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Index to financial statements

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Filed pursuant to Rule 424(b)(4)
Registration File No. 333-216949

PROSPECTUS    

15,625,000 Shares

LOGO

Common Stock

This is an initial public offering of shares of common stock by Akcea Therapeutics, Inc. We are offering 15,625,000 shares of our common stock. The initial public offering price is $8.00 per share.

Prior to this offering, there has been no market for our common stock. Our common stock has been approved for listing on the Nasdaq Global Select Market under the symbol "AKCA."

We are an "emerging growth company" as that term is used in the Jumpstart Our Business Startups Act of 2012 and, as such, we have elected to comply with certain reduced public company reporting requirements for this prospectus and future filings.


 
  Per share
to public
  Per share
to Ionis(1)
  Total  

Initial public offering price

  $ 8.00   $ 8.00   $ 125,000,000  

Underwriting discounts and commissions(1)(2)

  $ 0.56   $ 0.00   $ 7,000,000  

Proceeds to Akcea, before expenses

  $ 7.44   $ 8.00   $ 118,000,000  

(1)
Shares purchased by Ionis Pharmaceuticals, Inc. are not subject to underwriting discounts and commissions. See below for additional information.
(2)
See "Underwriting" for a description of the compensation payable to the underwriters.

We have granted the underwriters an option for a period of 30 days to purchase up to 2,343,750 additional shares of common stock.

Novartis Pharma AG, our strategic collaborator, has agreed to purchase $50.0 million of our common stock in a separate private placement concurrent with the completion of this offering at a price per share equal to the initial public offering price. The sale of shares in the concurrent private placement will not be registered under the Securities Act of 1933, as amended. The closing of this offering is not conditioned upon the closing of the concurrent private placement. The shares of common stock purchased in the concurrent private placement will not be subject to any underwriting discounts or commissions.

Ionis Pharmaceuticals, Inc., or Ionis, has agreed to purchase 3,125,000 shares of common stock in this offering at the initial public offering price. The underwriters will not receive any underwriting discounts or commissions on the shares purchased by Ionis. Ionis will own approximately 70.8% of the total number of shares of our common stock outstanding after the completion of this offering and will be able to determine the outcome of all corporate actions requiring stockholder approval.

Investing in our common stock involves a high degree of risk. See "Risk Factors" beginning on page 17.

Neither the Securities and Exchange Commission nor other regulatory body has approved or disapproved of these securities or passed on the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense.

The underwriters expect to deliver shares of common stock to purchasers on July 19, 2017.


Joint Book-running Managers

Cowen

 

Stifel

 
Wells Fargo Securities

Lead Manager

BMO Capital Markets

July 13, 2017


Table of Contents


TABLE OF CONTENTS

 
  Page
 

Prospectus Summary

    1  

Risk Factors

    17  

Special Note Regarding Forward-Looking Statements and Industry Data

    53  

Use of Proceeds

    55  

Dividend Policy

    56  

Capitalization

    57  

Dilution

    59  

Selected Consolidated Financial Data

    61  

Management's Discussion and Analysis of Financial Condition and Results of Operations

    64  

Business

    89  

Management

    145  

Executive Compensation

    154  

Certain Relationships and Related Person Transactions

    164  

Principal Stockholders

    170  

Description of Capital Stock

    172  

Shares Eligible for Future Sale

    177  

Material U.S. Federal Income Tax Consequences to Non-U.S. Holders

    179  

Underwriting

    183  

Legal Matters

    192  

Experts

    192  

Where You Can Find Additional Information

    192  

Index to Consolidated Financial Statements

    F-1  



        We have not, and the underwriters have not, authorized anyone to provide any information or to make any representations other than those contained in this prospectus, or in any free writing prospectuses prepared by or on behalf of us or to which we have referred you. We take no responsibility for, and can provide no assurance as to the reliability of, any other information that others may give you. This prospectus is an offer to sell only the shares offered hereby, but only under circumstances and in jurisdictions where it is lawful to do so. The information contained in this prospectus or in any applicable free writing prospectus is current only as of its date, regardless of its time of delivery or any sale of shares of our common stock. Our business, financial condition, results of operations and prospects may have changed since that date.

         Through and including August 7, 2017 (25 days after the commencement of this offering), all dealers that effect transactions in shares of our common stock, whether or not participating in this offering, may be required to deliver a prospectus. This delivery is in addition to a dealer's obligation to deliver a prospectus when acting as an underwriter and with respect to their unsold allotments or subscriptions.

        For investors outside the United States: We have not, and the underwriters have not, done anything that would permit this offering or possession or distribution of this prospectus in any jurisdiction where action for that purpose is required, other than in the United States. Persons outside the United States who come into possession of this prospectus must inform themselves about, and observe any restrictions relating to, the offering of the shares of common stock and the distribution of this prospectus outside the United States.


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PROSPECTUS SUMMARY

         This summary highlights selected information contained elsewhere in this prospectus. This summary does not contain all the information you should consider before investing in our common stock. You should read the entire prospectus carefully, including "Risk factors," "Management's discussion and analysis of financial condition and results of operations" and our consolidated financial statements and notes to those consolidated financial statements, before making an investment decision. Unless the context requires otherwise: (1) references to "Akcea," our "company," "we," "us" or "our" refer to Akcea Therapeutics, Inc., a Delaware corporation and its subsidiaries, Akcea Therapeutics UK Ltd., Akcea Intl Ltd. and Akcea Therapeutics Canada, Inc. and (2) references to "Ionis" or "Ionis Pharmaceuticals" refer to Ionis Pharmaceuticals, Inc., a Delaware corporation.

Overview

        We are a late-stage biopharmaceutical company focused on developing and commercializing drugs to treat patients with serious cardiometabolic diseases caused by lipid disorders. Our goal is to become the premier company offering treatments for inadequately treated lipid disorders. We are advancing a mature pipeline of four novel drugs with the potential to treat multiple diseases. Our drugs, volanesorsen, AKCEA-APO(a)-L Rx , AKCEA-ANGPTL3-L Rx and AKCEA-APOCIII-L Rx , are all based on antisense technology developed by Ionis Pharmaceuticals, Inc., or Ionis. Our most advanced drug, volanesorsen, has completed a Phase 3 clinical program for the treatment of familial chylomicronemia syndrome, or FCS, and is currently in Phase 3 clinical development for the treatment of familial partial lipodystrophy, or FPL. FCS and FPL are both severe, rare, genetically defined lipid disorders characterized by extremely elevated levels of triglycerides. Both diseases have life-threatening consequences and the lives of patients with these diseases are impacted daily by the associated symptoms. In our clinical program, we have observed consistent and substantial (>70%) decreases in triglycerides and improvements in other manifestations of FCS, including pancreatitis attacks and abdominal pain. We believe the safety and efficacy data from the volanesorsen program demonstrate a favorable risk-benefit profile for patients with FCS. In the third quarter of 2017, we plan to file for marketing authorization for volanesorsen to treat patients with FCS.

        We are assembling the infrastructure to commercialize our drugs globally with a focus on lipid specialists as the primary call point. A key element of our commercial strategy is to provide the specialized, patient-centric support required to successfully address rare disease patient populations. We believe our focus on treating patients with inadequately addressed lipid disorders will allow us to partner efficiently and effectively with the specialized medical community that supports these patients.

        To maximize the commercial potential of two of the drugs in our pipeline, we initiated a strategic collaboration with Novartis Pharma AG, or Novartis, for the development and commercialization of AKCEA-APO(a)-L Rx and AKCEA-APOCIII-L Rx . We believe Novartis brings significant resources and expertise to the collaboration that can accelerate our ability to deliver these potential therapies to the large populations of patients who have high cardiovascular risk due to inadequately treated lipid disorders. As part of our collaboration, we received $75.0 million in an upfront option payment, of which we retained $60.0 million and paid $15.0 million to Ionis as a sublicense fee. After we complete Phase 2 development of each of AKCEA-APO(a)-L Rx and AKCEA-APOCIII-L Rx , if, on a drug by drug basis, Novartis exercises its option to license a drug and pays us the $150.0 million license fee to do so, Novartis plans to conduct and pay for a Phase 3 cardiovascular outcome study in high-risk patients and, if approved, to commercialize each such licensed drug worldwide. We plan

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to co-commercialize any licensed drug commercialized by Novartis in selected markets, under terms and conditions that we plan to negotiate with Novartis in the future, through the specialized sales force we are building to commercialize volanesorsen. Overall, we are eligible to receive significant license fees, milestone payments and royalties on sales of each drug Novartis licenses if and when it meets the development, regulatory and sales milestones specified in our agreement. We will share any license fees, milestone payments and royalties equally with Ionis.

        Cardiometabolic disease, which includes cardiovascular diseases and metabolic diseases is the number one cause of death globally. According to the American Heart Association, or AHA, cardiovascular disease, or CVD, alone accounts for 17.3 million deaths per year globally, a number that the AHA expects to grow to more than 23.6 million by 2030. Further, between 2010 and 2030, total direct medical costs of CVD in the United States alone are projected to triple from $272.5 billion to $818.1 billion, according to the AHA. In addition, the number of individuals with metabolic diseases, including diabetes, is rising dramatically. According to a 2010 study published in Population Health Metrics , the number of people in the United States with diabetes is projected to grow from approximately 20 million in 2010 to between 46 million and 87 million by 2050. Cardiometabolic risk factors include metabolic syndrome, dyslipidemia, hypertension, obesity and insulin resistance. Lipid risk factors driven by abnormalities in lipid molecules or the processing of lipid molecules contribute to cardiometabolic diseases, with elevated low density lipoprotein cholesterol, or LDL-C, being the most widely recognized. Despite the availability of powerful drugs to lower LDL-C, many people remain at significant risk due to other lipid disorders that are not adequately addressed with current therapies. We believe this treatment gap represents a significant commercial opportunity both in rare and in broader patient populations.

        Our clinical pipeline contains novel drugs with the potential to treat inadequately addressed lipid disorders beyond elevated LDL-C that are contributing to the dramatic increase in the incidence of cardiometabolic disease, such as elevated triglycerides, oxidized phospholipids and other lipoproteins such as lipoprotein(a), or Lp(a). Each of the four drugs in our pipeline targets the specific ribonucleic acid, or RNA, that encodes for a unique protein associated with lipid dysfunction, robustly and selectively inhibiting the production of such protein. These drugs were designed and developed at Ionis, and use Ionis' proprietary antisense technology, which is a potent and specific way of reducing disease-causing proteins. Specifically, our drugs utilize Ionis' generation 2.0+ antisense technology, which is designed for increased potency and enhanced safety characteristics relative to Ionis' generation 2.0 technology. Additionally, AKCEA-APO(a)-L Rx , AKCEA-ANGPTL3-L Rx and AKCEA-APOCIII-L Rx utilize Ionis' advanced Ligand Conjugated Antisense, or LICA, technology. We believe the enhancements offered by Ionis' LICA technology can provide greater patient convenience by allowing for significantly lower doses and less frequent administration. Our current pipeline includes drugs with the potential to treat patients with a wide range of lipid disorders associated with cardiometabolic disease that other technologies, such as small molecules and antibodies, have not been able to adequately address.

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        The following figure illustrates our pipeline:

GRAPHIC


(1)
We have used alternate names for our drugs:

§
Volanesorsen also has been known as IONIS-APOCIII Rx , ISIS-APOCIII Rx and ISIS 304801.
§
AKCEA-APO(a)-L Rx also has been known as IONIS-APO(a)-L Rx , ISIS-APO(a)-L Rx and ISIS 681257.
§
AKCEA-ANGPTL3-L Rx also has been known as IONIS-ANGPTL3-L Rx , ISIS-ANGPTL3-L Rx and ISIS 703802.
§
AKCEA-APOCIII-L Rx also has been known as IONIS-APOCIII-L Rx , ISIS-APOCIII-L Rx and ISIS 678354.
(2)
We have initiated a strategic collaboration with Novartis for AKCEA-APO(a)-L Rx and AKCEA-APOCIII-L Rx .
Note:
The arrows designate the current phase of development for each drug and indication, and do not represent the extent of completion of the activities we are currently conducting within the phase.
Note:
The "L" designation indicates drugs that use Ionis' LICA technology.

Clinical Pipeline

Volanesorsen for the treatment of FCS and FPL

        We are developing volanesorsen to treat patients with FCS and FPL, orphan diseases characterized by extremely elevated triglyceride levels and a high risk of life-threatening pancreatitis. Patients with FCS and FPL live with daily and chronic manifestations of their disease that negatively affect their lives. Volanesorsen acts to reduce triglyceride levels by inhibiting the production of apolipoprotein C-III, or ApoC-III, a protein that is a key regulator of triglyceride clearance. People who have low levels of ApoC-III or reduced ApoC-III function have lower levels of triglycerides and a lower incidence of CVD.

        We estimate there are 3,000 to 5,000 FCS patients and an additional 3,000 to 5,000 FPL patients globally. Volanesorsen has been granted orphan drug status in both the United States and the European Union for the treatment of FCS. Volanesorsen has also been granted orphan drug status in the European Union for the treatment of FPL, and we are in the process of applying for orphan drug status for FPL in the United States. An orphan disease is defined as having a

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population of less than 200,000 patients in the United States and a population of less than 5 in 10,000 individuals in the European Union.

        Patients with FCS and FPL share certain common disease characteristics, particularly elevated triglyceride levels, or hypertriglyceridemia, but are quite distinct physically and genetically. As a consequence of their elevated triglyceride levels, both patient populations are at risk of debilitating and potentially life-threatening pancreatitis. In addition, both patient populations are susceptible to recurrent abdominal pain after eating. Other shared disease symptoms are chronic fatigue, abnormal enlargement of the liver or spleen, and insulin resistance and type 2 diabetes. Therapy for both diseases includes a strict, extremely low fat diet on a lifelong basis to manage abdominal pain and risk of pancreatitis. However, even this diet typically does not bring triglyceride levels into the normal range and most patients still suffer from chronic manifestations of their disease and remain at high risk for pancreatitis.

        Despite the similarities, triglyceride levels are generally more elevated in FCS patients compared to FPL patients, although levels in both groups are many times above the normal range and well above the risk threshold for acute pancreatitis. While insulin resistance and type 2 diabetes are common in both groups, a much higher proportion of FPL patients have these complications. FPL is a disease of abnormal fat storage and distribution, whereas FCS is a disease of abnormal fat clearance. This leads to an important difference between these patient populations: the quite distinct physical appearance in FPL, which is marked by the absence of subcutaneous fat in the buttocks and extremities and localization of subcutaneous fat in the head and neck. FPL patients also have significant fat deposits in and around major internal organs such as liver and heart. As a consequence, cardiovascular and peripheral vascular disease are common findings in the FPL patient population, and may cause premature death.

        ApoC-III is a validated therapeutic target in both diseases and the therapeutic intent of targeting ApoC-III with volanesorsen is to substantially reduce triglyceride levels. Based on our volanesorsen clinical development program to date, including our completed pivotal study in patients with FCS, treatment with volanesorsen significantly reduces triglyceride levels and has shown evidence of reducing the risk of pancreatitis and abdominal pain. We believe that the totality of evidence supports the potential for significant clinical benefit in patients suffering from both debilitating diseases, FCS and FPL.

        We recently completed the Phase 3 program for volanesorsen to treat patients with FCS and are planning to file for regulatory approval in this indication in the third quarter of 2017. The Phase 3 program consisted of two studies, the APPROACH study and the COMPASS study. The APPROACH study, a one year randomized, placebo-controlled study in 66 patients with FCS (average incoming triglycerides of 2,209 mg/dL), achieved its primary endpoint of reduction in triglycerides at three months, with a 77% mean reduction in triglycerides, which translated into a 1,712 mg/dL mean absolute triglyceride reduction in volanesorsen-treated patients. We observed 50% of treated patients achieved triglyceride levels below 500 mg/dL, a commonly accepted threshold for pancreatitis risk. In addition, in the APPROACH study, treatment with volanesorsen was associated with a statistically significant reduced rate of pancreatitis attacks in the group of patients who had the highest incidence of pre-study pancreatitis, and reduced abdominal pain in patients reporting pain before treatment in the study. The triglyceride lowering effects we observed were maintained throughout the 12 month study period. The COMPASS study, a six month randomized placebo-controlled study in 113 patients with very high triglycerides (>500 mg/dL), also achieved its primary endpoint of reduction in triglycerides at three months, with a 71% mean reduction in triglycerides. In the COMPASS study, treatment with volanesorsen was associated with a statistically significant reduction in pancreatitis attacks. The data from the COMPASS and APPROACH studies

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is consistent with and supports the robust triglyceride lowering we observed in the Phase 2 program for volanesorsen.

        The most common adverse event in the studies was injection site reactions, which were mostly mild. In addition, declines in platelet counts were observed in many patients. These platelet declines were not clinically significant in most patients and were generally well managed with monitoring and dose adjustment. Five patients discontinued participation in the APPROACH study due to platelet count declines and four patients discontinued due to other non-serious adverse events, including one case each of sweating and chills, severe fatigue, rash and injection site reaction. In the volanesorsen program as a whole, which included approximately 280 individuals who received volanesorsen, there were five treatment-related or potentially treatment-related serious adverse events, or SAEs. Two of the SAEs were described by the investigators as serum sickness-like reaction and serum sickness, respectively, and both patients fully recovered. The other three SAEs were serious platelet events (grade 4 thrombocytopenia), which resolved without complication after cessation of dosing. We believe our current regimen of platelet monitoring is designed to adequately identify any such potential event to provide patient safety. There have been no deaths and no treatment-related cardiovascular events in any volanesorsen clinical study. The ongoing Phase 3 study of volanesorsen in patients with FPL, called BROADEN, is currently enrolling and we plan to report data from this study in 2019. If the data are positive, in 2019 we plan to file for marketing authorization for volanesorsen to treat patients with FPL. If approved, we plan to globally commercialize volanesorsen ourselves for both FCS and FPL.

AKCEA-APO(a)-L Rx for the treatment of CVD driven by hyperlipoproteinemia(a)

        We are developing AKCEA-APO(a)-L Rx for patients who are at significant risk of CVD because of their elevated levels of Lp(a). AKCEA-APO(a)-L Rx inhibits the production of the apolipoprotein(a), or Apo(a), protein, thereby reducing Lp(a). Apo(a) is a form of low density lipoprotein, or LDL, that is very atherogenic (promoting the formation of plaques in the arteries) and very thrombogenic (promoting the formation of blood clots). Elevated Lp(a) is recognized as an independent, genetic cause of coronary artery disease, heart attack, stroke and peripheral arterial disease. Inhibiting the production of Apo(a) in the liver reduces the level of Lp(a) in blood, potentially slowing down or reversing cardiovascular disease in patients with hyperlipoproteinemia(a), a condition in which individuals have levels of Lp(a) greater than 60 mg/dL. Lp(a) is difficult to inhibit using other technologies, such as small molecules and antibodies; there are multiple genetically-determined forms of the Apo(a) molecule and creating a small molecule or antibody that can interact with multiple targets is difficult. We believe antisense technology is particularly well suited to address hyperlipoproteinemia(a) because it specifically targets the RNA that codes for all forms of the Apo(a) molecule. As a result, it can stop the production of all of the forms of the protein. Furthermore, we believe addressing elevated Lp(a) is the next important horizon in lipid-focused therapy and, through our collaboration with Novartis, we plan to develop AKCEA-APO(a)-L Rx to treat patients with established cardiovascular disease in whom hyperlipoproteinemia(a) plays a causal role.

        We have completed a Phase 1/2 study with AKCEA-APO(a)-L Rx in patients with hyperlipoproteinemia(a) and we reported the results at the AHA meeting in November 2015. In this clinical study, we observed significant and sustained reductions in Lp(a) of up to 97% with a mean reduction of 79% after only a single, small volume dose of AKCEA-APO(a)-L Rx . With multiple doses of AKCEA-APO(a)-L Rx , we observed even greater reductions of Lp(a) of up to 99% with a mean reduction of 92%. Based on these results, we have started a Phase 2b dose-ranging study of AKCEA-APO(a)-L Rx in patients with hyperlipoproteinemia(a) and established CVD. We have initiated a strategic collaboration with Novartis for this drug. In this collaboration, we intend to complete the above-referenced Phase 2b study. Following completion of this study, Novartis has an option to license the drug. If Novartis exercises its option to license AKCEA-APO(a)-L Rx , Novartis plans to

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conduct and pay for a Phase 3 cardiovascular outcome study in high-risk patients and, if approved, to commercialize AKCEA-APO(a)-L Rx worldwide.

AKCEA-ANGPTL3-L Rx for the treatment of multiple lipid disorders

        We are developing AKCEA-ANGPTL3-L Rx to treat multiple lipid disorders. Studies have shown that elevated levels of the angiopoietin-like 3, or ANGPTL3, protein are associated with an increased risk of premature heart attacks, increased arterial wall thickness and multiple metabolic disorders, such as insulin resistance. In contrast, people with lower levels of ANGPTL3 have lower LDL-C and triglyceride levels and thus lower risk of heart attacks and multiple metabolic disorders. In preclinical studies, an analog of AKCEA-ANGPTL3-L Rx inhibited the production of the ANGPTL3 protein in the liver, inhibiting liver fat accumulation and lowering blood levels of triglycerides, LDL-C and very low density lipoprotein cholesterol, or VLDL-C. In addition, our preclinical data and initial Phase 1 data suggest that inhibiting the production of ANGPTL3 could improve other lipid parameters, including triglyceride levels and total cholesterol.

        We are conducting a Phase 1/2 program for AKCEA-ANGPTL3-L Rx in people with elevated triglycerides. We reported results for the initial cohort from this study at the AHA meeting in November 2016. We observed that the people with elevated triglycerides achieved dose-dependent, statistically significant mean reductions in ANGPTL3 of up to 83%. Treatment with AKCEA-ANGPTL3-L Rx was also associated with statistically significant mean reductions in triglycerides of up to 66%, in LDL-C of up to 35% and in total cholesterol of up to 36%. In this study, AKCEA-ANGPTL3-L Rx was reported to be well tolerated. The most common adverse events in the AKCEA-ANGPTL3-L Rx treated group of patients were mild headaches and dizziness that were approximately equal to the rate observed in the placebo group. In the second half of 2017, we plan to begin a study of AKCEA-ANGPTL3-L Rx in patients with hyperlipidemia with metabolic complications including insulin resistance and fatty liver, in which we plan to include patients with nonalcoholic fatty liver disease, or NAFLD, or nonalcoholic steatohepatitis, or NASH. Further, in the second half of 2017, we also plan to study AKCEA-ANGPTL3-L Rx in patients with rare hyperlipidemias, including patients with FCS. If we find that AKCEA-ANGPTL3-L Rx can effectively lower triglyceride levels in patients with rare hyperlipidemias, including patients with FCS, through a different mechanism of action from volanesorsen, it may represent an opportunity to expand our FCS franchise. Additional potential indications for which we may consider developing AKCEA-ANGPTL3-L Rx include other rare hyperlipidemias and lipodystrophies.

AKCEA-APOCIII-L Rx for the treatment of CVD driven by high triglycerides

        We are developing AKCEA-APOCIII-L Rx to inhibit the production of ApoC-III, the same protein inhibited by volanesorsen, for the broad population of patients who have cardiometabolic disease due to their elevated triglyceride levels. ApoC-III impacts triglyceride levels and may also increase inflammatory processes. This combination of effects makes ApoC-III a promising target for patients with LDL-C already controlled on statin therapy, but for whom triglycerides remain poorly controlled. We believe that the enhancements offered by Ionis' LICA technology can provide greater patient convenience by allowing for significantly lower doses and less frequent administration, compared to volanesorsen. We are conducting a Phase 1/2 study of AKCEA-APOCIII-L Rx in people with elevated triglycerides and plan to report results from this study in the second half of 2017. We have initiated a strategic collaboration with Novartis for this drug. In this collaboration, we intend to complete the Phase 2 program required to define the appropriate dose and regimen to support a planned cardiovascular outcome study. We plan to initiate a Phase 2b dose-ranging study of AKCEA-APOCIII-L Rx in patients with hypertriglyceridemia and established CVD in the second half of 2017 and plan to report data from this study in 2019. At the completion of Phase 2 development, Novartis has an option to license the drug. If Novartis exercises its option to license AKCEA-APOCIII-L Rx ,

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Novartis plans to conduct and pay for a Phase 3 cardiovascular outcome study in high-risk patients and, if approved, to commercialize AKCEA-APOCIII-L Rx worldwide.

Commercial Approach

        We plan to commercialize volanesorsen ourselves globally, with a specialized and comprehensive patient-centric approach. Our orphan-focused commercial model will include a small, highly focused salesforce in each country that we are targeting, complemented by medical affairs and patient and healthcare provider services. We plan to provide high touch patient and healthcare provider support through reimbursement assistance, partnerships with specialty pharmacies, injection training, routine platelet monitoring and dietary counseling, which we believe will enable strong integration with treating physicians and facilitate patient uptake and compliance. We plan to include dedicated case managers as part of our support team who will work directly with patients, caregivers and healthcare providers to help patients start and stay on therapy. Our global commercial organization is initially focused on our nearest term opportunities with volanesorsen to treat patients with FCS and FPL. Our initial plan is to focus on lipid specialists, specialized endocrinologists and pancreatologists as our primary call points. At the outset, we plan to focus our commercial efforts in the United States, Canada and Europe, and intend to expand over time to other relevant geographies. We are also focused on disease education and market access, with the goal of ensuring that identified patients can most effectively obtain our drugs once commercialized. We plan to commercialize by ourselves any approved drugs with a rare disease or specialty focus. We may enter into additional strategic relationships to commercialize certain of our drugs, particularly in indications with large patient populations, as evidenced by our collaboration with Novartis. We believe Novartis brings significant resources and expertise to the collaboration that can accelerate our ability to deliver AKCEA-APO(a)-L Rx and AKCEA-APOCIII-L Rx to the large populations of patients who have high cardiovascular risk due to inadequately treated lipid disorders. We also plan to co-commercialize any such drug in selected markets, under terms and conditions that we plan to negotiate with Novartis in the future, through the specialized sales force we are building to commercialize volanesorsen.

        Our commercial organization is focused on the following priorities to prepare for the launch of volanesorsen:

    §
    Improve diagnosis by working with a small number of specialist physician experts to advance the understanding of the signs and symptoms of FCS and FPL, and then communicate that simplified clinical diagnosis criteria to the broader physician and patient community.
    §
    Build a database of patients by working with physicians and patient organizations and through improved diagnosis and referrals. We add patients to our database through communication with physicians, patient organizations, and other tools, such as electronic medical record database searches. We plan to use our database to help us engage with physicians who may have patients who could potentially benefit from our drugs. In order to protect patient confidentiality, we do not include patient-specific information in the database.
    §
    Build an integrated high-touch patient support team to help patients start and stay on therapy. We plan to provide reimbursement assistance, injection training, platelet monitoring and dietary support, as well as establish partnerships with specialty pharmacies, to help patients remain on therapy over the long term. We plan to include dedicated case managers as part of our support team who will work directly with patients, caregivers and healthcare providers to help patients start and stay on therapy.
    §
    Prepare for successful market access through payors and other reimbursement authorities by establishing and quantifying the burden of disease associated with living with FCS and FPL.

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        We have made significant strides in our commercialization priorities, in particular with respect to identifying FCS patients and advancing the understanding of the burden of this debilitating disease. In addition to the patients from our overall clinical program, we have made substantial progress in finding additional FCS patients globally, including the approximately 170 patients identified in an FCS survey that we commissioned called IN-FOCUS. The goal of this survey was to further our understanding of the profile of FCS, and an interim analysis on the first 60 respondents supports that patients with FCS have a significant disease burden. Our survey found that patients suffer from pain, fatigue, cognitive issues such as brain fog and depression, managing highly-controlled restrictive diets and chronic and acute pancreatitis (and resulting hospitalizations), among other consequences. These effects, and the associated fear and anxiety, impact FCS patients' quality of life and employment.

Our Strategy

        Our goal is to become the premier company offering treatments for previously inadequately treated lipid disorders. The critical components of our business strategy to achieve this goal include the following:

    §
    Successfully complete development, obtain regulatory approvals and commercialize volanesorsen in two orphan indications.
    §
    Pursue indications that drive the greatest near and long term value.
    §
    Advance multiple novel clinical-stage drugs to commercialization and further grow our pipeline.
    §
    Build a leading, fully integrated, independent development and commercialization organization with a specialized and focused global team centered around a high touch patient and physician experience through services including case management, reimbursement assistance, injection training, platelet monitoring and dietary support, as well as through partnerships with specialty pharmacies.
    §
    Create value through strategic collaborations, such as our collaboration with Novartis, to drive drugs to their fullest potential in indications with large target patient populations.

Our Relationship with Ionis

        We founded our operations in 2015 as a wholly owned subsidiary of Ionis to develop and commercialize Ionis' drugs to treat lipid disorders. Ionis has funded our expenses to date. We are becoming an independent company building a focus and excellence in development and commercialization. We expect Ionis to remain our principal stockholder for the foreseeable future. Through our relationship with Ionis, we benefit in the following ways:

    §
    We have access to Ionis' innovative generation 2.0+ antisense and LICA technologies for use in our drugs. These technologies allow for precise specificity, favorable dosing properties and no anticipated drug-to-drug interactions.
    §
    We obtained exclusive rights to globally commercialize a robust, mature pipeline of drugs, including volanesorsen, AKCEA-APO(a)-L Rx and our other drugs in development. Our licensed rights also include access to Ionis' intellectual property and expertise to develop, manufacture and commercialize these drugs.
    §
    We have a joint development program that provides us access to Ionis' development and regulatory organization, which has significant expertise in developing drugs to treat patients with lipid disorders. Ionis also provides resources to support our nonclinical and clinical studies.
    §
    We contract with Ionis for support in areas such as legal, finance and human resources, which allows us to be more capital efficient than a typical company of our size and stage of

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      development. This support allows us to focus our efforts and resources on developing and preparing to commercialize our drugs.

    §
    We are not required to make any upfront or pre-commercialization payments to Ionis for drugs we are developing under our development, commercialization and license agreement, as would be typical in a drug license. Our agreement allows us to more efficiently invest our capital in developing and preparing to commercialize our drugs, as we are only required to make milestone and royalty payments post-commercialization or if we grant a sublicense to Ionis' technology.
    §
    As a result of our relationship with Ionis, we may have the opportunity to evaluate additional antisense drugs that may complement our efforts in becoming the premier lipid disease company. For example, Ionis has granted us a right of first negotiation with respect to Ionis development candidates that are designed to treat a rare cardiometabolic disease or a rare inherited metabolic disease.

        While we and Ionis intend our relationship to enhance our capabilities, certain terms of our relationship may limit our ability to achieve this expected benefit, including:

    §
    Some of our directors and officers may have a conflict of interest because of their positions with Ionis.
    §
    A Joint Steering Committee, or JSC, sets the development and regulatory strategy for our drugs by mutual agreement. If the JSC cannot come to a mutual agreement, it could delay our ability to develop and commercialize our drugs in development.
    §
    We will need to mutually agree with Ionis on the terms of any additional sublicense to a third party for our drugs in development. If we cannot mutually agree, it could delay or prevent our ability to develop and commercialize our drugs.
    §
    Our agreements prevent Ionis from developing and commercializing drugs targeting ApoC-III, Apo(a) or ANGPTL3 RNA. However, our agreements do not prevent Ionis from developing and commercializing other drugs to pursue the same indications we are pursuing with our drugs.

        Immediately following the completion of this offering, Ionis will own 70.8% of our outstanding common stock. Ionis has advised us that it does not have any current plans to sell or distribute to its stockholders the shares of our common stock that it beneficially owns, although it may elect to do so in the future.

Concurrent Private Placement

        In connection with our strategic collaboration agreement with Novartis, Novartis has agreed to purchase $50.0 million of our common stock in a separate private placement concurrent with the completion of this offering at a price per share equal to the initial public offering price. Immediately following the completion of this offering, Novartis will own approximately 9.7% of the total number of shares of our common stock outstanding.

Risks Associated with Our Business

        Our business is subject to numerous risks and uncertainties, including those highlighted in the section entitled "Risk Factors" immediately following this prospectus summary. These risks include, among others, the following:

    §
    We have a limited operating history, have incurred losses since our inception and may never become profitable.

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    §
    We will require substantial additional funding to achieve our goals. If we fail to obtain timely funding, we may need to curtail or abandon some of our programs.
    §
    Even if our drugs are successful in preclinical and earlier-stage clinical studies, the drugs may not be successful in later-stage clinical studies.
    §
    If the FDA or another regulatory authority believes that we or our partners have not sufficiently demonstrated the safety or efficacy of any of our drugs, the regulatory authority will not approve the specific drug or will require additional studies. For example, since three of the patients in the Phase 3 program for volanesorsen experienced serious platelet events (grade 4 thrombocytopenia), a condition in which the patient has very low platelet levels, and five patients discontinued participation in the APPROACH study due to platelet count declines, the FDA or another regulatory authority may require us to conduct additional studies before considering an application for marketing authorization.
    §
    If we or our partners fail to obtain regulatory approval for our drugs, including volanesorsen and our other drugs in development, we or our partners cannot sell them in the applicable markets.
    §
    If we cannot establish effective marketing and sales capabilities or enter into agreements with third parties to market and sell our drug products, we may not generate product revenue.
    §
    If government or other third-party payors fail to provide adequate coverage and payment rates for volanesorsen, AKCEA-APO(a)-L Rx and our other drugs in development, our revenue and prospects for profitability will be limited.
    §
    We have granted Novartis an option to exclusively license AKCEA-APO(a)-L Rx and AKCEA-APOCIII-L Rx . If Novartis exercises its option, we will depend on Novartis to develop and commercialize these drugs. If Novartis does not exercise its option, we will have to seek additional sources for funding cardiovascular outcome studies and may have to delay or reduce our development and commercialization plans for AKCEA-APO(a)-L Rx or AKCEA-APOCIII-L Rx . Similarly, if Novartis exercises its option but does not adequately develop and commercialize these drugs, it could adversely affect our development and commercialization plans and potential revenue from these drugs.
    §
    We depend on third parties to conduct our clinical studies for our drugs and any failure of those parties to fulfill their obligations could adversely affect our development and commercialization plans.
    §
    Ionis controls the direction of our business, and the concentrated ownership of our common stock will prevent you and other stockholders from influencing significant decisions.
    §
    The resources Ionis provides us under our development, commercialization and license agreement and services agreement may not be sufficient for us to operate as a standalone company, and we may experience difficulty in separating our resources from Ionis.
    §
    If we cannot protect our patents or our other proprietary rights, others may compete more effectively against us.

Corporate and Other Information

        We were initially incorporated in December 2014 in Delaware as a wholly owned subsidiary of Ionis and founded our operations in 2015.

        Our principal executive offices are located at 55 Cambridge Parkway, Cambridge, Massachusetts. Our telephone number is (617) 207-0202. Our website address is www.akceatx.com. The information contained on, or that can be accessed through, our website is not incorporated by reference into this prospectus, and you should not consider any information contained on, or that can be accessed through, our website as part of this prospectus or in deciding whether to purchase our common stock.

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        "Akcea," the Akcea logo, and other trademarks or service marks of Akcea Therapeutics, Inc. appearing in this prospectus are the property of Akcea Therapeutics, Inc. This prospectus 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 prospectus may appear without the ® or TM symbols.

Implications of Being an Emerging Growth Company

        We qualify as an "emerging growth company" as defined in the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. An emerging growth company may take advantage of specified reduced reporting and other burdens that are otherwise applicable generally to public companies. These provisions include:

    §
    a requirement to have only two years of audited financial statements and only two years of related selected financial data and management's discussion and analysis of financial condition and results of operations disclosure;
    §
    an exemption from the auditor attestation requirement in the assessment of our internal control over financial reporting pursuant to the Sarbanes-Oxley Act of 2002;
    §
    reduced disclosure about the emerging growth company's executive compensation arrangements; and
    §
    no requirement to seek nonbinding advisory votes on executive compensation or golden parachute arrangements.

        We may take advantage of some or all of these provisions until we are no longer an emerging growth company. We will remain an emerging growth company until the earlier to occur of (1) the last day of the fiscal year (a) following the fifth anniversary of the completion of this offering, (b) in which we have total annual gross revenue of at least $1.07 billion or (c) in which we are deemed to be a "large accelerated filer" under the rules of the Securities and Exchange Commission, which means the market value of our common stock that is held by non-affiliates exceeds $700 million as of the prior June 30th and (2) the date on which we have issued more than $1.0 billion in non-convertible debt during the prior three-year period.

        We are choosing to "opt out" of the provision of the JOBS Act that permits emerging growth companies to take advantage of an extended transition period to comply with new or revised accounting standards applicable to public companies and, as a result, we will comply with new or revised accounting standards as required when they are adopted. This decision to opt out of the extended transition period is irrevocable.

        We have elected to adopt certain of the reduced disclosure requirements available to emerging growth companies. As a result of these elections, the information that we provide in this prospectus may be different than the information you may receive from other public companies in which you hold equity interests. In addition, it is possible that some investors will find our common stock less attractive as a result of these elections, which may result in a less active trading market for our common stock and higher volatility in our stock price.

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THE OFFERING

Common stock offered by us

  15,625,000 shares

Common stock to be outstanding immediately after this offering, the concurrent private placement and the conversion of outstanding indebtedness to Ionis. 

 

64,197,879 shares

Option to purchase additional shares

 

We have granted the underwriters an option, exercisable for 30 days after the date of this prospectus, to purchase up to an additional 2,343,750 shares from us.

Use of proceeds

 

We estimate that we will receive net proceeds from this public offering of approximately $115.0 million, based on the initial public offering price of $8.00 per share, after deducting the underwriting discounts and commissions and estimated offering expenses payable by us. Our net proceeds from the concurrent private placement will be approximately $50.0 million. We intend to use the aggregate net proceeds to advance the development of volanesorsen, AKCEA-APO(a)-L Rx , AKCEA-ANGPTL3-L Rx and AKCEA-APOCIII-L Rx through additional clinical studies and to support the launch and initial commercialization of volanesorsen, if approved. We also intend to use a portion of the net proceeds for development personnel expenses, other development activities, working capital and other general corporate purposes. We are also undertaking this offering in order to create a public market for our common stock and thereby facilitate access to the public equity markets, increase our visibility in the marketplace, obtain additional capital and increase our liquidity. Further, we may use a portion of the net proceeds to acquire complementary businesses, products, or technologies, although we have no present commitments or agreements for any specific acquisitions. These expectations are subject to change. See "Use of Proceeds" for a more complete description of the intended use of proceeds from this offering.

Risk factors

 

See "Risk factors" and the other information included in this prospectus for a discussion of factors you should carefully consider before deciding to invest in our common stock.

Nasdaq Global Select Market symbol

 

"AKCA"

        Ionis has agreed to purchase 3,125,000 shares of common stock in this offering at the initial public offering price. The underwriters will not receive any underwriting discounts or commissions on the shares purchased by Ionis.

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        The number of shares of our common stock that will be outstanding after this offering, the concurrent private placement and the conversion of outstanding indebtedness to Ionis is based on 28,884,540 shares of common stock outstanding as of March 31, 2017, and excludes:

    §
    5,063,585 shares of common stock issuable upon the exercise of options outstanding as of March 31, 2017, at a weighted-average exercise price of $6.48 per share;
    §
    3,436,415 shares of common stock reserved for future issuance under our 2015 equity incentive plan, as amended, of which 1,678,661 shares of common stock are issuable upon exercise of options granted subsequent to March 31, 2017; and
    §
    500,000 shares of common stock reserved for future issuance under our 2017 employee stock purchase plan, which will become effective upon the closing of this offering.

        Unless otherwise indicated, all information contained in this prospectus, and the number of shares of common stock outstanding as of March 31, 2017:

    §
    reflects the conversion of all our outstanding Series A convertible preferred stock into an aggregate of 28,884,540 shares of common stock in connection with the closing of this offering;
    §
    reflects the issuance of 13,438,339 shares of common stock to Ionis upon the automatic conversion, in connection with the closing of this offering, of $106.0 million of outstanding principal, together with accrued interest, pursuant to our line of credit agreement, based on the initial public offering price of $8.00 per share, and which are referred to in this prospectus as the Ionis Conversion Shares;
    §
    reflects the issuance of 6,250,000 shares of common stock to Novartis in the concurrent private placement, based on the initial public offering price of $8.00 per share, and which are referred to in this prospectus as the Novartis Private Placement Shares;
    §
    assumes no exercise by the underwriters of their option to purchase up to an additional 2,343,750 shares of our common stock;
    §
    assumes no issuance or exercise of options after March 31, 2017;
    §
    assumes the filing of our amended and restated certificate of incorporation and the adoption of our amended and restated bylaws immediately prior to the closing of this offering; and
    §
    reflects a one-for-2.555 reverse stock split of our common stock effected on June 19, 2017.

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SUMMARY CONSOLIDATED FINANCIAL DATA

        The following tables set forth our historical consolidated financial data as of and for the periods indicated. The summary consolidated financial data for the years ended December 31, 2014, 2015 and 2016 have been derived from our audited consolidated financial statements included elsewhere in this prospectus. The summary consolidated financial data for the three months ended March 31, 2016 and 2017 and as of March 31, 2017 have been derived from our unaudited financial statements included elsewhere in this prospectus. We have prepared the unaudited financial statements on the same basis as the audited financial statements, and the unaudited financial data include, in our opinion, all adjustments, consisting only of normal recurring adjustments, that we consider necessary for a fair presentation of our financial position and results of operations for these periods. Our historical operating results are not necessarily indicative of future operating results and results for the three months ended March 31, 2017 are not necessarily indicative of the results for the full year. We have derived the consolidated financial statements we present in this registration statement by carving out the expenses associated with our drugs from Ionis' consolidated financial statements in accordance with applicable accounting standards and Securities and Exchange Commission regulations.

        The following data should be read together with our consolidated financial statements and the related notes thereto, as well as the sections entitled "Selected Consolidated Financial Data" and

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"Management's Discussion and Analysis of Financial Condition and Results of Operations," included elsewhere in this prospectus.

