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Form 10-Q IONIS PHARMACEUTICALS For: Jun 30

August 9, 2023 1:51 PM EDT


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

Form 10-Q
(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended June 30, 2023

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____ to _____

Commission file number 000-19125

     

Ionis Pharmaceuticals, Inc.
(Exact name of Registrant as specified in its charter)

Delaware
 
33-0336973
(State or other jurisdiction of incorporation or organization)
 
(IRS Employer Identification No.)

2855 Gazelle Court, Carlsbad, California
 
92010
(Address of Principal Executive Offices)
 
(Zip Code)

760-931-9200
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class
 
Trading symbol
 
Name of each exchange on which registered
Common Stock, $.001 Par Value
 
IONS
 
The Nasdaq Stock Market LLC

     

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes  No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes  No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer 
Accelerated Filer
   
Non-accelerated Filer
Smaller Reporting Company
 
Emerging Growth Company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12(b)-2 of the Securities Exchange Act of 1934). Yes No

The number of shares of voting common stock outstanding as of August 3, 2023 was 143,326,208.





IONIS PHARMACEUTICALS, INC.
FORM 10-Q
INDEX

PART I
FINANCIAL INFORMATION
 
     
ITEM 1:
Financial Statements:
 
     
 
Condensed Consolidated Balance Sheets as of June 30, 2023 (unaudited) and December 31, 2022
3
     
 
Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2023 and 2022 (unaudited)
4
     
 
Condensed Consolidated Statements of Comprehensive Loss for the three and six months ended June 30, 2023 and 2022 (unaudited)
5
     
 
Condensed Consolidated Statements of Stockholders’ Equity for the three and six months ended June 30, 2023 and 2022 (unaudited)
6
     
 
Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2023 and 2022 (unaudited)
8
     
 
9
     
ITEM 2:
 
     
 
21
     
 
23
     
 
23
     
 
30
     
ITEM 3:
33
     
ITEM 4:
33
     
PART II
33
     
ITEM 1:
33
     
ITEM 1A:
33
     
ITEM 2:
51
     
ITEM 3:
51
     
ITEM 4:
51
     
ITEM 5:
51
     
ITEM 6:
52
     
53

TRADEMARKS

Ionis,” the Ionis logo, and other trademarks or service marks of Ionis Pharmaceuticals, Inc. appearing in this report are the property of Ionis Pharmaceuticals, Inc. “Akcea,” the Akcea logo, and other trademarks or service marks of Akcea Therapeutics, Inc. appearing in this report are the property of Akcea Therapeutics, Inc., Ionis’ wholly owned subsidiary. This report contains additional trade names, trademarks and service marks of others, which are the property of their respective owners. Solely for convenience, trademarks and trade names referred to in this report may appear without the ® or TM symbols.


IONIS PHARMACEUTICALS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)

 
June 30,
2023
   
December 31,
2022
 
   
(unaudited)
       
ASSETS
           
Current assets:
           
Cash and cash equivalents
 
$
424,790
   
$
276,472
 
Short-term investments
   
1,960,598
     
1,710,397
 
Contracts receivable
   
27,956
     
25,538
 
Inventories
   
25,538
     
22,033
 
Other current assets
   
177,872
     
168,254
 
Total current assets
   
2,616,754
     
2,202,694
 
Property, plant and equipment, net
   
91,634
     
74,294
 
Right-of-use assets
   
176,718
     
181,544
 
Deposits and other assets
   
86,025
     
75,344
 
Total assets
 
$
2,971,131
   
$
2,533,876
 
                 
LIABILITIES AND STOCKHOLDERS’ EQUITY
               
Current liabilities:
               
Accounts payable
 
$
24,021
   
$
17,921
 
Accrued compensation
   
29,322
     
49,178
 
Accrued liabilities
   
104,745
     
140,101
 
Income taxes payable
   
24,732
     
6,249
 
Current portion of deferred contract revenue
   
96,252
     
90,577
 
Other current liabilities
   
8,903
     
7,535
 
Total current liabilities
   
287,975
     
311,561
 
Long-term deferred contract revenue
   
254,398
     
287,768
 
1.75 percent convertible senior notes, net
   
560,937
     
 
0 percent convertible senior notes, net
   
623,809
     
622,242
 
0.125 percent convertible senior notes, net
   
114,081
     
544,504
 
Liability related to sale of future royalties, net
   
510,174
     
 
Long-term lease liabilities
   
175,020
     
178,941
 
Long-term obligations
   
16,436
     
15,973
 
Total liabilities
   
2,542,830
     
1,960,989
 
Stockholders’ equity:
               
