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):
Year Ended December 31,
Loss from operations $ (381.7 ) $ (475.1 )
Cash, cash equivalents and short-term investments $ 2,677.4 $ 2,297.7
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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):
Year Ended December 31,
Revenue:
Commercial revenue:
Product sales, net:
TRYNGOLZA sales, net $ 107.5 $ -
DAWNZERA sales, net 7.8 -
Total product sales, net 115.3 -
Royalty revenue:
Other commercial revenue 35.0 35.8
Research and development revenue:
Collaborative agreement revenue 465.8 332.6
WAINUA joint development revenue 42.1 79.4
Total research and development revenue 507.9 412.0
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):
Year Ended December 31,
WAINUA joint development revenue $ 42.1 $ 79.4
Medical affairs expenses for WAINUA 8.1 7.1
Commercialization expenses for WAINUA 30.3 26.7
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):
Year Ended December 31,
Non-cash compensation expense related to equity awards 133.9 130.2
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):
Year Ended December 31,
Non-cash compensation expense related to equity awards 1.9 0.8
Total cost of sales $ 15.9 $ 11.2
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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):
Year Ended December 31,
Non-cash compensation expense related to equity awards 90.1 92.4
Total research, development and patent expenses $ 915.6 $ 901.5
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 18.4
Total drug discovery expenses $ 141.4 $ 132.8
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):
Year Ended December 31,
Other development projects 81.1 84.5
Development overhead expenses 159.2 135.9
Non-cash compensation expense related to equity awards 42.5 41.2
Total drug development expenses $ 528.7 $ 568.5
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 clinical trials for certain drug candidates in certain indications in order to focus our resources on more promising drug candidates or indications. Our Phase 1 and Phase 2 programs are clinical research programs that fuel our Phase 3 pipeline. When our medicines are in Phase 1 or Phase 2 clinical trials, they are in a dynamic state in which we may adjust the development strategy for each medicine. Although we may characterize a medicine as “in Phase 1” or “in Phase 2,” it does not mean that we are conducting a single, well-defined study with dedicated resources. Instead, we allocate our internal resources on a shared basis across numerous medicines based on each medicine’s particular needs at that time. This means we are constantly shifting resources among medicines. Therefore, what we spend on each medicine during a particular period is usually a function of what is required to keep the medicines progressing in clinical development, not what medicines we think are most important. For example, the number of people required to start a new study is large, the number of people required to keep a study going is modest and the number of people required to finish a study is large. However, such fluctuations are not indicative of a shift in our emphasis from one medicine to another and cannot be used to accurately predict future costs for each medicine. Because we always have numerous medicines in preclinical and varying stages of clinical research, the fluctuations in expenses from medicine to medicine, in large part, offset one another. If we partner a medicine, it may affect the size of a trial, its timing, its total cost and the timing of the related costs.
Medical Affairs
Our medical affairs function is responsible for funding and coordinating investigator-sponsored trials, communicating scientific and clinical information to healthcare providers, medical professionals and patients, and managing publications.
The following table sets forth information on medical affairs expenses (in millions):
Year Ended December 31,
Non-cash compensation expense related to equity awards 5.4 4.7
Total medical affairs expenses $ 37.4 $ 31.9
Medical affairs expenses, excluding non-cash compensation expense related to equity awards, increased in 2025 compared to 2024 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 7.8 9.4
Total manufacturing and development chemistry expenses $ 95.1 $ 67.1
Manufacturing and development chemistry expenses, excluding non-cash compensation expense related to equity awards, increased in 2025 compared to 2024 due to the timing of manufacturing performed by our contract manufacturing organizations for drug product and active pharmaceutical ingredients related to several late-stage programs. 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.
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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,
Computer software and licenses 14.4 8.4
Patent expenses 6.4 5.3
Non-cash compensation expense related to equity awards 18.2 18.6
Total R&D support expenses $ 113.0 $ 101.2
R&D support expenses, excluding non-cash compensation expense related to equity awards, increased in 2025 compared to 2024 primarily due to increased costs relating to computer software and licenses.
Selling, General and Administrative Expenses
SG&A expenses include personnel, information technology systems and outside costs associated with the commercialization and pre-commercialization activities for our medicines and costs to support our company, our employees and our stockholders including, legal, human resources, investor relations and finance. Additionally, we include in SG&A expenses such costs as rent, repair and maintenance of buildings and equipment, depreciation and utilities costs that we need to support the corporate functions listed above. We also include fees we owe under our in-licensing agreements related to SPINRAZA and QALSODY and cost sharing payments associated with the co-commercialization activities under our WAINUA collaboration with AstraZeneca.
The following table sets forth information on SG&A expenses (in millions):
Year Ended December 31,
Non-cash compensation expense related to equity awards 41.9 37.0
Total selling, general and administrative expenses $ 393.9 $ 267.5
SG&A expenses, excluding non-cash compensation expense related to equity awards, increased in 2025 compared to 2024 primarily due to the launches of TRYNGOLZA, DAWNZERA and WAINUA. We expect SG&A expenses to increase as we continue to invest in our independent commercial launches.
Investment Income
Investment income for 2025 was $97.8 million compared to $107.0 million for 2024. The decrease in investment income was primarily due to a decrease in interest rates associated with our investments during 2025 compared to 2024.
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Interest Expense
The following table sets forth information on interest expense (in millions):
December 31,
Convertible notes:
Non-cash amortization of debt issuance costs $ 6.3 $ 6.1
Interest expense payable in cash 10.1 10.5
Interest on mortgage for manufacturing facility 0.4 0.4
Other 0.5 -
Total interest expense $ 17.3 $ 17.0
Interest Expense Related to Sale of Future Royalties
We recorded $73.3 million and $73.5 million of interest expense related to the sale of future royalties in 2025 and 2024, respectively. These amounts are related to the Royalty Pharma Investments, or Royalty Pharma, transaction, in which we sold a minority interest in our future SPINRAZA and pelacarsen royalties to Royalty Pharma for a $500 million upfront payment and $625 million of potential future payments. Refer to Part IV, Item 15, Note 7, Long-Term Obligations and Commitments, in the Notes to the Consolidated Financial Statements for further details.