 
  Years Ended December 31,   Three Months Ended March 31,  
(in thousands, except share and per share amounts)
  2014   2015   2016   2016   2017  

Consolidated statement of operations data:

                               

Research and development revenue under collaborative agreements

                  $ 9,597  

Research and development expenses

  $ 29,028   $ 50,885   $ 68,459   $ 11,796   $ 64,794  

General and administrative expenses

  $ 995   $ 10,553   $ 15,053   $ 4,253   $ 4,676  

Net loss

  $ (30,023 ) $ (61,422 ) $ (83,217 ) $ (15,962 ) $ (60,353 )

Net loss per share of preferred stock, basic and diluted(1)

  $ (1.04 ) $ (2.13 ) $ (2.88 ) $ (0.55 ) $ (2.09 )

Weighted-average shares of preferred stock outstanding, basic and diluted(1)

    28,884,540     28,884,540     28,884,540     28,884,540     28,884,540  

Pro forma net loss per share, basic and diluted (unaudited)(1)(2)

              $ (2.88 )       $ (2.09 )

Pro forma weighted-average shares of common stock outstanding, basic and diluted (unaudited)(1)(2)

                28,884,540           28,884,540  

(1)
See note 1, Organization and significant accounting policies , to our consolidated financial statements appearing elsewhere in this prospectus for further detail on the calculation of basic and diluted net loss per share.
(2)
Pro forma basic and diluted net loss per share represents net loss divided by the pro forma weighted-average shares of common stock outstanding. Pro forma weighted-average shares of common stock outstanding reflects the conversion of all outstanding shares of preferred stock into common stock as though the conversion had occurred on the first day of the relevant period.

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  As of March 31, 2017  
(in thousands)
  Actual   Pro forma(1)   Pro forma as
adjusted(2)
 
 
   
  (unaudited)
 

Consolidated balance sheet data:

                   

Cash, cash equivalents and short-term investments

  $ 124,522   $ 124,522   $ 290,799  

Working capital(3)

    51,922     51,922     231,922  

Total assets

    132,981     132,981     297,371  

Payable to Ionis

    15,000     15,000      

Line of credit with Ionis(4)

    91,541     91,541      

Series A convertible preferred stock

    100,000          

Common stock

        29     64  

Additional paid-in capital

    60,116     160,087     432,559  

Accumulated deficit

    (235,015 )   (235,015 )   (235,981 )

Stockholders' (deficit) equity

    (74,942 )   (74,942 )   196,599  

(1)
Pro forma consolidated balance sheet data reflects the automatic conversion of all outstanding shares of preferred stock into common stock immediately prior to the closing of this offering.
(2)
Pro forma as adjusted consolidated balance sheet data reflects (i) the pro forma items described immediately above, (ii) payment of our $15.0 million payable to Ionis which was paid in May 2017, (iii) the sale of 15,625,000 shares of common stock in this offering at the initial public offering price of $8.00 per share, after deducting the underwriting discounts and commissions and estimated unpaid offering expenses payable by us, (iv) $15.0 million of additional borrowing under our line of credit with Ionis in May 2017, (v) the issuance of 13,438,339 Ionis Conversion Shares, based on the initial public offering price of $8.00 per share, in full satisfaction of our obligations to Ionis pursuant to our line of credit and (vi) the issuance of 6,250,000 Novartis Private Placement Shares, based on the initial public offering price of $8.00 per share.
(3)
We define working capital as current assets less current liabilities. See our consolidated financial statements included elsewhere in this prospectus for further details regarding our current assets and current liabilities.
(4)
As of March 31, 2017, we borrowed $91.0 million under our line of credit with Ionis. In May 2017, we borrowed an additional $15.0 million under our line of credit with Ionis. As of the date of this prospectus, we have borrowed $106.0 million under our line of credit with Ionis. The outstanding principal and accrued interest under our line of credit will convert into 13,438,339 Ionis Conversion Shares, based on the initial public offering price of $8.00 per share. The pro forma as adjusted information set forth above reflects this conversion.

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RISK FACTORS

         Investing in our common stock involves a high degree of risk. You should carefully consider the risks and uncertainties described below, together with all of the other information in this prospectus, including our consolidated financial statements and related notes, before deciding whether to purchase shares of our common stock. If any of the following risks are realized, our business, operating results and prospects could be materially and adversely affected. In that event, the price of our common stock could decline, and you could lose part or all of your investment. The risks and uncertainties described below are not the only ones we face. Additional risks and uncertainties not presently known to us or that we currently believe to be immaterial may also adversely affect our business.


Risks Related to Our Financial Condition and Need for Additional Capital

We have a limited operating history and may never become profitable.

        Ionis Pharmaceuticals, Inc., or Ionis, incorporated us as a Delaware corporation in December 2014, and we have operated as a wholly owned subsidiary of Ionis since that time. As such, we have limited experience as a company, and no experience operating independently from Ionis, and have not yet demonstrated that we can successfully overcome many of the risks and uncertainties frequently encountered in new and rapidly evolving fields, particularly the biotechnology and pharmaceutical fields.

        As a company, we have never obtained regulatory approval for, or commercialized, any product. Our ability to generate substantial revenue and achieve profitability depends on our ability, alone or with strategic partners, to successfully develop our drugs, and obtain the regulatory approvals necessary to commercialize our drugs, including volanesorsen, AKCEA-APO(a)-L Rx and our other drugs in development. We do not anticipate generating revenue from product sales for at least the next few years, if ever. Even if we achieve profitability in the future, we may not sustain profitability in subsequent periods. Our ability to generate revenue from product sales depends heavily on our and our current and future strategic partners' success in:

    §
    completing clinical development of volanesorsen for one or more indications and nonclinical and clinical development of AKCEA-APO(a)-L Rx , AKCEA-ANGPTL3-L Rx and AKCEA-APOCIII-L Rx ;
    §
    seeking and obtaining regulatory and marketing authorization for our drugs, including volanesorsen, AKCEA-APO(a)-L Rx and our other drugs in development;
    §
    establishing and maintaining supply and manufacturing relationships with third parties that can provide the amount and quality of products and services we need to continue to develop and, if approved, commercialize volanesorsen, AKCEA-APO(a)-L Rx and our other drugs in development;
    §
    launching and commercializing volanesorsen and AKCEA-ANGPTL3-L Rx by establishing a sales, marketing and distribution infrastructure;
    §
    launching and co-commercializing AKCEA-APO(a)-L Rx and AKCEA-APOCIII-L Rx through our collaboration with Novartis Pharma AG, or Novartis, under terms that we plan to negotiate with Novartis in the future;
    §
    educating physicians about our target patient populations, including patients with familial chylomicronemia syndrome, or FCS, and patients with familial partial lipodystrophy, or FPL;
    §
    obtaining market acceptance of volanesorsen, AKCEA-APO(a)-L Rx and our other drugs in development as viable treatment options;

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    §
    obtaining and maintaining adequate coverage and reimbursement from third-party payors for volanesorsen, AKCEA-APO(a)-L Rx and our other drugs in development;
    §
    addressing any competing technological and market developments;
    §
    implementing additional internal systems and infrastructure, as needed, to ultimately operate without reliance on Ionis;
    §
    negotiating favorable terms in any partnership, licensing or other arrangements into which we may enter;
    §
    maintaining, protecting and expanding our portfolio of intellectual property rights, including patents, product trademarks and know-how;
    §
    developing and commercializing volanesorsen, AKCEA-APO(a)-L Rx and our other drugs in development without infringing others' intellectual property rights; and
    §
    attracting, hiring and retaining qualified personnel.

        We may not successfully develop any products, generate product revenue or achieve profitability. If we cannot achieve or maintain profitability, it would depress the market price of our common stock and could impair our ability to raise capital, expand our business, diversify our product offerings or continue our operations. If the market price of our common stock declined, you could lose all or part of your investment.

We have incurred losses since our inception.

        Because drug discovery and development require substantial lead-time and funding prior to commercialization, we have incurred expenses while generating limited revenue from our operating activities since our formation. Our net losses were $30.0 million, $61.4 million and $83.2 million for the years ended December 31, 2014, December 31, 2015 and December 31, 2016, respectively. Our net losses were $16.0 million and $60.4 million for the three months ended March 31, 2016 and 2017, respectively. As of March 31, 2017, we had an accumulated deficit of approximately $235.0 million. Most of the losses resulted from costs incurred in connection with our development programs and from general and administrative costs associated with our operations. We expect to incur additional operating losses for the foreseeable future, and these losses may increase if we cannot generate substantial revenue.

We will require substantial additional funding to achieve our goals. If we fail to obtain timely funding, we may need to curtail or abandon some of our programs.

        All of our drugs are undergoing clinical studies. All of our drug programs will require additional nonclinical and/or clinical testing and/or marketing authorization prior to commercialization. We will need to spend significant additional resources to conduct these activities. Our expenses could increase beyond expectations if the U.S. Food and Drug Administration, or FDA, the European Medicines Agency, or EMA, or other regulatory authorities require us to perform clinical studies and other studies in addition to those that we currently anticipate. As of March 31, 2017, we had cash, cash equivalents and short-term investments equal to $124.5 million. Our research and development expenses were $29.0 million, $50.9 million and $68.5 million for the years ended December 31, 2014, December 31, 2015 and December 31, 2016, respectively. Our research and development expenses were $11.8 million and $64.8 million for the three months ended March 31, 2016 and 2017, respectively.

        We have funded our operating activities through a $100.0 million cash contribution we received from Ionis in 2015, $75.0 million we received from initiating our collaboration with Novartis, which we received in the first quarter of 2017 and $106.0 million in drawdowns under our line of credit with Ionis which we received in the first and second quarters of 2017. We entered into our line of credit agreement with Ionis in January 2017 and it allows us to borrow up to $150.0 million. We will no

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longer have access to the line of credit following the closing of this offering and we do not have any firm commitment from Ionis to fund our cash flow deficits or provide other direct or indirect financial assistance to us following the closing of this offering. Based on our existing cash, cash equivalents and short-term investments and expected net proceeds from this offering and the concurrent private placement, we will need to raise additional funding to continue developing the drugs in our pipeline and to seek regulatory approval for and to commercialize volanesorsen and other drugs in our pipeline.

        Even if we obtain marketing authorizations to sell volanesorsen or AKCEA-ANGPTL3-L Rx , we will incur significant costs to commercialize the approved product. Even if we generate revenue from the sale of any approved products, we may not become profitable and would need to obtain additional funding to continue operations.


Risks Related to Clinical Development, Regulatory Review and Approval of Our Drugs

If the results of clinical testing indicate that any of our drugs are not suitable for commercial use we may need to abandon one or more of our drug development programs.

        Drug discovery and development has inherent risks and the historical failure rate for drugs is high. Antisense drugs are a relatively new approach to therapeutics. If we cannot demonstrate that our drugs are safe and effective for human use in the intended indication, we may need to abandon one or more of our drug development programs.

        If any of our drugs in clinical studies, including volanesorsen, AKCEA-APO(a)-L Rx and our other drugs in development, do not show sufficient safety and efficacy in patients with the targeted indication, it would negatively affect our development and commercialization goals for the drug and we would have expended significant resources with little or no benefit to us.

Even if our drugs are successful in preclinical and earlier-stage clinical studies, the drugs may not be successful in later-stage clinical studies.

        Successful results in preclinical or initial clinical studies, including the results of earlier studies for our drugs in development, may not predict the results of subsequent clinical studies, including the Phase 3 study of volanesorsen for the treatment of FPL. There are a number of factors that could cause a clinical study to fail or be delayed, including:

    §
    the clinical study may produce negative or inconclusive results;
    §
    regulators may require that we hold, suspend or terminate clinical research for noncompliance with regulatory requirements;
    §
    we, our partners, the FDA or foreign regulatory authorities could suspend or terminate a clinical study due to adverse side effects of a drug on people in the study;
    §
    we or our partners may decide, or regulators may require us, to conduct additional preclinical testing or clinical studies;
    §
    we or our partners may not identify, recruit and train suitable clinical investigators at a sufficient number of study sites;
    §
    the institutional review board for a prospective site might withhold or delay its approval for the study;
    §
    enrollment in our clinical studies may be slower than we anticipate;
    §
    patients who enroll in the clinical study may later drop out due to adverse events, a perception they are not benefiting from participating in the study, fatigue with the clinical study process or personal issues;

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    §
    a clinical study site may deviate from the protocol for the study;
    §
    the cost of our clinical studies may be greater than we anticipate;
    §
    we or our partners may require additional capital to fund the clinical study; and
    §
    the supply or quality of our drugs or other materials necessary to conduct the clinical studies may be insufficient, inadequate or delayed.

        In addition, volanesorsen and AKCEA-APOCIII-L Rx have the same mechanism of action, and all of our current drugs, including volanesorsen, AKCEA-APO(a)-L Rx , AKCEA-ANGPTL3-L Rx and AKCEA-APOCIII-L Rx, are chemically similar to each other and the drugs Ionis and other companies are developing separately. As a result, a safety observation we, Ionis or other companies encounter with one of our or their drugs could have or be perceived by a regulatory authority to have an impact on a different drug we are developing. This could cause the FDA and other regulators to ask questions or take actions that could harm or delay our ability to develop and commercialize our drugs or increase our costs. For example, the FDA or other regulatory agencies could request, among other things, any of the following regarding one of our drugs: additional information or commitments before we can start or continue a clinical study, protocol amendments, increased safety monitoring, additional product labeling information, and post-approval commitments. Similarly, we have an ongoing Phase 3 study of volanesorsen in patients with FPL and an ongoing open label extension study of volanesorsen in patients with FCS. Adverse events or results from these studies could negatively impact our planned marketing approval applications for volanesorsen in patients with FCS or the commercial opportunity for volanesorsen.

        Any failure or delay in the clinical studies for any of our drugs in development could reduce the commercial potential or viability of our drugs.

We may not have appropriately designed the planned and ongoing clinical studies for volanesorsen, AKCEA-APO(a)-L Rx and our other drugs in development to support submission of a marketing application to the FDA and foreign regulatory authorities or demonstrate safety or efficacy at the level required by the FDA and foreign regulatory authorities for product approval.

        We recently completed a Phase 3 clinical program for volanesorsen for the treatment of FCS and have an ongoing Phase 3 study of volanesorsen in patients with FPL. We are also conducting or plan to conduct clinical studies for AKCEA-APO(a)-L Rx , AKCEA-ANGPTL3-L Rx and AKCEA-APOCIII-L Rx .

        Even if we achieve positive results on the endpoints for these clinical studies or any future clinical studies, the FDA or foreign regulatory authorities may believe the clinical studies do not show the appropriate balance of safety and efficacy in the indication being sought or may interpret the data differently than we do, and deem the results insufficient to demonstrate the appropriate balance of safety and efficacy at the level required for product approval. For example, the FDA or foreign regulatory authorities could claim that we have not tested volanesorsen in a sufficient number of patients to demonstrate volanesorsen is safe and effective in patients with FCS or FPL to support an application for marketing authorization. In such a case, we may need to conduct additional clinical studies before obtaining marketing authorization, which would be expensive and delay these development programs. These risks are more likely to occur since we are developing our drugs against therapeutic targets or to treat diseases in which there is little or no clinical experience. In addition, these risks may be more likely to occur for volanesorsen since three of the patients in the Phase 3 program experienced serious platelet events (grade 4 thrombocytopenia), a condition in which the patient has very low platelet levels, and additional patients experienced other adverse

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events in the program, including five patients who discontinued participation in the APPROACH study due to platelet count declines.

        We may make modifications to the clinical study protocols or designs of our ongoing clinical studies that delay enrollment or completion of such clinical studies and could delay regulatory approval of volanesorsen and our other drugs in development. Any failure to obtain approval for volanesorsen, AKCEA-APO(a)-L Rx and our other drugs in development on the timeline that we currently anticipate, or at all, would have a material and adverse impact on our business, prospects, financial condition and results of operations and could cause our stock price to decline.

If we or our partners fail to obtain regulatory approval for our drugs, including volanesorsen, AKCEA-APO(a)-L Rx and our other drugs in development, we or our partners cannot sell them in the applicable markets.

        We cannot guarantee that any of our drugs, including volanesorsen, AKCEA-APO(a)-L Rx and our other drugs in development, will be safe and effective, or will be approved for commercialization. We and our partners must conduct time-consuming, extensive and costly clinical studies to demonstrate the safety and efficacy of each of our drugs, including volanesorsen, AKCEA-APO(a)-L Rx and our other drugs in development, before they can be approved for sale. We and our partners must conduct these studies in compliance with FDA regulations and with comparable regulations in other countries.

        We or our partners may not obtain necessary regulatory approvals on a timely basis, if at all, for any of our drugs. It is possible that regulatory authorities will not approve any of our drugs, including volanesorsen, AKCEA-APO(a)-L Rx and our other drugs in development, for marketing. If the FDA or another regulatory authority believes that we or our partners have not sufficiently demonstrated the safety or efficacy of any of our drugs, including volanesorsen, AKCEA-APO(a)-L Rx and our other drugs in development, the authority will not approve the specific drug or will require additional studies, which can be time consuming and expensive and which will delay or harm our ability to successfully commercialize the drug. For example, since three of the patients in the Phase 3 program for volanesorsen experienced serious platelet events (grade 4 thrombocytopenia), a condition in which the patient has very low platelet levels, and additional patients experienced other adverse events in the program, some of whom discontinued participation in the studies, including five patients who discontinued participation in the APPROACH study due to platelet count declines, the FDA or another regulatory authority may require us to conduct additional studies of volanesorsen before considering an application for marketing approval.

        The FDA or other comparable foreign regulatory authorities can delay, limit or deny approval of a drug for many reasons, including:

    §
    such authorities may disagree with the design or implementation of our clinical studies;
    §
    we or our partners may be unable to demonstrate to the satisfaction of the FDA or other regulatory authorities that a drug is safe and effective for any indication;
    §
    such authorities may not accept clinical data from studies conducted at clinical facilities that have deficient clinical practices or that are in countries where the standard of care is potentially different from the United States;
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    we or our partners may be unable to demonstrate that our drug's clinical and other benefits outweigh its safety risks to support approval;
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    such authorities may disagree with the interpretation of data from preclinical or clinical studies;

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    §
    such authorities may find deficiencies in the manufacturing processes or facilities of third-party manufacturers who manufacture clinical and commercial supplies for our drugs; and
    §
    the approval policies or regulations of such authorities or their prior guidance to us or our partners during clinical development may significantly change in a manner rendering our clinical data insufficient for approval.

        Failure to successfully develop volanesorsen, AKCEA-APO(a)-L Rx and our other drugs in development, or to receive marketing authorization for these drugs or delays in these authorizations would prevent or delay the commercial launch of the drug, and, as a result, would negatively affect our ability to generate revenue.

We may not be able to benefit from orphan drug designation for volanesorsen, or any of our other drugs.

        The FDA and EMA have granted orphan drug designation to volanesorsen for the treatment of patients with FCS. The EMA has granted orphan drug designation to volanesorsen for the treatment of patients with FPL and we are in the process of applying for orphan drug status for FPL in the United States. In the United States, under the Orphan Drug Act, the FDA may designate a drug as an orphan drug if it is intended to treat a rare disease or condition, which is generally defined as a patient population of fewer than 200,000 individuals in the United States. Orphan drug designation does not convey any advantage in, or shorten the duration of, the regulatory review and approval process, but it can provide financial incentives, such as tax advantages and user-fee waivers, as well as longer regulatory exclusivity periods.

        We may lose orphan drug exclusivity if the FDA determines that the request for designation was materially defective or if we cannot assure sufficient quantity of the applicable drug to meet the needs of patients with the rare disease or condition.

        Even if we maintain orphan drug exclusivity for volanesorsen or obtain orphan drug exclusivity for our other drugs, the exclusivity may not effectively protect the drug from competition because regulatory authorities still may authorize different drugs for the same condition.

We may expend our limited resources to pursue a particular drug or indication and fail to capitalize on drugs or indications that may be more profitable or for which there is a greater likelihood of success.

        We are dedicating a substantial amount of our resources to develop and seek regulatory approval for volanesorsen to treat patients with FCS and FPL. As a result, we may forego or delay pursuit of opportunities with our other drugs or for other indications that later prove to have greater commercial potential. Our resource allocation decisions may cause us to fail to capitalize on viable commercial drugs or profitable market opportunities. Our spending on current and future research and development programs and drugs for specific indications may not yield any commercially viable drugs.

Our drugs, including volanesorsen, AKCEA-APO(a)-L Rx and our other drugs in development, could be subject to regulatory limitations following approval.

        Following approval of a drug, we and our partners must comply with comprehensive government regulations regarding the manufacture, marketing and distribution of drug products. Promotional communications regarding prescription drugs must be consistent with the information in the product's approved labeling. We and our partners may not obtain the labeling claims necessary or desirable to

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successfully commercialize our drug products, including volanesorsen, AKCEA-APO(a)-L Rx and our other drugs in development.

        The FDA and foreign regulatory authorities can impose significant restrictions on an approved drug product through the product label and on advertising, promotional and distribution activities.

        In addition, when approved, the FDA or a foreign regulatory authority may condition approval on the performance of post-approval clinical studies or patient monitoring, which could be time consuming and expensive. If the results of such post-marketing studies are not satisfactory, the FDA or a foreign regulatory authority may withdraw marketing authorization or may condition continued marketing on commitments from us or our partners that may be expensive and/or time consuming to fulfill.

        In addition, if we or others identify side effects after any of our drug products are on the market, if manufacturing problems occur subsequent to regulatory approval, or if we, our manufacturers or our partners fail to comply with regulatory requirements, we or our partners could be subject to:

    §
    restrictions on our ability to conduct clinical studies, including full or partial clinical holds on ongoing or planned clinical studies;
    §
    restrictions on such products' manufacturing processes;
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    changes to the product label;
    §
    restrictions on the marketing of a product;
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    restrictions on product distribution;
    §
    requirements to conduct post-marketing clinical studies;
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    Untitled or Warning Letters;
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    withdrawal of the products from the market;
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    refusal to approve pending applications or supplements to approved applications that we submit;
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    recall of products;
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    fines, restitution or disgorgement of profits or revenue;
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    suspension or withdrawal of regulatory approvals;
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    refusal to permit the import or export of our products;
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    product seizure;
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    injunctions; or
    §
    imposition of civil or criminal penalties.

        Any one or a combination of these events could prevent us from achieving or maintaining market acceptance of the affected drug product or could substantially increase the costs and expenses of commercializing such drug product, which in turn could delay or prevent us from generating any revenue or profit from the sale of the drug product.


Risks Related to Commercialization of Our Drugs

If we cannot establish effective marketing and sales capabilities or enter into agreements with third parties to market and sell our drug products, we may not generate product revenue.

        We currently have a limited commercial infrastructure to market, sell or distribute our drugs. If approved, to commercialize our products, we must build our marketing, sales and distribution capabilities or make arrangements with third parties to perform these services. We may not be successful in doing so. To commercialize volanesorsen and AKCEA-ANGPTL3-L Rx in the initial indications we plan to pursue, we plan to build a specialty sales force in each global region we

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expect to market the applicable drug, supported by case managers, reimbursement specialists, partnerships with specialty pharmacies, injection training, routine platelet monitoring, dietary counseling and a medical affairs team. We may seek to further penetrate markets by expanding our sales force or through strategic partnerships with other pharmaceutical or biotechnology companies or third party sales organizations, such as our strategic collaboration with Novartis.

        Even though certain members of our management team and other employees have significant experience commercializing drug products, as a company we have no prior experience marketing, selling or distributing drug products, and there are significant risks involved in building and managing a commercial infrastructure. It will be expensive and time consuming for us to build and establish our own sales force and related compliance protocols to market any drug products. We may never successfully develop this capability and any failure could delay or preclude a product launch. We and our partners, will have to compete with other companies to recruit, hire, train, manage and retain marketing and sales personnel.

        We will incur expenses prior to product launch to develop a marketing and sales infrastructure. If regulatory requirements or other factors cause a delay in the commercial launch of volanesorsen, or our other drugs in development, we would incur additional expenses for having developed these capabilities earlier than required and prior to realizing any revenue from sales of volanesorsen and our other drugs in development. Even if we can effectively hire a sales force and develop a marketing and sales infrastructure, our sales force and marketing teams may not successfully commercialize volanesorsen or our other drugs in development.

        If we cannot hire a sales force or collaborate with a third-party marketing and sales organization to globally commercialize any approved drug product, our ability to generate product revenue may be limited. To the extent we rely on third parties to commercialize any drug products, such as would be the case if Novartis exercises its option for AKCEA-APO(a)-L Rx or AKCEA-APOCIII-L Rx, we may receive less revenue than if we commercialized these drug products ourselves. In addition, we would have less control over the sales efforts of any other third parties involved in our commercialization efforts.

We plan to rely on third-party specialty channels to distribute volanesorsen, and our other drugs to patients. If we cannot effectively establish and manage this distribution process, it could harm or delay the commercial launch and sales of volanesorsen and our other drugs in development.

        We and our strategic partners may contract with, and rely on, third-party specialty pharmacies to distribute volanesorsen, and our other drugs to patients. A specialty pharmacy is a pharmacy that specializes in dispensing medications for complex or chronic conditions, a process that requires a high level of patient education and ongoing management. Our management team will need to devote a significant amount of its attention to building and managing this distribution network. If we cannot effectively build and manage this distribution process, the commercial launch and sales of volanesorsen and AKCEA-ANGPTL3-L Rx will be delayed or less successful, which would harm our results of operations.

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        In addition, the use of specialty pharmacies involves certain risks, including, but not limited to, risks that these organizations will:

    §
    not provide us with accurate or timely information regarding their inventories, the number of patients who are using our drugs or complaints regarding our drugs;
    §
    not effectively sell or support volanesorsen, AKCEA-ANGPTL3-L Rx and our other drugs;
    §
    reduce or discontinue their efforts to sell or support volanesorsen, AKCEA-ANGPTL3-L Rx or our other drugs;
    §
    not devote the resources necessary to sell volanesorsen, AKCEA-ANGPTL3-L Rx or our other drugs in the volumes and within the time frames that we expect;
    §
    not satisfy financial obligations to us or others; or
    §
    cease operations.

        Any such events may result in decreased sales and lower revenue, which could have a material adverse effect on our business, prospects, financial condition and results of operations.

If the market does not accept our drugs, including volanesorsen and our other drugs in development, we are not likely to generate substantial product revenue or become profitable.

        Even if we or our strategic partners obtain a marketing authorization for volanesorsen and our other drugs in development, our success will depend upon the medical community, patients and third-party payors accepting our drugs as medically useful, cost-effective, safe and convenient. Even if the FDA or foreign regulatory authorities authorize our drugs for commercialization, doctors may not prescribe our drugs to treat patients. We and our partners may not successfully commercialize additional drugs.

        Additionally, in many of the markets where we or our partners may sell our drugs in the future, if we cannot agree with the government or other third-party payors regarding the price we can charge for our drugs, then we may not be able to sell our drugs in that market. Similarly, cost control initiatives by governments or third-party payors could decrease the price received for our drugs or increase patient coinsurance to a level that makes commercializing volanesorsen, AKCEA-APO(a)-L RX and our other drugs in development economically unviable.

        The degree of market acceptance for volanesorsen, AKCEA-APO(a)-L Rx and our other drugs in development depends upon a number of factors, including the:

    §
    receipt and scope of marketing authorizations;
    §
    establishment and demonstration in the medical and patient community of the efficacy and safety of our drugs and their potential advantages over competing products;
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    cost and effectiveness of our drugs compared to other available therapies;
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    patient convenience of the dosing regimen for our drugs; and
    §
    reimbursement by government and third-party payors.

        Based on the profile of our drugs, physicians, patients, patient advocates, payors or the medical community in general may not accept and/or use any drugs that we may develop. For example, we expect volanesorsen's product label will require periodic platelet monitoring, which could negatively affect our ability to attract and retain patients for volanesorsen. Additionally, in the clinical setting, some patients discontinued treatment with volanesorsen, including five patients who discontinued participation in the APPROACH study due to platelet count declines. While we believe we can better maintain patients on volanesorsen through our patient-centric commercial approach where we plan

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to have greater involvement with physicians and patients, if we cannot effectively maintain patients on volanesorsen, we may not be able to generate substantial revenue from volanesorsen sales.

The patient populations suffering from FCS and FPL are small and have not been established with precision. If the actual number of patients is smaller than we estimate, or if we cannot raise awareness of these diseases and diagnosis is not improved, our revenue and ability to achieve profitability may be adversely affected.

        We estimate there are 3,000 to 5,000 FCS patients and an additional 3,000 to 5,000 FPL patients globally. Our estimates of the sizes of the patient populations are based on published studies as well as internal analyses. If the results of these studies or our analyses of them do not accurately reflect the number of patients with FCS and FPL, our assessment of the market potential for volanesorsen may be inaccurate, making it difficult or impossible for us to meet our revenue goals, or to obtain and maintain profitability. In addition, as is the case with most orphan diseases, if we cannot successfully raise awareness of these diseases and improve diagnosis, it will be more difficult or impossible to achieve profitability.

        In addition, since the patient populations for FCS and FPL are small, the per-patient drug pricing must be high in order to recover our development and manufacturing costs, fund adequate patient support programs and achieve profitability. For these initial indications, we may not maintain or obtain sufficient sales volume at a price high enough to justify our product development efforts and our sales and marketing and manufacturing expenses.

If we or our partners fail to compete effectively, volanesorsen and our other drugs in development will not contribute significant r e venue.

        Our competitors engage in drug discovery throughout the world, are numerous and include, among others, major pharmaceutical companies and specialized biopharmaceutical firms. Our competitors may succeed in developing drugs that are:

    §
    safer than our drugs;
    §
    more effective than our drugs;
    §
    priced lower than our drugs;
    §
    reimbursed more favorably by government and other third-party payors than our drugs; or
    §
    more convenient to use than our drugs.

        These competitive developments could make our drugs, including volanesorsen, AKCEA-APO(a)-L Rx and our other drugs in development, obsolete or non-competitive. Further, all of our drugs are delivered by injection, which may render them less attractive to patients than non-injectable products offered by our current or future competitors.

        Many of our competitors have substantially greater financial, technical and human resources than we do. In addition, many of these competitors have significantly greater experience than we do in conducting preclinical testing and human clinical studies, in obtaining FDA and other regulatory authorizations and in commercializing pharmaceutical products. Accordingly, our competitors may succeed in obtaining regulatory authorization for products earlier than we do. Marketing and sales capability is another factor relevant to the competitive position of our drugs, and many of our competitors will have greater marketing and sales capabilities than our capabilities.

        There are several pharmaceutical and biotechnology companies engaged in the development or commercialization of products against targets that are also targets of drugs in our development pipeline. For example, if approved, volanesorsen could face competition from drugs like metreleptin.

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Metreleptin, produced by Novelion Therapeutics, Inc., is currently approved for use in generalized lipodystrophy patients. In September 2016, Arrowhead Pharmaceuticals, Inc. and Amgen Inc. announced a license and collaboration for development of Arrowhead's preclinical program which uses an RNAi conjugated with a GalNAc for the same target as AKCEA-APO(a)-L Rx. AKCEA-APOCIII-L Rx may compete with gemcabene, an oral small molecule that reduces ApoC-III, that Gemphire Therapeutics, Inc. is developing to treat patients with triglycerides above 500 mg/dL. If volanesorsen or the other drugs in our pipeline cannot compete effectively with these and other products with common or similar indications to the drugs in our pipeline, we may not be able to generate substantial revenue from our product sales.

If government or other third-party payors fail to provide adequate coverage and payment rates for volanesorsen, AKCEA-APO(a)-L Rx and our other drugs in development, our revenue and prospects for profitability will be limited.

        In both domestic and foreign markets, sales of our future products will depend in part upon the availability of coverage and reimbursement from third-party payors. The majority of patients in the United States who would fit within our target patient populations for our drugs have their healthcare supported by a combination of Medicare coverage, other government health programs such as Medicaid, managed care providers, private health insurers and other organizations. Coverage decisions may depend upon clinical and economic standards that disfavor new drug products when more established or lower cost therapeutic alternatives are already available or subsequently become available. Assuming coverage is approved, the resulting reimbursement payment rates might not be enough to make our drugs affordable. Accordingly, volanesorsen, AKCEA-APO(a)-L Rx and our other drugs in development, if approved, will face competition from other therapies and drugs for limited financial resources. We may need to conduct post-marketing studies to demonstrate the cost-effectiveness of any future products to satisfy third-party payors. These studies might require us to commit a significant amount of management time and financial and other resources. Third-party payors may never consider our future products as cost-effective. Adequate third-party coverage and reimbursement might not be available to enable us to maintain price levels sufficient to realize an appropriate return on investment in product development.

        Third-party payors, whether foreign or domestic, or governmental or commercial, are developing increasingly sophisticated methods of controlling healthcare costs. In addition, in the United States, no uniform policy of coverage and reimbursement for drug products exists among third-party payors. Therefore, coverage and reimbursement for drug products can differ significantly from payor to payor. Further, we believe that future coverage and reimbursement will likely be subject to increased restrictions both in the United States and in international markets. For example, in the United States, recent health reform measures have resulted in reductions in Medicare and other healthcare funding, and there have been several recent U.S. Congressional inquiries and proposed federal legislation designed to, among other things, reform government program reimbursement methodologies for drug products and bring more transparency to drug pricing. Third-party coverage and reimbursement for our products or drugs may not be available or adequate in either the United States or international markets, which would negatively affect the potential commercial success of our products, our revenue and our profits.

If we are found in violation of federal or state "fraud and abuse" laws or other healthcare laws and regulations, we may be required to pay a penalty and/or be suspended from participation in federal or state healthcare programs, which may adversely affect our business, financial condition and results of operation.

        We may be subject to various federal and state laws pertaining to healthcare "fraud and abuse," including anti-kickback laws and false claims laws. Anti-kickback laws, among other things, make it

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illegal for a prescription drug manufacturer to pay, or offer to pay, a healthcare provider to refer, purchase or prescribe a particular drug. Due to the breadth of the statutory and regulatory provisions, it is possible that government authorities and others might challenge our practices under anti-kickback or other fraud and abuse laws. Moreover, recent healthcare reform legislation has strengthened these laws. In addition, false claims laws prohibit anyone from knowingly and willingly presenting, or causing to be presented for payment, to government third-party payors, including Medicare and Medicaid claims for reimbursed drugs that are false or fraudulent, claims for items or services not provided as claimed, or claims for medically unnecessary items or services. Our activities relating to the sale and marketing of our products may be subject to scrutiny under these laws. If we violated fraud and abuse laws, we could face a combination of:

    §
    criminal and civil sanctions, including fines and civil monetary penalties;
    §
    the possibility of exclusion from federal healthcare programs, including Medicare and Medicaid; and
    §
    corporate integrity agreements, which could impose rigorous operational and monitoring requirements on us.

        Given the significant penalties and fines that the government can impose on companies and individuals if convicted, allegations of violations often result in settlements even if the company or individual being investigated admits no wrongdoing. Settlements often include significant civil sanctions, including fines and civil monetary penalties, and corporate integrity agreements. If the government were to allege or convict us or our executive officers of violating these laws, our business could be harmed. In addition, private individuals may bring similar actions under the False Claims Act. Our activities could be subject to challenge for the reasons discussed above and due to the broad scope of these laws and the increasing focus on these laws by law enforcement authorities. To the extent we have access to protected health information we could be subject to federal and state health information privacy and security laws, including without limitation, the Health Insurance Portability and Accountability Act of 1996, or HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act, which governs the conduct of certain electronic healthcare transactions and protects the security and privacy of protected health information. State health information privacy and security laws in certain circumstances are more stringent than HIPAA and many of the state laws differ from each other in significant ways and may not have the same effect, thus complicating compliance. Our failure to comply with applicable federal and state health information privacy and security laws could subject us to significant fines and multi-year corrective action plans. Once we have a commercialized drug, we will be required to report annually to Centers for Medicare and Medicaid Services certain information related to payments and other transfers of value we may provide to physicians and teaching hospitals. Further, an increasing number of state laws require manufacturers to make reports to states on pricing and marketing information. Many of these laws are unclear as to what is required to comply with the laws. Given the lack of clarity in laws and their implementation, our reporting actions could be subject to the penalty provisions of the pertinent state authorities.

        Similar rigid restrictions related to anti-kickbacks and promoting and marketing medicinal products apply in the European Union and other countries. Authorities in these countries strictly enforce these restrictions. Even in those countries where we will not be directly responsible for promoting and marketing our products, inappropriate activity by any of our international commercialization partners we may have could harm us.

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Risks Related to Dependence on Third Parties

We plan to substantially depend on our collaboration with Novartis to develop and commercialize AKCEA-APO(a)-L Rx and AKCEA-APOCIII-L Rx .

        We have granted Novartis an exclusive option to exclusively license each of AKCEA-APO(a)-L Rx and AKCEA-APOCIII-L Rx pursuant to our strategic collaboration, option and license agreement with Novartis . We plan to substantially depend on Novartis to develop and commercialize these drugs. We initiated this collaboration primarily to have Novartis:

    §
    conduct the cardiovascular outcome studies that are likely to be required for approval of AKCEA-APO(a)-L Rx and AKCEA-APOCIII-L Rx;
    §
    seek and obtain regulatory approvals for AKCEA-APO(a)-L Rx and AKCEA-APOCIII-L Rx ; and
    §
    globally commercialize AKCEA-APO(a)-L Rx and AKCEA-APOCIII-L Rx .

        If Novartis exercises its option to license one or both of these drugs, we would rely on Novartis to further develop, obtain regulatory approvals for, and commercialize the licensed drug. In general, we cannot control the amount and timing of resources that Novartis devotes to our strategic collaboration. If Novartis fails to use commercially reasonable effort to further develop, obtain regulatory approvals for, or commercialize these drugs, or if Novartis' efforts are not effective, our business may be negatively affected. Novartis could pursue other technologies or develop other drugs either on its own or in collaboration with others to treat the same diseases as we and Novartis plan to treat with AKCEA-APO(a)-L Rx or AKCEA-APOCIII-L Rx . Novartis could pursue these technologies and develop these other drugs at the same time as it is developing or commercializing AKCEA-APO(a)-L Rx or AKCEA-APOCIII-L Rx , and Novartis is not required to inform us of such activities.

        Our strategic collaboration with Novartis may not continue for various reasons. Novartis can terminate our agreement at any time and is under no obligation to exercise the options we granted them. If Novartis does not exercise its option, or following option exercise stops developing or commercializing a drug, we will have to seek additional sources for funding and may have to delay or reduce our development and commercialization plans for AKCEA-APO(a)-L Rx or AKCEA-APOCIII-L Rx .

        In addition, if Novartis exercises its option to license AKCEA-APO(a)-L Rx or AKCEA-APOCIII-L Rx , Novartis would be responsible for the long term supply of drug substance and finished drug product for the licensed drug.

        Our strategic collaboration with Novartis may not result in the successful commercialization of AKCEA-APO(a)-L Rx or AKCEA-APOCIII-L Rx . If Novartis does not successfully develop, manufacture or commercialize AKCEA-APO(a)-L Rx or AKCEA-APOCIII-L Rx , we may receive limited or no revenues for these drugs.

AKCEA-APOCIII-L Rx and AKCEA-ANGPTL3-L Rx may compete with volanesorsen, which could reduce our expected revenues for volanesorsen.

        Volanesorsen and AKCEA-APOCIII-L Rx both inhibit the production of the same protein. We believe the enhancements we incorporated into AKCEA-APOCIII-L Rx can provide greater patient convenience by allowing for significantly lower doses and less frequent administration compared to volanesorsen. As such, if Novartis exercises its option and successfully commercializes AKCEA-APOCIII-L Rx while we are commercializing volanesorsen, to the extent physicians and patients elect to use AKCEA-APOCIII-L Rx instead of volanesorsen, it will reduce the revenue we derive from

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volanesorsen. In addition, while AKCEA-ANGPTL3-L Rx and volanesorsen use different mechanisms of action, if AKCEA-ANGPTL3-L Rx can effectively lower triglyceride levels in FCS patients, it may likewise reduce the revenue we derive from volanesorsen.

If we cannot manufacture our drugs or contract with a third party to manufacture our drugs at costs that allow us to charge competitive prices to buyers, we will not be able to operate profitably.

        To successfully commercialize volanesorsen, AKCEA-APO(a)-L Rx and our other drugs in development, we will need to establish large-scale commercial manufacturing capabilities either on our own or through a third-party manufacturer. In addition, as our drug development pipeline matures, we will have a greater need for clinical study and commercial manufacturing capacity. We have no direct experience manufacturing pharmaceutical products of the chemical class represented by our drugs, called oligonucleotides, on a commercial scale for the systemic administration of a drug. We currently rely and expect to rely for the foreseeable future on Ionis' manufacturing capacity and efficiency to produce our oligonucleotide drugs, and our business could be negatively affected if Ionis ceased to provide us with this capability for any reason. In addition, there are a small number of suppliers for certain raw materials that we use to manufacture our drugs, and some of these suppliers will need to increase their scale of production to meet our projected needs for commercial manufacturing. Further, if we cannot continue to acquire raw materials from these suppliers on commercially reasonable terms or at all, we may be required to find alternative suppliers, which could be expensive and time consuming and negatively affect our ability to develop or commercialize our drugs in a timely manner or at all. We may not be able to manufacture our drugs at a cost or in quantities necessary to make commercially successful products.

        We do not have long-term supply agreements for our drugs. We cannot guarantee that we will have a steady supply of drug to complete clinical studies, make registration batches for approval or satisfy market demand if commercialized at prices that are commercially acceptable. In addition, if we need to change manufacturers for any reason, we will need to verify that the new manufacturer maintains facilities and procedures that comply with quality standards and with all applicable regulations and guidelines. The delays associated with verifying a new manufacturer could negatively affect our ability to develop drugs in a timely manner or within budget.

        Also, manufacturers must adhere to the FDA's current Good Manufacturing Practices regulations and similar regulations in foreign countries, which the applicable regulatory authorities enforce through facilities inspection programs. Our contract manufacturers may not comply or maintain compliance with Good Manufacturing Practices, or similar foreign regulations. Non-compliance could significantly delay or prevent receipt of marketing authorization for our drugs, including authorizations for volanesorsen, AKCEA-APO(a)-L Rx and our other drugs in development, or result in enforcement action after authorization that could limit the commercial success of our drugs, including volanesorsen, AKCEA-APO(a)-L Rx and our other drugs in development.

We depend on third parties to conduct our clinical studies for our drugs and any failure of those parties to fulfill their obligations could adversely affect our development and commercialization plans.

        We depend on independent clinical investigators, contract research organizations and other third-party service providers to conduct the clinical studies for our drugs and expect to continue to do so in the future. For example, we use clinical research organizations for the clinical studies for volanesorsen, AKCEA-APO(a)-L Rx and our other drugs in development. We rely heavily on these parties for successful execution of our clinical studies, but do not control many aspects of their activities. For example, the investigators are not our employees. However, we are responsible for

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ensuring that these third parties conduct each of our clinical studies in accordance with the general investigational plan, approved protocols for the study and applicable regulations. Third parties may not complete activities on schedule or may not conduct our clinical studies in accordance with regulatory requirements or our stated protocols. The failure of these third parties to carry out their obligations or a termination of our relationship with these third parties could delay or prevent the development, marketing authorization and commercialization of our drugs, including authorizations for volanesorsen, AKCEA-APO(a)-L Rx and our other drugs in development.