Common stock, $0.001 par value; 300,000,000 shares authorized, 143,167,414 and 142,057,736 shares issued and outstanding at June 30, 2023 (unaudited) and December 31, 2022, respectively
   
143
     
142
 
Additional paid-in capital
   
2,118,309
     
2,059,850
 
Accumulated other comprehensive loss
   
(50,913
)
   
(57,480
)
Accumulated deficit
   
(1,639,238
)
   
(1,429,625
)
Total stockholders’ equity
   
428,301
     
572,887
 
Total liabilities and stockholders’ equity
 
$
2,971,131
   
$
2,533,876
 


See accompanying notes.

3


IONIS PHARMACEUTICALS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except for per share amounts)
(Unaudited)

 
Three Months Ended
June 30,
   
Six Months Ended
June 30,
 
   
2023
   
2022
   
2023
   
2022
 
Revenue:
                       
Commercial revenue:
                       
SPINRAZA royalties
 
$
61,012
   
$
59,627
   
$
111,258
   
$
113,444
 
Other commercial revenue
   
16,885
     
18,557
     
34,406
     
37,024
 
Total commercial revenue
   
77,897
     
78,184
     
145,664
     
150,468
 
Research and development revenue:
                               
Collaborative agreement revenue
   
91,013
     
38,247
     
129,347
     
88,032
 
Eplontersen joint development revenue
   
19,501
     
17,360
     
43,924
     
37,210
 
Total research and development revenue
   
110,514
     
55,607
     
173,271
     
125,242
 
Total revenue
   
188,411
     
133,791
     
318,935
     
275,710
 
                                 
Expenses:
                               
Cost of sales
   
2,537
     
4,745
     
3,880
     
8,914
 
Research, development and patent
   
229,927
     
180,758
     
427,740
     
341,884
 
Selling, general and administrative
   
46,142
     
33,802
     
91,658
     
67,929
 
Total operating expenses
   
278,606
     
219,305
     
523,278
     
418,727
 
                                 
Loss from operations
   
(90,195
)
   
(85,514
)
   
(204,343
)
   
(143,017
)
                                 
Other income (expense):
                               
Investment income
   
20,792
     
3,403
     
39,419
     
5,396
 
Interest expense
   
(2,291
)
   
(2,130
)
   
(3,899
)
   
(4,252
)
Interest expense related to sale of future royalties
   
(17,655
)
   
     
(33,170
)
   
 
Gain (loss) on investments
   
718
     
(6,337
)
   
189
     
(12,963
)
Other income (expense)
   
11,183
     
(12,297
)
   
11,414
     
(12,110
)
                                 
Loss before income tax expense
   
(77,448
)
   
(102,875
)
   
(190,390
)
   
(166,946
)
                                 
Income tax expense
   
(7,842
)
   
(2,260
)
   
(19,223
)
   
(3,354
)
                                 
Net loss
 
$
(85,290
)
 
$
(105,135
)
 
$
(209,613
)
 
$
(170,300
)
                                 
Basic and diluted net loss per share
 
$
(0.60
)
 
$
(0.74
)
 
$
(1.47
)
 
$
(1.20
)
Shares used in computing basic and diluted net loss per share
   
143,098
     
141,794
     
142,918
     
141,697
 


 See accompanying notes.

4


IONIS PHARMACEUTICALS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(in thousands)
(Unaudited)

 
Three Months Ended
June 30,
   
Six Months Ended
June 30,
 
   
2023
   
2022
   
2023
   
2022
 
Net loss
 
$
(85,290
)
 
$
(105,135
)
 
$
(209,613
)
 
$
(170,300
)
Unrealized gains (losses) on debt securities, net of tax
   
(2,000
)
   
(5,018
)
   
6,393
     
(20,774
)
Currency translation adjustment
   
70
     
(411
)
   
174
     
(565
)
                                 
Comprehensive loss
 
$
(87,220
)
 
$
(110,564
)
 
$
(203,046
)
 
$
(191,639
)


See accompanying notes.

