10-Q 1 akca-10q_20190930.htm 10-Q akca-10q_20190930.htm
Akcea Therapeutics, Inc.
10-Q on 11/06/2019   Download
SEC Document
SEC Filing

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

 

Form 10-Q

 

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended September 30, 2019

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from            to           

Commission file number 001-38137

 

 

Akcea Therapeutics, Inc.

(Exact name of Registrant as specified in its charter)

 

 

Delaware

 

47-2608175

(State or other jurisdiction of

incorporation or organization)

 

(IRS Employer

Identification No.)

 

22 Boston Wharf Road, 9th Floor, Boston, MA 02210

(Address of principal executive offices, including zip code)

617-207-0202

(Registrant’s telephone number, including area code)

 

 

Securities registered pursuant to Section 12(b) of the Act.

 

Title of each class

 

Trading

Symbol(s)

 

Name of each exchange on which registered

Common Stock

 

AKCA

 

The Nasdaq Stock Market, LLC

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act:

 

Large accelerated filer

 

Accelerated filer

Non-accelerated filer

 

Smaller reporting company

 

 

 

Emerging growth company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12(b)-2 of the Securities Exchange Act of 1934). Yes No

 

The number of shares of common stock outstanding as of October 31, 2019 was 93,901,338.

 

 

 

 


 

AKCEA THERAPEUTICS, INC.

FORM 10-Q

INDEX

 

PART I

FINANCIAL INFORMATION

 

 

 

 

 

 

Item 1.

Financial Statements (unaudited):

 

 

 

 

 

 

 

Condensed Consolidated Balance Sheets as of September 30, 2019 and December 31, 2018

 

3

 

 

 

 

 

Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2019 and 2018

 

4

 

 

 

 

 

Condensed Consolidated Statements of Comprehensive Loss for the three and nine months ended September 30, 2019 and 2018

 

5

 

 

 

 

 

Condensed Consolidated Statements of Stockholders' Equity for the three and nine months ended September 30, 2019 and 2018

 

6

 

 

 

 

 

Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2019 and 2018

 

8

 

 

 

 

 

Notes to Condensed Consolidated Financial Statements

 

10

 

 

 

 

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations:

 

31

 

 

 

 

Item 3.

Quantitative and Qualitative Disclosures about Market Risk

 

43

 

 

 

 

Item 4.

Controls and Procedures

 

43

 

 

 

 

PART II

OTHER INFORMATION

 

 

 

 

 

 

Item 1.

Legal Proceedings

 

45

 

 

 

 

Item 1A

Risk Factors

 

45

 

 

 

 

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

 

74

 

 

 

 

Item 3.

Defaults Upon Senior Securities

 

74

 

 

 

 

Item 4.

Mine Safety Disclosures

 

74

 

 

 

 

Item 5.

Other Information

 

74

 

 

 

 

Item 6.

Exhibits

 

76

 

 

 

 

Signatures

 

78

 

TRADEMARKS

"Akcea," the Akcea logo, and other trademarks or service marks of Akcea Therapeutics, Inc. appearing in this Report are the property of Akcea Therapeutics, Inc. This Report contains additional trade names, trademarks and service marks of others, which are the property of their respective owners. Solely for convenience, trademarks and trade names referred to in this Report may appear without the ® or TM symbols.

 

2


 

AKCEA THERAPEUTICS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share data)

(Unaudited)

 

 

 

September 30,

 

 

December 31,

 

 

 

2019

 

 

2018

 

ASSETS

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

129,329

 

 

$

86,454

 

Short-term investments

 

 

123,362

 

 

 

166,155

 

Accounts receivable

 

 

10,653

 

 

 

4,597

 

Receivable from Ionis Pharmaceuticals, Inc.