We may seek to form additional partnerships in the future with respect to volanesorsen, and our other drugs in development, and we may not realize the benefits of such partnerships.

        Although we intend to develop and commercialize volanesorsen for patients with FCS and FPL ourselves, we may form partnerships, create joint ventures or collaborations or enter into licensing arrangements with third parties for the development and commercialization of our drugs in development. For example, we have granted Novartis an exclusive option to exclusively license AKCEA-APO(a)-L Rx and AKCEA-APOCIII-L Rx . We face significant competition in seeking appropriate strategic partners and the negotiation process is time-consuming and complex. Any delays in entering into new strategic partnership agreements related to our drugs could delay the development and commercialization of our drugs and reduce their competitiveness even if they reach the market. Moreover, we may not be successful in our efforts to establish a strategic partnership or other collaborative arrangement for any additional drugs because the potential partner may consider that our development pipeline is not advanced enough to justify a collaborative effort, or that volanesorsen and our other drugs in development do not have the requisite potential to demonstrate safety and efficacy in the target populations. In addition, we will need to mutually agree with Ionis on the terms of any sublicense to a third party for volanesorsen and our other drugs in development. If we cannot mutually agree on terms for a sublicense to a third party or if Ionis does not agree to a sublicense at all, it could delay our ability to develop and commercialize volanesorsen and our other drugs in development. Even if we are successful in establishing such a strategic partnership or collaboration, we cannot be certain that, following such a strategic transaction or collaboration, we will be able to progress the development and commercialization of the applicable drugs as envisioned, or that we will achieve the revenue that would justify such transaction. If we do not accurately evaluate the commercial potential or target market for a particular drug, we may relinquish valuable rights to that drug through future collaboration, licensing or other arrangements in cases in which it would have been more advantageous for us to retain sole development and commercialization rights.


Risks Related to Our Relationship with Ionis

Ionis controls the direction of our business, and the concentrated ownership of our common stock will prevent you and other stockholders from influencing significant decisions.

        Immediately following the completion of this offering, Ionis will own 70.8% of the economic interest and voting power of our outstanding common stock, or 68.3% of the economic interest and voting power of our outstanding common stock if the underwriters exercise their option to purchase additional shares in full. As long as Ionis beneficially controls a majority of the voting power of our outstanding common stock, it will generally be able to determine the outcome of all corporate actions requiring stockholder approval, including the election and removal of directors. Even if Ionis were to control less than a majority of the voting power of our outstanding common stock, it may influence the outcome of such corporate actions so long as it owns a significant portion of our common stock. If Ionis continues to hold its shares of our common stock, it could remain our controlling stockholder for an extended period of time or indefinitely.

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        Ionis' interests may not be the same as, or may conflict with, the interests of our other stockholders. Investors in this offering will not be able to affect the outcome of any stockholder vote while Ionis controls the majority of the voting power of our outstanding common stock. As a result, Ionis can control, directly or indirectly and subject to applicable law, all matters affecting us, including:

    §
    any determination with respect to our business strategy and policies, including the appointment and removal of officers and directors;
    §
    any determinations with respect to mergers, business combinations or disposition of assets;
    §
    our financing and dividend policy;
    §
    compensation and benefit programs and other human resources policy decisions;
    §
    termination of, changes to or determinations under our development, commercialization and license agreement, which we refer to as the license agreement, and services agreement with Ionis;
    §
    changes to any other agreements that may adversely affect us; and
    §
    determinations with respect to our tax returns.

        Because Ionis' interests may differ from ours or from those of our other stockholders, actions that Ionis takes with respect to us, as our controlling stockholder, may not be favorable to us or our other stockholders.

If Ionis sells a controlling interest in our company to a third party in a private transaction, you may not realize a change of control premium on shares of our common stock, and we may become subject to the control of a presently unknown third party.

        Following the completion of this offering, Ionis will continue to own a significant equity interest in our company. This means that Ionis could choose to sell some or all of its shares of our common stock in a privately negotiated transaction, which, if sufficient in size, could result in a change of control of our company.

        Ionis' ability to privately sell its shares of our common stock, with no requirement for a concurrent offer to be made to acquire your shares of our common stock, could prevent you from realizing any change of control premium on your shares of our common stock that may otherwise accrue to Ionis on its private sale of our common stock. Additionally, if Ionis privately sells its significant equity interest in our company, we may become subject to the control of a presently unknown third party. Such third party may have conflicts of interest with those of other stockholders. In addition, if Ionis sells a controlling interest in our company to a third party, such a sale could negatively impact or accelerate any future indebtedness we may incur, and negatively impact any other commercial agreements and relationships, all of which may adversely affect our ability to run our business as described herein and may have a material adverse effect on our operating results and financial condition.

Certain of our directors and officers may have actual or potential conflicts of interest because of their positions with Ionis.

        Following this offering, Stanley T. Crooke, Chairman of the Board and Chief Executive Officer for Ionis, and B. Lynne Parshall, Chief Operating Officer for Ionis, will serve on our board of directors and retain their positions with Ionis. Similarly, Elizabeth L. Hougen, Chief Financial Officer for Ionis, will serve as our Chief Financial Officer and retain her position with Ionis. In addition, these individuals will own Ionis equity and Ionis equity awards. Ionis common stock, options to purchase Ionis common stock and other Ionis equity awards represent a significant portion of these individuals' net worth. Their position at Ionis and the ownership of any Ionis equity or equity awards creates, or

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may create the appearance of, conflicts of interest when we ask these individuals to make decisions that could have different implications for Ionis than the decisions have for us. In addition, our certificate of incorporation will provide for the allocation of certain corporate opportunities between us and Ionis. Under these provisions, neither Ionis or its other affiliates, nor any of their officers, directors, agents or stockholders, will have any obligation to present to us certain corporate opportunities. For example, a director of our company who also serves as a director, officer or employee of Ionis or any of its other affiliates may present to Ionis certain acquisitions, in-licenses, potential development programs or other opportunities that may be complementary to our business and, as a result, such opportunities may not be available to us. To the extent attractive corporate opportunities are allocated to Ionis or its other affiliates instead of to us, we may not be able to benefit from these opportunities. See "Description of Capital Stock—Corporate Opportunities" for additional information.

The resources Ionis provides us under the license agreement and the services agreement may not be sufficient for us to operate as a standalone company, and we may experience difficulty in separating our resources from Ionis.

        Because we have not operated separately from Ionis in the past, we may have difficulty doing so. We will need to acquire resources in addition to, and eventually in lieu of, those provided by Ionis to our company, and may also face difficulty in separating our resources from Ionis' resources and integrating newly acquired resources into our business. In addition, Ionis may prioritize its own research, development, manufacturing and other needs ahead of the services Ionis has agreed to provide us, or Ionis employees who conduct services for us may prioritize Ionis' interests over our interests. Our business, financial condition and results of operations could be harmed if we have difficulty operating as a standalone company, fail to acquire resources that prove to be important to our operations or incur unexpected costs in separating our resources from Ionis' resources or integrating newly acquired resources.

Our historical financial information is not necessarily representative of the results that we would have achieved as a separate, publicly traded company and may not be a reliable indicator of our future results.

        Some of the historical information about us in this prospectus refers to our business as operated by and integrated with Ionis. Our historical financial information is derived from the consolidated financial statements and accounting records of Ionis. Accordingly, the financial information included in this prospectus does not necessarily reflect the financial condition, results of operations or cash flows that we would have achieved as a separate, publicly traded company during the periods presented or those that we will achieve in the future primarily as a result of the factors described below:

    §
    Prior to our formation as a separate subsidiary, Ionis operated our business as part of its broader corporate organization, rather than as an independent company. Ionis performed various corporate functions for our business, such as accounting, information technology, finance, business development and legal. Ionis currently provides some of these functions to us, as described in "Certain relationships and related person transactions." Our historical financial results reflect allocations of corporate expenses from Ionis for such functions and are likely to be less than the expenses we would have incurred had we operated as a separate publicly traded company. We will need to make significant investments to replicate or outsource from other providers the facilities, systems, infrastructure and personnel we may no longer have access to as a result of our separation from Ionis. As we transition more and more of these functions away from Ionis so that we can develop our independent ability to operate without access to Ionis' existing operational and administrative

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      infrastructure our costs will increase. We may not operate our business efficiently or at comparable costs, and our profitability may decline;

    §
    We have been able to use Ionis' size and purchasing power in procuring various goods and services and shared economies of scope and scale in costs, employees, vendor relationships and other business relationships. Although we have the license agreement and services agreement with Ionis, these arrangements may not fully capture the benefits we previously enjoyed when we were integrated with Ionis and may result in us paying higher charges than in the past for these services. As a separate, independent company, we may not obtain goods and services at the prices and terms obtained prior to our separation, which could decrease our overall profitability. As a separate, independent company, we also may not successfully negotiate favorable tax treatments and credits with governmental entities. This could have an adverse effect on our results of operations and financial condition;
    §
    Generally, our working capital requirements and capital for our general corporate purposes, including research and development and capital expenditures, were historically satisfied as part of Ionis' corporate-wide cash management policies. As a result of the separation, we may need to obtain additional financing from banks, through public offerings or private placements of debt or equity securities, strategic relationships or other arrangements; and
    §
    The cost of capital for our business may be higher than Ionis' cost of capital prior to the separation.

        Other significant changes may occur in our cost structure, management, financing and business operations as a result of operating as a company separate from Ionis. For additional information about the past financial performance of our business and the basis of presentation of the consolidated financial statements of our business, see "Management's Discussion and Analysis of Financial Condition and Results of Operations" and our consolidated financial statements and related notes included elsewhere in this prospectus.

We will incur incremental costs as a standalone company.

        We will need to replicate or replace the functions, systems and infrastructure to which we will no longer have the same access after this offering. We may also need to make investments or hire additional employees to operate without the same access to Ionis' existing operational and administrative infrastructure. These initiatives may be costly to implement. Due to the scope and complexity of the underlying projects relative to these efforts, the amount of total costs could be materially higher than our estimate, and the timing of the incurrence of these costs is subject to change.

        Ionis currently performs or supports many important corporate functions for our company. Our consolidated financial statements reflect charges for these services on an allocation basis. Following this offering, our services agreement with Ionis will govern many of these services. Under the services agreement we will be able to use these Ionis services for a fixed term established on a service-by-service basis. However, we generally will have the right to terminate a service earlier if we give notice to Ionis. Partial reduction in the provision of any service requires Ionis' consent. In addition, either party will be able to terminate the agreement due to a material breach of the other party, upon prior written notice, subject to limited cure periods.

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        We will pay Ionis mutually agreed upon fees for these services, based on Ionis' costs of providing the services. Since we negotiated the services agreement in the context of a parent subsidiary relationship, the terms of the agreement, including the fees charged for the services, may be higher or lower than those that would be agreed to by parties bargaining at arm's length for similar services and may be higher or lower than the costs reflected in the allocations in our historical consolidated financial statements. Ionis will pass third party costs through to us at Ionis' cost. In addition, while Ionis provides us these services, our operational flexibility to modify or implement changes with respect to such services or the amounts we pay for them will be limited.

        We may not be able to replace these services or enter into appropriate third-party agreements on terms and conditions, including cost, comparable to those that we will receive from Ionis under our services agreement. Additionally, after the agreement terminates, we may not sustain the services at the same levels or obtain the same benefits as when we were receiving such services and benefits from Ionis. When we begin to operate these functions separately, if we do not have our own adequate systems and business functions in place, or cannot obtain them from other providers, we may not operate our business effectively or at comparable costs, and our business may suffer. In addition, we have historically received informal support from Ionis, which may not be addressed in our services agreement. The level of this informal support will diminish and could end following this offering.

We may not be able to fully realize the expected benefits of our license agreement with Ionis.

        We have a development, commercialization and license agreement with Ionis. Pursuant to the license agreement, subject to certain restrictions, we and Ionis will share development responsibilities for volanesorsen, AKCEA-APO(a)-L Rx and our other drugs in development. We are paying for research and development costs and reimbursing Ionis for Ionis' employees supporting our development activities. Until we build or acquire our own capabilities to replace those Ionis is providing to us, particularly development, regulatory and manufacturing services, we will be heavily dependent on Ionis.

        While we and Ionis intend the license agreement to bolster our capabilities, certain terms of the license agreement may limit our ability to achieve this expected benefit, including:

    §
    a Joint Steering Committee, or JSC, comprising two senior members from our company and two senior members from Ionis, sets the development strategy for our drugs by mutual agreement. A Regulatory Sub-committee, established by the JSC and having equal membership from our company and Ionis, will set the regulatory strategy for each of our drugs by mutual agreement. If the JSC or the Regulatory Sub-committee cannot come to a mutual agreement, it could delay our ability to develop and commercialize volanesorsen, AKCEA-APO(a)-L Rx and our other drugs in development;
    §
    we will need to mutually agree with Ionis on the terms of any additional sublicense to a third party for volanesorsen and our other drugs in development. If we cannot mutually agree on terms for a sublicense to a third party or if Ionis does not agree to a sublicense at all, it could delay or prevent our ability to develop and commercialize volanesorsen and our other drugs in development;
    §
    we will need to obtain Ionis' approval to in-license a product, acquire a product or acquire another company, until the earlier of (i) 5 years following this offering or (ii) when Ionis no longer is required to record its share of our profits and losses from an accounting perspective; and

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    §
    there is nothing in our agreements with Ionis to prevent Ionis from developing and commercializing drugs targeting RNAs that are not ApoC-III, Apo(a) or ANGPTL3 to pursue the same indications we are pursuing with our drugs.

        Each of the foregoing terms and Ionis' other rights under the license agreement, could limit our ability to realize the expected benefits of the license agreement or otherwise limit our ability to pursue transactions or development efforts other stockholders may view as beneficial. Further, if Ionis does not continue to own a significant portion of our equity, Ionis' incentive to help us would be diminished. If we fail to achieve the expected benefits of our agreements with Ionis, it may be more difficult, time consuming or expensive for us to develop and commercialize volanesorsen, AKCEA-APO(a)-L Rx and our other drugs in development, or may result in our drugs being later to market than those of our competitors or prevent them from ever getting to market. If these events cause delays in new product development we could lose the first in class products in a given therapeutic area.

        For a summary description of the terms of the license agreement, see "Certain Relationships and Related Person Transactions."


Risks Related to Our Intellectual Property

If we breach our obligations under our license agreement with Ionis, we could lose our rights to volanesorsen and our other drugs in development.

        We obtained our rights to volanesorsen and our other drugs in development under our license agreement with Ionis. If we breach our obligations under this license agreement and, as a result, Ionis subsequently exercises its right to terminate it, we generally would not be able to continue to develop or commercialize volanesorsen, and our other drugs in development that incorporate Ionis' intellectual property, and Ionis would receive a royalty-free, nonexclusive license to our improvements to those programs, meaning we would lose the benefits of our investment in these programs. If we breach our obligations under this license agreement with respect to AKCEA-APO(a)-L Rx or AKCEA-APOCIII-L Rx and, as a result, Ionis exercises its right to terminate it, then our strategic collaboration with Novartis would convert into a direct strategic collaboration between Novartis and Ionis, and Ionis would receive all of the revenue and other benefits associated with that strategic collaboration. For a summary description of the license agreement, see "Certain Relationships and Related Person Transactions."

If we cannot protect our patent rights or our other proprietary rights, others may compete more effectively against us.

        Our success depends to a significant degree upon whether we can continue to secure and maintain intellectual property rights that protect volanesorsen, AKCEA-APO(a)-L Rx and our other drugs in development. However, patents may not issue from any of our pending patent applications in the United States or in other countries and we may not be able to obtain, maintain or enforce our owned or licensed patents and other intellectual property rights which could impact our ability to compete effectively. In addition, the scope of any of our owned or licensed patents may not be sufficiently broad to provide us with a competitive advantage. Furthermore, other parties may successfully challenge, invalidate or circumvent our issued patents or patents licensed to us so that our patent rights do not create an effective competitive barrier or revenue source.

        Composition of matter patents on the active pharmaceutical ingredient for a product are generally considered to be the strongest form of intellectual property protection for pharmaceutical

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products, as such patents provide protection without regard to any method of use. Our volanesorsen patent portfolio currently includes:

    §
    issued patent claims to the specific antisense sequence and chemical composition of volanesorsen in the United States, Australia, and Europe;
    §
    issued patent claims in the United States and Australia drawn to the use of antisense compounds complementary to an active region of human ApoC-III messenger ribonucleic acid, including the site targeted by volanesorsen;
    §
    additional patent applications designed to protect the volanesorsen composition in Canada; and
    §
    additional methods of use in jurisdictions worldwide for volanesorsen.

        The natural term of the issued U.S. patent covering the volanesorsen composition of matter will expire in 2023, but we plan to seek to extend the U.S. patent expiration beyond 2023 based upon the development and regulatory review period in the United States. The natural term of the granted European and Australian patents covering volanesorsen will expire in 2024, but we plan to seek to extend each of these patents beyond 2024 based upon the development and regulatory review periods in Europe and Australia.

        We cannot be certain that the U.S. Patent and Trademark Office, or U.S. PTO, and courts in the United States or the patent offices and courts in foreign countries will consider the claims in our owned or licensed patents and applications covering volanesorsen, AKCEA-APO(a)-L Rx and our other drugs in development as patentable. Method-of-use patents protect the use of a product for the specified method. This type of patent does not prevent a competitor from making and marketing a product that is identical to our product for an indication that is outside the scope of the patented method. Moreover, even if competitors do not actively promote their product for our targeted indications, physicians may prescribe these products off-label. Although off-label prescriptions may infringe or contribute to the infringement of method-of-use patents, the practice is common and such infringement is difficult to prevent, including through legal action.

        If we or any licensor partner loses or cannot obtain patent protection for volanesorsen, AKCEA-APO(a)-L Rx or our other drugs in development it could have a material adverse impact on our business.

Intellectual property litigation could cause us to spend substantial resources and prevent us from pursuing our programs.

        From time to time we may have to defend our intellectual property rights. If we are involved in an intellectual property dispute, we may need to litigate to defend our rights or assert them against others. Disputes can involve arbitration, litigation or proceedings declared by the U.S. PTO or the International Trade Commission or foreign patent authorities. Even if resolved in our favor, litigation or other legal proceedings relating to intellectual property claims may cause us to incur significant expenses, and could distract our technical and management personnel from their normal responsibilities. In addition, there could be public announcements of the results of hearings, motions or other interim proceedings or developments and if securities analysts or investors perceive these results to be negative, it could have a substantial adverse effect on the price of our common stock. Such litigation or proceedings could substantially increase our operating losses and reduce the resources available for development activities or any future sales, marketing or distribution activities. We may not have sufficient financial or other resources to adequately conduct such litigation or proceedings. Some of our competitors may be able to sustain the costs of such litigation or

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proceedings more effectively than we can because of their greater financial resources and more mature and developed intellectual property portfolios.

Third parties may initiate legal proceedings alleging that we are infringing their intellectual property rights, the outcome of which would be uncertain and could have a material adverse effect on the success of our business.

        Our commercial success depends upon our ability and the ability of our strategic partners to develop, manufacture, market and sell our drugs and use our proprietary technologies without infringing the proprietary rights and intellectual property of third parties. Extensive litigation regarding patents and other intellectual property rights is common in the biotechnology and pharmaceutical industries. We may in the future become party to, or threatened with, adversarial proceedings or litigation regarding intellectual property rights with respect to our drugs and technology, including interference, derivation, reexamination, post-grant review, opposition, cancellation or similar proceedings before the U.S. PTO or its foreign counterparts. Third parties may assert infringement claims against us based on existing patents or patents that may be granted in the future. We may not be aware of all such intellectual property rights potentially relating to our drugs and their uses. If a third party claims that volanesorsen, AKCEA-APO(a)-L Rx , our other drugs in development or our technology infringe its patents or other intellectual property rights, we or our partners may have to discontinue an important product or product line, alter our products and processes, pay license fees or cease certain activities. We may not be able to obtain a license to needed intellectual property on favorable terms, if at all. There are many patents issued or applied for in the biotechnology industry, and we may not be aware of patents or patent applications held by others that relate to our business. This is especially true since patent applications in the United States are filed confidentially for the first 18 months. Moreover, the validity and breadth of biotechnology patents involve complex legal and factual questions for which important legal issues remain. Thus, we do not know with certainty that our drugs or our intended commercialization thereof, does and will not infringe or otherwise violate any third party's intellectual property.

We will not seek to protect our intellectual property rights in all jurisdictions throughout the world and we may not be able to adequately enforce our intellectual property rights even in the jurisdictions where we seek protection.

        Filing, prosecuting and defending patents on drugs in all countries and jurisdictions throughout the world would be prohibitively expensive, and our intellectual property rights in some countries outside the United States could be less extensive than those we could obtain in the United States. In addition, the laws of some foreign countries do not protect intellectual property rights to the same extent as laws in the United States. Consequently, we may not be able to prevent third parties from practicing our inventions in all countries outside the United States, or from selling or importing products made using our inventions in and into the United States or other jurisdictions.

        Competitors may use our technologies in jurisdictions where we do not pursue and obtain patent protection to develop their own products. In addition, competitors may export otherwise infringing products to territories where we have patent protection, but enforcement is not as strong as that in the United States. These products may compete with our products and our patent rights or other intellectual property rights may not be effective or sufficient to prevent them from competing. Even if we pursue and obtain issued patents in particular jurisdictions, our patent claims or other intellectual property rights may not be effective or sufficient to prevent third parties from so competing.

        The laws of some foreign countries do not protect intellectual property rights to the same extent as the laws of the United States. Many companies have encountered significant problems in protecting and defending intellectual property rights in certain foreign jurisdictions. The legal systems

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of some countries, particularly developing countries, do not favor the enforcement of patents and other intellectual property protection, especially those relating to biotechnology. This could make it difficult for us to stop competitors from infringing our patent rights or misappropriating our other intellectual property rights. For example, many foreign countries have compulsory licensing laws under which a patent owner must grant licenses to third parties. In addition, many countries limit our right to enforce our patent rights against third parties, including government agencies or government contractors. In these countries, patents may provide limited or no benefit. We must ultimately seek patent protection on a country-by-country basis, which is an expensive and time-consuming process with uncertain outcomes. Accordingly, we may choose not to seek patent protection in certain countries, and we will not have the benefit of patent protection in such countries.

        In addition, proceedings to enforce our patent rights in foreign jurisdictions could result in substantial costs and divert our efforts and attention from other aspects of our business, could put our patent rights at risk of being invalidated or interpreted narrowly, could put our owned or licensed patent applications at risk of not issuing and could provoke third parties to assert claims against us. We may not prevail in any lawsuits that we initiate and the damages or other remedies awarded, if any, may not be commercially meaningful. Accordingly, our efforts to enforce our intellectual property rights around the world may be inadequate to obtain a significant commercial advantage from the intellectual property that we develop or license.

If we do not obtain additional protection under the Hatch-Waxman Amendments and similar foreign legislation by extending the patent protection for volanesorsen, AKCEA-APO(a)-L Rx and our other drugs in development, our business may be materially harmed.

        Depending upon the timing, duration and specifics of the first FDA marketing authorization of volanesorsen, AKCEA-APO(a)-L Rx and our other drugs in development, a United States patent that we own or license may be eligible for limited patent term restoration under the Drug Price Competition and Patent Term Restoration Act of 1984, referred to as the Hatch-Waxman Amendments. The Hatch-Waxman Amendments allow the owner of an approved product to extend patent protection for up to five years as compensation for patent term lost during product development and the FDA regulatory review process. During this period of extension, the scope of protection is limited to the approved product and approved uses.

        Although we plan on seeking patent term restoration for our products, we may not succeed if, for example, we fail to apply within applicable deadlines, fail to apply prior to expiration of relevant patents or otherwise fail to satisfy applicable requirements. Moreover, the applicable time period or the scope of patent protection afforded could be less than we request. If we cannot obtain patent term restoration or the term of any such patent restoration is less than we request, our competitors may enter the market and compete against us sooner than we anticipate, and our ability to generate revenue could be materially adversely affected.

Changes in United States patent law could diminish the value of patents in general, thereby impairing our ability to protect our products.

        Recent United States Supreme Court rulings have narrowed the scope of patent protection available in certain circumstances and weakened the rights of patent owners in certain situations. In addition to increasing uncertainty with regard to our ability to obtain patents in the future, this combination of events has created uncertainty with respect to the value of patents, once obtained. Depending on decisions by the United States Congress, the federal courts, and the U.S. PTO, the laws and regulations governing patents could change in unpredictable ways that would weaken our ability to obtain new patents or to enforce our existing patents and patents that we might obtain in the future.

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If we and our partners do not adequately protect the trademarks and trade names for our products, then we and our partners may not be able to build name recognition in our markets of interest and our business may be adversely affected.

        Our competitors or other third parties may challenge, infringe or circumvent the trademarks or trade names for our products. We and our partners may not be able to protect these trademarks and trade names. In addition, if the trademarks or trade names for one of our products infringe the rights of others, we or our partners may be forced to stop using the trademarks or trade names, which we need for name recognition in our markets of interest. If we cannot establish name recognition based on our trademarks and trade names, we and our partners may not be able to compete effectively and our business may be adversely affected.

Intellectual property rights do not necessarily address all potential threats to our competitive advantage.

        The degree of future protection afforded by our intellectual property rights is uncertain because intellectual property rights have limitations, and may not adequately protect our business, or permit us to maintain our competitive advantage. The following examples are illustrative:

    §
    others may make compounds that are similar to our drugs but that are not covered by the claims of the patents that we own or have exclusively licensed;
    §
    we, or our license partners or current or future strategic partners, might not have been the first to make the inventions covered by the issued patent or pending patent application that we own or have exclusively licensed;
    §
    we, or our license partners or current or future strategic partners, might not have been the first to file patent applications covering our inventions;
    §
    others may independently develop similar or alternative technologies or duplicate any of our technologies without infringing our intellectual property rights;
    §
    our pending licensed patent applications or those that we own in the future may not lead to issued patents;
    §
    issued patents that we hold rights to may be held invalid or unenforceable, including as a result of legal challenges by our competitors;
    §
    our competitors might conduct research and development activities in countries where we do not have patent rights and then use the information learned from such activities to develop competitive products for sale in our major commercial markets;
    §
    we may not develop additional proprietary technologies that are patentable; and
    §
    the patents of others may have an adverse effect on our business.

        Should any of these events occur, they could significantly harm our business, results of operations and prospects.


Risks Related to Our Business and Industry

We will need to significantly increase the size of our organization, and we may experience difficulties in managing growth.

        We are currently a small company with 30 full-time employees as of March 31, 2017. To commercialize volanesorsen, and our other drugs in development that we are responsible for commercializing, we will need to increase our operations and expand our use of third-party contractors. We plan to continue to build our compliance, financial and operating infrastructure to ensure the maintenance of a well-managed company including hiring additional staff within our regulatory, clinical and medical affairs groups and an in-house commercial organization initially

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focused on marketing and selling volanesorsen, if approved. We currently have limited sales and marketing capability and therefore intend to recruit a specialty sales force in anticipation of volanesorsen's potential approval.

        Future growth will impose significant added responsibilities on our management, including the need to identify, recruit, maintain and integrate additional employees. In addition, to meet our obligations as a public company, we will need to increase our general and administrative capabilities. Our current management, personnel and systems may not be adequate to support this future growth. Our future financial performance and our ability to commercialize our drugs and to compete effectively will depend, in part, on our ability to manage any future growth effectively. To that end, we must be able to:

    §
    manage our clinical studies and the regulatory process effectively;
    §
    manage the manufacturing of our drugs for clinical and commercial use;
    §
    integrate current and additional management, administrative, financial and sales and marketing personnel;
    §
    develop a marketing and sales infrastructure;
    §
    hire new personnel necessary to effectively commercialize volanesorsen and our other drugs in development;
    §
    develop our administrative, accounting and management information systems and controls; and
    §
    hire and train additional qualified personnel.

        Our staff, financial resources, systems, procedures or controls may be inadequate to support our operations and our management may be unable to successfully manage future market opportunities or our relationships with customers and other third parties.

If we do not progress in our programs as anticipated, the price of our securities could decrease.

        For planning purposes, we estimate and may disclose the timing of a variety of clinical, regulatory and other milestones, such as when we anticipate a certain drug will enter the clinic, when we anticipate completing a clinical study, when we anticipate filing an application for marketing authorization, or when we or our partners plan to commercially launch a drug. We base our estimates on present facts and a variety of assumptions. Many underlying assumptions are outside of our control. If we do not achieve milestones in accordance with our or our investors' or securities analysts' expectations, including milestones related to volanesorsen, AKCEA-APO(a)-L Rx and our other drugs in development, the price of our securities could decrease.

The loss of key personnel, or if we cannot attract and retain highly skilled personnel, could make it more difficult to run our business and reduce our likelihood of success.

        We are dependent on the principal members of our management and scientific staff. We do not have employment agreements with any of our executive officers that would prevent them from leaving us. The loss of management and key scientific employees might slow the achievement of important research and development goals. It is also critical to our success that we recruit and retain qualified scientific personnel to perform development work and marketing, sales and commercial support personnel to perform commercialization activities. We may not be able to attract and retain skilled and experienced scientific and commercial personnel on acceptable terms because of intense competition for experienced personnel among many pharmaceutical and health care companies, universities and non-profit research institutions. In addition, failure to successfully complete clinical

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studies, obtain regulatory approvals or effectively commercialize drugs may make it more challenging to recruit and retain qualified personnel.

We are exposed to potential product liability claims, and insurance against these claims may not be available to us at a reasonable rate in the future or at all.

        Our business exposes us to potential product liability risks that are inherent in the testing, manufacturing, marketing and sale of therapeutic products, including potential product liability claims related to volanesorsen, AKCEA-APO(a)-L Rx and our other drugs in development. We have clinical study insurance coverage and commercial product liability insurance coverage. In addition, Novartis has agreed to indemnify us against specific claims arising from Novartis' development and commercialization of AKCEA-APO(a)-L Rx and AKCEA-APOCIII-L Rx . However, this insurance coverage and indemnities may not be adequate to cover claims against us. Insurance may not be available to us at an acceptable cost, if at all. Regardless of their merit or eventual outcome, products liability claims may result in decreased demand for our drug products, injury to our reputation, withdrawal of clinical study volunteers and loss of revenue. Thus, whether or not we are insured or indemnified, a product liability claim or product recall may result in losses that could be material.

Because we use biological materials, hazardous materials, chemicals and radioactive compounds, if we do not comply with laws regulating the protection of the environment and health and human safety, our business could be adversely affected.

        Our development and manufacturing activities involve the use of potentially harmful biological materials as well as materials, chemicals and various radioactive compounds that could be hazardous to human health and safety or the environment. We cannot completely eliminate the risk of contamination, which could cause:

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    interruption of our development, manufacturing and distribution efforts;
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    injury to our employees and others;
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    environmental damage resulting in costly clean up; and
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    liabilities under federal, state and local laws and regulations governing health and human safety, as well as the use, storage, handling and disposal of these materials and resultant waste products.

        In such an event, we may be held liable for any resulting damages, and any liability could exceed our resources. Although we carry insurance in amounts and types that we consider commercially reasonable, we do not have insurance coverage for losses relating to an interruption of our development, manufacturing or commercialization efforts caused by contamination, and the coverage or coverage limits of our insurance policies may not be adequate. If our losses exceed our insurance coverage, our financial condition would be adversely affected.

A variety of risks associated with operating our business and, following approval, marketing our drugs internationally could materially adversely affect our business.

        In addition to our U.S. operations, we plan to establish operations and, following approval, commercialize our products in Europe and other countries globally. We face risks associated with our current and planned international operations, including possible unfavorable regulatory, pricing and reimbursement, political, tax and labor conditions, which could harm our business. Once we

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establish international operations we will be subject to numerous risks associated with international business activities, including:

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    compliance with differing or unexpected regulatory requirements for our drugs and foreign employees;
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    complexities associated with managing multiple payor reimbursement regimes, government payors or patient self-pay systems;
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    difficulties in staffing and managing foreign operations;
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    in certain circumstances, increased dependence on the commercialization efforts and regulatory compliance of third-party distributors or strategic partners;
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    foreign government taxes, regulations and permit requirements;
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    U.S. and foreign government tariffs, trade restrictions, price and exchange controls and other regulatory requirements;
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    anti-corruption laws, including the Foreign Corrupt Practices Act, or the FCPA, and its equivalent in foreign jurisdictions;
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    economic weakness, including inflation, natural disasters, war, events of terrorism or political instability in particular foreign countries;
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    fluctuations in currency exchange rates, which could result in increased operating expenses and reduced revenue, and other obligations related to doing business in another country;
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    compliance with tax, employment, privacy, immigration and labor laws, regulations and restrictions for employees living or traveling abroad;
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    workforce uncertainty in countries where labor unrest is more common than in the United States; and
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    changes in diplomatic and trade relationships.

        The UK's anticipated exit from the European Union could increase these risks.

        Our business activities outside of the United States are subject to the FCPA and similar anti-bribery or anti-corruption laws, regulations or rules of other countries in which we operate, including the U.K.'s Bribery Act 2010. In many other countries, the healthcare providers who prescribe pharmaceuticals are employed by their government, and the purchasers of pharmaceuticals are government entities; therefore, any dealings with these prescribers and purchasers may be subject to regulation under the FCPA. There is no certainty that all employees and third-party business partners (including our distributors, wholesalers, agents, contractors and other partners) will comply with anti-bribery laws. In particular, we do not control the actions of manufacturers and other third-party agents, although we may be liable for their actions. Violation of these laws may result in civil or criminal sanctions, which could include monetary fines, criminal penalties, and disgorgement of past profits, which could have a material adverse impact on our business and financial condition.

If a natural or man-made disaster strikes our development or manufacturing facilities or otherwise affects our business, it could delay our progress developing and commercializing our drugs.

        We currently rely on Ionis to manufacture our clinical supplies in a manufacturing facility located in Carlsbad, California. The facilities and the equipment required to develop and manufacture our drugs would be costly to replace and could require substantial lead time to repair or replace. Natural or man-made disasters, including, without limitation, earthquakes, floods, fires and acts of terrorism may harm these facilities. If a disaster affects these facilities, our and our partners' development and commercialization efforts would be delayed. Although we possess insurance for damage to our property and the disruption of our business from casualties, this insurance may not be sufficient to

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cover all of our potential losses and may not continue to be available to us on acceptable terms, or at all. In addition, a shutdown of the U.S. government, including the FDA could harm or delay our development and commercialization activities.

Our business and operations would suffer in the event of computer system failures.

        Despite the implementation of security measures, our internal computer systems, and those of our CROs, manufacturers and other third parties on which we rely, are vulnerable to damage from computer viruses, unauthorized access, natural disasters, terrorism, war and telecommunication and electrical failures. If issues were to arise and cause interruptions in our operations, it could result in a material disruption of our drug programs. For example, the loss of clinical study data from completed or ongoing or planned clinical studies could result in delays in our regulatory approval efforts and significantly increase our costs to recover or reproduce the data. To the extent that any disruption or security breach were to result in a loss of or damage to our data or applications, or inappropriate disclosure of confidential or proprietary information, we could incur liability and the further development of volanesorsen, AKCEA-APO(a)-L Rx and our other drugs in development could be delayed.


Risks Related to Our Common Stock and This Offering

We are an "emerging growth company" and as a result of the reduced disclosure and governance requirements applicable to emerging growth companies, our common stock may be less attractive to investors.

        We are an "emerging growth company" as defined in the Jumpstart Our Business Startups Act of 2012, and we intend to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies, including: not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.

        We may take advantage of these reporting exemptions until we are no longer an emerging growth company. We will remain an emerging growth company until the earlier to occur of (1) the last day of the fiscal year (a) following the fifth anniversary of the completion of this offering, (b) in which we have total annual gross revenue of at least $1.07 billion or (c) in which we are deemed to be a "large accelerated filer" under the rules of the U.S. Securities and Exchange Commission, which means the market value of our common stock that is held by non-affiliates exceeds $700 million as of the prior June 30th and (2) the date on which we have issued more than $1.0 billion in non-convertible debt during the prior three-year period.

        We have taken advantage of reduced reporting burdens in this prospectus. In particular, in this prospectus, we have not included all of the executive compensation related information that would be required if we were not an emerging growth company. We cannot predict whether investors will find our common stock less attractive than if we did not rely on these exemptions. If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and our stock price may be more volatile. In addition, the JOBS Act provides that an emerging growth company can take advantage of an extended transition period for complying with new or revised accounting standards. This allows an emerging growth company to delay the adoption of these accounting standards until they would otherwise apply to private companies. We have irrevocably elected not to avail ourselves of this exemption and, therefore, we will be subject to the same new or revised accounting standards as other public companies that are not emerging growth companies.

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        Even after we no longer qualify as an emerging growth company, we may still qualify as a "smaller reporting company" which would allow us to take advantage of many of the same exemptions from disclosure requirements, including not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act and reduced disclosure obligations regarding executive compensation in this prospectus and our periodic reports and proxy statements. We cannot predict if investors will find our common stock less attractive because we will rely on these exemptions. If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and our stock price may be more volatile.

There has been no public market for our common stock prior to this offering, and you may not be able to resell our shares at or above the price you paid, or at all.

        Prior to this offering, there has been no public market for our common stock. We have applied to list our common stock on the Nasdaq Global Select Market, or Nasdaq, but an active trading market for our common stock may never develop or be sustained following this offering. Further, since Ionis will remain a significant stockholder after we complete this offering, it is more likely that an active trading market for our common stock may never develop or be sustained. If an active trading market for our common stock does not develop after this offering, the market price and liquidity of our common stock will be materially and adversely affected. You may not be able to sell your shares quickly or at the market price if trading in our common shares is not active. Negotiations between us and the underwriters will determine the offering price for our common stock and the offering price may bear no relationship to the market price for our common stock after this offering. An active trading market for our common stock may not develop and the market price of our common stock may decline below the offering price. Further, an inactive market may also impair our ability to raise capital by selling shares of our common stock and may impair our ability to enter into strategic partnerships or acquire companies or products by using our shares of common stock as consideration.

The market price for our common stock may be volatile, which could contribute to the loss of your investment.

        Fluctuations in the price of our common stock could contribute to the loss of all or part of your investment. Prior to this offering, there has not been a public market for our common stock. Accordingly, the initial public offering price for the shares of our common stock may not be indicative of the price that will prevail in the trading market, if any, that develops following this offering. If an active market for our common stock develops and continues, the trading price of our common stock following this offering is likely to be highly volatile and could be subject to wide fluctuations in response to various factors, some of which are beyond our control. Any of the factors listed below could have a material adverse effect on your investment in our common stock and our common stock may trade at prices significantly below the initial public offering price. In such circumstances the trading price of our common stock may not recover and may experience a further decline.

        Factors affecting the trading price of our common stock may include:

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    our failure to effectively develop and commercialize volanesorsen and our other drugs in development;
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    Novartis' failure to exercise its option and/or effectively develop and commercialize AKCEA-APO(a)-L Rx and AKCEA-APOCIII-L Rx to the extent it exercises its option to license those drugs from us;
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    changes in the market's expectations about our operating results;
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    adverse results or delays in preclinical or clinical studies;

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    §
    our decision to initiate a clinical study, not to initiate a clinical study or to terminate an existing clinical study;
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    adverse regulatory decisions, including failure to receive regulatory approval for volanesorsen, AKCEA-APO(a)-L Rx and our other drugs in development;
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    success or failure of competitive products or antisense drugs more generally;
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    adverse developments concerning our manufacturers or our strategic partnerships;
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    inability to obtain adequate product supply for any drug for clinical studies or commercial sale or inability to do so at acceptable prices;
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    the termination of a strategic partnership or the inability to establish additional strategic partnerships;
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    unanticipated serious safety concerns related to the use of volanesorsen, AKCEA-APO(a)-L Rx and our other drugs in development;
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    adverse safety or other clinical results, such as those that have occurred in the past or that may occur in the future, related to drugs being developed by Ionis or other companies that are or may be perceived to be similar to our drugs;
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    our ability to effectively manage our growth;
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    the size and growth, if any, of the targeted market;
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    our operating results do not meet the expectation of securities analysts or investors in a particular period;
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    actual or anticipated fluctuations in our quarterly financial results or the quarterly financial results of companies perceived to be similar to us;
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    securities analysts do not publish reports about us or our business or publish negative reports;
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    changes in financial estimates and recommendations by securities analysts concerning our company, our market opportunity, or the biotechnology and pharmaceutical industries in general;
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    operating and stock price performance of other companies that investors deem comparable to us;
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    overall performance of the equity markets;
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    announcements by us or our competitors of acquisitions, new drugs or programs, significant contracts, commercial relationships or capital commitments;
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    our and our strategic partners' ability to successfully market volanesorsen, AKCEA-APO(a)-L Rx and our other drugs in development;
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    changes in laws and regulations affecting our business, including but not limited to clinical study requirements for approvals;
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    disputes or other developments relating to proprietary rights, including patents, litigation matters and our ability to obtain and maintain patent protection for volanesorsen, AKCEA-APO(a)-L Rx and our other drugs in development;
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    commencement of, or involvement in, litigation involving our company, our general industry, or both;
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    changes in our capital structure, such as future issuances of securities or the incurrence of additional debt;
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    the volume of shares of our common stock available for public sale;
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    additions or departures of key scientific or management personnel;
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    any major change in our board or management;
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    changes in accounting practices;
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    ineffectiveness of our internal control over financial reporting;
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    significant changes in our relationship with Ionis;

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    §
    sales of substantial amounts of common stock by our directors, executive officers or significant stockholders or the perception that such sales could occur; and
    §
    general economic and political conditions such as recessions, interest rates, fuel prices, elections, drug pricing policies, international currency fluctuations and acts of war or terrorism.

        Broad market and industry factors may materially harm the market price of our common stock irrespective of our operating performance. The stock market in general, and Nasdaq and the market for biotechnology companies in particular, have experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of the particular companies affected. The trading prices and valuations of these stocks, and of ours, may not be predictable. A loss of investor confidence in the market for biotechnology or pharmaceutical stocks or the stocks of other companies which investors perceive to be similar to us, the opportunities in the biotechnology and pharmaceutical market or the stock market in general, could depress our stock price regardless of our business, prospects, financial conditions or results of operations.

Raising additional funds through debt or equity financing could be dilutive and may cause the market price of our common stock to decline.