5


IONIS PHARMACEUTICALS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY
(in thousands)
(Unaudited)

 
Common Stock
   
Additional
   
Accumulated Other
   
Accumulated
   
Total
Stockholders
 
Description
 
Shares
   
Amount
   
Paid in Capital
   
Comprehensive Loss
   
Deficit
   
Equity
 
Balance at March 31, 2022
   
141,753
   
$
142
   
$
1,983,078
   
$
(48,578
)
 
$
(1,225,068
)
 
$
709,574
 
Net loss
   
     
     
     
     
(105,135
)
   
(105,135
)
Change in unrealized losses, net of tax
   
     
     
     
(5,018
)
   
     
(5,018
)
Foreign currency translation
   
     
     
     
(411
)
   
     
(411
)
Issuance of common stock in connection with employee stock plans
   
87
     
     
1,614
     
     
     
1,614
 
Stock-based compensation expense
   
     
     
24,502
     
     
     
24,502
 
Payments of tax withholdings related to vesting of employee stock awards and exercise of employee stock options
   
(9
)
   
     
(400
)
   
     
     
(400
)
Balance at June 30, 2022
   
141,831
   
$
142
   
$
2,008,794
   
$
(54,007
)
 
$
(1,330,203
)
 
$
624,726
 
                                                 
Balance at March 31, 2023
   
143,023
   
$
143
   
$
2,089,358
   
$
(48,983
)
 
$
(1,553,948
)
 
$
486,570
 
Net loss
   
     
     
     
     
(85,290
)
   
(85,290
)
Change in unrealized losses, net of tax
   
     
     
     
(2,000
)
   
     
(2,000
)
Foreign currency translation
   
     
     
     
70
     
     
70
 
Issuance of common stock in connection with employee stock plans
   
144
     
     
2,390
     
     
     
2,390
 
Stock-based compensation expense
   
     
     
26,561
     
     
     
26,561
 
Balance at June 30, 2023
   
143,167
   
$
143
   
$
2,118,309
   
$
(50,913
)
 
$
(1,639,238
)
 
$
428,301
 


See accompanying notes.

6


IONIS PHARMACEUTICALS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY
(in thousands)
(Unaudited)

 
Common Stock
   
Additional
   
Accumulated Other
   
Accumulated
   
Total
Stockholders
 
Description
 
Shares
   
Amount
   
Paid in Capital
   
Comprehensive Loss
   
Deficit
   
Equity
 
Balance at December 31, 2021
   
141,210
   
$
141
   
$
1,964,167
   
$
(32,668
)
 
$
(1,159,903
)
 
$
771,737
 
Net loss
   
     
     
     
     
(170,300
)
   
(170,300
)
Change in unrealized losses, net of tax
   
     
     
     
(20,774
)
   
     
(20,774
)
Foreign currency translation
   
     
     
     
(565
)
   
     
(565
)
Issuance of common stock in connection with employee stock plans
   
935
     
1
     
3,461
     
     
     
3,462
 
Stock-based compensation expense
   
     
     
50,738
     
     
     
50,738
 
Payments of tax withholdings related to vesting of employee stock awards and exercise of employee stock options
   
(314
)
   
     
(9,572
)
   
     
     
(9,572
)
Balance at June 30, 2022
   
141,831
   
$
142
   
$
2,008,794
   
$
(54,007
)
 
$
(1,330,203
)
 
$
624,726
 
                                                 
Balance at December 31, 2022
   
142,058
   
$
142
   
$
2,059,850
   
$
(57,480
)
 
$
(1,429,625
)
 
$
572,887
 
Net loss
   
     
     
     
     
(209,613
)
   
(209,613
)
Change in unrealized gains, net of tax
   
     
     
     
6,393
     
     
6,393
 
Foreign currency translation
   
     
     
     
174
     
     
174
 
Issuance of common stock in connection with employee stock plans
   
1,109
     
1
     
4,949
     
     
     
4,950
 
Stock-based compensation expense
   
     
     
53,510
     
     
     
53,510
 
Balance at June 30, 2023
   
143,167
   
$
143
   
$
2,118,309
   
$
(50,913
)
 
$
(1,639,238
)
 
$
428,301
 


See accompanying notes.

