Significant Accounting Policies (Tables)

3 Months Ended

Mar. 31, 2020

Significant Accounting Policies [Abstract]

Inventory

We review our inventory periodically and reduce the carrying value of items we consider to be slow moving or obsolete to their estimated net realizable value based on forecasted demand compared to quantities on hand. We consider several factors in estimating the net realizable value, including shelf life of our inventory, alternative uses for our medicines in development and historical write-offs. We did not record any material inventory write-offs for the three months ended March 31, 2020. Total inventory was $22.9 million and $18.2 million as of March 31, 2020 and December 31, 2019, respectively, and consisted of the following (in thousands):

	March 31, 2020		December 31, 2019
Raw materials:
Raw materials- clinical	$	9,162	$	9,363
Raw materials- commercial		10,476		6,520
Total raw materials		19,638		15,883
Work in process		2,645		2,039
Finished goods		602		258
Total inventory	$	22,885	$	18,180

Basic Net Income 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):

Three months ended March 31, 2020	Weighted Average Shares Owned in Akcea		Akcea’s Net Loss Per Share			Ionis’ Portion of Akcea’s Net Loss
Common shares		77,095	$	(0.42	)	$	(32,674	)
Akcea’s net loss attributable to our ownership						$	(32,674	)
Ionis’ stand-alone net loss							(15,630	)
Net loss available to Ionis common stockholders						$	(48,304	)
Weighted average shares outstanding							139,429
Basic net loss per share						$	(0.35	)

Our basic net income per share for the three months ended March 31, 2019, was calculated as follows (in thousands, except per share amounts):

Three months ended March 31, 2019	Weighted Average Shares Owned in Akcea		Akcea’s Net Income Per Share		Ionis’ Portion of Akcea’s Net Income
Common shares		68,582	$	0.35	$	23,846
Akcea’s net income attributable to our ownership					$	23,846
Ionis’ stand-alone net income						63,697
Net income available to Ionis common stockholders					$	87,543
Weighted average shares outstanding						138,582
Basic net income per share					$	0.63

Basic and Diluted Net Income Per Share

We calculated our diluted net income per share for the three months ended March 31, 2019 as follows (in thousands except per share amounts):

Three months ended March 31, 2019	Income (Numerator)		Shares (Denominator)		Per-Share Amount
Net income available to Ionis common stockholders	$	87,543		138,582	$	0.63
Effect of dilutive securities:
Shares issuable upon exercise of stock options		—		2,252
Shares issuable upon restricted stock award issuance		—		665
Shares issuable related to our Employee Stock Purchase Plan		—		38
Income available to Ionis common stockholders	$	87,543		141,537	$	0.62

Significant Accounting Policies [Abstract]

Weighted-Average Assumptions for Stock Options

We use the Black-Scholes model to estimate the fair value of stock options granted and stock purchase rights under our ESPP. The expected term of stock options granted represents the period of time that we expect them to be outstanding. We estimate the expected term of options granted based on historical exercise patterns. For the three months ended March 31, 2020 and 2019, we used the following weighted-average assumptions in our Black-Scholes calculations:

Ionis Employee Stock Options:

	Three Months Ended March 31,
	2020			2019
Risk-free interest rate		1.6	%		2.4	%
Dividend yield		0.0	%		0.0	%
Volatility		58.9	%		60.3	%
Expected life	4.7 years			4.6 years

Weighted-Average Assumptions for ESPP

Ionis ESPP:

	Three Months Ended March 31,
	2020			2019
Risk-free interest rate		1.1	%		2.5	%
Dividend yield		0.0	%		0.0	%
Volatility		47.2	%		45.5	%
Expected life	6 months			6 months

Stock-Based Compensation Expense

The following table summarizes stock-based compensation expense for the three months ended March 31, 2020 and 2019 (in thousands). Our non-cash stock-based compensation expense includes $7.3 million and $18.6 million of stock-based compensation expense for Akcea employees for the three months ended March 31, 2020 and 2019, respectively.

	Three Months Ended March 31,
	2020		2019
Cost of products sold	$	237	$	118
Research, development and patent		25,556		24,435
Selling, general and administrative		14,997		20,952
Total	$	40,790	$	45,505

Akcea [Member]

Significant Accounting Policies [Abstract]

Weighted-Average Assumptions for Stock Options

Akcea Employee Stock Options:

	Three Months Ended March 31,
	2020			2019
Risk-free interest rate		1.5	%		2.5	%
Dividend yield		0.0	%		0.0	%
Volatility		73.6	%		76.4	%
Expected life	6.1 years			6.1 years

Akcea Board of Directors Stock Options:

	Three Months Ended March 31,
	2020
Risk-free interest rate		1.5	%
Dividend yield		0.0	%
Volatility		73.3	%
Expected life	6.3 years

Weighted-Average Assumptions for ESPP

Akcea ESPP:

	Three Months Ended March 31,
	2020			2019
Risk-free interest rate		1.0	%		2.5	%
Dividend yield		0.0	%		0.0	%
Volatility		71.9	%		64.1	%
Expected life	6 months			6 months