Significant Accounting Policies (Tables)

9 Months Ended

Sep. 30, 2021

Significant Accounting Policies [Abstract]

Inventory

Our inventory consisted of the following (in thousands):

	September 30, 2021		December 31, 2020
Raw materials:
Raw materials- clinical	$	11,993	$	9,206
Raw materials- commercial		4,147		7,502
Total raw materials		16,140		16,708
Work in process		6,183		2,252
Finished goods		607		3,005
Total inventory	$	22,930	$	21,965

Basic Net Loss per Share

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

Three months ended September 30, 2020	Weighted Average Shares Owned in Akcea		Akcea’s Net Loss Per Share			Basic Net Loss Per Share Calculation (as revised*)
Ionis’ portion of Akcea’s net loss		77,095	$	(0.49	)	$	(37,822	)
Akcea’s net loss attributable to our ownership						$	(37,822	)
Ionis’ stand-alone net income							13,251
Net loss available to Ionis common stockholders						$	(24,571	)
Weighted average shares outstanding							139,708
Basic net loss per share						$	(0.18	)

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

Nine months ended September 30, 2020	Weighted Average Shares Owned in Akcea		Akcea’s Net Loss Per Share			Basic Net Loss Per Share Calculation (as revised*)
Ionis’ portion of Akcea’s net loss		77,095	$	(1.40	)	$	(108,176	)
Akcea’s net loss attributable to our ownership						$	(108,176	)
Ionis’ stand-alone net income							18,235
Net loss available to Ionis common stockholders						$	(89,941	)
Weighted average shares outstanding							139,497
Basic net loss per share						$	(0.64	)

* 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.

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):

	December 31, 2020
	As Previously Reported			ASU 2020-06 Adjustment			As Revised
1 percent convertible senior notes	$	293,161		$	15,648		$	308,809
0.125 percent convertible senior notes	$	455,719		$	84,417		$	540,136
Additional paid-in-capital	$	2,113,646		$	(218,127	)	$	1,895,519
Accumulated deficit	$	(1,249,368	)	$	118,062		$	(1,131,306	)

The following tables summarize the adjustments we made to the condensed consolidated statement of operations we originally reported for the three and nine months ended September 30, 2020 to adopt ASU 2020-06 (in thousands):

	Three Months Ended September 30, 2020
	As Previously Reported			ASU 2020-06 Adjustment			As Revised
Interest expense	$	(11,321	)	$	8,893		$	(2,428	)
Loss before income tax expense	$	(40,443	)	$	8,893		$	(31,550	)
Income tax expense	$	(2,648	)	$	(2,416	)	$	(5,064	)
Net loss	$	(43,091	)	$	6,477		$	(36,614	)
Net loss attributable to Ionis Pharmaceuticals, Inc. common stockholders	$	(30,944	)	$	6,477		$	(24,467	)
Basic and diluted net loss per share	$	(0.22	)	$	0.04		$	(0.18	)

	Nine Months Ended September 30, 2020
	As Previously Reported			ASU 2020-06 Adjustment			As Revised
Interest expense	$	(33,484	)	$	26,408		$	(7,076	)
Loss before income tax benefit (expense)	$	(146,387	)	$	26,408		$	(119,979	)
Income tax benefit (expense)	$	1,047		$	(5,124	)	$	(4,077	)
Net loss	$	(145,340	)	$	21,284		$	(124,056	)
Net loss attributable to Ionis Pharmaceuticals, Inc. common stockholders	$	(111,015	)	$	21,284		$	(89,731	)
Basic and diluted net loss per share	$	(0.80	)	$	0.16		$	(0.64	)

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):

	December 31, 2020
	As Previously Reported			ASU 2020-06 Adjustment			As Revised
Additional paid-in-capital	$	2,113,646		$	(218,127	)	$	1,895,519
Accumulated deficit	$	(1,249,368	)	$	118,062		$	(1,131,306	)
Total stockholders’ equity	$	843,347		$	(100,065	)	$	743,282

	December 31, 2019
	As Previously Reported			ASU 2020-06 Adjustment			As Revised
Additional paid-in-capital	$	2,203,778		$	(218,128	)	$	1,985,650
Accumulated deficit	$	(707,534	)	$	111,039		$	(596,495	)
Total stockholders’ equity	$	1,684,547		$	(107,089	)	$	1,577,458

Weighted-Average Assumptions for Stock Options

Employee Stock Options:

	Nine Months Ended September 30,
	2021			2020
Risk-free interest rate		0.5	%		1.5	%
Dividend yield		0.0	%		0.0	%
Volatility		54.3	%		58.8	%
Expected life	4.9 years			4.7 years

Ionis Board of Director Stock Options:

	Nine Months Ended September 30,
	2021			2020
Risk-free interest rate		1.2	%		0.5	%
Dividend yield		0.0	%		0.0	%
Volatility		55.9	%		57.6	%
Expected life	7.3 years			6.7 years

Weighted-Average Assumptions for ESPP

ESPP:

	Nine Months Ended September 30,
	2021			2020
Risk-free interest rate		0.1	%		0.8	%
Dividend yield		0.0	%		0.0	%
Volatility		42.4	%		47.9	%
Expected life	6 months			6 months

Stock-Based Compensation Expense

The following table summarizes stock-based compensation expense for the three and nine months ended September 30, 2021 and 2020 (in thousands).

	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Cost of sales	$	111	$	315	$	293	$	902
Research, development and patent expense		23,332		25,359		71,979		76,931
Selling, general and administrative expense		7,094		20,171		26,147		57,244
Total non-cash stock-based compensation expense	$	30,537	$	45,845	$	98,419	$	135,077