7


IONIS PHARMACEUTICALS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(Unaudited)

 
Six Months Ended
June 30,
 
   
2023
   
2022
 
Operating activities:
           
Net loss
 
$
(209,613
)
 
$
(170,300
)
Adjustments to reconcile net loss to net cash used in operating activities:
               
Depreciation
   
5,225
     
7,484
 
Amortization of right-of-use operating lease assets
   
4,826
     
1,300
 
Amortization of other assets
   
1,244
     
1,197
 
Amortization of premium (discount) on investments, net
   
(12,481
)
   
7,867
 
Amortization of debt issuance costs
   
2,966
     
2,688
 
Non-cash royalty revenue related to sale of royalties
   
(12,562
)
   
 
Non-cash interest related to sale of future royalties
   
32,915
     
 
Stock-based compensation expense
   
53,510
     
50,738
 
Loss (gain) on investments
   
(301
)
   
54
 
Gain on early retirement of debt
   
(11,292
)
   
 
Non-cash losses related to disposal of property, plant and equipment
   
205
     
527
 
Non-cash losses related to other assets
   
570
     
951
 
Changes in operating assets and liabilities:
               
Contracts receivable
   
(2,254
)
   
55,145
 
Inventories
   
(3,505
)
   
4,995
 
Other current and long-term assets
   
(19,696
)
   
(39
)
Income taxes payable
   
18,483
     
(22
)
Accounts payable
   
5,517
     
(2,672
)
Accrued compensation
   
(19,856
)
   
(13,825
)
Accrued liabilities and other current liabilities
   
(37,562
)
   
45,170
 
Deferred contract revenue
   
(27,695
)
   
(41,004
)
Net cash used in operating activities
   
(231,356
)
   
(49,746
)
                 
Investing activities:
               
Purchases of short-term investments
   
(932,362
)
   
(663,195
)
Proceeds from sale of short-term investments
   
701,034
     
380,375
 
Purchases of property, plant and equipment
   
(22,483
)
   
(6,040
)
Acquisition of licenses and other assets, net
   
(2,314
)
   
(1,993
)
Net cash used in investing activities
   
(256,125
)
   
(290,853
)
                 
Financing activities:
               
Proceeds from equity, net
   
4,950
     
3,462
 
Payments of tax withholdings related to vesting of employee stock awards and exercise of employee stock options
   
     
(9,572
)
Proceeds from issuance of 1.75 percent convertible senior notes
   
575,000
     
 
1.75 percent convertible senior notes issuance costs
   
(13,658
)
   
 
Repurchase of $434.1 million principal amount of 0.125 percent convertible senior notes
   
(420,158
)
   
 
Proceeds from sale of future royalties
   
500,000
     
 
Payments of transaction costs related to sale of future royalties
   
(10,434
)
   
 
Principal payments on mortgage debt
   
(75
)
   
 
Net cash provided by (used in) financing activities
   
635,625
     
(6,110
)
                 
Effects of exchange rates on cash
   
174
     
(565
)
                 
Net increase (decrease) in cash and cash equivalents
   
148,318
     
(347,274
)
Cash and cash equivalents at beginning of period
   
276,472
     
869,191
 
Cash and cash equivalents at end of period
 
$
424,790
   
$
521,917
 
                 
Supplemental disclosures of cash flow information:
               
Interest paid
 
$
529
   
$
1,544
 
Income taxes paid
 
$
510
   
$
2
 
                 
Supplemental disclosures of non-cash investing and financing activities:
               
Amounts accrued for capital and patent expenditures
 
$
251
   
$
1,121
 


See accompanying notes.


8

IONIS PHARMACEUTICALS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2023
(Unaudited)

1.  Organization and Basis of Presentation


Organization and Business Activity


We incorporated in California on January 10, 1989. In conjunction with our initial public offering, we reorganized as a Delaware corporation in April 1991. We are a leader in the discovery and development of RNA-targeted therapeutics.


Basis of Presentation


We prepared the unaudited interim condensed consolidated financial statements for the three and six months ended June 30, 2023 and 2022 on the same basis as the audited financial statements for the year ended December 31, 2022. 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, 2022 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 operate 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.


Use of Estimates


We prepare our condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States, or 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.

2.  Significant Accounting Policies


Our significant accounting policies have not changed substantially from those included in our Annual Report on Form 10-K for the year ended December 31, 2022, other than as discussed below.


Liability Related to Sale of Future Royalties


In January 2023, we entered into a royalty purchase agreement with Royalty Pharma Investments, or Royalty Pharma, to monetize a portion of our future SPINRAZA and pelacarsen royalties we are entitled to under our arrangements with Biogen and Novartis, respectively. Refer to Note 11, Liability Related to Sale of Future Royalties, for further details on the agreement.


