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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, 2023, and our financial condition as of December 31, 2023.

Refer to our 2022 Form 10-K for our results of operations for 2022 compared to 2021. 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 Item 1A of Part I of this report, 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 Item 8 of Part II of

this report.

Overview

As noted in our Business Overview in Part I of this report, 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 five

marketed medicines: SPINRAZA, QALSODY, WAINUA, TEGSEDI and WAYLIVRA. We also have a rich innovative late- and mid-stage pipeline in neurology, cardiology and other areas of

high patient need. We currently have nine medicines in Phase 3 development and multiple 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

Below we have included our results of operations for 2023 compared to 2022. Refer to our 2022 Form 10-K for our results of operations for 2022 compared to 2021. The following table provides selected summary information from our consolidated statements of operations for 2023 and 2022 (in millions):

Year Ended December 31,

Loss from operations $ (353.7 ) $ (410.2 )

Cash, cash equivalents and short-term investments $ 2,331.2 $ 1,986.9

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Revenue

Total revenue for 2023 was $787.6 million compared to $587.4 million in 2022 and was comprised of the following (in millions):

Year Ended December 31,

Revenue:

Commercial revenue:

Other commercial revenue:

TEGSEDI and WAYLIVRA revenue, net 34.9 30.1

Licensing and other royalty revenue 33.3 31.0

Total other commercial revenue 68.2 61.1

R&D revenue:

Amortization from upfront payments 125.3 68.6

Collaborative agreement revenue 352.6 207.2

WAINUA joint development revenue 126.4 76.8

Commercial revenues in 2023 were relatively consistent compared to 2022. Commercial revenue for 2023 included $240 million from SPINRAZA

royalties, which were relatively consistent compared to 2022. Our commercial revenue in 2023 also included royalties from QALSODY U.S. product sales.

Our R&D revenue increased in 2023 compared to 2022 primarily due to continued success with our pipeline and technology. As a result,

we earned significant partner payments, including $50 million from AstraZeneca for the FDA approval of WAINUA for ATTRv-PN in the U.S., $36 million from AstraZeneca for licensing ION826 and payments from our new collaborations with Otsuka, Roche and

Novartis.

WAINUA (Eplontersen) Collaboration with AstraZeneca

Our financial results for the years ended December 31, 2023 and 2022 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 is currently paying 55 percent of the costs associated with the ongoing global Phase 3 development program. Because we are leading and

conducting the Phase 3 development program, we are recognizing as R&D revenue the 55 percent 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 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.

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

Year Ended December 31,

WAINUA joint development revenue $ 126.4 $ 76.8

Medical affairs expenses for WAINUA 4.1 2.0

Commercialization expenses for WAINUA 15.6 2.6

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Our WAINUA joint development revenue in 2023 includes a $50 million milestone payment from AstraZeneca that we earned when the FDA

approved WAINUA for ATTRv-PN in the U.S.

Operating Expenses

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

Year Ended December 31,

Non-cash compensation expense related to equity awards 105.7 100.3

Our operating expenses, excluding non-cash compensation expense related to equity awards, increased in 2023 compared to 2022, primarily

due to certain one-time costs, including a non-cash charge associated with a lease exit and the license fee we paid to Vect-Horus. Our R&D expenses increased as we advanced our pipeline, which included an increase in the costs associated with our

clinical studies as most of our Phase 3 studies were either fully enrolled or approaching full enrollment at the end of 2023. Our SG&A expenses increased due to expenses related to our launch preparation activities for WAINUA, olezarsen and

donidalorsen.

To analyze and compare our results of operations to other similar companies, we believe it is important to exclude non-cash compensation

expense related to equity awards from our operating expenses. We believe non-cash compensation expense related to equity awards is not indicative of our operating results or cash flows from our operations. Further, we internally evaluate the

performance of our operations excluding it.

Cost of Sales

Our cost of sales is comprised of costs related to our commercial revenue, which consisted of manufacturing costs, including certain fixed

costs, transportation and freight, indirect overhead costs associated with the manufacturing and distribution of TEGSEDI and WAYLIVRA and certain associated period costs.