        Until such time, if ever, as we can generate substantial product revenue, we expect to finance our cash needs through cash received under our license agreement with Novartis, a combination of equity offerings and debt financings, and potentially through additional license and development agreements or strategic partnerships with third parties. If we raise additional capital by selling equity or convertible debt securities, these sales could substantially dilute your investment and the terms may include liquidation or other preferences that adversely affect your rights as a stockholder. Furthermore, if we issue additional securities, whether equity or debt, or if investors believe we may issue additional securities, the market price of our common stock could decline. Moreover, if we raise capital by issuing debt, we may need to dedicate a substantial portion of our operating cash flow to pay principal and interest on the debt and we would likely need to comply with restrictions on our operations, such as limitations on our ability to incur additional debt, limitations on our ability to acquire, sell or license intellectual property rights and other operating restrictions that could adversely affect our ability to conduct our business. Additional funding may not be available to us on acceptable terms, or at all. If adequate funds are not available or not available on acceptable terms, we may have to cut back on one or more of our drug development or commercialization programs.

If securities analysts do not publish research or reports about our business or if they publish negative reports or downgrade our stock, the price of our common stock could decline.

        The trading market for our common stock will rely in part on the research and reports that industry or financial analysts publish about us, our business, our markets and our competitors. We do not control these analysts. If securities analysts do not cover our common stock after the closing of this offering, the lack of research coverage may adversely affect the market price of our common stock. Furthermore, if one or more of the analysts who do cover us downgrade our stock or if those analysts issue other unfavorable commentary about us or our business, our stock price would likely decline. If one or more of these analysts cease coverage of us or fails to regularly publish reports on us, we could lose visibility in the market and interest in our stock could decrease, which in turn could cause our stock price or trading volume to decline and may also impair our ability to expand our business with existing customers and attract new customers.

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Sales of a substantial number of shares of our common stock by our existing stockholders in the public market may cause our stock price to decline.

        Sales of our common stock in the public market after this offering, or the perception that these sales may occur, could cause the market price of our common stock to decline. Upon the closing of this offering, we will have 64,197,879 shares of common stock outstanding. Of these, only 12,500,000 shares of our common stock sold in this offering, plus any shares sold upon exercise of the underwriters' option to purchase additional shares, will be freely transferable without restriction or additional registration under the Securities Act of 1933, as amended, or the Securities Act. Novartis has agreed that it will not sell any of the Novartis Private Placement Shares until the earlier of January 5, 2020 or six months after we stop developing a drug under our agreement with Novartis. Thereafter, Novartis may only sell a limited number of shares each day. The remaining shares outstanding after this offering will be available for sale, upon the expiration of the 180-day lock-up period beginning from the date of this prospectus, if applicable, subject to volume and other restrictions as applicable under Rule 144 under the Securities Act. At its discretion, Cowen and Company, LLC may release any or all of these shares prior to expiration of the lock-up period. Immediately after the lock-up agreements expire, up to an additional 45,447,879 shares of common stock held by Ionis will be eligible for sale in the public market, all of which will be subject to volume limitations under Rule 144 under the Securities Act. In addition, 9,000,000 shares of common stock that are either subject to outstanding options or reserved for future issuance under our employee benefit plans will become eligible for sale in the public market to the extent permitted by the provisions of various vesting schedules, the lock-up agreements and Rule 144 and Rule 701 under the Securities Act. To the extent the holders of these shares sell them into the market or our stockholders believe these sales might occur, the market price of our common stock could decline.

        Immediately following the completion of this offering, Ionis will own approximately 70.8% of the total number of shares of our common stock outstanding. Subject to the restrictions described in the paragraph above, future sales of these shares in the public market will be subject to the volume and other restrictions of Rule 144 under the Securities Act for so long as Ionis is deemed to be our affiliate, unless we register the shares to be sold with the Securities and Exchange Commission, or SEC. We cannot predict with certainty whether or when Ionis will sell a substantial number of shares of our common stock. Ionis' sale of a substantial number of shares after this offering, or a perception that such sales could occur, could significantly reduce the market price of our common stock. Upon completion of this offering, except as otherwise described herein, all shares we are offering hereby will be freely tradable without restriction, assuming our affiliates do not hold the shares.

        For a further description of restrictions affecting certain shares of our common stock immediately after this offering, see the section entitled "Share Eligible for Future Sale."

Future sales and issuances of our common stock or rights to purchase common stock, including pursuant to our equity incentive plans, could result in additional dilution of the percentage ownership of our stockholders and could cause our stock price to fall.

        We expect we will need significant additional capital in the future to continue our planned operations, including expanded research and development activities, clinical studies, commercial activities and cover costs associated with operating a public company. To raise capital, we may sell common stock, convertible securities or other equity securities in one or more transactions at prices and in a manner we determine from time to time. If we sell common stock, convertible securities or other equity securities in more than one transaction, investors may be materially diluted by subsequent sales. Such sales may also result in material dilution to our existing stockholders, and new investors could gain rights, preferences and privileges senior to the holders of our common stock, including shares of common stock sold in this offering.

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        Immediately following this offering, we intend to file a registration statement registering under the Securities Act the shares of our common stock reserved for issuance under the 2015 Akcea Equity Incentive Plan. If the holders of equity securities granted under the 2015 Akcea Equity Incentive Plan sell a large amount of these securities or it is perceived that the holders will sell these securities in the public market, the trading price of our common stock could decline substantially. These sales also could impede our ability to raise future capital.

You will experience immediate and substantial dilution in the net tangible book value of the shares you purchase in this offering.

        If you purchase shares of our common stock in this offering, you will experience immediate and substantial dilution, as the initial public offering price of our common stock will be substantially greater than the net tangible book value per share of our common stock.

        Based on the initial public offering price of $8.00 per share, if you purchase our common stock in this offering, you will suffer immediate and substantial dilution of approximately $4.96 per share. Further, giving effect to the same assumptions, investors other than Ionis purchasing common stock in this offering and the concurrent private placement will contribute approximately 39.4% of the total amount invested by stockholders since our inception, but will own only approximately 29.2% of the shares of common stock outstanding after giving effect to this offering, the concurrent private placement and the issuance of shares of common stock to Ionis pursuant to our line of credit. If the underwriters exercise their option to purchase additional shares, or if outstanding options to purchase our common stock are exercised, you will experience additional dilution. For a further description of the dilution that you will experience immediately after this offering, see the section entitled "Dilution."

We have broad discretion in the use of net proceeds from this offering and the concurrent private placement and may not use them effectively.

        We currently intend to use the net proceeds from this offering and the concurrent private placement to advance the development of volanesorsen, AKCEA-APO(a)-L Rx , AKCEA-ANGPTL3-L Rx and AKCEA-APOCIII-L Rx through additional non-clinical and clinical studies and to support the launch and commercialization of volanesorsen if approved, as well as for development personnel expenses, other development activities, working capital and other general corporate purposes. We may also use the proceeds to acquire and develop other products. For a further description of our use of proceeds from this offering and the concurrent private placement, see the section entitled "Use of Proceeds." Although we currently intend to use the net proceeds in such a manner, we will have broad discretion in the application of the net proceeds. If we do not use these funds effectively, it could harm our ability to continue to develop and commercialize volanesorsen, AKCEA-APO(a)-L Rx and our other drugs in development.

We will incur significant increased costs as a result of operating as a public company, and our management will be required to devote substantial time to new compliance initiatives.

        As a newly public company, we will incur significant legal, accounting and other expenses that we did not incur as a private company. In addition, the Sarbanes-Oxley Act and rules of the SEC and those of Nasdaq have imposed various requirements on public companies including that we establish and maintain effective disclosure and financial controls. Our management and other personnel will need to devote a substantial amount of time to these compliance initiatives. Moreover, these rules and regulations have increased and will continue to increase our legal and financial compliance costs and will make some activities more time-consuming and costly.

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        The Sarbanes-Oxley Act requires, among other things, that we maintain effective internal control over financial reporting and disclosure controls and procedures. In particular, we must evaluate our systems and procedures, and test our internal control over financial reporting to allow management to report on the effectiveness of our internal control over financial reporting, as required by Section 404 of the Sarbanes-Oxley Act. In addition, we will be required to have our independent registered public accounting firm attest to the effectiveness of our internal control over financial reporting the later of our second annual report on Form 10-K or the first annual report on Form 10-K following the date on which we are no longer an emerging growth company. Our compliance with Section 404 of the Sarbanes-Oxley Act will require that we incur substantial accounting expense and expend significant management efforts. We currently do not have an internal audit group, and we will need to hire additional accounting and financial staff with appropriate public company experience and technical accounting knowledge. If we do not comply with the requirements of Section 404 in a timely manner, or if we or our independent registered public accounting firm identify deficiencies in our internal control over financial reporting that are deemed to be material weaknesses, the market price of our stock could decline and we could be subject to sanctions or investigations by Nasdaq, the SEC or other regulatory authorities, which would require additional financial and management resources.

        To successfully implement our business plan and comply with Section 404, we must prepare timely and accurate financial statements. We expect that we will need to continue to improve existing procedures and controls, and implement new operational and financial systems, to manage our business effectively. Any delay in the implementation of, or disruption in the transition to, new or enhanced systems, procedures or controls, may cause our operations to suffer, and we may be unable to conclude that our internal control over financial reporting is effective and to obtain an unqualified report on internal controls from our auditors as required under Section 404 of the Sarbanes-Oxley Act. This, in turn, could have an adverse impact on trading prices for our common stock and could adversely affect our ability to access the capital markets.

        The SEC and other regulators have continued to adopt new rules and regulations and make additional changes to existing regulations that require our compliance. On July 21, 2010, the Dodd-Frank Wall Street Reform and Protection Act, or the Dodd-Frank Act, was enacted. There are significant corporate governance and executive compensation-related provisions in the Dodd-Frank Act that require the SEC to adopt, or add where the SEC has adopted, rules and regulations in these areas such as "say on pay" and proxy access. Stockholder activism, the current political environment and the current high level of government intervention and regulatory reform may lead to substantial new regulations and disclosure obligations, which may lead to additional compliance costs and impact the manner in which we operate our business.

We do not expect to pay any cash dividends for the foreseeable future.

        You should not rely on an investment in our common stock to provide dividend income. We do not anticipate that we will pay any cash dividends to holders of our common stock in the foreseeable future. Instead, we plan to retain any earnings to maintain and expand our operations. Accordingly, investors must rely on sales of their common stock after price appreciation, which may never occur, as the only way to realize any return on their investment. As a result, investors seeking cash dividends should not purchase our common stock.

Our ability to use our net operating loss carryovers and certain other tax attributes may be limited.

        As described above under "—Risks related to our financial condition and need for additional capital," we have incurred net losses since our inception and anticipate that we will continue to incur

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significant losses for the foreseeable future. Under the Internal Revenue Code of 1986, as amended, or the Code, a corporation is generally allowed a deduction for net operating losses, or NOLs, carried over from a prior taxable year. Under that provision, we can carry forward our NOLs to offset our future taxable income, if any, until such NOLs are used or expire. The same is true of other unused tax attributes, such as tax credits. The amounts of our unused carryovers of NOLs and tax credits as of December 31, 2016, and a description of the valuation allowance we have recorded with respect to those items, are set forth below under "Management's discussion and analysis of financial condition and results of operations."

        If a corporation undergoes an "ownership change," generally defined as a greater than 50% change (by value) in its equity ownership over a three-year period, Sections 382 and 383 of the Code limit the corporation's ability to use carryovers of its pre-change NOLs, credits and certain other tax attributes to reduce its tax liability for periods after the ownership change. Our issuance of common stock pursuant to this offering may result in a limitation under Sections 382 and 383, either separately or in combination with certain prior or subsequent shifts in the ownership of our common stock. As a result, our ability to use carryovers of our pre-change NOLs and credits to reduce our future U.S. federal income tax liability may be subject to limitations. This could result in increased U.S. federal income tax liability for us if we generate taxable income in a future period. Limitations on the use of NOLs and other tax attributes could also increase our state tax liability. The use of our tax attributes will also be limited to the extent that we do not generate positive taxable income in future tax periods.

We could be subject to securities class action litigation.

        In the past, securities class action litigation has often been brought against a company following a decline in the market price of its securities. This risk is especially relevant for us because biotechnology companies have experienced significant stock price volatility in recent years. If we face such litigation, it could result in substantial costs and a diversion of management's attention and resources, which could harm our business.

Provisions in our amended and restated certificate of incorporation, our amended and restated bylaws and Delaware law may have anti-takeover effects that could discourage an acquisition of us by others, even if an acquisition would be beneficial to our stockholders, and may prevent attempts by our stockholders to replace or remove our current management.

        Our amended and restated certificate of incorporation, amended and restated bylaws and Delaware law contain provisions that may have the effect of delaying or preventing a change in control of us or changes in our management. Our amended and restated certificate of incorporation and bylaws include provisions that:

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    authorize "blank check" preferred stock, which could be issued by our board of directors without stockholder approval and may contain voting, liquidation, dividend and other rights superior to our common stock;
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    specify that only board of directors or holders of greater than 10% of our common stock can call special meetings of our stockholders;
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    prohibit stockholder action by written consent once Ionis no longer holds a majority of our voting power;
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    establish an advance notice procedure for stockholder approvals to be brought before an annual meeting of our stockholders, including proposed nominations of persons for election to our board of directors;

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    §
    provide that a majority of directors then in office, even though less than a quorum, may fill vacancies on our board of directors;
    §
    specify that no stockholder is permitted to cumulate votes at any election of directors;
    §
    expressly authorize our board of directors to modify, alter or repeal our amended and restated bylaws; and
    §
    require supermajority votes of the holders of our common stock to amend specified provisions of our amended and restated certificate of incorporation and amended and restated bylaws.

        These provisions, alone or together, could delay or prevent hostile takeovers and changes in control or changes in our management. Further, Novartis has agreed that until Novartis holds less than 7.5% of our outstanding common stock, Novartis will vote the Novartis Private Placement Shares consistent with the recommendation of our board of directors. Although Novartis has retained the right to vote the Novartis Private Placement Shares in its sole discretion in connection with certain enumerated matters, including any transaction which would result in our change of control, our agreement with Novartis may nevertheless delay or prevent changes in our management or board of directors.

        In addition, because we are incorporated in the State of Delaware, we are governed by the provisions of Section 203 of the Delaware General Corporation Law, which limits the ability of stockholders owning in excess of 15% of our outstanding voting stock to merge or combine with us.

        Any provision of our amended and restated certificate of incorporation or amended and restated bylaws or Delaware law that has the effect of delaying or deterring a change in control could limit your opportunity to receive a premium for your shares of our common stock, and could also affect the price that some investors are willing to pay for our common stock.

        Our bylaws designate the Court of Chancery of the State of Delaware and federal court within the State of Delaware as the exclusive forum for certain types of actions and proceedings that our stockholders may initiate, which could limit our stockholders' ability to obtain a favorable judicial forum for disputes with us or our directors, officers or employees.

        Our bylaws provide that, subject to limited exceptions, the Court of Chancery of the State of Delaware and federal court within the State of Delaware will be exclusive forums for any:

    §
    derivative action or proceeding brought on our behalf;
    §
    action asserting a claim of breach of a fiduciary duty owed by any of our directors, officers or other employees to us or our stockholders;
    §
    action asserting a claim against us arising pursuant to any provision of the Delaware General Corporation Law, our amended and restated certificate of incorporation or our amended and restated bylaws; or
    §
    other action asserting a claim against us that is governed by the internal affairs doctrine.

        Any person or entity purchasing or otherwise acquiring any interest in shares of our capital stock shall be deemed to have notice of and to have consented to the provisions of our bylaws described above. This choice of forum provision may limit a stockholder's ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers or other employees, which may discourage such lawsuits against us and our directors, officers and employees. Alternatively, if a court were to find these provisions of our amended and restated certificate of incorporation inapplicable to, or unenforceable in respect of, one or more of the specified types of actions or proceedings, we may incur additional costs associated with resolving such matters in other jurisdictions, which could adversely affect our business and financial condition.

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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS AND INDUSTRY DATA

        This prospectus includes forward-looking statements, including in the sections entitled "Prospectus Summary," "Risk Factors," "Management's Discussion and Analysis of Financial Condition and Results of Operations," and "Business." These forward-looking statements include, without limitation, statements regarding our industry, business strategy, our future financial condition, and plans and objectives of management for future operations. Terminology such as "may," "believes," "intends," "seeks," "anticipates," "plans," "estimates," "expects," "should," "assumes," "continues," "could," "will," "future," "goal," "potential," "likely," and the negative of these or similar terms and phrases are intended to identify forward-looking statements in this prospectus.

        Forward-looking statements reflect our current expectations regarding future events, results or outcomes. These expectations may or may not be realized. Although we believe the expectations reflected in the forward-looking statements are reasonable, we can give you no assurance these expectations will be proven correct. Some of these expectations may be based upon assumptions, data or judgments that prove to be incorrect. Actual events, results and outcomes may differ materially from our expectations due to a variety of known and unknown risks, uncertainties and other factors. Although it is not possible to identify all of these risks and factors, they include, among others, the following:

    §
    the success, cost, timing and potential indications of our drug development activities and clinical studies, including our ongoing and later studies of volanesorsen, AKCEA-APO(a)-L Rx , AKCEA-ANGPTL3-L Rx and AKCEA-APOCIII-L Rx ;
    §
    our and our partners' ability to obtain and maintain regulatory approval of our drugs, including volanesorsen, AKCEA-APO(a)-L Rx , AKCEA-ANGPTL3-L Rx and AKCEA-APOCIII-L Rx , in any of the indications for which we plan to develop them, and any related restrictions, limitations, and/or warnings in the label of an approved drug;
    §
    the future results of ongoing or later clinical studies, including of volanesorsen, AKCEA-APO(a)-L Rx , AKCEA-APOCIII-L Rx and AKCEA-ANGPTL3-L Rx ;
    §
    our ability to obtain orphan drug designation for AKCEA-ANGPTL3-L Rx or any of our other drugs, if applicable;
    §
    Novartis' exercise of its option to license AKCEA-APO(a)-L Rx and/or AKCEA-APOCIII-L Rx from us and/or Novartis' ability to effectively develop and commercialize AKCEA-APO(a)-L Rx and/or AKCEA-APOCIII-L Rx to the extent it exercises its option to license each of these drugs from us;
    §
    our ability to obtain funding for our operations, including funding necessary to complete the clinical studies of any of our drugs;
    §
    our plans to research, develop and commercialize our drugs;
    §
    our ability to attract and retain strategic partners with development, regulatory and commercialization expertise;
    §
    the size and growth potential of the markets for our drugs, and our ability to identify target patient populations and serve those markets, especially for diseases with small patient populations;
    §
    our and our strategic partners' ability to successfully commercialize our drugs;
    §
    the rate and degree of market acceptance of our drugs;
    §
    our ability to grow our organization and increase the size of our facilities to meet our anticipated growth;
    §
    our ability to develop and maintain sales and marketing capabilities, whether alone or with potential future strategic partners;

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    §
    our ability to contract with third-party suppliers and manufacturers and their ability to perform adequately;
    §
    the success of competing therapies that are or become available;
    §
    our ability to attract and retain key scientific, commercial or management personnel;
    §
    our expectations regarding the period during which we qualify as an emerging growth company under the JOBS Act;
    §
    our use of the proceeds from this offering and the concurrent private placement;
    §
    the accuracy of our estimates regarding expenses, future revenue, capital requirements and needs for additional financing;
    §
    our expectations regarding our ability to obtain and maintain intellectual property protection for our drugs and our ability to operate our business without infringing on the intellectual property rights of others;
    §
    regulatory developments in the United States and foreign countries; and
    §
    other risks and factors listed under "Risk factors" and elsewhere in this prospectus.

        These risks are not exhaustive. Other sections of this prospectus may include additional factors that could adversely affect our business and financial performance. Moreover, we operate in a very competitive and rapidly changing environment. New risk factors emerge from time to time, and it is not possible for our management to predict all risk factors nor can we assess the effects of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in, or implied by, any forward-looking statements.

        In light of these risks, uncertainties and other factors, the forward-looking statements contained in this prospectus might not prove to be accurate and you should not place undue reliance upon them. All forward-looking statements speak only as of the date made and we undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

        You should read this prospectus and the documents that we reference in this prospectus, and have filed as exhibits to the registration statement of which this prospectus is a part, with the understanding that our actual future results, levels of activity, performance and achievements may be materially different from what we expect. We qualify all of our forward-looking statements by these cautionary statements. You should also read carefully the factors described in the section of this prospectus captioned "Risk Factors" and elsewhere to better understand the risks and uncertainties inherent in our business and underlying and forward-looking statements. In addition, statements that "we believe" and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this prospectus, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and investors are cautioned not to unduly rely upon these statements.

        Unless otherwise indicated, information contained in this prospectus concerning our industry, our business, and the markets for treatments of certain diseases, including data regarding the estimated size of those markets, and the incidence and prevalence of certain medical conditions is based on information from various third-party sources. In presenting this information, we have also made assumptions based on such data and other similar sources, and on our knowledge of, and our experience to date in our industry. The industry in which we operate is subject to a high degree of uncertainty and risk due to a variety of factors, including those described in the "Risk Factors" section. These and other factors could cause results to differ materially from those expressed in the estimates made by third parties and by us.

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USE OF PROCEEDS

        We estimate that the net proceeds from the sale of 15,625,000 shares of common stock in this public offering will be approximately $115.0 million, based on the initial public offering price of $8.00 per share, after deducting the underwriting discounts and commissions and estimated offering expenses payable by us. If the underwriters exercise their option to purchase additional shares in full, we estimate that the net proceeds from this public offering will be approximately $132.4 million, based on the initial public offering price of $8.00 per share, after deducting the underwriting discounts and commissions and estimated offering expenses payable by us. Our net proceeds from the concurrent private placement will be approximately $50.0 million.

        We intend to use the net proceeds of this offering and the concurrent private placement, together with our existing cash, cash equivalents and short-term investments, as follows:

    §
    approximately $80.0 million to complete planned Phase 3 development for volanesorsen in both FCS and FPL, including regulatory expenses for global marketing authorizations for FCS, and to support the launch and initial commercialization of volanesorsen for FCS, if approved;
    §
    approximately $30.0 million to complete the planned Phase 2 program for AKCEA-APO(a)-L Rx ;
    §
    approximately $16.0 million to complete the planned Phase 2 program for AKCEA-ANGPTL3-L Rx ;
    §
    approximately $24.0 million to complete the planned Phase 2 program for AKCEA-APOCIII-L Rx ; and
    §
    the remainder for development personnel expenses, other development activities, working capital and other general corporate purposes.

        We believe that the net proceeds from this offering, the concurrent private placement and our existing cash, cash equivalents and short-term investments, together with interest thereon, will be sufficient to fund our operations for at least the next 12 months, including those activities listed above.

        Our expected use of the net proceeds from this offering and the concurrent private placement represents our current intentions based upon our present plans and business condition. We are also undertaking this offering in order to create a public market for our common stock and thereby facilitate access to the public equity markets, increase our visibility in the marketplace, obtain additional capital, and increase our liquidity. Further, we may use a portion of the net proceeds to acquire complementary businesses, products, or technologies, although we have no present commitments or agreements for any specific acquisitions.

        The amount and timing of our actual expenditures will depend upon numerous factors, including the results of our development efforts, the results of our ongoing nonclinical and clinical studies or nonclinical and clinical studies we may commence in the future, feedback from regulatory agencies, the timing of approval of any of our drugs and the results of any commercialization efforts. We may find it necessary or advisable to use the net proceeds for other purposes, our management will have broad discretion over the use of the net proceeds from this offering and the concurrent private placement, and investors will be relying on our judgement regarding the application of the aggregate net proceeds.

        Until any such net proceeds are used, we intend to invest the net proceeds in short-term, investment-grade, interest-bearing securities.

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DIVIDEND POLICY

        We have never declared or paid any cash dividends on our common stock or any other securities. We anticipate that we will retain all available funds and any future earnings, if any, for use in the operation of our business and do not anticipate paying cash dividends in the foreseeable future. In addition, future debt instruments may materially restrict our ability to pay dividends on our common stock. Payment of future cash dividends, if any, will be at the discretion of our board of directors after taking into account various factors, including our financial condition, operating results, current and anticipated cash needs, the requirements of then-existing debt instruments and other factors our board of directors deems relevant.

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CAPITALIZATION

        The following table sets forth our cash, cash equivalents and short-term investments and capitalization as of March 31, 2017:

    §
    on an actual basis;
    §
    on a pro forma basis to reflect (1) the conversion of all our outstanding Series A convertible preferred stock into an aggregate of 28,884,540 shares of our common stock, which will occur immediately prior to the closing of this offering, and (2) the filing of our amended and restated certificate of incorporation immediately prior to the closing of this offering; and
    §
    on a pro forma as adjusted basis to reflect (1) the transactions described in the preceding clause, (2) payment of our $15.0 million payable to Ionis, which was paid in May 2017, (3) the sale of 15,625,000 shares of common stock in this offering at the initial public offering price of $8.00 per share, after deducting the underwriting discounts and commissions and estimated unpaid offering expenses payable by us, (4) $15.0 million of additional borrowing under our line of credit with lonis in May 2017, (5) the issuance of 13,438,339 Ionis Conversion Shares, based on the initial public offering price of $8.00 per share, in full satisfaction of our obligations to Ionis pursuant to our line of credit and (6) the issuance of 6,250,000 Novartis Private Placement Shares, based on the initial public offering price of $8.00 per share.

        You should read this table in conjunction with the sections of this prospectus entitled "Selected Consolidated Financial Data," "Management's Discussion and Analysis of Financial Condition and Results of Operations," and our consolidated financial statements and related notes included elsewhere in this prospectus.

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  As of March 31, 2017  
(in thousands, except share and per share data)
  Actual   Pro Forma   Pro Forma
as Adjusted
 
 
   
  (unaudited)
 

Cash, cash equivalents and short-term investments

  $ 124,522   $ 124,522   $ 290,799  

Payable to Ionis

    15,000     15,000      

Line of credit with Ionis(1)

    91,541     91,541      

Stockholders' (deficit) equity:

                   

Series A convertible preferred stock, $0.001 par value per share; 28,884,540 shares authorized, issued and outstanding, actual; no shares authorized, issued or outstanding, pro forma and pro forma as adjusted

    100,000          

Preferred stock, $0.001 par value per share; no shares authorized, issued or outstanding, actual; 10,000,000 shares authorized, no shares issued or outstanding, pro forma and pro forma as adjusted

             

Common stock, $0.001 par value per share; 100,000,000 shares authorized, no shares issued and outstanding, actual; 100,000,000 shares authorized, 28,884,540 shares issued and outstanding, pro forma; 100,000,000 shares authorized, 64,197,879 shares issued and outstanding, pro forma as adjusted

        29     64  

Additional paid-in capital

    60,116     160,087     432,559  

Accumulated other comprehensive loss

    (43 )   (43 )   (43 )

Accumulated deficit

    (235,015 )   (235,015 )   (235,981 )

Total stockholders' (deficit) equity

    (74,942 )   (74,942 )   196,599  

Total capitalization

  $ (74,942 ) $ (74,942 ) $ 196,599  

(1)
As of March 31, 2017, we borrowed $91.0 million under our line of credit with Ionis. In May 2017, we borrowed an additional $15.0 million under our line of credit with Ionis. As of the date of this prospectus, we have borrowed $106.0 million under our line of credit with Ionis. The outstanding principal and accrued interest under our line of credit will convert into 13,438,339 Ionis Conversion Shares, based on the initial public offering price of $8.00 per share. The pro forma as adjusted information set forth above reflects this conversion.

        The number of shares of our common stock shown as issued and outstanding on a pro forma as adjusted basis in the table above is based on 28,884,540 shares of common stock outstanding as of March 31, 2017, and excludes:

    §
    5,063,585 shares of common stock issuable upon the exercise of options outstanding as of March 31, 2017, at a weighted-average exercise price of $6.48 per share;
    §
    3,436,415 shares of common stock reserved for future issuance under our 2015 equity incentive plan, as amended, of which 1,678,661 shares of common stock are issuable upon exercise of options granted subsequent to March 31, 2017; and
    §
    500,000 shares of common stock reserved for future issuance under our 2017 employee stock purchase plan, which will become effective upon the closing of this offering.

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DILUTION

        If you invest in our common stock in this offering, your interest will be diluted to the extent of the difference between the initial public offering price per share and the pro forma as adjusted net tangible book value per share of our common stock immediately after this offering.

        Our historical net tangible book value as of March 31, 2017 was $(76.3) million, or $(2.64) per share of preferred stock. Our historical net tangible book value per share represents our total tangible assets less our total liabilities divided by the number of shares of preferred stock outstanding as of March 31, 2017.

        Our pro forma net tangible book value as of March 31, 2017 was $(76.3) million, or $(2.64) per share of common stock. Pro forma net tangible book value per share is determined by dividing our total tangible assets less total liabilities by the number of shares of our common stock outstanding as of March 31, 2017, after giving effect to the conversion of all of our outstanding Series A convertible preferred stock into shares of common stock in connection with the closing of this offering.

        Our pro forma as adjusted net tangible book value represents our pro forma net tangible book value, plus (1) payment of our $15.0 million payable to Ionis, which was paid in May 2017, (2) the effect of the sale of 15,625,000 shares of common stock in this offering at the initial public offering price of $8.00 per share, after deducting underwriting discounts and commissions and estimated offering expenses payable by us, (3) $15.0 million of additional borrowing under our line of credit with Ionis in May 2017, (4) the issuance of 13,438,339 Ionis Conversion Shares, based on the initial public offering price of $8.00 per share, in full satisfaction of our obligations to Ionis pursuant to our line of credit and (5) the issuance of 6,250,000 Novartis Private Placement Shares, based on the initial public offering price of $8.00 per share.

        Our pro forma as adjusted net tangible book value as of March 31, 2017 was $195.3 million, or $3.04 per share of common stock. This amount represents an immediate increase in pro forma as adjusted net tangible book value of $5.68 per share to Ionis, our sole existing stockholder, and an immediate dilution of $4.96 per share to investors participating in this offering other than Ionis. We determine dilution per share to investors participating in this offering other than Ionis by subtracting pro forma as adjusted net tangible book value per share after this offering from the assumed initial public offering price per share paid by investors participating in this offering.

Initial public offering price per share

        $ 8.00  

Historical net tangible book value per share as of March 31, 2017

  $ (2.64 )      

Increase per share attributable to the pro forma transactions described above              

           

Pro forma net tangible book value per share as of March 31, 2017

  $ (2.64 )      

Increase in pro forma net tangible book value per share attributed to new investors purchasing shares from us in this offering and to Novartis in the concurrent private placement

  $ 5.68        

Pro forma as adjusted net tangible book value per share after giving effect to this offering and the concurrent private placement

        $ 3.04  

Dilution in pro forma as adjusted net tangible book value per share to new investors in this offering and to Novartis in the concurrent private placement

        $ 4.96  

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        If the underwriters exercise their option in full to purchase an additional 2,343,750 shares of our common stock in this offering, the pro forma as adjusted net tangible book value per share of our common stock after the offering would be $3.20 per share, representing an immediate increase to Ionis of $5.84 per share and immediate dilution of $4.80 per share to investors participating in this offering other than Ionis.

        The following table summarizes as of March 31, 2017, on the pro forma as adjusted basis described above, the number of shares of our common stock, the total consideration and the average price per share (1) paid to us by Ionis, including with respect to the issuance of the Ionis Conversion Shares and shares purchased by Ionis in this offering and (2) to be paid by (i) investors purchasing our common stock in this offering other than Ionis at the initial public offering price of $8.00 per share, before deducting the underwriting discounts and commissions and estimated offering expenses payable by us and (ii) by Novartis in the concurrent private placement at the initial public offering price of $8.00 per share.

 
  Shares Purchased   Total Consideration    
 
 
  Weighted-
Average Price
Per Share
 
 
  Number   Percent   Amount   Percent  

Ionis

    45,447,879     70.8 % $ 231,000,000     60.6 % $ 5.08  

New investors (including Novartis)

    18,750,000     29.2     150,000,000     39.4     8.00  

Total

    64,197,879     100.0 % $ 381,000,000     100.0 %      

        Except as otherwise indicated, the above discussion and tables assume no exercise of the underwriters' option to purchase additional shares. If the underwriters exercise their option in full, Ionis would own 68.3% and our new investors would own 31.7% of the total number of shares of our common stock outstanding after the completion of this offering.

        The foregoing table and calculations above are based on 28,884,540 shares of common stock outstanding as of March 31, 2017, and exclude:

    §
    5,063,585 shares of common stock issuable upon the exercise of options outstanding as of March 31, 2017, at a weighted-average exercise price of $6.48 per share;
    §
    3,436,415 shares of common stock reserved for future issuance under our 2015 equity incentive plan, as amended, of which 1,678,661 shares of common stock are issuable upon exercise of options granted subsequent to March 31, 2017; and
    §
    500,000 shares of common stock reserved for future issuance under our 2017 employee stock purchase plan, which will become effective upon the closing of this offering.

        To the extent that options are exercised, new options or other securities are issued under our equity incentive plans or we issue additional shares of common stock in the future, there will be further dilution to investors participating in this offering. In addition, we may choose to raise additional capital because of market conditions or strategic considerations, even if we believe that we have sufficient funds for our current or future operating plans. If we raise additional capital through the sale of equity or convertible debt securities, the issuance of these securities could result in further dilution to our stockholders.

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SELECTED CONSOLIDATED FINANCIAL DATA

        The following tables set forth our historical financial data as of and for the periods indicated. The selected consolidated financial data for the years ended December 31, 2014, 2015 and 2016 and as of December 31, 2015 and 2016 have been derived from our audited consolidated financial statements included elsewhere in this prospectus. The selected consolidated financial data for three months ended March 31, 2016 and 2017 and as of March 31, 2017 have been derived from our unaudited financial statements included elsewhere in this prospectus. We have prepared the unaudited financial statements on the same basis as the audited financial statements, and the unaudited financial data include, in our opinion, all adjustments, consisting only of normal recurring adjustments, that we consider necessary for a fair presentation of our financial position and results of operations for these periods. Our historical operating results are not necessarily indicative of future operating results and results for the three months ended March 31, 2017 are not necessarily indicative of the results for the full year. We have derived the consolidated financial statements we present in this registration statement by carving out the expenses associated with our drugs from Ionis' consolidated financial statements in accordance with applicable accounting standards and Securities and Exchange Commission regulations.

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        The following data should be read together with our consolidated financial statements and the related notes thereto, as well as the section entitled "Management's Discussion and Analysis of Financial Condition and Results of Operations," included elsewhere in this prospectus.

 
  Years Ended December 31,   Three Months
Ended March 31,
 
(in thousands, except share and
per share amounts)

  2014   2015   2016   2016   2017  

Consolidated statement of operations data:

                               

Research and development revenue under collaborative agreements

  $   $   $   $   $ 9,597  

Research and development expenses

  $ 29,028   $ 50,885   $ 68,459   $ 11,796   $ 64,794  

General and administrative expenses

  $ 995   $ 10,553   $ 15,053   $ 4,253   $ 4,676  

Net loss

  $ (30,023 ) $ (61,422 ) $ (83,217 ) $ (15,962 ) $ (60,353 )

Net loss per share of preferred stock, basic and diluted(1)

  $ (1.04 ) $ (2.13 ) $ (2.88 ) $ (0.55 ) $ (2.09 )

Weighted-average shares of preferred stock outstanding, basic and diluted(1)

    28,884,540     28,884,540     28,884,540     28,884,540     28,884,540  

Pro forma net loss per share, basic and diluted (unaudited)(1)(2)

              $ (2.88 )       $ (2.09 )

Pro forma weighted-average shares of common stock outstanding, basic and diluted (unaudited)(1)(2)

                28,884,540           28,884,540  

(1)
See note 1, Organization and significant accounting policies, to our consolidated financial statements appearing elsewhere in this prospectus for further detail on the calculation of basic and diluted net loss per share.
(2)
Pro forma basic and diluted net loss per share represents net loss divided by the pro forma weighted-average shares of common stock outstanding. Pro forma weighted-average shares of common stock outstanding reflects the conversion of all outstanding shares of preferred stock into common stock as though the conversion had occurred on the first day of the relevant period.

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  Year Ended
December 31,
  As of
March 31,
 
(in thousands)
  2015   2016   2017  

Consolidated balance sheet data:

                   

Cash, cash equivalents and short-term investments

  $ 64,310   $ 7,857   $ 124,522  

Working capital(1)

    53,761     (19,344 )   51,922  

Total assets

    66,067     10,684     132,981  

Payable to Ionis

    9,198     24,355     15,000  

Line of credit with Ionis(2)

            91,541  

Series A convertible preferred stock

    100,000     100,000     100,000  

Accumulated deficit

    (91,445 )   (174,662 )   (235,015 )

Stockholders' equity (deficit)

    55,267     (17,747 )   (74,942 )

(1)
We define working capital as current assets less current liabilities. See our consolidated financial statements included elsewhere in this prospectus for further details regarding our current assets and current liabilities.
(2)
As of March 31, 2017 we borrowed $91.0 million under our line of credit with Ionis. In May 2017 we borrowed an additional $15.0 million. As of the date of this prospectus, we have borrowed $106.0 million under our line of credit with Ionis. The outstanding principal and accrued interest under our line of credit will convert into 13,438,339 Ionis Conversion Shares, based on the initial public offering price of $8.00 per share. The pro forma as adjusted information set forth above reflects this conversion.

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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

         You should read the following discussion in conjunction with the "Selected Consolidated Financial Data" and our consolidated financial statements and related notes thereto included elsewhere in this prospectus. In addition to historical information, this discussion contains forward-looking statements that involve risks, uncertainties and assumptions that could cause actual results to differ materially from management's expectations. We discuss factors that could cause such differences in the sections entitled "Special Note Regarding Forward-Looking Statements and Industry Data" and "Risk Factors." We are not undertaking any obligation to update any forward-looking statements or other statements we may make in the following discussion or elsewhere in this document even though these statements may be affected by events or circumstances occurring after the forward-looking statements or other statements were made.

Overview

        We are a late-stage biopharmaceutical company focused on developing and commercializing drugs to treat patients with serious cardiometabolic diseases caused by lipid disorders. Our goal is to become the premier company offering treatments for inadequately treated lipid disorders. We are advancing a mature pipeline of four novel drugs with the potential to treat multiple diseases. Our drugs, volanesorsen, AKCEA-APO(a)-L Rx , AKCEA-ANGPTL3-L Rx and AKCEA-APOCIII-L Rx , are all based on antisense technology developed by Ionis Pharmaceuticals, Inc., or Ionis. Our most advanced drug, volanesorsen, has completed a Phase 3 clinical program for the treatment of familial chylomicronemia syndrome, or FCS, and is currently in Phase 3 clinical development for the treatment of familial partial lipodystrophy, or FPL. FCS and FPL are both severe, rare, genetically defined lipid disorders characterized by extremely elevated levels of triglycerides. Both diseases have life-threatening consequences and the lives of patients with these diseases are impacted daily by the associated symptoms. In our clinical program, we have observed consistent and substantial (>70%) decreases in triglycerides and improvements in other manifestations of FCS, including pancreatitis attacks and abdominal pain. We believe the safety and efficacy data from the volanesorsen program demonstrate a favorable risk-benefit profile for patients with FCS. In the third quarter of 2017, we plan to file for marketing authorization for volanesorsen to treat patients with FCS.

        We are assembling the infrastructure to commercialize our drugs globally with a focus on lipid specialists as the primary call point. A key element of our commercial strategy is to provide the specialized, patient-centric support required to successfully address rare disease patient populations. We believe our focus on treating patients with inadequately addressed lipid disorders will allow us to partner efficiently and effectively with the specialized medical community that supports these patients.

        To maximize the commercial potential of two of the drugs in our pipeline, we initiated a strategic collaboration with Novartis Pharma AG, or Novartis, for the development and commercialization of AKCEA-APO(a)-L Rx. and AKCEA-APOCIII-L Rx . We believe Novartis brings significant resources and expertise to the collaboration that can accelerate our ability to deliver these potential therapies to the large populations of patients who have high cardiovascular risk due to inadequately treated lipid disorders. After we complete Phase 2 development of each of AKCEA-APO(a)-L Rx. and AKCEA-APOCIII-L Rx. , if, on a drug by drug basis, Novartis exercises its option to license a drug, Novartis plans to conduct and pay for a Phase 3 cardiovascular outcome study in high-risk patients and, if approved, to commercialize such drug worldwide. We plan to co-commercialize any approved drugs resulting from this collaboration with Novartis in selected markets, under terms and conditions that

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we plan to negotiate with Novartis in the future, through the specialized sales force we are building to commercialize volanesorsen.

        Our strategic collaboration with Novartis has a potential aggregate transaction value of over $1.0 billion, plus royalties, which we will generally share equally with Ionis. The calculation of potential aggregate transaction value assumes that Novartis licenses, successfully develops and achieves regulatory approval for both AKCEA-APO(a)-L Rx and AKCEA-APOCIII-L Rx in the United States, Europe and Japan, and that Novartis achieves pre-specified sales targets with respect to both drugs. We received $75.0 million in an upfront option payment, of which we retained $60.0 million and paid $15.0 million as a sublicense fee under our license agreement with Ionis. If Novartis exercises its option for a drug, Novartis will pay us a license fee equal to $150.0 million for each drug licensed by Novartis. In addition, for AKCEA-APO(a)-L Rx we are eligible to receive up to $600.0 million in milestone payments, including $25.0 million for the achievement of a development milestone, up to $290.0 million for the achievement of regulatory milestones and up to $285.0 million for the achievement of commercialization milestones. In addition, for AKCEA-APOCIII-L Rx we are eligible to receive up to $530.0 million in milestone payments, including $25.0 million for the achievement of a development milestone, up to $240.0 million for the achievement of regulatory milestones and up to $265.0 million for the achievement of commercialization milestones. Further, we are eligible to receive tiered royalties in the mid-teens to low twenty percent range on net sales of each drug. As a sublicense fee, we will pay to Ionis 50% of the license fees, milestone payments and royalties we receive from Novartis. See "Business—Our Strategic Collaboration with Novartis" and "Certain Relationships and Related Person Transactions" for additional information.

        Through 2016, we did not generate revenue and we have incurred net losses in each period since inception. In January 2017, we initiated a strategic collaboration with Novartis and began recognizing revenue under this collaboration. Our revenue for the first quarter of 2017 was $9.6 million. Our net losses were $30.0 million, $61.4 million and $83.2 million for the years ended December 31, 2014, 2015 and 2016, respectively and $16.0 million and $60.4 million for the three months ended March 31, 2016 and 2017, respectively. Our net loss increased in the first quarter of 2017 compared to the same period in 2016 because we incurred $48.4 million of sublicensing expenses related to our collaboration with Novartis, of which $33.4 million was non-cash. As of March 31, 2017, we had an accumulated deficit of $235.0 million. Our net losses have resulted from costs incurred in developing volanesorsen and the other drugs in our pipeline, preparing to commercialize volanesorsen and general and administrative activities associated with our operations. We expect to continue to incur significant expenses and increasing operating losses for the foreseeable future as we continue to develop volanesorsen and our other drugs, and seek regulatory approval for and prepare to commercialize volanesorsen. We expect to incur significant expenses to continue to build the infrastructure to support volanesorsen's commercialization, including manufacturing, marketing, sales and distribution functions. Further, we expect to incur additional costs associated with operating as a public company and in building our internal resources to become less reliant on Ionis.