Under our agreement with Royalty Pharma, we record upfront payments and milestone payments we receive from the sale of future royalties as a liability, net of transaction costs. We record royalty payments made to Royalty Pharma as a reduction of the liability and amortize the transaction costs over the estimated life of the royalty stream. We account for the associated interest expense under the effective interest rate method, while continuing to recognize the full amount of royalty revenue in the period in which the counterparty sells the related product and recognizes the related revenue.


We calculate the liability related to the sale of future royalties, effective interest rate and the related interest expense using our current estimate of anticipated future royalty payments under the arrangement, which we periodically reassess based on internal projections and information from our partners who are responsible for commercializing the medicines. If there is a material change in our estimate, we will prospectively adjust the liability related to the sale of future royalties, effective interest rate and the related interest expense.

9


Recently Adopted Accounting Standards


We do not expect any recently issued accounting standards to have a material impact to our financial results.

3. Supplemental Financial Data


Inventories


Our inventory consisted of the following (in thousands):

 
June 30, 2023
   
December 31, 2022
 
Raw materials:
           
Raw materials - clinical
 
$
17,665
   
$
17,061
 
Raw materials - commercial
   
5,585
     
2,699
 
Total raw materials
   
23,250
     
19,760
 
Work in process
   
2,092
     
2,109
 
Finished goods
   
196
     
164
 
Total inventory
 
$
25,538
   
$
22,033
 


Accrued Liabilities


Our accrued liabilities consisted of the following (in thousands):

 
June 30, 2023
   
December 31, 2022
 
Clinical development expenses
 
$
83,524
   
$
116,460
 
In-licensing expenses
   
7,179
     
7,945
 
Commercial expenses
   
3,151
     
3,498
 
Other miscellaneous expenses
   
10,891
     
12,198
 
Total accrued liabilities
 
$
104,745
   
$
140,101
 

4. Revenues


During the three and six months ended June 30, 2023 and 2022, our revenues were comprised of the following (in thousands):

 
Three Months Ended
June 30,
   
Six Months Ended
June 30,
 
   
2023
   
2022
   
2023
   
2022
 
Revenue:
                       
Commercial revenue:
                       
SPINRAZA royalties
 
$
61,012
   
$
59,627
   
$
111,258
   
$
113,444
 
Other commercial revenue:
                               
TEGSEDI and WAYLIVRA revenue, net
   
10,655
     
10,386
     
17,133
     
16,547
 
Licensing and other royalty revenue
   
6,230
     
8,171
     
17,273
     
20,477
 
Total other commercial revenue
   
16,885
     
18,557
     
34,406
     
37,024
 
Total commercial revenue
   
77,897
     
78,184
     
145,664
     
150,468
 
Research and development revenue:
                               
Collaborative agreement revenue
   
91,013
     
38,247
     
129,347
     
88,032
 
Eplontersen joint development revenue
   
19,501
     
17,360
     
43,924
     
37,210
 
Total research and development revenue
   
110,514
     
55,607
     
173,271
     
125,242
 
Total revenue
 
$
188,411
   
$
133,791
   
$
318,935
   
$
275,710
 


Refer to Note 5, Collaborative Arrangements and Licensing Agreements, for further details on our collaborative agreement revenue.

10

5.  Collaborative Arrangements and Licensing Agreements


Below, we have included our AstraZeneca, Biogen and GSK collaborations, which are our only collaborations with substantive changes during 2023 from those included in Part IV, Item 15, Note 7, Collaborative Arrangements and Licensing Agreements, of our audited financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2022.


AstraZeneca


We have two collaborations with AstraZeneca, one focused on the joint development and commercialization of eplontersen for the treatment of transthyretin amyloidosis, or ATTR, and one focused on the treatment of cardiovascular, renal and metabolic diseases. From inception through June 30, 2023, we have received nearly $610 million from these collaborations.


We are jointly developing and preparing to commercialize eplontersen with AstraZeneca in the U.S. In addition, we granted AstraZeneca exclusive rights to commercialize eplontersen outside the U.S. In the second quarter of 2023, we earned a $20 million license fee payment when we licensed rights to Latin America for eplontersen to AstraZeneca. We recognized the upfront payment in full in the second quarter of 2023 because AstraZeneca had full use of the license without any continuing involvement from us. We will achieve the next payment of up to $50 million upon the first regulatory approval under this collaboration.


