Ionis Pharmaceuticals(IONS) - 2024 Q1 - Quarterly Report

PART I FINANCIAL INFORMATION Financial Statements This section presents the unaudited condensed consolidated financial statements for Q1 2024 vs. Q1 2023, including balance sheets, operations, and cash flows with detailed notes Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Total Assets | $2,763,928 | $2,990,072 | | Cash and cash equivalents | $348,889 | $399,266 | | Short-term investments | $1,857,327 | $1,931,935 | | Total Liabilities | $2,467,413 | $2,603,386 | | Total Stockholders' Equity | $296,515 | $386,686 | Condensed Consolidated Statement of Operations Highlights (in thousands, except per share data) | Metric | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Total Revenue | $119,497 | $130,524 | | Total Operating Expenses | $269,010 | $244,672 | | Loss from Operations | $(149,513) | $(114,148) | | Net Loss | $(142,803) | $(124,323) | | Net Loss Per Share (Basic & Diluted) | $(0.98) | $(0.87) | Condensed Consolidated Statement of Cash Flows Highlights (in thousands) | Cash Flow Activity | Three Months Ended March 31, 2024 | | :--- | :--- | | Net cash used in operating activities | $(149,938) | | Net cash provided by investing activities | $76,105 | | Net cash provided by financing activities | $23,570 | | Net decrease in cash and cash equivalents | $(50,377) | Notes to Condensed Consolidated Financial Statements The notes provide detailed explanations of the company's accounting policies and specific financial statement items, covering revenue recognition, collaborative arrangements, investments, and convertible debt Revenue Breakdown (in thousands) | Revenue Category | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Commercial Revenue | $59,593 | $67,768 | | SPINRAZA royalties | $38,455 | $50,247 | | WAINUA royalties | $1,125 | $— | | Other commercial revenue | $20,013 | $17,521 | | R&D Revenue | $59,904 | $62,756 | | Collaborative agreement revenue | $49,345 | $38,334 | | WAINUA joint development revenue | $10,559 | $24,422 | | Total Revenue | $119,497 | $130,524 | - Revenue from the Biogen relationship was $59.2 million (50% of total revenue) in Q1 2024, down from $70.5 million (54% of total) in Q1 2023[50][52] - The liability related to the sale of future royalties to Royalty Pharma increased to $525.1 million as of March 31, 2024, with an estimated effective interest rate of 13.5%[74][75] - As of March 31, 2024, outstanding principal balances included $575.0 million (1.75% Notes due 2028), $632.5 million (0% Notes due 2026), and $44.5 million (0.125% Notes due 2024)[77][80] Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on the company's financial condition and operational results, including business overview, critical accounting estimates, and liquidity - The company has five marketed medicines: SPINRAZA, QALSODY, WAINUA, TEGSEDI, and WAYLIVRA, with WAINUA launched in the U.S. in January 2024 for ATTRv-PN[89][93] - The pipeline includes nine medicines in Phase 3 development for eleven indications, with key programs like olezarsen for FCS and sHTG, and donidalorsen for HAE[89][96] - As of March 31, 2024, the company had cash, cash equivalents, and short-term investments totaling $2.2 billion[209] Results of Operations This subsection details financial performance for Q1 2024 vs. Q1 2023, showing decreased total revenue and increased operating expenses from R&D and SG&A - The year-over-year decrease in total revenue was primarily due to lower SPINRAZA royalties ($38.5 million vs $50.2 million) and declining WAINUA joint development revenue, partially offset by new WAINUA royalties and increased amortization[109][110] Operating Expenses (in millions) | Expense Category | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Research, development and patent | $214.2 | $197.8 | | Selling, general and administrative | $52.6 | $45.5 | | Cost of sales | $2.2 | $1.3 | | Total Operating Expenses | $269.0 | $244.7 | - SG&A expenses increased primarily due to the U.S. launch of WAINUA and launch preparation activities for olezarsen and donidalorsen, while R&D expenses rose due to the timing of late-stage program activities[114] Liquidity and Capital Resources This part discusses the company's funding sources, working capital, and contractual obligations, noting historical financing through collaborative agreements, product revenues, and equity/debt sales - The company has financed operations primarily through collaborative R&D agreements, product revenues, equity sales (approx. $2.1 billion net proceeds since inception), debt issuance (approx. $2.7 billion), and a $0.5 billion sale of future royalties[139] Contractual Obligations as of March 31, 2024 (in millions) | Obligation | Total | Due in < 1 year | Due in > 1 year | | :--- | :--- | :--- | :--- | | 1.75% Notes | $620.3 | $10.1 | $610.2 | | 0% Notes | $632.5 | $— | $632.5 | | 0.125% Notes | $44.6 | $44.6 | $— | | Operating leases | $274.9 | $20.6 | $254.3 | | Total (selected) | $1,583.1 | $75.9 | $1,507.2 | Quantitative and Qualitative Disclosures about Market Risk The company discloses its exposure to market risks, primarily interest rate risk from investments and foreign currency exchange rate risk, which are deemed immaterial - The company's primary market risk exposures are to changes in interest rates on its short-term investments and foreign currency exchange rates[147][148] - A hypothetical 10 percent change in foreign exchange rates during the presented periods would not have had a material impact on the condensed consolidated financial statements[148] Controls and Procedures Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of March 31, 2024 - Based on an evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective as of March 31, 2024[150] - No changes in internal controls over financial reporting were identified during the latest fiscal quarter that have materially affected, or are reasonably likely to materially affect, these controls[151] PART II OTHER INFORMATION Legal Proceedings The company states that there are no pending material legal proceedings to which it is a party or of which its property is the subject - There are no pending material legal proceedings to which the company is a party[84][152] Risk Factors This section details significant risks and uncertainties that could adversely affect the company's business, financial condition, and results of operations - Key risks include the company's limited experience in commercializing medicines, reliance on third parties, and the need for market acceptance and adequate reimbursement for its products[156][158][164] - SPINRAZA faces significant competition from onasemnogene abeparvovec and risdiplam, which has previously led to decreased revenue for the product[173][175] - The company is heavily dependent on its collaborations with partners like Biogen (for SPINRAZA and QALSODY) and AstraZeneca (for WAINUA) for development, funding, and commercialization[181][184] - The business has a history of losses, with an accumulated deficit of approximately $1.9 billion as of March 31, 2024, and future profitability is not guaranteed[211] Other Information This section discloses the adoption or termination of Rule 10b5-1 trading plans by the company's Section 16 officers and directors during the quarter - Several officers and directors, including B. Lynne Parshall, Joseph Klein, III, Joseph Baroldi, Eugene Schneider, Elizabeth Hougen, and Patrick O'Neil, adopted or terminated Rule 10b5-1 trading plans during Q1 2024[254] Exhibits This item lists the exhibits filed with the Form 10-Q, including an advisory services agreement, CEO/CFO certifications, and iXBRL financial statements - Exhibits filed with the report include an Advisory Services Agreement, certifications by the CEO and CFO pursuant to the Securities Exchange Act, and iXBRL data files[255]