        We have funded our operating activities through a $100.0 million cash contribution that we received from Ionis in 2015, $75.0 million from initiating our collaboration with Novartis that we received in the first quarter of 2017 and $106.0 million in drawdowns under our line of credit with Ionis that we received in the first and second quarters of 2017. We entered into our line of credit agreement with Ionis in January 2017 and it allows us to borrow up to $150.0 million. The outstanding principal and accrued interest under our line of credit will convert into shares of our common stock at the initial public offering price in connection with the closing of this offering. As of March 31, 2017, we had cash, cash equivalents and short-term investments of $124.5 million.

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        We believe that the net proceeds from this offering and the concurrent private placement, together with our existing cash, cash equivalents and short-term investments, will be sufficient to fund our operations for at least the next 12 months. However, we will need to raise additional capital in the future to continue developing the drugs in our pipeline and to commercialize any approved drug, including volanesorsen. We may seek to obtain additional financing in the future through the issuance of our common stock, through other equity or debt financings or through collaborations or partnerships with other companies. We may not be able to raise additional capital on terms acceptable to us, or at all, and any failure to raise capital as and when needed could compromise our ability to execute on our business plan.

Our Relationship with Ionis

        Prior to January 2015, the drugs we licensed from Ionis were part of Ionis' broad pipeline of antisense drugs. Ionis' employees performed all of the development, regulatory and manufacturing activities for these drugs either themselves or through third-party providers. As such, Ionis incurred all of the expenses associated with these activities and reported them in its consolidated financial statements. Ionis formed Akcea as a wholly owned subsidiary to complete development of and commercialize Ionis' drugs to treat lipid disorders. We began business operations in January 2015.

        We have derived the consolidated financial statements we present in this registration statement by carving out the expenses associated with our drugs from Ionis' consolidated financial statements in accordance with applicable accounting standards and Securities and Exchange Commission, or SEC, regulations. We have a development, commercialization and license agreement, which we refer to as the license agreement, and a services agreement with Ionis that we entered into in January 2015. We have prepared our consolidated financial statements for 2014 and 2015 as if these agreements with Ionis were in place for the entirety of both annual periods.

        We exclusively licensed our pipeline of four novel drugs from Ionis effective in January 2015. Prior to then, Ionis had been advancing these drugs in development and incurring the expenses for those activities. Under our license agreement with Ionis, Ionis continued and is continuing to conduct development, regulatory and manufacturing activities for our drugs and charge us for this work. In this way, we benefit from Ionis' more than 25 years of experience developing and manufacturing antisense drugs. As we build our development, regulatory and manufacturing capabilities and capacity, we expect to assume increasing responsibility for these functions and Ionis' responsibilities will decrease. We expect that our collaborative approach will allow us to build these capabilities and capacity while still working closely with Ionis to help ensure a smooth transition as our drugs advance. Moreover, because Ionis is currently conducting the majority of the development activities for our drugs, we are focused on building the commercial organization and conducting the pre-commercialization activities necessary to support the launch of volanesorsen, if approved, for marketing.

        We pay Ionis for the research and development expenses it incurs on our behalf, which include both external and internal expenses in accordance with our license agreement with Ionis. External research and development expenses include costs for contract research organizations, or CROs, costs to conduct nonclinical and clinical studies on our drugs, costs to acquire and evaluate clinical study data such as investigator grants, patient screening fees and laboratory work, and fees paid to consultants. Internal development expenses include costs for the work that Ionis' development employees perform for us. Ionis charges us a full-time equivalent rate that covers personnel-related expenses, including salaries and benefits, plus an allocation of facility-related expenses, including rent, utilities, insurance and property taxes, for those research and development employees who work either directly or indirectly on the development of our drugs. In accordance with the license agreement, we began paying Ionis for external research and development expenses on January 1,

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2015 and began paying Ionis for internal research and development expenses on January 1, 2016. All Ionis-provided research and development expenses shown in our consolidated financial statements for 2014 and all internal research and development expenses for 2015 were treated as a capital contribution from Ionis. We also pay Ionis for the active pharmaceutical ingredient, or API, and drug product we use in our nonclinical and clinical studies for all of our drugs. Ionis manufactures the API for us and charges us a price per gram consistent with the price Ionis charges its pharmaceutical partners, which includes the cost for direct materials, direct labor and overhead required to manufacture the API. If we need the API filled in vials or pre-filled syringes for our clinical studies, Ionis will contract with a third party to perform this work and Ionis will charge us for the resulting cost. We began paying Ionis for API that commenced manufacturing during 2015 in accordance with the license agreement. The cost of Ionis-manufactured API that began the manufacturing process prior to 2015 was treated as a capital contribution from Ionis.

        Under the services agreement, Ionis also provides us certain services, including, without limitation, general and administrative support services and development support services. We pay Ionis for our share of the internal and external expenses for each of these functions based on our relative use of each function, plus an allocation of facility-related expenses. We began paying Ionis for these services on January 1, 2015 in accordance with the services agreement. All Ionis-provided general and administrative expenses shown in our consolidated financial statements for 2014 were treated as a capital contribution from Ionis. As our business grows and we assume increasing responsibility from Ionis, we will assume direct responsibility for procuring and financing the services we currently receive from Ionis and Ionis' responsibility to provide us with these services will decrease.

        We do not pay a mark-up or profit on the external or internal expenses Ionis bills to us or on the cost of the drugs Ionis manufactures for us. Moreover, Ionis only charges us for the portion of its resources that we use. For example, we do not have to pay for a full time person if we only need the person's skills for 50% of the time. In this way, we can increase our headcount as our requirements grow and as we assume increasing responsibility for our drugs from Ionis, rather than building capabilities and capacity in advance of full utilization. We believe that our expenses reasonably reflect the expenses we would have incurred if we had the capabilities and capacity in place to perform this work ourselves. Further, we do not believe that our expenses will increase significantly as we assume development, regulatory, manufacturing and administrative responsibilities from Ionis because we will only assume these functions when we believe we can do so in a cost-efficient manner. See note 3, Development, Commercialization and License Agreement and Services Agreement with Ionis, to our consolidated financial statements for more information on our agreements with Ionis.

        In addition, Ionis has helped fund our operations through a line of credit agreement for up to $150.0 million that we entered into in January 2017. As of the date of this prospectus, we had borrowed an aggregate of $106.0 million pursuant to the line of credit, which together with accrued interest will automatically convert upon completion of this offering into an aggregate of 13,438,339 Ionis Conversion Shares, based on the initial public offering price of $8.00 per share.

Basis of Presentation

        We have derived the consolidated financial statements presented in this registration statement by carving out the expenses associated with our drugs from Ionis' consolidated financial statements in accordance with applicable accounting standards and SEC regulations. These results reflect amounts specifically attributable to our business, including the costs Ionis incurred for the drugs we exclusively licensed from Ionis under our license agreement with Ionis. We also have a services agreement with Ionis that provides us with certain general and administrative and development

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support services that became effective in January 2015. However, consistent with accounting regulations, we have assumed that the services agreement was in place in 2014 and we have reflected the related expenses in our results. We have calculated our income tax amounts using a separate return methodology and we have presented these amounts as if we were a separate taxpayer from Ionis in each jurisdiction for each period we present. We have not determined the amount of tax attributes, including net operating losses and tax credit carryovers, that we would retain if we were to deconsolidate for tax purposes from Ionis. An analysis will be performed at a future date, if necessary.

        We consider our expense methodology and results to be reasonable for all periods we present. However, our allocations may not be indicative of the actual expenses we would have incurred had we operated as an independent, publicly traded company for the periods we present.

        We discuss our agreements with Ionis in note 3, Development, Commercialization and License Agreement and Services Agreement with Ionis, to our consolidated financial statements.

Revenue

        Through 2016, we did not generate any revenue. In January 2017, we initiated a strategic collaboration with Novartis and began recognizing revenue under this collaboration. During the first quarter of 2017, we recognized $9.6 million in research and development revenue from our collaboration with Novartis.

Operating Expenses

        Our operating expenses consist of research and development expenses and general and administrative expenses, which are described below.

    Research and Development Expenses

        Since our inception, we have focused on developing our lead drug, volanesorsen, and the other drugs in our pipeline. Our research and development expenses primarily consist of:

    §
    salaries and related expenses for research and development personnel, including expenses related to stock-based compensation granted to personnel in development functions;
    §
    fees paid to clinical study sites and vendors, including CROs, in connection with our clinical studies, costs of acquiring and evaluating clinical study data such as investigator grants, patient screening fees, laboratory work and statistical compilation and analysis, and fees paid to clinical consultants;
    §
    expenses to acquire clinical study materials, including fees paid to Ionis;
    §
    other consulting fees paid to third parties;
    §
    expenses related to compliance with drug development regulatory requirements;
    §
    travel, facilities, depreciation and amortization, insurance and other expenses; and
    §
    sublicense expenses related to partnered drugs that we licensed from Ionis.

        As described above, Ionis charges us for many of the expenses listed above because it is performing many of the development activities for our drugs on our behalf. As we assume increasing responsibility for developing and manufacturing our drugs, we will also increase the amount of expenses that we directly incur. As Ionis' responsibilities decrease, the expenses Ionis charges us will also decrease. We do not expect our overall research and development expenses to change significantly as we transition work from Ionis to us. However, we expect our overall development expenses to increase as we advance our pipeline. This increase will be driven by external costs associated with larger clinical studies as the pipeline moves into the later stages of development,

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costs of manufacturing drug product to be used in clinical studies and for validation and regulatory purposes, regulatory costs associated with seeking approval for our drugs and costs associated with expanding our internal development organization to support our pipeline as it advances into the later stages of development.

        We expense our research and development costs as we incur them. We do not track research and development expenses by project, with the exception of costs related to volanesorsen. We typically use our employees, consultants and infrastructure resources across all of our projects. Thus, some of our research and development expenses are not attributable to an individual project, but are included in other research and development projects in our results of operations.

        Our expenses related to clinical studies are based on estimates of patient enrollment and related expenses at clinical investigator sites as well as estimates for the services received and efforts expended pursuant to contracts with CROs that we may use to conduct and manage our clinical studies on our behalf. We generally accrue expenses related to clinical studies based on contracted amounts applied to the level of patient enrollment and activity. If we modify timelines or contracts based upon changes in the clinical study protocol or scope of work to be performed, we modify our estimates of accrued expenses accordingly on a prospective basis.

        Development activities are central to our business model. We cannot determine with certainty the timing of initiation, the duration or the costs to complete current or future clinical studies of our drugs, including volanesorsen. Clinical development timelines, the probability of success and development costs can differ materially from expectations. The cost of clinical studies may vary significantly over the life of a project as a result of differences arising during clinical development, including, among others:

    §
    per patient study costs;
    §
    the number of studies required for approval;
    §
    the number of sites included in the studies;
    §
    the length of time required to enroll suitable patients;
    §
    the number of doses that patients receive;
    §
    the number of patients that participate in the studies;
    §
    the drop-out or discontinuation rates of patients;
    §
    the duration of patient follow-up;
    §
    potential additional safety monitoring or other studies requested by regulatory agencies;
    §
    the number and complexity of analyses and tests performed during the study;
    §
    the phase of development of the drug; and
    §
    the efficacy and safety profile of the drug.

        In addition, we expect to incur substantial expenses beyond our present and planned nonclinical and clinical studies to file for marketing authorization for volanesorsen and our other drugs in development, assuming the data are supportive.

        We cannot forecast which drugs may be subject to future collaborations, when we will complete such arrangements, if at all, and to what degree such arrangements would affect our development plans and capital requirements.

General and Administrative Expenses

        Our general and administrative expenses consist of salaries and personnel-related costs, including stock-based compensation, for our employees in executive, sales and marketing, and administrative functions. Significant external general and administrative expenses also include costs

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associated with the pre-commercialization activities we are performing to prepare to launch volanesorsen, if approved, for marketing. Our general and administrative expenses also include professional fees for accounting, auditing and consulting services, legal services, investor relations, travel and facilities. As described above, Ionis charges us for many of the expenses associated with these functions, including, among others, accounting, human resources, legal and investor relations. We expect to assume responsibility from Ionis for these general and administrative functions as our business grows and we build our internal development and commercialization capabilities. As Ionis' efforts on our behalf decrease, so will the expenses Ionis charges us for those efforts. We expect the increase in expenses we will incur for performing the work ourselves will be largely offset by the decrease in expenses Ionis charges us. We do not expect our overall general and administrative expenses to change significantly as we transition work from Ionis to us.

        We anticipate our general and administrative expenses to increase in the future to support our continued development and potential commercialization of volanesorsen and the continued development of the other drugs in our pipeline. In addition, we expect to incur increased expenses associated with expanding our sales and marketing team and commercialization infrastructure to support the launch of volanesorsen. Increases over and above the level of work Ionis is currently performing on our behalf will result in an increase in general and administrative expenses and could include costs related to hiring additional personnel, increased office space, implementing new IT systems and other costs associated with expanding our general and administrative functions. Our general and administrative expenses will also increase due to the costs of operating as a public company. These public company expenses will likely include increased costs related to outside consultants, attorneys, accountants and investor relations personnel, among other expenses.

Results of Operations

Comparison of the Three Months Ended March 31, 2016 and March 31, 2017

Revenue

        During the first quarter of 2017, we recognized $9.6 million in research and development revenue from our collaboration with Novartis, which we initiated in January 2017.

Operating Expenses

        Operating expenses were $16.0 million for the three months ended March 31, 2016 and increased to $69.5 million for the same period in 2017 as a result of the following:

    §
    We incurred $48.4 million of sublicensing expenses related to our collaboration with Novartis of which $33.4 million was non-cash.
    §
    We continued to build our organization and advance the pre-commercialization activities necessary to launch volanesorsen, if approved for marketing.

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Research and Development Expenses

        The following table sets forth our research and development expenses for the periods presented:

 
  Three Months
Ended
March 31,
 
(in thousands)
  2016   2017  

External volanesorsen expenses

  $ 5,337   $ 5,603  

Other external research and development project expenses

    2,632     4,910  

Sublicensing expenses

        48,394  

Research and development personnel and overhead expenses

    2,992     4,287  

Total research and development expenses, excluding non-cash stock-based compensation expense

    10,961     63,194  

Non-cash stock-based compensation expense

    835     1,600  

Total research and development expenses

  $ 11,796   $ 64,794  

        Research and development expenses were $11.8 million for the three months ended March 31, 2016 and increased to $64.8 million for the same period in 2017. The increase in expenses was primarily due to sublicensing expenses, the majority of which were non-cash, related to our collaboration with Novartis, and the progression of our other drugs in development, including AKCEA-APO(a)-L Rx and AKCEA-ANGPTL3-L Rx .

General and Administrative Expenses

        The following table sets forth our general and administrative expenses for the periods presented:

 
  Three Months
Ended
March 31,
 
(in thousands)
  2016   2017  

General and administrative support expenses

  $ 1,205   $ 1,578  

Pre-commercialization expenses for volanesorsen

    694     1,518  

Total general and administrative expenses, excluding non-cash stock-based compensation expense

    1,899     3,096  

Non-cash stock-based compensation expense

    2,354     1,580  

Total general and administrative expenses

  $ 4,253   $ 4,676  

        General and administrative expenses were $4.3 million for the three months ended March 31, 2016 and increased slightly to $4.7 million for the same period in 2017. Our general and administrative expenses increased primarily because we were continuing to build the organization and advance pre-commercialization activities necessary to launch volanesorsen, if approved for marketing, offset in part by reduced non-cash stock-based compensation expense.

Comparison of the Years Ended December 31, 2015 and December 31, 2016

Revenue

        Through 2016, we did not generate any revenue.

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Operating Expenses

        Operating expenses were $61.4 million for 2015 and increased to $83.5 million for 2016 as a result of the following:

    §
    We were conducting more and later-stage clinical studies in 2016 than we were in 2015, including the continuation of our Phase 3 studies for volanesorsen in patients with FCS and FPL.
    §
    Our operating expenses also increased in 2016 as we continued to build our organization and advance the pre-commercialization activities necessary to launch volanesorsen, if approved for marketing.

Research and Development Expenses

        The following table sets forth our research and development expenses for the periods presented:

 
  Years Ended
December 31,
 
(in thousands)
  2015   2016  

External volanesorsen expenses

  $ 23,137   $ 38,403  

Other external research and development project expenses

    19,199     11,567  

Research and development personnel and overhead expenses

    7,722     13,913  

Total research and development expenses, excluding non-cash stock-based compensation expense

    50,058     63,883  

Non-cash stock-based compensation expense

    827     4,576  

Total research and development expenses

  $ 50,885   $ 68,459  

        Research and development expenses were $50.9 million for 2015 and increased to $68.5 million for 2016. The increase in expenses was primarily due to our Phase 3 studies for volanesorsen, which continued to advance, and the progression of our other drugs, including AKCEA-APO(a)-L Rx and AKCEA-ANGPTL3-L Rx .

General and Administrative Expenses

        The following table sets forth our general and administrative expenses for the periods presented:

 
  Years Ended
December 31,
 
(in thousands)
  2015   2016  

General and administrative support expenses

  $ 3,424   $ 5,591  

Pre-commercialization expenses for volanesorsen

    1,460     3,889  

Total general and administrative expenses, excluding non-cash stock-based compensation expense

    4,884     9,480  

Non-cash stock-based compensation expense

    5,669     5,573  

Total general and administrative expenses

  $ 10,553   $ 15,053  

        General and administrative expenses were $10.6 million for 2015 and increased to $15.1 million for 2016. Our general and administrative expenses increased primarily because we were continuing to build the organization and advance pre-commercialization activities necessary to launch volanesorsen, if approved for marketing.

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Comparison of the Years Ended December 31, 2014 and December 31, 2015

Revenue

        We did not generate any revenue in 2014 or 2015.

Operating Expenses

        Operating expenses were $30.0 million for 2014 and increased to $61.4 million for 2015 as a result of the following:

    §
    We were conducting more and later-stage clinical studies in 2015 than we were in 2014, including our Phase 3 program for volanesorsen. In 2015, we incurred a full year of expenses associated with the Phase 3 study of volanesorsen in patients with FCS, which we began in August 2014. We also incurred expenses for the initiation of the Phase 3 study of volanesorsen in patients with FPL, which we began in November 2015. In addition, we incurred expenses for an additional Phase 3 clinical study in patients with high triglycerides.
    §
    Our operating expenses increased in 2015 as we began building our organization and advanced the pre-commercialization activities necessary to launch volanesorsen, if approved for marketing.
    §
    We granted stock options to our employees for the first time during 2015 and therefore for 2014 we did not have any stock-based compensation expense.

Research and Development Expenses

        The following table sets forth our research and development expenses for the periods presented:

 
  Years Ended
December 31,
 
(in thousands)
  2014   2015  

External volanesorsen expenses

  $ 11,455   $ 23,137  

Other external research and development project expenses

    11,014     19,199  

Research and development personnel and overhead expenses

    6,559     7,722  

Total research and development expenses, excluding non-cash stock-based compensation expense

    29,028     50,058  

Non-cash stock-based compensation expense

        827  

Total research and development expenses

  $ 29,028   $ 50,885  

        Research and development expenses were $29.0 million for 2014, compared to $50.9 million for 2015. The increase in expenses was primarily due to our Phase 3 studies for volanesorsen, which continued to advance, and the progression of our other drugs, including AKCEA-APO(a)-L Rx and AKCEA-ANGPTL3-L Rx . We granted stock options to our employees for the first time during 2015 and therefore for 2014 we did not have any non-cash stock-based compensation expense.

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General and Administrative Expenses

        The following table sets forth our general and administrative expenses for the periods presented:

 
  Years Ended
December 31,
 
(in thousands)
  2014   2015  

General and administrative support expenses

  $ 995   $ 3,424  

Pre-commercialization expenses

        1,460  

Total general and administrative expenses, excluding non-cash stock-based compensation expense

    995     4,884  

Non-cash stock-based compensation expense

        5,669  

Total general and administrative expenses

  $ 995   $ 10,553  

        General and administrative expenses were $1.0 million for 2014 and increased to $10.6 million for 2015. Our general and administrative expenses increased as we continued to build the organization and advance the pre-commercialization activities necessary to launch volanesorsen, if approved for marketing. We granted stock options to our employees for the first time during 2015 and therefore for 2014 we did not have any non-cash stock-based compensation expense.

Liquidity and Capital Resources

        At March 31, 2017 we had cash, cash equivalents and short-term investments of $124.5 million and stockholders' deficit of $74.9 million.

        We have funded our operating activities through a $100.0 million cash contribution that we received from Ionis in 2015, $75.0 million from initiating our collaboration with Novartis that we received in the first quarter of 2017 and $106.0 million in drawdowns under our line of credit with Ionis that we received in the first and second quarters of 2017. Our line of credit agreement with Ionis allows us to borrow up to $150.0 million. The outstanding principal and accrued interest under our line of credit will convert into shares of our common stock at the initial public offering price in connection with the closing of this offering, and we will no longer have access to the line of credit following the completion of this offering.

        At December 31, 2016, we had working capital of $(19.3) million, compared to working capital of $51.9 million at March 31, 2017. Working capital increased in 2017 primarily due to the increase in our cash and short-term investments and a decrease in our payable to Ionis under our development, commercialization and license agreement and services agreement. As of March 31, 2017, our outstanding payable to Ionis was $15.0 million. In January 2017, we initiated a strategic collaboration with Novartis and we received $75.0 million in an upfront option payment, of which we retained $60.0 million and paid Ionis $15.0 million as a sublicense fee under our license agreement with Ionis, in May 2017. During the first quarter of 2017, we recognized $9.6 million in research and development revenue from our collaboration with Novartis, which we initiated in January 2017.

        We do not currently have any approved drugs and, therefore, we do not expect to generate significant revenue from drug sales unless and until we or our partners obtain regulatory approval for and commercialize volanesorsen or one of our other drugs in development. We anticipate that we will continue to incur losses for the foreseeable future, and we expect the losses to increase as we continue to develop, seek regulatory approval for, and begin to commercialize our drugs. We are subject to all of the risks incident in developing and commercializing new drugs, and we may encounter unforeseen expenses, difficulties, complications, delays and other unknown factors that

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may adversely affect our business. Upon the completion of this offering, we expect to incur additional costs associated with operating as a public company.

Future Funding Requirements

        We will need to raise additional capital in the future to continue developing the drugs in our pipeline and to commercialize any approved drug, including volanesorsen. We believe that the net proceeds from this offering and the concurrent private placement, together with our existing cash, cash equivalents and short-term investments, will be sufficient to fund our operations for at least the next 12 months. Until such time, if ever, as we can generate substantial product revenue, we may finance our cash needs through revenue received under our strategic collaboration with Novartis and any one or a combination of stock offerings, debt financings, collaborations, licensing arrangements and additional funding from Ionis. In any event, we do not expect to generate revenue from product sales prior to the use of the net proceeds from this offering and the concurrent private placement. We do not have any committed external source of funds and we will no longer have access to our line of credit with Ionis following completion of this offering. Additional capital may not be available on reasonable terms, if at all. To the extent that we raise additional capital through the sale of stock or convertible debt securities, the ownership interest of our stockholders will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of our common stockholders. Debt financing, if available, may involve agreements that include increased fixed payment obligations and covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures, declaring dividends, selling or licensing intellectual property rights and other operating restrictions that could adversely affect our ability to conduct our business. If we raise additional funds through collaborations or licensing arrangements with third parties, we may have to relinquish valuable rights to our drugs or grant licenses on terms that may not be favorable to us. If we cannot raise additional funds through stock offerings or debt financings when needed, we may be required to delay, limit, reduce or terminate our product development or future commercialization efforts or grant rights to develop and commercialize our drugs even if we would otherwise prefer to develop and commercialize the drugs ourselves.

        Our forecast of the period of time through which our financial resources will be adequate to support our operations involves risks and uncertainties, and actual results could vary as a result of a number of factors. We have based this estimate on assumptions that may prove to be wrong, and we could use our available capital resources sooner than we currently expect. The amount and timing of future funding requirements, both near- and long-term, will depend on many factors, including, but not limited to:

    §
    the design, initiation, progress, size, timing, costs and results of our clinical and nonclinical studies;
    §
    the outcome, timing and cost of regulatory approvals by the FDA and comparable foreign regulatory authorities, including the potential for the FDA or comparable foreign regulatory authorities to require that we perform more studies than, or evaluate clinical endpoints other than, those that we currently expect;
    §
    the number and characteristics of drugs that we may pursue;
    §
    our need to expand our development activities, including our need and ability to hire additional employees;
    §
    the effect of competing technological and market developments;
    §
    the cost of establishing sales, marketing, manufacturing and distribution capabilities for our drugs;
    §
    our strategic collaborators' success in developing and commercializing our drugs;
    §
    our need to add infrastructure, implement internal systems and hire additional employees to operate as a public company; and

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    §
    the revenue, if any, generated from commercial sales of our drugs for which we receive marketing authorization, which may be affected by market conditions, including obtaining coverage and adequate reimbursement of our drugs from third-party payors, including government programs and managed care organizations, and competition within the therapeutic class to which our drugs are assigned.

        If we cannot expand our operations or otherwise capitalize on our business opportunities because we lack sufficient capital, our business, financial condition and results of operations could be materially adversely affected.

Contractual Obligations and Commitments

        The following table summarizes our contractual obligations as of December 31, 2016, which consist of our operating lease for our office facility. The table provides a breakdown of when our office facility lease obligations become due:

 
  Payments due by period
(in thousands)
 
Contractual obligations
  Total   Less than
1 year
  1 - 2 years  

Office facility operating lease payments

  $ 646   $ 407   $ 239  

        As of December 31, 2016, we did not have any contractual obligations that extended beyond two years.

        The following table shows our contractual obligations as of March 31, 2017:

 
  Payments due by period
(in thousands)
 
Contractual obligations
  Total   Less than
1 year
  1 - 2 years   3 - 5 years  

Sublicense fee payable to Ionis

  $ 15,000   $ 15,000   $   $  

Office facility operating lease payments

  $ 1,289   $ 633   $ 635   $ 21  

        The tables above do not reflect the line of credit agreement for up to $150.0 million we entered into with Ionis in January 2017. As of the date of this prospectus, we have drawn $106.0 million. The outstanding principal and accrued interest under our line of credit will convert into shares of our common stock at the initial public offering price in connection with the closing of this offering.

        Excluding the $15.0 million sublicense fee payable to Ionis shown in the table above, which we paid in May 2017, we have not included potential milestone payments, sublicense fees and royalties that we may be required to pay Ionis for the license of intellectual property. We have not included these potential obligations in the table above because they are contingent upon the occurrence of future events, and we do not know the timing and likelihood of such potential obligations with certainty.

        The table above does not include certain general and administrative and development support services for which we will pay Ionis under our services agreement or obligations under agreements that we can cancel without a significant penalty.

        We describe our agreements with Ionis in more detail in note 3, Development, Commercialization and License Agreement and Services Agreement with Ionis, to our consolidated financial statements.

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        In addition to contractual obligations, we had outstanding purchase orders as of December 31, 2016 and March 31, 2017 for the purchase of services and materials as part of our normal course of business.

Other Information

Recently Issued Accounting Pronouncements

        We describe the recently issued accounting pronouncements that apply to us in note 1 to our consolidated financial statements , Organization and Significant Accounting Policies .

Off-balance Sheet Arrangements

        We did not have any off-balance sheet arrangements during the period presented, as defined in the rules and regulations of the SEC.

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 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 Fitch, respectively. We have established guidelines relative to diversification and maturities that are designed to maintain safety and liquidity. We periodically review and modify these guidelines to maximize trends in yields and interest rates without compromising safety and liquidity. 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 are 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.

        Our results of operations are subject to foreign currency exchange rate fluctuations as we have a foreign subsidiary, Akcea Therapeutics UK Ltd., or Akcea UK., with a functional currency other than the U.S. dollar. We created Akcea UK to support our initial pre-commercialization activities in Europe, and to serve as a potential entity for future United Kingdom and/or European operations. We translate Akcea UK's functional currency, the British pound sterling, or British pound, to our reporting currency the U.S. dollar. As a result, our financial position, results of operations and cash flows can be affected by market fluctuations in the British pound to U.S. dollar exchange rate which are difficult to predict. However, because Akcea UK currently has limited operations, the effect on fluctuations of the British pound to U.S. dollar exchange rate on our consolidated results is immaterial to our consolidated financial statements. Our business strategy incorporates potentially significant international expansion, particularly in anticipation of approval of volanesorsen, therefore we expect that the impact of foreign currency exchange rate fluctuations may become more substantial in the future.

Critical Accounting Policies

        We prepare our consolidated financial statements in conformity with accounting principles generally accepted in the United States, or GAAP. 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. In the

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following paragraphs, we describe our most significant accounting policies, which we believe are the most critical to aid in fully understanding and evaluating our reported financial results. As described below, there are specific risks associated with these critical accounting policies and we caution that future events rarely develop exactly as one may expect, and that best estimates may require adjustment.

        The significant accounting policies, which we believe are the most critical to aid in fully understanding and evaluating our reported financial results, require the following:

    §
    Assessing the propriety of revenue recognition and associated deferred revenue;
    §
    Determining the proper valuation of investments in marketable securities;
    §
    Determining the stock-based compensation expense and valuation assumptions;
    §
    Determining the fair value of our common stock; and
    §
    Determining the appropriate cost estimates for unbilled preclinical and clinical development activities.

        Descriptions of these critical accounting policies follow.

Revenue Recognition

        We will recognize revenue when we have satisfied all contractual obligations and we are reasonably assured of collecting the resulting receivable. We may be entitled to bill our customers and receive payment from our customers in advance of recognizing the revenue. In the instances in which we receive payment from our customers in advance of recognizing revenue, we will include the amounts in deferred revenue on our consolidated balance sheet.

        Research and development revenue under collaborative agreements

    Arrangements with multiple deliverables

        Our strategic collaboration, option and license agreement, or collaboration agreement, with Novartis, which we entered into in January 2017, contains multiple elements, or deliverables, including options to obtain licenses to drugs, research and development services, and manufacturing services. Therefore, we accounted for the collaboration under the multiple deliverables guidance.

    Multiple agreements

        When we enter into separate agreements at or near the same time with the same partner, we must first evaluate such agreements to determine whether they should be accounted for individually as distinct arrangements or whether the separate agreements are, in substance, a single multiple element arrangement. We evaluate whether the negotiations are conducted jointly as part of a single negotiation, whether the deliverables are interrelated or interdependent, whether fees in one arrangement are tied to performance in another arrangement, and whether elements in one arrangement are essential to another arrangement. Our evaluation involves significant judgment to determine whether a group of agreements might be so closely related that they are, in effect, part of a single arrangement. For example, in the first quarter of 2017, we and Ionis entered into two separate agreements with Novartis at the same time: a collaboration agreement and a stock purchase agreement, or SPA.

        We entered into the collaboration agreement with Novartis to develop and commercialize AKCEA-APO(a)-L Rx and AKCEA-APOCIII-L Rx . Under the collaboration agreement, we received a $75.0 million upfront payment. For each drug, we are responsible for completing a Phase 2 program, conducting an end-of-Phase 2 meeting with the FDA and delivering active pharmaceutical ingredient, or API. Under the collaboration agreement, Novartis has an exclusive option to develop and

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commercialize AKCEA-APO(a)-L Rx and AKCEA-APOCIII-L Rx . If Novartis exercises an option for one of these drugs, it will pay us a license fee and will assume all further global development, regulatory and commercialization activities for the licensed drug. We are also eligible to receive a development milestone payment, milestone payments if Novartis achieves pre-specified regulatory milestones, commercial milestone payments and tiered royalties on net sales from each drug under the collaboration.

        Under the SPA, Novartis purchased 1.6 million shares of Ionis' common stock for $100.0 million in the first quarter of 2017 and paid a premium over the weighted average trading price at the time of purchase. Additionally, Novartis agreed to purchase up to $50.0 million of our common stock in a separate private placement concurrent with the completion of this offering at a price per share equal to the initial public offering price, subject to a number of conditions. If we do not complete this offering or a similar offering by the 15 month anniversary of the SPA, or if we complete an offering that does not meet the specified criteria for Novartis to invest, then Novartis is required to purchase $50.0 million of Ionis' common stock at a premium over the weighted average trading price of Ionis' common stock at the time of purchase.

        We evaluated the Novartis agreements to determine whether we should treat the agreements separately or as a single arrangement. We considered that the agreements were negotiated concurrently and in contemplation of one another. Additionally, the same individuals were involved in the negotiations of both agreements. Based on these facts and circumstances, we concluded that we should treat both agreements as a single arrangement, which we refer to as the Novartis collaboration. We evaluated the provisions of the agreements on a combined basis.

    Identifying deliverables and units of accounting

        We evaluate the deliverables in a collaboration agreement to determine whether they meet the criteria to be accounted for as separate units of accounting or whether they should be combined with other deliverables and accounted for as a single unit of accounting. When the delivered items in an arrangement have 'stand-alone value' to the customer, we will account for the deliverables as separate units of accounting. Delivered items have stand-alone value if they are sold separately by any vendor or the customer could resell the delivered items on a stand-alone basis. For example, our Novartis collaboration and SPA have multiple elements. We evaluated the deliverables in the Novartis collaboration when we entered into the agreements and determined that certain deliverables have stand-alone value.

        We identified the following four separate units of accounting under the collaboration, each with stand-alone value:

    §
    Development activities for AKCEA-APO(a)-L Rx ;
    §
    Development activities for AKCEA-APOCIII-L Rx ;
    §
    API for AKCEA-APO(a)-L Rx ; and
    §
    API for AKCEA-APOCIII-L Rx .

        The development activities and the supply of API each have stand-alone value because Novartis or another third party could provide these items without our assistance.

    Measurement and allocation of arrangement consideration

        Our Novartis collaboration provides for various types of payments to us including upfront payments, milestone payments, licensing fees, royalties on product sales and payments for the purchase of common stock. We first evaluated the total consideration under both the collaboration agreement and SPA and determined how much of the total consideration was attributable to elements that we are delivering under the collaboration.

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        We determined that our portion of the allocable arrangement consideration for the Novartis collaboration was $108.4 million, comprised of the following:

    §
    $75.0 million from the upfront payment received;
    §
    $28.4 million for the premium paid by Novartis, which represents the excess of the fair value Ionis received from Novartis' purchase of Ionis' stock at a premium in the first quarter of 2017; and
    §
    $5.0 million for the potential premium Novartis will pay if Novartis purchases Ionis' stock in the future at a premium.

        We will recognize the $75.0 million upfront payment plus the premium paid by Novartis from its purchase of Ionis' stock and the potential premium if Novartis purchases Ionis' stock in the future as revenue because we are the party providing the services and API under the collaboration agreement.

        We initially allocate the amount of consideration that is fixed or determinable at the time the agreement is entered into and exclude contingent consideration. We allocate the consideration to each unit of accounting based on the relative selling price of each deliverable. We use the following hierarchy of values to estimate the selling price of each deliverable: (i) vendor-specific objective evidence of fair value; (ii) third-party evidence of selling price; and (iii) best estimate of selling price, or BESP. BESP reflects our best estimate of what the selling price would be if we regularly sold the deliverable on a stand-alone basis. We recognize the revenue allocated to each unit of accounting as we deliver the related goods or services. If we determine that we should treat certain deliverables as a single unit of accounting, then we will recognize the revenue ratably over our estimated period of performance.

        We allocated the consideration based on the relative BESP of each unit of accounting. We estimated the selling price of the development services over the expected period during which we will perform these services. The significant inputs we used to determine the selling price of the development services included:

    §
    The number of internal hours we will spend performing these services;
    §
    The estimated cost of the work we will perform;
    §
    The estimated cost of work that we will contract with third parties to perform; and
    §
    The estimated cost of API we will use.

        For purposes of determining BESP of the services we will perform and the API we will deliver under our Novartis collaboration, accounting guidance required us to include a markup for a reasonable profit margin.

        Based on the units of accounting under the Novartis collaboration, we allocated the $108.4 million of allocable consideration as follows:

    §
    $64.0 million for development services for AKCEA-APO(a)-L Rx ;
    §
    $40.1 million for development services for AKCEA-APOCIII-L Rx ;
    §
    $1.5 million for the delivery of AKCEA-APO(a)-L Rx API; and
    §
    $2.8 million for the delivery of AKCEA-APOCIII-L Rx API.

    Timing of revenue recognition

        We recognize revenue as we deliver each item under our Novartis collaboration as we provide services and the related revenue is realizable and earned. We also recognizes revenue over time. Our Novartis collaboration agreement includes a development project plan outlining the activities the

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agreement requires each party to perform during the collaboration. We estimated our period of performance when the agreement was entered into because the agreement did not clearly define such information. We then recognize revenue from development services ratably over such period. We made estimates of our time to complete our obligations under our Novartis collaboration agreement, and in certain instances the timing of satisfying these obligations may change as the development plans for our drugs progress. If our estimates and judgments change over the course of the Novartis collaboration agreement, it may affect the timing and amount of revenue that we will recognize in future periods. Any changes in estimates are recognized on a prospective basis.

        The following are the periods over which we are recognizing revenue for each of our units of accounting under the Novartis collaboration:

    §
    We are recognizing the amount attributed to the development services for AKCEA-APO(a)-L Rx over the period of time we are performing the services, currently estimated to be through August 2018;
    §
    We are recognizing the amount attributed to the development services for AKCEA-APOCIII-L Rx over the period of time we are performing the services, currently estimated to be through May 2019;
    §
    We will recognize the amount attributed to the AKCEA-APO(a)-L Rx API supply when we deliver API to Novartis; and
    §
    We will recognize the amount attributed to the AKCEA-APOCIII-L Rx API supply when we deliver API to Novartis.

    Milestone payments

        Our Novartis collaboration contains contractual milestone payments that relate to the achievement of pre-specified development, regulatory and commercialization events. These three categories of milestone events reflect the three stages of the life-cycle of our drugs, which we describe in more detail in the following paragraphs.

        The designation of a development candidate is the first stage in the life-cycle of our drugs. A development candidate is a chemical compound that has demonstrated the necessary safety and efficacy in preclinical animal studies to warrant further study in humans.

        During the first step of the development stage, we or our partner study our drugs in Investigational New Drug, or IND,-enabling studies, which are animal studies intended to support an IND application and/or the foreign equivalent. An approved IND allows us or our partners to study our development candidate in humans. If the regulatory agency approves the IND, we or our partners initiate Phase 1 clinical trials in which we typically enroll a small number of healthy volunteers to ensure the development candidate is safe for use in patients. If we or our partners determine that a development candidate is safe based on the Phase 1 data, we or our partners initiate Phase 2 studies that are generally larger scale studies in patients with the primary intent of determining the efficacy of the development candidate.

        The final step in the development stage is Phase 3 studies to gather the necessary safety and efficacy data to request marketing authorization from the FDA and/or foreign equivalents. The Phase 3 studies typically involve large numbers of patients and can take up to several years to complete. If the data gathered during the trials demonstrates acceptable safety and efficacy results, we or our partners will submit an application to the FDA and/or its foreign equivalents for marketing authorization. This stage of the drug's life-cycle is the regulatory stage.

        If a drug achieves marketing authorization, it moves into the commercialization stage, during which we or our partners will market and sell the drug to patients. Although our partner may

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ultimately be responsible for marketing and selling the partnered drug, our efforts to develop a drug that is safe, effective and reliable contributes significantly to our partner's ability to successfully sell the drug. The FDA and its foreign equivalents have the authority to impose significant restrictions on an approved drug through the product label and on advertising, promotional and distribution activities. Therefore, our efforts designing and executing the necessary animal and human studies are critical to obtaining claims in the product label from the regulatory agencies that would allow us or our partners to successfully commercialize our drug. Further, the patent protection afforded our drugs as a result of our initial patent applications and related prosecution activities in the United States and foreign jurisdictions are critical to our or our partner's ability to sell our drugs without competition from generic drugs. The potential sales volume of an approved drug is dependent on several factors including the size of the patient population, market penetration of the drug, and the price charged for the drug.

        The milestone events contained in our Novartis collaboration agreement coincide with the progression of our drugs from development, to marketing authorization and then to commercialization. The process of successfully discovering a new development candidate, having it approved and ultimately sold for a profit is highly uncertain. As such, the milestone payments we may earn from our partners involve a significant degree of risk to achieve. Therefore, as a drug progresses through the stages of its life-cycle, the value of the drug generally increases.

        Development milestones in our Novartis collaboration agreement or potential future collaborations may include the following types of events:

    §
    Designation of a development candidate. Following the designation of a o development candidate, IND-enabling animal studies for a new development candidate generally take 12 to 18 months to complete;
    §
    Initiation of a Phase 1 clinical trial. Generally, Phase 1 clinical trials take one to two years to complete;
    §
    Initiation or completion of a Phase 2 clinical trial. Generally, Phase 2 clinical trials take one to three years to complete; and
    §
    Initiation or completion of a Phase 3 clinical trial. Generally, Phase 3 clinical trials take two to four years to complete.

        Regulatory milestones in our Novartis collaboration agreement or potential future collaborations may include the following types of events:

    §
    Filing of regulatory applications for marketing authorization such as a New Drug Application, or NDA, in the United States or a Marketing Authorization Application, or MAA, in Europe. Generally, it takes six to twelve months to prepare and submit regulatory filings.
    §
    Marketing authorization in a major market, such as the United States, Europe or Japan. Generally, it takes one to two years after an application is submitted to obtain authorization from the applicable regulatory agency.

        Commercialization milestones in our Novartis agreement or potential future collaborations may include the following types of events:

    §
    First commercial sale in a particular market, such as in the United States or Europe.
    §
    Product sales in excess of a pre-specified threshold, such as annual sales exceeding $1 billion. The amount of time to achieve this type of milestone depends on several factors including but not limited to the dollar amount of the threshold, the pricing of the product and the pace at which customers begin using the product.

