Significant Accounting Policies (Tables)

9 Months Ended

Sep. 30, 2022

Significant Accounting Policies [Abstract]

Our inventory consisted of the following (in thousands):

	September 30, 2022		December 31, 2021
Raw materials:
Raw materials- clinical	$	15,598	$	14,507
Raw materials- commercial		1,019		4,139
Total raw materials		16,617		18,646
Work in process		3,740		5,770
Finished goods		288		390
Total inventory	$	20,645	$	24,806

Weighted-Average Assumptions for Stock Options

Employee Stock Options:

	Nine Months Ended September 30,
	2022			2021
Risk-free interest rate		1.9	%		0.5	%
Dividend yield		0.0	%		0.0	%
Volatility		54.9	%		54.3	%
Expected life*	6.3 years			4.9 years

In 2021, our Compensation Committee approved an amendment to the 2011 Equity Incentive Plan, or 2011 Plan, and 2020 Plan, that increased the contractual term of stock options granted under these plans from seven years to ten years for stock options granted on January 1, 2022 and thereafter. We determined that we are unable to rely on our historical exercise data as a basis for estimating the expected life of stock options granted to employees following this change because the contractual term changed and we have no other means to reasonably estimate future exercise behavior. We therefore used the simplified method for determining the expected life of stock options granted to employees in the nine months ended September 30, 2022. Under the simplified method, we calculate the expected term as the average of the time-to-vesting and the contractual life of the options. As we gain additional historical information, we will transition to calculating our expected term based on our historical exercise patterns.

Ionis Board of Director Stock Options:

	Nine Months Ended September 30,
	2022			2021
Risk-free interest rate		2.9	%		1.2	%
Dividend yield		0.0	%		0.0	%
Volatility		56.2	%		55.9	%
Expected life	7.4 years			7.3 years

Weighted-Average Assumptions for ESPP

ESPP:

	Nine Months Ended September 30,
	2022			2021
Risk-free interest rate		1.2	%		0.1	%
Dividend yield		0.0	%		0.0	%
Volatility		50.1	%		42.4	%
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, 2022 and 2021 (in thousands).

	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Cost of sales	$	163	$	111	$	376	$	293
Research, development and patent expense		17,733		23,332		55,315		71,979
Selling, general and administrative expense		5,941		7,094		18,884		26,147
Total stock-based compensation expense	$	23,837	$	30,537	$	74,575	$	98,419