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Form 10-Q IONIS PHARMACEUTICALS For: Sep 30

November 2, 2023 2:44 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 September 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 October 27, 2023 was 143,472,119.





IONIS PHARMACEUTICALS, INC.
FORM 10-Q
INDEX

PART I
FINANCIAL INFORMATION
 
     
ITEM 1:
Financial Statements:
 
     
 
Condensed Consolidated Balance Sheets as of September 30, 2023 (unaudited) and December 31, 2022
3
     
 
Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2023 and 2022 (unaudited)
4
     
 
Condensed Consolidated Statements of Comprehensive Loss for the three and nine months ended September 30, 2023 and 2022 (unaudited)
5
     
 
Condensed Consolidated Statements of Stockholders’ Equity for the three and nine months ended September 30, 2023 and 2022 (unaudited)
6
     
 
Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2023 and 2022 (unaudited)
8
     
 
9
     
ITEM 2:
 
     
 
22
     
 
24
     
 
24
     
 
31
     
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)

 
September 30,
2023
   
December 31,
2022
 
   
(unaudited)
       
ASSETS
           
Current assets:
           
Cash and cash equivalents
 
$
352,060
   
$
276,472
 
Short-term investments
   
1,883,522
     
1,710,397
 
Contracts receivable
   
142,359
     
25,538
 
Inventories
   
25,634
     
22,033
 
Other current assets
   
181,075
     
168,254
 
Total current assets
   
2,584,650
     
2,202,694
 
Property, plant and equipment, net
   
70,928
     
74,294
 
Right-of-use assets
   
174,310
     
181,544
 
Deposits and other assets
   
104,083
     
75,344
 
Total assets
 
$
2,933,971
   
$
2,533,876
 
                 
LIABILITIES AND STOCKHOLDERS’ EQUITY
               
Current liabilities:
               
Accounts payable
 
$
5,615
   
$
17,921
 
Accrued compensation
   
33,781
     
49,178
 
Accrued liabilities
   
118,968
     
140,101
 
Income taxes payable
   
31,070
     
6,249
 
Current portion of deferred contract revenue
   
204,824
     
90,577
 
Other current liabilities
   
9,952
     
7,535
 
Total current liabilities
   
404,210
     
311,561
 
Long-term deferred contract revenue
   
249,272
     
287,768
 
1.75 percent convertible senior notes, net
   
561,609
     
 
0 percent convertible senior notes, net
   
624,594
     
622,242
 
0.125 percent convertible senior notes, net
   
44,287
     
544,504
 
Liability related to sale of future royalties, net
   
512,700
     
 
Long-term lease liabilities
   
173,038
     
178,941
 
Long-term obligations
   
48,801
     
15,973
 
Total liabilities
   
2,618,511
     
1,960,989
 
Stockholders’ equity:
               
Common stock, $0.001 par value; 300,000,000 shares authorized, 143,393,493 and 142,057,736 shares issued and outstanding at September 30, 2023 (unaudited) and December 31, 2022, respectively
   
143
     
142
 
Additional paid-in capital
   
2,148,002
     
2,059,850
 
Accumulated other comprehensive loss
   
(46,037
)
   
(57,480
)
Accumulated deficit
   
(1,786,648
)
   
(1,429,625
)
Total stockholders’ equity
   
315,460
     
572,887
 
Total liabilities and stockholders’ equity
 
$
2,933,971
   
$
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
September 30,
   
Nine Months Ended
September 30,
 
   
2023
   
2022
   
2023
   
2022
 
Revenue:
                       
Commercial revenue:
                       
SPINRAZA royalties
 
$
67,253
   
$
61,647
   
$
178,511
   
$
175,092
 
Other commercial revenue
   
16,828
     
10,763
     
51,235
     
47,787
 
Total commercial revenue
   
84,081
     
72,410
     
229,746
     
222,879
 
Research and development revenue:
                               
Collaborative agreement revenue
   
44,167
     
69,250
     
173,513
     
157,282
 
Eplontersen joint development revenue
   
15,959
     
18,107
     
59,883
     
55,317
 
Total research and development revenue
   
60,126
     
87,357
     
233,396
     
212,599
 
Total revenue
   
144,207
     
159,767
     
463,142
     
435,478
 
                                 
Expenses:
                               
Cost of sales
   
2,191
     
1,515
     
6,071
     
10,430
 
Research, development and patent
   
215,330
     
182,990
     
643,070
     
524,875
 
Selling, general and administrative
   
69,951
     
34,416
     
161,608
     
102,345
 
Total operating expenses
   
287,472
     
218,921
     
810,749
     
637,650
 
                                 
Loss from operations
   
(143,265
)
   
(59,154
)
   
(347,607
)
   
(202,172
)
                                 
Other income (expense):
                               
Investment income
   
23,935
     
7,524
     
63,355
     
13,447
 
Interest expense
   
(4,203
)
   
(2,139
)
   
(8,102
)
   
(6,391
)
Interest expense related to sale of future royalties
   
(17,779
)
   
     
(50,948
)
   
 
Gain (loss) on investments
   
(1,943
)
   
2,347
     
(1,753
)
   
(10,616
)
Other income (expense)
   
2,447
     
4,713
     
13,857
     
(7,923
)
                                 
Loss before income tax expense
   
(140,808
)
   
(46,709
)
   
(331,198
)
   
(213,655
)
                                 
Income tax expense
   
(6,602
)
   
(283
)
   
(25,825
)
   
(3,637
)
                                 
Net loss
 
$
(147,410
)
 
$
(46,992
)
 
$
(357,023
)
 
$
(217,292
)
                                 
Basic and diluted net loss per share
 
$
(1.03
)
 
$
(0.33
)
 
$
(2.50
)
 
$
(1.53
)
Shares used in computing basic and diluted net loss per share
   
143,317
     
141,950
     
143,052
     
141,782
 


 See accompanying notes.

4


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

 
Three Months Ended
September 30,
   
Nine Months Ended
September 30,
 
   
2023
   
2022
   
2023
   
2022
 
Net loss
 
$
(147,410
)
 
$
(46,992
)
 
$
(357,023
)
 
$
(217,292
)
Unrealized gains (losses) on debt securities, net of tax
   
5,029
     
(8,734
)
   
11,421
     
(29,508
)
Currency translation adjustment
   
(153
)
   
(399
)
   
22
     
(964
)
                                 
Comprehensive loss
 
$
(142,534
)
 
$
(56,125
)
 
$
(345,580
)
 
$
(247,764
)


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 June 30, 2022
   
141,831
   
$
142
   
$
2,008,794
   
$
(54,007
)
 
$
(1,330,203
)
 
$
624,726
 
Net loss
   
     
     
     
     
(46,992
)
   
(46,992
)
Change in unrealized losses, net of tax
   
     
     
     
(8,734
)
   
     
(8,734
)
Foreign currency translation
   
     
     
     
(399
)
   
     
(399
)
Issuance of common stock in connection with employee stock plans
   
203
     
     
2,567
     
     
     
2,567
 
Stock-based compensation expense
   
     
     
23,837
     
     
     
23,837
 
Payments of tax withholdings related to vesting of employee stock awards and exercise of employee stock options
   
(17
)
   
     
(644
)
   
     
     
(644
)
Balance at September 30, 2022
   
142,017
   
$
142
   
$
2,034,554
   
$
(63,140
)
 
$
(1,377,195
)
 
$
594,361
 
                                                 
Balance at June 30, 2023
   
143,167
   
$
143
   
$
2,118,309
   
$
(50,913
)
 
$
(1,639,238
)
 
$
428,301
 
Net loss
   
     
     
     
     
(147,410
)
   
(147,410
)
Change in unrealized losses, net of tax
   
     
     
     
5,029
     
     
5,029
 
Foreign currency translation
   
     
     
     
(153
)
   
     
(153
)
Issuance of common stock in connection with employee stock plans
   
226
     
     
3,729
     
     
     
3,729
 
Stock-based compensation expense
   
     
     
25,964
     
     
     
25,964
 
Balance at September 30, 2023
   
143,393
   
$
143
   
$
2,148,002
   
$
(46,037
)
 
$
(1,786,648
)
 
$
315,460
 


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
   
     
     
     
     
(217,292
)
   
(217,292
)
Change in unrealized losses, net of tax
   
     
     
     
(29,508
)
   
     
(29,508
)
Foreign currency translation
   
     
     
     
(964
)
   
     
(964
)
Issuance of common stock in connection with employee stock plans
   
1,138
     
1
     
6,029
     
     
     
6,030
 
Stock-based compensation expense
   
     
     
74,575
     
     
     
74,575
 
Payments of tax withholdings related to vesting of employee stock awards and exercise of employee stock options
   
(331
)
   
     
(10,217
)
   
     
     
(10,217
)
Balance at September 30, 2022
   
142,017
   
$
142
   
$
2,034,554
   
$
(63,140
)
 
$
(1,377,195
)
 
$
594,361
 
                                                 
Balance at December 31, 2022
   
142,058
   
$
142
   
$
2,059,850
   
$
(57,480
)
 
$
(1,429,625
)
 
$
572,887
 
Net loss
   
     
     
     
     
(357,023
)
   
(357,023
)
Change in unrealized gains, net of tax
   
     
     
     
11,421
     
     
11,421
 
Foreign currency translation
   
     
     
     
22
     
     
22
 
Issuance of common stock in connection with employee stock plans
   
1,335
     
1
     
8,679
     
     
     
8,680
 
Stock-based compensation expense
   
     
     
79,473
     
     
     
79,473
 
Balance at September 30, 2023
   
143,393
   
$
143
   
$
2,148,002
   
$
(46,037
)
 
$
(1,786,648
)
 
$
315,460
 


See accompanying notes.

7


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

 
Nine Months Ended
September 30,
 
   
2023
   
2022
 
Operating activities:
           
Net loss
 
$
(357,023
)
 
$
(217,292
)
Adjustments to reconcile net loss to net cash used in operating activities:
               
Depreciation
   
7,748
     
11,301
 
Amortization of right-of-use operating lease assets
   
7,234
     
1,970
 
Amortization of other assets
   
1,904
     
1,805
 
Amortization of premium (discount) on investments, net
   
(20,396
)
   
9,072
 
Amortization of debt issuance costs
   
4,666
     
4,035
 
Non-cash royalty revenue related to sale of royalties
   
(27,814
)
   
 
Non-cash interest related to sale of future royalties
   
50,541
     
 
Stock-based compensation expense
   
79,473
     
74,575
 
Loss on investments
   
1,429
     
228
 
Gain on early retirement of debt
   
(13,389
)
   
 
Non-cash losses related to disposal of property, plant and equipment
   
14,646
     
528
 
Non-cash losses related to other assets
   
849
     
1,155
 
Changes in operating assets and liabilities:
               
Contracts receivable
   
(116,814
)
   
55,251
 
Inventories
   
(3,601
)
   
4,161
 
Other current and long-term assets
   
(18,325
)
   
(988
)
Income taxes payable
   
24,821
     
(20
)
Accounts payable
   
(12,462
)
   
5,607
 
Accrued compensation
   
(15,397
)
   
(8,400
)
Accrued liabilities and other current liabilities
   
(24,219
)
   
38,263
 
Deferred contract revenue
   
75,751
     
(55,426
)
Net cash used in operating activities
   
(340,378
)
   
(74,175
)
                 
Investing activities:
               
Purchases of short-term investments
   
(1,353,100
)
   
(1,223,791
)
Proceeds from sale of short-term investments
   
1,193,724
     
764,101
 
Purchases of property, plant and equipment
   
(24,624
)
   
(11,582
)
Acquisition of licenses and other assets, net
   
(3,414
)
   
(3,511
)
Net cash used in investing activities
   
(187,414
)
   
(474,783
)
                 
Financing activities:
               
Proceeds from equity, net
   
8,680
     
6,030
 
Payments of tax withholdings related to vesting of employee stock awards and exercise of employee stock options
   
     
(10,217
)
Proceeds from issuance of 1.75 percent convertible senior notes
   
575,000
     
 
1.75 percent convertible senior notes issuance costs
   
(14,175
)
   
 
Repurchase of $504.4 million principal amount of 0.125 percent convertible senior notes
   
(487,943
)
   
 
Proceeds from sale of future royalties
   
500,000
     
 
Payments of transaction costs related to sale of future royalties
   
(10,434
)
   
 
Proceeds from real estate transaction
   
32,352
     
 
Principal payments on mortgage debt
   
(122
)
   
(89
)
Net cash provided by (used in) financing activities
   
603,358
     
(4,276
)
                 
Effects of exchange rates on cash
   
22
     
(964
)
                 
Net increase (decrease) in cash and cash equivalents
   
75,588
     
(554,198
)
Cash and cash equivalents at beginning of period
   
276,472
     
869,191
 
Cash and cash equivalents at end of period
 
$
352,060
   
$
314,993
 
                 
Supplemental disclosures of cash flow information:
               
Interest paid
 
$
952
   
$
2,204
 
Income taxes paid
 
$
714
   
$
2
 
                 
Supplemental disclosures of non-cash investing and financing activities:
               
Amounts accrued for capital and patent expenditures
 
$
341
   
$
3,032
 
Right-of-use assets obtained in exchange for lease liabilities
 
$
   
$
657
 


See accompanying notes.

8

IONIS PHARMACEUTICALS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 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 nine months ended September 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):

 
September 30, 2023
   
December 31, 2022
 
Raw materials:
           
Raw materials - clinical
 
$
18,427
   
$
17,061
 
Raw materials - commercial
   
4,380
     
2,699
 
Total raw materials
   
22,807
     
19,760
 
Work in process
   
2,651
     
2,109
 
Finished goods
   
176
     
164
 
Total inventory
 
$
25,634
   
$
22,033
 


Accrued Liabilities


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

 
September 30, 2023
   
December 31, 2022
 
Clinical development expenses
 
$
89,217
   
$
116,460
 
In-licensing expenses
   
7,560
     
7,945
 
Commercial expenses
   
8,575
     
3,498
 
Other miscellaneous expenses
   
13,616
     
12,198
 
Total accrued liabilities
 
$
118,968
   
$
140,101
 

4. Revenues


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

 
Three Months Ended
September 30,
   
Nine Months Ended
September 30,
 
   
2023
   
2022
   
2023
   
2022
 
Revenue:
                       
Commercial revenue:
                       
SPINRAZA royalties
 
$
67,253
   
$
61,647
   
$
178,511
   
$
175,092
 
Other commercial revenue:
                               
TEGSEDI and WAYLIVRA revenue, net
   
8,286
     
5,920
     
25,420
     
22,467
 
Licensing and other royalty revenue
   
8,542
     
4,843
     
25,815
     
25,320
 
Total other commercial revenue
   
16,828
     
10,763
     
51,235
     
47,787
 
Total commercial revenue
   
84,081
     
72,410
     
229,746
     
222,879
 
Research and development revenue:
                               
Collaborative agreement revenue
   
44,167
     
69,250
     
173,513
     
157,282
 
Eplontersen joint development revenue
   
15,959
     
18,107
     
59,883
     
55,317
 
Total research and development revenue
   
60,126
     
87,357
     
233,396
     
212,599
 
Total revenue
 
$
144,207
   
$
159,767
   
$
463,142
   
$
435,478
 


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, GSK, Novartis, Roche and Sobi collaborations, which are the 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 September 30, 2023, we have received nearly $650 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 $50 million upon regulatory approval in the U.S. 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 earned 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 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. We will achieve the next payment of up to $30 million if AstraZeneca licenses a medicine under this collaboration.


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

 
Three Months Ended
September 30,
   
Nine Months Ended
September 30,
 
   
2023
   
2022
   
2023
   
2022
 
Revenue from our relationship with AstraZeneca
 
$
15,959
   
$
18,107
   
$
99,885
   
$
55,718
 
Percentage of total revenue
   
11
%
   
11
%
   
22
%
   
13
%


We did not have any deferred contract revenue from our relationship with AstraZeneca at September 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 in the U.S. to treat patients 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, or AS, Alzheimer’s disease, or AD, and Parkinson’s disease, or PD. 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 September 30, 2023, we have received more than $3.6 billion in payments from our Biogen collaborations.


Under our 2013 strategic neurology collaboration, we earned a $16 million milestone payment from Biogen when the U.S. Food and Drug Administration, or FDA, approved Biogen’s New Drug Application, or NDA, for QALSODY in the second quarter of 2023. 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


Under our 2012 neurology collaboration, we achieved $21 million in milestone payments from Biogen when Biogen advanced ION582, our investigational antisense medicine for the potential treatment of AS, in the third quarter of 2023. We are recognizing these milestone payments as revenue as we perform services based on our effort to satisfy our R&D services performance obligation relative to the total effort expected to satisfy our performance obligation for ION582.


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

 
Three Months Ended
September 30,
   
Nine Months Ended
September 30,
 
   
2023
   
2022
   
2023
   
2022
 
Revenue from our relationship with Biogen
 
$
94,695
   
$
88,959
   
$
262,599
   
$
259,713
 
Percentage of total revenue
   
66
%
   
56
%
   
57
%
   
60
%


In October 2023, we earned a milestone payment of $9 million from Biogen when we advanced ION582 under our 2012 neurology collaboration. We will achieve the next payment of $70 million if Biogen licenses ION582 under this collaboration.


Our condensed consolidated balance sheets at September 30, 2023 and December 31, 2022 included deferred contract revenue of $316.8 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 for the treatment of hepatitis B virus, or 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 September 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 nine months ended September 30, 2023 and 2022, we earned the following revenue from our relationship with GSK (in thousands, except percentages):

 
Three Months Ended
September 30,
   
Nine Months Ended
September 30,
 
   
2023
   
2022
   
2023
   
2022
 
Revenue from our relationship with GSK
 
$
   
$
   
$
15,000
   
$
 
Percentage of total revenue
   
0
%
   
0
%
   
3
%
   
0
%


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


Novartis


In January 2017, we initiated a collaboration with Novartis to develop and commercialize pelacarsen, an investigational medicine for patients with elevated lipoprotein(a), or Lp(a)-driven cardiovascular disease, or CVD. Novartis is responsible for conducting and funding development and regulatory activities for pelacarsen, including a global Phase 3 cardiovascular outcomes study, which Novartis initiated in December 2019.


In August 2023, we entered into a collaboration and license agreement with Novartis for the discovery, development and commercialization of a novel medicine for patients with Lp(a)-driven CVD. Novartis is solely responsible for the development, manufacturing and potential commercialization of the next generation Lp(a) therapy. In September 2023, this agreement received clearance under the Hart-Scott-Rodino Antitrust Improvements Act of 1976. Novartis paid us a $60 million upfront payment in October 2023 and we are eligible to receive development, regulatory and commercial milestone payments and tiered royalties ranging from 10 percent to 20 percent on net sales of any product resulting from this collaboration.

12


At the commencement of this collaboration, we identified one performance obligation, which was to perform R&D services for Novartis. We included the upfront payment in our transaction price for our R&D services performance obligation. We are recognizing revenue for our R&D services performance obligation as we perform services based on our effort to satisfy our performance obligation relative to our total effort expected to satisfy our performance obligation. We will achieve the next payment of $5 million if we designate a development candidate under this collaboration.


From inception through September 30, 2023, we have received more than $275 million in payments from our Novartis collaborations.


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

 
Three Months Ended
September 30,
   
Nine Months Ended
September 30,
 
   
2023
   
2022
   
2023
   
2022
 
Revenue from our relationship with Novartis
 
$
1,908
   
$
   
$
2,023
   
$
 
Percentage of total revenue
   
1
%
   
0
%
   
0
%
   
0
%


Our condensed consolidated balance sheet at September 30, 2023 included deferred contract revenue of $58.1 million from our relationship with Novartis. We did not have any deferred contract revenue from our relationship with Novartis at December 31, 2022.


Roche


We have three collaborations with Hoffmann-La Roche Inc and F. Hoffmann-La Roche Ltd, collectively Roche: one to develop treatments for Huntington’s disease, or HD, one to develop IONIS-FB-LRx for the treatment of complement-mediated diseases, and one to develop RNA-targeted programs for AD and HD.


In September 2023, we entered into an agreement with Roche to develop two undisclosed early-stage programs for RNA-targeting investigational medicines for the treatment of AD and HD. Under the agreement, we are responsible for advancing the two programs through preclinical studies and Roche is responsible for clinical development, manufacturing and commercialization of the medicines if they receive regulatory approval. Roche paid us a $60 million upfront payment in October 2023 and we are eligible to receive development, regulatory and commercial milestone payments and tiered royalties up to the mid-teens on net sales of any product resulting from this collaboration.


We identified two performance obligations under this new agreement, comprised of R&D services for each of the two separate programs. We included the upfront payment in our transaction price for our R&D services performance obligations. We are recognizing revenue for our R&D services performance obligations as we perform services based on our effort to satisfy our performance obligations relative to our total effort expected to satisfy our performance obligations. We will achieve the next payment of $7.5 million if we advance a medicine under this collaboration.


From inception through September 30, 2023, we have received more than $285 million in payments from our Roche collaborations.


During the three and nine months ended September 30, 2023 and 2022, we earned the following revenue from our relationship with Roche (in thousands, except percentage amounts):

   
Three Months Ended
September 30,
   
Nine Months Ended
September 30,
 
   
2023
   
2022
   
2023
   
2022
 
R&D revenue
 
$
8,858
   
$
41,504
   
$
16,979
   
$
65,360
 
Percentage of total revenue
   
6
%
   
26
%
   
4
%
   
15
%


Our condensed consolidated balance sheets at September 30, 2023 and December 31, 2022 included deferred contract revenue of $68.0 million and $22.4 million, respectively, from our relationship with Roche.

13


Swedish Orphan Biovitrum AB (Sobi)


We began commercializing TEGSEDI and WAYLIVRA in Europe in January 2021 and TEGSEDI in North America in April 2021 through distribution agreements with Swedish Orphan Biovitrum AB, or Sobi. 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. In exchange, we earn a distribution fee on net sales from Sobi for each medicine.


In October 2023, our distribution agreement for TEGSEDI in North America was terminated. During the three and nine months ended September 30, 2023 and 2022, we earned the following revenue from our distribution agreement with Sobi for TEGSEDI in North America (in thousands, except percentage amounts).

   
Three Months Ended
September 30,
   
Nine Months Ended
September 30,
 
   
2023
   
2022
   
2023
   
2022
 
TEGSEDI revenue from our distribution agreement with Sobi in North America
 
$
794
   
$
1,008
   
$
2,189
   
$
3,443
 
Percentage of total revenue
   
1
%
   
1
%
   
2
%
   
1
%

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 nine months ended September 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 nine months ended September 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;