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        We will assess whether a substantive milestone exists at the inception of the collaboration agreement. When a substantive milestone is achieved, we will recognize revenue related to the milestone payment immediately. In evaluating if a milestone is substantive we will consider whether:

    §
    Substantive uncertainty exists as to the achievement of the milestone event at the inception of the arrangement;
    §
    The achievement of the milestone involves substantive effort and can only be achieved based in whole or in part on the performance or the occurrence of a specific outcome resulting from our performance;
    §
    The amount of the milestone payment appears reasonable either in relation to the effort expended or to the enhancement of the value of the delivered items;
    §
    There is no future performance required to earn the milestone payment; and
    §
    The consideration is reasonable relative to all deliverables and payment terms in the arrangement.

        If any of these conditions are not met, we will not consider the milestone to be substantive and we will defer recognition of the milestone payment and recognize it as revenue over the estimated period of performance, if any. We have determined that all milestones under our Novartis collaboration are substantive milestones.

    Option to license

        When we have a multiple element arrangement that includes an option to obtain a license, we will evaluate if the option is a deliverable at the inception of the arrangement. We do not consider the option to be a deliverable if we conclude that it is substantive and not priced at a significant and incremental discount. We will consider an option substantive if, at the inception of the arrangement, we are at risk as to whether the collaboration partner will choose to exercise its option to obtain the license. In those circumstances, we do not include the associated license fee in the allocable consideration at the inception of the agreement. Rather, we account for the license fee when our partner exercises its option. Under the Novartis collaboration, we concluded that the option to license is a substantive option. Therefore, we did not include any amounts in the initial allocable consideration at the inception of the collaboration. We will recognize any future exercise of an option to license a drug under the Novartis agreement in full in the period in which the option is exercised.

Valuation of 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 investments as ``available-for-sale" and carry them at fair market value based upon prices for identical or similar items on the last day of the fiscal period. We record unrealized gains and losses as a separate component of comprehensive income (loss) and include net realized gains and losses in gain (loss) on investments. We use the specific identification method to determine the cost of securities sold. 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 investments in equity securities in publicly held 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 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

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professional pricing service provider and comparing that fair value to the fair value based on observable market prices.

Stock-Based Compensation Expense and Valuation Assumptions

        We measure stock-based compensation expense for equity-classified stock option awards 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 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.

        Prior to December 2015, Ionis granted our employees options to purchase shares of Ionis' common stock, or Ionis options. In December 2015, we granted our employees holding Ionis options additional options to purchase shares of our common stock, or Akcea options. Subject to service based vesting requirements, the Ionis options only become exercisable if (1) our company is not acquired or if we do not complete a qualified financing transaction, such as an initial public offering, by June 30, 2017 and (2) the employee forfeits his or her Akcea equity. Upon the consummation of any such transaction, our employees would forfeit their rights to the Ionis options that they hold such that under no circumstances would an employee be able to exercise both Ionis options and Akcea options.

        We determined the stock-based compensation expense for the Ionis options at the date of grant and recognized compensation expense over the vesting period of the Ionis options. In December 2015, we accounted for the issuance of the Akcea options as a modification to the original grant of the Ionis options because the grant of the Ionis options and Akcea options essentially represented a single stock award as the exercisability provisions of the Ionis options and Akcea options grants were interrelated and mutually exclusive. The total compensation expense measured on the modification date was the sum of the grant date fair value of the Ionis options plus any incremental compensation expense resulting from the grant of the Akcea options.

        In 2016, we began concurrently granting Ionis options and Akcea options to our employees. Because the exercisability provisions of the awards are interrelated and mutually exclusive as described above, the fair values of the Ionis options and the Akcea options were determined on the date of grant and the option with the greater fair value is recognized over the vesting period of the awards.

        Following the completion of this offering, all outstanding Ionis options granted to our employees will cease to be exercisable and our employees will only hold Akcea options.

        We recognize compensation expense for option awards using the accelerated multiple-option approach. Under the accelerated multiple-option approach, also known as the graded-vesting method, an entity recognizes 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.

        We and Ionis value our stock option awards using the Black-Scholes option pricing model. The determination of the grant date fair value of options using an option pricing model is affected principally by the estimated common stock fair value and requires management to make a number of other assumptions, including: the risk-free interest rate, expected dividend yield, expected volatility, expected term, rate of forfeiture and fair value of common stock.

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        Ionis considered the following factors in valuing options for its common stock granted to our employees:

    §
    Risk-free interest rate.     Ionis bases the risk-free interest rate assumption on the yields of U.S. Treasury securities with maturities that correspond to the term of the award.
    §
    Expected dividend yield.     Ionis bases the dividend yield assumption on its history and expectation of dividend payouts. Ionis has not paid dividends in the past and it does not expect to do so in the foreseeable future.
    §
    Expected volatility.     Ionis uses an average of the historical stock price volatility of Ionis' stock. Ionis computes its historical stock volatility based on the expected term of its awards.
    §
    Expected term.     The expected term of stock options Ionis has granted represents the period of time that it expects them to be outstanding. Ionis estimates the expected term of options it has granted based on actual and projected exercise patterns.
    §
    Rate of forfeiture.     Ionis estimates forfeitures at the time of grant and revises its estimates, if necessary, in subsequent periods if actual forfeitures differ from those estimates. It estimates forfeitures based on historical experience. Ionis' historical forfeiture estimates have not been materially different from its actual forfeitures.
    §
    Fair value of common stock.     Ionis uses the market closing price for its common stock on the date of grant as reported on Nasdaq to determine the fair value of Ionis' common stock on the date of grant.

        We considered the following factors in valuing options for our common stock:

    §
    Risk-free interest rate.     We determine the risk-free interest rate assumption based on the yields of U.S. Treasury securities with maturities that correspond to the term of the award.
    §
    Expected dividend yield.     We assume a dividend yield of zero as we have not paid dividends in the past and do not expect we will pay dividends on our common stock for the foreseeable future.
    §
    Expected volatility.     We do not have sufficient history to estimate the volatility of our common stock. We calculate expected volatility based on reported data from selected publicly traded peer companies for which historical information is available. We plan to continue to use a peer group to calculate our volatility until the historical volatility of our common stock is sufficient to measure expected volatility for future option grants.
    §
    Expected term.     Our expected term estimates represent the period of time that we expect the options to be outstanding. As we do not have historical information, we use the simplified method for estimating the expected term. Under the simplified method, we calculate the expected term as the average 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 exercise patterns.
    §
    Rate of forfeiture.     We estimate forfeitures based on Ionis' historical rates of forfeiture as we do not have similar historical information for ourselves. We and Ionis are engaged in similar businesses and we believe this is a good estimate of expected forfeitures. As we gain additional historical information, we will transition to using our historical forfeiture rate.
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    Fair value of common stock.     As our common stock has not historically been publicly traded, we estimated the fair value of our common stock. See "—Fair Value of Common Stock" below.

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    Fair Value of Common Stock

        We granted all options to purchase shares of our common stock with an exercise price per share no less than the fair value per share of our common stock underlying those options on the date of grant. Historically, for all periods prior to this offering, the fair values of the shares of common stock underlying our stock options were estimated on each grant date by our board of directors. Given the absence of a public trading market of our common stock, our board of directors exercised reasonable judgment and considered a number of objective and subjective factors to determine the best estimate of the fair value of our common stock. To determine the fair value of our common stock, our board of directors considered, among other things, contemporaneous valuations of our common stock prepared by an unrelated third-party valuation firm in accordance with the guidance provided by the American Institute of Certified Public Accountants 2013 Practice Aid, Valuation of Privately-Held-Company Equity Securities Issued as Compensation , or the Practice Aid. Our board of directors also considered various objective and subjective factors in estimating the fair value of our common stock on the date of grant, including:

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    the prices, rights, preferences and privileges of our preferred stock relative to our common stock;
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    our business, financial condition and results of operations, including related industry trends affecting our operations;
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    the likelihood of achieving a liquidity event, such as an initial public offering or sale of our company, given prevailing market conditions;
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    the lack of marketability of our common stock;
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    the market performance of comparable publicly traded companies; and
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    U.S. and global economic and capital market conditions and outlook.

Enterprise Valuation Methodologies

        Our third party valuation firm prepares our valuations in accordance with the guidelines in the Practice Aid, which prescribes several valuation approaches for setting the value of an enterprise, such as the cost, income and market approaches, and various methodologies for allocating the value of an enterprise to its common stock. The cost approach establishes the value of an enterprise based on the cost of reproducing or replacing the property less depreciation and functional or economic obsolescence, if present. The income approach establishes the value of an enterprise based on the present value of future cash flows that are reasonably reflective of a company's future operations, discounting to the present value with an appropriate risk adjusted discount rate or capitalization rate. The market approach is based on the assumption that the value of an asset is equal to the value of a substitute asset with the same characteristics. Our third party valuation firm uses the income and market valuation approaches to determine our stock price. When applying the income approach, our third party valuation firm uses a discounted cash flow analysis based on our projections. When applying the market approach, our third party valuation firm uses the guideline publicly traded companies method choosing pharmaceutical companies whose business descriptions, including products and/or stage of development, are similar to ours. Our third party valuation firm calculates our enterprise value under each of the income and market approaches and then uses an equal weighting of these two approaches to arrive at our enterprise value.

Methods Used to Allocate Our Enterprise Value to Classes of Securities

        In accordance with the Practice Aid, our third party valuation firm considers the various methods for allocating the enterprise value across our classes and series of capital stock to determine the fair

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value of our common stock at each valuation date. The methods the third party valuation firm considers consist of the following:

Current Value Method

        Under the current value method, once the fair value of the enterprise is established, the value is allocated to the various series of preferred and common stock based on their respective seniority, liquidation preference or conversion values, whichever is greatest. This method was considered, but not used in any of the valuations discussed below.

Option Pricing Method

        The option pricing method, or OPM, treats common stock and preferred stock as call options on the total equity value of a company, with exercise prices based on the liquidation preference of the preferred stock. Under this method, the common stock has value only if the funds available for distribution to the stockholders exceed the value of the liquidation preference at the time of a liquidity event such as a merger, sale, or initial public offering, assuming the enterprise has funds available to make a liquidation preference meaningful and collectible by the stockholders. The common stock is modeled as a call option on the underlying equity value at a predetermined exercise price. In the model, the exercise price is based on a comparison with the total equity value, rather than, as in the case of a regular call option, a comparison with a per share stock price. The OPM uses the Black-Scholes option-pricing model to price the call option.

        The valuation of our common stock as of January 1, 2015 used the OPM. We applied a discount to the valuation due to the lack of marketability of our stock. We calculated the discount for lack of marketability using the Finnerty model and applied it as applicable to each allocation.

Probability-Weighted Expected Return Method

        The probability-weighted expected return method, or PWERM, considers various potential liquidity outcomes, including in our case an initial public offering, the sale of our company, dissolution and staying private, and assigns probabilities to each outcome to arrive at a weighted equity value.

        We performed an updated valuation analysis of our common stock as of January 1, 2017 using a hybrid of the OPM and the PWERM, consistent with how such hybrid method is described in the Practice Aid. We calculated the discount for lack of marketability using the Finnerty model and applied it as applicable to each allocation.

        After completion of this offering, we expect to use the market closing price for our common stock as reported on Nasdaq to determine the fair value of our common stock. See note 4, Stockholders' Equity (Deficit), to our consolidated financial statements for additional information regarding our stock-based compensation plans and valuation assumptions.

Estimated Liability for Research and Development Costs

        We record accrued liabilities related to expenses for which vendors or service providers have not yet billed us. These liabilities are for products or services that we have received and primarily relate to ongoing nonclinical studies and clinical studies. These costs primarily include third-party clinical management costs, laboratory and analysis costs, toxicology studies and investigator grants. We have drugs in concurrent nonclinical studies and clinical studies at several sites throughout the world. To ensure that we have adequately provided for ongoing nonclinical and clinical research and development costs during the period in which we incur such costs, we maintain an accrual to cover these costs. We update our estimate for this accrual on at least a quarterly basis. The assessment

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of these costs is a subjective process that requires 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.

JOBS Act and Emerging Growth Company Status

        Under Section 107(b) of the Jumpstart our Business Startups Act of 2012, or the JOBS Act, an emerging growth company, or EGC, can delay adopting new or revised accounting standards until such time as those standards apply to private companies. We have irrevocably elected not to avail ourselves of this exemption from new or revised accounting standards and, therefore, we will be subject to the same new or revised accounting standards as other public companies that are not emerging growth companies.

        We are in the process of evaluating the benefits of relying on other exemptions and reduced reporting requirements under the JOBS Act. Subject to certain conditions, as an EGC, we intend to rely on certain of these exemptions, including exemptions from the requirement to provide an auditor's attestation report on our system of internal control over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act of 2002. We will remain an EGC until the earlier to occur of (1) the last day of the fiscal year (a) following the fifth anniversary of the completion of this offering, (b) in which we have total annual gross revenue of at least $1.07 billion or (c) in which we are deemed to be a "large accelerated filer" under the rules of the SEC, which means the market value of our common stock that is held by non-affiliates exceeds $700 million as of the prior June 30th and (2) the date on which we have issued more than $1.0 billion in non-convertible debt during the prior three-year period.

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BUSINESS

        We are a late stage biopharmaceutical company focused on developing and commercializing drugs to treat patients with serious cardiometabolic diseases caused by lipid disorders. Our goal is to become the premier company offering treatments for inadequately treated lipid disorders. We are advancing a mature pipeline of four novel drugs with the potential to treat multiple diseases. Our drugs, volanesorsen, AKCEA-APO(a)-L Rx , AKCEA-ANGPTL3-L Rx and AKCEA-APOCIII-L Rx , are all based on antisense technology developed by Ionis Pharmaceuticals, Inc., or Ionis. Our most advanced drug, volanesorsen, has completed a Phase 3 clinical program for the treatment of familial chylomicronemia syndrome, or FCS, and is currently in Phase 3 clinical development for the treatment of familial partial lipodystrophy, or FPL. FCS and FPL are both severe, rare, genetically defined lipid disorders characterized by extremely elevated levels of triglycerides. Both diseases have life-threatening consequences and the lives of patients with these diseases are impacted daily by the associated symptoms. In our clinical program, we have observed consistent and substantial (>70%) decreases in triglycerides and improvements in other manifestations of FCS, including pancreatitis attacks and abdominal pain. We believe the safety and efficacy data from the volanesorsen program demonstrate a favorable risk-benefit profile for patients with FCS. In the third quarter of 2017, we plan to file for marketing authorization for volanesorsen to treat patients with FCS. We plan to report data from the Phase 3 study in patients with FPL in 2019. If the data are positive, in 2019 we plan to file for marketing authorization for volanesorsen to treat patients with FPL.

        We are assembling the infrastructure to commercialize our drugs globally with a focus on lipid specialists as the primary call point. A key element of our commercial strategy is to provide the specialized, patient-centric support required to successfully address rare disease patient populations. We believe our focus on treating patients with inadequately addressed lipid disorders will allow us to partner efficiently and effectively with the specialized medical community that supports these patients. In the future, this global infrastructure may support commercialization of additional drugs within and outside the cardiometabolic arena.

        To maximize the commercial potential of two of the drugs in our pipeline, we initiated a strategic collaboration with Novartis Pharma AG, or Novartis, for the development and commercialization of AKCEA-APO(a)-L Rx and AKCEA-APOCIII-L Rx . We believe Novartis brings significant resources and expertise to the collaboration that can accelerate our ability to deliver these potential therapies to the large populations of patients who have high cardiovascular risk due to inadequately treated lipid disorders. As part of our collaboration, we received $75.0 million in an upfront option payment, of which we retained $60.0 million and paid $15.0 million to Ionis as a sublicense fee. After we complete Phase 2 development of each of AKCEA-APO(a)-L Rx and AKCEA-APOCIII-L Rx , if, on a drug by drug basis, Novartis exercises its option to license a drug and pays us the $150.0 million license fee to do so, Novartis plans to conduct and pay for a Phase 3 cardiovascular outcome study in high-risk patients and, if approved, to commercialize such drug worldwide. We plan to co-commercialize any licensed drug commercialized by Novartis in selected markets, under terms and conditions that we plan to negotiate with Novartis in the future, through the specialized sales force we are building to commercialize volanesorsen. Overall, we are eligible to receive significant license fees, milestone payments and royalties on sales of each drug Novartis licenses if and when it meets the development, regulatory and sales milestones specified in our agreement. We will share any license fees, milestone payments and royalties equally with Ionis.

        Cardiometabolic disease, which includes cardiovascular diseases and metabolic diseases, is the number one cause of death globally. According to the American Heart Association, or AHA,

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cardiovascular disease, or CVD, alone accounts for 17.3 million deaths per year globally, a number that the AHA expects to grow to more than 23.6 million by 2030. Further, between 2010 and 2030, total direct medical costs of CVD in the United States alone are projected to triple from $272.5 billion to $818.1 billion, according to the AHA. In addition, the number of individuals with metabolic diseases, including diabetes, is rising dramatically. According to a 2010 study published in Population Health Metrics , the number of people in the United States with diabetes is projected to grow from approximately 20 million in 2010 to between 46 million and 87 million by 2050. Cardiometabolic risk factors include metabolic syndrome, dyslipidemia, hypertension, obesity and insulin resistance. Lipid risk factors driven by abnormalities in lipid molecules or the processing of lipid molecules contribute to cardiometabolic diseases, with elevated low density lipoprotein cholesterol, or LDL-C, being the most widely recognized. Despite the availability of powerful drugs to lower LDL-C, many people remain at significant risk due to other lipid disorders that are not adequately addressed with current therapies. We believe this treatment gap represents a significant commercial opportunity both in rare and in broader patient populations.

        Each of the four drugs in our pipeline targets the specific ribonucleic acid, or RNA, that encodes for a unique protein associated with lipid dysfunction, robustly and selectively inhibiting the production of such protein. These drugs were designed and developed at Ionis, and use Ionis' proprietary antisense technology, which is a potent and specific way of reducing disease-causing proteins. Specifically, our drugs utilize Ionis' generation 2.0+ antisense technology, which is designed for increased potency and enhanced safety characteristics relative to Ionis' generation 2.0 technology. Additionally, AKCEA-APO(a)-L Rx , AKCEA-ANGPTL3-L Rx and AKCEA-APOCIII-L Rx utilize Ionis' advanced Ligand Conjugated Antisense, or LICA, technology. We believe the enhancements offered by Ionis' LICA technology can provide greater patient convenience by allowing for significantly lower doses and less frequent administration. Our current pipeline includes drugs with the potential to treat patients with a wide range of lipid disorders associated with cardiometabolic disease that other technologies, such as small molecules and antibodies, have not been able to adequately address. Our development approach and commercialization strategy include:

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    transforming the lives of patients with serious diseases that are currently inadequately addressed;
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    addressing the root cause of each disease;
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    maximizing near-term and long-term commercial opportunities; and
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    optimizing the efficiency of our sales, marketing and patient support infrastructure by focusing on rare and specialty diseases.

        Our clinical pipeline contains novel drugs with the potential to treat inadequately addressed lipid disorders beyond elevated LDL-C that are contributing to the dramatic increase in the incidence of cardiometabolic disease, such as elevated triglycerides, oxidized phospholipids and other lipoproteins such as lipoprotein(a), or Lp(a).

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    Volanesorsen . We are developing volanesorsen to treat patients with FCS and FPL, orphan diseases characterized by extremely elevated triglyceride levels and a high risk of life-threatening pancreatitis. Patients with FCS and FPL live with daily and chronic manifestations of their disease that negatively affect their lives, including severe, recurrent abdominal pain, cognitive impairment and fatigue. Volanesorsen acts to reduce triglyceride levels by inhibiting the production of apolipoprotein C-III, or ApoC-III, a protein that is a key regulator of triglyceride clearance. We demonstrated in Phase 2 studies that volanesorsen robustly reduced ApoC-III and triglycerides in patients, including in FCS patients, and also had a beneficial impact on insulin sensitivity. We published our findings from the Phase 2 studies with volanesorsen in two publications in the New England Journal of Medicine. We

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      recently completed the Phase 3 program for volanesorsen to treat patients with FCS and are planning to file for regulatory approval in this indication in the third quarter of 2017. The Phase 3 program consisted of two studies, the APPROACH study and the COMPASS study. The APPROACH study, a one year randomized, placebo-controlled study in 66 patients with FCS (average incoming triglycerides of 2,209 mg/dL), achieved its primary endpoint of reduction in triglycerides at three months, with a 77% mean reduction in triglycerides, which translated into a 1,712 mg/dL mean absolute triglyceride reduction in volanesorsen-treated patients. We observed 50% of treated patients achieved triglyceride levels below 500 mg/dL, a commonly accepted threshold for pancreatitis risk. In addition, in the APPROACH study, treatment with volanesorsen was associated with a statistically significant reduced rate of pancreatitis attacks in the group of patients who had the highest incidence of pre-study pancreatitis, and reduced abdominal pain in patients reporting pain before treatment in the study. The triglyceride lowering effects we observed were maintained throughout the 12 month study period. The COMPASS study, a six month randomized placebo-controlled study in 113 patients with very high triglycerides (>500 mg/dL), also achieved its primary endpoint of reduction in triglycerides at three months, with a 71% mean reduction in triglycerides. In the COMPASS study, treatment with volanesorsen was associated with a statistically significant reduction in pancreatitis attacks. The data from the COMPASS and APPROACH studies is consistent with and supports the robust triglyceride lowering we observed in the Phase 2 program for volanesorsen. Overall in our volanesorsen program, data are available for 43 FCS patients treated with volanesorsen, including 33 in the APPROACH study, seven in the COMPASS study and three in Phase 2 studies. In these patients, treatment with volanesorsen was associated with robust reduction of triglyceride levels. The most common adverse event in patients in the studies was injection site reactions, which were mostly mild. In addition, declines in platelet counts were observed in many patients. These platelet declines were not clinically significant in most patients and were generally well managed with monitoring and dose adjustment. Five patients discontinued participation in the APPROACH study due to platelet count declines and four patients discontinued due to other non-serious adverse events, including one case each of sweating and chills, severe fatigue, rash and injection site reaction. In the volanesorsen program as a whole, which includes approximately 280 individuals who received volanesorsen, there were five treatment-related or potentially treatment related serious adverse events, or SAEs. Two of the SAEs were described by the investigators as serum sickness-like reaction and serum sickness, respectively, and both patients fully recovered. The other three SAEs were serious platelet events (grade 4 thrombocytopenia), which resolved without complication after cessation of dosing. We believe our current regimen of platelet monitoring is designed to adequately identify any such potential event to provide patient safety. There have been no deaths and no treatment-related cardiovascular events in any volanesorsen clinical study. The ongoing study of volanesorsen in patients with FPL, called BROADEN, is currently enrolling and we plan to report data from this study in 2019. If the data are positive, in 2019 we plan to file for marketing authorization for volanesorsen to treat patients with FPL. If approved, we plan to globally commercialize volanesorsen ourselves for both FCS and FPL.

        The remainder of our pipeline incorporates Ionis' LICA technology that enhances delivery and potency of the drugs.

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    AKCEA-APO(a)-L Rx . We are developing AKCEA-APO(a)-L Rx for patients who are at significant risk of CVD because of their elevated levels of Lp(a). AKCEA-APO(a)-L Rx inhibits the production of the apolipoprotein(a), or Apo(a), protein, thereby reducing Lp(a). Apo(a) is a form of low density lipoprotein, or LDL, that is very atherogenic (promoting the formation

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      of plaques in the arteries) and very thrombogenic (promoting the formation of blood clots). We have started a Phase 2b dose-ranging study of AKCEA-APO(a)-L Rx in patients with hyperlipoproteinemia(a), a condition in which individuals have levels of Lp(a) greater than 60 mg/dL, and established CVD. We have initiated a strategic collaboration with Novartis for this drug. In this collaboration, we intend to complete the above-referenced Phase 2b study. Following completion of this study, Novartis has an option to license the drug. If Novartis exercises its option to license AKCEA-APO(a)-L Rx , Novartis plans to conduct and pay for a Phase 3 cardiovascular outcome study in high-risk patients and, if approved, to commercialize AKCEA-APO(a)-L Rx worldwide.

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    AKCEA-ANGPTL3-L Rx . We are developing AKCEA-ANGPTL3-L Rx to treat multiple lipid disorders. In preclinical studies, an analog of AKCEA-ANGPTL3-L Rx inhibited the production of the angiopoietin-like 3, or ANGPTL3, protein in the liver, inhibiting liver fat accumulation and lowering blood levels of triglycerides, LDL-C and very low density lipoprotein cholesterol, or VLDL-C. We are conducting a Phase 1/2 program for AKCEA-ANGPTL3-L Rx in people with elevated triglycerides. We reported results for the initial cohort from this study at the AHA meeting in November 2016. In the second half of 2017, we plan to begin a study of AKCEA-ANGPTL3-L Rx in patients with hyperlipidemia with metabolic complications including insulin resistance and fatty liver, in which we plan to include patients with nonalcoholic fatty liver disease, or NAFLD, or nonalcoholic steatohepatitis, or NASH. Further, in the second half of 2017, we also plan to study AKCEA-ANGPTL3-L Rx in patients with rare hyperlipidemias, including patients with FCS. If we find that AKCEA-ANGPTL3-L Rx can effectively lower triglyceride levels in patients with rare hyperlipidemias, including patients with FCS, through a different mechanism of action from volanesorsen, it may represent an opportunity to expand our FCS franchise.
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    AKCEA-APOCIII-L Rx . We are developing AKCEA-APOCIII-L Rx to inhibit the production of ApoC-III, the same protein inhibited by volanesorsen, for the broad population of patients who have cardiometabolic disease due to their elevated triglyceride levels. We believe that the enhancements offered by Ionis' LICA technology can provide greater patient convenience by allowing for significantly lower doses and less frequent administration, compared to volanesorsen. We are conducting a Phase 1/2 study of AKCEA-APOCIII-L Rx in people with elevated triglycerides and plan to report results from this study in the second half of 2017. We have initiated a strategic collaboration with Novartis for this drug. In this collaboration, we intend to complete the Phase 2 program required to define the appropriate dose and regimen to support a planned cardiovascular outcome study. We plan to initiate a Phase 2b dose-ranging study of AKCEA-APOCIII-L Rx in patients with hypertriglyceridemia and established CVD in the second half of 2017 and plan to report data from this study in 2019. At the completion of Phase 2 development, Novartis has an option to license the drug. If Novartis exercises its option to license AKCEA-APOCIII-L Rx , Novartis plans to conduct and pay for a Phase 3 cardiovascular outcome study in high-risk patients and, if approved, to commercialize AKCEA-APOCIII-L Rx worldwide.

Commercial Approach

        We plan to commercialize volanesorsen ourselves globally, with a specialized and comprehensive patient-centric approach. Our orphan-focused commercial model will include a small highly focused salesforce in each country that we are targeting, complemented by medical affairs and patient and healthcare provider services. We plan to provide high touch patient and healthcare provider support through reimbursement assistance, partnerships with specialty pharmacies, injection training, routine platelet monitoring and dietary counseling, which we believe will enable strong integration with treating physicians and facilitate patient uptake and compliance. Reimbursement assistance may include activities such as a reimbursement hotline, patient assistance, co-pay assistance through foundations and insurance verification. We plan to include dedicated case

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managers as part of our support team who will work directly with patients, caregivers and healthcare providers to help patients start and stay on therapy. Our global commercial organization is initially focused on our nearest term opportunities with volanesorsen to treat patients with FCS and FPL. Our initial plan is to focus on lipid specialists, specialized endocrinologists and pancreatologists as our primary call points. At the outset, we plan to focus our commercial efforts in the United States, Canada and Europe, and intend to expand over time to other relevant geographies. We believe the relatively small number of specialized physicians treating FCS and FPL patients will allow us to address this market with a nimble, scalable organization. We are currently identifying patients and having them referred to specialists for treatment, which we believe will facilitate successful commercialization. Building awareness of these orphan diseases among not only lipid specialists, but also referring physicians, is a key element of our pre-commercial and commercial plans. We are focused on disease education and market access, with the goal of ensuring that identified patients can most effectively obtain our drugs once commercialized. We are also creating the specialized support required to potentially address other rare disease patient populations.

        We plan to commercialize by ourselves any approved drugs with a rare disease or specialty focus. We may enter into additional strategic relationships to commercialize certain of our drugs, particularly in indications with large patient populations, as evidenced by our collaboration with Novartis. We believe Novartis brings significant resources and expertise to the collaboration that can accelerate our ability to deliver AKCEA-APO(a)-L Rx and AKCEA-APOCIII-L Rx to the large populations of patients who have high cardiovascular risk due to inadequately treated lipid disorders. We also plan to co-commercialize any such drug in selected markets, under terms and conditions that we plan to negotiate with Novartis in the future, through the specialized sales force we are building to commercialize volanesorsen.

Integrated Development and Commercial Opportunities

        Our drugs are designed to target a variety of lipid disorders, present in both orphan and broad patient populations, which available therapies do not adequately address. We are initially focused on developing volanesorsen and AKCEA-ANGPTL3-L Rx for orphan indications that will not require large cardiovascular outcome studies. The smaller, orphan size populations allow a potentially rapid path to commercialization and we believe will allow us to address the commercial market with a nimble, scalable organization. At the same time, we initiated a strategic collaboration with Novartis for AKCEA-APO(a)-L Rx and AKCEA-APOCIII-L Rx , allowing development of these drugs in larger populations with the potential to expand the commercial opportunity.

        While preparing to commercialize volanesorsen, we are building relationships with specialist physicians. These specialists influence and drive treatment practice across lipid disorders. Accordingly, we believe that we will be able to leverage these relationships in commercializing all of the drugs in our pipeline.

Experienced Team

        Our senior management team has extensive experience in successfully developing and commercializing drugs for orphan, endocrine and cardiometabolic diseases through their involvement with major pharmaceutical and biotechnology companies. Our team members have led commercial development activities in orphan diseases, including identifying patients, obtaining orphan pricing and reimbursement and establishing patient support programs to facilitate long-term adherence to drug therapy.

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    Paula Soteropoulos, our Chief Executive Officer, has extensive global executive management experience leading commercialization, business and manufacturing operations,

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      preclinical and clinical development, global strategic alliances and business development in multiple therapeutic areas at companies including Genzyme Corporation and Moderna Therapeutics.

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    Dr. Louis St. L. O'Dea, our Chief Medical Officer, is a board-certified physician specializing in endocrinology and metabolism and has successfully led global drug development resulting in thirteen clinical new drug applications, or NDAs, including four for orphan drugs, at several companies including Serono and Radius Health.
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    Jeffrey M. Goldberg, our Chief Operating Officer, has led teams through drug development, from discovery to commercialization, as well as business development, manufacturing and supply chain development, global launches and market access at companies including Genzyme, Sanofi S.A. and Proteostasis Therapeutics.

Our Relationship with Ionis

        We founded our operations in 2015 as a wholly owned subsidiary of Ionis to develop and commercialize Ionis' drugs to treat lipid disorders. Ionis has funded our expenses to date. We are becoming an independent company building a focus and excellence in development and commercialization. We expect Ionis to remain our principal stockholder for the foreseeable future. Through our relationship with Ionis, we benefit in the following ways:

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    We have access to Ionis' innovative generation 2.0+ antisense and LICA technologies for use in our drugs. These technologies allow for precise specificity, favorable dosing properties and no anticipated drug-to-drug interactions.
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    We obtained exclusive rights to globally commercialize a robust, mature pipeline of drugs, including volanesorsen, AKCEA-APO(a)-L Rx and our other drugs in development. Our licensed rights also include access to Ionis' intellectual property and expertise to develop, manufacture and commercialize these drugs.
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    We have a joint development program that provides us access to Ionis' development and regulatory organization, which has significant expertise in developing drugs to treat patients with lipid disorders. Ionis also provides resources to support our nonclinical and clinical studies.
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    We contract with Ionis for support in areas such as legal, finance and human resources, which allows us to be more capital efficient than a typical company of our size and stage of development. This support allows us to focus our efforts and resources on developing and preparing to commercialize our drugs.
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    We are not required to make any upfront or pre-commercialization payments to Ionis for drugs we are developing under our development, commercialization and license agreement, as would be typical in a drug license. Our agreement allows us to more efficiently invest our capital in developing and preparing to commercialize our drugs, as we are only required to make milestone and royalty payments post-commercialization or if we grant a sublicense to Ionis' technology.
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    As a result of our relationship with Ionis, we may have the opportunity to evaluate additional antisense drugs that may complement our efforts in becoming the premier lipid disease company. For example, Ionis has granted us a right of first negotiation with respect to Ionis development candidates that are designed to treat a rare cardiometabolic disease or a rare inherited metabolic disease.

        While we and Ionis intend our relationship to enhance our capabilities, certain terms of our relationship may limit our ability to achieve this expected benefit, including:

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    Some of our directors and officers may have a conflict of interest because of their positions with Ionis.

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    A Joint Steering Committee, or JSC, sets the development and regulatory strategy for our drugs by mutual agreement. If the JSC cannot come to a mutual agreement, it could delay our ability to develop and commercialize our drugs in development.
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    We will need to mutually agree with Ionis on the terms of any additional sublicense to a third party for our drugs in development. If we cannot mutually agree, it could delay or prevent our ability to develop and commercialize our drugs.
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    Our agreements prevent Ionis from developing and commercializing drugs targeting ApoC-III, Apo(a) or ANGPTL3 RNA. However, our agreements do not prevent Ionis from developing and commercializing other drugs to pursue the same indications we are pursuing with our drugs.

Our Strategy

        Our goal is to become the premier company offering treatments for previously inadequately treated lipid disorders. The critical components of our business strategy to achieve this goal include the following:

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    Successfully complete development, obtain regulatory approval and commercialize volanesorsen in two orphan indications .    We are focused on rapidly and efficiently developing and commercializing volanesorsen for the treatment of patients with FCS and FPL. There are limited therapeutic options available for these patients, who suffer from serious health issues including heightened risk of premature death. Volanesorsen has completed a Phase 3 clinical program for the treatment of FCS and is currently being investigated in the Phase 3 BROADEN clinical study for the treatment of FPL. We announced data from the APPROACH study in FCS patients in March 2017, and the COMPASS study in patients with high triglycerides in December 2016. We are planning to file for regulatory approval in this indication in the third quarter of 2017 and are preparing for commercialization. Enrollment in the BROADEN study is ongoing and we plan to report data in 2019. If the data are positive, in 2019 we plan to file for marketing authorization for volanesorsen to treat patients with FPL.
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    Pursue indications that drive the greatest near and long term value .    We seek to maximize near-term and long-term commercial opportunities through development paths in both orphan and broader patient populations. We are developing our first drug for the treatment of orphan lipid disorders, which may provide a more rapid path to marketing authorization, nearer-term commercial value and more immediate clinical benefit for the patients with the greatest need and their physicians.
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    Advance multiple novel clinical-stage drugs to commercialization and further grow our pipeline .    Our pipeline of antisense drugs currently contains four clinical-stage novel therapies that we plan to develop and commercialize by ourselves or in conjunction with a partner, such as Novartis, for multiple indications driven by lipid disorders. To sustain our goal of being the premier lipid disorder company, we also plan to actively replenish our pipeline as our current drugs advance through development. For example, we will have the opportunity to potentially license antisense drugs that Ionis advances to treat rare cardiometabolic and rare inherited metabolic diseases under our right of first negotiation that Ionis granted us.
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    Build a leading, fully integrated, independent development and commercialization organization with a specialized and focused global team centered around a high touch patient and physician experience.     As our drug pipeline and commercialization efforts mature, we plan to strategically expand our internal development and regulatory capabilities. Further, we plan to establish our own global commercial organization, which will begin with a small, highly focused commercial organization for volanesorsen. This organization will work closely with the same specialists who are participating in developing

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      our drugs, including lipid specialists, specialized endocrinologists and pancreatologists. We plan to efficiently manage this organization to access additional markets as our commercial opportunities for both volanesorsen and our other drugs expand into additional patient populations. We plan to provide high touch patient and healthcare provider support through dedicated case management providing reimbursement assistance, as well as by establishing partnerships with specialty pharmacies, injection training, routine platelet monitoring and dietary counseling, which we believe will enable strong integration with treating physicians and facilitate patient uptake and compliance.

    §
    Create value through strategic collaborations, such as our strategic collaboration with Novartis, to drive drugs to their fullest potential. We believe that each of the drugs in our pipeline can be developed for multiple lipid disorders, some of which have very large patient populations. In these patient populations, large, costly, late-stage clinical development programs, as well as large sales forces, are required to maximize a drug's commercial potential. As a result, in some cases, partnering with a large organization with global scale may be the optimal approach for maximizing the potential of drugs in these indications. As an example, we have initiated a strategic collaboration with Novartis for AKCEA-APO(a)-L Rx and AKCEA-APOCIII-L Rx , to provide us with an opportunity to move rapidly to Phase 3 cardiovascular outcome studies with both drugs, which should enhance the commercial potential of each drug. We also plan to co-commercialize these two drugs in selected markets, under terms and conditions that we plan to negotiate with Novartis in the future, through the specialized sales force we are building to commercialize volanesorsen. We believe Novartis brings significant resources and expertise to the collaboration that can accelerate our ability to deliver these potential therapies to the large populations of patients who have high cardiovascular risk due to inadequately treated lipid disorders.

Background

Antisense Technology

        Ionis discovered each of the drugs in our pipeline using its innovative antisense technology platform. Antisense technology is based on the use of synthetic nucleic acid sequences to interrupt the production of a specified protein by targeting the specific corresponding messenger RNA, or mRNA, that encodes that protein. In this way, antisense drugs can be used to reduce the level of proteins that cause, or contribute to, the progression of various diseases. Because there are virtually no undruggable mRNA targets, we believe antisense technology may have broader potential than other small molecule- and antibody-based technologies that target proteins. Furthermore, antisense technology has the potential to target a growing number of disease-related genes more directly and efficiently than other protein-directed modalities. We believe this technology represents an important advance in treating diseases.

        The production of a protein starts with a process called transcription, where the instructions for making a protein are transcribed from a gene, or DNA, into mRNA. The cell's protein production process is called translation, and antisense drugs interrupt this process by causing the destruction of

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the targeted mRNA and therefore preventing the production of a protein of interest. The graphic below further illustrates the impact of antisense drugs on the production of proteins:

GRAPHIC

        Ionis has made significant improvements in its antisense drug technology in recent years. These include improving the discovery screening processes, which resulted in second-generation drugs, or generation 2.0+ drugs, with better properties. In clinical studies, Ionis observed an approximate two fold increase in potency with generation 2.0+ drugs over Ionis' generation 2.0 drugs. In addition, Ionis observed lower incidences of injection-site reactions and flu-like symptoms compared to Ionis' generation 2.0 drugs.

        The unique properties of our antisense drugs provide several potential advantages over traditional drug modalities. These advantages include:

    §
    Precise specificity .    Our antisense drugs are designed using Ionis' generation 2.0+ screening processes to target single mRNAs, which minimizes or eliminates the possibility of our drugs binding to unintended genetic targets that can cause unwanted side effects.
    §
    Favorable dosing properties .    We believe our drugs have predictable safety, pharmacokinetic and pharmacodynamic properties based on Ionis' experience with dosing over 6,000 people with antisense drugs to date. Further, our drugs have a relatively long half-life of two to four weeks, which enables volanesorsen to be dosed once weekly and other drugs in our pipeline, which incorporate Ionis' LICA technology, to potentially be dosed once monthly or less frequently. Upon dosing, our drugs distribute well throughout the body, eliminating the need for special formulations or delivery vehicles.
    §
    No anticipated drug-to-drug interactions .    Because they are nucleic acid-based, we believe our drugs can be used in combination with virtually any existing treatment modality without the risk of drug-to-drug interactions or susceptibility to traditional enzyme degradation or metabolism pathways.

LICA Technology

        Ionis' LICA technology conjugates specific chemical structures or molecules to antisense drugs to increase the efficiency of drug uptake in a particular tissue. Three of the drugs in our pipeline contain Ionis' most advanced liver-targeting LICA. Ionis has demonstrated that this technology can further enhance the potency of its drugs. Ionis has designed N-acetyl galactosamine, or GalNAc, LICA that interact specifically with receptors present on the surface of important liver cells to achieve this advanced potency. We observed AKCEA-APO(a)-L Rx , the most advanced of our Ionis-designed

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LICA drugs, to be more than 30 fold more potent than its unconjugated drug counterpart in a Phase 1 study in patients with elevated levels of Lp(a). We saw a similar increase in potency with AKCEA-ANGPTL3-L Rx . We believe that the enhancements offered by Ionis' LICA technology can allow for at least an order of magnitude lower doses and less frequent administration. Therefore, we expect fewer side effects and improved patient convenience when using LICA drugs as compared to their non-LICA forms.

Lipid Biology

        Lipids are a group of organic compounds that, together with carbohydrates and proteins, constitute the primary structural material of living cells. Lipids include fatty acids and cholesterol, as well as triglycerides, which are lipids that contain three fatty acid molecules and are a major source of energy. Triglycerides are made in the liver or in the intestine after a person eats foods containing fat.

        Because lipids are relatively insoluble in water, they must be transported from one site in the body to another in the form of lipoproteins. Lipoproteins package the lipids in a soluble form and also contain special proteins, known as apolipoproteins, that help regulate the metabolism of the lipids and direct their sub-cellular delivery. Commonly recognized lipoproteins are LDL, which transports cholesterol made in the liver to other tissues and is associated with elevated CVD risk, and high density lipoprotein, or HDL, which transports cholesterol from the body back to the liver. Another important lipoprotein is an aggressive form of LDL known as Lp(a). Lp(a) not only carries the risks of LDL, but also has attached a protein, known as Apo(a), which carries highly-inflammatory oxidized phospholipids. When levels of these lipoproteins are high, they can accumulate in the walls of blood vessels, leading to cholesterol accumulation and inflammation. This cholesterol deposition and inflammation can profoundly damage the arteries and, if continued, cause CVD, which includes heart attacks, strokes and disease of the peripheral arteries in the legs. Lp(a) both accumulates in the artery with higher affinity and has a longer residence time than LDL, causing more thrombogenesis and atherosclerosis.

        Triglycerides are also transported by lipoproteins known as triglyceride rich lipoproteins, such as chylomicrons and VLDL. High levels of these lipoproteins can cause metabolic complications such as pancreatitis, insulin resistance and diabetes. When triglyceride levels are too high, remnants, which are cholesterol-containing breakdown products of the triglyceride rich lipoproteins, can also enter the artery and, in a similar manner as LDL, lead to atherosclerosis. Further, the release of excess fatty acids can promote insulin resistance and diabetes.

Statistical Significance

        In the description of our clinical trials below, n represents the number of patients in a particular group and p or p-values represent the probability that random chance caused the result (e.g., a p-value = 0.001 means that there is a 0.1% probability that the difference between the placebo group and the treatment group is purely due to random chance). A p-value £  0.05 is a commonly used criterion for statistical significance, and may be supportive of a finding of efficacy by regulatory authorities. However, regulatory authorities, including the FDA and EMA, do not rely on strict statistical significance thresholds as criteria for market approval and maintain the flexibility to evaluate the overall risks and benefits of a treatment.

Clinical Pipeline

        Cardiometabolic disease, which includes cardiovascular diseases and metabolic diseases such as diabetes, is the number one cause of death globally. According to the AHA, CVD alone accounts for 17.3 million deaths per year globally, a number that the AHA expects to grow to more than 23.6 million by 2030. Further, the number of individuals with metabolic diseases, including diabetes, is also rising dramatically. According to a 2010 study published in Population Health Metrics , the number of people in the United States with diabetes is projected to grow from approximately 20 million in 2010 to between 46 million and 87 million by 2050. Cardiometabolic risk factors include metabolic syndrome, dyslipidemia, hypertension, obesity and insulin resistance.

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        Lipid risk factors driven by abnormalities in lipid molecules contribute to cardiometabolic diseases, with elevated LDL-C being the most widely recognized. Despite the availability of powerful drugs to lower LDL-C, many people remain at significant risk due to other lipid disorders that are not adequately addressed with current therapies. This treatment gap represents a significant commercial opportunity both in orphan and in broader diseases, with new therapies needed.

        The following figure illustrates our pipeline:

GRAPHIC


(1)
We have used alternate names for our drugs:

§
Volanesorsen also has been known as IONIS-APOCIII Rx , ISIS-APOCIII Rx and ISIS 304801.
§
AKCEA-APO(a)-L Rx also has been known as IONIS-APO(a)-L Rx , ISIS-APO(a)-L Rx and ISIS 681257.
§
AKCEA-ANGPTL3-L Rx also has been known as IONIS-ANGPTL3-L Rx , ISIS-ANGPTL3-L Rx and ISIS 703802.
§
AKCEA-APOCIII-L Rx also has been known as IONIS-APOCIII-L Rx , ISIS-APOCIII-L Rx and ISIS 678354.
(2)
We have initiated a strategic collaboration with Novartis for AKCEA-APO(a)-L Rx and AKCEA-APOCIII-L Rx .
Note:
The arrows designate the current phase of development for each drug and indication, and do not represent the extent of completion of the activities we are currently conducting within the phase.
Note:
The "L" designation indicates drugs that use Ionis' LICA technology.

Volanesorsen

    Overview

        We are developing volanesorsen to treat patients with FCS and FPL, orphan diseases characterized by extremely elevated triglyceride levels and a high risk of life-threatening pancreatitis. Patients with FCS and FPL live with daily and chronic manifestations of their disease that negatively affect their lives, including severe, recurrent abdominal pain and cognitive impairment. Volanesorsen acts to reduce triglyceride levels by inhibiting the production of apolipoprotein C-III, or ApoC-III, a protein that is a key regulator of triglyceride clearance. People who have low levels of ApoC-III or reduced ApoC-III function have lower levels of triglycerides and a lower incidence of CVD.

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        We believe volanesorsen has the potential to significantly improve the lives of patients with FCS and FPL. We demonstrated in Phase 2 studies that volanesorsen robustly reduced ApoC-III and triglycerides in patients, including in FCS patients, and also had a beneficial impact on insulin sensitivity. Further, in a Phase 2 study, the triglyceride levels in all patients with FCS treated with volanesorsen were reduced to levels below 500 mg/dL, which is a commonly accepted level associated with reduced risk of pancreatitis. We published our findings from the Phase 2 studies with volanesorsen in two publications in the New England Journal of Medicine.

        We recently completed the Phase 3 program for volanesorsen to treat patients with FCS and are planning to file for regulatory approval in multiple jurisdictions for this indication in the third quarter of 2017. The Phase 3 program consisted of two studies, the APPROACH study and the COMPASS study. The APPROACH study, a one year randomized, placebo-controlled study in 66 patients with FCS (average incoming triglycerides of 2,209 mg/dL), achieved its primary endpoint of reduction in triglycerides at three months, with a 77% mean reduction in triglycerides (p<0.0001), which translated into a 1,712 mg/dL mean absolute triglyceride reduction in volanesorsen-treated patients (p<0.0001). In the study, we observed that more than 75% of treated patients achieved triglyceride levels below 750 mg/dL, the level at which chylomicron formation begins to become significant, and 50% of treated patients achieved triglyceride levels below 500 mg/dL, a commonly accepted threshold for pancreatitis risk. Each of these results was statistically significant compared to placebo-treated patients, none of whom achieved triglyceride levels below 500 mg/dL. In addition, in the APPROACH study, treatment with volanesorsen was associated with a statistically significant reduced rate of pancreatitis attacks in the group of patients who had a documented history of recurrent pancreatitis attacks in the 5 years prior to the study (p=0.02). Patients treated with volanesorsen who had reported abdominal pain before treatment in the study, also experienced reduced and less frequent pain than their placebo-treated counterparts, a difference that was more evident as the study progressed. The triglyceride lowering effects we observed were maintained throughout the 12 month study period. The COMPASS study, a six month randomized placebo-controlled study in 113 patients with very high triglycerides (>500 mg/dL), also achieved its primary endpoint of reduction in triglycerides at three months, with a 71% mean reduction in triglycerides. In the COMPASS study, treatment with volanesorsen was associated with a statistically significant reduction in pancreatitis attacks (p=0.036). The data from the COMPASS and APPROACH studies is consistent with and supports the robust triglyceride lowering we observed in the Phase 2 program for volanesorsen. Overall in our volanesorsen program, data are available for 43 patients with FCS treated with volanesorsen, including 33 in the APPROACH study, seven in the COMPASS study and three in Phase 2 studies. In these patients, treatment with volanesorsen was associated with robust reduction of triglyceride levels.

        The most common adverse event in the studies was injection site reactions, which were mostly mild. In addition, declines in platelet counts were observed in many patients. These platelet declines were not clinically significant in most patients and were generally well managed with monitoring and dose adjustment. Five patients discontinued participation in the APPROACH study due to platelet count declines and four patients discontinued due to other non-serious adverse events, including one case each of sweating and chills, severe fatigue, rash and injection site reaction. In the volanesorsen program as a whole (approximately 280 individuals who received volanesorsen), there were five treatment-related or potentially treatment-related SAEs. Two of the SAEs were described by the investigators as serum sickness-like reaction and serum sickness, respectively. Both patients fully recovered. The other three SAEs were serious platelet events (grade 4 thrombocytopenia): two in APPROACH and one in the APPROACH open label extension study (where a deviation from the protocol occurred in a patient who was on placebo during APPROACH). These events resolved without incident following cessation of dosing. We believe our current regimen of platelet monitoring is designed to adequately identify any such potential event and to provide patient safety. There have

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been no deaths and no treatment-related cardiovascular events in any volanesorsen clinical study. We have now simplified our platelet monitoring program such that monitoring is expected to occur once weekly in all patients on volanesorsen. We believe our greater involvement with physicians and patients, which will be a core focus of the education and support provided by our patient-centric commercial approach, should allow us to better maintain patients on volanesorsen therapy.

        Based on what we believe is a favorable risk-benefit profile supported by data from both APPROACH and COMPASS, we are actively preparing our regulatory filings in multiple jurisdictions for volanesorsen in FCS. If approved, we plan to globally commercialize volanesorsen ourselves for both FCS and FPL. The FPL study, called BROADEN, is currently enrolling and we plan to report data from this study in 2019. If the data are positive, in 2019 we plan to file for marketing authorization for volanesorsen to treat patients with FPL. The FDA and EMA have granted orphan drug designation to volanesorsen for the treatment of patients with FCS. The EMA has granted orphan drug designation to volanesorsen for the treatment of patients with FPL and we are in the process of applying for orphan drug status for FPL in the United States.

    Disease Background

    Familial chylomicronemia syndrome

        FCS is an inherited orphan disorder and includes type 1 hyperlipoproteinemia, Fredrickson type 1 hyperlipidemia and lipoprotein lipase, or LPL, deficiency. Patients with FCS lack the ability to produce enzymes to clear triglycerides, normally due to one or more loss of function mutations in genes related to triglyceride metabolism, which often results in triglyceride levels higher than 2,000 mg/dL—more than 10 times the normal level. As a result, patients with FCS may suffer from many health issues including severe, recurrent abdominal pain, fatigue and a high risk of life-threatening pancreatitis. In addition, they also suffer from daily conditions that can negatively impact their quality of life including neuropsychiatric symptoms such as memory loss, dementia, mild depression, and cognitive impairment (described as brain fog and forgetfulness), as well as gastrointestinal symptoms including nausea and vomiting. There are no approved therapeutic options for patients with FCS. Standard triglyceride lowering agents, including niacin, fish oils and fibrates, are generally not effective in this patient population. Patients are required to adhere to a very strict, low fat diet, which is extremely burdensome, difficult to maintain, and many patients still experience symptoms, even if they are compliant with the diet. At the 2016 meeting of the European Atherosclerosis Society, Dr. Daniel Gaudet presented natural history data showing that patients with FCS experience substantial fluctuations in platelet counts, sometimes reaching levels as low as 42,000 platelets/ml. We believe these abnormal fluctuations in platelets may be related to the patient's extremely high triglyceride levels. We observed similar fluctuations in patients on placebo in the APPROACH study. By inhibiting the production of ApoC-III, volanesorsen is able to increase triglyceride clearance in FCS patients, reducing their triglyceride levels.

    Familial Partial Lipodystrophy

        People with FPL lack subcutaneous adipose tissue and have abnormal subcutaneous fat distribution. Because FPL patients are unable to store fat properly, they may have triglyceride levels higher than 1,000 mg/dL—more than five times the normal level. Additionally, because FPL patients cannot store excess triglycerides, their triglyceride levels may be extremely elevated after meals. These triglycerides deposit in organs other than normal fat tissue, known as ectopic fat. Ectopic fat accumulation may affect many organs, but primarily leads to health issues in the liver, pancreas and skeletal muscles. As a result, patients with FPL experience an increased incidence of potentially life-threatening pancreatitis, diabetes and extreme insulin resistance, as well as the accumulation of harmful fat in the liver, known as hepatic steatosis. Without enough fat tissue, an FPL patient's metabolic system, which regulates energy use, also falls out of balance. We believe that the robust

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triglyceride reduction and the improvements in glucose control and insulin sensitivity we observed in our Phase 2 program support development of volanesorsen for patients with FPL.

    Burden of Disease

        Due to the high levels of triglycerides in their blood, patients with FCS and FPL may suffer from many chronic health issues including severe, recurrent abdominal pain, fatigue, high risk of life-threatening pancreatitis and abnormal enlargement of the liver or spleen. When triglyceride levels are very high (greater than 750 mg/dL), they form chylomicrons, which are large particles that can block pancreatic ducts causing an inflammatory cascade that ultimately results in pancreatitis, which is when the organ begins to digest itself. The presence of excess chylomicrons results in blood that is milky-white in appearance due to the excess of these fat particles. Patients with FCS may also experience organ failure and pancreatic necrosis. Some of these debilitating conditions may also result in lengthy hospitalization stays, including time in the intensive care unit. In addition, they also suffer from daily conditions that can negatively impact their quality of life, including neuropsychiatric symptoms such as memory loss, dementia, mild depression, and cognitive impairment (described as brain fog and forgetfulness), as well as gastrointestinal symptoms, including nausea and vomiting. In addition, patients with FCS or FPL have to adhere to a very low fat diet, which is extremely burdensome. Generally, patients try to consume no more than the equivalent of approximately one tablespoon of olive oil per day. As a result of these factors, patients with FCS and FPL are often unable to work, adding to the burden of the disease.

        In order to quantify the burden of FCS on patients and the healthcare system, we, in conjunction with patients and clinicians, developed and conducted a global FCS patient survey called IN-FOCUS. We have recruited approximately 170 patients, from multiple countries, to take this survey, and have performed an interim analysis on the first 60 respondents in the United States. In this analysis, we found that pain, fatigue and chronic pancreatitis impact employment and productivity. Other key findings were:

    §
    Age: The majority of respondents were between 20 and 40 years of age, with an average age of 36.
    §
    Diagnosis: Respondents saw an average of five physicians (range: 1-30) before receiving a diagnosis of FCS.
    §
    Symptoms: All of the symptoms described below occurred daily to several times per week and were moderate to very severe in magnitude.
    §
    Physical symptoms: generalized abdominal pain, bloating, indigestion and lack of appetite as well as generalized weakness and fatigue.
    §
    Emotional symptoms: anxiety about their overall health due to FCS, constant uncertainty about having an attack of pain or acute pancreatitis at any time, embarrassment about always thinking about and planning for food and anxiety about eating food prepared by someone else.
    §
    22% of patients reported feeling depressed, as compared to a 6.7% rate of depression diagnosis in the general adult U.S. population.
    §
    33% of patients reported constant anxiety, fear or worry about having an attack of pain or acute pancreatitis at any time.
    §
    Cognitive symptoms: difficulty concentrating, "brain fog" (i.e. lack of thought clarity), impaired judgment, forgetfulness and recent memory loss.
    §
    Acute Pancreatitis: Lifetime number of pancreatitis attacks ranged from 1-31+, with a mean of 12. Additionally, over their lifetimes, 40% of those hospitalized for acute pancreatitis were readmitted within 30 days of their discharge.
    §
    Diet: The average fat intake of respondents was 20-21g/day. 87% of the respondents noted that managing their diet was extremely challenging.

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    §
    Employment: Only 22% of patients reported full time employment and 20% were unemployed.
    §
    Absences: Time off from work due to FCS ranged from 0-61+ days with a mean of 30 days in the past 12 months, compared with the U.S. Bureau of Labor Statistics reported average absence of four to five days per calendar year.

        Davidson et. al. The burden of familial chylomicronemia syndrome: interim results from the IN-FOCUS study. Expert Rev Cardiovasc Ther. May; 15(5): 415-423.

        While all the complications of FCS cause patients to have a lower quality of life, pancreatitis is the most serious consequence of the disease. The mortality rate of acute pancreatitis ranges between six and eight percent. Some FCS patients have multiple episodes of acute pancreatitis in a year. Further, pancreatitis attacks generally become more frequent from the teenage years through patients' 30s and 40s. Patients are often admitted to the intensive care unit for further monitoring and hospitalization can last for multiple days. In severe cases, patients can have bleeding into the pancreas, serious tissue damage, infection and cyst formation, as well as damage to other vital organs such as the heart, lungs and kidneys. Further, even a single episode of acute pancreatitis can permanently damage the pancreas, potentially leading to pancreatic deficiency, which can cause digestive issues, oily stool and insulin dependent diabetes. The persistent and often severe abdominal pain that FCS patients may experience may also be indicative of episodes of undiagnosed pancreatitis. There is no specific drug treatment for acute pancreatitis and typically physicians manage pancreatitis with intravenous fluids and pain medications in the hospital.

        Acute pancreatitis caused by high triglycerides can result in more days in the hospital, with a risk of irreversible organ damage and premature death. For example, a 2015 study published by Nawaz et. al. in The American Journal of Gastroenterology, demonstrated that acute pancreatitis caused by high triglycerides (triglycerides > 1000 mg/dL) can have serious manifestations, and can be substantially worse than pancreatitis from other causes (triglycerides < 150 mg/dL), leading to longer median hospital stays, increased need for intensive care, a higher rate of pancreatic necrosis, more frequent persistent (i.e. >48 hr.) organ failure, and higher rates of mortality, as illustrated in the figure below:

GRAPHIC

Adapted from Nawaz et. al. 2015

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    Volanesorsen Clinical Development

    Phase 2 studies

        We conducted a randomized, double-blind, placebo-controlled, dose-ranging, Phase 2 study to evaluate volanesorsen in both untreated patients with fasting triglyceride levels between 350 mg/dL and 2,000 mg/dL (volanesorsen monotherapy cohort) and in patients receiving stable fibrate therapy who had fasting triglyceride levels between 225 mg/dL and 2,000 mg/dL (volanesorsen—fibrate cohort). We randomly assigned eligible patients to receive either volanesorsen, at doses ranging from 100 to 300 mg, or placebo, once weekly for 13 weeks. The primary endpoint was percent change in ApoC-III level from baseline. We designed the secondary endpoints to evaluate the effects of volanesorsen on additional lipid parameters, including triglyceride, LDL and HDL levels. We also investigated pharmacokinetic and pharmacodynamic effects of volanesorsen in these patients. We published the results of this study, which was the first to support the role of ApoC-III as a key regulator of triglyceride metabolism in a wide variety of patients with hypertriglyceridemia, in the New England Journal of Medicine in 2015.

        A total of 57 patients were treated in the volanesorsen monotherapy cohort (41 received volanesorsen and 16 received placebo), and 28 patients were treated in the volanesorsen—fibrate cohort (20 received volanesorsen and 8 received placebo). The mean baseline triglyceride levels in the two cohorts were 581 mg/dL and 376 mg/dL, respectively. Treatment with volanesorsen resulted in dose-dependent, highly consistent and prolonged decreases in plasma ApoC-III and in triglyceride levels when clinicians administered the drug as a single agent and as an add-on to fibrates.

        The tables below illustrate the triglyceride changes in aggregate across the study cohorts:

Monotherapy Cohort
Dose (mg) / Patients(1)
  Mean Baseline
Triglyceride Level
(mg/dL)
  Average of Day 85 and
92 Triglyceride Level
(mg/dL)
  Mean Change (%)   p-value

100 (n=11)

    591     312     –31.3   p = 0.015

200 (n=13)

    642     235     –57.7   p = 0.001

300 (n=11)

    559     139     –70.9   p < 0.001

Placebo (n=16)

    523     547     20.1    

 

Volanesorsen-Fibrate Cohort
Dose (mg) / Patients(1)
  Mean Baseline
Triglyceride Level
(mg/dL)
  Average of Day 85 and
92 Triglyceride Level
(mg/dL)
  Mean Change (%)   p-value

200 (n=8)

    282     141     –51.0   p = 0.008

300 (n=10)

    394     134     –63.9   p = 0.002

Placebo (n=8)

    457     372     –7.7    

(1)
The number of patients in the tables above represent those who completed the study. Additional patients received at least one dose of volanesorsen, but discontinued treatment prior to completing the study.

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        The graphics below illustrate certain changes as seen in the study published in the New England Journal of Medicine in 2015:

GRAPHIC


*
The graphics above show the mean percent changes from baseline over time in levels of ApoC-III, triglycerides and HDL cholesterol in the cohort that received ISIS 304801 (which we refer to as volanesorsen) monotherapy or placebo. Triangles indicate dosing days. I bars indicate standard errors. N Engl J Med 2015; 373:438-447.

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        As part of our Phase 2 study, we included an open label cohort using a 300 mg dose of volanesorsen in three FCS patients. At baseline, ApoC-III levels were elevated to two to three times normal levels in all three patients. The patients' ApoC-III levels fell dramatically during the first two weeks of treatment with volanesorsen with reductions in ApoC-III from baseline ranging from approximately 70% to 90%. Baseline triglyceride levels in the three patients varied, but were all above 1,000 mg/dL, and fell rapidly during the first two weeks of treatment in parallel with decreases in ApoC-III, with triglyceride levels in all patients dropping below 500 mg/dL during the study. Triglyceride levels at day 85, the time of the primary analysis, were 56% to 86% lower than at baseline, with absolute reductions of 790 mg/dL to 1,796 mg/dL. The triglyceride levels of patients two and three, who had baseline triglyceride levels greater than 2,000 mg/dL, dropped to as low as 251 mg/dL and 234 mg/dL, respectively, during the treatment period. After cessation of dosing on day 85, triglycerides slowly began to return to pre-treatment levels.

        The figures below further illustrate these results:


Fasting ApoC-III levels in FCS patients treated with 300mg of volanesorsen

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Fasting triglyceride levels in FCS patients treated with 300mg of volanesorsen

GRAPHIC

        We published the results of the FCS patient cohort in the New England Journal of Medicine in 2014 because they revealed for the first time that ApoC-III raised triglycerides by two different pathways, one dependent on LPL and one independent of LPL. It was previously thought that ApoC-III raised triglycerides primarily by inhibiting LPL, which breaks down triglycerides in the blood. Patients with FCS lack LPL activity and yet inhibiting ApoC-III with volanesorsen nevertheless dramatically lowered triglyceride levels.

        Additionally, in a separate Phase 2 clinical study, patients with high triglycerides and type 2 diabetes treated with volanesorsen achieved significant reductions in ApoC-III and triglyceride levels and exhibited improvements in measures of glucose control and insulin sensitivity. We observed a 57% improvement in insulin sensitivity in patients treated with volanesorsen compared to patients receiving placebo, as measured by a hyperinsulinemic euglycemic clamp, which assesses how well the body uses insulin to remove sugar, in the form of glucose, from the blood and maintain normal blood sugar levels.

        No safety concerns were identified in our Phase 2 study that included the monotherapy group, the volanesorsen-fibrate group and the FCS patient group. Injection site reactions occurred with 13% of injections of volanesorsen in the monotherapy group, 15% of injections in the volanesorsen—fibrate group and 46% of injections in the FCS group. These reactions were typically mild redness or pain, did not get worse or lead to other issues and resolved spontaneously. Six of 64 patients (9%) treated with volanesorsen in the Phase 2 program discontinued treatment because of adverse events; there was no apparent relationship between discontinuation and dose. Other safety assessments, including vital signs, electrocardiographic findings and urinalysis results, were clinically unremarkable. In addition, there was no clinical or laboratory evidence of drug-to-drug interactions in patients receiving concomitant medications, including statins, fibrates and glucose-lowering agents.

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        A similar safety profile was seen in the study involving patients with high triglycerides and type 2 diabetes. No patients treated in this study with volanesorsen discontinued treatment with the study drug because of adverse events.

    Phase 3 program and regulatory approach

        Volanesorsen has completed a Phase 3 clinical program for the treatment of FCS and is currently in Phase 3 clinical development for the treatment of FPL. The Phase 3 FCS program includes the APPROACH and COMPASS studies. The Phase 3 FPL program includes these same two studies, as well as the BROADEN study.

    APPROACH Study

        APPROACH is a randomized, double-blind, placebo-controlled study of 300 mg of volanesorsen administered by a subcutaneous injection in patients with FCS. Patients in the study were treated once a week for a period of one year. The primary endpoint in this study was percent change, relative to baseline, in fasting triglycerides at three months. In addition, we designed the secondary endpoints to allow us to further evaluate changes in triglycerides, changes in frequency and severity of abdominal pain and pancreatitis, and levels of hepatosplenomegaly, which is abnormal swelling of the spleen and liver. The patients were randomized 1:1, receiving either volanesorsen or placebo. After one year of dosing, patients were eligible to roll over into an open label extension study, in which all patients receive volanesorsen. APPROACH closed enrollment in December 2015 with a total of 66 patients. We dosed the last patient with his/her last dose in the study in January 2017. We reported top-line data from this study in March 2017.

        The average incoming triglyceride level of patients in the study was 2,209 mg/dL. Patients treated with volanesorsen experienced clinically meaningful benefits in triglyceride levels, consistent with the Phase 2 experience described above as well as additional disease benefits, as summarized below. For the primary endpoint of the study, volanesorsen-treated patients (n=33) achieved a statistically significant (p<0.0001) mean reduction in triglycerides of 77% from baseline after three months of treatment, compared to a mean increase of 18% in placebo-treated patients (n=33). This represented a mean absolute reduction of 1,712 mg/dL in treated patients.

    §
    The treatment effect was maintained over the 52-week treatment period.
    §
    50% of the treated patients achieved triglyceride levels less than 500 mg/dL after three months of treatment, a commonly accepted threshold for pancreatitis risk. By comparison, none of the placebo-treated patients achieved this level at the analysis time points (p<0.003). Additionally, 76.7% of the treated patients, as compared to 9.7% of the placebo-treated patients (p=0.0001), achieved triglyceride levels less than 750 mg/dL after three months of treatment, a level above which chylomicron formation begins.
    §
    A statistically significant reduction in abdominal pain was observed in volanesorsen-treated patients compared to placebo-treated patients (p=0.02) who reported abdominal pain before treatment in the study.
    §
    Volanesorsen-treated patients who had a documented history of recurrent pancreatitis attacks in the five years prior to the study experienced no attacks during the 52-week treatment period (p=0.02) as compared to the placebo. Further details are shown in the figure below:

 
  Placebo   Volanesorsen  
 
  Patients   Events   Patients   Events  

Patients with Multiple Adjudicated Events in Past 5 Years

    4     17     7     24  

Events During Study

    3     4     0     0  

p-value

    p = 0.02
 

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        The most common adverse event in the volanesorsen-treated group of patients was injection site reactions, which were mostly mild. In addition, declines in platelet counts were observed in many patients. These platelet declines were not clinically significant in most patients and were generally well managed with monitoring and dose adjustment, although five patients discontinued treatment with volanesorsen due to declines in platelet count. Five patients discontinued participation in the APPROACH study due to platelet count declines and four patients discontinued due to other non-serious adverse events, including one case each of sweating and chills, severe fatigue, rash and injection site reaction. In the volanesorsen Phase 3 program, serious platelet events (grade 4 thrombocytopenia) occurred in a total of three volanesorsen-treated patients: two in APPROACH and one in the APPROACH open label extension study (where a deviation from the protocol occurred in a patient who was on placebo during APPROACH). These events resolved without incident following cessation of dosing. In the study, there were no treatment-related liver adverse events, including no increases in liver fat. There were no treatment-related renal adverse events. There were no deaths and no treatment-related cardiovascular events in the study. We have now simplified our platelet monitoring program such that monitoring is expected to occur once weekly in all patients on volanesorsen. We believe our greater involvement with physicians and patients, which will be a core focus of the education and support provided by our patient-centric commercial approach, should allow us to better maintain patients on volanesorsen therapy.

    COMPASS Study

        COMPASS is a randomized, double-blind, placebo-controlled Phase 3 study of 300 mg of volanesorsen administered by subcutaneous injection in patients with elevated triglyceride levels (greater than 500 mg/dL). Patients in the study were dosed once a week for a period of six months. The primary endpoint is percent change, relative to baseline, in fasting triglycerides at week 13. We designed the secondary endpoints to allow us to further evaluate changes in triglycerides, incidence of pancreatitis and parameters associated with insulin resistance and diabetes. The patients were randomized 2:1, receiving either volanesorsen or placebo. We completed enrollment in this study in May 2016 with 113 patients dosed. We dosed the last patient with his/her last dose in the study in November 2016.

        In December 2016, we announced that the COMPASS study met its primary endpoint. The average incoming triglyceride level of patients in the study was 1,261 mg/dL. Patients treated with volanesorsen experienced clinically meaningful benefits in triglyceride levels, consistent with the Phase 2 experience described above, and as summarized below:

    §
    For the primary endpoint of the study, volanesorsen-treated patients (n=75) achieved a statistically significant (p<0.0001) mean reduction in triglycerides of 71% from baseline after 13 weeks of treatment, compared with a mean reduction of 0.9% in placebo-treated patients (n=38). This represented a mean absolute reduction of 869 mg/dL in treated patients. The treatment effect observed was maintained through the end of the 26 week treatment period.
    §
    In a subset of seven patients with FCS, whose average incoming triglyceride level was 2,280 mg/dL, volanesorsen-treated patients (n=5) achieved a mean reduction in triglycerides of 73% from baseline after 13 weeks of treatment, compared with a mean increase of 70% in placebo-treated patients (n=2). This represented a mean absolute reduction of 1,511 mg/dL in treated patients. The treatment effect observed was maintained through the end of the 26 week treatment period. None of the reductions in triglyceride levels in the FCS group were statistically significant.
    §
    In addition, 82% of patients treated with volanesorsen, including three of the volanesorsen-treated FCS patients, achieved triglyceride levels less than 500 mg/dL, a commonly

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      accepted threshold for pancreatitis risk, after 13 weeks of treatment, compared to 14% of placebo-treated patients (p<0.0001).

    §
    Further, we observed a statistically significant reduction in pancreatitis events with volanesorsen treatment compared to placebo (p=0.036), with 5 pancreatitis events in the placebo-treated cohort and no pancreatitis events in the volanesorsen-treated cohort during the treatment period.

        The most common adverse event in the volanesorsen-treated group of patients was injection site reactions, which were mostly mild. In this study, 13% of treated patients discontinued treatment due to injection site reactions and 7% of treated patients discontinued treatment for other adverse events. None of the FCS patients in the study discontinued. There were no deaths or cardiovascular events in the study. In addition, there were no serious platelet events in the study. There was one potentially related serious adverse event in the drug-treated arm. This was a report of serum sickness that occurred two weeks after the last study dose and resolved.

    BROADEN Study

        BROADEN is a randomized, double-blind, placebo-controlled study of 300 mg of volanesorsen administered by a subcutaneous injection in patients with FPL. Patients in the study will be dosed once weekly for a period of one year. The primary endpoint is the percent change, relative to baseline, in fasting triglycerides at week 13. We designed the secondary endpoints to allow us to further evaluate changes in triglycerides, rates of pancreatitis, parameters associated with insulin resistance and diabetes, and changes in liver fat. The patients are randomized 1:1, receiving either volanesorsen or placebo. After one year of dosing, patients are eligible to roll over into an open label extension period in which all patients will receive volanesorsen. We treated the first patient in late 2015 and plan to complete enrollment by the end of 2017 with approximately 60 patients. We plan to report results from the BROADEN study in 2019. If the data are positive, in 2019 we plan to file for marketing authorization for volanesorsen to treat patients with FPL.

    Volanesorsen Clinical Data Summary

        In both APPROACH and COMPASS, we saw reductions in rates of pancreatitis, one of the most important and impactful symptoms of FCS, in patients treated with volanesorsen. The table below describes the number of pancreatitis attacks in each study, and also shows the combined rate of pancreatitis across both studies. While the reduction in the total number of pancreatitis attacks in APPROACH was not statistically significant due to the small sample size, both COMPASS (p=0.036) and the combined data (p=0.019) showed statistically significant reductions in pancreatitis attacks.

Incidence of Pancreatitis
  Placebo   Volanesorsen    

APPROACH (n)

    33     33    

# of pancreatitis events

    4     1    

COMPASSS (n)

    38     75    

# of pancreatitis events

    5     0   (p = 0.036)

COMPASS + APPROACH (n)

    71     108    

# of pancreatitis events

    9     1   (p = 0.019)

        Across the entire volanesorsen clinical program, we administered volanesorsen to approximately 280 individuals. This includes 43 patients with FCS for whom data are available, some of whom have been treated for over two years. Based on what we believe is a favorable risk-benefit profile, supported by data from both APPROACH and COMPASS, we plan to file for marketing authorization in the United States, Canada and Europe for volanesorsen to treat patients with FCS in the third quarter of 2017. We plan to file marketing applications to treat patients with FCS in regions outside

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of the United States, Canada and Europe as soon as practical starting in 2018. Once we complete the BROADEN study, if positive, we plan to file to expand our drug label to include FPL patients.

    Volanesorsen Commercial Opportunity

        If we are successful in obtaining regulatory approval to commercialize volanesorsen to treat patients with FCS and FPL on our anticipated timeline, we believe volanesorsen could be the only drug on the market in the United States specifically approved for these indications. We also believe volanesorsen could be the only specifically approved drug for these indications on the market in Europe. We believe that volanesorsen could, over time, be used in a significant proportion of FCS and FPL patients, given that there are no currently approved, effective treatments for FCS or FPL.

        We estimate there are 3,000 to 5,000 FCS patients and an additional 3,000 to 5,000 FPL patients globally. As with many orphan diseases, however, patients with FCS and FPL are underdiagnosed and, as a result, we believe the population sizes may be underestimated. We believe that our efforts to raise awareness of these diseases and improve diagnosis with simplified clinical diagnosis criteria, plus the availability of a drug, could significantly improve identification of patients and result in larger identified patient populations. We are building a database of identified patients by working with physicians and patient organizations and through improved diagnosis and referrals. We add patients to our database through communication with physicians, patient organizations, and other tools, such as electronic medical record database searches. We plan to use our database to help us engage with physicians who may have patients who could potentially benefit from our drugs. In order to protect patient confidentiality, we do not include patient-specific information in the database.

        Due to the specialized nature of managing FCS and FPL, there are a limited number of treating physicians.

    §
    In the United States, there are approximately:
    §
    45 lipid treatment hubs; and
    §
    200 to 300 lipid specialists, with an additional 300 to 400 endocrinologists specializing in lipids.
    §
    In Europe, there are approximately:
    §
    75 specialized lipid treatment hubs; and
    §
    400 to 600 physician specialists who treat lipid disorders.

AKCEA-APO(a)-L Rx

    Overview

        We are developing AKCEA-APO(a)-L Rx for patients who are at significant risk of CVD because of their elevated levels of Lp(a). AKCEA-APO(a)-L Rx inhibits the production of the Apo(a) protein, thereby reducing Lp(a). Apo(a) is a very atherogenic and thrombogenic form of LDL. Elevated Lp(a) is recognized as an independent, genetic cause of coronary artery disease, heart attack, stroke and peripheral arterial disease. Inhibiting the production of Apo(a) in the liver reduces the level of Lp(a) in blood, potentially slowing down or reversing cardiovascular disease in patients with hyperlipoproteinemia(a), a condition in which individuals have levels of Lp(a) greater than 60 mg/dL. Lp(a) is difficult to inhibit using other technologies, such as small molecules and antibodies; there are multiple genetically-determined forms of the Apo(a) molecule and creating a small molecule or antibody that can interact with multiple targets is difficult. We believe antisense technology is particularly well suited to address hyperlipoproteinemia(a) because it specifically targets the RNA that codes for all forms of the Apo(a) molecule. As a result, it can stop the production of all of the forms of the protein. Furthermore, we believe addressing elevated Lp(a) is the next important horizon in

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lipid-focused treatment and, through our collaboration with Novartis, we plan to develop AKCEA-APO(a)-L Rx to treat patients with established cardiovascular disease in whom hyperlipoproteinemia(a) likely plays a causal role.

        We have completed a Phase 1/2 study with AKCEA-APO(a)-L Rx in patients with hyperlipoproteinemia(a) and we reported the results at the AHA meeting in November 2015. In this clinical study, we observed significant and sustained reductions in Lp(a) of up to 97% with a mean reduction of 79% after only a single, small volume dose of AKCEA-APO(a)-L Rx . With multiple doses of AKCEA-APO(a)-L Rx , we observed even greater reductions of Lp(a) of up to 99% with a mean reduction of 92%. Based on these results, we have started a Phase 2b dose-ranging study of AKCEA-APO(a)-L Rx in patients with hyperlipoproteinemia(a) and established CVD. We have initiated a strategic collaboration with Novartis for this drug. See "—Our Strategic Collaboration with Novartis" for additional information.

    Disease Background

        Despite the management of LDL-C with statins and other therapies, the incidence of CVD continues to rise dramatically. Lipid disorders are a cause of this continuing rise. Hyperlipoproteinemia(a), which is present in approximately 20% of the general population, causes CVD.

        Currently, there is no effective drug therapy to specifically and robustly lower elevated levels of Lp(a). Lp(a) levels are determined at birth and, therefore, lifestyle modification, including diet and exercise, do not impact Lp(a) levels. Statins do not have significant effects on Lp(a) levels. Further, a new class of drugs that lower LDL-C and modestly lower Lp(a) levels, known as PCSK9 inhibitors, inactivate a protein in the plasma that regulates the number of LDL receptors on the liver cell surface, thereby capturing and removing additional LDL particles from the blood. While PCSK9 inhibitors reduce Lp(a) by approximately 25%, we believe this level of reduction is unlikely to materially reduce the risk of cardiovascular events related to hyperlipoproteinemia(a). The only currently known effective way to significantly reduce plasma Lp(a) is to physically remove the particles from blood through a process called apheresis. In this process, the patient's blood is filtered through a machine where the LDL-C and Lp(a) particles are removed and the blood is returned to the patient's body. Since 2010, apheresis has been an approved therapy in Germany to treat patients with hyperlipoproteinemia(a), but it is expensive, time consuming and only performed by a small number of centers worldwide. Lp(a) apheresis has been shown to lower the rate of cardiovascular events, providing support that lowering Lp(a) can provide therapeutic benefit.

        A number of expert groups, including the National Institutes for Health, European Society of Cardiology and the National Lipid Association, and publications have stated that Lp(a) is an independent cause of cardiovascular risk. The authors of three such publications evaluated data from over 180,000 participants and used statistical and genetic approaches to evaluate the correlation between Lp(a) levels and cardiovascular risk. The specific techniques the authors used were epidemiological/meta-analyses, Mendelian randomization and genome wide associations. In each technique used, the authors demonstrated a clear relationship between elevated levels of Lp(a) and increased cardiovascular risk.

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        The graphics below further illustrate these correlations:

GRAPHIC

    AKCEA-APO(a)-L Rx Clinical Development

    Phase 1/2a studies

        We conducted a Phase 1/2a single and multiple ascending dose study with AKCEA-APO(a)-L Rx in 58 people with elevated levels of Lp(a). Individuals treated with AKCEA-APO(a)-L Rx achieved significant dose-dependent reductions in Lp(a), with the largest reductions at day 30. The results of this study were published in the Lancet in 2016. In the single dose portion of the study, we investigated five dose levels of AKCEA-APO(a)-L Rx ranging from 10 mg to 120 mg, compared to placebo.

        The results from this portion of the study are illustrated in the tables below:

Single Dose; Randomized 3:1
Dose
  10mg   20mg   40mg   80mg   120mg   placebo

Number of people

  3   3   3   6   6   7

Mean change from baseline at day 30 (%)

  –26%   –33%   –44%   –79%   –85%   3%

        In the multiple ascending dose portion of the study, we investigated three dose levels of AKCEA-APO(a)-L Rx , compared to placebo. At each dose level, people received three doses on alternate days during the first week and then a single dose once a week for the next three weeks.

        The results from this portion of the study are illustrated in the tables below:

Multiple Ascending Dose; Randomized 4:1
Dose
  10mg   20mg   40mg   placebo

Number of people

  8   8   8   6

Mean change from baseline at day 30 (%)

  –66%   –80%   –92%   –9%

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        The graphic below shows the mean percent change in Lp(a) in the multiple ascending dose groups:

GRAPHIC


*
The asterisks represent p-values as follows: *p<0.05; **p £ 0.01; ***p £ 0.001. Arrows indicate dosing at days 1, 3, 5, 8, 15, and 22. P values are for the primary efficacy endpoint at day 36 as determined by the Exact Wilcoxon Rank Sum comparing AKCEA-APO(a)-L Rx versus placebo.

        AKCEA-APO(a)-L Rx was generally safe and well tolerated in the study, which supported continued development. Out of 165 injections, there were no injection site reactions or flu-like symptoms reported. Additionally, in the multiple-dose cohorts, there were no clinically-relevant changes in electrocardiograms or vital signs, or in safety laboratory parameters including liver and kidney markers, hematology (including platelet count), coagulation (including activated partial thromboplastin time), inflammation (high sensitivity C Reactive Protein), complement and urinalysis.

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    Phase 2b study

        We are conducting a Phase 2b study of AKCEA-APO(a)-L Rx in patients with hyperlipoproteinemia(a) and established CVD. The goal of the study is to determine the dose level and frequency for use in a future cardiovascular outcome study. The study is a randomized, double-blind, placebo-controlled, dose-ranging study of AKCEA-APO(a)-L Rx administered by a subcutaneous injection. Patients in the study will be dosed for a period of six months, and a portion of the patients will continue for up to one year. We are testing multiple different dosing levels and regimens. The primary endpoint is the percent change in plasma Lp(a) from baseline at six months. The secondary endpoints will be changes in LDL-C, responder analyses, and other key lipid parameters. Further, we will evaluate safety and pharmacokinetics of the different doses. We designed the study to enroll 270 patients, randomized 5:1, to receive AKCEA-APO(a)-L Rx or a matched quantity of placebo. We plan to report data from this study in the middle of 2018.

    AKCEA-APO(a)-L Rx Commercial Opportunity

        Elevated levels of Lp(a) are associated with increased cardiovascular risk and lowering Lp(a) may reduce the risk. We estimate the eligible population to be 8.5 to 11 million people globally. We believe that positive results from a large cardiovascular outcome study will be required to support marketing authorization for the treatment of these patients. If Novartis exercises its option, it plans to conduct, at its expense, such a study pursuant to our strategic collaboration and, if approved, to commercialize AKCEA-APO(a)-L Rx for these patients.

AKCEA-ANGPTL3-L Rx

    Overview

        We are developing AKCEA-ANGPTL3-L Rx to treat multiple lipid disorders. Studies have shown that elevated levels of the ANGPTL3 protein are associated with an increased risk of premature heart attacks, increased arterial wall thickness and multiple metabolic disorders, such as insulin resistance. In contrast, people with lower levels of ANGPTL3 have lower LDL-C and triglyceride levels and thus lower risk of heart attacks and multiple metabolic disorders. In preclinical studies, an analog of AKCEA-ANGPTL3-L Rx inhibited the production of the ANGPTL3 protein in the liver, inhibiting liver fat accumulation and lowering blood levels of triglycerides, LDL-C and very low density lipoprotein cholesterol, or VLDL-C. In addition, our preclinical data and initial Phase 1 data suggest that inhibiting the production of ANGPTL3 could improve other lipid parameters, including triglyceride levels and total cholesterol.

        We are conducting a Phase 1/2 program for AKCEA-ANGPTL3-L Rx in people with elevated triglycerides. We reported results for the initial cohort from this study at the AHA meeting in November 2016. We observed that the people with elevated triglycerides achieved dose-dependent, statistically significant mean reductions in ANGPTL3 of up to 83%. Treatment with AKCEA-ANGPTL3-L Rx was also associated with statistically significant mean reductions in triglycerides of up to 66%, in LDL-C of up to 35% and in total cholesterol of up to 36%. In this study, AKCEA-ANGPTL3-L Rx was reported to be well tolerated. The most common adverse events in the AKCEA-ANGPTL3-L Rx treated group of patients were mild headaches and dizziness that were approximately equal to the rate observed in the placebo group. In the second half of 2017, we plan to begin a study of AKCEA-ANGPTL3-L Rx in patients with hyperlipidemia with metabolic complications including insulin resistance and fatty liver, in which we plan to include patients with NAFLD or NASH. We plan to report data from this study in 2019. Further, in the second half of 2017, we also plan to study AKCEA-ANGPTL3-L Rx in patients with rare hyperlipidemias, including patients with FCS, and we plan to report data from this study in 2018. If we find that AKCEA-ANGPTL3-L Rx can effectively lower triglyceride levels in patients with rare hyperlipidemias, including patients with FCS, through a different mechanism of action from volanesorsen, it may represent an opportunity to expand our FCS

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franchise. Additional potential indications for which we may consider developing AKCEA-ANGPTL3-L Rx include other rare hyperlipidemias and lipodystrophies.