Gain (Loss) on Investments
We recorded a $10.2 million gain on investments and a $2.9 million loss on investments for 2025 and 2024, respectively. The period-over-period fluctuation in our gain (loss) on investments was primarily driven by changes in the fair value of our investments in privately held and publicly traded biotechnology companies.
Other Income (Expense)
In 2025, we completed a $770.0 million offering of our 0% Notes due 2030 and used $267.6 million of the net proceeds to repurchase $200.0 million in principal of our 0% Notes due 2026 at a premium. As a result of the repurchase, we recognized induced conversion expense of $16.3 million, which we recorded as other expense in our consolidated statement of operations for the year ended December 31, 2025. The induced conversion expense is the difference between the amount paid to repurchase the 0% Notes due 2026 and the if-converted value of the notes at the time that the debt repurchase terms were finalized. 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 $1.8 million for 2025 compared to an income tax benefit of $6.2 million for 2024.
The income tax expense for 2025 primarily relates to state income taxes, partially offset by a federal tax benefit related to a capital loss carryback. The income tax benefit for 2024 primarily related to adjustments to prior year tax return positions for the royalty purchase agreement with Royalty Pharma and deductions related to foreign SPINRAZA royalties.
In July 2025, H.R.1 - 119th Congress was signed into law, introducing significant changes to U.S. federal tax law. The new law restores current expensing of domestic R&D costs and allows us to accelerate the deduction for a significant amount of such costs we capitalized since 2022. These tax law changes did not have a material effect on our tax expense for the year ended December 31, 2025.
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 $381.4 million for 2025 compared to $453.9 million for 2024. Our net loss decreased for 2025 compared to 2024 primarily due to factors discussed in the sections above. Basic and diluted net loss per share for 2025 were $2.38 compared to $3.04 for 2024. Our net loss per share decreased for 2025 compared to 2024 primarily due to factors discussed in the sections above.
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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, WAINUA and QALSODY royalties and TEGSEDI and WAYLIVRA commercial revenue. In addition, we began earning commercial revenue from TRYNGOLZA product sales in late December 2024 and DAWNZERA product sales in late August 2025. From our inception through December 31, 2025, we have earned approximately $8.9 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, 2025, we have raised net proceeds of approximately $2.8billion from the sale of our equity securities. Additionally, from our inception through December 31, 2025, we have borrowed approximately $3.5 billion under long-term debt arrangements and received proceeds of approximately $0.5 billion from the sale of future royalties to finance a portion of our operations.
Our working capital decreased from 2024 to 2025 as we reclassified our 0% Notes due 2026 from non-current liabilities to current liabilities in the second quarter of 2025 because the notes are due in April 2026. During the same period, our long-term obligations increased due to the issuance of our 0% Notes due 2030, which was partially offset by the partial repurchase of our 0% Notes due 2026, in the fourth quarter of 2025.
The following table summarizes our contractual obligations, excluding our liability related to the sale of future royalties, as of December 31, 2025. 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
Building mortgage payments (principal and interest payable) 9.1 0.5 8.6
Other obligations (principal and interest payable) 0.6 0.1 0.5
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. In the third quarter of 2025, our build-to-suit lease in Carlsbad, California commenced, resulting in an increase to our contractual obligations related to operating leases. 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 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, 2025 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:
● Assessing the propriety of revenue recognition and associated deferred revenue;
● Determining the appropriate cost estimates for unbilled preclinical studies and clinical development activities; and
● Assessing the appropriate estimate of anticipated future royalty payments under our royalty purchase agreement.
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.
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The following is a summary of the critical accounting estimates we make with respect to our revenue.
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 we recognize immediately or amortize 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:
●
Whether a milestone payment is probable (discussed in detail above under “Determining the transaction price, including any variable consideration”); and
●
If we are performing services, we recognize revenue over our estimated period of performance in a similar manner to the amortization of upfront payments (discussed above under “R&D Services with Upfront Payments”).
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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.”
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, 2025, 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 $5.4 million.
Liability Related to Sale of Future Royalties
In 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, 2025 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.
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Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None.
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, 2025.
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, and effected by our board of directors, management and other personnel, 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, 2025, 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, 2025.
Ernst & Young LLP, an independent registered public accounting firm, audited the effectiveness of our internal control over financial reporting as of December 31, 2025, 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 the 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, 2025, 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, 2025, 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, 2025 and 2024, 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, 2025, and the related notes and our report dated February 26, 2026 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 26, 2026
74
Item 9B. Other Information
Trading Plans
During the quarter ended December 31, 2025, our directors and officers (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.
*
Contract, instruction or written plan intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) under the Exchange Act.
**
“Non-Rule 10b5-1 trading arrangement” as defined in item 408(c) of Regulation S-K under the Exchange Act.
Trading Arrangement
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Not applicable.
75
PART III
Item 10. Directors, Executive Officers and Corporate Governance
The information required by this Item and not provided below is incorporated herein by reference to our definitive Proxy Statement, which we intend to file with the Securities and Exchange Commission within 120 days after the end of the fiscal year ended December 31, 2025, or the Proxy Statement. We expect this information will be provided under captions of the Proxy Statement entitled “PROPOSAL 1— ELECTION OF DIRECTORS,” “INFORMATION REGARDING THE BOARD AND CORPORATE GOVERNANCE,” “Executive Officers,” and, if required, “Delinquent Section 16(a) Reports.”
We also incorporate by reference the required information concerning our Code of Ethics and Business Conduct 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.ionis.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.
We have adopted insider trading policies and procedures governing the purchase, sale and other dispositions of our securities by our directors, officers and employees that are reasonably designed to promote compliance with insider trading laws, rules and regulations, and any listing standards applicable to us. In addition, it is the our practice to comply with both the letter and the spirit of applicable laws and regulations relating to insider trading. A copy of our insider trading policy is filed as an exhibit to this report.
___________
(1)
Any information that is included on or linked to our website is not part of this Form 10-K.
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, except as to information disclosed therein pursuant to Item 402(v) of Regulation S-K relating to pay versus performance.
We incorporate by reference the information required by Item 402(x) of Regulation S-K to the information under the caption “Policies and practices related to the grant of certain equity awards close in time to the release of material nonpublic information” contained in the Proxy Statement.
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, 2025.