Under our collaboration for cardiovascular, renal and metabolic diseases, AstraZeneca has licensed multiple medicines from us. AstraZeneca is responsible for global development, regulatory and commercialization activities and costs for each of the medicines it has licensed from us. In the second quarter of 2023, we achieved a $20 million milestone payment when AstraZeneca initiated a Phase 2b study for ION839, an investigational ligand-conjugated antisense, or LICA, medicine designed to inhibit the production of patatin-like phospholipase domain-containing 3, or PNPLA3, protein. We recognized these milestone payments as R&D revenue in full in the second quarter of 2023 because we did not have any remaining performance obligations related to the milestone payments. We will achieve the next payment of up to $30 million if AstraZeneca licenses a medicine under this collaboration.


During the three and six months ended June 30, 2023 and 2022, we earned the following revenue from our relationship with AstraZeneca (in thousands, except percentages):

 
Three Months Ended
June 30,
   
Six Months Ended
June 30,
 
   
2023
   
2022
   
2023
   
2022
 
Revenue from our relationship with AstraZeneca
 
$
59,501
   
$
17,768
   
$
83,926
   
$
37,611
 
Percentage of total revenue
   
32
%
   
13
%
   
26
%
   
14
%


We did not have any deferred revenue from our relationship with AstraZeneca at June 30, 2023 or December 31, 2022.


Biogen


We have several strategic collaborations with Biogen focused on using antisense technology to advance the treatment of neurological disorders. We developed and licensed to Biogen SPINRAZA, our approved medicine to treat people with spinal muscular atrophy, or SMA. Under our 2013 strategic neurology collaboration, Biogen developed QALSODY (tofersen), our recently approved medicine to treat people with superoxide dismutase 1 amyotrophic lateral sclerosis, or SOD1-ALS. Under our collaborations, we and Biogen are currently developing numerous investigational medicines to treat neurodegenerative diseases in addition to SMA and SOD1-ALS, including medicines in development to treat people with amyotrophic lateral sclerosis, or ALS, Angelman Syndrome, 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 June 30, 2023, we have received more than $3.6 billion in payments from our Biogen collaborations.


In the second quarter of 2023, we earned a $16 million milestone payment from Biogen when the FDA approved Biogen’s New Drug Application, or NDA, for QALSODY. We recognized this milestone payment as R&D revenue in full in the second quarter of 2023 because we did not have any remaining performance obligations related to the milestone payment. Under our collaboration agreement with Biogen, we are eligible to receive tiered royalties ranging from 11 percent to 15 percent on sales of QALSODY. Following the NDA approval in April 2023, we began earning royalties from QALSODY sales, which we recognize as other commercial revenue in our condensed consolidated statements of operations. We will achieve the next milestone payment for QALSODY of $20 million if the European Medicines Agency approves Biogen’s Marketing Authorization Application filing of QALSODY.

11


During the three and six months ended June 30, 2023 and 2022, we earned the following revenue from our relationship with Biogen (in thousands, except percentages):

 
Three Months Ended
June 30,
   
Six Months Ended
June 30,
 
   
2023
   
2022
   
2023
   
2022
 
Revenue from our relationship with Biogen
 
$
97,402
   
$
76,887
   
$
167,903
   
$
170,754
 
Percentage of total revenue
   
52
%
   
58
%
   
53
%
   
62
%


Our condensed consolidated balance sheets at June 30, 2023 and December 31, 2022 included deferred revenue of $323.1 million and $351.2 million, respectively, from our relationship with Biogen.


GSK


In March 2010, we entered into a collaboration with GSK using our antisense drug discovery platform to discover and develop new medicines against targets for serious and rare diseases, including infectious diseases and some conditions causing blindness. Our collaboration with GSK currently includes bepirovirsen, our medicine in development targeting hepatitis B virus, or HBV. We designed this medicine to reduce the production of viral proteins associated with HBV infection. In the third quarter of 2019, following positive Phase 2 results, GSK licensed our HBV program. GSK is responsible for all global development, regulatory and commercialization activities and costs for the HBV program. From inception through June 30, 2023, we have received more than $105 million in an upfront payment and payments related to the HBV program.


In the first quarter of 2023, we earned a $15 million milestone payment when GSK initiated a Phase 3 program of bepirovirsen. We recognized this milestone payment as R&D revenue in full in the first quarter of 2023 because we did not have any remaining performance obligations related to the milestone payment. We will achieve the next payment of $15 million if the FDA accepts an NDA filing of bepirovirsen for review.