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

Year Ended December 31,

Non-cash compensation expense related to equity awards 0.4 0.7

Total cost of sales $ 9.1 $ 14.1

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):

Year Ended December 31,

Non-cash compensation expense related to equity awards 77.9 73.7

Total research, development and patent expenses $ 899.6 $ 833.1

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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):

Year Ended December 31,

Non-cash compensation expense related to equity awards 16.2 16.2

Total drug discovery expenses $ 141.8 $ 197.5

Drug discovery expenses, excluding non-cash compensation expense related to equity awards, decreased in 2023 compared to 2022. In 2022, we

recognized $80 million for licensing Metagenomi’s gene editing technologies.

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):

Year Ended December 31,

TEGSEDI and WAYLIVRA 8.1 10.6

Development overhead expenses 123.3 92.0

Non-cash compensation expense related to equity awards 34.5 31.5

Total drug development expenses $ 564.8 $ 457.7

Our development expenses, excluding non-cash compensation expense related to equity awards, increased in 2023 compared to 2022 primarily

due to our advancing late-stage pipeline and full or nearly full enrollment of many of our Phase 3 studies.

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.

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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):

Year Ended December 31,

Non-cash compensation expense related to equity awards 3.4 2.0

Total medical affairs expenses $ 22.9 $ 17.9

Medical affairs expenses, excluding non-cash compensation

expense related to equity awards, increased in 2023 compared to 2022 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):

Year Ended December 31,

Non-cash compensation expense related to equity awards 8.8 9.9

Total manufacturing and development chemistry expenses $ 74.1 $ 86.1

Manufacturing and development chemistry expenses, excluding

non-cash compensation expense related to equity awards, decreased in 2023 compared to 2022. In 2022, we manufactured higher quantities of API to support launch preparation activities for WAINUA, olezarsen and donidalorsen. Refer to the section

titled, Manufacturing, in Part I, Item 1, Business, for further details on the activities and types of costs we incur

in our manufacturing process.

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):

Year Ended December 31,

Patent expenses 4.3 4.7

Computer software and licenses 2.7 1.9

Non-cash compensation expense related to equity awards 15.0 14.1

Total R&D support expenses $ 96.0 $ 73.9

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R&D support expenses, excluding non-cash compensation expense related to equity awards, increased in 2023 compared to 2022. The

increase was primarily related to increased occupancy, personnel and consulting costs to support advancing our pipeline and our technology. In October 2022, we executed a sale and leaseback transaction for our headquarters in Carlsbad, California. As a

result, beginning in the fourth quarter of 2022, our occupancy costs increased because we began incurring rent expense for these facilities.

Selling, General and Administrative Expenses

SG&A expenses include personnel and outside costs associated with the pre-commercialization and 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.

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

Year Ended December 31,

Non-cash compensation expense related to equity awards 27.5 25.9

Total selling, general and administrative expenses $ 232.6 $ 150.3

SG&A expenses, excluding non-cash compensation expense related to equity awards, increased in 2023 compared to 2022 primarily due to

increased expenses related to our go-to-market activities for WAINUA, olezarsen and donidalorsen. In addition, we recorded a one-time expense of $20 million when we terminated a build-to-suit lease agreement in August 2023. Refer to Part IV, Item 15,

Note 7, Long-Term Obligations and Commitments, in the Notes to the

Consolidated Financial Statements for further details on the lease termination.

Investment Income

Investment income for 2023

was $89.0 million compared to $25.3

million for 2022. The increase in investment income was primarily due to an increase in interest rates associated with our investments in debt

securities and an increase in our cash available for investment during 2023 compared to 2022. Our cash balance increased due to the $500.0 million upfront payment we received in January 2023 from our royalty purchase agreement with Royalty Pharma

Investments, or Royalty Pharma, net proceeds we received from the debt offering in June 2023 and payments from partners. These increases were partially offset by the repurchase of $504.4 million in principal of our 0.125% Notes during 2023.

Interest Expense

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

Year Ended December 31,

Convertible senior notes:

Non-cash amortization of debt issuance costs $ 5.9 $ 5.3

Interest expense payable in cash 6.4 0.7

Interest on mortgage for primary R&D and manufacturing facilities 0.4 2.1

Total interest expense $ 12.7 $ 8.1

In 2023, we completed a $575.0 million offering of our 1.75% Notes and repurchased $504.4 million in principal of our 0.125% Notes. As a

result, beginning in the second quarter of 2023, our interest expense related to our convertible notes increased because we began incurring interest expense for our 1.75% Notes.