Number of Shares to Weighted Average Number of Shares
be Issued Upon Exercise Exercise Price of Remaining Available
Plan Category of Outstanding Options Outstanding Options for Future Issuance
________________
(a) Consists of four Ionis plans: Amended and Restated 2002 Non-Employee Directors’ Stock Option Plan, 2011 Equity Incentive Plan, 2020 Equity Incentive Plan and Employee Stock Purchase Plan, or ESPP.
(b) Does not include PRSU awards.
(c) Of these shares, 130,884 were available for purchase under the ESPP as of December 31, 2025.
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.
76
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 and 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
77
INDEX TO EXHIBITS
Exhibit Number Description of Document
78
79
80
81
82
83
21.1 List of Subsidiaries for the Registrant.
23.1 Consent of Independent Registered Public Accounting Firm.
*
Indicates management compensatory plans and arrangements as required to be filed as exhibits to this Report pursuant to Item 14(c).
+
This certification is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section, nor shall it be deemed incorporated by reference into any filing under the Securities Act of 133, as amended, or the Securities Exchange Act of 1934, as amended.
84
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 26th day of February, 2026.
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 26, 2026
Brett P. Monia, Ph.D. (Principal executive officer)
Elizabeth L. Hougen (Principal financial and accounting officer)
/s/ JOSEPH LOSCALZO Chairman of the Board February 26, 2026
Joseph Loscalzo, M.D., Ph.D.
/s/ SPENCER R. BERTHELSEN Director February 26, 2026
Spencer R. Berthelsen, M.D.
/s/ ALLENE M. DIAZ Director February 26, 2026
Allene M. Diaz
/s/ MICHAEL HAYDEN Director February 26, 2026
Michael Hayden, CM OBC MB ChB PhD FRCP(C) FRSC
/s/ JOAN E. HERMAN Director February 26, 2026
Joan E. Herman
/s/ JOSEPH KLEIN Director February 26, 2026
Joseph Klein, III
/s/ B. LYNNE PARSHALL Director February 26, 2026
B. Lynne Parshall, J.D.
/s/ JOSEPH H. WENDER Director February 26, 2026
Joseph H. Wender
/s/ MICHAEL YANG Director February 26, 2026
Michael Yang
85
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, 2025 and 2024 F-4
Notes to the Consolidated Financial Statements F-9
F-1
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Stockholders and the 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, 2025 and 2024, 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, 2025, 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, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2025, 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, 2025, 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 26, 2026 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 Matter
The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the critical audit matter 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 matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
F-2
Estimated Liability for Clinical Development Costs
/s/ Ernst & Young LLP
We have served as the Company’s auditor since 1989.
San Diego, California
February 26, 2026
F-3
IONIS PHARMACEUTICALS, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share and par value data)
December 31,
ASSETS
Current assets:
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
0 percent convertible senior notes due 2026, net 431,948 -
Current portion of deferred contract revenue 73,761 78,989
0 percent convertible senior notes due 2030, net 751,495 -
0 percent convertible senior notes due 2026, net - 628,535
Liability related to sale of future royalties, net 551,353 542,212
Stockholders’ equity:
Accumulated other comprehensive loss (25,281 ) (30,811 )
See accompanying notes.
F-4
IONIS PHARMACEUTICALS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except for per share amounts)
Year Ended December 31,
Revenue:
Commercial revenue:
Product sales, net $ 115,315 $ - $ -
Research and development revenue:
Expenses:
Other income (expense):
Basic and diluted net loss per share $ (2.38 ) $ (3.04 ) $ (2.56 )
See accompanying notes.
F-5
IONIS PHARMACEUTICALS, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(In thousands)
Year Ended December 31,
Unrealized gains on debt securities, net of tax 4,828 2,107 24,484
Currency translation adjustment 702 (273 ) 351
See accompanying notes.
F-6
IONIS PHARMACEUTICALS, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(In thousands)
Common Stock Additional Accumulated Other Total
Change in unrealized gains, net of tax - - - 24,484 - 24,484
Foreign currency translation - - - 351 - 351
Change in unrealized gains, net of tax - - - 2,107 - 2,107
Foreign currency translation - - - (273 ) - (273 )
Change in unrealized gains, net of tax - - - 4,828 - 4,828
Foreign currency translation - - - 702 - 702
See accompanying notes.
F-7
IONIS PHARMACEUTICALS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Year Ended December 31,
Operating activities:
Adjustments to reconcile net loss to net cash used in operating activities:
Amortization of right-of-use operating lease assets 10,247 10,040 9,647
Gain on early retirement of debt - - (13,389 )
Inducement expense related to early retirement of debt 16,344 - -
Changes in operating assets and liabilities:
Accrued liabilities and other liabilities 5,332 (42,993 ) (5,506 )
Investing activities:
Acquisition of licenses and other assets, net (5,640 ) (5,061 ) (4,184 )
Financing activities:
Proceeds from issuance of common stock in public offering, net - 489,120 -
0 percent convertible senior notes due 2030 issuance costs (18,949 ) - -
1.75 percent convertible senior notes due 2028 issuance costs - - (14,175 )
Proceeds from sale of future royalties - - 500,000
Payments of transaction costs related to sale of future royalties - - (10,434 )
Proceeds from real estate transaction - - 32,352
Principal payments on mortgage debt (175 ) (167 ) (160 )
Effects of exchange rates on cash 702 (273 ) 352
Supplemental disclosures of cash flow information:
Income taxes paid (refunds received), net $ (639 ) $ (5,620 ) $ 48,334
Supplemental disclosures of non-cash investing and financing activities:
Right-of-use assets obtained in exchange for lease obligations $ 86,939 $ - $ -
Amounts accrued for capital and patent expenditures $ 478 $ 947 $ 172
See accompanying notes.
F-8
IONIS PHARMACEUTICALS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Organization and Significant Accounting Policies
Basis of Presentation
In our consolidated financial statements we included the accounts of Ionis Pharmaceuticals, Inc. and the consolidated results of our wholly owned subsidiary, Akcea Therapeutics, Inc. and its wholly owned subsidiaries (“we”, “us” or “our”).