During the three and six months ended June 30, 2023 and 2022, we earned the following revenue from our relationship with GSK (in thousands, except percentages):

 
Three Months Ended
June 30,
   
Six Months Ended
June 30,
 
   
2023
   
2022
   
2023
   
2022
 
Revenue from our relationship with GSK
 
$
   
$
   
$
15,000
   
$
 
Percentage of total revenue
   
0
%
   
0
%
   
5
%
   
0
%


We did not have any deferred revenue from our relationship with GSK at June 30, 2023 or December 31, 2022.

6. Basic and Diluted Net Loss Per Share


Basic net loss per share


We calculated our basic net loss per share for the three and six months ended June 30, 2023 and 2022 by dividing our net loss by our weighted-average number of common shares outstanding during the period.


Diluted net loss per share


For the three and six months ended June 30, 2023 and 2022, 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:

1.75 percent convertible senior notes, or 1.75% Notes;
0 percent convertible senior notes, or 0% Notes;
Note hedges related to the 0% Notes;
0.125 percent convertible senior notes, or 0.125% Notes;
Note hedges related to the 0.125% Notes;
Dilutive stock options;
Unvested restricted stock units, or RSUs;
Unvested performance restricted stock units, or PRSUs; and
Employee Stock Purchase Plan, or ESPP.

12


Additionally, as of June 30, 2023, we had warrants related to our 0% and 0.125% 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.

7.  Investments


The following table summarizes the contract maturity of the available-for-sale securities we held as of June 30, 2023:

One year or less
   
77
%
After one year but within two years
   
16
%
After two years but within three and a half years
   
7
%
Total
   
100
%


As illustrated above, at June 30, 2023, 93 percent of our available-for-sale securities had a maturity of less than two years.


All of our available-for-sale debt 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 debt securities with strong credit ratings and an investment grade rating at or above A-1, P-1 or F-1 by Standard & Poor’s, Moody’s or Fitch, respectively.


At June 30, 2023, we had an equity ownership interest of less than 20 percent in seven private companies and three public companies with which we conduct business.


The following is a summary of our investments (in thousands):

 
Amortized
   
Gross Unrealized
   
Estimated
 
June 30, 2023
 
Cost
   
Gains
   
Losses
   
Fair Value
 
Available-for-sale debt securities:
                       
Corporate debt securities (1)
 
$
605,532
   
$
25
   
$
(4,763
)
 
$
600,794
 
Debt securities issued by U.S. government agencies
   
281,703
     
4
     
(1,314
)
   
280,393
 
Debt securities issued by the U.S. Treasury (1)
   
622,829
     
6
     
(5,031
)
   
617,804
 
Debt securities issued by states of the U.S. and political subdivisions of the states
   
42,230
     
     
(269
)
   
41,961
 
Total debt securities with a maturity of one year or less
   
1,552,294
     
35
     
(11,377
)
   
1,540,952
 
Corporate debt securities
   
220,569
     
133
     
(5,135
)
   
215,567
 
Debt securities issued by U.S. government agencies
   
39,443
     
     
(870
)
   
38,573
 
Debt securities issued by the U.S. Treasury
   
194,967
     
     
(3,659
)
   
191,308
 
Debt securities issued by states of the U.S. and political subdivisions of the states
   
12,000
     
66
     
(235
)
   
11,831
 
Total debt securities with a maturity of more than one year
   
466,979
     
199
     
(9,899
)
   
457,279
 
Total available-for-sale debt securities
 
$
2,019,273
   
$
234
   
$
(21,276
)
 
$
1,998,231
 
Equity securities:
                               
Publicly traded equity securities included in other current assets (2)
 
$
11,897
   
$
253
   
$
(3,928
)
 
$
8,222
 
Privately held equity securities included in deposits and other assets (3)
   
23,115
     
25,001
     
(5,125
)
   
42,991
 
Total equity securities
   
35,012
     
25,254
     
(9,053
)
   
51,213
 
Total available-for-sale debt and equity securities
 
$
2,054,285
   
$
25,488
   
$
(30,329
)
 
$
2,049,444
 
13


 
Amortized
   
Gross Unrealized
   
Estimated
 
December 31, 2022
 
Cost
   
Gains
   
Losses
   
Fair Value
 
Available-for-sale debt securities:
                       
Corporate debt securities (1)
 
$
513,790
   
$
23
   
$
(4,365
)
 
$
509,448
 
Debt securities issued by U.S. government agencies
   
133,585
     
     
(1,829
)