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Interest Expense Related to Sale of Future Royalties

We recorded $68.8 million of interest expense related to the sale of future royalties in 2023 as a result of the

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. Refer to Part IV, Item 15,

Note 7, Long-Term Obligations and Commitments, in the Notes to the Consolidated Financial Statements for further details.

Loss on Investments

We recorded a $1.9 million and

$7.3 million loss on investments for 2023 and 2022, respectively. The period-over-period fluctuation in our loss on investments was primarily

driven by changes in the fair value of our investments in publicly traded and privately held biotechnology companies.

Gain on Sale of Real Estate

In 2022, we closed a purchase and sale agreement with a real estate investor in which we sold and leased back the facilities at our

headquarters location in Carlsbad, California for a total purchase price of $263.4 million and recorded a gain of $150.1 million in 2022, resulting in income tax expense of $8.8 million. Refer to Part IV, Item 15, Note 7, Long-Term Obligations and Commitments, for further details on this transaction.

Other Income (Expense)

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

Notes and used $488.2 million of the net proceeds to repurchase $504.4 million in principal of our 0.125% Notes. As a result of these repurchases, we recorded a $13.4 million gain on early retirement of debt in 2023, which reflects the difference

between the amounts we paid to repurchase portions of our 0.125% Notes and the net carrying balance of the liability at the time that we repurchased the debt. Refer to Part IV, Item 15, Note 7, Long-Term Obligations and Commitments, in the Notes to the Consolidated Financial Statements for further

details regarding our convertible debt.

Income Tax Expense (Benefit)

We recorded an income tax expense of $32.3 million for 2023 compared to $11.7 million for 2022.

The primary drivers of our income tax expense despite our full year pretax loss relate to the requirement for taxpayers to amortize

research and development expenditures over five years pursuant to Internal Revenue Code, or IRC, Section 174 beginning in 2022 under the Tax Cuts and Jobs Act of 2017, or TCJA, and the impact of the royalty purchase agreement with Royalty Pharma, which

we reflected as a taxable sale which required us to include the proceeds from the sale, net of currently deductible issuance costs, as taxable income in 2023. The resulting tax liability is partially offset by the utilization of our R&D tax

credits.

The increase in income tax expense for 2023 compared to 2022 relates primarily to the impact of the Royalty Pharma transaction.

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

Net Loss and Net Loss per Share

We generated a net loss of $366.3

million for 2023 compared to $269.7

million for 2022. Our net loss increased for 2023 compared to 2022 primarily due to factors discussed in the sections above. Basic and diluted net loss per share for 2023 were $2.56 compared to $1.90 for 2022.

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Liquidity and Capital Resources

We have financed our operations primarily from research and

development collaborative agreements. We also financed our operations from commercial revenue from SPINRAZA and QALSODY royalties and TEGSEDI and WAYLIVRA commercial revenue. In addition, we expect to receive commercial revenue from WAINUA

royalties beginning in 2024. From our inception through December 31, 2023,

we have earned approximately $7.2 billion in revenue. We have also

financed our operations through the sale of our equity securities, the issuance of long-term debt and the sale of future royalties. From the time we were founded through December 31, 2023, we have raised net proceeds of approximately $2.1 billion from the sale of our equity securities. Additionally, from our inception through December 31, 2023, we have borrowed approximately $2.7 billion under long-term debt arrangements and received proceeds of $0.5

billion from the sale of future royalties to finance a portion of our operations.

Our cash, cash equivalents and short-term investments, working capital and long-term obligations increased from 2022 to 2023. As discussed

above, in 2023, we repurchased $504.4 million in principal of our 0.125% Notes. In the third quarter of 2023, we closed a real estate transaction and received $32.4 million. In the second quarter of 2023, we issued $575.0 million of 1.75% Notes (due in

June 2028). In the first quarter of 2023, we received an upfront payment of $500.0 million when we entered into a royalty purchase agreement with Royalty Pharma and recorded a corresponding long-term liability related to the sale of future royalties.

The following table summarizes our contractual obligations, excluding our liability related to the sale of future royalties, as of December 31, 2023. The table provides a breakdown of when obligations become due. We provide a more detailed description of the major components of our

debt in Part IV, Item 15, Note 7, Long-Term Obligations and

Commitments, in the Notes to the Consolidated Financial Statements.