Organization and Business Activity
We incorporated in California on January 10, 1989. In conjunction with our IPO, we reorganized as a Delaware corporation in April 1991. In December 2015, we changed our name from Isis Pharmaceuticals, Inc. to Ionis Pharmaceuticals, Inc. We are a fully integrated commercial-stage biotechnology company and a leader in the discovery and development of RNA-targeted therapeutics.
We operate as a single segment, Ionis operations, because our chief operating decision maker, or CODM, reviews operating results on an aggregate basis and manages our operations as a single operating segment. Refer to Note 12, Segment Information, for further details on our segment information.
Use of Estimates
We prepare our consolidated financial statements in conformity with accounting principles generally accepted in the United States, or U.S., that require us to make estimates and assumptions that affect the amounts reported in our consolidated financial statements and accompanying notes. Actual results could differ from our estimates.
Reclassifications
We reclassified certain prior period amounts to conform to the current period presentation, including revenue in the consolidated statements of operations. These reclassifications had no impact on prior period results.
Revenue Recognition
We generally recognize revenue when we have satisfied all contractual obligations and are reasonably assured of collecting the resulting receivable. In the instances in which we have received payment from our customers in advance of recognizing revenue, we include the amounts within deferred revenue in our consolidated balance sheets.
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 ASC Topic 808, Collaborative Arrangements, or ASC 808. ASC 808 does not address the recognition and measurement of collaborative arrangements and instead refers companies to use other authoritative accounting literature. 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 therefore are 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.
We evaluate the income statement classification for presentation of amounts due from or owed to other participants associated with multiple activities in a collaboration arrangement based on the nature of each separate activity. For example, in our WAINUA collaboration with AstraZeneca, we recognize funding received from AstraZeneca for co-development activities as revenue; while we recognize cost sharing payments to and from AstraZeneca associated with co-commercialization activities and co-medical affairs activities as selling, general and administrative, or SG&A, expense and research and development, or R&D, expense, respectively.
F-9
Steps to Recognize Revenue
For elements of our contractual relationships that we account for under ASC 606, we use a five-step process to determine the amount of revenue we should recognize and when we should recognize it. The five-step process is as follows:
1. Identify the contract
Accounting rules require us to first determine if we have a contract with our partner or customer.
2. Identify the performance obligations
We next identify our performance obligations, which represent the distinct goods and services we are required to provide under the contract.
3. Determine the transaction price
We then determine the transaction price by reviewing the amount of consideration we are eligible to earn under the collaboration agreement, including any variable consideration.
4. Allocate the transaction price
Next, we allocate the transaction price to each of our performance obligations. When we have to 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. We then allocate the transaction price to each performance obligation based on the relative stand-alone selling price. We do not reallocate the transaction price after the start of an agreement to reflect subsequent changes in stand-alone selling prices.
5. Recognize revenue
We recognize collaborative agreement revenue in one of two ways, over time or at a point in time. We recognize revenue over time when we are executing on our performance obligation over time and our partner receives benefit over time. For example, we recognize revenue over time when we provide R&D services. We recognize revenue at a point in time when our partner receives full use of an item at a specific point in time. For example, we recognize revenue at a point in time when we deliver a license or API to a partner.
We recognize revenue from product sales when the customer obtains control of our product in the amount of the transaction price, which is the amount that reflects the consideration which we expect to receive. We estimate reserves for variable consideration related to applicable discounts, rebates, chargebacks, co-pay assistance and other allowances included in our agreements with customers, payors and other third parties. We include the amount of variable consideration in the transaction price to the extent that it is probable that a significant reversal in the amount of the cumulative revenue recognized will not occur in a future period. If actual results vary significantly from our estimates, we adjust our estimates in the period that we become aware of such variances.
We recognize royalty revenue in the period in which the counterparty sells the related product and recognizes the related revenue, which in certain cases may require us to estimate our royalty revenue.
Amendments to Agreements
From time to time we amend our collaboration agreements. When this occurs, we are required to assess the following items to determine the accounting for the amendment:
1) If the additional goods and/or services are distinct from the other performance obligations in the original agreement; and
2) If the goods and/or services are sold at a stand-alone selling price.
If we conclude the goods and/or services in the amendment are distinct from the performance obligations in the original agreement and at a stand-alone selling price, we account for the amendment as a separate agreement. If we conclude the goods and/or services are not distinct and are sold at a stand-alone selling price, we then assess whether the remaining goods or services are distinct from those already provided. If the goods and/or services are distinct from what we have already provided, then we allocate the remaining transaction price from the original agreement and the additional transaction price from the amendment to the remaining goods and/or services. If the goods and/or services are not distinct from what we have already provided, we update the transaction price for our single performance obligation and recognize any change in our estimated revenue as a cumulative-effect adjustment.
F-10
Multiple agreements
From time to time, we may enter into separate agreements at or near the same time with the same partner. We evaluate such agreements to determine whether we should account for them individually as distinct arrangements or whether the separate agreements should be combined and accounted for together. We evaluate the following to determine the accounting for the agreements:
● Whether the agreements were negotiated together with a single objective;
● Whether the amount of consideration in one contract depends on the price or performance of the other agreement; or
● Whether the goods and/or services promised under the agreements are a single performance obligation.
Our evaluation involves significant judgment to determine whether a group of agreements might be so closely related that accounting guidance requires us to account for them as a combined arrangement.
Contracts Receivable
Our contracts receivable balance represents the amounts we have billed our partners or customers that are due to us unconditionally for goods we have delivered or services we have performed. When we bill our partners or customers with payment terms based on the passage of time, we consider the contracts receivable to be unconditional. We typically receive payment within one quarter of billing our partner or customer.
As of December 31, 2025, approximately 93.6 percent of our contracts receivables were from three significant customers, including approximately 31.6 percent of our contract receivables that were from one significant customer for product sales. In the year ended December 31, 2025, our TRYNGOLZA sales were primarily from one significant customer. As of December 31, 2024, approximately 95.6 percent of our contracts receivables were from three significant customers.
Unbilled Royalties
Our unbilled royalties represent our right to receive consideration from our partners in advance of when we are eligible to bill them for royalties. We include these unbilled amounts in other current assets in our consolidated balance sheets.
Deferred Revenue
We are often entitled to bill our customers and receive payment from our customers in advance of our obligation to provide services or transfer goods to our partners. In these instances, we include the amounts in deferred revenue in our consolidated balance sheets. During the years ended December 31, 2025 and 2024, we recognized $78.4 million and $166.1 million of revenue from amounts that were in our beginning deferred revenue balance for each respective period. For further discussion, refer to our revenue recognition policy above.
Cost of Sales
Our cost of sales is comprised of costs related to our commercial revenue, including manufacturing costs, transportation and freight costs and indirect overhead costs associated with the manufacturing and distribution of our products. We also may include certain period costs related to manufacturing services and inventory adjustments in cost of sales.
Cost of sales for a newly launched product, such as TRYNGOLZA or 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.
Research, Development and Patent Expenses
Our research, development and patent expenses include wages, benefits, facilities, supplies, external services, clinical trial and manufacturing costs, patents and other expenses that are directly related to our R&D operations. We expense R&D costs as we incur them. When we make payments for R&D services prior to the services being rendered, we record those amounts as prepaid assets in our consolidated balance sheets and we expense them as the services are provided. A portion of the costs included in R&D expenses are costs associated with our partner agreements. In 2025, 2024 and 2023, patent expenses were $6.4 million, $5.3 million and $4.3 million, respectively.
F-11
Income Taxes
We account for income taxes using the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in our financial statements or tax returns. In addition, deferred tax assets are recorded for the future benefit of utilizing net operating losses and research and development credit carryforwards. We record a valuation allowance when necessary to reduce our net deferred tax assets to the amount expected to be realized.
We apply the authoritative accounting guidance prescribing a threshold and measurement attribute for the financial recognition and measurement of a tax position taken or expected to be taken in a tax return. We recognize liabilities for uncertain tax positions based on a two-step process. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step requires us to estimate and measure the tax benefit as the largest amount that is more than 50 percent likely to be realized upon ultimate settlement.
We are required to use significant judgment in evaluating our uncertain tax positions and determining our provision for income taxes. Although we believe our reserves are reasonable, we can provide no assurance that the final tax outcome of these matters will not be different from that which we have reflected in our historical income tax provisions and accruals. We adjust these reserves for changing facts and circumstances, such as the closing of a tax audit or the refinement of an estimate. To the extent that the final tax outcome of these matters is different than the amounts recorded, such differences may impact the provision for income taxes in the period in which we make such determination.
We are also required to use significant judgment in determining any valuation allowance recorded against our deferred tax assets. In assessing the need for a valuation allowance, we consider all available evidence, including scheduled reversal of deferred tax liabilities, past operating results, the feasibility of tax planning strategies and estimates of future taxable income. We base our estimates of future taxable income on assumptions that are consistent with our plans. The assumptions we use represent our best estimates and involve inherent uncertainties and the application of our judgment. Should actual amounts differ from our estimates, the amount of our tax expense and liabilities we recognize could be materially impacted. We record a valuation allowance to reduce the balance of our net deferred tax assets to the amount we believe is more-likely-than-not to be realized.
Basic and Diluted Net Loss per Share
Basic net loss per share
We compute basic net loss per share by dividing our net loss by our weighted-average number of common shares outstanding during the period.
Diluted net loss per share
For the years ended December 31, 2025, 2024 and 2023, we incurred a net loss; therefore, we did not include dilutive common equivalent shares in the computation of diluted net loss per share because the effect would have been anti-dilutive. Common stock from the following would have had an anti-dilutive effect on net loss per share:
● 0 percent convertible senior notes due 2030, or 0% Notes due 2030;
● 1.75 percent convertible senior notes due 2028, or 1.75% Notes due 2028;
● 0 percent convertible senior notes due 2026, or 0% Notes due 2026;
● Note hedges related to the 0% Notes due 2026;
● Warrants related to the 0% Notes due 2026;
● Dilutive stock options;
● Unvested restricted stock units, or RSUs;
● Unvested performance restricted stock units, or PRSUs; and
● Employee Stock Purchase Plan, or ESPP.
For the years ended December 31, 2024 and 2023, common stock underlying the 0.125 percent convertible senior notes due 2024, or 0.125% Notes due 2024 and note hedges related to the 0.125% Notes due 2024 would also have had an anti-dilutive effect on net loss per share.
F-12
Stock-Based Compensation Expense
We measure stock-based compensation expense for equity-classified awards, principally related to stock options, RSUs, PRSUs and stock purchase rights under our ESPP based on the estimated fair value of the award on the date of grant. We recognize the value of the portion of the award that we ultimately expect to vest as stock-based compensation expense over the requisite service period in our consolidated statements of operations. We reduce stock-based compensation expense for estimated forfeitures at the time of grant and revise in subsequent periods if actual forfeitures differ from those estimates.
We recognize compensation expense for stock options granted, RSUs, PRSUs and stock purchase rights under the ESPP using the accelerated multiple-option approach. Under the accelerated multiple-option approach (also known as the graded-vesting method), we recognize compensation expense over the requisite service period for each separately vesting tranche of the award as though the award were in substance multiple awards, which results in the expense being front-loaded over the vesting period.
Stock Options and Stock Purchase Rights:
We use the Black-Scholes model to estimate the fair value of stock options granted and stock purchase rights under our ESPP. On the grant date, we use our stock price and assumptions regarding a number of variables to determine the estimated fair value of stock-based payment awards. These variables include, but are not limited to, our expected stock price volatility over the term of the awards, and actual and projected employee stock option exercise behaviors. The expected term of stock options granted represents the period of time that we expect them to be outstanding. Historically, we estimated the expected term of options granted based on historical exercise patterns. In 2021, our Compensation Committee approved an amendment to the 2011 Equity Incentive Plan, or 2011 Plan, and the 2020 Equity Incentive Plan, or 2020 Plan, that increased the contractual term of stock options granted under these plans from seven years to ten years for stock options granted on January 1, 2022 and thereafter. We determined that we are unable to rely on our historical exercise data as a basis for estimating the expected life of stock options granted to employees following this change because the contractual term changed and we have no other means to reasonably estimate future exercise behavior. We therefore used the simplified method for determining the expected life of stock options granted to employees in the years ended December 31, 2025, 2024 and 2023. Under the simplified method, we calculate the expected term as the average of the time-to-vesting and the contractual life of the options. As we gain additional historical information, we will transition to calculating our expected term based on our historical exercise patterns.
RSU’s:
The fair value of RSUs is based on the market price of our common stock on the date of grant. The RSUs we have granted to employees vest annually over a four-year period. The RSUs we granted to our board of directors prior to June 2020 vested annually over a four-year period. The annual RSUs we granted to our board of directors after June 2020 fully vest after one year. The RSUs we grant to board members at their initial appointment to the board of directors vest annually over a three-year period.
PRSU’s:
Beginning in 2020, we added PRSU awards to the compensation for our Chief Executive Officer, Dr. Brett Monia. Beginning in 2022, we added PRSU awards to the compensation for our other Section 16 officers. Under the terms of the PRSUs we granted in 2020 through 2022, one third of the PRSUs may vest at the end of three separate performance periods spread over the three years following the date of grant (i.e., the one-year period commencing on the date of grant and ending on the first anniversary of the date of grant; the two-year period commencing on the date of grant and ending on the second anniversary of the date of grant; and the three-year period commencing on the date of grant and ending on the third anniversary of the date of grant) based on our relative total shareholder return, or TSR, as compared to a peer group of companies, and as measured, in each case, at the end of the applicable performance period. Under the terms of the grants no number of PRSUs is guaranteed to vest and the actual number of PRSUs that will vest at the end of each performance period may be anywhere from zero to 150 percent of the target number depending on our relative TSR. These PRSU awards also included an alternative three-year payout mechanism, or the Alternative Calculation, under which we must calculate an alternative payout at the end of the final three-year measurement period assuming the only measurement period for all shares under the award was the three-year period. If the Alternative Calculation is greater than payouts under the sum of the three years, then such PRSU award will pay out to achieve the number of shares payable under the Alternative Calculation.
Under the terms of the PRSUs we granted in 2025, 2024 and 2023, 100 percent of the PRSUs may vest at the end of the three-year performance period based on our relative TSR as compared to a peer group of companies and as measured at the end of the performance period. Under the terms of the grants, no number of PRSUs is guaranteed to vest and the actual number of PRSUs that will vest at the end of each performance period may be anywhere from zero to 200 percent of the target number depending on our relative TSR.
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We determine the fair value of the PRSUs using a Monte Carlo model because the performance target is based on our relative TSR, which represents a market condition. We are recognizing the grant date fair value of these awards as stock-based compensation expense using the accelerated multiple-option approach over the vesting period.
Refer to Note 8, Stockholders’ Equity, for additional information regarding our stock-based compensation plans.
Concentration of Credit Risk
Financial instruments that potentially subject us to concentrations of credit risk consist primarily of cash equivalents, short-term investments and receivables. We place our cash equivalents and short-term investments with reputable financial institutions. We primarily invest our excess cash in commercial paper and debt instruments of the U.S. Treasury, financial institutions, corporations, and U.S. government agencies with strong credit ratings and an investment grade rating at or above A-1, P-1 or F-1 by Moody’s, Standard & Poor’s, or S&P, or Fitch, respectively. We have established guidelines relative to diversification and maturities that maintain safety and liquidity. We periodically review and modify these guidelines to maximize trends in yields and interest rates without compromising safety and liquidity.
Fair Value Measurements
We have estimated the fair value of our financial instruments. The amounts reported for cash, accounts receivable, accounts payable and accrued expenses approximate the fair value because of their short maturities. We report our investment securities at their estimated fair value based on quoted market prices for identical or similar instruments.
We use a three-tier fair value hierarchy to prioritize the inputs used in our fair value measurements. These tiers include: Level 1, defined as observable inputs such as quoted prices in active markets for identical assets, which includes our money market funds and treasury securities classified as available-for-sale securities and our investment in equity securities in publicly traded biotechnology companies; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable, which includes our fixed income securities and commercial paper classified as available-for-sale securities; and Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring us to develop our own assumptions. We classify most of our securities as Level 2. We obtain the fair value of our Level 2 investments from our custodian bank or from a professional pricing service. We validate the fair value of our Level 2 investments by understanding the pricing model used by the custodian banks or professional pricing service provider and comparing that fair value to the fair value based on observable market prices.
Cash, Cash Equivalents and Investments
We consider all liquid investments with maturities of three months or less when we purchase them to be cash equivalents. Our short-term investments have initial maturities of greater than three months from date of purchase. We classify our short-term debt investments as “available-for-sale” and carry them at fair market value based upon prices on the last day of the fiscal period for identical or similar items. We record unrealized gains and losses on debt securities as a separate component of comprehensive income (loss) and include net realized gains and losses in gain (loss) on investments in our consolidated statements of operations. We use the specific identification method to determine the cost of securities sold.
We also have equity investments of less than 20 percent ownership in public and private biotechnology companies that we received as part of a technology license or partner agreement. At December 31, 2025, we held equity investments in three publicly traded companies and five privately held companies.
We are required to measure and record our equity investments at fair value and to recognize the changes in fair value in our consolidated statements of operations. We account for our equity investments in publicly traded companies at their listed stock price. We account for our equity investments in privately held companies at their cost minus impairments, plus or minus changes resulting from observable price changes in orderly transactions for the identical or similar investment of the same issuer.
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Inventories
We reflect our inventory in our consolidated balance sheets at the lower of cost or net realizable value under the first-in, first-out method, or FIFO. Our inventory costs include material, labor and overhead costs. Our raw materials include active pharmaceutical ingredient, or API, for commercial medicines. We capitalize inventory costs related to drug products when we consider future commercialization to be probable and expect to realize future economic benefit. When evaluating whether to capitalize inventory costs, we consider various factors, including the likelihood of receiving required regulatory approvals, communications from regulatory agencies such as safety or efficacy concerns, underlying manufacturing processes and supply chain matters, shelf life of the inventory, market trends such as competition and pricing, potential legal matters and potential reimbursement strategies. We record inventory costs that do not meet our capitalization requirements as R&D expense in our consolidated statements of operations.
We review our inventory periodically and reduce the carrying value of items we consider to be slow moving or obsolete to their estimated net realizable value based on forecasted demand compared to quantities on hand. We consider several factors in estimating the net realizable value, including shelf life of our inventory and historical write-offs.
Capitalized Materials
We capitalize the costs of certain materials that we purchase for use in manufacturing our medicines in our clinical development programs because until we use these materials, they have alternative future uses. We can use these materials in multiple drug candidates and, as a result, each material has future economic value independent of the development status of any single medicine. We include capitalized materials in other current assets in our consolidated balance sheets and expense these costs as R&D expenses when we use the materials. We review our capitalized materials periodically for continued alternative future use and reduce the carrying value of items in the period in which an impairment is identified.
We record capitalized costs related to materials to be used in our clinical development programs within other current assets in our consolidated balance sheets.
Property, Plant and Equipment
We carry our property, plant and equipment at cost and depreciate it on the straight-line method over its estimated useful life, which we determine as the following (in years):
Estimated
Useful Lives
Computer software, laboratory, manufacturing and other equipment 3 to 10
Building, building improvements and building systems 15 to 40
Land improvements 20
Leasehold improvements 5 to 15
Furniture and fixtures 5 to 10
We depreciate our leasehold improvements using the shorter of the estimated useful life or remaining lease term. We evaluate long-lived assets, which include property, plant and equipment, for impairment whenever events or changes in circumstances indicate that we may not be able to recover the carrying amount of such assets.
Accrued Liabilities
We have numerous medicines in preclinical studies and/or clinical trials at clinical sites throughout the world. 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.
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Convertible Debt
We account for each of our convertible debt instruments as a single unit of accounting, a liability, because we concluded that the conversion features do not require bifurcation as a derivative under ASC 815-15 and we did not issue our convertible debt instruments at a substantial premium. We record debt issuance costs as contra-liabilities in our consolidated balance sheets at issuance and amortize them over the contractual term of the convertible debt instrument using the effective interest rate. The balances of our convertible senior notes presented in our consolidated balance sheets represent the principal balance of each convertible debt instrument less the unamortized portion of the debt issuance costs.
As of December 31, 2025, we had three outstanding convertible senior notes, our 0% Notes due 2030, which mature in December 2030, our 1.75% Notes due 2028, which mature in June 2028, and our 0% Notes due 2026, which mature in April 2026. Our 0.125% Notes due 2024 matured in December 2024. Refer to Note 7, Long-Term Obligations and Commitments, for further details on our convertible senior notes.
Call Spread
In conjunction with the issuance of our 0% Notes due 2026 and 0.125% Notes due 2024 in April 2021 and December 2019, respectively, we entered into call spread transactions, which were comprised of purchasing note hedges and selling warrants. We account for the note hedges and warrants as separate freestanding financial instruments and treat each instrument as a separate unit of accounting. We determined that the note hedges and warrants do not meet the definition of a liability using the guidance contained in ASC Topic 480; therefore, we account for the note hedges and warrants using the Derivatives and Hedging – Contracts in Entity’s Own Equity accounting guidance contained in ASC Topic 815. We determined that the note hedges and warrants meet the definition of a derivative, are indexed to our stock and meet the criteria to be classified in shareholders’ equity. We recorded the aggregate amount paid for the note hedges and the aggregate amount received for the warrants as additional paid-in capital in our consolidated balance sheets. We reassess our ability to continue to classify any outstanding note hedges and warrants in shareholders’ equity at each reporting period. Refer to Note 7, Long-Term Obligations and Commitments, for further details on the call spread transactions.
Liability Related to Sale of Future Royalties
In January 2023, we entered into a royalty purchase agreement with Royalty Pharma Investments, or Royalty Pharma, to monetize a portion of our future SPINRAZA and pelacarsen royalties we are entitled to under our arrangements with Biogen and Novartis, respectively. Under our agreement with Royalty Pharma, we record upfront payments and milestone payments we receive from the sale of future royalties as a liability, net of transaction costs. Refer to Note 7, Long-Term Obligations and Commitments, for further details on the agreement.
We record royalty payments made to Royalty Pharma as a reduction of the liability or accrued interest and amortize the transaction costs over the estimated life of the royalty stream. We account for the associated interest expense under the effective interest rate method, while continuing to recognize the full amount of royalty revenue in the period in which the counterparty sells the related product and recognizes the related revenue.
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. If there is a material change in our estimate, we will prospectively adjust the effective interest rate and the related interest expense.
Leases
We determine if an arrangement contains a lease at inception. We currently only have operating leases. We recognize a right-of-use operating lease asset and associated short- and long-term operating lease liability in our consolidated balance sheets for operating leases greater than one year. Our right-of-use assets represent our right to use an underlying asset for the lease term and our lease liabilities represent our obligation to make lease payments arising from the lease arrangement. We recognize our right-of-use operating lease assets and lease liabilities based on the present value of the future minimum lease payments we will pay over the lease term.We determine the lease term at the inception of each lease, and in certain cases our lease term could include renewal options if we conclude we are reasonably certain to exercise the renewal option. When we exercise a lease option that was not previously included in the initial lease term, we reassess our right-of-use asset and lease liabilities for the new lease term.
As our leases do not provide an interest rate implicit in the lease, we use our incremental borrowing rate, based on the information available as of the lease inception date or at the lease option extension date in determining the present value of future payments. We recognize rent expense for our minimum lease payments on a straight-line basis over the expected term of our lease. Our leases do not include material variable or contingent lease payments. We recognize period expenses, such as common area maintenance expenses, in the period we incur the expense.
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Recent Accounting Standards
In November 2023, the Financial Accounting Standards Board, or FASB, issued Accounting Standard Update, or ASU, 2023-07, which provides updated guidance on segment reporting. The guidance requires public companies to disclose significant expenses that are regularly provided to the CODM, other segment items for each reportable segment and measures of segment profit or loss used by the CODM for allocating resources. In addition, the updated guidance requires public companies with a single reportable segment to provide all disclosures required under Accounting Standards Codification, or ASC, Topic 280, Segment Reporting, and public companies to include in interim reports all disclosures related to a reportable segment's profit or loss and assets that are currently required in annual reports. We adopted the annual reporting requirements in our 2024 Annual Report on Form 10-K and began providing the interim reporting requirements in our Quarterly Report on Form 10-Q in the first quarter of 2025. Refer to Note 12, Segment Information, for further details on our segment information.
In December 2023, the FASB issued ASU 2023-09, which provides updated guidance on income tax disclosures. The new guidance requires companies to provide additional disaggregation of information related to the income tax rate reconciliation and income tax payments. In addition, the guidance eliminates certain existing disclosure requirements related to uncertain tax positions and unrecognized deferred tax liabilities. This update is effective for annual periods beginning after December 15, 2024. We adopted this guidance on a prospective basis in our 2025 Annual Report on Form 10-K. This guidance did not have a material impact on our consolidated financial statements. Refer to Note 9, Income Taxes, for further details on our income taxes.
In November 2024, the FASB issued ASU 2024-03, which requires public companies to disclose disaggregated expenses for certain expenses in the income statement. This update is effective for annual periods beginning after December 15, 2026 and interim periods within annual periods beginning after December 15, 2027. Early adoption of this guidance is permitted. The guidance may be applied on a prospective or retrospective basis. We are currently assessing the impact and timing of adopting this update.
In November 2024, the FASB issued ASU 2024-04 to clarify the guidance for determining whether to account for early settlements of convertible debt as induced conversions or extinguishments. The amended guidance clarifies that the induced conversion accounting guidance under ASC Topic 470-20, Debt with Conversion and Other Options, is applicable to convertible debt instruments that are settled in equity, cash or other assets, or a combination thereof. Under the amended guidance, a settlement of a convertible debt instrument qualifies as an induced conversion if (i) the inducement offer includes all consideration (in form and amount) issuable under the conversion privileges defined in the terms of the convertible debt instrument, and (ii) the convertible debt instrument has a substantive conversion feature as of its issuance date and the inducement offer acceptance date. This update is effective for annual periods beginning after December 15, 2025 and interim periods within those annual periods. Early adoption of this guidance is permitted. The guidance may be applied on a prospective or retrospective basis. We early adopted this update in the fourth quarter of 2025 on a prospective basis and accounted for the partial repurchase of our 0% Notes due 2026 in accordance with the amended guidance. Refer to Note 7, Long-Term Obligations and Commitments, for further details on our convertible debt.
In July 2025, the FASB issued ASU 2025-05, which amended the guidance in ASC 326, Credit Losses, to simplify the estimation of credit losses on accounts receivable and contract assets from revenue transactions. The amended guidance allows companies to elect a practical expedient to assume that conditions as of the balance sheet date will remain unchanged for the remaining life of the asset when estimating the expected credit losses of the asset. This update is effective for annual periods beginning after December 15, 2025 and interim periods within those annual periods. Early adoption of this guidance is permitted. Companies that elect the practical expedient are required to apply the amendments prospectively. We are currently assessing the impact and timing of adopting this update.
In September 2025, the FASB issued ASU 2025-06, which amended and simplified the existing guidance for software costs. The amended guidance removes references to software development stages and allows companies to begin capitalizing software costs when management has authorized and committed to funding the software project and it is probable that the project will be completed with the software performing the intended function. This update is effective for annual periods beginning after December 15, 2027 and interim periods within those annual periods. Early adoption of this guidance is permitted at the beginning of an annual reporting period. The guidance may be applied on a prospective or retrospective basis. We expect to early adopt this update in the first quarter of 2026 on a prospective basis. We expect this guidance will not have a material impact on our consolidated financial statements.
In September 2025, the FASB issued ASU 2025-07, which clarifies that share-based non-cash consideration received from a customer in exchange for goods or services under a revenue contract is subject to the guidance on non-cash consideration under ASC 606. This update is effective for annual periods beginning after December 15, 2026 and interim periods within those annual periods. Early adoption of this guidance is permitted. The guidance may be applied on a prospective or modified retrospective basis. We are currently assessing the impact and timing of adopting this update.
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In December 2025, the FASB issued ASU 2025-11, which clarifies the current interim disclosure requirements and the applicability of ASC 270, Interim Reporting. The updated guidance does not change the fundamental nature or expand or reduce the disclosure requirements of interim reporting. This update is effective for interim reporting periods within annual reporting periods beginning after December 15, 2027. Early adoption of this guidance is permitted. We are currently assessing the impact and timing of adopting this update.
In December 2025, the FASB issued ASU 2025-12, which includes clarification and improvements to various topics in the ASC. This update is effective for annual reporting periods beginning after December 15, 2026 and interim periods within those annual periods. Early adoption of this guidance is permitted. We are currently assessing the impact and timing of adopting this update.
We do not expect any other recently issued accounting standards to have a material impact to our financial statements or disclosures.
2. Supplemental Financial Data
Inventories
Our inventory consisted of the following (in thousands):
December 31,
Reported as:
Deposits and other assets 16,138 -
We classify inventories as non-current assets when we expect the inventories to remain on hand beyond one year. We include non-current inventories in deposits and other assets in our consolidated balance sheets. The amount reported as deposits and other assets as of December 31, 2025 consists of work in process inventory.
Property, Plant and Equipment
Our property, plant and equipment consisted of the following (in thousands):
December 31,
Building, building improvements and building systems 41,801 41,228
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Accrued Liabilities
Our accrued liabilities consisted of the following (in thousands):
December 31,
3. Revenues
During the years ended December 31, 2025, 2024 and 2023, our revenues were comprised of the following (in thousands):
Year Ended December 31,
Revenue:
Commercial revenue:
Product sales, net:
TRYNGOLZA sales, net $ 107,526 $ - $ -
DAWNZERA sales, net 7,789 - -
Total product sales, net 115,315 - -
Royalty revenue:
Research and development revenue:
Revenue Sources
The following are sources of revenue and when we typically recognize revenue.
Commercial Revenue
In December 2024, the U.S. Food and Drug Administration, or FDA, approved TRYNGOLZA (olezarsen) for the treatment of familial chylomicronemia syndrome, or FCS. Following the approval, we launched TRYNGOLZA and began earning revenue from TRYNGOLZA sales.
In August 2025, the FDA approved DAWNZERA (donidalorsen) for prophylaxis to prevent attacks of hereditary angioedema, or HAE, in adult and pediatric patients 12 years of age and older. Following the approval, we launched DAWNZERA and began earning revenue from DAWNZERA sales.
We earn royalty payments primarily on net sales of SPINRAZA, WAINUA and QALSODY.
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