IONIS PHARMACEUTICALS INC

Results of Operations

The following is a summary of our financial results (in millions):

Revenue

Total revenue for the three and nine months ended September 30, 2026 was $242.7 million and $756.8 million, respectively, compared to $156.7 million and $740.4 million for the same periods in 2025 respectively, and was comprised of the following (in millions):

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Commercial revenue for the three months and nine months ended September 30, 2026 increased 18% and 23%, respectively, compared to the same periods in 2025. This increase was primarily driven by DAWNZERA product sales.

Research and development, or R&D, revenue for the three and nine months ended September 30, 2026 increased compared to the same periods in 2025 due to multiple payments we earned for programs advancing under our R&D collaborations and excluding the $280 million upfront payment we earned for the global license of sapablursen to Ono Pharmaceutical Co., Ltd. in the second quarter of 2025.

WAINUA (Eplontersen) Collaboration with AstraZeneca

Our financial results for the three and nine months ended September 30, 2026 and 2025 reflected the cost-sharing provisions related to our collaboration with AstraZeneca to develop and commercialize WAINUA for the treatment of ATTR. From inception through December 31, 2025, AstraZeneca was responsible for 55 percent of the costs associated with the ongoing global Phase 3 development program. Beginning on January 1, 2026, AstraZeneca was responsible for 75 percent of costs for development activities intended solely to support U.S. regulatory approvals and 87.5 percent of costs for development activities intended to support global regulatory approvals. Because we were leading and conducting the Phase 3 development program, we recognized as R&D revenue the percentage of cost-share funding AstraZeneca was responsible for, net of our share of AstraZeneca's development expenses, in the same period we incurred the related development expenses.

In June 2026, we exercised our right to opt-out of the shared responsibility and costs for development and U.S. commercialization activities under the agreement. The opt-out became effective on August 1, 2026. Effective August 1, 2026, AstraZeneca is responsible for 100 percent of WAINUA costs under this agreement.

Prior to August 2026, AstraZeneca was 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. As a result, we recognized cost-share funding we received from AstraZeneca related to these activities as a reduction of our medical affairs and commercialization expenses, which we classified as R&D and selling, general and administrative, or SG&A expenses, respectively.

The following table sets forth information on revenue and expenses under this collaboration (in millions):

Operating Expenses

The following table sets forth information on operating expenses (in millions):

Operating expenses, excluding non-cash compensation expense related to equity awards, for the three months and nine months ended September 30, 2026 increased compared to the same periods in 2025. SG&A expenses increased as anticipated year over year primarily due to investments related to the commercialization efforts for TRYNGOLZA, DAWNZERA and ZANVASTRO. We expect our operating expenses, excluding non-cash compensation expense related to equity awards, to continue to increase during the remainder of 2026 as we advance our commercialization activities.

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Non-cash compensation expense related to equity awards for the three and nine months ended September 30, 2026 increased compared to the same periods in 2025 due to a higher stock price on the grant date of annual equity awards in 2026 compared to 2025 and increased headcount. We employed 1,485 people as of September 30, 2026 compared to 1,225 people as of September 30, 2025. We believe non-cash compensation expense related to equity awards is not indicative of our operating results or cash flows from our operations.

Cost of Sales

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

Cost of sales for newly launched products, such as TRYNGOLZA, DAWNZERA and ZANVASTRO, 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 R&D expense.

The following table sets forth information on cost of sales (in millions):

Research, Development and Patent Expenses

Our research, development and patent expenses consist of expenses for drug discovery, drug development, medical affairs, manufacturing and development chemistry and R&D support expenses.

The following table sets forth information on research, development and patent expenses (in millions):

Drug Discovery

We use our proprietary technologies to generate information about the function of genes and to determine the value of genes as drug discovery targets. We use this information to direct our own drug discovery research, and that of our partners. Drug discovery is also the function that is responsible for advancing our core technology. This function is also responsible for making investments in complementary technologies to expand the reach of our technologies.

The following table sets forth information on drug discovery expenses (in millions):

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Drug discovery expenses, excluding non-cash compensation expense related to equity awards, were essentially flat in the three and nine months ended September 30, 2026 compared to the same periods in 2025.

Drug Development

The following table sets forth drug development expenses, including expenses for our marketed medicines and those in Phase 3 development for which we have incurred significant costs (in millions):

Our development expenses, excluding non-cash compensation expense related to equity awards, decreased for the three and nine months ended September 30, 2026 compared to the same periods in 2025 as several late-stage studies ended.

We may conduct multiple clinical trials on a drug candidate, including multiple clinical trials for the various indications we may be studying. Furthermore, as we obtain results from trials, we may elect to discontinue clinical trials for certain drug candidates in certain indications in order to focus our resources on more promising drug candidates or indications. Our Phase 1 and Phase 2 programs are clinical research programs that fuel our Phase 3 pipeline. When our medicines are in Phase 1 or Phase 2 clinical trials, they are in a dynamic state in which we may adjust the development strategy for each medicine. Although we may characterize a medicine as “in Phase 1” or “in Phase 2,” it does not mean that we are conducting a single, well-defined study with dedicated resources. Instead, we allocate our internal resources on a shared basis across numerous medicines based on each medicine’s particular needs at that time. This means we are constantly shifting resources among medicines. Therefore, what we spend on each medicine during a particular period is usually a function of what is required to keep the medicines progressing in clinical development, not what medicines we think are most important. For example, the number of people required to start a new study is large, the number of people required to keep a study going is modest and the number of people required to finish a study is large. However, such fluctuations are not indicative of a shift in our emphasis from one medicine to another and cannot be used to accurately predict future costs for each medicine. Because we always have numerous medicines in preclinical and varying stages of clinical research, the fluctuations in expenses from medicine to medicine, in large part, offset one another. If we partner a medicine, it may affect the size of a trial, its timing, its total cost and the timing of the related costs.

Medical Affairs

Our medical affairs function is responsible for funding and coordinating investigator-sponsored trials, communicating scientific and clinical information to healthcare providers, medical professionals and patients, and managing publications.

The following table sets forth information on medical affairs expenses (in millions):

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Medical affairs expenses, excluding non-cash compensation expense related to equity awards, increased in the three and nine months ended September 30, 2026 compared to the same periods in 2025 as we continued advancing our late-stage pipeline.

Manufacturing and Development Chemistry

Expenditures in our manufacturing and development chemistry function consist primarily of personnel costs, specialized chemicals for oligonucleotide manufacturing, validation batches to support regulatory approvals, laboratory supplies and outside services. Our manufacturing and development chemistry function is responsible for providing drug supplies to drug development and our collaboration partners. Our manufacturing procedures include testing to satisfy good laboratory and good manufacturing practice requirements.

The following table sets forth information on manufacturing and development chemistry expenses (in millions):

Manufacturing and development chemistry expenses, excluding non-cash compensation expense related to equity awards, increased in the three and nine months ended September 30, 2026 due to the timing of manufacturing performed by our contract manufacturing organizations for drug product and active pharmaceutical ingredients related to several late-stage programs.

R&D Support

In our research, development and patent expenses, we include support costs such as rent, repair and maintenance for buildings and equipment, utilities, depreciation of laboratory equipment and facilities, amortization of our intellectual property, information technology costs, procurement costs and waste disposal costs. We call these costs R&D support expenses.

The following table sets forth information on R&D support expenses (in millions):

R&D support expenses, excluding non-cash compensation expense related to equity awards, increased in the three and nine months ended September 30, 2026 compared to the same periods in 2025 primarily due to increased occupancy costs attributed to our lease of the laboratory and office space facility that commenced in September 2025. In addition, personnel costs increased period over period due to increased headcount.

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Selling, General and Administrative Expenses

SG&A expenses include personnel, information technology systems and outside costs associated with the commercialization and pre-commercialization activities for our medicines and costs to support our company, our employees and our stockholders including, legal, human resources, investor relations and finance. Additionally, we include in SG&A expenses such costs as rent, repair and maintenance of buildings and equipment, depreciation and utilities costs that we need to support the corporate functions listed above. We also include fees we owe under our in-licensing agreements related to SPINRAZA and QALSODY and cost sharing payments associated with shared commercialization activities under our WAINUA collaboration with AstraZeneca.

The following table sets forth information on SG&A expenses (in millions):

SG&A expenses, excluding non-cash compensation expense related to equity awards, increased in the three and nine months ended September 30, 2026 compared to the same periods in 2025 primarily due toinvestments related to commercialization efforts for TRYNGOLZA, DAWNZERA and ZANVASTRO. We expect SG&A expenses to increase as we continue to invest in our independent commercial launches.

Investment Income

The following table sets forth information on investment income (in millions):

Investment income for the three and nine months ended September 30, 2026 decreased compared to the same periods in 2025 due to a decrease in our cash balance during the nine months ended September 30, 2026 compared to the same period in 2025. Our cash balance decreased due to the repayment upon maturity of our 0% Notes due 2026 in April 2026.

Interest Expense

The following table sets forth information on interest expense (in millions):

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Interest Expense Related to Sale of Future Royalties

We recorded $4.1 million and $39.0 million of interest expense related to the sale of future royalties in the three and nine months ended September 30, 2026, respectively, compared to $18.0 million and $55.4 million in the same periods in 2025. 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. In September 2026, we began recognizing contra-interest expense related to the Royalty Pharma arrangement due to a change in estimate. Refer to Part I, Item 1, Note 10, Liability Related to Sale of Future Royalties, in the Notes to Condensed Consolidated Financial Statements for further details related to the Royalty Pharma arrangement.

Gain on Investments

The following table sets forth information on gain on investments, net (in millions):

The period over period fluctuations in gain on investments were primarily due to changes in the fair value of investments in publicly traded biotechnology companies.

Net Loss and Net Loss per Share

The following table sets forth information on net loss and net loss per share (in millions, except per share amounts):

The period-over-period fluctuations in our net loss were driven by factors discussed in the sections above.