Contractual Obligations Payments Due by Period (in millions)

(selected balances described below) Total Less than 1 year More than 1 year

0.125% Notes (principal and interest payable) 44.6 44.6 —

Building mortgage payments (principal and interest payable) 10.2 0.5 9.7

Other obligations (principal and interest payable) 0.8 0.1 0.7

Our contractual obligations consist primarily of our convertible debt. In addition, we also have a facility mortgage, facility leases,

equipment financing arrangements and other obligations. We believe our cash, cash equivalents and short-term investments, as well as plans for cash in the future, will be sufficient to fund our planned operations and these obligations. We have not

entered into, nor do we currently have, any off-balance sheet arrangements (as defined under SEC rules).

Convertible Debt and Call Spread

Refer to our Convertible Debt and Call Spread accounting

policies in Part IV, Item 15, Note 1, Organization and Significant Accounting Policies, and Note 7, Long-Term Obligations and Commitments, in the Notes to the Consolidated Financial Statements for the significant terms of each convertible debt instrument.

Operating Facilities

Refer to Part IV, Item 15, Note 7, Long-Term Obligations and Commitments, in the Notes to the Consolidated

Financial Statements for further details on our operating facilities.

Operating Leases

Refer to Part IV, Item 15, Note 7, Long-Term Obligations and Commitments, in the Notes to the Consolidated

Financial Statements for further details on our operating leases.

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Royalty Revenue Monetization

In January 2023, we entered into a royalty purchase agreement with Royalty Pharma to monetize a portion of our future SPINRAZA and

pelacarsen royalties we are entitled to under our agreements with Biogen and Novartis, respectively. Refer to Part IV, Item 15, Note 7, Long-Term Obligations and Commitments, in the Notes to the Consolidated Financial Statements

for further details on this agreement.

Other Obligations

In addition to contractual obligations, we had outstanding purchase orders as of December 31, 2023 for the purchase of services, capital equipment and materials as part of our normal course of business.

We may enter into additional collaborations with partners which could provide for additional revenue to us and we may incur additional

cash expenditures related to our obligations under any of the new agreements we may enter into. We currently intend to use our cash, cash equivalents and short-term investments to finance our activities. However, we may also pursue other financing

alternatives, like issuing additional shares of our common stock, issuing debt instruments, refinancing our existing debt, securing lines of credit or executing royalty monetization agreements. Whether we use our existing capital resources or choose to

obtain financing will depend on various factors, including the future success of our business, the prevailing interest rate environment and the condition of financial markets generally.

Critical Accounting Estimates

We prepare our consolidated financial statements in conformity with accounting principles generally accepted in the U.S. As such, we make

certain estimates, judgments and assumptions that we believe are reasonable, based upon the information available to us. These judgments involve making estimates about the effect of matters that are inherently uncertain and may significantly impact our

quarterly or annual results of operations and financial condition. Each quarter, our senior management reviews the development, selection and disclosure of such estimates with the audit committee of our board of directors. In the following paragraphs,

we describe the specific risks associated with these critical accounting estimates and we caution that future events rarely develop exactly as one may expect, and that best estimates may require adjustment. Our significant accounting policies are

outlined in Part IV, Item 15, Note 1, Organization and Significant

Accounting Policies, in the Notes to the Consolidated Financial Statements.

The following are our significant accounting estimates, which we believe are the most critical to aid in fully understanding and

evaluating our reported financial results:

The following are descriptions of our critical accounting estimates.

Revenue Recognition

We earn revenue from several sources. The judgements and estimates we make vary between each source of our revenue. At contract inception,

we analyze our collaboration arrangements to assess whether such arrangements involve joint operating activities performed by parties that are both active participants in the activities and exposed to significant risks and rewards dependent on the

commercial success of such activities and therefore within the scope of Accounting Standards Codification, or ASC, Topic 808, Collaborative Arrangements,

or ASC 808. For collaboration arrangements within the scope of ASC 808 that contain multiple elements, we first determine which elements of the collaboration reflect a vendor-customer relationship and are therefore within the scope of ASC 606, Revenue from Contracts with Customers. When we determine elements of a collaboration do not reflect a vendor-customer relationship, we consistently

apply the reasonable and rational policy election we made by analogizing to authoritative accounting literature.

The following is a summary of the critical accounting estimates we make with respect to our revenue.

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Research and development revenue under collaborative agreements

We recognize R&D revenue from numerous collaboration agreements. 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. Upon entering into a collaboration agreement, we are required to make the following judgements:

● Identifying the performance obligations contained in the agreement

Our assessment of what constitutes a separate performance

obligation requires us to apply judgement. Specifically, we have to identify which goods and services we are required to provide under the contract are distinct.

● Determining the transaction price, including any variable consideration

To determine the transaction price, we review the amount of consideration we are eligible to earn under the agreement. We do not typically

include any payments we may receive in the future in our initial transaction price since the payments are typically not probable because they are contingent upon certain future events. We reassess the total transaction price at each reporting period to

determine if we should include additional payments in the transaction price that have become probable.

● Allocating the transaction price to each of our performance obligations

When we allocate the transaction price to more than one performance obligation, we make estimates of the relative stand-alone selling

price of each performance obligation because we do not typically sell our goods or services on a stand-alone basis. The estimate of the relative stand-alone selling price requires us in some cases to make significant judgements. For example, when we

deliver a license at the start of an agreement, we use valuation methodologies, such as the relief from royalty method, to value the license. Under this method we are required to make estimates including: future sales, royalties on future product

sales, contractual milestones, expenses, income taxes and discount rates. Additionally, when we estimate the selling price for R&D services, we make estimates, including: the number of internal hours we will spend on the services, the cost of work

we and third parties will perform and the cost of clinical trial material we will use.

The R&D revenue we recognize each period is comprised of several types of revenue, including amortization from upfront payments,

milestone payments, license fees and other services that are recognized immediately or amortized over the period in which we satisfy our performance obligation. Each of these types of revenue require us to make various judgements and estimates.

R&D Services with Upfront Payments

We recognize revenue from the amortization of upfront payments as we perform R&D services. We use an input method to estimate the

amount of revenue to recognize each period. This method requires us to make estimates of the total costs we expect to incur to complete our R&D services performance obligation or the total amount of effort it will take us to complete our R&D

services performance obligation. If we change our estimates, we may have to adjust our revenue.

Milestone Payments

When recognizing revenue related to milestone payments, we typically make the following judgements and estimates:

License Fees

When we grant a license for a medicine in clinical

development, we generally recognize as R&D 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. Refer to Part IV, Item 15, Note 1, Organization and Significant Accounting Policies, in the Notes to the Consolidated Financial Statementsfor our revenue recognition policy. We discuss

the estimates we make related to the relative stand-alone selling price of a license in detail above under “Allocating the transaction price to each of our performance obligations.”

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Estimated Liability for Clinical Development Costs

We have numerous medicines in preclinical studies and/or clinical trials at clinical sites throughout the world. On at least a quarterly

basis, we estimate our liability for preclinical and clinical development costs we have incurred and services that we have received but for which we have not yet been billed and maintain an accrual to cover these costs. These costs primarily relate to

third-party clinical management costs, laboratory and analysis costs, toxicology studies and investigator grants. We estimate our liability using assumptions about study and patient activities and the related expected expenses for those activities

determined based on the contracted fees with our service providers. The assumptions we use represent our best estimates of the activity and expenses at the time of our accrual and involve inherent uncertainties and the application of our judgment. Upon

settlement, these costs may differ materially from the amounts accrued in our consolidated financial statements. Our historical accrual estimates have not been materially different from our actual amounts.

As of December 31, 2023, a

hypothetical 10 percent increase in our liability for preclinical and clinical development costs would have resulted in an increase in our loss before income tax benefit and accrued liabilities of approximately $10.6 million.

Liability Related to Sale of Future Royalties

In January 2023, we entered into a royalty purchase agreement with Royalty Pharma to monetize a portion of our future SPINRAZA and

pelacarsen royalties we are entitled to under our agreements with Biogen and Novartis, respectively. Under our agreement with Royalty Pharma, we calculate the liability related to the sale of future royalties, effective interest rate and the related

interest expense using our current estimate of anticipated future royalty payments under the arrangement, which we periodically reassess based on internal projections and information from our partners who are responsible for commercializing the

medicines. The amount that Royalty Pharma will receive under the agreement is based on sales of SPINRAZA, our currently commercialized medicine, and pelacarsen, a product candidate that is not currently commercialized. As such, the repayment amounts

that we estimate related to projections of future pelacarsen revenues contain more subjective estimation which we believe could lead to larger changes in estimates in the future. If there is a material change in our estimate, we will prospectively

adjust the effective interest rate and the related interest expense.

