Item 1.01 Entry into a Material Agreement.
On April 12, 2021, Ionis Pharmaceuticals, Inc. (the “Company”) completed its previously announced private offering (the “Offering”) of $632.5 million aggregate principal amount of 0% Convertible Senior Notes due 2026 (the “Notes”), including the exercise in full of the initial purchasers’ option to purchase up to an additional $82.5 million principal amount of Notes (the “Option”). The Notes were issued pursuant to an indenture, dated April 12, 2021 (the “Indenture”), between the Company and U.S. Bank National Association, as trustee.
The Notes are general senior unsecured obligations of the Company and will mature on April 1, 2026, unless earlier converted or repurchased. The Notes will not bear regular interest, and the principal amount of the Notes will not accrete. The Notes are convertible at the option of the holders at any time prior to the close of business on the business day immediately preceding January 1, 2026 only under the following circumstances: (1) during any calendar quarter commencing after the calendar quarter ending on June 30, 2021 (and only during such calendar quarter), if the last reported sale price of the Company’s common stock, par value $0.001 per share (“Common Stock”), for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price for the Notes on each applicable trading day; (2) during the five business day period after any ten consecutive trading day period (the “measurement period”) in which the trading price (as defined in the Indenture) per $1,000 principal amount of the Notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price of the Common Stock and the conversion rate on each such trading day; or (3) upon the occurrence of specified corporate events as set forth in the Indenture. On or after January 1, 2026 until the close of business on the second scheduled trading day immediately preceding the maturity date, holders may convert all or any portion of their Notes at any time, regardless of the foregoing circumstances. Upon conversion, the Company will pay or deliver, as the case may be, cash, shares of Common Stock or a combination of cash and shares of Common Stock, at the Company’s election, in the manner and subject to the terms and conditions provided in the Indenture.
The conversion rate for the Notes will initially be 17.2902 shares of Common Stock per $1,000 principal amount of Notes (equivalent to an initial conversion price of approximately $57.84 per share of Common Stock). The initial conversion price of the Notes represents a premium of approximately 32.5% to the last reported sale price of the Common Stock on The Nasdaq Global Select Market on April 7, 2021. The conversion rate for the Notes is subject to adjustment in some events in accordance with the terms of the Indenture but will not be adjusted for any accrued and unpaid special interest, if any. In addition, following certain corporate events that occur prior to the maturity date of the Notes, the Company will, in certain circumstances, increase the conversion rate of the Notes for a holder who elects to convert its Notes in connection with such a corporate event.
The Company may not redeem the Notes prior to the maturity date of the Notes, and no sinking fund is provided for the Notes.
If the Company undergoes a fundamental change (as defined in the Indenture), then, subject to certain conditions and except as described in the Indenture, holders may require the Company to repurchase for cash all or any portion of their Notes at a fundamental change repurchase price equal to 100% of the principal amount of the Notes to be repurchased, plus accrued and unpaid special interest, if any, to, but excluding, the fundamental change repurchase date.
The Indenture includes customary covenants and sets forth certain events of default after which the Notes may be declared immediately due and payable and sets forth certain types of bankruptcy or insolvency events of default involving the Company after which the Notes become automatically due and payable. The following events are considered “events of default” under the Indenture:
|
•
|
|
default in any payment of special interest on any Note when due and payable and the default continues for a period of 30 days;
|
|
•
|
|
default in the payment of principal of any Note when due and payable at its stated maturity, upon any required repurchase, upon declaration of acceleration or otherwise;
|
|
•
|
|
the Company’s failure to comply with its obligation to convert the Notes in accordance with the Indenture upon exercise of a holder’s conversion right and such failure continues for three business days;
|
|
•
|
|
the Company’s failure to give a fundamental change notice, notice of a make-whole fundamental change, or notice of a specified corporate event, in each case when due and such failure continues for one business day;
|
|
•
|
|
the Company’s failure to comply with its obligations in respect of any consolidation, merger or sale of assets;
|
|
•
|
|
the Company’s failure to comply with any of the Company’s other agreements contained in the Notes or the Indenture for 60 days after its receipt of written notice of such failure from the trustee or the holders of at least 25% in principal amount of the Notes then outstanding;
|