IONIS PHARMACEUTICALS INC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2025

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 fully integrated commercial-stage biotechnology company and 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, 2025 and 2024 on the same basis as the audited financial statements for the year ended December 31, 2024. 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, 2024 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 asingle segment, Ionis operations, because our chief operating decision maker, or CODM, reviews operating results on an aggregate basis and manages our operations as asingle operating segment. Refer to Note 15, Segment Information, for further details on our segment information.

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

Below, we have included our accounting policies for revenue recognition related to product sales, net and cost of sales as a result of our launch of TRYNGOLZA and DAWNZERA in the U.S. Our other significant accounting policies have not changed substantially from those included in our Annual Report on Form 10-K for the year ended December 31, 2024.

Revenue Recognition

Product Sales, Net

We recognize revenue from product sales when the customer obtains control of our product in the amount of the transaction price, which is the amount that reflects the consideration which we expect to receive. We estimate reserves for variable consideration related to applicable discounts, rebates, chargebacks and other allowances included in our agreements with customers, payors and other third parties. We include the amount of variable consideration in the transaction price to the extent that it is probable that a significant reversal in the amount of the cumulative revenue recognized will not occur in a future period. If actual results vary significantly from our estimates, we adjust our estimates in the period that we become aware of such variances.

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Cost of Sales

Our cost of sales is comprised of costs related to our commercial revenue, including manufacturing costs, transportation and freight costs and indirect overhead costs associated with the manufacturing and distribution of our products. We also may include certain period costs related to manufacturing services and inventory adjustments in cost of sales.

Cost of sales for a newly launched product, such as TRYNGOLZA or DAWNZERA, does not include the full cost of manufacturing until we manufacture and sell additional inventory after exhausting pre-launch inventory, which we previously recorded as research and development, or R&D, expense.

Recent Accounting Standards

In November 2023, the Financial Accounting Standards Board, or FASB, issued Accounting Standard Update, or ASU, 2023-07, which provides updated guidance on segment reporting. The guidance requires public companies to disclose significant expenses that are regularly provided to the CODM, other segment items for each reportable segment and measures of segment profit or loss used by the CODM for allocating resources. In addition, the updated guidance requires public companies with a single reportable segment to provide all disclosures required under Accounting Standards Codification, or ASC, Topic 280, Segment Reporting, and public companies to include in interim reports all disclosures related to a reportable segment’s profit or loss and assets that are currently required in annual reports. We adopted the reporting requirements in our 2024 Annual Report on Form 10-K and began providing the interim reporting requirements in our Quarterly Report on Form 10-Q for the first quarter of 2025. Refer to Note 15, Segment Information, for further details on our segment information.

In July 2025, the FASB issued ASU 2025-05, which amended the guidance in ASC 326 to simplify the estimation of credit losses on accounts receivable and contract assets from revenue transactions. The amended guidance allows companies to elect a practical expedient to assume that conditions as of the balance sheet date will remain unchanged for the remaining life of the asset when estimating the expected credit losses of the asset. This update is effective for annual periods beginning after December 15, 2025 and interim periods within those annual periods. Early adoption of this guidance is permitted. Companies that elect the practical expedient are required to apply the amendments prospectively. We are currently assessing the impact and timing of adopting this update.

In September 2025, the FASB issued ASU 2025-06, which amended and simplified the existing guidance for software costs. The amended guidance removes references to software development stages and allows companies to begin capitalizing software costs when management has authorized and committed to funding the software project and it is probable that the project will be completed with the software performing the intended function. This update is effective for annual periods beginning after December 15, 2027 and interim periods within those annual periods. Early adoption of this guidance is permitted at the beginning of an annual reporting period. The guidance may be applied on a prospective or retrospective basis. We expect to early adopt this update on January 1, 2026 on a prospective basis.

In September 2025, the FASB issued ASU 2025-07, which clarifies that share-based non-cash consideration received from a customer in exchange for goods or services under a revenue contract is subject to the guidance on non-cash consideration under ASC 606. This update is effective for annual periods beginning after December 15, 2026 and interim periods within those annual periods. Early adoption of this guidance is permitted. The guidance may be applied on a prospective or modified retrospective basis. We are currently assessing the impact and timing of adopting this update.

We do not expect any recently issued accounting standards other than the standards mentioned above and those included in our Annual Report on Form 10-K for the year ended December 31, 2024 to have a material impact to our financial results.