 

 

647

 

 

 

 

Inventories

 

 

8,641

 

 

 

85

 

Other current assets

 

 

5,809

 

 

 

9,944

 

Total current assets

 

 

278,441

 

 

 

267,235

 

Property, plant and equipment, net

 

 

5,277

 

 

 

5,696

 

Operating lease right-of-use assets

 

 

11,300

 

 

 

 

Intangible assets, net

 

 

84,529

 

 

 

88,914

 

Deposits and other assets

 

 

3,620

 

 

 

3,416

 

Total assets

 

$

383,167

 

 

$

365,261

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

5,711

 

 

$

12,068

 

Payable to Ionis Pharmaceuticals, Inc.

 

 

 

 

 

18,901

 

Accrued compensation

 

 

9,382

 

 

 

8,583

 

Accrued liabilities

 

 

15,211

 

 

 

14,787

 

Current portion of deferred revenue

 

 

10,840

 

 

 

25,354

 

Other current liabilities

 

 

1,977

 

 

 

968

 

Total current liabilities

 

 

43,121

 

 

 

80,661

 

Long-term portion of lease liabilities

 

 

14,558

 

 

 

4,442

 

Long-term portion of deferred revenue

 

 

 

 

 

3,434

 

Total liabilities

 

 

57,679

 

 

 

88,537

 

Stockholders’ equity:

 

 

 

 

 

 

 

 

Common stock, $0.001 par value; 125,000,000 shares authorized at September 30,

   2019 and December 31, 2018; 93,885,414 and 89,345,978 shares issued and

   outstanding at September 30, 2019 and December 31, 2018, respectively.

 

 

94

 

 

 

89

 

Additional paid-in capital

 

 

889,133

 

 

 

799,001

 

Accumulated other comprehensive loss

 

 

(63

)

 

 

(324

)

Accumulated deficit

 

 

(563,676

)

 

 

(522,042

)

Total stockholders’ equity

 

 

325,488

 

 

 

276,724

 

Total liabilities and stockholders’ equity

 

$

383,167

 

 

$

365,261

 

 

See accompanying notes.

3


 

AKCEA THERAPEUTICS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except share and per share data)

(Unaudited)

 

 

 

Three Months Ended

September 30,

 

 

Nine Months Ended

September 30,

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

Revenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Product revenue, net

 

$

11,944

 

 

$

 

 

$

28,563

 

 

$

 

Licensing revenue

 

 

136

 

 

 

12,000

 

 

 

6,172

 

 

 

12,000

 

Research and development and license revenue under

   collaborative agreement

 

 

8,544

 

 

 

7,241

 

 

 

176,329

 

 

 

42,670

 

Total revenue

 

 

20,624

 

 

 

19,241

 

 

 

211,064

 

 

 

54,670

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of sales - product

 

 

967

 

 

 

1,043

 

 

 

3,373

 

 

 

1,043

 

Cost of sales - intangible asset amortization

 

 

1,434

 

 

 

701

 

 

 

4,256

 

 

 

701

 

Cost of license

 

 

 

 

 

7,200

 

 

 

3,000

 

 

 

7,200

 

Research and development

 

 

24,797

 

 

 

29,381

 

 

 

144,687

 

 

 

96,808

 

Selling, general and administrative

 

 

34,905

 

 

 

45,924

 

 

 

130,247

 

 

 

107,676

 

Net loss share from commercial activities under arrangement

   with Ionis Pharmaceuticals, Inc.

 

 

(8,889

)

 

 

 

 

 

(29,410

)

 

 

 

Total expenses

 

 

53,214

 

 

 

84,249

 

 

 

256,153

 

 

 

213,428

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss from operations

 

 

(32,590

)

 

 

(65,008

)

 

 

(45,089

)

 

 

(158,758

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other income (expense):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investment income

 

 

1,487

 

 

 

1,675

 

 

 

4,282

 

 

 

4,089

 

Other (expense)

 

 

(136

)

 

 

(25

)

 

 

(276

)

 

 

(148

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss before income tax expense

 

 

(31,239

)

 

 

(63,358

)

 

 

(41,083

)

 

 

(154,817

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income tax expense

 

 

(259

)

 

 

(233

)

 

 

(551

)

 

 

(447

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

$

(31,498

)

 

$

(63,591

)

 

$

(41,634

)

 

$

(155,264

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss per share of common stock owned by Ionis, basic and

   diluted

 

$

(0.34

)

 

$

(0.73

)

 

$

(0.40

)

 

$

(1.93

)

Weighted-average shares of common stock outstanding owned by

   Ionis, basic and diluted

 

 

70,221,338

 

 

 

65,538,467

 

 

 

69,680,886

 

 

 

57,346,539

 

Net loss per share of common stock owned by others, basic and

   diluted

 

$

(0.34

)

 

$

(0.73

)

 

$

(0.60

)

 

$

(2.07

)

Weighted-average shares of common stock outstanding owned by

   others, basic and diluted

 

 

22,821,555

 

 

 

21,671,415

 

 

 

22,509,819

 

 

 

21,446,813

 

 

See accompanying notes.

4


 

AKCEA THERAPEUTICS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(In thousands)

(Unaudited)

 

 

 

Three Months Ended

September 30,

 

 

Nine Months Ended

September 30,

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

Net loss

 

$

(31,498

)

 

$

(63,591

)

 

$

(41,634

)

 

$

(155,264

)

Unrealized gains on debt securities, net of tax

 

 

64

 

 

 

37

 

 

286

 

 

 

143

 

Currency translation adjustment

 

 

(17

)

 

 

(29

)

 

 

(25

)

 

19

 

Comprehensive loss

 

$

(31,451

)

 

$

(63,583

)

 

$

(41,373

)

 

$

(155,102

)

 

See accompanying notes.

5


 

AKCEA THERAPEUTICS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

Three Months Ended September 30, 2018 and 2019

(In thousands)

(Unaudited)

 

 

 

 

For the Three Months Ended September 30, 2018

 

 

 

Common Stock

 

 

Additional

Paid In

 

 

Accumulated

Other

Comprehensive

 

 

Accumulated

 

 

Total

Stockholders'

 

Description

 

Shares

 

 

Amount

 

 

Capital

 

 

Loss

 

 

Deficit

 

 

Equity

 

Balance at June 30, 2018

 

 

85,681

 

 

$

86

 

 

$

678,509

 

 

$

(297

)

 

$

(387,894

)

 

$

290,404

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(63,591

)

 

 

(63,591

)

Change in unrealized gains, net of tax

 

 

 

 

 

 

 

 

 

 

 

37

 

 

 

 

 

 

37

 

Currency translation adjustment

 

 

 

 

 

 

 

 

 

 

 

 

(29

)

 

 

 

 

 

(29

)

Exercise of common stock options

 

 

177

 

 

 

 

 

 

1,626

 

 

 

 

 

 

 

 

 

1,626

 

Issuance of common stock to Ionis in connection with

   TEGSEDI regulatory milestones

 

 

1,597

 

 

 

1

 

 

 

39,999

 

 

 

 

 

 

 

 

 

40,000

 

Issuance of common stock in connection with

   employee stock purchase plan

 

 

16

 

 

 

 

 

 

234

 

 

 

 

 

 

 

 

 

234

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

12,730

 

 

 

 

 

 

 

 

 

12,730

 

Balance at September 30, 2018

 

 

87,471

 

 

$

87

 

 

$

733,098

 

 

$

(289

)

 

$

(451,485

)

 

$

281,411

 

 

 

 

For the Three Months Ended September 30, 2019

 

 

 

Common Stock

 

 

Additional

Paid In

 

 

Accumulated

Other

Comprehensive

 

 

Accumulated

 

 

Total

Stockholders'

 

Description

 

Shares

 

 

Amount

 

 

Capital

 

 

Loss

 

 

Deficit

 

 

Equity

 

Balance at June 30, 2019

 

 

92,921

 

 

$

93

 

 

$

900,837

 

 

$

(110

)

 

$

(532,178

)