    Disease Background

    Fatty liver disease

        While some fat in the liver is normal, a significant percentage of individuals have elevated levels of liver fat. Individuals with excessive fat accumulation in the liver also have elevated risk of developing insulin resistance and metabolic syndrome, type 2 diabetes and CVD. These risks are further elevated in patients with hyperlipidemia, especially those with elevated triglyceride levels. The most common form of fatty liver disease is NAFLD, which is associated with obesity-related disorders even in patients who drink little or no alcohol, and is characterized by the gradual accumulation of fat in the liver, or steatosis. One of the key causes of this condition is the Western diet, which is rich in processed foods with high fat and sugar content. In the early stages of NAFLD, patients typically experience steatosis that is slow-progressing. Over time, a subset of these patients progress to steatohepatitis, a more severe and progressive form of NAFLD characterized by chronic inflammation and liver-cell damage, called NASH. Over time, the chronic inflammation caused by NASH can lead to the formation of scar tissue in the liver, known as fibrosis. As scar tissue gradually replaces healthy liver tissue, blood flow is restricted, which can lead to the loss of normal liver function, cirrhosis, portal hypertension, liver cancer and ultimately liver failure. Currently, there are no approved treatments specifically for NAFLD or NASH. If the disease ultimately progresses beyond NASH, the only alternative is a liver transplant.

    Rare Hyperlipidemias

        Rare hyperlipidemias are genetic diseases characterized by high levels of lipids or lipoproteins in the blood. Function or levels of various lipid clearing enzymes, like LPL and hepatic lipase, are decreased in patients with rare hyperlipidemias. These patients may also have a reduced ability to clear other lipids, including LDL, leading to very high lipid levels. Examples of diseases in this category include FCS and familial hypercholesterolemia. Despite existing and emerging therapies, there remains an unmet need to reduce multiple lipid parameters in these patients, including LDL and triglycerides.

    Lipodystrophies

        Congenital and acquired forms of lipodystrophy are diseases characterized by abnormal or degenerative conditions of the body's adipose tissue. Patients with various forms of lipodystrophy may have difficulties in normal processing of lipids resulting in high LDL-C, triglycerides and fatty liver disease.

    AKCEA-ANGPTL3-L Rx Clinical Development

    Preclinical and other related studies

        Our preclinical data suggest that reducing ANGPTL3 could improve lipid parameters, including LDL-C, triglycerides, and total cholesterol. In a mouse model of increased liver fat, we observed that treatment with an analog of AKCEA-ANGPTL3-L Rx reduced liver fat concentrations by more than 50%.

        Further, in a Phase 1 study that Ionis conducted with a non-LICA version of AKCEA-ANGPTL3-L Rx , healthy volunteers experienced significant reductions of up to 93% in ANGPTL3, up to 63% in triglycerides and up to 46% in total cholesterol.

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    Phase 1/2 program

        We are conducting a placebo-controlled, dose escalation Phase 1/2 program to assess the safety, tolerability, pharmacokinetics and pharmacodynamics of single and multiple doses of AKCEA-ANGPTL3-L Rx administered by a subcutaneous injection to people with elevated triglycerides. We are evaluating single doses of AKCEA-ANGPTL3-L Rx at 20mg, 40mg, 80mg and 120 mg and are randomizing people 3:1, active to placebo, where three participants will receive AKCEA-ANGPTL3-L Rx and one participant will receive placebo. The multiple dose cohorts used lower doses with eight participants in each cohort. We reported initial results for the initial group of people with elevated triglycerides from this study at the AHA meeting in November 2016.

        People who received multiple doses of 10 mg, 20 mg, 40 mg, or 60 mg of AKCEA-ANGPTL3-L Rx achieved dose-dependent, statistically significant mean reductions at Day 37 in ANGPTL3 of up to 83% (p £ 0.001). These subjects also experienced statistically significant mean reductions in triglycerides of up to 66% (p £ 0.001), in LDL-C of up to 35% (p £ 0.001) and in total cholesterol of up to 36% (p £ 0.001). In this study, AKCEA-ANGPTL3-L Rx was reported to be well tolerated. The most common adverse events in the AKCEA-ANGPTL3-L Rx treated group of patients were mild headaches and dizziness that were approximately equal to the rate observed in the placebo group. There were no discontinuations due to adverse events and no clinically meaningful platelet declines. The graphic below further summarizes these results.

GRAPHIC

    Phase 2 studies

        In the second half of 2017, we plan to begin a study of AKCEA-ANGPTL3-L Rx in patients with hyperlipidemia with metabolic complications including insulin resistance and fatty liver, in which we plan to include patients with NAFLD or NASH. The goal of the study is to evaluate dose levels, frequencies and markers of liver fat. The study is expected to be a randomized, double-blind, placebo-controlled, dose-ranging study of AKCEA-ANGPTL3-L Rx administered by a subcutaneous injection. We expect to dose patients over a period of at least six months. We plan to test multiple doses, and expect to evaluate safety and efficacy to support dose selection in future trials. We have not determined the endpoints yet, but expect to include changes in key lipid parameters including triglycerides and LDL-C, as well as measures of liver fat and other metabolic parameters. We plan to enroll approximately 200 patients in this study. We plan to report data from this study in 2019.

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        We are also planning to study AKCEA-ANGPTL3-L Rx in patients with rare hyperlipidemias, including patients with FCS, in the second half of 2017. We expect the primary goal of the study to be to evaluate the ability of AKCEA-ANGPTL3-L Rx to lower triglyceride levels and/or other important lipid markers in patients with rare hyperlipidemias, including FCS. We plan to test multiple doses, and expect to evaluate safety and efficacy to support dose selection in future trials. We have not finalized the secondary endpoints yet, but expect to include markers of safety in FCS patients. We plan to report data from this study in 2018. If we demonstrate that we can successfully lower key lipid parameters in these patients, we plan to begin a Phase 3 study in rare hyperlipidemias in 2018.

    AKCEA-ANGPTL3-L Rx Commercial Opportunity

        NAFLD is the most common chronic liver disease worldwide and more than 75 million patients are affected in the United States alone. Approximately 30% of patients with NAFLD will eventually progress to NASH. In the United States, the most recent epidemiological studies show that approximately 3% to 5% of the general population has NASH. We believe there are a comparable number of patients in Europe and the rest of the world. While there are a number of treatments currently in development for the treatment of NAFLD and NASH, none are currently approved and we believe there will continue to be a significant unmet medical need in this population.

        Rare hyperlipidemia contains multiple diseases, including FCS and familial hypercholesterolemia. We believe that these populations are all orphan sized.

        There are several types of lipodystrophies, congenital generalized, acquired generalized, familial partial, acquired partial, mandibuloacral dysplasia associated, and HIV associated. We believe these populations are all orphan sized.

AKCEA-APOCIII-L Rx

    Overview

        We are developing AKCEA-APOCIII-L Rx to inhibit the production of ApoC-III, the same protein inhibited by volanesorsen, for the broad population of patients who have cardiometabolic disease due to their elevated triglyceride levels. ApoC-III impacts triglyceride levels and may also increase inflammatory processes. This combination of effects makes ApoC-III a promising target for patients with LDL-C already controlled on statin therapy, but for whom triglycerides remain poorly controlled. We believe that the enhancements offered by Ionis' LICA technology can provide greater patient convenience by allowing for significantly lower doses and less frequent administration, compared to volanesorsen. We are conducting a Phase 1/2 study of AKCEA-APOCIII-L Rx in people with elevated triglycerides and plan to report results from this study in the second half of 2017. We have initiated a strategic collaboration with Novartis for this drug. In this collaboration, we intend to complete the Phase 2 program required to define the appropriate dose and regimen to support a planned cardiovascular outcome study. We plan to initiate a Phase 2b dose-ranging study of AKCEA-APOCIII-L Rx in patients with hypertriglyceridemia and established CVD in the second half of 2017 and plan to report data from this study in 2019. At the completion of Phase 2 development, Novartis has an option to license the drug. If Novartis exercises its option to license AKCEA-APOCIII-L Rx and pays us the $150.0 million license fee to do so, Novartis plans to conduct and pay for a Phase 3 cardiovascular outcome study in high-risk patients and, if approved, to commercialize AKCEA-APOCIII-L Rx worldwide. We plan to co-commercialize AKCEA-APOCIII-L Rx with Novartis in selected markets, under terms and conditions that we plan to negotiate with Novartis in the future, through the specialized sales force we are building to commercialize volanesorsen. We believe Novartis brings significant resources and expertise to the collaboration that can accelerate our ability to deliver this potential therapy to patients at significant cardiovascular risk due to their elevated triglyceride levels.

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    Disease Background

        ApoC-III is an important emerging target linking hypertriglyceridemia with CVD. Several studies have found that ApoC-III levels are an independent risk factor for CVD. Further, its presence on lipoproteins may increase their atherogenicity. A study in the New England Journal of Medicine reported that out of a sample of over 100,000 people, individuals with an APOC3 gene loss of function mutation had a reduced risk of clinical coronary heart disease. Each decrease of 1 mg/dL in plasma levels of ApoC-III was associated with a 4% decrease in the risk of incident coronary heart disease. Triglycerides may also play a role in cardiovascular risk. As shown in the figure below, in two separate studies encompassing nearly 20,000 patients, as triglyceride levels increased, so did the risk of a cardiovascular event. In summary, ApoC-III impacts triglyceride levels and may also increase inflammatory processes, and this combination of effects makes ApoC-III a promising target for reducing the residual CVD risk in patients already on statin therapy, but for whom triglycerides are poorly controlled.

GRAPHIC

    AKCEA-APOCIII-L Rx Clinical Development

        We have not completed any clinical studies with AKCEA-APOCIII-L Rx to date. We conducted a Phase 2 clinical study with volanesorsen in patients with high triglycerides and type 2 diabetes that showed patients treated with volanesorsen evidenced significantly reduced triglycerides, improved insulin sensitivity, and additionally reduced lipid parameters associated with cardiovascular disease, including ApoC-III.

        We are conducting a Phase 1/2 study of AKCEA-APOCIII-L Rx in people with elevated triglycerides to evaluate the safety of various doses in humans. The first part of the study is a single ascending dose portion in which we will examine multiple different dose levels sequentially in approximately 40 people. We will administer each dose level, using a subcutaneous injection. Upon completion of the single ascending dose portion of the study, we plan to begin the multiple ascending dose portion of the study. In this part of the study, we plan to enroll approximately 34 people with elevated triglycerides. We are planning to examine multiple different dosing levels and regimens. We plan to administer each dose level to a cohort of people at multiple time points.

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        We have initiated a strategic collaboration with Novartis for this drug. See "—Our Strategic Collaboration with Novartis" for additional information.

    AKCEA-APOCIII-L Rx Commercial Opportunity

        ApoC-III levels and elevated triglycerides have been linked to increased cardiovascular risk and lowering ApoC-III and triglycerides may reduce the risk. We estimate the eligible population to be 8.5 to 14.5 million people globally. We believe that positive results from a large cardiovascular outcome study will be required to support marketing authorization for the treatment of these patients. If Novartis exercises its option, it plans to conduct, at its expense, such a study pursuant to our strategic collaboration to conduct this study and to commercialize AKCEA-APOCIII-L Rx for these patients.

Sales and Marketing

        Our goal is to become the premier company offering treatments for previously inadequately treated lipid disorders. We are assembling the global infrastructure to develop the drugs in our pipeline and to commercialize them with a focus on lipid specialists, specialized endocrinologists and pancreatologists as our primary call points. We are also creating the specialized support required to potentially address other rare disease patient populations. We plan to build a small, highly-focused salesforce to support the commercialization of volanesorsen, if approved, which would serve as the foundation of our sales, marketing and patient support efforts for all of the drugs in our pipeline, including our co-commercialization activities with Novartis for AKCEA-APO(a)-L Rx and AKCEA-APOCIII-L Rx , if and when approved under terms and conditions that we plan to negotiate with Novartis in the future.

Global Commercialization Infrastructure

        We plan to commercialize volanesorsen ourselves globally, with a specialized and comprehensive patient-centric approach. Our orphan-focused commercial model will include a small highly focused salesforce in each country that we are targeting, complemented by medical affairs and patient and healthcare provider services. We plan to provide high touch patient and healthcare provider support through reimbursement assistance, partnerships with specialty pharmacies, injection training, routine platelet monitoring and dietary counseling, which we believe will enable strong integration with treating physicians and facilitate patient uptake and compliance. Reimbursement assistance may include activities such as a reimbursement hotline, patient assistance, co-pay assistance through foundations and insurance verification. We plan to include dedicated case managers as part of our support team who will work directly with patients, caregivers and healthcare providers to help patients start and stay on therapy. Our global commercial organization is initially focused on our nearest term opportunities with volanesorsen to treat patients with FCS and FPL. Our initial plan is to focus on lipid specialists, specialized endocrinologists and pancreatologists as our primary call points. At the outset, we plan to focus our commercial efforts in the United States, Canada and Europe, and intend to expand over time to other relevant geographies. We believe the relatively small number of specialized physicians treating FCS and FPL patients will allow us to address this market with a nimble, scalable organization. We are currently identifying patients and having them referred to specialists for treatment, which we believe will facilitate successful commercialization. Building awareness of these orphan diseases among not only lipid specialists, but also referring physicians, is a key element of our pre-commercial and commercial plans. We are focused on disease education and market access, with the goal of ensuring that identified patients can most effectively obtain our drugs once commercialized. We are also creating the specialized support required to potentially address other rare disease patient populations.

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        Due to the specialized nature of managing FCS and FPL, there are a limited number of treating physicians.

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    In the United States, there are approximately:
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    45 lipid treatment hubs; and
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    200 to 300 lipid specialists, with an additional 300 to 400 endocrinologists specializing in lipid disorders.
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    In Europe, there are approximately:
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    75 specialized lipid treatment hubs; and
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    400 to 600 physician specialists who treat lipid disorders.

        In North America and Europe, we are planning for an overall field force size of between 75 and 100 individuals for the initial launch of volanesorsen in FCS, which we expect to be sufficient to target substantially all of the potential volanesorsen prescribers. This field force would include sales representatives, medical liaisons, and personnel for reimbursement assistance and patient support.

        In August 2016, we formed Akcea UK, our wholly-owned subsidiary located in the United Kingdom. Akcea UK is supporting our initial pre-commercialization activities in Europe, and will serve as a potential entity for future United Kingdom and/or European operations.

        We expect to market our drugs to the same specialist call point as volanesorsen, enabling us to leverage this commercial organization as the core global infrastructure for all of our drugs. We plan to commercialize by ourselves any approved drugs with a rare disease or specialty focus. We may enter into strategic relationships to commercialize certain of our drugs, particularly in indications with large patient populations, as evidenced by our collaboration with Novartis. We believe Novartis brings significant resources and expertise to the collaboration that can accelerate our ability to deliver AKCEA-APO(a)-L Rx and AKCEA-APOCIII-L Rx to the large populations of patients who have high cardiovascular risk due to inadequately treated lipid disorders. We also plan to co-commercialize any such drug in selected markets, under terms and conditions that we plan to negotiate with Novartis in the future, through the specialized sales force we are building to commercialize volanesorsen.

Preparing for Successful Commercialization

        A key aspect of successfully commercializing therapies for orphan diseases is to identify eligible patients. Patient populations are frequently very small and sometimes heterogeneous. Our management team is experienced in maximizing patient identification for both clinical development and commercial purposes in orphan diseases. We also have significant experience in establishing the burden of disease in support of securing orphan pricing and reimbursement.

        Our commercial organization is focused on the following priorities to prepare for the launch of volanesorsen:

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    Improve diagnosis by working with a small number of specialist physician experts to advance the understanding of the signs and symptoms of FCS and FPL, and then communicate that simplified clinical diagnosis criteria to the broader physician and patient community.
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    Build a database of patients by working with physicians and patient organizations and through improved diagnosis and referrals. We add patients to our database through communication with physicians, patient organizations, and other tools, such as electronic medical record database searches. We plan to use our database to help us engage with physicians who may have patients who could potentially benefit from our drugs. In order to protect patient confidentiality, we do not include patient-specific information in the database.

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    §
    Build an integrated high-touch patient support team to help patients start and stay on therapy. We plan to provide reimbursement assistance, injection training, platelet monitoring and dietary support, as well as establish partnerships with specialty pharmacies, to help patients remain on therapy over the long term. We plan to include dedicated case managers as part of our support team who will work directly with patients, caregivers and healthcare providers to help patients start and stay on therapy.
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    Prepare for successful market access through payors and other reimbursement authorities by establishing and quantifying the burden of disease associated with living with FCS and FPL.

Our Relationship with Ionis

        We founded our operations in 2015 as a wholly owned subsidiary of Ionis to develop and commercialize Ionis' drugs to treat lipid disorders. Ionis has funded our expenses to date. We are becoming an independent company building a focus and excellence in development and commercialization. We expect Ionis to remain our principal stockholder for the foreseeable future. Ionis has been a publicly traded company for over 25 years and had over $1.0 billion in assets and over 400 employees primarily focused on researching and developing antisense drugs as of March 31, 2017.

        By partnering with Ionis, we require less infrastructure than a typical company of our size and stage of development, and can focus our efforts on developing and preparing to commercialize our drugs.

        Through our relationship with Ionis, we benefit in the following ways:

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    We have access to Ionis' innovative generation 2.0+ antisense and LICA technologies for use in our drugs. These technologies allow for precise specificity, favorable dosing properties and no anticipated drug-to-drug interactions.
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    We obtained exclusive rights to globally commercialize a robust, mature pipeline of drugs, including volanesorsen, AKCEA-APO(a)-L Rx and our other drugs in development. Our licensed rights also include access to Ionis' intellectual property and expertise to develop, manufacture and commercialize these drugs.
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    We have a joint development program that provides us access to Ionis' development and regulatory organization, which has significant expertise in developing drugs to treat patients with lipid disorders. Ionis also provides resources to support our nonclinical and clinical studies.
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    We contract with Ionis for support in areas such as legal, finance and human resources, which allows us to be more capital efficient than a typical company of our size and stage of development. This support allows us to focus our efforts and resources on developing and preparing to commercialize our drugs.
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    We are not required to make any upfront or pre-commercialization payments to Ionis for drugs we are developing under our development, commercialization and license agreement, as would be typical in a drug license. Our agreement allows us to more efficiently invest our capital in developing and preparing to commercialize our drugs, as we are only required to make milestone and royalty payments post-commercialization or if we grant a sublicense to Ionis' technology.
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    As a result of our relationship with Ionis, we may have the opportunity to evaluate additional antisense drugs that may complement our efforts in becoming the premier lipid disease company. For example, Ionis has granted us a right of first negotiation with respect to Ionis development candidates that are designed to treat a rare cardiometabolic disease or a rare inherited metabolic disease.

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        While we and Ionis intend our relationship to enhance our capabilities, certain terms of our relationship may limit our ability to achieve this expected benefit, including:

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    Some of our directors and officers may have a conflict of interest because of their positions with Ionis.
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    A Joint Steering Committee, or JSC, sets the development and regulatory strategy for our drugs by mutual agreement. If the JSC cannot come to a mutual agreement, it could delay our ability to develop and commercialize our drugs in development.
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    We will need to mutually agree with Ionis on the terms of any additional sublicense to a third party for our drugs in development. If we cannot mutually agree, it could delay or prevent our ability to develop and commercialize our drugs.
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    Our agreements prevent Ionis from developing and commercializing drugs targeting ApoC-III, Apo(a) or ANGPTL3 RNA. However, our agreements do not prevent Ionis from developing and commercializing other drugs to pursue the same indications we are pursuing with our drugs.

Exclusive Rights to Development Pipeline and Intellectual Property; Right of First Negotiation

        Ionis is the leading company researching and developing antisense drugs. Under our agreements with Ionis, we have rights to Ionis' proprietary technologies for use with our drugs. Specifically, we obtained an exclusive license from Ionis to globally commercialize our development pipeline of drugs, including volanesorsen, AKCEA-APO(a)-L Rx , AKCEA-ANGPTL3-L Rx and AKCEA-APOCIII-L Rx . Ionis also agreed that it would not work on its own or with other parties to develop or commercialize antisense drugs that target the same gene targets as the drugs we are developing and commercializing. Under our agreements with Ionis, we have a license to use Ionis' technology platform with our drugs. We also have access to future improvements Ionis may make to its antisense technology platform, such as improved manufacturing technologies.

        In addition, Ionis has granted us a right of first negotiation with respect to Ionis development candidates that are designed to treat a rare cardiometabolic disease or a rare inherited metabolic disease.

Access to Ionis' Development, Regulatory and Manufacturing Expertise

    Development

        We receive access to Ionis' infrastructure and expertise in developing antisense drugs and, in particular, drugs to treat lipid disorders. We have a joint steering committee comprised of Akcea and Ionis representatives who set the development strategy for each of our drugs. In addition, a team of Akcea and Ionis employees run each clinical study for our drugs. This way we can stay focused on developing our drugs and preparing for commercialization rather than immediately building an extensive development organization. Over time as we strategically expand our internal development capabilities, we plan to assume more and more responsibility for each development program. Because of our relationship with a much larger company like Ionis, we can use Ionis' relationships and negotiating power with clinical research organizations and other vendors to obtain lower pricing and better resourcing from these vendors than we otherwise could achieve on our own as a relatively new and smaller company. These benefits help us manage our development costs.

    Regulatory

        We take a similar approach to regulatory affairs as we do for drug development. We have a joint regulatory committee comprised of Akcea and Ionis representatives that sets the regulatory strategy for each of our drugs. Because Ionis has filed over 30 investigational new drug applications, or INDs, for antisense drugs, and supported the approval of three new drug applications, or NDAs,

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for antisense drugs, Ionis understands how to successfully work with the FDA and other regulatory agencies. We can also benefit from Ionis' more than 25 years of knowledge regarding antisense drugs to prepare important sections of an IND or NDA. These are important benefits we can immediately access as we continue to build our own regulatory organization and assume more regulatory responsibility for our drugs.

    Manufacturing

        As the leader in antisense technology, Ionis has discovered many of the breakthroughs that have made it possible to manufacture antisense drugs at commercial scale and at a commercially feasible price. Through our relationship with Ionis, we enjoy the benefit of Ionis' historical and continuing investment in antisense drug manufacturing. Specifically, Ionis has agreed to supply the active pharmaceutical ingredient, or API, and, through its outside vendors, the finished drug product for the clinical studies for each of the drugs in our pipeline through the end of 2017. Ionis also has agreed to supply the API and the finished drug product for at least the first two years of volanesorsen's commercial launch. Ionis has long-standing and strong relationships with third party vendors who can supply us with both API and finished drug product, and are currently supplying API and finished drug product to other of Ionis' partners. Ionis also has long-standing and strong relationships with the vendors who supply the key raw materials to Ionis to make our drugs and to the other major oligonucleotide contract manufacturers. We plan to use these relationships to establish our own long term raw material and drug supplies at competitive prices.

    Infrastructure

        When Ionis formed our company, a key premise was to initially utilize Ionis' existing infrastructure in areas like business development, finance, patents, legal, human resources, benefits and other general and administrative areas, so that we could remain critically focused on developing and preparing to commercialize our drugs and could more efficiently utilize our capital. By taking advantage of Ionis' existing infrastructure in these areas, we can spend very little of our management and financial resources building these functions ourselves. As we commercialize our drugs, we expect to be able to expand these systems with a relatively modest additional investment. We can use Ionis' extensive corporate partnering expertise and resources to help us if and when we choose to partner our drugs for the larger indications.

Payment Structure Under our Agreements with Ionis

        We have agreed to pay Ionis for the services it provides us. We intentionally designed our agreements with Ionis to allow us to invest our initial capital to develop and prepare to commercialize our drugs. We were not required to make an upfront cash payment to license Ionis' drugs and technology. In addition, other than paying Ionis the cost of the support services Ionis provides to us, we are not required to make significant payments to Ionis until we successfully commercialize or partner our drugs. For drug development Ionis conducts on our behalf, we will reimburse Ionis for its out-of-pocket expenses and for the cost of Ionis' employees who conduct the research and development activities for our drugs. For general and administrative services, we pay Ionis for our share of internal and external expenses for each of the functions they provide based on our relative use of each function, plus an allocation of facility-related expenses.

        For the drugs we commercialize ourselves, we will pay Ionis royalties ranging from the mid-teens to the mid-twenties on sales related to those drugs. If we sell a drug for an orphan disease indication, defined in our agreement as less than 500,000 patients worldwide, or an indication that required a Phase 3 program of less than 1,000 patients and less than two years of treatment, we pay a higher royalty rate to Ionis than we do if we sell a drug for a disease having more than 500,000 patients worldwide or an indication that required a Phase 3 program of 1,000 or

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more patients and two or more years of treatment. Other than with respect to the drugs licensed to Novartis under the strategic collaboration, option and license agreement, if our annual sales reach $500.0 million, $1.0 billion and $2.0 billion, we will pay Ionis sales milestones in the amount of $50.0 million for each sales milestone reached by each drug, spread in equal installments over the 12 quarters following the milestone event.

        For drugs we sublicense to a commercial partner, we will share 50% of any revenue from the commercial partner with Ionis, excluding money received from our partner specifically designated to fund future development costs and money we are obligated to spend to co-commercialize a drug. Regarding our Novartis collaboration, we paid Ionis $15.0 million of the $75.0 million upfront option payment we received from Novartis. We will pay Ionis 50% of any additional payments we receive from Novartis, excluding money received specifically designated to fund future development costs and money we are obligated to spend to co-commercialize a drug.

Line of Credit Agreement

        In addition, Ionis has helped fund our operations through a line of credit agreement of up to $150.0 million. As of the date of this prospectus, we had borrowed an aggregate of $106.0 million pursuant to the line of credit, which together with accrued interest will automatically convert upon completion of this offering into an aggregate of 13,438,339 Ionis Conversion Shares, based on the initial public offering price of $8.00 per share.

        We have four main agreements that govern our relationship with Ionis, a development, commercialization and license agreement, a services agreement, a line of credit agreement and an investor rights agreement. We describe each of these agreements in greater detail under the section entitled "Certain Relationships and Related Person Transactions."

Our Strategic Collaboration with Novartis

        In January 2017, we initiated a strategic collaboration with Novartis for the development and commercialization of AKCEA-APO(a)-L Rx and AKCEA-APOCIII-L Rx . Under the strategic collaboration, option and license agreement, Novartis has an exclusive option to develop and commercialize these drugs. We are responsible for completing a Phase 2 program and conducting an end-of-Phase 2 meeting with the FDA for each drug and delivering active pharmaceutical ingredient, or API. Following the successful completion of each Phase 2 program, and prior to initiation of the Phase 3 study, Novartis will be able to exercise its option to license and commercialize each drug. Novartis will have 60 days following the end of the applicable end-of-Phase 2 meeting to exercise its option for each of these drugs. If Novartis exercises its option for a drug, Novartis will be responsible, at its expense, to use commercially reasonable efforts to develop and commercialize that drug. We received $75.0 million in an upfront option payment, of which we retained $60.0 million and paid Ionis $15.0 million as a sublicense fee under our license agreement with Ionis. During the first quarter of 2017, we recognized $9.6 million of revenue related to our Novartis collaboration. In conjunction with this collaboration, Novartis purchased $100.0 million of Ionis' common stock at a premium.

        If Novartis exercises its option for a drug, Novartis will pay us a license fee equal to $150.0 million for each drug licensed by Novartis. In addition, for AKCEA-APO(a)-L Rx , we are eligible to receive up to $600.0 million in milestone payments, including $25.0 million for the achievement of a development milestone, up to $290.0 million for the achievement of regulatory milestones and up to $285.0 million for the achievement of commercialization milestones. In addition, for AKCEA-APOCIII-L Rx , we are eligible to receive up to $530.0 million in milestone payments, including $25.0 million for the achievement of a development milestone, up to $240.0 million for the

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achievement of regulatory milestones and up to $265.0 million for the achievement of commercialization milestones. We are eligible to receive tiered royalties in the mid-teens to low twenty percent range on net sales of AKCEA-APO(a)-L Rx and AKCEA-APOCIII-L Rx . Novartis will reduce these royalties upon the expiration of certain patents or if a generic competitor negatively impacts the product in a specific country. In addition, we and Novartis may negotiate in good faith a potential adjustment to the Novartis royalty as a result of changes in active pharmaceutical ingredient costs. We will pay 50% of these license fees, milestone payments and royalties to Ionis as a sublicense fee.

        For each product Novartis commercializes under this agreement, we will have the right to co-commercialize the product with Novartis in selected markets, through the specialized sales force we are building to commercialize volanesorsen, on terms and conditions that we plan to negotiate with Novartis in the future.

        If Novartis does not exercise its option, or stops developing or commercializing after exercising its option with respect to a particular drug, we will have all rights to develop or commercialize the drug (including the right to sublicense these rights to a third party) at our sole expense. If Novartis stops developing or commercializing a drug after exercising its option, and we subsequently commercialize the drug on our own or with another party, we are required to negotiate in good faith and mutually agree with Novartis the terms of a royalty payable to Novartis on the returned drug.

        Our agreement with Novartis will continue until the earlier of the date that all of Novartis' options to obtain the exclusive licenses under the agreement expire unexercised or, if Novartis exercises its options, until the expiration of all payment obligations under the agreement. In addition, the agreement, as a whole or with respect to any drug under the agreement, may terminate early under the following situations:

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    Novartis may terminate the agreement as a whole or with respect to any drug at any time by providing written notice to us;
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    Either we or Novartis may terminate the agreement with respect to any drug by providing written notice to the other party in good faith that we or Novartis has determined that the continued development or commercialization of the drug presents safety concerns that pose an unacceptable risk or threat of harm in humans or would violate any applicable law, ethical principles, or principles of scientific integrity;
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    Either we or Novartis may terminate the agreement for a drug by providing written notice to the other party upon the other party's uncured failure to perform a material obligation related to the drug under the agreement, or the entire agreement if the other party becomes insolvent; and
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    We may terminate the agreement if Novartis disputes or assists a third party to dispute the validity of any or our patents.

        Novartis has agreed to purchase $50.0 million of our common stock in a separate private placement concurrent with the completion of this offering at a price per share equal to the initial public offering price. Novartis has agreed that it will not sell any of these shares until the earlier of January 5, 2020 or six months after we stop developing a drug under the agreement, and if Novartis wishes to sell such shares after this initial period, then Novartis may only sell a limited number of shares each day.

        Immediately following the completion of this offering, Novartis will own approximately 9.7% of the total number of shares of our common stock outstanding after the completion of this offering.

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        Based on the initial public offering price of $8.00 per share, we will issue 6,250,000 Novartis Private Placement Shares.

Competition

        The commercialization of new drugs is competitive, and we may face worldwide competition from major pharmaceutical companies, specialty pharmaceutical companies, biotechnology companies, nutraceutical companies and ultimately generic companies. Our competitors may develop or market therapies that are more effective, safer, more convenient to use, or less costly than any that we are commercializing, or may obtain regulatory or reimbursement approval for their therapies more rapidly than we may obtain approval for ours. Many of our competitors have substantially greater financial, technical and human resources than we have. Additionally, mergers and acquisitions in the pharmaceutical industry may result in even more resources being concentrated in our competitors. Competition may increase further as a result of advances made in the commercial applicability of technologies and greater availability of capital for investment in these fields.

        With respect to volanesorsen to treat patients with FCS, we believed Glybera, which is a gene therapy made by uniQure N.V., could compete with volanesorsen. However, in April 2017 uniQure announced it would not renew Glybera's marketing authorization in Europe, and has previously announced it is not pursuing approval in the Unites States. To our knowledge, there are currently no direct competitors in clinical development.

        Metreleptin is the only approved drug we believe could be a competitor to volanesorsen for FPL patients. Metreleptin is currently approved for use in generalized lipodystrophy, or GL, patients. The FDA denied initial approval in FPL patients, not all of whom are leptin deficient, the mechanism by which metreleptin works. In December 2016, Novelion Therapeutics, Inc. submitted a marketing authorization application to the EMA seeking approval for Metreleptin as replacement therapy to treat complications of leptin deficiency in a small subset of FPL patients and in patients with GL. An investigator-sponsored study is currently ongoing with the support of Novelion to evaluate Metreleptin in FPL patients who also have NASH. Metreleptin does not affect ApoC-III levels. ApoC-III levels have been shown to be elevated in FPL patients, and directly correlate to triglyceride levels. To our knowledge, there are currently no other direct competitors lowering ApoC-III in clinical development.

        In addition, many patients with FCS and FPL use diet, niacin, fish oils and/or fibrates to reduce their elevated triglycerides. Niacin, fish oils and fibrates are generally not effective in patients with FCS. The ultra-low fat diet that patients with FCS and FPL are required to maintain is extremely burdensome to patients and their families. Based on our volanesorsen clinical experience, including in individuals with FCS, we believe that volanesorsen will work equally well as a single agent or in combination with other triglyceride-lowering drugs or approaches.

        With respect to AKCEA-APO(a)-L Rx , we are not aware of any other drugs currently in clinical development specifically for the treatment of hyperlipoproteinemia(a) and associated cardiovascular disease. In September 2016, Arrowhead Pharmaceuticals, Inc. and Amgen Inc. announced a license and collaboration for development of Arrowhead's preclinical program which uses an RNAi conjugated with a GalNAc for the same target as AKCEA-APO(a)-L Rx . It is possible that other competitors may produce, develop, and commercialize drugs, or utilize other approaches, to treat patients with CVD. Under its strategic collaboration agreement with Alnylam Pharmaceuticals, Inc., or Alnylam, Ionis received an exclusive, royalty-bearing license to Alnylam's chemistry, RNA targeting mechanism and target-specific intellectual property for oligonucleotides against Apo(a),

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which means that Alnylam agreed not to use the exclusively-licensed technology to develop or commercialize an oligonucleotide against Apo(a).

        AKCEA-ANGPTL3-L Rx may compete with a monoclonal antibody that binds to ANGPTL3 that Regeneron Pharmaceuticals, Inc. is developing, currently in Phase 2 development for the treatment of homozygous familial hypercholesterolemia and severe forms of hyperlipidemia. Additionally, many patients with familial hyperlipidemias are treated using diet and statins, which have limited effect in these patients.

        AKCEA-APOCIII-L Rx may compete with gemcabene, an oral small molecule that reduces ApoC-III, that Gemphire Therapeutics, Inc. is developing to treat patients with triglycerides above 500 mg/dL. Gemphire is conducting a Phase 2 study of gemcabene in patients with severely high triglycerides. We are aware of other approaches such as RNA interference, or RNAi, that are in preclinical development for ApoC-III-driven cardiometabolic disease.

Intellectual Property

        We have in-licensed numerous patents and patent applications and possess substantial know-how and trade secrets relating to volanesorsen, AKCEA-APO(a)-L Rx , our other drugs in development and, more generally, the development and commercialization of oligonucleotide therapeutics. Our objective is to continue to develop and strengthen our proprietary position to further protect our drugs.

        We obtained our rights to the patents covering volanesorsen, AKCEA-APO(a)-L Rx and our other drugs in development and our rights in Ionis' proprietary technology platform and know-how under our development, commercialization and license agreement with Ionis. We seek to expand our portfolio of patents and patent applications by filing and prosecuting existing patent rights and filing additional patent applications.

        We seek patent protection in significant markets and/or countries for each drug in development. We also seek to maximize patent term. The patent exclusivity period for a drug will prevent generic drugs from entering the market. Patent exclusivity depends on a number of factors including initial patent term and available patent term extensions based upon delays caused by the regulatory approval process.

ApoC-III, Volanesorsen and AKCEA-APOCIII-L Rx Intellectual Property

        We have an exclusive license under Ionis' ApoC-III patent estate to develop and commercialize volanesorsen and the LICA follow-on drug AKCEA-APOCIII-L Rx . The ApoC-III patent estate includes patent claims in the United States drawn to the use of antisense compounds complementary to the mRNA of human ApoC-III including compounds designed to the region targeted by volanesorsen and AKCEA-APOCIII-L Rx (US 7,598,227), which excluding any additional term adjustments or patent term extensions, expires in 2023. Similar claims covering compounds complementary to any site on human ApoC-III have granted in Australia.

        The ApoC-III patent estate also includes issued patent claims to the specific antisense sequence and chemical composition of volanesorsen in the United States (US 7,750,141), Australia, and Europe (EP1622597). The issued claims in the United States should protect volanesorsen from generic competition in the United States until at least 2023. In addition, depending upon the timing, duration and specifics of FDA regulatory review, this patent may be eligible for patent term restoration to recapture a portion of the term lost during such review. We are also pursuing additional patent applications directed to methods of using volanesorsen and other ApoC-III

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compounds for treating various disorders including FCS in jurisdictions worldwide. Claims drawn to methods of using ApoC-III specific inhibitors, and specifically compounds designed to target the same sequence as volanesorsen and AKCEA-APOCIII-L Rx , for treating FCS have issued in the United States (US 9,593,333) and, will expire in 2034, excluding any additional term adjustments or patent term extensions.

        The ApoC-III patent estate also includes issued patent claims covering the specific chemical composition of AKCEA-APOCIII-L Rx in the United States (US 9,163,239). The claims should protect AKCEA-APOCIII-L Rx from generic competition until at least 2034. We are pursuing additional patent coverage for AKCEA-APOCIII-L Rx in jurisdictions worldwide.

Apo(a) and AKCEA-APO(a)-L Rx Intellectual Property

        We have an exclusive license under Ionis' Apo(a) patent estate to develop and commercialize AKCEA-APO(a)-L Rx . The Apo(a) patent estate includes issued patent claims to the specific antisense sequence and chemical composition of AKCEA-APO(a)-L Rx in the United States (US 9,181,550). The issued claims directed to the composition should protect AKCEA-APO(a)-L Rx from generic competition in the United States until at least 2034. In addition, patent term restoration may be available to recapture a portion of the term lost during FDA regulatory review. We are also pursuing additional patent applications designed to protect the AKCEA-APO(a)-L Rx composition and additional dosing and methods of use in jurisdictions worldwide.

ANGPTL3 and AKCEA-ANGPTL3-L Rx Intellectual Property

        We have an exclusive license under Ionis' ANGPTL3 patent estate to develop and commercialize AKCEA-ANGPTL3-L Rx . The ANGPTL3 patent estate includes issued patent claims drawn to the use of antisense compounds complementary to ANGPTL3 RNA for inhibiting the production of ANGPTL3 (US 8,653,047). The ANGPTL3 patent estate also includes issued patent claims covering the specific antisense sequence and chemical composition of AKCEA-ANGPTL3-L Rx in the United States (US 9,382,540). The issued claims directed to the chemical composition should protect AKCEA-ANGPTL3-L Rx from generic competition until at least 2035. We are pursuing additional patent claims designed to protect the sequence and chemical composition of AKCEA-ANGPTL3-L Rx in jurisdictions worldwide.

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Trade Secrets

        In addition to the protections afforded by patents and other regulatory protections, we may rely, in some circumstances, on trade secrets to protect our technology. Trade secrets may be useful to protect proprietary know-how that is not patentable or which we elect not to patent. Trade secrets may also be useful for processes or improvements for which patents are difficult to enforce. We also protect our drugs and the proprietary technology platform by confidentiality agreements with employees, consultants, advisors, contractors, and collaborators. We also seek to preserve the integrity and confidentiality of our data and trade secrets by maintaining physical security of our premises and physical and electronic security of our information technology systems.

Manufacturing

        We believe we have sufficient manufacturing capacity, through Ionis, to meet our current development needs, including the Phase 3 clinical studies for volanesorsen. We believe that we have, or will be able to develop or acquire, sufficient supply capacity to meet our anticipated needs. Ionis has agreed to supply the API and the finished drug product for the clinical studies for each of the drugs in our pipeline through the end of 2017. Ionis also has agreed to supply the API and, through its outside vendors, the finished drug product for at least the first two years of volanesorsen's commercial launch. Ionis has long-standing and strong relationships with third party vendors who can supply us with both API and finished drug product, and are currently supplying API and finished drug product to other of Ionis' partners. Ionis also has long-standing and strong relationships with the vendors who supply the key raw materials to Ionis to make our drugs and to the other major oligonucleotide contract manufacturers. We also believe that with anticipated benefits from increases in scale and improvements in chemistry, through Ionis or third parties, we will be able to manufacture our antisense drugs at commercially reasonable prices.

        In the past, except for small quantities, it was generally expensive and difficult to produce chemically modified oligonucleotides like antisense drugs. As a result, Ionis dedicated significant resources to develop ways to improve manufacturing efficiency and capacity. Since Ionis can use variants of the same nucleotide building blocks and the same type of equipment to produce their oligonucleotide drugs, they found that the same techniques used to efficiently manufacture one oligonucleotide drug could help improve the manufacturing processes for many other oligonucleotide drugs. By developing several proprietary chemical processes to scale up their manufacturing capabilities, Ionis has greatly reduced the cost of producing oligonucleotide drugs. For example, Ionis has significantly reduced the cost of raw materials through improved yield efficiency, while at the same time increasing its capacity to make the drugs. Through both Ionis' internal research and development programs and collaborations with outside vendors, we may benefit from even greater efficiency and further cost reductions. In addition, if Novartis exercises its option to license AKCEA-APO(a)-L Rx or AKCEA-APOCIII-L Rx , Novartis will be responsible for the long term supply of drug substance and finished drug product for the licensed drug.

        For LICA-conjugated drugs, to date, Ionis has manufactured itself or through a contract manufacturing organization only limited supplies of LICA for their own and our own nonclinical and clinical studies. LICA enables lower doses than unconjugated oligonucleotides. Along with Ionis' expertise in optimizing manufacturing of oligonucleotides, we believe this will enable the development of new processes to scale up manufacturing of these LICA conjugated drugs at commercially competitive prices.

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Government Regulation and Approval

United States—FDA Process

        In the United States, the FDA regulates drugs. The Federal Food, Drug and Cosmetic Act, or FDCA, and other federal and state statutes and regulations, govern, among other things, the research, development, testing, manufacture, storage, recordkeeping, approval, labeling, promotion and marketing, distribution, post-approval monitoring and reporting, sampling and import and export of drugs. To obtain regulatory approvals in the United States and in foreign countries, and subsequently comply with applicable statutes and regulations, we will need to spend substantial time and financial resources.

Approval Process

        The FDA must approve any new unapproved drug or a drug with certain changes to a previously approved drug before a manufacturer can market it in the United States. If a company does not comply with applicable United States requirements it may be subject to a variety of administrative or judicial sanctions, such as FDA refusal to approve pending applications, Warning or Untitled Letters, clinical holds, drug recalls, drug seizures, total or partial suspension of production or distribution, injunctions, fines, civil penalties and criminal prosecution. The steps we must complete before we can market a drug include: