Akcea Merger

12 Months Ended

Dec. 31, 2021

7. Akcea Merger

Purchase Price and Direct Transaction Costs Accounting for the Akcea Merger

In October 2020, we reacquired the shares of Akcea’s common stock we did not own, increasing our ownership from 76 percent to 100 percent. Under the purchase agreement, we purchased 24.8 million shares at $18.15 per share, resulting in a total purchase price of $450.6 million.

To reflect our 100 percent ownership, we accounted for the increase in our ownership by eliminating the noncontrolling interest adjustment in stockholders’ equity in accordance with the Consolidation accounting guidance (ASC Topic 810). We recognized the difference between the purchase price and the adjustment to noncontrolling interest in stockholders’ equity as additional-paid-in capital. Refer to our Statement of Stockholders’ Equity for detailed amounts.

We accounted for the transaction costs related to the Akcea Merger as a direct charge to stockholders’ equity. We incurred $40.6 million of direct transaction costs from the Akcea Merger, primarily comprised of banking and legal fees.

Equity Award Payouts related to the Akcea Merger

In October 2020, as part of the Akcea Merger, Ionis cancelled all of Akcea’s equity awards. In exchange for the cancelled awards, if eligible under the terms of the Akcea Merger, we paid holder’s a cash payment. We paid $18.15 for each outstanding RSU. For each outstanding option with an exercise price less than $18.15, we paid $18.15 less the exercise price. As a result, we paid out $53.4 million in the fourth quarter of 2020 related to Akcea’s cancelled equity awards. We accounted for these payments as part of the transaction costs recorded to stockholders’ equity in the fourth quarter of 2020. Because we did not replace the Akcea awards, we recognized all unrecognized non-cash stock-based compensation ($59.3 million) under Akcea’s Plan in our statement of operations in the post-merger period in the fourth quarter of 2020.

Severance and Retention Costs related to the Akcea Merger

As a result of the Akcea Merger, we incurred severance and retention expenses of $27.0 million. During 2021 and 2020, we recorded $11.7 million and $15.3 million of severance and retention related costs in operating expenses, respectively. As of December 31, 2021, we have recognized all severance and retention costs related to the Akcea Merger.

The following table summarizes the severance and retention expenses related to the Akcea Merger that we recognized for the periods indicated (in millions):

	Year Ended December 31, 2021		Year Ended December 31, 2020
R&D expenses	$	5.1	$	3.9
SG&A expenses		6.6		11.4
Total	$	11.7	$	15.3

The following table summarizes the severance and retention reserve amounts related to the Akcea Merger that we included in accrued compensation for the period indicated (in millions):

	Year Ended December 31, 2021
Beginning balance as of January 1, 2021	$	14.7
Amount expensed during the year		13.5
Reserve adjustments during the year		(1.8	)
Net amount expensed during the year		11.7
Amounts paid during the year		(26.4	)
Ending balance as of December 31, 2021	$	—

The reserve adjustments during the period primarily related to forfeitures of severance and retention payments as a result of employee terminations before they earned the amounts.