 

$

368,642

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(31,498

)

 

 

(31,498

)

Change in unrealized gains, net of tax

 

 

 

 

 

 

 

 

 

 

 

64

 

 

 

 

 

 

64

 

Currency translation adjustment

 

 

 

 

 

 

 

 

 

 

 

(17

)

 

 

 

 

 

(17

)

Exercise of common stock options

 

 

1,544

 

 

 

 

 

 

1,335

 

 

 

 

 

 

 

 

 

1,335

 

Issuance of common stock in connection with

   employee stock purchase plan

 

 

22

 

 

 

 

 

 

441

 

 

 

 

 

 

 

 

 

441

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

(3,464

)

 

 

 

 

 

 

 

 

(3,464

)

Payments of tax withholdings related to exercise of

   employee stock awards

 

 

(602

)

 

 

1

 

 

 

(10,016

)

 

 

 

 

 

 

 

 

(10,015

)

Balance at September 30, 2019

 

 

93,885

 

 

$

94

 

 

$

889,133

 

 

$

(63

)

 

$

(563,676

)

 

$

325,488

 

 

See accompanying notes.

6


 

AKCEA THERAPEUTICS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(In thousands)

Nine Months Ended September 30, 2018 and 2019

(Unaudited)

 

 

 

For the Nine Months Ended September 30, 2018

 

 

 

Common Stock

 

 

Additional

Paid In

 

 

Accumulated

Other

Comprehensive

 

 

Accumulated

 

 

Total

Stockholders'

 

Description

 

Shares

 

 

Amount

 

 

Capital

 

 

Loss

 

 

Deficit

 

 

Equity

 

Balance at December 31, 2017

 

 

66,542

 

 

$

67

 

 

$

464,430

 

 

$

(451

)

 

$

(296,221

)

 

$

167,825

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(155,264

)

 

 

(155,264

)

Change in unrealized gains, net of tax

 

 

 

 

 

 

 

 

 

 

 

143

 

 

 

 

 

 

143

 

Currency translation adjustment

 

 

 

 

 

 

 

 

 

 

 

19

 

 

 

 

 

 

19

 

Exercise of common stock options

 

 

633

 

 

 

 

 

 

4,800

 

 

 

 

 

 

 

 

 

4,800

 

Issuance of common stock to Ionis in connection with

   TTR License Agreement

 

 

18,667

 

 

 

19

 

 

 

200,081

 

 

 

 

 

 

 

 

 

200,100

 

Distribution to Ionis in connection with the TTR license

   transaction

 

 

 

 

 

 

 

 

(7,792

)

 

 

 

 

 

 

 

 

(7,792

)

Issuance of common stock to Ionis in connection with

   TEGSEDI regulatory milestones

 

 

1,597

 

 

 

1

 

 

 

39,999

 

 

 

 

 

 

 

 

 

40,000

 

Issuance of common stock in connection with

   employee stock purchase plan

 

 

32

 

 

 

 

 

 

341

 

 

 

 

 

 

 

 

 

341

 

Stock compensation expense

 

 

 

 

 

 

 

 

31,239

 

 

 

 

 

 

 

 

 

31,239

 

Balance at September 30, 2018

 

 

87,471

 

 

$

87

 

 

$

733,098

 

 

$

(289

)

 

$

(451,485

)

 

$

281,411

 

 

 

 

 

For the Nine Months Ended September 30, 2019

 

 

 

Common Stock

 

 

Additional

Paid In

 

 

Accumulated

Other

Comprehensive

 

 

Accumulated

 

 

Total

Stockholders'

 

Description

 

Shares

 

 

Amount

 

 

Capital

 

 

Loss

 

 

Deficit

 

 

Equity

 

Balance at December 31, 2018

 

 

89,346

 

 

$

89

 

 

$

799,001

 

 

$

(324

)

 

$

(522,042

)

 

$

276,724

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(41,634

)

 

 

(41,634

)

Change in unrealized gains, net of tax

 

 

 

 

 

 

 

 

 

 

 

286

 

 

 

 

 

 

286

 

Currency translation adjustment

 

 

 

 

 

 

 

 

 

 

 

(25

)

 

 

 

 

 

(25

)

Exercise of common stock options

 

 

2,264

 

 

 

1

 

 

 

8,362

 

 

 

 

 

 

 

 

 

8,363

 

Issuance of common stock in connection with

   employee stock purchase plan

 

 

40

 

 

 

 

 

 

822

 

 

 

 

 

 

 

 

 

822

 

Issuance of common stock in connection with Ionis

   sublicense fee

 

 

2,837

 

 

 

3

 

 

 

74,997

 

 

 

 

 

 

 

 

 

75,000

 

Distribution to Ionis

 

 

 

 

 

 

 

 

(13,492

)

 

 

 

 

 

 

 

 

(13,492

)

Stock-based compensation expense

 

 

 

 

 

 

 

 

29,459

 

 

 

 

 

 

 

 

 

29,459

 

Payments of tax withholdings related to exercise of

   employee stock awards

 

 

(602

)

 

 

1

 

 

 

(10,016

)

 

 

 

 

 

 

 

 

(10,015

)

Balance at September 30, 2019

 

 

93,885

 

 

$

94

 

 

$

889,133

 

 

$

(63

)

 

$

(563,676

)

 

$

325,488

 

 

See accompanying notes.

7


 

AKCEA THERAPEUTICS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

 

 

 

Nine Months Ended September 30,

 

 

 

2019

 

 

2018

 

Operating activities:

 

 

 

 

 

 

 

 

Net loss

 

$

(41,634

)

 

$

(155,264

)

Adjustments to reconcile net loss to net cash provided by (used in)

   operating activities:

 

 

 

 

 

 

 

 

Depreciation

 

 

594

 

 

 

109

 

Amortization of right-of-use operating lease assets

 

 

735

 

 

 

 

Amortization of intangibles

 

 

4,385

 

 

 

815

 

Amortization of discount/premium on investment securities, net

 

 

(470

)

 

 

197

 

Non-cash sublicensing expense

 

 

75,000

 

 

 

 

Stock-based compensation expense

 

 

29,459

 

 

 

31,239

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Accounts receivable

 

 

(6,056

)

 

 

4,777

 

Other current and long-term assets

 

 

(256

)

 

 

(7,104

)

Inventory

 

 

(4,369

)

 

 

Accounts payable

 

 

(5,114

)

 

 

300

 

Receivable/payable to Ionis Pharmaceuticals, Inc.

 

 

(19,548

)

 

 

9,198

 

Accrued compensation

 

 

799

 

 

 

4,765

 

Accrued liabilities

 

 

(558

)

 

 

13,237

 

Income taxes payable

 

 

72

 

 

 

(553

)

Deferred revenue

 

 

(17,948

)

 

 

(35,882

)

Net cash provided by (used in) operating activities

 

 

15,091

 

 

 

(134,166

)

 

 

 

 

 

 

 

 

 

Investing activities:

 

 

 

 

 

 

 

 

Purchases of short-term investments

 

 

(111,750

)

 

 

(105,091

)

Proceeds from maturity of short-term investments

 

 

155,299

 

 

 

138,580

 

Purchases of property, plant and equipment

 

 

(1,418

)

 

 

(116

)

Net cash provided by investing activities

 

 

42,131

 

 

 

33,373

 

 

 

 

 

 

 

 

 

 

Financing activities:

 

 

 

 

 

 

 

 

Proceeds from exercise of common stock options and employee stock

   purchase plan issuances

 

 

9,185

 

 

 

5,141

 

Distribution to Ionis

 

 

(13,492

)

 

 

(7,792

)

Proceeds from issuance of common stock to Ionis in TTR transaction

 

 

 

 

 

163,648

 

Payments of tax withholdings related to exercise of employee stock awards

 

 

(10,015

)