3. Supplemental Financial Data

Inventories

Our inventories consisted of the following (in thousands):

We classify inventories as non-current assets when we expect the inventories to remain on hand beyond one year. We include non-current inventories in deposits and other assets in our condensed consolidated balance sheets. The amount reported as deposits and other assets as of September 30, 2025 consists of work in process inventory.

Accrued Liabilities

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

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4. Revenues

During the three and nine months ended September 30, 2025 and 2024, our revenues consisted of the following (in thousands):

Revenue Sources

The following are sources of revenue and when we typically recognize revenue.

Commercial Revenue

In December 2024, the U.S. Food and Drug Administration, or FDA, approved TRYNGOLZA (olezarsen) for the treatment of familial chylomicronemia syndrome, or FCS. Following the approval, we launched TRYNGOLZA and began earning revenue from TRYNGOLZA sales.

In August 2025, the FDA approved DAWNZERA (donidalorsen) for prophylaxis to prevent attacks of hereditary angioedema, or HAE, in adult and pediatric patients 12 years of age and older. Our launch of DAWNZERA is currently underway.

We earn royalty payments primarily on net sales of SPINRAZA, WAINUA and QALSODY.

We earn commercial revenue from TEGSEDI and WAYLIVRA sales under our distribution agreements with Swedish Orphan Biovitrum AB, or Sobi. In addition, we receive royalties from PTC Therapeutics International Limited, or PTC, for TEGSEDI and WAYLIVRA sales. Refer to Part IV, Item 15, Note 4, 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, 2024 for details on our commercialization partnerships with Sobi and PTC.

Under our distribution agreements with Sobi, we concluded that our performance obligation is to provide services to Sobi over the term of the agreement, which includes supplying finished goods inventory to Sobi. We are also responsible for maintaining the marketing authorization for TEGSEDI and WAYLIVRA in major markets and for leading the global commercial strategy for each medicine. We view this performance obligation as a series of distinct activities that are substantially the same. Therefore, we recognize as revenue the price Sobi pays us for the inventory when we deliver the finished goods inventory to Sobi. We also recognize distribution fee revenue based on Sobi’s net sales of TEGSEDI and WAYLIVRA. Under our agreements with Sobi, Sobi does not generally have a right of return.

Research and development revenue under collaboration agreements

We enter into collaboration agreements to license and sell our technology on an exclusive or non-exclusive basis. Our collaboration agreements typically contain multiple elements, or performance obligations, including technology licenses or options to obtain technology licenses, R&D services and manufacturing services.

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For R&D services that we recognize over time, we measure our progress using an input method. The input methods we use are based on the effort we expend or costs we incur toward the satisfaction of our performance obligation. We estimate the amount of effort we expend, including the time we estimate it will take us to complete the activities, or costs we incur in a given period, relative to the estimated total effort or costs to satisfy the performance obligation. This results in a percentage that we multiply by the transaction price to determine the amount of revenue we recognize each period. This approach requires us to make numerous estimates that may involve judgement. If our estimates or judgements change over the course of the collaboration, they may affect the timing and amount of revenue that we recognize in the current and future periods.

Upfront payments: When we enter into a collaboration agreement and receive an upfront payment, we record the entire upfront payment as deferred revenue if our only performance obligation is for R&D services we will provide in the future. We amortize the upfront payment into revenue as we perform the R&D services. If part or all of the upfront payment is a license fee, we recognize as revenue the portion related to the license when we deliver the license to our partner because our partner has full use of the license and we do not have any additional performance obligations related to the license after delivery.

Milestone payments: We consider milestone payments to be variable consideration and include them in the transaction price when it is probable. We typically include milestone payments for R&D services in the transaction price when they are achieved. We include these milestone payments when they are achieved because there is considerable uncertainty in the research and development processes that trigger these payments. Similarly, we include regulatory milestone payments in the transaction price once the medicine is approved by the applicable regulatory agency. We will recognize sales-based milestone payments in the period in which we achieve the milestone under the sales-based royalty exception allowed under accounting rules.

We recognize milestone payments that relate to an ongoing performance obligation over our period of performance. For example, when we achieve a milestone payment from a partner for advancing a clinical study under a collaboration agreement, we add the milestone payment to the transaction price if the milestone relates to an ongoing R&D services performance obligation and recognize revenue related to the milestone payment over our estimated period of performance. If we have partially completed our performance obligation, then we record a cumulative-effect adjustment in the period we add the milestone payment to the transaction price.

Conversely, we recognize in full those milestone payments that we earn based on our partners’ activities when our partner achieves the milestone event and we do not have a remaining performance obligation.

License fees: We recognize as revenue the total amount we determine to be the relative stand-alone selling price of a license when we deliver the license to our partner because our partner has full use of the license and we do not have any additional performance obligations related to the license after delivery.

WAINUA (Eplontersen) Collaboration with AstraZeneca

In 2021, we entered into a joint development and commercialization agreement with AstraZeneca to develop and commercialize WAINUA for the treatment of transthyretin amyloidosis, or ATTR. Under the terms of the agreement, we received a $200 million upfront payment in 2021.

We evaluated our WAINUA collaboration under ASC Topic 808, Collaborative Arrangements, or ASC 808, and identified four material components: (i) the license we granted to AstraZeneca in 2021, (ii) the co-development activities that we and AstraZeneca are performing, (iii) the co-commercialization activities that we and AstraZeneca are performing and (iv) the co-medical affairs activities that we and AstraZeneca are performing.

We determined that we had a vendor-customer relationship within the scope of ASC Topic 606, Revenue from Contracts with Customers, or ASC 606, for the license we granted to AstraZeneca and as a result we hadone performance obligation. For our sole performance obligation, we determined the transaction price was the $200 million upfront payment we received. We recognized the upfront payment in full in 2021 because we did not have any remaining performance obligations after we delivered the license to AstraZeneca.

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We also concluded that the co-development activities, the co-commercialization activities and the co-medical affairs activities are within the scope of ASC 808 because we and AstraZeneca are active participants exposed to the risks and benefits of the activities under the collaboration and therefore do not have a vendor-customer relationship. AstraZeneca is currently responsible for 55 percent of the costs associated with the ongoing global Phase 3 development program. Because we are leading the Phase 3 development program, we made an accounting policy election to recognize as non-customer revenue the cost-share funding from AstraZeneca, net of our share of AstraZeneca’s development expenses, in the same period we incur the related development expenses. As AstraZeneca is responsible for the majority of the commercial and medical affairs costs in the U.S. and all costs associated with bringing WAINUA to market outside the U.S., we made an accounting policy election to recognize cost-share funding we receive from AstraZeneca related to commercial and medical affairs activities as reductions of our selling, general and administrative, or SG&A, expense and R&D expense, respectively.

5. Collaborative Arrangements and Licensing Agreements

Below, we have included our AstraZeneca and Ono collaborations, which were the only collaborations that had either substantive changes or were new from those included in Part IV, Item 15, Note 4, 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, 2024.

AstraZeneca

We havetwo collaborations with AstraZeneca: one focused on the joint development and commercialization of WAINUA andone focused on the treatment of cardiovascular, renal and metabolic diseases. From inception through September 30, 2025, we have received more than $960 million from these collaborations.

In the second quarter of 2025, we earned a $30 million milestone payment under our cardiovascular, renal and metabolic diseases collaboration when AstraZeneca initiated the Phase 2b study of opemalirsen (formerly ION532), an investigational medicine designed to reduce the production of apolipoprotein L1, or APOL1, for the treatment of APOL1-mediated kidney disease. We recognized this milestone payment as R&D revenue in full in the second quarter of 2025 because we did not have any remaining performance obligations related to the milestone payment. We will achieve the next payment of $20 million if AstraZeneca advances a medicine under this collaboration.

During the three and nine months ended September 30, 2025 and 2024, we earned the following revenue from our relationship with AstraZeneca (in thousands, except percentage amounts):

We didnot have any deferred revenue from our relationship with AstraZeneca at September 30, 2025 and December 31, 2024.

Ono

In March 2025, we entered into an agreement with Ono Pharmaceutical Co., Ltd., or Ono, to develop and commercialize sapablursen, an investigational RNA-targeted medicine for the potential treatment of polycythemia vera, or PV, a rare and potentially life-threatening hematologic disease. We are responsible for completing the ongoing Phase 2 IMPRSSION study, while Ono will be solely responsible for subsequent development, regulatory filings and commercialization of sapablursen.

Over the term of this collaboration, we are eligible to receive up to $940 million, which is comprised of a $280 million upfront payment, a $20 million development milestone payment, up to $20 million in regulatory milestone payments and up to $620 million in sales milestone payments. In addition, we are eligible to receive royalties in the mid-teen percentage range on net sales. From inception through September 30, 2025, we received more than $280 million from this collaboration, which includes the upfront payment and reimbursements for additional R&D services. We will achieve the next payment of $20 million if Ono initiates a pivotal clinical trial under this collaboration.

At inception, we identifiedtwo performance obligations under this agreement, comprised of our license of sapablursen to Ono and R&D services for sapablursen. We determined the transaction price to be the $280 million upfront payment we received when this transaction received clearance under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, or HSR Act, in the second quarter of 2025. We allocated the transaction price based on the estimated stand-alone selling price of each performance obligation as follows:

● $278 million for the license of sapablursen; and

● $2 million for the R&D services for sapablursen.

We recognized $278 million of R&D revenue for the license of sapablursen in the second quarter of 2025 because we completed the performance obligation when we delivered the license to Ono. We recognized revenue for our R&D services performance obligation as we performed services based on our effort to satisfy our performance obligation relative to our total effort expected to satisfy our performance obligation. In the second quarter of 2025, we completed our R&D services performance obligation and recognized $2 million of R&D revenue.

Duringthe three and nine months ended September 30, 2025 and 2024, we earned the following revenue from our relationship with Ono (in thousands, except percentage amounts):

Our condensed consolidated balance sheet at September 30, 2025 included deferred revenue of $2.9 million from our relationship with Ono. We didnot have any deferred revenue from our relationship with Ono at December 31, 2024.

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, 2025 and 2024 by dividing our net loss by our weighted-average number of common shares outstanding during the period.

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Diluted net loss per share

For the three and nine months ended September 30, 2025 and 2024, 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;

● Dilutive stock options;

● Unvested restricted stock units, or RSUs;

● Unvested performance restricted stock units, or PRSUs; and

● Employee Stock Purchase Plan, or ESPP.

For the three and nine months ended September 30, 2024, common stock underlying the 0.125 percent convertible senior notes, or 0.125% Notes, and note hedges related to the 0.125% Notes would also have had an anti-dilutive effect on net loss per share.

As of September 30, 2025, we had warrants related to our 0% Notes outstanding. As of September 30, 2024, 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 September 30, 2025:

As illustrated above, at September 30, 2025,96 percent of our available-for-sale securities had a maturity of less thantwo 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 September 30, 2025, we had an equity ownership interest of less than 20 percent inseven private companies andthree public companies with which we conduct business.

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

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(1)Includes investments classified as cash equivalents in our condensed consolidated balance sheets.

(2)Our publicly traded equity securities are included in other current assets. We recognize publicly traded equity securities at fair value. In the nine months ended September 30, 2025, we recorded a $2.0 million net unrealized loss in our condensed consolidated statements of operations related to changes in the fair value of our investments in publicly traded companies.

(3)Our privately held equity securities are included in deposits and other assets. We recognize our privately held equity securities at cost minus impairments, plus or minus changes resulting from observable price changes in orderly transactions for the identical or similar investment of the same issuer, which are Level 3 inputs. In the nine months ended September 30, 2025, the amortized cost of our privately held equity securities increased $11.2 million. In the third quarter of 2025, we recorded a $29.4 million unrealized gain related to our investment in a privately held company due to an observable price change in an orderly transaction for a similar investment of the investee. This increase was partially offset by a loss of $18.2 million related to an impairment of our investment in another privately held company that we recorded in the second quarter of 2025.

The following is a summary of our investments we consider to be temporarily impaired at September 30, 2025 (in thousands, except for number of investments):

We believe that the decline in value of these securities is temporary and is primarily related to the change in market interest rates since purchase rather than underlying credit deterioration for any of the issuers. We believe it is more likely than not that we will be able to hold our debt securities with declines in value to maturity. Therefore, we intend to hold these securities to maturity and anticipate full recovery of our debt securities’ amortized cost basis at maturity.

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8. Fair Value Measurements

The following tables present the major security types we held at September 30, 2025 and December 31, 2024 that we regularly measure and carry at fair value. The following tables segregate each security type by the level within the fair value hierarchy of the valuation techniques we utilized to determine the respective security’s fair value (in thousands):

The following footnotes reference lines in our condensed consolidated balance sheets:

(1)Included in cash and cash equivalents.

(2)$39.9 million was included in cash and cash equivalents, with the difference included in short-term investments.

(3) $6.0 million was included in cash and cash equivalents, with the difference included in short-term investments.

(4)$36.0 million was included in cash and cash equivalents, with the difference included in short-term investments.

(5)Included in short-term investments.

(6)Included in other current assets.

Convertible Notes

Our 1.75% Notes and 0% Notes had a fair value of $794.5 million and $777.0 million at September 30, 2025, respectively. Our 1.75% Notes and 0% Notes had a fair value of $569.3 million and $612.8 million at December 31, 2024, respectively. We determine the fair value of our notes based on quoted market prices for these notes, which are Level 2 measurements because the notes do not trade regularly.

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9. Stock-based Compensation Expense

The following table summarizes stock-based compensation expense for the three and nine months ended September 30, 2025 and 2024 (in thousands):

As of September 30, 2025, total unrecognized estimated stock-based compensation expense related to non-vested stock options, RSUs and PRSUs was $37.2 million, $88.1 million and $13.0 million, respectively. Our actual expenses will likely differ from these estimates because we will adjust our unrecognized stock-based compensation expense for future forfeitures, including any PRSUs that do not vest. We expect to recognize the cost of stock-based compensation expense related to our non-vested stock options, RSUs and PRSUs over a weighted average amortization period of 1.2 years,1.5 years and 1.4 years, respectively.

Refer to Part IV, Item 15, Note 1, Organization and Significant Accounting Policies, of our audited financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2024 for further details on how we determine the fair value of stock options granted, RSUs, PRSUs and stock purchase rights under the ESPP.

For the nine months ended September 30, 2025 and 2024, we used the following weighted-average assumptions in our Black-Scholes calculations:

Employee Stock Options:

Board of Director Stock Options:

ESPP:

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Stock Options:

The weighted-average grant date fair value of stock options granted to employees for thenine months ended September 30, 2025 and 2024 was $17.21 and $24.73 per share, respectively. The weighted-average grant date fair value of stock options granted to non-employee directors for thenine months ended September 30, 2025 and 2024 was $20.86 and $27.47 per share, respectively.

RSUs:

The weighted-average grant date fair value of RSUs granted to employees for the nine months ended September 30, 2025 and 2024 was $33.78 and $52.08 per share, respectively.

PRSUs:

Under the terms of the PRSUs we granted in 2025 and 2024, the PRSUs may vest at the end of thethree-year performance period based on our relative total shareholder return, or TSR, as compared to a peer group of companies and as measured at the end of the performance period. Under the terms of the grants, no number of PRSUs is guaranteed to vest and the actual number of PRSUs that will vest at the end of each performance period may be anywhere from zero to 200 percent of the target number depending on our relative TSR.

The weighted-average grant date fair value of PRSUs we granted to our executive officers for the nine months ended September 30, 2025 and 2024 was $48.81 and $78.41 per share, respectively.

10. Income Taxes

We recorded nominal income tax expense for the three and nine months ended September 30, 2025 compared to income tax benefit of $3.6 million and $3.5 million for the same periods in 2024.

The benefit for the three and nine months ended September 30, 2024 was primarily related to the 2023 tax return position for the royalty purchase agreement with Royalty Pharma that we finalized during the third quarter of 2024.

In July 2025, the One Big Beautiful Bill Act, or OBBBA, was signed into law, introducing significant changes to U.S. federal tax law. The new law restores current expensing of domestic R&D costs and allows us to accelerate the deduction for a significant amount of such costs we capitalized since 2022. The tax law changes from the OBBBA did not have a material effect on our tax expense for the three and nine months ended September 30, 2025.

We continue to maintain a full valuation allowance on all of our net deferred tax assets.

11. Liability Related to Sale of Future Royalties

In 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. As a result, we received an upfront payment of $500 million and we are eligible to receive up to $625 million in additional milestone payments. Under the terms of the agreement, Royalty Pharma will receive 25 percent of our SPINRAZA royalty payments from 2023 through 2027, increasing to 45 percent of royalty payments in 2028, on up to $1.5 billion in annual sales. In addition, Royalty Pharma will receive 25 percent of any future royalty payments on pelacarsen, our medicine in development to treat patients with elevated lipoprotein(a)-driven cardiovascular disease. Royalty Pharma’s royalty interest in SPINRAZA will revert to us after total SPINRAZA royalty payments to Royalty Pharma reach either $475 million or $550 million, depending on the timing and occurrence of FDA approval of pelacarsen.

We recorded the upfront payment of $500 million as a liability related to the sale of future royalties, net of transaction costs of $10.4 million, which we are amortizing over the estimated life of the arrangement using the effective interest rate method. We recognize royalty revenue in the period in which the counterparty sells the related product and recognizes the related revenue. We record royalty payments made to Royalty Pharma as a reduction of the liability.

We determine the effective interest rate used to record interest expense under this agreement based on an estimate of future royalty payments to Royalty Pharma. As of September 30, 2025 and 2024, the estimated effective interest rate under the agreement was 12.4 percent and 13.5 percent, respectively.

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The following table sets forth information on our liability related to sale of future royalties (in thousands):

(1) Included in other current liabilities in our condensed consolidated balance sheet.

There are numerous factors, most of which are not within our control, that could materially impact the amount and timing of royalty payments from Biogen and Novartis, and result in changes to our estimate of future royalty payments to Royalty Pharma. Such factors include, but are not limited to, the commercial sales of SPINRAZA, the regulatory approval and commercial sales of pelacarsen, competing products or other significant events.

12. Convertible Debt

1.75 Percent Convertible Senior Notes

In 2023, we completed a $575.0 million offering of our 1.75% Notes.

At September 30, 2025, we had the following 1.75% Notes outstanding (in millions except interest rate and price per share data):

0 Percent Convertible Senior Notes and Call Spread

In 2021, we completed a $632.5 million offering of our 0% Notes.

At September 30, 2025, we had the following 0% Notes outstanding (in millions except interest rate and price per share data):

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In conjunction with the 2021 offering, we entered into a call spread transaction, which was comprised of purchasing note hedges and selling warrants, to minimize the impact of potential economic dilution upon conversion of our 0% Notes by increasing the effective conversion price on our 0% Notes. We increased our effective conversion price to $76.39 with the same number of underlying shares as our 0%Notes. The call spread cost us $46.9 million, of which $136.7 million was for the note hedge purchase, offset by $89.8 million we received for selling the warrants. Similar to our 0% Notes, our note hedges are subject to adjustment. Additionally, our note hedges are exercisable upon conversion of the 0% Notes. The note hedges will expire upon maturity of the 0% Notes, or April 2026. The warrants will expire in July 2026. The note hedges and warrants are separate transactions and are not part of the terms of our 0% Notes. The holders of the 0% Notes do not have any rights with respect to the note hedges and warrants.

We recorded the amount we paid for the note hedges and the amount we received for the warrants in additional paid-in capital in our condensed consolidated balance sheets. Refer to Part IV, Item 15, Note 1, Organization and Significant Accounting Policies, of our audited financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2024 for our Call Spread accounting policy. We reassess our ability to continue to classify the note hedges and warrants in shareholders’ equity at each reporting period.

Other Terms of Convertible Senior Notes

The 1.75% and 0% Notes are convertible under certain conditions, at the option of the note holders. We can settle conversions of the notes, at our election, in cash, shares of our common stock or a combination of both. We may not redeem the notes prior to maturity, and we do not have to provide a sinking fund for them. Holders of the notes may require us to purchase some or all of their notes upon the occurrence of certain fundamental changes, as set forth in the indentures governing the notes, at a purchase price equal to 100 percent of the principal amount of the notes to be purchased, plus any accrued and unpaid interest.

13. Operating Leases

In 2022, we concurrently entered intotwo purchase and sale agreements with a real estate investor. In the same period, we closed the first transaction in which we sold the facilities at our headquarters in Carlsbad, California, which includes our primary R&D facility, for a purchase price of $263.4 million. In connection with this transaction, we leased back our headquarters facilities for an initial lease term of 15 years with options to extend the lease fortwo additional terms offive years each.

In 2023, we closed the second transaction and transferred legal ownership oftwo lots of undeveloped land adjacent to our headquarters to the real estate investor for a purchase price of $33.0 million. In connection with this transaction, we entered into a build-to-suit lease agreement with the same real estate investor to lease a new R&D facility. The lessor developed and constructed a new building composed of R&D and office space. We are designing and constructing tenant improvements to customize the facility’s interior space.

The lease commenced in September 2025 when the lessor completed constructing the structure of the new facility. The initial lease term for this facility is 15 years with options to extend the lease for 2 additional terms offive years each. We determined at lease inception that it was not reasonably certain that we would exercise any of the options to extend the lease. We estimated our lease payments over the initial term to total approximately $230 million. In addition, we expect to receive reimbursements totaling $41.2 million from the lessor for tenant improvements that we own.

Since the building was under construction and unavailable to lease, we were unable to complete the sale-leaseback evaluation under ASC Topic 842, Leases, in 2023. As a result, the land remained in our consolidated balance sheets and we accounted for the proceeds as a financial liability. In September 2025, we reassessed the transaction under the sale-leaseback accounting guidance when the facility became available for lease commencement. We determined the transaction qualified as a sale-leaseback transaction upon lease commencement. As a result, we de-recognized the land and recorded a net gain of $4.2 million that we reported within operating loss in our condensed consolidated statements of operations. In addition, we recorded a financial liability of $19.6 million, which reflects the difference in the fair value of the land as of the lease commencement date compared to the purchase price of the land in 2023. We reported the current portion of the financial liability in other current liabilities and the non-current portion of the financial liability in long-term obligations in our condensed consolidated balance sheets. We recognize interest expense related to the financial liability based on our incremental borrowing rate at the commencement of the lease. We allocate payments to the lessor between the financial liability and lease expense.

14. Legal Proceedings

From time to time, we are involved in legal proceedings arising in the ordinary course of our business. Periodically, we evaluate the status of each legal matter and assess our potential financial exposure. If we consider the potential loss from any legal proceeding to be probable and we can reasonably estimate the amount, we accrue a liability for the estimated loss. The outcome of any proceeding is not determinable in advance. Therefore, we are required to use significant judgment to determine the probability of a loss and whether the amount of the loss is reasonably estimable. Our assessment of a potential liability and the amount of accruals we recorded are based only on the information available to us at the time. As additional information becomes available, we reassess the potential liability related to the legal proceeding and may revise our estimates.

On September 10, 2025, Arrowhead Pharmaceuticals, Inc., or Arrowhead, filed a lawsuit in the District of Delaware seeking a declaratory judgment that our patent US9,593,333 is invalid or not infringed by use of Arrowhead’s ApoCIII inhibitor plozasiran. On September 11, 2025, we filed suit in the Central District of California asserting infringement of that same patent by Arrowhead’s announced intention to commercialize plozasiran in November 2025. On October 8, 2025, we filed a motion to dismiss, or in the alternative, transfer Arrowhead’s Delaware suit in favor of the case we brought in the Central District of California. At present, both lawsuits remain pending.

15. Segment Information

We operate as asingle operating segment, Ionis operations, focused on the research, development and commercialization of our RNA-targeted medicines to bring better futures to people with serious diseases. The CODM, our Chief Executive Officer, manages our company, reviews operating results, assesses performance and allocates resources on an aggregate basis using consolidated net income or loss as the key measure of segment profit or loss. As such, results of our operations are reported on a consolidated basis for purposes of management and segment reporting.

Ionis operations derives its revenues from commercial and R&D revenue sources. Refer to Note 4, Revenues, for further details on our sources of revenue.

Index

The following table sets forth information on segment profit or loss, including significant segment expenses (in thousands):

(1)Other segment items include stock-based compensation expense, investment income, interest expense, gain or loss on investments, other income or expense and income tax expense or benefit.

Index

ITEM 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

In this Report on Form 10-Q, unless the context requires otherwise, “Ionis,” the “Company,” “we,” “our,” and “us,” means Ionis Pharmaceuticals, Inc. and its subsidiaries.

Forward-Looking Statements

In addition to historical information contained in this Report on Form 10-Q, the Report includes forward-looking statements regarding our business and the therapeutic and commercial potential of our commercial medicines, additional medicines in development and technologies. Any statement describing our goals, expectations, financial or other projections, intentions or beliefs is a forward-looking statement and should be considered an at-risk statement. Such statements are subject to certain risks and uncertainties and particularly those inherent in the process of discovering, developing and commercializing medicines that are safe and effective for use as human therapeutics, and in the endeavor of building a business around such medicines. Our forward-looking statements also involve assumptions that, if they never materialize or prove correct, could cause our results to differ materially from those expressed or implied by such forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed in this report and described in additional detail in our annual report on Form 10-K for the year ended December 31, 2024, which is on file with the U.S. Securities and Exchange Commission and is available from us, and those identified within Part II Item 1A. Risk Factors of this Report. Although our forward-looking statements reflect the good faith judgment of our management, these statements are based only on facts and factors currently known by us. Except as required by law, we undertake no obligation to update any forward-looking statements for any reason. As a result, you are cautioned not to rely on these forward-looking statements.