IONIS PHARMACEUTICALS INC

Previous wording

This financial review presents our operating results for each of the two years in the period ended December 31, 2023, and our financial condition as of December 31, 2023. Refer to our 2022 Form 10-K for our results of operations for 2022 compared to 2021. Except for the historical information contained herein, the following discussion contains forward-looking statements that are subject to known and unknown risks, uncertainties and other factors that may cause our actual results to differ materially from those expressed or implied by such forward-looking statements. We discuss such risks, uncertainties and other factors throughout this report and specifically under Item 1A of Part I of this report, Risk Factors. In addition, the following review should be read in conjunction with the information presented in our consolidated financial statements and the related notes to our consolidated financial statements included in Item 8 of Part II of this report.

Current wording

This financial review presents our operating results for each of the two years in the period ended December 31, 2024, and our financial condition as of December 31, 2024. Refer to Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, in our 2023 Form 10-K for our results of operations for 2023 compared to 2022. Except for the historical information contained herein, the following discussion contains forward-looking statements that are subject to known and unknown risks, uncertainties and other factors that may cause our actual results to differ materially from those expressed or implied by such forward-looking statements. We discuss such risks, uncertainties and other factors throughout this report and specifically under Part I, Item 1A, Risk Factors. In addition, the following review should be read in conjunction with the information presented in our consolidated financial statements and the related notes to our consolidated financial statements included in Part II, Item 8, Financial Statements and Supplementary Data, of this report.

Previous wording

As noted in our Business Overview in Part I of this report, for three decades, we have invented medicines that we believe bring better futures to people with serious diseases. Today, as a pioneer in RNA-targeted medicines, we continue to drive innovation in RNA therapies. We currently have five marketed medicines: SPINRAZA, QALSODY, WAINUA, TEGSEDI and WAYLIVRA. We also have a rich innovative late- and mid-stage pipeline in neurology, cardiology and other areas of high patient need. We currently have nine medicines in Phase 3 development and multiple additional medicines in early and mid-stage development. Refer to Part I, Item 1, Business, for further details on our business and key developments in our medicines.

Current wording

As noted in our Business Overview in Part I, Item 1, Business, for three decades, we have invented medicines that we believe bring better futures to people with serious diseases. Today, as a pioneer in RNA-targeted medicines, we continue to drive innovation in RNA therapies. We currently have six marketed medicines: TRYNGOLZA, WAINUA, SPINRAZA, QALSODY, TEGSEDI and WAYLIVRA. We also have a rich innovative late- and mid-stage pipeline in neurology, cardiology and rare diseases. We currently have nine medicines in Phase 3 development and additional medicines in early and mid-stage development. Refer to Part I, Item 1, Business, for further details on our business and key developments in our medicines.

Previous wording

Below we have included our results of operations for 2023 compared to 2022. Refer to our 2022 Form 10-K for our results of operations for 2022 compared to 2021. The following table provides selected summary information from our consolidated statements of operations for 2023 and 2022 (in millions):

Current wording

Below we have included our results of operations for 2024 compared to 2023. Refer to Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, of our 2023 Form 10-K for our results of operations for 2023 compared to 2022. The following table provides selected summary information from our consolidated statements of operations for 2024 and 2023 (in millions):

Previous wording

Total revenue for 2023 was $787.6 million compared to $587.4 million in 2022 and was comprised of the following (in millions):

Current wording

Total revenue for 2024 was $705.1 million compared to $787.6 million in 2023 and was comprised of the following (in millions):

Previous wording

As AstraZeneca is responsible for the majority of the medical affairs and commercial costs in the U.S. and all costs associated with bringing WAINUA to market outside the U.S., we are recognizing cost-share funding we receive from AstraZeneca related to these activities as a reduction of our medical affairs and commercialization expenses, which we classify as R&D and selling, general and administrative, or SG&A, expenses, respectively. We expect our medical affairs and commercialization expenses to increase as WAINUA advances toward the market under our collaboration with AstraZeneca.

Current wording

As AstraZeneca is responsible for the vast majority of the medical affairs and commercial costs in the U.S. and all costs associated with bringing WAINUA to market outside the U.S., we are recognizing cost-share funding we receive from AstraZeneca related to these activities as a reduction of our medical affairs and commercialization expenses, which we classify as R&D and selling, general and administrative, or SG&A, expenses, respectively. We expect our medical affairs and commercialization expenses to increase as WAINUA advances toward the market under our collaboration with AstraZeneca.

Previous wording

Our WAINUA joint development revenue in 2023 includes a $50 million milestone payment from AstraZeneca that we earned when the FDA approved WAINUA for ATTRv-PN in the U.S.

Current wording

Our WAINUA joint development revenue in 2024 and 2023 includes a $30 million milestone payment from AstraZeneca that we earned when the MHRA approved WAINUA for ATTRv-PN in the UK as WAINZUA and a $50 million milestone payment from AstraZeneca that we earned when the FDA approved WAINUA for ATTRv-PN in the U.S., respectively.

Previous wording

To analyze and compare our results of operations to other similar companies, we believe it is important to exclude non-cash compensation expense related to equity awards from our operating expenses. We believe non-cash compensation expense related to equity awards is not indicative of our operating results or cash flows from our operations. Further, we internally evaluate the performance of our operations excluding it.

Current wording

Non-cash compensation expense related to equity awards increased in 2024 compared to 2023 due to increased headcount and a higher stock price on the grant date of annual equity awards in 2024 compared to 2023. We believe non-cash compensation expense related to equity awards is not indicative of our operating results or cash flows from our operations.

Previous wording

Our cost of sales is comprised of costs related to our commercial revenue, which consisted of manufacturing costs, including certain fixed costs, transportation and freight, indirect overhead costs associated with the manufacturing and distribution of TEGSEDI and WAYLIVRA and certain associated period costs.

Current wording

Our cost of sales is comprised of costs related to our commercial revenue, which consisted of manufacturing costs, including certain fixed costs, transportation and freight, indirect overhead costs primarily associated with the manufacturing and distribution of TRYNGOLZA, TEGSEDI and WAYLIVRA and certain associated period costs.

Previous wording

Drug discovery expenses, excluding non-cash compensation expense related to equity awards, decreased in 2023 compared to 2022. In 2022, we recognized $80 million for licensing Metagenomi’s gene editing technologies.

Current wording

Drug discovery expenses, excluding non-cash compensation expense related to equity awards, decreased in 2024 compared to 2023. In 2023, we recognized $15 million in R&D expense for licensing Vect-Horus’ platform technology.

Previous wording

Manufacturing and development chemistry expenses, excluding non-cash compensation expense related to equity awards, decreased in 2023 compared to 2022. In 2022, we manufactured higher quantities of API to support launch preparation activities for WAINUA, olezarsen and donidalorsen. Refer to the section titled, Manufacturing, in Part I, Item 1, Business, for further details on the activities and types of costs we incur in our manufacturing process.

Current wording

Manufacturing and development chemistry expenses, excluding non-cash compensation expense related to equity awards, decreased in 2024 compared to 2023 due to the timing of manufacturing performed by our contract manufacturing organizations for drug product related to several late-stage programs. Refer to the section titled, Manufacturing, in Part I, Item 1, Business, for further details on the activities and types of costs we incur in our manufacturing process.

Previous wording

Investment income for 2023 was $89.0 million compared to $25.3 million for 2022. The increase in investment income was primarily due to an increase in interest rates associated with our investments in debt securities and an increase in our cash available for investment during 2023 compared to 2022. Our cash balance increased due to the $500.0 million upfront payment we received in January 2023 from our royalty purchase agreement with Royalty Pharma Investments, or Royalty Pharma, net proceeds we received from the debt offering in June 2023 and payments from partners. These increases were partially offset by the repurchase of $504.4 million in principal of our 0.125% Notes during 2023.

Current wording

Investment income for 2024 was $107.0 million compared to $89.0 million for 2023. The increase in investment income was primarily due to an increase in interest rates associated with our investments during a majority of 2024 compared to 2023. In addition, our cash available for investing increased due to the $489.1 million net proceeds we received from our public common stock offering in September 2024. Refer to Part IV, Item 15, Note 8, Stockholders’ Equity, in the Notes to the Consolidated Financial Statements for further details on the public offering.

Previous wording

In 2023, we completed a $575.0 million offering of our 1.75% Notes and repurchased $504.4 million in principal of our 0.125% Notes. As a result, beginning in the second quarter of 2023, our interest expense related to our convertible notes increased because we began incurring interest expense for our 1.75% Notes.

Current wording

Interest expense for 2024 was $17.0 million compared to $12.7 million for 2023. In June 2023, we completed a $575.0 million offering of our 1.75% Notes and repurchased $504.4 million in principal of our 0.125% Notes. As a result, beginning in the second quarter of 2023, our interest expense related to our convertible notes included interest expense incurred for our 1.75% Notes. Interest expense in 2024 included a full year of interest expense related to our 1.75% Notes.

Previous wording

We recorded $68.8 million of interest expense related to the sale of future royalties in 2023 as a result of the Royalty Pharma transaction, in which we sold a minority interest in our future SPINRAZA and pelacarsen royalties to Royalty Pharma for a $500 million upfront payment and $625 million of potential future payments. Refer to Part IV, Item 15, Note 7, Long-Term Obligations and Commitments, in the Notes to the Consolidated Financial Statements for further details.

Current wording

We recorded $73.5 million and $68.8 million of interest expense related to the sale of future royalties in 2024 and 2023, respectively. These amounts are related to the Royalty Pharma Investments, or Royalty Pharma, transaction, in which we sold a minority interest in our future SPINRAZA and pelacarsen royalties to Royalty Pharma for a $500 million upfront payment and $625 million of potential future payments. Refer to Part IV, Item 15, Note 7, Long-Term Obligations and Commitments, in the Notes to the Consolidated Financial Statements for further details.

Previous wording

We recorded a $1.9 million and $7.3 million loss on investments for 2023 and 2022, respectively. The period-over-period fluctuation in our loss on investments was primarily driven by changes in the fair value of our investments in publicly traded and privately held biotechnology companies.

Current wording

We recorded a $2.9 million and $1.9 million loss on investments for 2024 and 2023, respectively. The period-over-period fluctuation in our loss on investments was primarily driven by changes in the fair value of our investments in privately held and publicly traded biotechnology companies.

Previous wording

We recorded an income tax expense of $32.3 million for 2023 compared to $11.7 million for 2022.

Current wording

We recorded an income tax benefit of $6.2 million for 2024 compared to an income tax expense of $32.3 million for 2023.

Previous wording

The primary drivers of our income tax expense despite our full year pretax loss relate to the requirement for taxpayers to amortize research and development expenditures over five years pursuant to Internal Revenue Code, or IRC, Section 174 beginning in 2022 under the Tax Cuts and Jobs Act of 2017, or TCJA, and the impact of the royalty purchase agreement with Royalty Pharma, which we reflected as a taxable sale which required us to include the proceeds from the sale, net of currently deductible issuance costs, as taxable income in 2023. The resulting tax liability is partially offset by the utilization of our R&D tax credits.

Current wording

The decrease in income tax expense for 2024 compared to 2023 primarily related to the impact of the Royalty Pharma transaction in 2023. We reflected the Royalty Pharma transaction as a taxable sale, which required us to include the proceeds from the sale, net of currently deductible issuance costs, as taxable income in 2023.

Previous wording

We generated a net loss of $366.3 million for 2023 compared to $269.7 million for 2022. Our net loss increased for 2023 compared to 2022 primarily due to factors discussed in the sections above. Basic and diluted net loss per share for 2023 were $2.56 compared to $1.90 for 2022.

Current wording

We generated a net loss of $453.9 million for 2024 compared to $366.3 million for 2023. Our net loss increased for 2024 compared to 2023 primarily due to factors discussed in the sections above. Basic and diluted net loss per share for 2024 were $3.04 compared to $2.56 for 2023. Our net loss per share increased for 2024 compared to 2023 primarily due to factors discussed in the sections above.

Previous wording

We have financed our operations primarily from research and development collaborative agreements. We also financed our operations from commercial revenue from SPINRAZA and QALSODY royalties and TEGSEDI and WAYLIVRA commercial revenue. In addition, we expect to receive commercial revenue from WAINUA royalties beginning in 2024. From our inception through December 31,2023, we have earned approximately $7.2 billion in revenue. We have also financed our operations through the sale of our equity securities, the issuance of long-term debt and the sale of future royalties. From the time we were founded through December 31, 2023, we have raised net proceeds of approximately $2.1 billion from the sale of our equity securities. Additionally, from our inception through December 31, 2023, we have borrowed approximately $2.7 billion under long-term debt arrangements and received proceeds of $0.5 billion from the sale of future royalties to finance a portion of our operations.

Current wording

We have financed our operations primarily from research and development collaborative agreements. We also financed our operations from commercial revenue from SPINRAZA royalties and TEGSEDI and WAYLIVRA commercial revenue. In addition, we began receiving commercial revenue from WAINUA royalties in 2024. From our inception through December 31,2024, we have earned approximately $7.9 billion in revenue. We have also financed our operations through the sale of our equity securities, the issuance of long-term debt, the sale leaseback of facilities and the sale of future royalties. From the time we were founded through December 31, 2024, we have raised net proceeds of approximately $2.6 billion from the sale of our equity securities, which includes our sale of 11.5 million shares of common stock for net proceeds of $489 million in September 2024. Additionally, from our inception through December 31, 2024, we have borrowed approximately $2.7 billion under long-term debt arrangements and received proceeds of approximately $0.5 billion from the sale of future royalties to finance a portion of our operations.

Previous wording

The R&D revenue we recognize each period is comprised of several types of revenue, including amortization from upfront payments, milestone payments, license fees and other services that are recognized immediately or amortized over the period in which we satisfy our performance obligation. Each of these types of revenue require us to make various judgements and estimates.

Current wording

The R&D revenue we recognize each period is comprised of several types of revenue, including amortization from upfront payments, milestone payments, license fees and other services that we recognize immediately or amortize over the period in which we satisfy our performance obligation. Each of these types of revenue require us to make various judgements and estimates.

Previous wording

As of December 31, 2023, a hypothetical 10 percent increase in our liability for preclinical and clinical development costs would have resulted in an increase in our loss before income tax benefit and accrued liabilities of approximately $10.6 million.

Current wording

As of December 31, 2024, a hypothetical 10 percent increase in our liability for preclinical and clinical development costs would have resulted in an increase in our loss before income tax benefit and accrued liabilities of approximately $7.7 million.