||||||||||||
| Fair Value Measurements [Abstract] | ||||||||||||||
| Available-for-sale securities | 0 | 0 | ||||||||||||
| Recurring Basis [Member] | Quoted Prices in Active Markets (Level 1) [Member] | Debt Securities Issued by the U.S. Treasury [Member] | ||||||||||||||
| Fair Value Measurements [Abstract] | ||||||||||||||
| Available-for-sale securities | 293,611 | 358,497 | ||||||||||||
| Recurring Basis [Member] | Quoted Prices in Active Markets (Level 1) [Member] | Debt Securities Issued by States of the U.S. and Political Subdivisions of the States [Member] | ||||||||||||||
| Fair Value Measurements [Abstract] | ||||||||||||||
| Available-for-sale securities | 0 | 0 | ||||||||||||
| Recurring Basis [Member] | Quoted Prices in Active Markets (Level 1) [Member] | Other Municipal Debt Securities [Member] | ||||||||||||||
| Fair Value Measurements [Abstract] | ||||||||||||||
| Available-for-sale securities | 0 | 0 | ||||||||||||
| Recurring Basis [Member] | Significant Other Observable Inputs (Level 2) [Member] | ||||||||||||||
| Fair Value Measurements [Abstract] | ||||||||||||||
| Cash equivalents | 0 | 0 | ||||||||||||
| Investment in ProQR Therapeutics N.V. | 0 | 0 | ||||||||||||
| Total | 1,122,227 | 1,163,710 | ||||||||||||
| Recurring Basis [Member] | Significant Other Observable Inputs (Level 2) [Member] | Corporate Debt Securities [Member] | ||||||||||||||
| Fair Value Measurements [Abstract] | ||||||||||||||
| Available-for-sale securities | 776,776 | 846,315 | ||||||||||||
| Recurring Basis [Member] | Significant Other Observable Inputs (Level 2) [Member] | Debt Securities Issued by U.S. Government Agencies [Member] | ||||||||||||||
| Fair Value Measurements [Abstract] | ||||||||||||||
| Available-for-sale securities | 177,563 | 174,861 | ||||||||||||
| Recurring Basis [Member] | Significant Other Observable Inputs (Level 2) [Member] | Debt Securities Issued by the U.S. Treasury [Member] | ||||||||||||||
| Fair Value Measurements [Abstract] | ||||||||||||||
| Available-for-sale securities | 0 | 0 | ||||||||||||
| Recurring Basis [Member] | Significant Other Observable Inputs (Level 2) [Member] | Debt Securities Issued by States of the U.S. and Political Subdivisions of the States [Member] | ||||||||||||||
| Fair Value Measurements [Abstract] | ||||||||||||||
| Available-for-sale securities | 156,545 | 136,309 | ||||||||||||
| Recurring Basis [Member] | Significant Other Observable Inputs (Level 2) [Member] | Other Municipal Debt Securities [Member] | ||||||||||||||
| Fair Value Measurements [Abstract] | ||||||||||||||
| Available-for-sale securities | 11,343 | 6,225 | ||||||||||||
| Recurring Basis [Member] | Significant Unobservable Inputs (Level 3) [Member] | ||||||||||||||
| Fair Value Measurements [Abstract] | ||||||||||||||
| Total | $ 0 | $ 0 | ||||||||||||
| ||||||||||||||
Collaborative Arrangements and Licensing Agreements (Details) $ in Thousands |
1 Months Ended | 3 Months Ended | ||
|---|---|---|---|---|
|
Apr. 30, 2021
USD ($)
|
Mar. 31, 2021
USD ($)
Medicine
|
Mar. 31, 2020
USD ($)
|
Dec. 31, 2020
USD ($)
|
|
| Collaborative Arrangement and Licensing Agreement [Abstract] | ||||
| Revenue | $ 111,607 | $ 133,367 | ||
| SPINRAZA Royalties [Member] | ||||
| Collaborative Arrangement and Licensing Agreement [Abstract] | ||||
| Revenue | 59,986 | 66,008 | ||
| R&D Revenue [Member] | ||||
| Collaborative Arrangement and Licensing Agreement [Abstract] | ||||
| Revenue | $ 27,159 | 49,406 | ||
| Biogen [Member] | ||||
| Collaborative Arrangement and Licensing Agreement [Abstract] | ||||
| Number of medicines currently being developed | Medicine | 8 | |||
| Cumulative payments received | $ 2,900,000 | |||
| Revenue | 78,100 | $ 87,400 | ||
| Deferred revenue | $ 447,700 | $ 465,800 | ||
| Biogen [Member] | Revenue [Member] | Strategic Partner [Member] | ||||
| Collaborative Arrangement and Licensing Agreement [Abstract] | ||||
| Concentration percentage | 70.00% | 66.00% | ||
| Biogen [Member] | SPINRAZA Royalties [Member] | ||||
| Collaborative Arrangement and Licensing Agreement [Abstract] | ||||
| Revenue | $ 60,000 | $ 66,000 | ||
| Biogen [Member] | R&D Revenue [Member] | ||||
| Collaborative Arrangement and Licensing Agreement [Abstract] | ||||
| Revenue | $ 18,100 | $ 21,400 | ||
| 2013 Strategic Neurology [Member] | Plan [Member] | ||||
| Collaborative Arrangement and Licensing Agreement [Abstract] | ||||
| Next prospective payment | $ 8,000 | |||
| 2013 Strategic Neurology [Member] | ION541 [Member] | Subsequent Event [Member] | ||||
| Collaborative Arrangement and Licensing Agreement [Abstract] | ||||
| Milestone payment achieved | $ 10,000 | |||
Convertible Debt (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions |
1 Months Ended | 3 Months Ended | ||
|---|---|---|---|---|
Apr. 30, 2021 |
Dec. 31, 2019 |
Mar. 31, 2021 |
Dec. 31, 2020 |
|
| Convertible Debt [Abstract] | ||||
| Cost of call spread | $ 52.6 | |||
| Purchase of note hedges | 108.7 | |||
| Proceeds from issuance of warrants | $ 56.1 | |||
| Subsequent Event [Member] | ||||
| Convertible Debt [Abstract] | ||||
| Cost of call spread | $ 46.9 | |||
| Purchase of note hedges | 136.7 | |||
| Proceeds from issuance of warrants | 89.8 | |||
| 0% Convertible Senior Notes [Member] | Subsequent Event [Member] | ||||
| Convertible Debt [Abstract] | ||||
| Face amount of offering | 632.5 | |||
| Outstanding principal balance | $ 632.5 | |||
| Maturity date | Apr. 30, 2026 | |||
| Interest rate | 0.00% | |||
| Conversion price per share (in dollars per share) | $ 57.84 | |||
| Effective conversion price per share with call spread (in dollars per share) | $ 76.39 | |||
| Total shares of common stock subject to conversion (in shares) | 10.9 | |||
| Percentage of principal amount used as purchase price upon occurrence of fundamental change | 100.00% | |||
| 0.125% Convertible Senior Notes [Member] | ||||
| Convertible Debt [Abstract] | ||||
| Outstanding principal balance | $ 548.8 | |||
| Maturity date | Dec. 31, 2024 | |||
| Interest rate | 0.125% | 0.125% | ||
| Conversion price per share (in dollars per share) | $ 83.28 | |||
| Effective conversion price per share with call spread (in dollars per share) | $ 123.38 | |||
| Total shares of common stock subject to conversion (in shares) | 6.6 | |||
| Unamortized debt issuance costs | $ 8.1 | |||
| Percentage of principal amount used as purchase price upon occurrence of fundamental change | 100.00% | |||
| 1% Convertible Senior Notes [Member] | ||||
| Convertible Debt [Abstract] | ||||
| Outstanding principal balance | $ 309.9 | |||
| Maturity date | Nov. 30, 2021 | |||
| Interest rate | 1.00% | 1.00% | ||
| Conversion price per share (in dollars per share) | $ 66.81 | |||
| Total shares of common stock subject to conversion (in shares) | 4.6 | |||
| Unamortized debt issuance costs | $ 0.8 | |||
| Percentage of principal amount used as purchase price upon occurrence of fundamental change | 100.00% | |||
| 1% Convertible Senior Notes [Member] | Subsequent Event [Member] | ||||
| Convertible Debt [Abstract] | ||||
| Principal amount repurchased | $ 247.9 | |||
| Repurchase of convertible notes | 257.0 | |||
| Outstanding principal balance | $ 62.0 | |||
| Total shares of common stock subject to conversion (in shares) | 0.9 | |||
Severance and Retention Costs, Akcea Acquisition (Details) - Akcea Acquisition [Member] - USD ($) $ in Millions |
3 Months Ended | |
|---|---|---|
Mar. 31, 2021 |
Dec. 31, 2020 |
|
| Severance and Retention Costs [Abstract] | ||
| Total estimated expenses | $ 28.5 | |
| Remaining estimated expenses to be recognized through October 2021 | 7.8 | |
| Beginning balance | 14.7 | |
| Amounts expensed during the period | 6.1 | |
| Reserve adjustments during the period | (0.7) | |
| Net amount expensed during the period | 5.4 | $ 15.3 |
| Amounts paid during the period | (9.0) | |
| Ending balance | 11.1 | $ 14.7 |
| R&D Expenses [Member] | ||
| Severance and Retention Costs [Abstract] | ||
| Net amount expensed during the period | 2.5 | |
| SG&A Expenses [Member] | ||
| Severance and Retention Costs [Abstract] | ||
| Net amount expensed during the period | $ 2.9 | |
Severance and Retention Costs, Restructured European Operations (Details) - Restructured European Operations [Member] - USD ($) $ in Millions |
3 Months Ended | |
|---|---|---|
Mar. 31, 2021 |
Dec. 31, 2020 |
|
| Severance and Retention Costs [Abstract] | ||
| Total estimated expenses | $ 13.6 | |
| Remaining estimated expenses to be recognized through October 2021 | 0.4 | |
| Beginning balance | 12.4 | |
| Amounts expensed during the period | 2.2 | |
| Reserve adjustments during the period | (1.5) | |
| Net amount expensed during the period | 0.7 | $ 12.5 |
| Amounts paid during the period | (11.9) | |
| Ending balance | 1.2 | $ 12.4 |
| R&D Expenses [Member] | ||
| Severance and Retention Costs [Abstract] | ||
| Net amount expensed during the period | 0.1 | |
| SG&A Expenses [Member] | ||
| Severance and Retention Costs [Abstract] | ||
| Net amount expensed during the period | $ 0.6 | |
Severance and Retention Costs, Restructured North American TEGSEDI Operations (Details) - Restructured North American TEGSEDI Operations [Member] $ in Millions |
Mar. 31, 2021
USD ($)
|
|---|---|
| Minimum [Member] | |
| Severance and Retention Costs [Abstract] | |
| Total estimated expenses | $ 11 |
| Maximum [Member] | |
| Severance and Retention Costs [Abstract] | |
| Total estimated expenses | $ 14 |