There are numerous factors, most of which are not within our control, that could materially impact the amount and timing of future royalty

payments, particularly those from Novartis for pelacarsen, and could result in changes to our estimate of future royalty payments to Royalty Pharma. Such factors include, but are not limited to, the regulatory approval and commercial sales of

pelacarsen, competing products or other significant events. These factors and other events or circumstances could result in reduced royalty payments from sales of pelacarsen, which would result in a reduction of our non-cash royalty revenue and

non-cash interest expense over the life of the agreement. Conversely, if sales of pelacarsen are more than amounts we estimated, the non-cash royalty revenue and non-cash interest expense we record would be greater over the life of the arrangement.

.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

We are exposed to changes in interest rates primarily from

our investments in certain short-term investments. We primarily invest our excess cash in highly liquid short-term investments of the U.S. Treasury and reputable financial institutions, corporations, and U.S. government agencies with strong credit

ratings. We typically hold our investments for the duration of the term of the respective instrument. We do not utilize derivative financial instruments, derivative commodity instruments or other market risk sensitive instruments, positions or

transactions to manage exposure to interest rate changes. Accordingly, we believe that, while the securities we hold are subject to changes in the financial standing of the issuer of such securities, we were not subject to any material risks arising

from changes in interest rates, foreign currency exchange rates, commodity prices, equity prices or other market changes that affect market risk sensitive instruments as of December 31, 2023 and will not be subject to any material risks arising from these changes in the foreseeable future.

Item 8. Financial Statements and Supplementary Data

We filed our consolidated financial statements and supplementary data required by this item as exhibits hereto, and listed them under Item

15(a)(1) and (2), and incorporate them herein by reference.

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

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Item 9A. Controls and Procedures

Disclosure Controls and Procedures

We maintain disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as

amended, or Exchange Act) that are designed to ensure that information we are required to disclose in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such

information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. We designed and evaluated our disclosure controls

and procedures recognizing that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance and not absolute assurance of achieving the desired control objectives.

As of the end of the period covered by this report on Form 10-K, we carried out an evaluation of our disclosure controls and procedures

under the supervision of, and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer. Based on our evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure

controls and procedures were effective as of December 31, 2023.

Management’s Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Exchange

Act Rules 13a-15(f). Our internal control over financial reporting is a process designed under the supervision of our Chief Executive Officer and Chief Financial Officer to provide reasonable assurance regarding the reliability of financial reporting

and the preparation of our financial statements for external purposes in accordance with U.S. generally accepted accounting principles.

As of December 31, 2023, we

assessed the effectiveness of our internal control over financial reporting based on the criteria for effective internal control over financial reporting under the 2013 “Internal Control—Integrated Framework,” issued by the Committee of Sponsoring

Organizations, or COSO, of the Treadway Commission, under the supervision of, and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer. Based on that assessment, our management concluded that we

maintained effective internal control over financial reporting as of December 31, 2023.

Ernst & Young LLP, an independent registered public accounting firm, audited the effectiveness of our internal control over financial

reporting as of December 31, 2023, as stated in their attestation report, which is included elsewhere herein.

Changes in Internal Control over Financial Reporting

The above assessment did not identify any change in our internal control over financial reporting that occurred during our latest fiscal

quarter and that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Stockholders and Board of Directors of Ionis Pharmaceuticals, Inc.

Opinion on Internal Control over Financial Reporting

We have audited Ionis Pharmaceuticals, Inc.’s internal control over financial reporting as of December 31, 2023, based on criteria

established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, Ionis Pharmaceuticals, Inc. (the Company) maintained, in all

material respects, effective internal control over financial reporting as of December 31, 2023, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the

consolidated balance sheets of the Company as of December 31, 2023 and 2022, the related consolidated statements of operations, comprehensive loss, stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2023,

and the related notes and our report dated February 21, 2024 expressed an unqualified opinion thereon.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the

effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial

reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the

Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to

obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.

Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness

exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable

basis for our opinion.

Definition and Limitations of Internal Control Over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of

financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1)

pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit

preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3)

provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections

of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ Ernst & Young LLP

San Diego, California

February 21, 2024

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Item 9B. Other Information

Trading Plans

During the quarter ended December 31, 2023, our

officers and directors (as defined in Rule 16a-1(f) under the Exchange Act), or Section 16 officers and directors, adopted or terminated contracts, instructions or written plans for the purchase or sale of our securities as noted in the table below.

Action Date Trading Arrangement Total Shares to be Sold Expiration Date

Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

Not applicable.

PART III

Item 10. Directors, Executive Officers and Corporate Governance

We incorporate by reference the information required by this

Item with respect to directors and the Audit Committee from the information under the caption “ELECTION OF DIRECTORS,” including in particular the information under “Nominating, Governance and Review Committee” and “Audit Committee,” contained in our

definitive Proxy Statement, which we will file with the Securities and Exchange Commission within 120 days after the end of the fiscal year ended December 31, 2023, or the Proxy Statement.

We include information concerning our executive officers in the section titled, Information about our Executive Officers, in this report on the Form 10-K in Item 1 titled “Business.”

We incorporate by reference the required information concerning our Code of Ethics from the information under the caption “Code of Ethics

and Business Conduct” contained in the Proxy Statement. Our Code of Ethics and Business Conduct is posted on our website at www.ionispharma.com(1). We intend to make all required disclosures regarding any amendments to, or waivers from,

provisions of our Code of Ethics and Business conduct on our website.

___________

Delinquent Section 16(a) Reports

Item 1, Part I of this Report contains information concerning our executive officers. We incorporate by reference the information required

by this Item concerning compliance with Section 16(a) of the Exchange Act from the information under the caption “Delinquent Section 16(a) Reports” contained in the Proxy Statement.

Item 11. Executive Compensation

We incorporate by reference the information required by this item to the information under the caption “EXECUTIVE COMPENSATION,”

“Compensation Committee Interlocks and Insider Participation” and “COMPENSATION COMMITTEE REPORT” contained in the Proxy Statement.

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Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

We incorporate by reference the information required by this item to the information under the captions “SECURITY OWNERSHIP OF CERTAIN

BENEFICIAL OWNERS AND MANAGEMENT” contained in the Proxy Statement.

Securities Authorized for Issuance under Equity Compensation Plans

The following table sets forth information regarding outstanding options and shares reserved for future issuance under our equity

compensation plans as of December 31, 2023.

________________

For additional details about our equity compensation plans, including a description of each plan, refer to Part IV, Item 15, Note 8, Stockholders’ Equity, in the Notes to the Consolidated Financial Statements.

Item 13. Certain Relationships and Related Transactions, and Director Independence

We incorporate by reference the information required by this item to the information under the captions “Information Regarding the Board

and Corporate Governance" and "Certain Relationships and Related Transactions” contained in the Proxy Statement.

Item 14. Principal Accountant Fees and Services

We incorporate by reference the information required by this item to the information under the caption “Ratification of Selection of

Independent Auditors” contained in the Proxy Statement.

PART IV

Item 15. Exhibits, Financial Statement Schedules

(a)(1) Index to Financial Statements

We submitted the consolidated financial statements required by this item in a separate section beginning on page F-1 of this Report.

(a)(2) Index to Financial Statement Schedules

We omitted these schedules because they are not required, or are not applicable, or the required information is shown in the consolidated

financial statements or notes thereto.

(a)(3) Index to Exhibits

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INDEX TO EXHIBITS

Exhibit Number Description of Document

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86

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88

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21.1 List of Subsidiaries for the Registrant.

23.1 Consent of Independent Registered Public Accounting Firm.

97 Registrant’s Amended and Restated Clawback Policy

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report on

Form 10-K to be signed on its behalf by the undersigned, thereunto duly authorized on the 21st day of February, 2024.

IONIS PHARMACEUTICALS, INC.

By: /s/ BRETT P. MONIA

Brett P. Monia, Ph.D.

Chief Executive Officer (Principal executive officer)

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Brett P. Monia and Elizabeth L.

Hougen, or any of them, his or her attorney-in-fact, each with the power of substitution, for him or her in any and all capacities, to sign any amendments to this Report, and to file the same, with exhibits thereto and other documents in connection

therewith, with the Securities and Exchange Commission, hereby ratifying and confirming all that each of said attorneys-in-fact, or his or her substitute or substitutes, may do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf

of the Registrant and in the capacities and on the dates indicated.

Signatures Title Date

/s/ BRETT P. MONIA Director and Chief Executive Officer February 21, 2024

Brett P. Monia, Ph.D. (Principal executive officer)

Elizabeth L. Hougen (Principal financial and accounting officer)

/s/ JOSEPH LOSCALZO Chairman of the Board February 21, 2024

Joseph Loscalzo, M.D., Ph.D.

/s/ SPENCER R. BERTHELSEN Director February 21, 2024

Spencer R. Berthelsen, M.D.

/s/ ALLENE M. DIAZ Director February 21, 2024

Allene M. Diaz

/s/ MICHAEL HAYDEN Director February 21, 2024

Michael Hayden, CM OBC MB ChB PhD FRCP(C) FRSC

/s/ JOAN E. HERMAN Director February 21, 2024

Joan E. Herman

/s/ JOSEPH KLEIN Director February 21, 2024

Joseph Klein, III

/s/ B. LYNNE PARSHALL Director February 21, 2024

B. Lynne Parshall, J.D.

/s/ JOSEPH H. WENDER Lead Independent Director February 21, 2024

Joseph H. Wender

/s/ MICHAEL YANG Director February 21, 2024

Michael Yang

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IONIS PHARMACEUTICALS, INC.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Page

Report of Independent Registered Public Accounting Firm (PCAOB ID 42) F-2

Consolidated Balance Sheets at December 31, 2023 and 2022 F-4

Notes to the Consolidated Financial Statements F-9

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Stockholders and Board of Directors of Ionis Pharmaceuticals, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Ionis Pharmaceuticals, Inc. (the Company) as of December 31, 2023 and 2022, the related

consolidated statements of operations, comprehensive loss, stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2023, and the related notes (collectively referred to as the “consolidated financial

statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the

three years in the period ended December 31, 2023, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal

control over financial reporting as of December 31, 2023, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated

February 21, 2024 expressed an unqualified opinion thereon.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial

statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the

Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable

assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error

or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting

principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or

required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of critical

audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the

accounts or disclosures to which they relate.

Estimated Liability for Clinical Development Costs

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Accounting for the Royalty Pharma Sale of Future Royalties Transaction

/s/ Ernst & Young LLP

We have served as the Company’s auditor since 1989.

San Diego, California

February 21, 2024

F-3

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IONIS PHARMACEUTICALS, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)

December 31,

ASSETS

Current assets:

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:

0.125 percent convertible senior notes, net 44,332 —

Current portion of deferred contract revenue 151,128 90,577

1.75 percent convertible senior notes, net 562,285 —

0.125 percent convertible senior notes, net — 544,504

Liability related to sale of future royalties, net 513,736 —

Stockholders’ equity:

Accumulated other comprehensive loss (32,645 ) (57,480 )

See accompanying notes.

F-4

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IONIS PHARMACEUTICALS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except for per share amounts)

Year Ended December 31,

Revenue:

Commercial revenue:

Research and development revenue:

Expenses:

Other income (expense):

Interest expense related to sale of future royalties (68,797 ) — —

Gain (loss) on sale of real estate assets (161 ) 149,604 —

Basic and diluted net loss per share $ (2.56 ) $ (1.90 ) $ (0.20 )

See accompanying notes.

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IONIS PHARMACEUTICALS, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(In thousands)

Year Ended December 31,

Unrealized gains (losses) on investments, net of tax 24,484 (24,395 ) (11,486 )

Currency translation adjustment 351 (417 ) (111 )

See accompanying notes.

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IONIS PHARMACEUTICALS, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In thousands)

Common Stock Additional Accumulated Other Accumulated Total Ionis Stockholders’

Description Shares Amount Paid in Capital Comprehensive Loss Deficit Equity

Change in unrealized losses, net of tax — — — (11,486 ) — (11,486 )

Foreign currency translation — — — (111 ) — (111 )

Change in unrealized losses, net of tax — — — (24,395 ) — (24,395 )

Foreign currency translation — — — (417 ) — (417 )

Change in unrealized gains, net of tax — — — 24,484 — 24,484

Foreign currency translation — — — 351 — 351

See accompanying notes.

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IONIS PHARMACEUTICALS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

Year Ended December 31,

Operating activities:

Amortization of right-of-use operating lease assets 9,647 5,362 1,721

Amortization of premium (discount) on investments, net (28,885 ) 7,389 17,776

Non-cash royalty revenue related to sale of royalties (44,628 ) — —

Non-cash interest related to sale of future royalties 68,238 — —

Loss (gain) on early retirement of debt (13,389 ) — 8,627

Loss (gain) on sale of real estate assets 161 (150,135 ) —

Changes in operating assets and liabilities: