IONIS PHARMACEUTICALS INC (IONS)

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, technologies and our expectations regarding development and regulatory milestones. 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, 2025, 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.

Overview

For three decades, we have invented medicines that bring better futures to people with serious diseases. As a pioneer in RNA-targeted medicines with a deep understanding of disease biology and an industry-leading drug discovery technology, we are driven to deliver innovative, life-changing advances for patients.

With multiple independent commercial launches now underway, we have transitioned into a fully integrated commercial-stage biotechnology company. We currently have seven marketed medicines to treat serious diseases: TRYNGOLZA (olezarsen), DAWNZERA (donidalorsen), WAINUA (eplontersen), SPINRAZA (nusinersen), QALSODY (tofersen), TEGSEDI (inotersen) and WAYLIVRA (volanesorsen). Following approval by the U.S. Food and Drug Administration, or FDA, in June 2026, we independently launched TRYNGOLZA for the treatment of severe hypertriglyceridemia, or sHTG. In addition, we are on track to independently launch zilganersen for Alexander disease, or AxD, in 2026, assuming regulatory approval. We also have a rich innovative pipeline across our focus areas of neurology, cardiometabolic diseases and select areas of high patient needs. We currently have two wholly owned medicines and eight partnered medicines in Phase 3 development, including obudanersen for Angelman syndrome, or AS, which has completed enrollment of the Phase 3 study. We also have additional medicines in early and mid-stage development.

Our multiple sources of revenue and solid financial foundation enable our continued investments to support ongoing and planned launches and to advance our wholly owned medicines in development. Our key recent achievements, combined with our independent and partnered product launches anticipated by the end of 2027, position us well to help millions of patients with serious diseases and deliver increasing product and royalty revenue.

Our Marketed Medicines

TRYNGOLZA is a once monthly, self-administered LIgand-Conjugated Antisense, or LICA, medicine approved in the United States, or U.S., as an adjunct to diet to reduce triglycerides and the risk of acute pancreatitis in adults with sHTG and as an adjunct to diet to reduce triglycerides in adults with familial chylomicronemia syndrome, or FCS. TRYNGOLZA is also approved in the European Union, or EU, Canada and the United Kingdom, or UK, as an adjunct to diet in adult patients for the treatment of genetically confirmed FCS. TRYNGOLZA is the first and only treatment approved by the FDA that significantly and substantially reduces triglyceride levels in adults with sHTG and provides a clinically meaningful reduction in acute pancreatitis, or AP, events. TRYNGOLZA is the first medicine we are commercializing independently in the U.S. Sobi has exclusive rights to commercialize TRYNGOLZA in countries outside of the U.S., Canada and China.

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DAWNZERA is an RNA-targeted medicine approved in the U.S. for prophylaxis to prevent attacks of hereditary angioedema, or HAE, in adult and pediatric patients 12 years of age and older. DAWNZERA is also approved in the EU and UK for the routine prevention of recurrent attacks of HAE in the same age group. DAWNZERA 80mg is self-administered via subcutaneous autoinjector once every four or eight weeks. DAWNZERA is the first and only FDA-approved RNA-targeted prophylactic therapy for HAE. DAWNZERA has the potential to offer durable efficacy, a favorable safety and tolerability profile, and the longest available dosing interval. DAWNZERA is the second medicine we are commercializing independently in the U.S. We licensed commercialization rights for DAWNZERA in Europe and the Asia-Pacific region to Otsuka Pharmaceutical Co., Ltd., or Otsuka.

SPINRAZA is an antisense medicine for the treatment of patients with spinal muscular atrophy, or SMA, a progressive, debilitating and often fatal genetic disease. Higher dose SPINRAZA was approved and launched in the U.S. and EU for the treatment of SMA. Higher dose SPINRAZA is also approved in Japan. Our partner, Biogen, is responsible for commercializing SPINRAZA worldwide.

WAINUA (WAINZUA in Europe) is a once monthly, self-administered subcutaneous LICA medicine that is approved in numerous countries, including the U.S., EU, UK, Canada and China, for the treatment of adults with polyneuropathy of hereditary transthyretin-mediated amyloidosis, or ATTRv-PN, a debilitating, progressive, and fatal disease. In January 2024, we and AstraZeneca launched WAINUA in the U.S. for the treatment of adults with ATTRv-PN. The launch of WAINUA is underway in numerous countries, including the countries in the EU, following the approval by the European Commission, or EC, in March 2025. AstraZeneca is our commercialization partner for WAINUA.

QALSODY is an antisense medicine that received accelerated approval from the FDA in April 2023 and marketing authorization under exceptional circumstances from the European Medicines Agency, or EMA, in May 2024 for the treatment of adult patients with superoxide dismutase 1 amyotrophic lateral sclerosis, or SOD1-ALS, a rare, neurodegenerative disorder that causes progressive loss of motor neurons leading to death. QALSODY was the first treatment approved to target a genetic cause of ALS. Our partner, Biogen, is responsible for commercializing QALSODY worldwide. Biogen is also evaluating QALSODY as a potential treatment for presymptomatic SOD1-ALS patients in the ongoing ATLAS study. QALSODY was granted Orphan Drug designation by the FDA and EMA.

TEGSEDI is a once weekly, self-administered subcutaneous medicine approved in Europe and Brazil for the treatment of patients with ATTRv-PN. We currently sell TEGSEDI in Europe through our distribution agreement with Swedish Orphan Biovitrum AB, or Sobi. In Latin America, PTC Therapeutics International Limited, or PTC, is commercializing TEGSEDI in Brazil and is pursuing access in additional Latin American countries through its exclusive license agreement with us.

WAYLIVRA is a once weekly, self-administered, subcutaneous medicine approved in Europe and Brazil as an adjunct to diet in adult patients with genetically confirmed FCS and at high risk for pancreatitis. We sell WAYLIVRA in Europe through our distribution agreement with Sobi. In Latin America, PTC is commercializing WAYLIVRA in Brazil for two indications, FCS and familial partial lipodystrophy, or FPL, and is pursuing access in additional Latin American countries through its exclusive license agreement with us.

Our Innovative Late-Stage Pipeline of Ionis-Owned Investigational Medicines

Zilganersen is our investigational medicine for AxD. The FDA has granted Priority Review of zilganersen, with a Prescription Drug User Fee Act, or PDUFA, action date of September 22, 2026. The regulatory submission was based on the positive results from the Phase 3 portion of the pivotal study in children and adults with AxD. These results were presented at the Child Neurology Society Annual Meeting in October 2025 and the American Academy of Neurology Annual Meeting in April 2026. We established an expanded access program in the U.S. for eligible patients aged two and older living with AxD. Zilganersen has received Fast Track and Rare Pediatric Disease designations from the FDA and received Orphan Drug designation from both the FDA and the EMA. We licensed commercialization rights for zilganersen in countries outside of the U.S. to Recordati.

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Obudanersen is our medicine in development for AS. In July 2026, we completed enrollment of the Phase 3 study, REVEAL, which we designed to evaluate the efficacy and safety of obudanersen. In addition, we are continuing to conduct the open label Phase 1/2 study, HALOS, of obudanersen in patients with AS designed to assess the safety, tolerability and activity of multiple ascending doses of obudanersen administered intrathecally. In 2025, we presented positive 12- and 18-month long-term extension data from the HALOS study which supports continued development. The FDA and EMA granted Orphan Drug designation to obudanersen. Additionally, the FDA granted Breakthrough Therapy, Fast Track and Rare Pediatric designations to obudanersen.

Our Innovative Late-Stage Pipeline of Partnered Investigational Medicines

Bepirovirsen is our medicine in development for chronic hepatitis B, or CHB. GSK is developing bepirovirsen. The FDA has granted Priority Review of bepirovirsen, with a PDUFA action date of October 26, 2026. In May 2026, GSK presented positive Phase 3 data for bepirovirsen at the 2026 European Association for the Study of the Liver, or EASL, Congress. Bepirovirsen is also under regulatory review in the EU, China and Japan, with additional submissions planned. The FDA, Center for Drug Evaluation, or CDE, of National Medical Products Administration, or NMPA, of China and Japanese Ministry of Health, Labour and Welfare, or MHLW, granted bepirovirsen Fast Track designation, Breakthrough Therapy designation and SENKU (formerly known as SAKIGAKE) designation, respectively, for the treatment of patients with CHB.

Eplontersen is our medicine in development to treat patients with transthyretin amyloidosis cardiomyopathy, or ATTR-CM. In July 2026, we and AstraZeneca announced that the CARDIO-TTRansform trial for eplontersen in patients with ATTR-CM missed the primary efficacy endpoint of the composite outcome of cardiovascular, or CV, mortality and recurrent CV clinical events up to Week 140 compared with placebo. In this contemporary patient population treated with standard of care, including a majority on a stabilizer, adding eplontersen did not provide a statistically significant benefit. We and AstraZeneca are continuing to analyze the full data set, and results will be shared with the scientific community at the European Society of Cardiology, or ESC, Congress in August 2026.

Pelacarsen is our medicine i

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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

This financial review presents our operating results for each of the two years in the period ended December 31, 2025, and our financial condition as of December 31, 2025. Refer to Part II, Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations, in our 2024 Form 10-K for our results of operations for 2024 compared to 2023. 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.

Overview

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 seven marketed medicines: TRYNGOLZA, DAWNZERA, WAINUA, SPINRAZA, QALSODY, TEGSEDI and WAYLIVRA. We also have a rich innovative late- and mid-stage pipeline in neurology, cardiometabolic diseases and select areas of high patient needs. 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.

Results of Operations

The following table provides selected summary information from our consolidated statements of operations for 2025 and 2024 (in millions):

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Revenue

Total revenue for 2025 was $943.7 million compared to $705.1 million in 2024 and was comprised of the following (in millions):

Commercial revenue in 2025 increased 49 percent compared to 2024. This increase was primarily driven by TRYNGOLZA product sales and higher royalty revenue.

The remainder of our revenue came from programs under our R&D collaborations, including a $280 million upfront payment for the global license of sapablursen to Ono in the second quarter of 2025, reflecting the value that our pipeline and technology continues to generate.

WAINUA (Eplontersen) Collaboration with AstraZeneca

Our financial results for the years ended December 31, 2025 and 2024 reflected the cost-sharing provisions related to our collaboration with AstraZeneca to develop and commercialize WAINUA for the treatment of ATTR. Under the terms of the collaboration agreement, AstraZeneca was responsible for 55 percent of the costs associated with the ongoing global Phase 3 development program through December 31, 2025. After December 31, 2025, AstraZeneca is responsible for 75 percent and 87.5 percent of development costs in the U.S. and the rest of the world, respectively. Because we are leading and conducting the Phase 3 development program, we are recognizing as R&D revenue the percentage of cost-share funding AstraZeneca is responsible for, 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 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.

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

Our WAINUA joint development revenue in 2024 included a $30 million milestone payment from AstraZeneca that we earned when the Medicines and Healthcare products Regulatory Agency, or MHRA, approved WAINUA for ATTRv-PN in the UK as WAINZUA. Research and development expenses related to the Phase 3 development of WAINUA decreased in 2025 compared to 2024 as development activities related to ATTRv-PN continued to wind down with the commercial launch of WAINUA.

Operating Expenses

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

Operating expenses, excluding non-cash compensation expense related to equity awards, increased in 2025 compared to 2024. SG&A expenses increased year over year primarily due to the launches of TRYNGOLZA, DAWNZERA and WAINUA.

Non-cash compensation expense related to equity awards were essentially flat year over year due to increased headcount offset by a lower stock price on the grant date of annual equity awards in 2025 compared to 2024. 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.

Costs of sales for recently launched products, such as TRYNGOLZA and 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 R&D expense.

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

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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):

Drug discovery expenses, excluding non-cash compensation expense related to equity awards, increased in 2025 compared to 2024 as we continued to advance our technologies discussed above.

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 in 2025 compared to 2024 as several late-stage studies ended. We expect our development expenses will continue to stabilize as several late-stage studies end and we reallocate resources toward earlier stage programs.

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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 clini

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