Ionis reports third quarter 2020 financial results and recent business achievements

CARLSBAD, Calif.,Nov. 4, 2020/PRNewswire/ -- Ionis Pharmaceuticals, Inc. (Nasdaq:IONS) today reported its financial results for the third quarter of 2020 and recent business highlights.

"We took an important step forward in our evolution when we acquired Akcea. This transaction supports our commercial strategy, further enabling us to maximize the value of our Ionis-owned pipeline. As one company, we believe we are stronger and more efficient, with an enhanced ability to achieve even greater future success," said Brett P. Monia, Ph.D., chief executive officer at Ionis. "We made significant progress across our pipeline this year. Recently, we advanced inhaled delivery with IONIS-ENAC-2.5Rx, positioning us to bring new treatment options to patients with pulmonary diseases. We also initiated mid-stage studies for vupanorsen in cardiovascular disease patients and ION541, our medicine to treat nearly all forms of ALS. Additionally, our five Phase 3 studies continue to progress, with our sixth expected to begin by the end of this year. We believe our achievements this year move us closer to delivering 10 or more marketing applications through 2025. Our goal is to bring these medicines to millions of patients around the world."

• On track to achieve financial guidance of being meaningfully profitable this year

• Achieved quarter over quarter revenue growth

• Maintained a strong balance sheet with cash of$2.3 billion

• Net income of$5 millionon a non-GAAP basis and a net loss of$31 millionon a GAAP basis for the third quarter

• Commercial revenue from SPINRAZA®(nusinersen) royalties of$74 million, in line with the prior quarter

• Product sales from TEGSEDI®(inotersen) and WAYLIVRA®(volanesorsen) increased more than 15 percent

• R&D revenue increased more than 15 percent from advancing several partnered programs

• Estimated pro forma cash following the Akcea acquisition of$1.8 billion

"Our acquisition of Akcea further strengthens our business and financial position in numerous ways. We now retain more value from Akcea's rich pipeline and commercial products. We are also able to use Akcea's current cash and future cash flows to advance Ionis' strategic priorities. And beginning next year, we expect to realize meaningful cost synergies as we continue to integrate the two companies," said Elizabeth L. Hougen, chief financial officer of Ionis. "Looking ahead, we are maintaining our 2020 financial guidance driven by the significant revenue and earnings growth we expect in the fourth quarter. We have already earned revenue from multiple sources this quarter, including$75 millionfrom Pfizer for advancing vupanorsen. Importantly, we remain well capitalized with the financial resources to achieve our strategic goals."

All non-GAAP amounts referred to in this press release exclude non-cash compensation expense related to equity awards. Please refer to the reconciliation of non-GAAP and GAAP measures, which is provided later in this release.

• SPINRAZA: a global foundation-of-care for the treatment of spinal muscular atrophy (SMA) patients of all ages

• TEGSEDI: the only approved at-home subcutaneous therapy for the treatment of hereditary transthyretin amyloidosis (hATTR) with polyneuropathy in adult patients

• WAYLIVRA: the only approved treatment in the EU for adults with genetically confirmed familial chylomicronemia syndrome (FCS) at high risk for pancreatitis

• $495 millionin worldwide sales in the third quarter

• More than 11,000 patients were on SPINRAZA treatment worldwide at the end of the third quarter, including patients across commercial, expanded access and clinical trial settings

• The open-label safety cohort of the DEVOTE study of higher-dose SPINRAZA is fully enrolled and the pivotal randomized treatment cohort will begin enrolling patients next

• The Phase 4 RESPOND study in patients with a suboptimal clinical response to gene therapy is expected to begin early next year

• Commercially available in 15 countries

• Secured pricing and reimbursement in multiple new EU markets and inCanadain the largest provinces and with multiple private payers

• Won 2020 Prix GalienUSAAward for the Best Biotechnology Product

• Commercially available in 4 countries

• Finalized pricing negotiations in additional EU markets, including in the UK

• Positive Phase 2 vupanorsen and AKCEA-APOCIII-LRxresults presented at the European Society of Cardiology annual meeting

• Advanced multiple programs into key mid-stage studies

• Advanced inhaled delivery

• Advanced the IONIS-PKK-LRxprogram

• Progressed multiple neurological disease medicines under Ionis' broad collaboration with Biogen, earning more than$50 million

• The U.S. FDA granted orphan drug designation to Ionis-owned medicines for people with Alexander disease, β-thalassemia and Lafora diseases

• Vupanorsen advanced into Phase2bdevelopment with the initiation of the TRANSLATE-TIMI 70 dose-ranging study in statin-treated patients with dyslipidemia, resulting in a$75 millionpayment from Pfizer

• IONIS-FXI-LRxadvanced into Phase2bdevelopment in patients with end-stage renal disease

• IONIS-HBVRxadvanced into Phase2bdevelopment in patients with hepatitis B virus infection

• Positive IONIS-ENAC-2.5Rxhealthy volunteer results provided support for inhaled antisense medicine delivery

• Dosing completed in the IONIS-ENAC-2.5RxPhase 2 study in patients with cystic fibrosis

• Proof-of-concept data from the PKK development program in patients with hereditary angioedema were reported in theNew England Journal of Medicine

• Enrollment completed in the IONIS-PKK-LRxPhase 2 study in patients with hereditary angioedema

• IONIS-PKK-LRxadvanced into an investigator-initiated study in hospitalized COVID-19 patients inBrazil

• ION541 advanced into Phase 1/2 development in patients with nearly all forms of ALS

• ION464 advanced into Phase 1/2 development in patients with multiple system atrophy

• IONIS-MAPTRxcontinued to advance in a long-term extension study in patients with Alzheimer's disease

• Report clinical data, potentially enabling key programs to advance towards the market:

• Advance the pipeline with numerous study initiations:

• Expand TEGSEDI and WAYLIVRA commercial availability in the EU and Latin America

• Refile the WAYLIVRA application for marketing authorization in the U.S. next year

• Subcutaneous and orally delivered ION449 targeting PCSK9 at the American Heart Association Scientific Sessions 2020

• IONIS-AGT-LRxPhase 2 studies in patients with hypertension

• IONIS-ENAC-2.5RxPhase 2 study in patients with cystic fibrosis

• IONIS-GHR-LRxPhase 2 study in patients with acromegaly

• IONIS-PKK-LRxPhase 2 study in patients with hereditary angioedema

• AKCEA-APOCIII-LRxPhase 3 study in patients with FCS

• ION363 registrational study in patients with FUS-ALS

• IONIS-ENAC-2.5RxPhase 2 study in patients with chronic obstructive pulmonary disease

• Phase 1/2 studies of Ionis-owned medicines:

• ION251 for patients with multiple myeloma

• ION373 for patients with Alexander disease

• ION716 for patients with Prion diseases

Ionis' revenue was comprised of the following (amounts in millions):

Three months ended,

Nine months ended,

September 30,

September 30,

2020

2019

2020

2019

Revenue:

Commercial revenue:

SPINRAZA royalties

$74

$82

$212

$212

Product sales, net

19

12

51

29

Licensing and royalty revenue

2

2

6

11

Total commercial revenue

95

96

269

252

R&D Revenue:

Amortization from upfront payments

19

23

68

100

Milestone payments

44

12

73

64

License fees

-

26

15

198

Other services

2

11

14

15

Total R&D revenue

65

72

170

377

Total revenue

$160

$168

$439

$629

Ionis' operating expenses for the third quarter of 2020 increased compared to the same period in 2019 driven by the Company's investments in advancing the Phase 3 program for AKCEA-TTR-LRxand other medicines in its Ionis-owned pipeline.

Prior to completing its acquisition of Akcea inOctober 2020, Ionis owned approximately 76 percent of Akcea. The line titled "Net loss attributable to noncontrolling interest in Akcea" on Ionis' statement of operations reflects the portion of Akcea's net income or loss attributable to the other owners of Akcea's common stock. InOctober 2020, after the acquisition of Akcea closed, Ionis no longer recognizes any noncontrolling interest in Akcea on its statement of operations.

Ionis recognized a net loss attributable to Ionis' common stockholders for the third quarter of 2020 compared to net income in the same period in 2019 primarily due to higher revenue in 2019, including a$150 millionlicense fee Ionis earned from Novartis. Additionally, Ionis' operating expenses increased in 2020 compared to the same period last year as described above.

Ionis endedSeptember 2020with cash, cash equivalents and short-term investments of more than$2.3 billion, compared to$2.5 billionatDecember 31, 2019. InOctober 2020, Ionis used approximately$545 millionof its cash for the Akcea acquisition.

Today, at11:30 a.m. Eastern Time, Ionis will conduct a live webcast to discuss this earnings release and related activities. Interested parties may access the webcasthere. A webcast replay will be available for a limited time at the same address.

As the leader in RNA-targeted drug discovery and development, Ionis has created an efficient, broadly applicable, drug discovery platform called antisense technology that can treat diseases where no other therapeutic approaches have proven effective. Our drug discovery platform has served as a springboard for actionable promise and realized hope for patients with unmet needs. We created the first and only approved treatment for children and adults with spinal muscular atrophy as well as the world's first RNA-targeted therapeutic approved for the treatment of polyneuropathy in adults with hereditary transthyretin amyloidosis. Our sights are set on all the patients we have yet to reach with a pipeline of more than 40 novel medicines designed to potentially treat a broad range of diseases, including neurological, cardio-renal, metabolic, infectious, and pulmonary diseases.

To learn more about Ionis visitwww.ionispharma.comor follow us on twitter @ionispharma.

This press release includes forward-looking statements regarding Ionis' business, financial guidance and the therapeutic and commercial potential of SPINRAZA (nusinersen), TEGSEDI (inotersen) and WAYLIVRA (volanesorsen) and Ionis' technologies and products in development, including the business of Akcea Therapeutics, Inc., Ionis' wholly owned subsidiary. Any statement describing Ionis' 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, including those related to the impact COVID-19 could have on our business, and including but not limited to those related to our commercial products and the medicines in our pipeline, 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. Ionis' forward-looking statements also involve assumptions that, if they never materialize or prove correct, could cause its results to differ materially from those expressed or implied by such forward-looking statements. Although Ionis' forward-looking statements reflect the good faith judgment of its management, these statements are based only on facts and factors currently known by Ionis. As a result, you are cautioned not to rely on these forward-looking statements. These and other risks concerning Ionis' programs are described in additional detail in Ionis' annual report on Form 10-K for the year endedDecember 31, 2019, and the most recent Form 10-Q quarterly filing, which are on file with the SEC. Copies of these and other documents are available from the Company.

In this press release, unless the context requires otherwise, "Ionis," "Company," "we," "our," and "us" refers to Ionis Pharmaceuticals and its subsidiaries.

Ionis Pharmaceuticals™is a trademark of Ionis Pharmaceuticals, Inc. Akcea Therapeutics®is a registered trademark of Akcea Therapeutics, Inc. TEGSEDI®is a registered trademark of Akcea Therapeutics, Inc. WAYLIVRA®is a registered trademark of Akcea Therapeutics, Inc. SPINRAZA®is a registered trademark of Biogen.

Three months ended,

Nine months ended,

September 30,

September 30,

2020

2019

2020

2019

(unaudited)

Revenue:

Commercial revenue:

SPINRAZA royalties

$74

$82

$212

$212

Product sales, net

19

12

51

29

Licensing and royalty revenue

2

2

6

11

Total commercial revenue

95

96

269

252

Research and development revenue undercollaborative agreements

65

72

170

377

Total revenue

160

168

439

629

Expenses:

Cost of products sold

3

1

9

3

Research, development and patent

125

104

364

317

Selling, general and administrative

69

60

215

204

Total operating expenses

197

165

588

524

Income (loss) from operations

(37)

3

(149)

105

Other income (loss), net

(3)

1

3

4

Income (loss) before income tax benefit (expense)

(40)

4

(146)

109

Income tax benefit (expense)

(3)

14

1

(10)

Net income (loss)

$(43)

$18

$(145)

$99

Net loss attributable to noncontrolling interest in AkceaTherapeutics, Inc.

12

8

34

11

Net income (loss) attributable to Ionis Pharmaceuticals,Inc. common stockholders

$(31)

$26

$(111)

$110

Basic net income (loss) per share

$(0.22)

$0.19

$(0.80)

$0.81

Diluted net income (loss) per share

$(0.22)

$0.18

$(0.80)

$0.79

Shares used in computing basic net income (loss) per share

140

141

139

140

Shares used in computing diluted net income (loss) per share

140

143

139

143

Nine months ended,

September 30, 2020

(unaudited)

Ionis

Akcea

Eliminations

IonisConsolidated

Revenue:

Commercial revenue:

SPINRAZA royalties

$212

$-

$-

$212

Product sales, net

-

51

-

51

Licensing and royalty revenue

6

-

-

6

Total commercial revenue

218

51

-

269

Research and development revenue undercollaborative agreements

163

7

-

170

Intercompany revenue

8

-

(8)

-

Total revenue

389

58

(8)

439

Expenses:

Cost of products sold

-

16

(7)

9

Research, development and patent expenses

297

72

(5)

364

Selling, general and administrative

88

127

-

215

Profit/ loss share for TEGSEDIcommercialization activities

12

(12)

-

-

Total operating expenses

397

203

(12)

588

Loss from operations

(8)

(145)

4

(149)

Other income, net

-

3

-

3

Loss before income tax benefit

(8)

(142)

4

(146)

Income tax benefit

1

-

-

1

Net loss

$(7)

$(142)

$4

$(145)

Net loss attributable to noncontrolling interest inAkcea Therapeutics, Inc.

$-

$-

$34

$34

Net loss attributable to Ionis Pharmaceuticals, Inc.common stockholders

$(7)

$(142)

$38

$(111)

IONIS PHARMACEUTICALS, INC.Reconciliation of GAAP to Non-GAAP Basis:Condensed Consolidated Operating Expenses, Income (Loss) From Operations, and Net Income (Loss)(In Millions)

Three months ended,

September 30,

Nine months ended,

September 30,

2020

2019

2020

2019

(unaudited)

$125

$104

$364

$317

Excluding compensation expense related to equity awards

(25)

(24)

(77)

(72)

$100

$80

$287

$245

$69

$60

$215

$204

Excluding compensation expense related to equity awards

(20)

-

(57)

(39)

$49

$60

$158

$165

$197

$165

$588

$524

Excluding compensation expense related to equity awards

(46)

(24)

(135)

(112)

$151

$141

$453

$412

$(37)

$3

$(149)

$105

Excluding compensation expense related to equity awards

(46)

(24)

(135)

(112)

$9

$27

$(14)

$217

$(31)

$26

$(111)

$110

Excluding compensation expense related to equity awardsattributable to Ionis Pharmaceuticals, Inc. commonstockholders

(42)

(25)

(126)

(104)

Income tax effect related to compensation expense relatedto equity awards attributable to Ionis Pharmaceuticals,Inc. common stockholders

6

12

18

25

$5

$39

$(3)

$189

As illustrated in the Selected Financial Information in this press release, non-GAAP operating expenses, non-GAAP income (loss) from operations, and non-GAAP net income (loss) attributable to Ionis Pharmaceuticals, Inc. common shareholders were adjusted from GAAP to exclude compensation expense related to equity awards and the related tax effect. Compensation expense related to equity awards are non-cash. Ionis has regularly reported non-GAAP measures for operating results as non-GAAP results. These measures are provided as supplementary information and are not a substitute for financial measures calculated in accordance with GAAP. Ionis reports these non-GAAP results to better enable financial statement users to assess and compare its historical performance and project its future operating results and cash flows. Further, the presentation of Ionis' non-GAAP results is consistent with how Ionis' management internally evaluates the performance of its operations.

September 30,

December 31,

2020

2019

(unaudited)

Assets:

Cash, cash equivalents and short-term investments

$2,329

$2,500

Contracts receivable

39

63

Other current assets

169

158

Property, plant and equipment, net

182

154

Other assets

377

358

Total assets

$3,096

$3,233

Liabilities and stockholders' equity:

Other current liabilities

$140

$155

Current portion of deferred contract revenue

105

118

0.125% convertible senior notes

450

435

1% convertible senior notes

289

275

Long-term obligations, less current portion

76

75

Long-term deferred contract revenue

430

490

Total Ionis stockholders' equity

1,383

1,471

Noncontrolling interest in Akcea Therapeutics, Inc.

223

214

Total stockholders' equity

$1,606

$1,685

Total liabilities and stockholders' equity

$3,096

$3,233

September 30, 2020

(unaudited)

Ionis

Ionis

Akcea

Eliminations

Consolidated

Assets:

Cash, cash equivalents and short-term investments

$1,963

$366

$-

$2,329

Contracts receivable

23

16

-

39

Other current assets

150

28

(9)

169

Property, plant and equipment, net

176

6

-

182

Other assets

1,125

92

(840)

377

Total assets

$3,437

$508

$(849)

$3,096

Liabilities and stockholders' equity:

Other current liabilities

100

49

(9)

140

Current portion of deferred contract revenue

105

-

-

105

0.125% convertible senior notes

450

-

-

450

1% convertible senior notes

289

-

-

289

Long-term obligations, less current portion

62

14

-

76

Long-term deferred contract revenue

432

-

(2)

430

Total stockholders' equity before noncontrolling interest

1,999

445

(1,061)

1,383

Noncontrolling interest in Akcea Therapeutics, Inc.

-

-

223

223

Total stockholders' equity

$1,999

$445

$(838)

$1,606

Total liabilities and stockholders' equity

$3,437

$508

$(849)

$3,096