Ionis Pharmaceuticals (IONS) DEF 14ADefinitive proxy

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934

(Amendment No.__)

Check the appropriate box:

Ionis Pharmaceuticals, Inc.

(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check all boxes that apply):

NOTICE OF 2023 ANNUAL MEETING OF STOCKHOLDERS

AND PROXY STATEMENT

Dear Stockholders,

I am pleased to invite you to Ionis Pharmaceuticals, Inc.’s 2023 Annual Meeting of Stockholders to be held on June 1, 2023. The Annual Meeting will be held in a virtual meeting format only, via live webcast on the Internet, with no physical in-person meeting. You can attend and participate in the Annual Meeting online by visiting www.virtualshareholdermeeting.com/IONS2023, where you will be able to listen to the meeting live, submit questions and vote. As always, we encourage you to vote your shares prior to the Annual Meeting.

This document includes the agenda for this year’s Annual Meeting and the Proxy Statement. We will cover the formal items on the agenda during the Annual Meeting. Following the formal Annual Meeting, we will review the major developments of the past year and our plans for 2023 via webcast. You can find information regarding how to join the webcast on our website at ir.ionispharma.com. The Proxy Statement explains the matters we will discuss in the meeting and provides additional information about us.

Your vote is very important. Whether or not you plan to attend the meeting, please be sure to vote your shares as soon as possible to ensure your representation at the meeting. We are distributing our proxy materials under a Securities and Exchange Commission rule that allows us to furnish proxy materials to our stockholders over the Internet rather than in paper form. We believe this method of distribution reduces our environmental impact and costs without hindering our stockholders’ timely access to such important material. As a result, if you are a stockholder of record (that is, if your stock is registered with us in your own name) you will receive a Notice Regarding the Availability of Proxy Materials in the mail, which contains instructions on how to access our proxy materials and vote electronically through the Internet or to request printed proxy materials so you may vote by telephone or mail.

If your shares are registered in the name of a broker or other nominee, that nominee will forward the Notice Regarding the Availability of Proxy Materials to you and you can direct that nominee to vote your shares. Alternatively, if your nominee participates in a program provided through Broadridge Financial Solutions, Inc. that allows you to vote by telephone or through the Internet, your nominee will send you a voting form with telephone and Internet voting instructions.

If you plan to attend the virtual meeting and prefer to vote online, you may still do so even if you have already returned your proxy.

PLEASE NOTE, HOWEVER, THAT IF A BROKER, BANK OR OTHER NOMINEE HOLDS YOUR SHARES OF RECORD AND YOU WISH TO VOTE AT THE MEETING, YOU MUST OBTAIN A PROXY ISSUED IN YOUR NAME FROM THE BROKER, BANK OR OTHER NOMINEE.

In this document, unless the context requires otherwise, the words “Ionis,” “Company,” “we,” “our” and “us” refer only to Ionis Pharmaceuticals, Inc. and its subsidiaries and not to any other person or entity.

NOTICE OF 2023 ANNUAL MEETING OF STOCKHOLDERS

Carlsbad, California
April 20, 2023

ALL STOCKHOLDERS ARE CORDIALLY INVITED TO ATTEND THE VIRTUAL MEETING VIA LIVE WEBCAST.

IONIS PHARMACEUTICALS, INC.
2855 Gazelle Court
Carlsbad, CA 92010

PROXY STATEMENT
FOR THE 2023 ANNUAL MEETING OF STOCKHOLDERS

To Be Held on June 1, 2023

QUESTIONS AND ANSWERS ABOUT THESE PROXY MATERIALS AND VOTING

Why did I receive a Notice Regarding the Availability of Proxy Materials on the Internet?

The Board of Directors (the “Board”) of Ionis Pharmaceuticals, Inc. (the “Company”) is soliciting your proxy to vote at the 2023 Annual Meeting of Stockholders, including at any adjournments or postponements of the meeting. We are distributing our Notice of Annual Meeting and Proxy Materials (the “Notice”) by mail using the Notice and Access procedures established by the United States Securities and Exchange Commission (the “SEC”). The Notice is important because it contains a control number and instructions that will allow you to access our proxy materials and vote electronically through the Internet or to request printed proxy materials so you may vote by telephone or mail. Your vote is very important. Whether or not you plan to attend the meeting, please be sure to vote your shares as soon as possible to ensure your representation at the meeting. All stockholders will have the ability to access the proxy materials on the website referred to in the Notice or request to receive a printed set of the proxy materials. You can find instructions on how to access the proxy materials over the Internet or to request a printed copy in the Notice.

We intend to mail the Notice on April 21, 2023 to all stockholders of record entitled to vote at the Annual Meeting.

Will I receive any other proxy materials by mail?

We may send you a proxy card, along with a second Notice, on or after May 3, 2023.

Where and when is the Annual Meeting?

The Annual Meeting will be held on Thursday, June 1, 2023, at 2:00 p.m. Pacific Time. The Annual Meeting will be held in a virtual meeting format only, via live webcast on the Internet, with no physical in-person meeting. To participate, vote or submit questions during the Annual Meeting via live webcast, please visit www.virtualshareholdermeeting.com/IONS2023.

If you cannot attend, please note that we will make a webcast of the presentation that follows the Annual Meeting available on the day of the meeting and for a limited time following the meeting at www.ionispharma.com.¹

If you plan to attend the virtual meeting and prefer to vote online, you may still do so even if you have already returned your proxy.

How do I attend the Annual Meeting?

We will be hosting the Annual Meeting via live webcast on the Internet. You will not be able to attend the Annual Meeting in person.  All stockholders at the close of business on April 3, 2023 can listen to and participate in the Annual Meeting live via the internet at www.virtualshareholdermeeting.com/IONS2023. The webcast will begin at 2:00 p.m. Pacific Time on June 1, 2023. Stockholders may vote and submit questions while connected to the Annual Meeting on the Internet. A summary of the information you need to attend the Annual Meeting online is provided below.

¹ Any information that is included on or linked to our website is not part of this Proxy Statement or any registration statement or report that incorporates this Proxy Statement by reference.

What do I need in order to be able to participate in the Annual Meeting online?

You will need the 16-digit control number included on your Notice of Internet Availability of Proxy Materials, proxy card or voting instruction form that accompanied your proxy materials to be able to vote your shares or submit questions during the virtual Annual Meeting.  Instructions on how to connect and participate in the Annual Meeting via the internet, including how to demonstrate proof of stock ownership, are posted at www.virtualshareholdermeeting.com/IONS2023.

What if I have technical difficulties or trouble accessing the live webcast of the Annual Meeting?

If you encounter any difficulties accessing the live webcast of the Annual Meeting or during the Annual Meeting, please call the telephone number that is listed at www.virtualshareholdermeeting.com/IONS2023 for assistance. If you misplace the 16-digit control number that is required to enter the Annual Meeting webcast and are a stockholder of record, operators providing assistance at this telephone number will be able to provide it to you. However, if you need your 16-digit control number and hold your shares in an account at a brokerage firm, bank, dealer, or other similar organization, you must contact that organization to obtain your 16-digit control number prior to the Annual Meeting.

Who can attend and vote at the Annual Meeting?

Only stockholders at the close of business on April 3, 2023 may attend and vote at the Annual Meeting. On this record date, there were 143,023,414 shares of common stock outstanding and entitled to vote.

Stockholder of Record: Shares Registered in Your Name

If on April 3, 2023 your shares were registered directly in your name with our transfer agent, American Stock Transfer & Trust Company, then you are a stockholder of record. As a stockholder of record, you may vote online at the virtual meeting or vote by proxy over the telephone, by mail, or the Internet as instructed under the section below titled “How do I vote?” Whether or not you plan to attend the meeting, we urge you to fill out and return the proxy card or vote over the telephone or Internet to ensure your vote is counted.

Beneficial Owner: Shares Registered in the Name of a Broker or Bank

If on April 3, 2023 you did not own shares in your name, but rather in an account at a brokerage firm, bank, dealer or other similar organization, then you are the beneficial owner of shares held in “street name” and that organization is forwarding the Notice to you. The organization holding your account is the stockholder of record for purposes of voting at the Annual Meeting. As a beneficial owner, you may direct your broker or other agent regarding how to vote the shares in your account. If your shares are registered in the name of a broker or other nominee, your nominee may be participating in a program provided through Broadridge Financial Solutions, Inc. (“Broadridge”) that also allows you to vote by telephone or through the Internet. If so, the voting form your nominee sends you will provide telephone and Internet instructions. You are also invited to attend the virtual Annual Meeting via live webcast.

PLEASE NOTE, HOWEVER, THAT IF A BROKER, BANK OR OTHER NOMINEE HOLDS YOUR SHARES OF RECORD AND YOU WISH TO VOTE AT THE MEETING, YOU MUST OBTAIN A PROXY ISSUED IN YOUR NAME FROM THE BROKER, BANK OR OTHER NOMINEE.

What am I voting on?

The following matters are scheduled for a vote:

What if another matter is properly brought before the meeting?

The Board knows of no other matters that will be presented for consideration at the Annual Meeting. If any other matters are properly brought before the meeting, the persons named in the accompanying proxy intend to vote on those matters in accordance with their best judgment.

How do I vote?

You may vote in one of the following ways:

The procedures for voting are fairly simple:

For Shares Registered in Your Name:

If you are a stockholder of record, you may go to www.proxyvote.com to vote your shares through the Internet up until 11:59 p.m. Eastern Time on May 31, 2023. The votes represented by your proxy will be displayed on the computer screen and you will be prompted to submit or revise your votes as desired.

To vote your shares by telephone, you must first request that we send proxy materials to you by following the instructions included in your Notice. Once you have received your proxy materials, you may vote using a touch-tone telephone by calling 1-800-690-6903 up until 11:59 p.m. Eastern Time on May 31, 2023 and following the recorded instructions. Please have your proxy card available at the time you vote.

To vote using the proxy card, simply complete, sign and date the proxy card that may be delivered to you and return it promptly in the envelope provided. If we receive your signed proxy card before the Annual Meeting, we will vote your shares as you direct.

For Shares Registered in the Name of a Broker or Bank:

If your broker or bank holds your shares in “street name,” you will need to obtain a proxy form from the institution that holds your shares and follow the instructions included on that form regarding how to instruct your broker to vote your shares. If you do not give instructions to your broker, your broker can vote your shares with respect to “discretionary” items, but not with respect to “non-discretionary” items. Discretionary items are proposals considered routine under the rules of the New York Stock Exchange (“NYSE”) on which a broker may vote shares held in street name in the absence of your voting instructions. While Ionis is listed with the Nasdaq Stock Market (“Nasdaq”), NYSE rules affect how brokers licensed by the NYSE can vote in a director election of any company, including companies listed with Nasdaq. The proposal to ratify Ernst & Young LLP as independent auditors is a discretionary item. Proposals 1 through 5 regarding (1) the election of Directors, (2) approval, on an advisory basis, of our executive compensation, (3) approval, on an advisory basis, of the frequency of future advisory votes on executive compensation, (4) approval of an amendment of the Ionis Pharmaceuticals, Inc. 2011 Equity Incentive Plan to increase the aggregate number of shares of common stock authorized for issuance under such plan by 5,500,000 shares to an aggregate of 35,200,000 shares, and (5) ratification of increasing the vesting of future initial stock option and restricted stock unit awards to new non-employee Directors from one year to three years are non-discretionary items. If you do not give your broker instructions for a non-discretionary item your broker cannot vote your shares, which will result in what is commonly referred to as a “broker non-vote.” Broker non-votes will have no effect.

A number of brokers and banks are participating in a program provided by Broadridge that allows proxies to vote shares by means of the telephone and Internet. If your shares are held in an account with a broker or bank participating in the Broadridge program, you may vote your shares by telephone or through the Internet by having the voting form in hand and calling the number or going to the website indicated on the form and following the instructions.

What if I return a proxy card or otherwise vote but do not make specific choices?

If you return a signed and dated proxy card or otherwise vote without marking voting selections, one of the individuals named on your proxy card will vote your shares as follows:

If any other matter is properly presented at the meeting, one of the individuals named on your proxy card will vote your shares using his or her best judgment.

Who is paying for this proxy solicitation?

Our Board is soliciting your proxy to vote at the Annual Meeting. We will bear the entire cost of soliciting proxies, including preparing, assembling, making available on the Internet and printing and mailing this Proxy Statement, the proxy card and any additional information furnished to stockholders. We will furnish copies of solicitation materials to banks, brokerage houses, fiduciaries and custodians holding our common stock in “street name” on behalf of beneficial owners of such shares. We may reimburse persons representing beneficial owners of our common stock for their costs of forwarding solicitation materials to such beneficial owners. Our Directors, officers or other employees may supplement original solicitation of proxies by telephone, electronic mail, or personal solicitation. We will not pay our Directors, officers, or employees any additional compensation for soliciting proxies. However, please be aware that you must bear any costs associated with your Internet service, such as usage charges from Internet access providers or telephone companies.

What does it mean if I receive more than one Notice?

If you receive more than one Notice or proxy card, your shares are registered in more than one name or are registered in different accounts. Please complete, sign, date and return each separate proxy card or vote by telephone or through the Internet by following the instructions included with each Notice or proxy card to properly vote your shares.

Can I change my vote after submitting my proxy?

Yes. Once you have submitted your proxy by mail, Internet, or telephone, you may revoke it at any time before we exercise it at the Annual Meeting. You may revoke your proxy by any one of the following four ways:

If your shares are held by your broker, bank, or other agent, you should follow the instructions provided by your broker, bank, or other agent.

When are stockholder proposals due for next year’s Annual Meeting?

If you have a proposal that you would like us to include in our proxy materials for next year’s Annual Meeting of Stockholders, you must send the proposal to us in writing by no later than December 22, 2023 and comply with all applicable requirements of Rule 14a-8 promulgated under the Securities Exchange Act of 1934, as amended (“Rule 14a-8”). Stockholders wishing to submit proposals or Director nominations that are not to be included in such proxy materials for next year’s Annual Meeting of Stockholders pursuant to Rule 14a-8 must do so no later than the close of business on February 2, 2024, as required by our bylaws. Stockholders should also review our bylaws, which contain additional requirements with respect to advance notice of stockholder proposals and Director nominations. In addition to satisfying the foregoing requirements under our bylaws, stockholders who intend to solicit proxies in support of director nominees other than the Company’s nominees must also comply with the additional requirements of Rule 14a-19(b).

What is the quorum requirement?

A quorum of stockholders is necessary to hold a valid meeting. A quorum will be present at the meeting if at least a majority of the outstanding shares entitled to vote are represented at the meeting or by proxy. We will count your shares towards the quorum only if you submit a valid proxy vote (or one is submitted on your behalf by your broker, bank, or other nominee) or vote at the meeting. We will count abstentions and broker non-votes towards the quorum requirement.

If there is no quorum, the holders of a majority of shares present at the meeting or represented by proxy may adjourn the meeting to another date.

How are votes counted?

Each share of our common stock you own entitles you to one vote. Your Notice and proxy card indicates the number of shares of our common stock you owned at the close of business on April 3, 2023. The inspector of elections will count votes for the meeting and will separately count “For” and “Against” votes, abstentions, and broker non-votes. With respect to Proposal 1, the election of Directors, stockholders do not affirmatively vote “Against” nominees. Instead, if you do not want to elect a particular nominee, you should choose to “Withhold” a vote in favor of the applicable nominee for Director and the inspector of elections will count each “Withhold” for each nominee. Abstentions will have no effect on Proposal 1 or Proposal 3. Abstentions will count towards the vote total for Proposal 2, Proposal 4, Proposal 5 and Proposal 6 and will have the same effect as “Against” votes. Broker non-votes have no effect and the inspector of elections will not count them towards the vote total for any proposal.

What are “broker non-votes”?

Broker non-votes occur when a beneficial owner of shares held in “street name” does not give instructions to the broker or nominee holding the shares as to how to vote on matters deemed “non-routine.” If your broker holds your shares in “street name,” and you do not give instructions to your broker, your broker can vote your shares with respect to “discretionary” items, but not with respect to “non-discretionary” items. The proposal to ratify Ernst & Young LLP as independent auditors is a discretionary item. Proposals 1 through 5 regarding (1) the election of Directors, (2) approval, on an advisory basis, of our executive compensation, (3) the advisory vote on the frequency of future advisory votes on executive compensation, (4) approval of an amendment of the Ionis Pharmaceuticals, Inc. 2011 Equity Incentive Plan to increase the aggregate number of shares of common stock authorized for issuance under such plan by 5,500,000 shares to an aggregate of 35,200,000 shares, and (5) ratification of increasing the vesting of future initial stock option and restricted stock unit awards to new non-employee Directors from one year to three years, are all non-discretionary items.

How many votes are needed to approve each proposal?

How can I find out the results of the voting at the Annual Meeting?

We will announce preliminary voting results at the Annual Meeting. In addition, we will publish final voting results in a current report on Form 8-K that we expect to file within four business days after the Annual Meeting. If final voting results are not available to us in time to file as part of a Form 8-K within four business days after the Annual Meeting, we intend to file a Form 8-K to publish preliminary results and, within four business days after we know the final results, file an additional Form 8-K to publish final results.

How can I elect to receive materials for future Annual Meetings electronically?

We are pleased to offer to our stockholders the benefits and convenience of electronic delivery of Annual Meeting materials, including:

We encourage you to conserve natural resources and to reduce printing and mailing costs by signing up for electronic delivery of our stockholder communications after you place your current vote at www.proxyvote.com.

List of Shareholders

A list of stockholders entitled to vote at the Annual Meeting will be available for examination at our principal executive offices at the address listed above for a period of 10 days prior to the Annual Meeting, and will be available during the virtual Annual Meeting for examination at www.virtualshareholdermeeting.com/IONS2023.

Environmental, Social and Governance Initiatives

At Ionis, we work with a sense of urgency to discover, develop and deliver breakthrough medicines to create a better future for people with devastating diseases. We believe operating responsibly and sustainably creates value for the Company and our stakeholders. We consider the long-term impact we can make across five key areas:

We continue to build our corporate responsibility program and environmental, social and governance (“ESG”) framework to support our ongoing commitment to operate our business responsibly and sustainably. In 2022, we established a formal Corporate Responsibility Steering Committee (the “Steering Committee”) to guide us as we develop the right programs and policies to continue to integrate ESG across our organization. Our corporate responsibility initiatives, policies and programs are reviewed on a regular basis by the Steering Committee and its recommendations are key to driving efforts to advance our corporate responsibility strategy to support our growth. The Steering Committee reports to our Chief Executive Officer (“CEO” or “PEO”) and consists of senior leaders in key functions across the Company, including legal, finance, human resources and corporate affairs.

Product Quality and Safety

Our senior management is focused on proactively managing risks associated with quality and safety. The Ionis Quality Steering Committee oversees our quality programs including our formal Quality Management System (“QMS”). In addition, our team of researchers and developers receive training according to internationally recognized current Good Laboratory Practice (“GLP”), Good Clinical Practice (“GCP”), Good Manufacturing Practice (“GMP”), Good Distribution Practice (“GDP”) and Good Pharmacovigilance Practice (“GVP”) standards.

Safety of Clinical Trial Participants

Clinical research is a key component of developing safe and effective new medicines to treat diseases where no other therapeutic approaches have proven effective. We require adherence to GCP guidance and regional laws and regulations for designing and conducting clinical trials and reporting trial results. Additionally, Independent Review Boards (“IRBs”) monitor the ethical conduct of our trials and have the authority to approve, modify or stop trials. Independent ethics committees, IRBs and health authorities review and approve essential clinical trial documents, such as protocols and informed consent forms before they are used.

Access to Medicines

At Ionis, we believe the goal of making life-changing medicines available to patients in need is achieved through rigorous science, innovation and well-designed clinical studies, followed by regulatory approval. We also recognize that to fulfill this goal, we need to get our medicines to those who need them most. We work closely with patient advocacy organizations and communities around the world to identify and understand the needs of the people we serve. We also have an Expanded Access Policy that aims to provide access to investigational products based on select criteria and to support those patients with a serious or immediately life-threatening condition who have exhausted all available medical options and are unable to enroll in any ongoing clinical study.

Human Resources Management

Our pursuit of excellence begins with our talent recruitment process. Whether we are hiring entry-level, mid-career or executive-level candidates, we look beyond a candidate’s academic qualifications to identify valuable experience and skills that will add to our culture and organizational capacity. We also offer internships, post-doctorate fellowships and clinical fellowships to extend the reach of our talent pipeline.

In addition to our supportive and inclusive culture, we offer employees a combination of robust and meaningful benefits, compensation and well-being programs. Our compensation is awarded based on individual and Company performance. We recognize achievements with salary increases, equity awards, promotions and bonus opportunities. We offer highly competitive benefits to all regular employees who work at least 20 hours per week and a range of industry-leading wellness and stress management initiatives and programs.

Beginning with our employees’ first day, we aim to provide them with tools and trainings necessary to succeed at every stage of their careers. Our robust training and development program illustrated in the graphic below, referred to as “The Learning Continuum,” supports the development of our employees as they progress through their careers.

Diversity, Equity and Inclusion

Diversity, equity and inclusion (“DEI”) is embedded within our culture at Ionis. We have a corporate objective to enhance and improve DEI initiatives across our organization supported by our employee-led DEI Advisory Council to our CEO. Our senior management regularly monitors performance against our objectives and our Board of Directors oversees our DEI programs through semi-annual reporting and discussion. We offer a three-part diversity training series, which focuses on unconscious bias, inclusion and belonging, and allyship and advocacy. We also provide mandatory anti-discrimination and anti-harassment training for all employees.

To promote DEI within our organization, we have employee-led, executive-sponsored Employee Resource Groups (“ERGs”). Our ERGs are designed to build cultural awareness, promote an inclusive and supportive culture and support our business goals. Many of our ERG employee leaders also serve on the CEO’s DEI Advisory Council. Our ERGs include:

Employee Health and Safety

We strive to protect the health and safety of all employees, contractors and visitors. We are also committed to providing an injury-free workplace. We have implemented a safety management system that uses monitoring, auditing and target setting to continuously improve our occupational health and workplace safety. Regular safety training is provided to all laboratory and manufacturing employees, and health and safety compliance is audited routinely.

Employee Pay Equity

We are committed to paying our employees fairly, regardless of their gender, race or other personal characteristics. To achieve our objective, we benchmark and evaluate pay based on market data and consider factors such as an employee’s role, experience, performance as well as internal equity. We also regularly review our compensation practices, both in terms of our overall workforce and in terms of individual employees. In 2021, we engaged an independent third-party expert to perform a pay equity analysis that reviewed pay equity by gender, race and age. The results of this analysis did not reveal any pay gaps based on gender, race or age. In 2022, we performed an internal analysis, leveraging our biostatistics team. The analysis showed similar results to the analysis performed in 2021. In addition, we implemented a comprehensive plan to comply with the new California pay transparency law that went into effect on January 1, 2023.

Commitment to Our Communities

Every year we provide support—from financial assistance to employee volunteerism and beyond—to various organizations that have a positive impact in our communities. We seek sustainable partnerships and initiatives that encourage scientific innovation and help address unmet patient needs, including disease awareness, education and support. In 2022, we donated approximately $2.9 million to charitable groups. We also coordinated volunteering days and provided in-kind support to a range of organizations, including:

In addition, we have implemented the Adapt X Ionis Hope Scholarship grant program in collaboration with Adapt Functional Movement Center. This program provides fully sponsored care services, rehabilitation programs and education to individuals impacted by ALS. Scholarship grants under this program support ALS patients’ participation in group classes, massage therapy, meditation and functional movement therapy offered by Adapt Functional Movement Center located in Carlsbad, California.

Environmental Sustainability

We are committed to conducting our operations in an environmentally responsible manner to protect our employees, the environment and the communities in which we operate. We have established an environmental management system (“EMS”) that establishes policies and procedures, outlines processes for identifying risk and implementing preventative measures, assigns roles and responsibilities and sets performance standards to improve our environmental performance.

Our Carlsbad, California, headquarters was designed and built to meet energy-efficient Leadership in Energy and Environmental Design (“LEED”) standards, a green building rating system. Our conference center was also built to the U.S. Green Building Council’s Green Building Codes and Standards in alignment with LEED standards. In addition, we are in the process of constructing a new research and development facility and we recently began work on a new state-of-the-art manufacturing facility, both of which will include sustainability and environmental protection features. We have several solar photovoltaic systems in place for our current buildings and electric vehicle charging stations at our Carlsbad headquarters that are available to all employees and visitors.

Governance and Integrity

We are guided by our Code of Ethics and Business Conduct (“Code”) that applies to all employees, including executive officers and all members of our Board of Directors. We are committed to upholding a comprehensive and rigorous ethics program, including anti-bribery and anti-corruption commitments as detailed in our Code and our anti-bribery and anti-corruption policy. We maintain the Ionis Helpline, a confidential 24/7 helpline, hosted through a third-party provider, which is available by phone or web and provided in local languages. We proactively communicate the availability of the Ionis Helpline on our external website, on our internal intranet site and on posters in our buildings.

We encourage you to view our 2022 Corporate Responsibility Report published on our website for more detailed information regarding our ESG initiatives. Nothing in the report or on our website shall be deemed incorporated by reference into this Proxy Statement.

PROPOSAL 1

ELECTION OF DIRECTORS

Information about our Board

The Board is divided into three classes. Presently, the Board has nine members with two classes consisting of four Directors each and one class consisting of one Director. Each class serves a three-year term and we hold elections each year at the Annual Meeting to elect the Directors whose terms are expiring. Our Nominating, Governance and Review Committee of the Board reviews the Company’s classified Board structure every year to evaluate whether it continues to be the appropriate structure for the Company. Following such evaluation, we believe maintaining this structure is critical at this time given the Company’s recent CEO transition and to enable us to execute on our new commercial strategy, which we believe will generate long-term sustainable value for stockholders.

In addition, the Board may elect a new Director to fill any vacant spot, including a vacancy caused by an increase in the size of the Board. However, the Board believes it is important for our stockholders to ratify any member of the Board whom the Board appoints. As a result, whenever the Board appoints a new member, the Board will submit such new member’s directorship for ratification or election at the next regularly scheduled Annual Meeting of Stockholders.

The Board represents the interests of our stockholders by overseeing the Chief Executive Officer and other members of senior management in our operations. The Board’s goal is to optimize long-term value by providing guidance and strategic oversight to Ionis’ management on our stockholders’ behalf.

Information about the 2023 Elections

The Board has nominated four individuals for election at the Annual Meeting. Each of the nominees currently serves as one of our Directors. Spencer R. Berthelsen, Joan E. Herman, B. Lynne Parshall, and Joseph H. Wender have each served as a Director for the periods set forth in the table below.

Dr. Berthelsen, Ms. Herman, Ms. Parshall, and Mr. Wender have each been previously re-elected by our stockholders. If re-elected, Dr. Berthelsen, Ms. Herman, Ms. Parshall, and Mr. Wender will serve until the 2026 Annual Meeting or, in each case, until his or her successor is elected and has qualified, or until his or her earlier death, resignation or removal.

Our bylaws provide a majority vote standard for the election of directors in uncontested elections. In an uncontested election, the majority vote standard means that to be elected, a Director nominee must receive a majority of the votes cast in the election such that the number of shares voted “For” the nominee must exceed 50% of the votes cast with respect to that Director. The number of votes cast with respect to a Director’s election excludes abstentions and broker non-votes. In contested elections where the number of nominees exceeds the number of Directors to be elected, the vote standard will be a plurality of the shares present or represented by proxy and entitled to vote.

If a nominee who already serves as a Director is not elected, and no successor is elected, the Director will offer to tender his or her resignation to the Board. The Nominating, Governance and Review Committee will make a recommendation to the Board on whether to accept or reject the resignation, or whether to take other action. The Board will act on the Nominating, Governance and Review Committee’s recommendation and publicly disclose its decision and the rationale behind it within 90 days from the date of the certification of the election results. The Director who tenders his or her resignation will not participate in the recommendation of the Nominating, Governance and Review Committee or in the Board’s decision. If a nominee’s failure to be elected at the Annual Meeting results in a vacancy on the Board, then the Board can fill the vacancy.

On March 13, 2023, the Nominating, Governance and Review Committee provided its recommendations to the Board for Director nominees to stand for election at the Annual Meeting. Following such recommendations, the Board determined it would be in the best interests of Ionis and its stockholders to nominate Dr. Berthelsen, Ms. Herman, Ms. Parshall, and Mr. Wender to be elected as Directors at the Annual Meeting. We provide below a short biography for each nominee. Dr. Berthelsen, Ms. Herman, Ms. Parshall, and Mr. Wender have agreed to serve if elected, and we have no reason to believe that they cannot serve. However, if they cannot serve, we may vote your proxy for another nominee proposed by the Board, or the Board may reduce the number of authorized Directors.

Board Skills Matrix

The following tables illustrate (i) the core skills the Nominating, Governance and Review Committee considers to be the most relevant to the Board’s oversight role with respect to our business, and (ii) each of our Director’s skills in such areas indicated by check mark. The lack of a check mark for a particular item for a Director does not mean the Director lacks that skill; rather, a check mark indicates a specific area of focus or expertise for which the Board relies on such Director. Additional information about each Director’s background, business experience and other matters, including a description of how each individual’s experience qualifies the Director to serve on the Board, is provided below beginning on the following page of this Proxy Statement.

Director Skills and Qualifications	Spencer R. Berthelsen	Allene M. Diaz	Michael Hayden	Joan E. Herman	Joseph Klein III	Joseph Loscalzo	Brett Monia	B. Lynne Parshall	Joseph H. Wender
Industry Experience
Executive/Leadership Experience
Corporate Governance and Public Company Board Experience
Accounting, Financial or Investment Experience
Scientific, Research or Development Experience
Commercial, Marketing, Reimbursement or Sales Experience

Biographies of the Nominees for Election for a Three-Year Term Expiring at the 2026 Annual Meeting

Spencer R. Berthelsen, M.D., age 70², has served as a Director of Ionis since May 2002. Dr. Berthelsen practiced Internal Medicine with the Kelsey Seybold Clinic, a 400-physician medical group based in the Texas Medical Center in Houston, until March 2017. Dr. Berthelsen began at Kelsey Seybold in 1980 and served in various senior leadership positions throughout his nearly four-decade career at the clinic, including Chairman of the Department of Internal Medicine, Medical Director and Managing Director. He also served as Chairman of its board of directors from October 2001 through April 2016. He has served as Clinical Professor of Medicine at both Baylor College of Medicine and The University of Texas Health Science Center. Previously, Dr. Berthelsen served on the boards of the Texas Academy of Internal Medicine and the Caremark National Pharmacy and Therapeutics Committee from 1999 through 2005.

The Board believes Dr. Berthelsen is uniquely suited to serve on the Board because of his experience advising a large multispecialty group practice and almost 40 years of experience as a practicing physician.

Joan E. Herman, age 69, has served as a Director of Ionis since June 2019. Since 2008, Ms. Herman has served as President and Chief Executive Officer of Herman & Associates, a management consulting firm that specializes in advising private equity firms investing in healthcare. She has experience leading healthcare and payor companies, serving in several executive positions at Elevance (formerly Anthem, which was formerly WellPoint), including as President and Chief Executive Officer of several different business units. Ms. Herman also served as a Senior Vice President of Phoenix Life Insurance Company. Since January 2013, Ms. Herman has served on the board of directors of Encompass Health (formerly HealthSouth). Ms. Herman also serves on the board of managers of Fifth Avenue Private Equity 17. She previously served on the boards of both Convergys and AARP Services, Inc.

The Board believes Ms. Herman is uniquely suited to serve on the Board because of her experience leading healthcare and payor companies. Ms. Herman also brings valuable cybersecurity experience to the Board through her cybersecurity certification from the National Association of Corporate Directors (“NACD”).

B. Lynne Parshall, age 68, has served as a Director of Ionis since September 2000. Ms. Parshall is CEO of Lyme Pinnacle Consulting, which provides strategic advisory services to biotechnology companies. Ms. Parshall was a Senior Strategic Advisor to Ionis from January 2018 to December 2022. Previously she served as our Chief Operating Officer from December 2007 through January 2018 and as our Chief Financial Officer from June 1994 through December 2012. She also served as our Corporate Secretary through 2014 and has served with the Company in various executive roles since November 1991. Prior to joining Ionis, Ms. Parshall practiced law at Cooley LLP, outside counsel to Ionis, where she was a partner from 1986 to 1991. Ms. Parshall is a member of the American and California bar associations. Ms. Parshall has served on the boards of directors of Foghorn Therapeutics Inc, a public biopharmaceutical company, since August 2022, Cytokinetics, Inc., a public biopharmaceutical company, since February 2013, and Akcea Therapeutics, Inc., from January 2015 until the completion of the Company’s merger with Akcea Therapeutics, Inc. (the “Akcea Merger”). Ms. Parshall also serves on the Board of Directors of several private biotechnology companies.

The Board believes Ms. Parshall is uniquely suited to serve on the Board primarily because, as the former Chief Operating Officer and former executive of the Company for over 26 years, she has valuable Company-specific experience and expertise. In addition, Ms. Parshall has over 35 years of experience structuring and negotiating strategic licensing and financing transactions in the life sciences field. She has also sat on the Boards of Directors of numerous biotechnology companies. Ms. Parshall recently received a directorship certification from the NACD for completion of a director education program designed as a framework for continuous learning. Ms. Parshall is also in the process of obtaining a cybersecurity certification from the NACD.

Joseph H. Wender, age 78, has served as a Director of Ionis since January 1994 and our Independent Lead Director since December 2020. Mr. Wender began with Goldman, Sachs & Co. in 1971 and became a General Partner of that firm in 1982, where he headed the Financial Institutions Group for over a decade. Since January 2022 he has been a Senior Consultant to Goldman Sachs & Co., from January 2019 to December 2021 he was an Advisory Director to Goldman Sachs & Co. and from January 2008 to December 2018 was a Senior Consultant to Goldman Sachs & Co. He is a former Independent Trustee of the Schwab Family of Funds and Director of Grandpoint Capital, a bank holding company. Mr. Wender also is co-CEO and partner of Colgin Cellars. Since March 2014, Mr. Wender has been a Director of Outfront Media, a lessor of advertising space on out-of-home advertising structures, and has served as its Lead Independent Director since 2016.

The Board believes Mr. Wender is uniquely suited to serve on the Board and as our Independent Lead Director primarily because, with over 50 years of experience as an investment banker with Goldman, Sachs & Co., he provides Ionis important advice regarding our financial reporting, corporate finance, strategic transactions, and compensation matters. He also has a deep understanding of our Company due to his tenure on the Board and provides invaluable advice as we grow and diversify our business.

² The ages of all our Directors are as of March 1, 2023. 

THE BOARD UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE ELECTION OF THE ABOVE NOMINEES.

Biography of the Director Whose Term Expires at the 2024 Annual Meeting

Brett P. Monia, Ph.D., age 61, has served as a Director of Ionis since March 2019. Dr. Monia was promoted to Chief Executive Officer in January 2020. From January 2018 to December 2019, Dr. Monia served as our Chief Operating Officer, from January 2012 to January 2018, as our Senior Vice President, Drug Discovery, from February 2009 to January 2012, as our Vice President, Drug Discovery, and from October 2000 to February 2009, as our Vice President, Preclinical Drug Discovery. From October 1989 to October 2000, he held various positions within our Molecular Pharmacology department. Following the Akcea Merger, Dr. Monia became the President of Akcea. Dr. Monia has served on the board of directors of Cognition Therapeutics, Inc., a public clinical stage neuroscience company, since October 2020.

The Board believes Dr. Monia is uniquely suited to serve on the Board primarily because, as an executive officer of the Company since 2012 and a founder of Ionis, he has dedicated more than 33 years to discovering and developing antisense-based drugs. Dr. Monia is the inventor on over 100 issued patents and has directly supervised programs resulting in the clinical development of more than 40 antisense-based drugs across a broad range of therapeutic areas.

Biographies of the Directors Whose Terms Expire at the 2025 Annual Meeting

Allene M. Diaz, age 58, has served as a Director of Ionis since June 2021. Since 2020 Ms. Diaz has led AMD Consulting, a new product strategy and portfolio management consulting practice based in Boston, MA. Previously, Ms. Diaz served as Senior Vice President, Research and Development Portfolio Management at GlaxoSmithKline, a global pharmaceutical company based in Brentwood, UK, from September 2019 through June 2020 and as Senior Vice President, Global Commercial Development and Program Strategy at TESARO Inc., a biotechnology company based in Waltham, MA, from May 2015 through August 2019. Prior to that she held a variety of commercial leadership roles in the Merck Serono and EMD Serono divisions of Merck KGaA. Earlier in her career, Ms. Diaz held management, operating, sales, and medical affairs roles at various biopharmaceutical companies, including Pfizer, Parke-Davis, Biogen, and Amylin Pharmaceuticals. She has contributed to the global development, launch or commercialization of multiple transformative products across several therapeutic areas. Ms. Diaz has served on the board of directors of Mersana Therapeutics since March 2021. Ms. Diaz served on the board of directors of Allena Pharmaceuticals from April 2019 to September 2022, BCLS Acquisition Corporation from October 2020 to October 2022, and Erytech Pharma SA from September 2016 to September 2019.

The Board believes Ms. Diaz is uniquely suited to serve on the Board primarily because of her deep expertise in product development, commercial strategy, market access, and portfolio management.

Michael Hayden, CM, OBC, MB, ChB, Ph.D., FRCP(C), FRSC, age 71, has served as a Director of Ionis since September 2018. Dr. Hayden has been Chief Executive Officer and Director of Prilenia Therapeutics, a private clinical stage biotech company, since September 2018. Dr. Hayden is also a Killam Professor at the University of British Columbia, the highest honor UBC can confer on any faculty member. In addition, he is an accomplished scientist and physician. He was the President of Global R&D and Chief Scientific Officer at Teva Pharmaceuticals from 2012 to 2017. During this time approximately 35 new products were approved in major markets with many for diseases of the central nervous system. In 2015 Teva R&D was recognized as one of the 100 most exciting innovators in the pharmaceutical industry by IDEA Pharma and in 2017 Teva R&D ranked top of the industry for central nervous system development and clinical trial success rate by Pharma Intelligence. Dr. Hayden has founded three biotechnology companies and has been the recipient of numerous prestigious honors and awards, including being inducted into the Canadian Medical Hall of Fame and receiving the July 2012 Diamond Jubilee Medal on behalf of HRH Queen Elisabeth II. He has also received the Canada Gairdner Wightman award. Dr. Hayden was awarded the Order of Canada, the Order of British Columbia, named Canada’s Health Researcher of the Year by Canadian Institutes of Health Research, and received the Prix Galien Award in 2007. Dr. Hayden served on the board of Aurinia Pharmaceuticals, Inc. until August 2021 and Xenon Pharmaceuticals until June 2022, and currently serves on the boards of, 89Bio, AbCellera Biologics and Oxford Biomedica.

The Board believes Dr. Hayden is uniquely suited to serve on the Board because he has significant expertise in pharmaceutical research and development, both in academia and in commercial settings. In addition, Dr. Hayden has made substantial research contributions to advance treatments for brain diseases, which is particularly valuable as we grow our neurologic disease franchise, a key focus of ours. Dr. Hayden also serves as the Chair of our Science/Medical Committee, providing invaluable guidance on the key scientific and development issues facing our technology and medicines in development.

Joseph “Skip” Klein, III, age 61, has served as a Director of Ionis since December 2005 and is Chairman of the Audit Committee. Mr. Klein is currently Managing Director of Gauss Capital Advisors, LLC, a financial consulting and investment advisory firm focused on biopharmaceuticals, which he founded in March 1998. From September 2003 to December 2008, Mr. Klein also served as a Venture Partner of Red Abbey Venture Partners, L.P., a life science private equity fund. From September 2001 to September 2002, Mr. Klein was a Venture Partner of MPM Capital, a healthcare venture capital firm. From June 1999 to September 2000 when it merged with WebMD Corporation, Mr. Klein served as Vice President, Strategy, for Medical Manager Corporation, a leading developer of physician office management information systems. For over nine years from 1989 to 1998, Mr. Klein was a health care investment analyst at T. Rowe Price Associates, Inc., where he was the founding portfolio manager of the T. Rowe Price Health Sciences Fund. Mr. Klein has served on the boards of directors of The Prospector Funds, Inc., an SEC Registered Investment Company that manages two no-load mutual funds, since September 2007, and Akcea Therapeutics, Inc., from September 2019 until the completion of the Akcea Merger. Mr. Klein also serves on the boards of private and non-profit entities.

The Board believes Mr. Klein is uniquely suited to serve on the Board and as Chairman of the Audit Committee because he is a Chartered Financial Analyst and has extensive public company, venture investment, board, and financial advisory expertise in the life sciences industry, including previously serving as Chairman of the Audit Committee at several public biopharmaceutical companies.

Joseph Loscalzo, M.D., Ph.D., age 71, has served as a Director of Ionis since February 2014 and as Chairman of the Board since June 2021. Dr. Loscalzo is the Hersey Distinguished Professor of the Theory and Practice of Medicine, the Samuel A. Levine Professor of Medicine at Harvard Medical School and Physician-in-Chief Emeritus at Brigham and Women’s Hospital. Dr. Loscalzo is also a co-founder and member of the Scientific Advisory Board of Scipher Medicine, a private network medicine-based company matching patients with their most effective therapy. Dr. Loscalzo received his A.B. degree, summa cum laude, his Ph.D. in biochemistry, and his M.D. from the University of Pennsylvania. He completed his clinical training at Brigham and Women’s Hospital and Harvard Medical School, where he served as Resident and Chief Resident in medicine and Fellow in cardiovascular medicine. Post-training, Dr. Loscalzo joined the Harvard faculty and staff at Brigham and Women’s Hospital in 1984. He rose to the rank of Associate Professor of Medicine, Chief of Cardiology at the West Roxbury Veterans Administration Medical Center, and Director of the Center for Research in Thrombolysis at Brigham and Women’s Hospital. He joined the faculty of Boston University in 1994, first as Chief of Cardiology and, in 1997, Wade Professor and Chair of Medicine, Professor of Biochemistry, and Director of the Whitaker Cardiovascular Institute. He returned to Harvard and Brigham and Women’s Hospital in 2005. Since January 2016, Dr. Loscalzo has served on the board of directors of Leap Therapeutics, Inc., a public biopharmaceutical company.

The Board believes Dr. Loscalzo is uniquely suited to serve on the Board and as our Chairman primarily because of his extensive scientific expertise, including 32 years of research in the areas of vascular biology, thrombosis, and atherosclerosis, and practical knowledge as a practicing physician. Dr. Loscalzo’s expertise and role as a leading cardiologist is particularly valuable as we advance and grow our cardiovascular franchise.

INFORMATION REGARDING THE BOARD AND CORPORATE GOVERNANCE

Independence of the Board of Directors

As required under Nasdaq listing standards, a majority of the members of a listed company’s board of directors must qualify as “independent,” as evaluated by our Nominating, Governance and Review Committee and affirmatively determined by our Board. Our Nominating, Governance and Review Committee consults with our legal counsel to ensure that the Committee’s determinations are consistent with all relevant securities and other laws and regulations regarding the definition of “independent,” including those set forth in the applicable Nasdaq listing standards and applicable SEC rules and regulations, as in effect from time to time.

Consistent with these considerations, after review of all relevant transactions or relationships between each Director, or any of his or her family members, and Ionis, its senior management and its independent auditors, the Board affirmatively has determined that all of our Directors are independent Directors within the meaning of the applicable Nasdaq listing standards and SEC rules and regulations, except for Ms. Parshall and Dr. Monia, our former Chief Operating Officer, and current Chief Executive Officer, respectively. In making this determination, the Board found that none of these independent Directors has a material or other disqualifying relationship with us., Notably, although the Company does business with Goldman Sachs & Co. and Brigham and Women’s Hospital, neither Mr. Wender nor Dr. Loscalzo, respectively, receives any personal compensation directly from revenue received from Ionis.

Information Regarding the Board and its Committees

Leadership Structure

Mr. Wender has served as our Independent Lead Director since December 2020 and Dr. Loscalzo has served as Chairman of our Board since June 2021. The Board believes that the appointment of an Independent Lead Director and the separated roles of Chairman of the Board and Chief Executive Officer reinforce the independence of the Board in its oversight of the business and affairs of the Company. In addition, following the Board’s dissolution of the Agenda Committee of the Board in March 2021, Mr. Wender, Dr. Loscalzo and Dr. Monia have worked together to set the agenda for each Board meeting. We will continue to rely on our Chairman of the Board, Independent Lead Director and CEO to set the agendas for future Board meetings and believe this is the appropriate structure to ensure the Board focuses on the most important matters facing our business at each meeting.

Risk Oversight

Our Board administers its risk oversight function directly and through all of its current committees. We provide a complete description of each committee and its respective roles and responsibilities on pages 18 through 23 of this Proxy Statement. While each of these committees is responsible for evaluating certain risks and overseeing how we manage risk, these committees inform the entire Board about such risks through committee reports.

The Audit Committee oversees management of financial risks and related party transactions. In 2019, the Audit Committee authorized the formation of an internal audit function known as “Advisory Services” that reports to the Audit Committee. Advisory Services strives to accomplish its mission of adding value to and improving the Company’s operations through sustaining a systematic, disciplined, and transparent approach to evaluating the effectiveness of governance, risk management, and control processes. The scope of Advisory Services is to determine if the control environment and internal control structure, as designed and represented by Company management, are adequate and functioning in a manner to enable the Company to meet its business objectives and satisfy its responsibilities. The Audit Committee is also responsible for reviewing and discussing the Company’s cybersecurity risks.

The Nominating, Governance and Review Committee manages risks associated with the independence of the Board and potential conflicts of interests at the Board level, and periodically reviews our policies and procedures and makes recommendations when appropriate. The Compensation Committee reviews risks to the Company related to our executive compensation program and our general compensation philosophies. The Finance Committee evaluates risks to the Company associated with our corporate finance matters. The Science/Medical Committee identifies risks to the Company related to our technology platform. The Compliance Committee is responsible for evaluating risks to the Company in connection with the commercialization of our medicines and good practice guidelines and regulations.

In addition to the formal compliance program, the Board and its committees encourage management to promote a corporate culture that understands risk management and incorporates it into the overall corporate strategy and day-to-day business operations. Our risk management structure also includes an ongoing effort to assess and analyze the most likely areas of future risk for Ionis. As a result, the Board and most of its committees periodically ask our executives to discuss the most likely sources of material future risks and how we are addressing any significant potential vulnerability.

Board Committees

The Board has six committees: an Audit Committee, a Compensation Committee, a Nominating, Governance and Review Committee, a Science/Medical Committee, a Finance Committee, and a Compliance Committee. Below is a description of each committee of our Board. Each of the committees has authority to engage legal counsel or other experts or consultants as it deems appropriate to carry out its responsibilities. The Board has determined that each member of our Audit Committee, Compensation Committee, and Nominating, Governance and Review Committee:

Meetings and Attendance; Committee Members

The Board met six times in 2022. Each Director serving as of December 31, 2022 attended 75% or more of the aggregate number of meetings of the Board and the committees on which such Director served during 2022. We encourage each member of the Board to attend the Annual Meeting of Stockholders.

Board Committee Members

The table below provides membership and meeting information for each of the Board committees until September 2022.

The table below identifies our current Board and committee members as of September 2022.

Audit Committee

The Audit Committee of the Board oversees our corporate accounting and financial reporting process, including audits of our financial statements. For this purpose, the Audit Committee performs several functions.

The Audit Committee:

In addition to the responsibilities listed above, the Audit Committee has the following functions:

Our Audit Committee utilizes an Audit Committee calendar to manage and track its key duties and responsibilities throughout each year.

Our Audit Committee charter requires that each member must be independent. We consider the members to be independent as long as they:

In addition, all Audit Committee members must be financially literate and at least one member must be a “financial expert,” as defined by SEC regulations. Our Board has determined that the Audit Committee’s financial expert is Mr. Klein based on, among other things, his status as a Chartered Financial Analyst and his extensive public company, venture investment, board, and financial advisory expertise in the life sciences industry, including previously serving as Chairman of the Audit Committee at several public biopharmaceutical companies. We provide the Audit Committee with the funding it needs to perform its duties.

The Audit Committee is responsible for reviewing and discussing the Company’s cybersecurity risks. The Audit Committee periodically meets with the Company’s informatics management and with the Company’s independent auditors regarding their annual audit procedures, which include information technology. Ms. Herman has obtained a cybersecurity certification from the NACD and Ms. Parshall is in the process of obtaining such cybersecurity certification. In addition, we utilize an information security awareness training program that is available to all employees. We are not aware of any breaches of our information security systems in the last three years.

The Audit Committee typically meets twice each quarter: once face-to-face in connection with quarterly Board of Directors meetings, and once by teleconference to review quarterly financial results and Form 10-Q or annual financial results and Form 10-K. In 2022, the Audit Committee met nine times. The Board has adopted a written Audit Committee charter, which you can find on our corporate website at www.ionispharma.com.³ Each member meets the membership criteria set forth in the Audit Committee charter and as stated above.

Compensation Committee

The primary function of the Compensation Committee of the Board is to review, modify (as needed) and approve our overall compensation strategy and policies for our executive officers and recommend that the Board approve the compensation and other terms of employment for our Chief Executive Officer. We include a full list of the Compensation Committee’s responsibilities as part of the Compensation Discussion and Analysis (“CD&A”) set forth on pages 48 through 75 of this Proxy Statement. The charter of the Compensation Committee grants the Compensation Committee full access to all of our books, records, facilities and personnel, and authority to obtain, at our expense, advice and assistance from internal and external legal, accounting or other advisors and consultants and other external resources that the Compensation Committee considers necessary or appropriate in the performance of its duties. In particular, the Compensation Committee has the sole authority to retain independent compensation consultants to help the Compensation Committee evaluate executive and Director compensation, including the authority to approve the consultants’ reasonable fees and other retention terms.

We also have a Non-Management Stock Option Committee that, as delegated by the Compensation Committee, may award stock options and RSUs to employees who are below director level in accordance with guidelines adopted by the Compensation Committee. The Non-Management Stock Option Committee has one member, Dr. Monia.

The Compensation Committee met ten times in 2022. The Compensation Committee acted by unanimous written consent (“UWC”) 17 times, which number has increased in recent years due to separate UWCs for grants made pursuant to our 2020 Equity Incentive Plan for legacy Akcea employees. The Board has adopted a written Compensation Committee charter, which you can find on our corporate website at www.ionispharma.com.⁴

³ Any information that is included on or linked to our website is not part of this Proxy Statement or any registration statement or report that incorporates this Proxy Statement by reference.

⁴ Any information that is included on or linked to our website is not part of this Proxy Statement or any registration statement or report that incorporates this Proxy Statement by reference. 

The Compensation Committee reviews with management Ionis’ CD&A to consider whether to recommend that we include the CD&A in our Proxy Statements and other filings.

Compensation Committee Interlocks and Insider Participation

As noted above, during the fiscal year ended December 31, 2022, our Compensation Committee was composed of Dr. Berthelsen, Mr. Wender, Mr. Muto (until July 2022) and Ms. Herman (beginning in September 2022). In each case, none of the members of the Compensation Committee has ever been an employee or officer of Ionis. None of our executive officers serves as a member of the board of directors or compensation committee of any other entity that has one or more executive officers serving as a member of our Board or Compensation Committee.

Nominating, Governance and Review Committee

The Nominating, Governance and Review Committee of the Board is responsible for:

The Nominating, Governance and Review Committee met three times during 2022. You can find our Nominating, Governance and Review Committee charter on our corporate website at www.ionispharma.com.⁵

Director Nominations - Minimum Qualifications

The Nominating, Governance and Review Committee believes that candidates for Director should have certain minimum qualifications. As a result, the Board adopted membership standards (that may be revised from time to time) and believes that the Board members should meet the minimum membership requirements listed below.

The minimum membership requirements are as follows:

In addition to these minimum standards, the Nominating, Governance and Review Committee will consider such factors as:

⁵ Any information that is included on or linked to our website is not part of this Proxy Statement or any registration statement or report that incorporates this Proxy Statement by reference.

Director Nominations - Diversity

In considering Director nominations, the Nominating, Governance and Review Committee considers the total mix of competencies represented on the Board as a whole, as well as the competencies each member, or nominee, brings to the Board. In general, our Board members’ experience falls into three large categories: (1) investment banking, financial accounting, and corporate governance experience; (2) medical and scientific expertise; and (3) experience with the commercialization of pharmaceutical products. By selecting individuals who have investment banking, financial accounting, and corporate governance backgrounds, we gain valuable experience that ensures we are managing our financial resources appropriately, reporting our financial results fairly and accurately, and generally running our business consistent with current good corporate practices. As a cutting-edge drug discovery and development company, we also greatly benefit from Board members who themselves are scientists and medical doctors and can help set and adjust our strategy and objectives based on the results we generate from our research and development efforts. In addition, as we advance our commercial strategy, we will benefit from Board members with backgrounds in the commercialization of pharmaceutical products. In different ways, these categories allow us to effectively manage our cash and make prudent investments in our technology to achieve the greatest likelihood of success. We have historically tried to evenly balance the Board members across the first two categories and are increasing our focus on the third category as we advance our commercial strategy.

We also value diversity on our Board and do not discriminate against nominees on the basis of gender, race, religion, national origin, sexual orientation, disability, or any other basis. Recognizing the importance of diversity on our Board, in December 2020, the Nominating, Governance and Review Committee approved authorizing the Company to begin a search for qualified Director candidates who are diverse and have commercial experience. As a result of such search, Ms. Allene Diaz joined our Board in June 2021. We will continue to strive to add Directors to our Board who will provide relevant and valuable expertise while contributing to its diversity.

Board Diversity Matrix

Director Nominations – Tenure

Our drug technology is a “platform technology,” which means the more knowledge and experience an individual has with our technology platform, the better equipped that individual is to create value at Ionis. This is no different for our non-employee Directors. While we believe it’s important to add new non-employee Directors that will bring fresh ideas and perspectives, given the uniqueness and complexity of our technology, it is also critical to retain the knowledge and experience of an appropriate number of outstanding long service non-employee Directors who can contribute to our future business decisions while understanding our history.

Director Nominations - Process

The Nominating, Governance and Review Committee will consider Director candidates our stockholders recommend. The Nominating, Governance and Review Committee does not intend to alter the manner in which it evaluates candidates, including the minimum criteria set forth above, based on whether or not a stockholder recommended the candidate.

The Nominating, Governance and Review Committee reviews new candidates for Director in the context of the Board’s composition, our operating requirements, and our stockholders’ long-term interests. In conducting this assessment, the Nominating, Governance and Review Committee considers diversity, maturity, skills, the minimum membership requirements discussed above, and such other factors as it deems appropriate given the current needs of the Board and Ionis, to maintain a balance of knowledge, experience and capability. The Nominating, Governance and Review Committee then uses its network of contacts to compile a list of potential candidates, but may also engage, if it deems appropriate, a paid professional search firm. The Nominating, Governance and Review Committee conducts any appropriate and necessary inquiries into the backgrounds and qualifications of possible candidates after considering the function and needs of the Board. In the case of incumbent Directors whose terms of office are set to expire, the Nominating, Governance and Review Committee reviews such Directors’ overall service to Ionis during their term, including the number of meetings attended, level of participation, quality of performance, and any other relationships and transactions that might impair such Directors’ independence.

The Nominating, Governance and Review Committee meets to discuss and consider the candidates’ qualifications and determines whether each candidate is independent based upon applicable Nasdaq listing standards, SEC rules and regulations, and the advice of counsel, if necessary. Finally, the Nominating, Governance and Review Committee then selects a nominee for recommendation to the Board by majority vote.

Stockholder Recommendations for Directors

Stockholders who wish to recommend individuals for consideration by the Nominating, Governance and Review Committee to become nominees for election to the Board may do so by delivering a written recommendation to Ionis’ corporate secretary at the following address: 2855 Gazelle Court, Carlsbad, California 92010. Submissions must include:

In addition, the nominee will need to complete a written questionnaire regarding the background and qualifications of the nominee, and the background of any other person or entity on whose behalf the nomination is being made. The nominee must also agree to comply with all of our applicable publicly disclosed corporate governance, conflict of interest, confidentiality and stock ownership and trading policies and guidelines. The description of the requirements for Director nomination set forth above is qualified in its entirety by reference to our full and complete bylaws, which is an exhibit to our Current Report on Form 8-K filed with the SEC on March 29, 2021, a copy of which is available by contacting our corporate secretary. To date, the Board has not received or rejected a timely Director nominee for election at the upcoming stockholder meeting from a stockholder or stockholders holding more than 5% of our voting stock.

Science/Medical Committee

The primary functions of the Science/Medical Committee of the Board are to focus on the key scientific and development issues facing our technology and medicines in development and help set our strategy in such areas. The Science/Medical Committee met three times in 2022.

Finance Committee

The primary function of the Finance Committee of the Board is to advise the Board and management on certain corporate finance matters for the Company and its subsidiaries, including capital structures, financings, investments, and share repurchase activities. The Finance Committee met four times in 2022.

Compliance Committee

The Compliance Committee met five times in 2022. The Compliance Committee is primarily responsible for overseeing and reviewing the Company’s healthcare compliance program and the status of the Company’s compliance with laws, regulations (including good practice guidelines and regulations), industry standards, and internal procedures. The primary function of the Committee is to oversee the development and implementation of compliance and ethics policies and practices at the Company; however, management is responsible to design and implement such policies and practices.

Stockholder Communications with the Board

We make every effort to ensure that our Board or individual Directors, as applicable, hear our stockholders’ views, and provide appropriate responses to stockholders in a timely manner. Stockholders who wish to communicate with the Board, or individual Directors, may do so by sending written communications addressed to Ionis’ corporate secretary at 2855 Gazelle Court, Carlsbad, California 92010. If you wish to communicate with the independent Directors about your concerns or issues, you may address correspondence to a particular Director or to the independent Directors generally. If you do not name a particular Director, depending on the subject matter, we will forward the letter to the Chair of the appropriate committee of the Board. One or more of our employees designated by the Board will review these communications and will determine whether to present the materials to the Board. The purpose of this screening is to allow the Board to avoid having to consider irrelevant or inappropriate communications, such as advertisements, commercial solicitations, and hostile communications. In accordance with our Code of Ethics and Business Conduct, all communications that relate to questionable accounting or auditing matters involving Ionis will be promptly and directly forwarded to the Audit Committee. Other than the processes described above, our Board has not adopted a formal written process for stockholder communications with the Board. We believe our Board’s responsiveness to stockholder communications has been excellent.

Code of Ethics and Business Conduct

We have adopted a Code of Ethics and Business Conduct that applies to all officers, Directors, and employees. We have posted our Code of Ethics and Business Conduct on our website. If we make any substantive amendments to the Code of Ethics and Business Conduct or grant any waiver from a provision of the Code of Ethics and Business Conduct to any executive officer or Director, we will promptly disclose the nature of the amendment or waiver via an 8-K filing with the SEC or on our website at www.ionispharma.com.⁶

Corporate Governance Guidelines

The Board has adopted corporate governance guidelines to ensure that the Board will have the necessary authority and practices in place to review and evaluate our business operations as needed and to make decisions that are independent of our management. The guidelines are also intended to align our Directors’ and management’s interests with those of our stockholders. The corporate governance guidelines set forth the practices the Board intends to follow with respect to board composition and selection, board meetings and involvement of senior management, Chief Executive Officer performance evaluation, succession planning for Board committees and compensation, “clawbacks” of executive compensation, and share retention guidelines for our executive officers and Directors. The Board adopted the corporate governance guidelines to, among other things, reflect changes to the Nasdaq listing standards and SEC rules adopted to implement provisions of the Sarbanes-Oxley Act of 2002. You may view our corporate governance guidelines, as well as the charters for the Audit, Compensation, Nominating, Governance and Review, Finance and Compliance committees at www.ionispharma.com.⁷

⁶ Any information that is included on or linked to our website is not part of this Proxy Statement or any registration statement or report that incorporates this Proxy Statement by reference.

Anti-Hedging Policy and Anti-Pledging Policy

All Directors and employees, including our named executive officers, are prohibited from taking a “short” position in our stock and otherwise hedging their position in our stock against a future drop in our stock price including short sales and derivatives such as put or call options, swaps, forwards, and futures, or other inherently speculative transactions with respect to Ionis’ securities at any time.  In addition, we also prohibit all Directors and employees, including our named executive officers, from pledging our stock as collateral.

⁷ Any information that is included on or linked to our website is not part of this Proxy Statement or any registration statement or report that incorporates this Proxy Statement by reference.

PROPOSAL 2

ADVISORY VOTE ON EXECUTIVE COMPENSATION

The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, called the “Dodd-Frank Act,” entitles Ionis’ stockholders to vote to approve, on an advisory (nonbinding) basis, the compensation of our Chief Executive Officer, Chief Financial Officer and our three other most highly compensated executive officers (at December 31, 2022), called our “named executive officers” as disclosed in this Proxy Statement in accordance with Section 14A of the Exchange Act.

We are asking our stockholders to indicate their support for our named executive officers’ compensation as described in this Proxy Statement. This Proposal 2, commonly known as a “say on pay” proposal, gives our stockholders the opportunity to express their views on the compensation paid to our named executive officers. This vote is not intended to address any specific item of compensation, but rather the overall compensation of our named executive officers and the philosophy, policies and practices described in this Proxy Statement. Accordingly, we are asking our stockholders to vote “FOR” the following resolution at the Annual Meeting:

“RESOLVED, that Ionis’ stockholders approve, on an advisory basis, the compensation of the named executive officers, as disclosed in this Proxy Statement for the 2023 Annual Meeting of Stockholders pursuant to the compensation disclosure rules of the Securities and Exchange Commission.”

We recommend you carefully review the EXECUTIVE COMPENSATION section of this Proxy Statement located on pages 48 through 75. Below is a high-level summary of some of our compensation practices. This summary is qualified by the detailed disclosure contained in the EXECUTIVE COMPENSATION section of this Proxy Statement.

Unless the Board decides to modify its policy regarding the frequency of soliciting advisory votes on the compensation of our named executives, the next scheduled “say on pay” vote will be at the 2024 Annual Meeting of Stockholders.

The table below summarizes some of our executive compensation practices, both the practices we implement because we believe they are consistent with our vision and long-term stockholder value, and those that we choose not to implement as we believe they are counter to our vision and long-term stockholder value:

General compensation principles	We design our compensation structure to drive the creation of long-term stockholder value and mitigate unnecessary or imprudent business risk taking. Specifically, we: ●     Use a combination of compensation vehicles that provide a balanced mix of fixed and variable cash incentives, and long-term stock incentives; ●     Require a 12-month minimum vesting period for equity awards; ●     Set explicit and demanding objectives at the beginning of each year from which we measure performance for the year; ●     Set a strict budget for equity awards and salary increases; ●     Do not provide perquisites for any employees; and ●     Do not provide “gross-up” payments, other than for relocation.
Align executive compensation with Company performance and design performance based awards to drive creation of long-term stockholder value	We tie a significant portion of our executive officers’ compensation to Company performance and design performance-based awards to drive the creation of long-term stockholder value. For example, we: ●     Allocated 65% of our Chief Executive Officer’s 2022 compensation in the form of performance-based compensation, which we consider to consist of cash bonuses, stock options and PRSUs; ●     Revised our PRSU structure for grants made in 2023 and going forward such that: ○     awards will have a single vesting period at the end of three years; and ○     the relative TSR percentile rank for maximum payout of the awards increased from the 75th percentile to the 90th percentile. ●     Place a maximum limit on cash bonuses and do not guarantee a cash bonus – cash bonuses can be, and have been, zero; and ●     Empower our Compensation Committee with the ability to exercise downward discretion with respect to the Company Performance Factor (used to determine cash bonuses) for our executive officers based on Company performance, which occurred in 2021.
Stock ownership and holding guidelines	We maintain stock ownership and holding guidelines that require our executive officers and non-employee Directors to meet certain ownership thresholds. We increased such ownership requirements for non-employee Directors in 2023.
Clawback policy	We use an executive “clawback” policy that applies to all Section 16 officers.
Disallow hedging and pledging	We do not allow pledging, shorting, or hedging against our stock by Directors or employees.
No option re-pricing or cash buyouts	We do not reprice or “cash-out” stock options without stockholder approval.
Engage an independent compensation consultant	The Compensation Committee has retained a compensation consultant whose relationship with the Company was confirmed to be independent for 2022.   The compensation consultant, among other things, assists us in selecting an appropriate peer group and annually reviewing our compensation levels, policies, practices, and procedures for our employees and non-employee Directors compared to our peer group.
Use a “double trigger” for change of control for our executive officers	We use a “double trigger” for cash payments and equity acceleration for change of control for our executive officers.
Hold a “say on pay” vote annually	Provides an effective way for us to obtain information on stockholder sentiment about our executive compensation program each year.

The affirmative vote of a majority of the holders of shares present or represented by proxy at the Annual Meeting and entitled to vote on the matter is required to adopt the resolution. If you indicate on your proxy to “Abstain” from voting, it will have the same effect as a vote “Against” this Proposal 2. Brokers do not have discretion to vote uninstructed shares with respect to this Proposal 2. Accordingly, if brokers do not receive voting instructions from beneficial owners of the shares, they cannot vote the shares. Therefore, broker non-votes will not affect the outcome of the voting on this Proposal 2.

The “say on pay” vote is advisory, and therefore is not binding on Ionis, the Compensation Committee or the Board. However, Ionis’ management, the Board and the Compensation Committee value the opinions of the stockholders. As such, if there is any significant vote against the named executive officers’ compensation as disclosed in this Proxy Statement, the Board will consider the stockholders’ concerns and the Board and Compensation Committee will evaluate whether any actions are necessary to address those concerns.

THE BOARD UNANIMOUSLY RECOMMENDS A VOTE “FOR” APPROVAL OF PROPOSAL 2.

PROPOSAL 3

ADVISORY VOTE ON THE FREQUENCY OF THE VOTE ON EXECUTIVE COMPENSATION

The Dodd-Frank Act and Section 14A of the Exchange Act enable our stockholders to indicate their preference at least once every six years regarding how frequently we should solicit a non-binding advisory vote on the compensation of our named executive officers as disclosed in our proxy statement. Accordingly, consistent with the preference expressed by our stockholders at the 2017 Annual Meeting of Stockholders, as required by these rules, we are presenting this proposal, commonly known as a “say-on-frequency vote,” which gives you as a stockholder the opportunity to inform us regarding how often you wish us to include a “say-on-pay” proposal, similar to Proposal 2, in our Proxy Statement.  Please note that as a stockholder you have the choice to vote for one of the following choices, as indicated on the proxy card: to hold the advisory vote on executive compensation every year, every two years, every three years, or to abstain from voting.

Board Recommendation

The Board of Directors values constructive dialogue on executive compensation and other important governance topics with our stockholders.  The Board believes an advisory vote every year will provide an effective way to obtain information on stockholder sentiment about our executive compensation program.

Required Vote of Stockholders

We will consider the frequency with the highest number of votes from the holders of shares present or represented by proxy at the Annual Meeting and entitled to vote as the frequency preferred by the stockholders.  If you indicate on your proxy to “Abstain” from voting, it will not have an effect on this Proposal 3. Brokers do not have discretion to vote uninstructed shares with respect to this Proposal 3. Accordingly, if brokers do not receive voting instructions from beneficial owners of the shares, they cannot vote the shares. Therefore, broker non-votes will not affect the outcome of the voting on this Proposal 3.  

While this say-on-frequency vote is advisory in nature and therefore will not bind us to adopt any particular frequency, our Board of Directors intends to carefully consider the stockholder vote resulting from the proposal in determining how frequently we will hold “say-on-pay” votes.

THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR “EVERY YEAR.”

PROPOSAL 4

APPROVAL OF AN AMENDMENT OF OUR 2011 EQUITY INCENTIVE PLAN

In March 2011, the Compensation Committee of the Board, and the Board, adopted the Ionis Pharmaceuticals, Inc. 2011 Equity Incentive Plan (the “2011 Plan”) and the stockholders approved the Plan on June 16, 2011. The stockholders have approved amendments to the 2011 Plan to increase the aggregate number of shares of common stock authorized for issuance under the 2011 Plan as follows: on June 30, 2015, an increase of 5,500,000 to an aggregate of 11,000,000 shares; on May 24, 2017, an increase of 5,000,000 to an aggregate of 16,000,000 shares; on June 6, 2019, an increase of 7,000,000 to an aggregate of 23,000,000 shares; and in March 2021, an increase of 6,700,000 shares to an aggregate of 29,700,000 shares.

In this Proposal 4, we are requesting stockholders to approve an amendment of the 2011 Plan to increase the aggregate number of shares of common stock authorized for issuance under the 2011 Plan by 5,500,000 shares to an aggregate of 35,200,000 shares.

Our management, Board and Compensation Committee believe that stock options, restricted stock units (“RSUs”) and performance-based restricted stock units (“PRSUs”) are a key aspect of our ability to attract and retain qualified personnel in the face of intense competition for experienced scientists and other personnel among many pharmaceutical and health care companies. On March 14, 2023, the Board, upon the recommendation of the Compensation Committee, approved an amendment to the 2011 Plan to increase the aggregate number of shares of common stock authorized for issuance under the 2011 Plan by 5,500,000 to an aggregate of 35,200,000 shares, to ensure that for a period of at least one year, based on our current business plans, we can continue to grant stock options, RSUs and PRSUs to employees at appropriate levels as determined by the Compensation Committee. If the stockholders do not approve this Proposal 4, and as a consequence, we cannot continue to grant options, RSUs and PRSUs at competitive levels, we believe that it will negatively affect our ability to recruit and retain highly qualified personnel and our ability to manage future growth. Without these additional shares, management expects that the current shares available for grant under the 2011 Plan will not be sufficient to maintain our stock award practices for new employees or for promotions or merit awards for current employees.

Each year the Compensation Committee approves a budget that sets the number of stock options, RSUs and PRSUs we can grant our employees for annual merit awards. We do not grant options, RSUs or PRSUs that exceed this budget without the Compensation Committee’s approval. Over the past three years, the average merit award stock budget set by the Compensation Committee has been approximately 2.2% of our outstanding common stock on an issued and outstanding basis. This stock compensation budget, and therefore our equity compensation burn rate, is well below the ISS-adjusted 4.4% average of our peers.

The 2011 Plan was adopted to ultimately replace the Ionis Pharmaceuticals, Inc. 1989 Stock Option Plan (the “89 Plan”). There were only approximately 65,000 shares available as of March 31, 2023 for grant under the 89 Plan; however our practice is not to issue grants under this plan.

The 2011 Plan is our primary means of offering stock options, RSUs and PRSUs to our employees. There were only approximately 3.2 million shares available as of March 31, 2023 for grant under the 2011 Plan. The 2011 Plan also allows us to utilize a broad array of equity incentives and performance cash incentives to secure and retain the services of our employees and to provide long-term incentives that align the interests of our employees with the interests of our stockholders.

We also have the Ionis Pharmaceuticals, Inc. 2020 Equity Incentive Plan (the “2020 Plan”) that we assumed in connection with the Akcea Merger. Equity awards granted under the 2020 Plan are reserved solely for legacy employees of Akcea who were employed as of October 12, 2020, which was the completion date of the merger. As of March 31, 2023 we had only 40 employees eligible to receive stock awards under the 2020 Plan. There were approximately 1.0 million shares available as of March 31, 2023 for grant under the 2020 Plan.

The table below provides certain information regarding the 2020 Plan, 2011 Plan and the 89 Plan.

Required Vote and Board of Directors Recommendation

Approval of this Proposal 4 requires the affirmative vote of a majority of the holders of shares present or represented by proxy at the Annual Meeting and entitled to vote on the matter. If you indicate on your proxy to “Abstain” from voting, it will have the same effect as an “Against” vote for this Proposal 4. Broker non-votes will have no effect on the outcome of the vote.

Our Board believes that approval of Proposal 4 is in our best interests and the best interests of our stockholders for the reasons stated above.

THE BOARD UNANIMOUSLY RECOMMENDS A VOTE “FOR” APPROVAL OF PROPOSAL 4.

DESCRIPTION OF THE IONIS PHARMACEUTICALS, INC. 2011 EQUITY INCENTIVE PLAN

Below is a high-level summary of the terms of the 2011 Plan. This summary is qualified in its entirety by reference to the complete text of the 2011 Plan. We encourage our stockholders to read the actual text of the 2011 Plan, as amended, in its entirety, a copy of which we filed with this Proxy Statement as Appendix A.

The 2011 Plan:

Purpose

The main purpose of the 2011 Plan is to allow us to give our employees (including officers), Directors and consultants an opportunity to benefit from increases in value of our common stock through the granting of a combination of stock options and RSUs. We believe providing our employees a combination of stock options and RSUs allows us to:

In 2022, we granted our employees a combination of stock options and RSUs under our 2011 Plan, where we allocated 50% of the grant date dollar value to stock options and allocated 50% of the value to RSUs; and assumed that each share subject to an RSU was worth two shares subject to a stock option.

Background

The terms of the 2011 Plan provide for the grant of stock options, SARs, restricted stock awards, RSUs, PRSU awards and performance cash awards that may be settled in cash, stock, or other property.

Shares Available for Awards

If this Proposal 4 is approved, there will be a total of 35,200,000 shares of our common stock authorized for issuance under the 2011 Plan. If this Proposal 4 is not approved, there will only be approximately 3.2 million shares available for issuance under the 2011 Plan as of March 31, 2023, which, given our future hiring projections, we expect will not be sufficient to maintain our stock award practices for new employees or for promotions or merit awards for current employees.

The following table summarizes the equity awards granted over the last three years, and through March 31, 2023, to our employees under our equity plans. We grant most of our equity awards for each year in January of such year as part of the annual merit compensation process. We have not attempted to forecast our future grant activity due to the number of assumptions that would be necessary to do so and the potential unpredictability of such underlying assumptions and estimates.

Limited Recycling of Shares Related to Options and SARs

We prohibit the recycling of shares we reacquire pursuant to our withholding obligations in connection with a stock option or SAR or as consideration for the exercise of a stock option or SAR and such reacquired shares will not become available for issuance under the 2011 Plan.

Eligibility

All of our employees in the United States and our Directors and consultants are eligible to participate in the 2011 Plan. Our practice, however, is not to grant awards to consultants or non-employee Directors under the 2011 Plan. As of March 31, 2023, we had a total of 758 employees who were eligible to participate in the 2011 Plan.

Administration

Our Board administers the 2011 Plan. The Board may delegate authority to administer the 2011 Plan to a committee but may retain the authority to concurrently administer the 2011 Plan with the committee and may, at any time, revest in itself some or all of the powers previously delegated to the committee. Our Board has delegated administration of the 2011 Plan to the Compensation Committee.  Subject to the terms of the 2011 Plan, the Compensation Committee may determine the recipients, numbers, and types of stock awards to be granted, and terms and conditions of the stock awards, including the period of their exercisability and vesting. Subject to the limitations set forth below, the Compensation Committee also determines the fair market value applicable to a stock award and the exercise price of stock options and SARs granted under the 2011 Plan.

At the discretion of the Board, the Compensation Committee may consist solely of two or more “non-employee directors” within the meaning of Rule 16b-3 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).  We also have a Non-Management Stock Award Committee that, as delegated by the Compensation Committee, awards stock awards to employees who are below director level in accordance with guidelines adopted by the Compensation Committee.  The Non-Management Stock Award Committee has one member, Dr. Monia.  As used herein, except as explicitly stated otherwise, with respect to the 2011 Plan, the “Board” refers to any committee the Board appoints or, if applicable, any subcommittee, as well as to the Board itself.

No Repricing, “Cash-Out,” or Cancellation and Re-Grant of Stock Awards without Stockholder Approval

Under the 2011 Plan, the Board cannot reprice any outstanding options or SARs by reducing the exercise price of the stock award or cancel any outstanding options or SARs in exchange for cash or other stock awards without obtaining the approval of our stockholders within 12 months prior to the repricing or cancellation and re-grant event.

Minimum Vesting; Restrictions on Accelerated Vesting

Under the 2011 Plan, no stock award granted to an employee or member of the Board will become 100% vested in a period of less than one year after the grant of such award, except that the vesting of a stock award may accelerate (or may be accelerated by the Board or Compensation Committee) in the case of (1) a sale of all or substantially all of the assets of the Company, (2) a disposition of at least 90% of the Company’s securities, a merger or other similar transaction after which the Company is not the surviving corporation, (3) a merger or other similar transaction after which the Company is the surviving corporation but the shares of common stock immediately preceding the transaction are exchanged into other property, (4) an award granted in exchange for previously granted awards of a company acquired by the Company and (5) awards to non-employee directors that vest on the earlier of the one-year anniversary of the date of grant or the next annual meeting of stockholders, provided in such case that such vesting period may not be less than 50 weeks; and Ionis may grant up to 1,485,000 shares worth of stock options, restricted stock awards, RSUs, SARs or PRSU awards that vest earlier than the minimum period described above.

Dividends and Dividend Equivalents

The 2011 Plan prohibits the payment of dividends and dividend equivalents with respect to shares subject to an award until such shares have vested in accordance with the terms of the corresponding award agreement.

No Evergreen

The 2011 Plan does not include an automatic share reserve increase provision (i.e., an evergreen provision).

Stock Options

The Board grants stock options under the 2011 Plan pursuant to stock option agreements.  The 2011 Plan permits the grant of stock options that qualify as nonstatutory stock options (“NSOs”).  Individual stock option agreements may be more restrictive as to any or all of the permissible terms described in this section.

Exercise Price; Payment

The exercise price of stock options may not be less than 100% of the fair market value of the common stock subject to the stock option on the date of grant.  As of March 31, 2023, the closing price of our common stock as reported on the Nasdaq Global Select Market was $35.74 per share.

Vesting

Stock options granted under the 2011 Plan may become exercisable in cumulative increments, or “vest,” as determined by our Board at the rate specified in the stock option agreement, subject to the minimum vesting requirements described above.  Shares covered by different stock options granted under the 2011 Plan may be subject to different vesting schedules as our Board may determine.

Term

In general, the term of stock options granted under the 2011 Plan was previously seven years, which we increased to ten years beginning with grants made in January 2022. The 2011 Plan does not allow stock options to have a term that exceeds ten years.  Unless the terms of an option holder’s stock option agreement or other agreement with the Company provides for earlier or later termination:

Under the 2011 Plan, the stock option term may be extended in the event that exercise of the stock option following termination of service is prohibited by applicable securities laws or if the sale of stock received upon exercise of a stock option would violate the Company’s insider trading policy. In no event may a stock option be exercised after its expiration date.

Consideration

Our Board determines the acceptable forms of consideration for the purchase of our common stock pursuant to the exercise of a stock option under the 2011 Plan, which may include cash, check, bank draft or money order made payable to us, shares of our common stock, payment pursuant to a program developed under Regulation T as promulgated by the Federal Reserve Board, or a net exercise feature.

Transferability

Generally, an option holder may not transfer a stock option other than by will or the laws of descent and distribution or a domestic relations order.  However, to the extent permitted under the terms of the applicable stock option agreement, an option holder may designate a beneficiary who may exercise the stock option following the option holder’s death.

Restricted Stock Unit Awards

RSUs are granted under the 2011 Plan pursuant to restricted stock unit award agreements.  Payment of any purchase price is made in any legal form acceptable to the Board.  We settle a payment due to a recipient of a restricted stock unit award by delivery of shares of our common stock, by cash, by a combination of cash and stock, or in any other form of consideration determined by our Board and set forth in the restricted stock unit award agreement.  We may credit dividend equivalents in respect of shares of our common stock covered by a restricted stock unit award; however, no dividend equivalents may be paid with respect to such shares before the date such shares have vested in accordance with the terms of the corresponding award agreement. RSUs are subject to vesting in accordance with a vesting schedule determined by our Board, subject to the minimum vesting requirements described earlier.  Except as otherwise provided in the applicable RSU award agreement, RSUs that have not vested will be forfeited upon the participant’s termination of continuous service for any reason.

Restricted Stock Awards

The Board may grant restricted stock awards under the 2011 Plan pursuant to restricted stock award agreements.  The Board may grant a restricted stock award in consideration for cash, check, bank draft or money order payable to us, the recipient’s services performed for us or our affiliate, or any other form of legal consideration acceptable to the Board.  Shares of our common stock acquired under a restricted stock award are subject to forfeiture to us in accordance with a vesting schedule determined by our Board.  Holders of awards may only transfer their rights to acquire shares of our common stock under a restricted stock award upon such terms and conditions as are set forth in the restricted stock award agreement.  We may credit dividend equivalents in respect of shares of our common stock covered by a restricted stock award; however, no dividend equivalents may be paid with respect to such shares before the date such shares have vested in accordance with the terms of the corresponding award agreement. Except as otherwise provided in the applicable restricted stock award agreement, restricted stock awards that have not vested will be forfeited upon the participant’s termination of continuous service for any reason.

Stock Appreciation Rights

The Board may grant SARs under the 2011 Plan pursuant to SAR agreements. Each SAR is denominated in common stock share equivalents.  The Board will determine the strike price of each stock appreciation right but the strike price cannot be less than 100% of the fair market value of the stock subject to the SAR at the time of grant.  Our Board may also impose restrictions or conditions upon the vesting of SARs that it deems appropriate, subject to the minimum vesting requirements described earlier.  We may settle SARs in our common stock, in cash, in a combination of cash and stock, or in any other form of legal consideration approved by our Board and set forth in the stock appreciation right agreement.  SARs will be subject to the same conditions upon termination and restrictions on transfer as stock options under the 2011 Plan.

Performance Awards

The 2011 Plan provides for the grant of two types of performance awards: PRSU awards and performance cash awards.  The Board may grant, vest, or settle performance awards based upon the attainment of specified performance goals during a specified period of time.  The Compensation Committee will determine the length of any performance period, the performance goals to be achieved during the performance period, and the measure of whether and to what degree such performance goals have been attained.

In granting a performance award, the Compensation Committee will set a period of time, called a performance period, over which the attainment of one or more performance goals will be measured for the purpose of determining whether the award recipient has a vested right in or to such award. The Compensation Committee will establish the performance goals, based upon one or more criteria, called performance criteria enumerated in the 2011 Plan. As soon as administratively practicable following the end of the performance period, the Compensation Committee will determine whether the performance goals have been satisfied.

The Board is authorized to determine whether, when calculating the attainment of performance goals for a performance period, as follows:

Changes to Capital Structure

If certain capitalization adjustments occur, the Board will appropriately adjust:

Corporate Transactions

Unless otherwise provided in the stock award agreement, any other written agreement between the Company or any of its affiliates and the participant, or in any director compensation policy of the Company, in the event of a corporate transaction (as specified in the 2011 Plan and described below), all outstanding stock awards under the 2011 Plan will be assumed, continued or substituted for by any surviving or acquiring entity (or its parent company). If the surviving or acquiring entity (or its parent company) elects not to assume, continue or substitute for such stock awards, then (i) with respect to any such stock awards that are held by individuals whose continuous service with us or an affiliate has not terminated prior to the effective date of the corporate transaction, the vesting and exercisability provisions of such stock awards will be accelerated in full (and with respect to any performance stock awards, vesting will be deemed satisfied at the greater of actual performance or target level) and such awards will terminate if not exercised prior to the effective date of the corporate transaction, and (ii) with respect to any stock awards that are held by individuals whose continuous service with the Company or an affiliate of the Company has terminated prior to the effective date of the corporate transaction, the vesting and exercisability provisions of such stock awards will not be accelerated and such awards will terminate if not exercised prior to the effective date of the corporate transaction (except that any reacquisition or repurchase rights held by the Company with respect to such stock awards will not terminate and may continue to be exercised notwithstanding the corporate transaction).

For purposes of the 2011 Plan, a corporate transaction will be deemed to occur in the event of the consummation of:

The acceleration of vesting of an award in the event of a corporate transaction under the 2011 Plan may be viewed as an anti-takeover provision, which may have the effect of discouraging a proposal to acquire or otherwise obtain control of the Company.

Change in Control

A stock award will not be subject to additional acceleration of vesting and exercisability in connection with a change in control (as defined in the 2011 Plan), except upon certain termination events that are in connection with a change in control as provided in the stock award agreement for such stock award or as otherwise may be provided in any other written agreement between us or any affiliate and the participant. In such a case, the stock award agreement or other written agreement may provide that vesting (and, if applicable, exercisability) of time-based awards will be accelerated in full and performance-based stock awards will be deemed to have been satisfied at the greater of actual performance or target level.

The acceleration of vesting of an award in the event of a change in control event under the 2011 Plan may be viewed as an anti-takeover provision, which may have the effect of discouraging a proposal to acquire or otherwise obtain control of the Company.

Plan Amendments

Our Board has the authority to amend or terminate the 2011 Plan.  However, no amendment or termination of the plan will adversely affect any rights under awards already granted to a participant unless agreed to by the affected participant. We will obtain stockholder approval of any amendment to the 2011 Plan as required by applicable law and listing requirements.  We will not seek to amend the prohibition on option repricing or “cashing-out” without obtaining such stockholder approval.

Plan Termination

Unless sooner terminated by our Board, the 2011 Plan will automatically terminate on June 15, 2031.

Federal Income Tax Information

The information set forth below is a summary only and does not purport to be complete.  The information is based upon current federal income tax rules and therefore is subject to change when those rules change.  Because the tax consequences to any recipient may depend on his or her particular situation, each recipient should consult the recipient’s tax adviser regarding the federal, state, local, and other tax consequences of the grant or exercise of an award or the disposition of stock acquired as a result of an award.  The 2011 Plan is not qualified under the provisions of Section 401(a) of the Code and is not subject to any of the provisions of the Employee Retirement Income Security Act of 1974.  Our ability to realize the benefit of any tax deductions described below depends on our generation of taxable income, as well as the requirement of reasonableness and the satisfaction of our tax reporting obligations.

Nonstatutory Stock Options

Generally, there is no taxation upon the grant of an NSO if the stock option is granted with an exercise price equal to the fair market value of the underlying stock on the grant date.  On exercise, an option holder will recognize ordinary income equal to the excess, if any, of the fair market value of the underlying stock on the date of exercise of the stock option over the exercise price.  If the option holder is employed by us or one of our affiliates, that income will be subject to withholding taxes.  The option holder’s tax basis in those shares will be equal to their fair market value on the date of exercise of the stock option, and the option holder’s capital gain holding period for those shares will begin on that date.

Subject to the requirement of reasonableness, the provisions of Section 162(m) of the Code (“Section 162(m)”), and the satisfaction of our tax reporting obligation, we will generally be entitled to a tax deduction equal to the taxable ordinary income realized by the option holder.

Restricted Stock Unit Awards

Generally, the recipient of a restricted stock unit award structured to comply with the requirements of Section 409A of the Code or an exemption to Section 409A of the Code will recognize ordinary income at the time the stock is delivered equal to the excess, if any, of the fair market value of the shares of our common stock received over any amount paid by the recipient in exchange for the shares of our common stock.  To comply with the requirements of Section 409A of the Code, the shares of our common stock subject to a restricted stock unit award may generally only be delivered upon one of the following events: a fixed calendar date (or dates), separation from service, death, disability or a change in control.  If delivery occurs on another date, unless the restricted stock unit award otherwise complies with or qualifies for an exemption to the requirements of Section 409A of the Code, in addition to the tax treatment described above, the recipient will owe an additional 20% federal tax and interest on any taxes owed.

The recipient’s basis for the determination of gain or loss upon the subsequent disposition of shares acquired from a restricted stock unit award will be the amount paid for such shares plus any ordinary income recognized when the stock is delivered.

Subject to the requirement of reasonableness, the provisions of Section 162(m), and the satisfaction of our tax reporting obligation, we will generally be entitled to a tax deduction equal to the taxable ordinary income realized by the recipient of the restricted stock unit award.

Restricted Stock Awards

Generally, the recipient of a restricted stock award will recognize ordinary income at the time the stock is received equal to the excess, if any, of the fair market value of the stock received over any amount paid by the recipient in exchange for the stock.  If, however, the stock is not vested when it is received (for example, if the employee is required to work for a period of time in order to have the right to sell the stock), the recipient generally will not recognize income until the stock becomes vested, at which time the recipient will recognize ordinary income equal to the excess, if any, of the fair market value of the stock on the date it becomes vested over any amount paid by the recipient in exchange for the stock.  A recipient may, however, file an election with the Internal Revenue Service, within 30 days following his or her receipt of the stock award, to recognize ordinary income, as of the date the recipient receives the award, equal to the excess, if any, of the fair market value of the stock on the date the award is granted over any amount paid by the recipient for the stock.

The recipient’s basis for the determination of gain or loss upon the subsequent disposition of shares acquired from a restricted stock award will be the amount paid for such shares plus any ordinary income recognized either when the stock is received or when the stock becomes vested.

Subject to the requirement of reasonableness, the provisions of Section 162(m) of the Code, and the satisfaction of our tax reporting obligation, we will generally be entitled to a tax deduction equal to the taxable ordinary income realized by the recipient of the restricted stock award.

Stock Appreciation Rights

We may grant stock appreciation rights under the Amended 2011 Plan separate from any other award or together with other awards under the 2011 Plan.

Generally, if a stock appreciation right is granted with an exercise price equal to the fair market value of the underlying stock on the grant date, the recipient will recognize ordinary income equal to the fair market value of the stock or cash received upon such exercise.

Subject to the requirement of reasonableness, the provisions of Section 162(m), and the satisfaction of our tax reporting obligation, we will generally be entitled to a tax deduction equal to the taxable ordinary income realized by the recipient of the stock appreciation right.

Section 162(m) Limitations

Section 162(m) disallows a deduction to any publicly held corporation and its affiliates for certain compensation paid to “covered employees” in a taxable year to the extent that compensation paid to a covered employee exceeds $1 million. The exemption from Section 162(m)’s deduction limit for performance-based compensation has been repealed, effective for taxable years beginning after December 31, 2017, such that compensation paid to our covered employees in excess of $1 million will not be deductible unless it qualifies for transition relief applicable to certain arrangements in place as of November 2, 2017, and not modified in any material respect on or after such date. As a result, compensation (including compensation pursuant to awards granted under the 2011 Plan) paid to any of our “covered employees” under Section 162(m) in excess of $1 million per taxable year generally will not be deductible.

New Plan Benefits

 Awards granted under the 2011 Plan to our executive officers and other employees are discretionary and are not subject to set benefits or amounts under the terms of the 2011 Plan, and our Board and our Compensation Committee have not granted any awards under the 2011 Plan subject to stockholder approval of this Proposal 2. Accordingly, the future benefits or amounts that will be received by or allocated to our executive officers and other employees under the 2011 Plan are not determinable.

Plan Benefits

The following table sets forth, for each of the individuals indicated, the total number of shares subject to awards that have been granted under the 2011 Plan as of March 31, 2023.

Please see page 47 for information regarding outstanding options and shares reserved for future issuance under our equity compensation plans as of March 31, 2023.

PROPOSAL 5

RATIFY INCREASING THE VESTING OF FUTURE INITIAL STOCK OPTION AND RESTRICTED STOCK UNIT AWARDS TO NEW NON-EMPLOYEE DIRECTORS FROM ONE YEAR TO THREE YEARS

In this Proposal 5, we are requesting our stockholders ratify increasing the vesting of future initial stock option and restricted stock unit awards of our new non-employee Directors upon joining the Board such that all initial awards granted under the Ionis Pharmaceuticals, Inc. 2002 Non-Employee Directors’ Stock Option Plan will vest equally over three years on each annual anniversary of the date of grant. These initial awards currently vest on the one-year anniversary of the date of grant or the next regularly scheduled annual meeting of stockholders, whichever occurs earlier.

The affirmative vote of the holders of a majority of the shares present or represented by proxy at the Annual Meeting and entitled to vote on the matter will be required to ratify increasing the vesting of future initial stock option and restricted stock unit awards to new non-employee Directors from one year to three years. If you indicate on your proxy to “Abstain” from voting, it will have the same effect as an “Against” vote for this Proposal 5. Broker non-votes will have no effect on the outcome of the vote.

THE BOARD UNANIMOUSLY RECOMMENDS A VOTE “FOR” APPROVAL OF PROPOSAL 5.

DESCRIPTION OF THE 2002 NON-EMPLOYEE DIRECTORS’ STOCK OPTION PLAN

Below is a high-level summary of the terms of the 2002 Non-Employee Directors’ Stock Option Plan, as amended on March 14, 2023 (the “Amended Directors’ Plan”). This summary is qualified in its entirety by reference to the complete text of the Amended Director’s Plan. We encourage our stockholders to read the actual text of the Amended Directors Plan in its entirety, a copy of which we filed with this Proxy Statement as Appendix B. References in this Proposal 5 to our Board of Directors include the Compensation Committee of the Board, where applicable.

Purpose

The purpose of the Amended Directors’ Plan is to:

Administration

Our Board administers the Amended Directors’ Plan.  Our Board is empowered to delegate administration of the Plan to a committee of the Board.  The Board has the power to construe and interpret the Amended Directors’ Plan and stock awards granted under it, and to establish, amend and revoke rules and regulations for its administration.

Stock Subject to the Amended Directors’ Plan

An aggregate of 2.8 million shares of common stock are authorized by the Board for issuance under the Amended Directors’ Plan.  As of March 31, 2023, 606,333 shares were available for future grants under the Directors’ Plan.

Eligibility, Option Grants, RSU Awards

The Amended Directors’ Plan provides that we may only grant options and RSU awards to a non-employee Director.  Under the Amended Directors’ Plan a “non-employee Director” is a Director of Ionis or one of our affiliates who is not otherwise an employee of Ionis or any affiliate.  Eight of our nine current Directors, all except Dr. Monia, are eligible to participate in the Amended Directors’ Plan.

Options granted under the Amended Directors’ Plan are nonstatutory stock options, meaning they are not intended to qualify as incentive stock options within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”).

Under the Amended Directors’ Plan, awards are set at fixed amounts as follows:

Terms of Options

Each option under the Amended Directors’ Plan is subject to the following terms and conditions:

Vesting Schedule and Option Exercise.  Options granted under the Amended Directors’ Plan vest as follows:

The Board has the power to accelerate the time during which an option may vest or be exercised.  Options granted under the Amended Directors’ Plan do not permit exercise prior to vesting.

A Director may exercise an option under the Amended Directors’ Plan by written notice to us, specifying the number of full shares of common stock to be purchased accompanied by payment of the purchase price.

Exercise Price; Payment.  The exercise price of options granted under the Amended Directors’ Plan is equal to 100% of the fair market value of the common stock on the date granted; however, an option may be granted with a lower exercise price if the option is granted pursuant to an assumption or substitution for another option in a manner that satisfies Section 424(a) of the Code.  Optionholders must pay the exercise price of options granted under the Amended Directors’ Plan in cash, or pursuant to a “same-day-sale” under Regulation T.  To the extent provided by the terms of an option, an optionholder may satisfy any federal, state or local tax withholding obligation relating to the exercise of such option by a cash payment upon exercise.

Transferability; Term.  Under the Amended Directors’ Plan, an optionholder may not transfer an option, except as determined by the Board and as set forth in the option agreement.  Currently, the Board has determined, and Director option agreements provide, that in addition to the ability to transfer an option by will or the laws of descent and distribution, a Director may transfer part or all of an option to any of the following:

Furthermore, an optionholder may, by delivering written notice to us, in a form satisfactory to us, designate a third party who, in the event of the optionholder’s death, will thereafter be entitled to exercise the option.

No option granted under the Amended Directors’ Plan is exercisable by any person after the expiration of ten years from the date the option is granted.

Other Provisions.  The option agreement may contain such other terms, provisions and conditions not inconsistent with the Amended Directors’ Plan as may be determined by the Board.

Terms of Restricted Stock Unit Awards

Each RSU award under the Amended Directors’ Plan is subject to the following terms and conditions:

Consideration.  At the time of grant of an RSU award, the Board will determine the consideration, if any, to be paid by the Participant upon delivery of each share of common stock subject to the RSU award. The consideration to be paid (if any) by the Participant for each share of common stock subject to an RSU award may be paid in any form of legal consideration that may be acceptable to the Board, in its sole discretion, and permissible under applicable law.

Vesting.  The Amended Directors’ Plan provides that each RSU award vests as follows:

Payment.  An RSU award may be settled by the delivery of shares of common stock, their cash equivalent, any combination thereof or in any other form of consideration, as determined by the Board and contained in the RSU award agreement. RSU awards settle on July 15^th of the year in which they vest.

Additional Restrictions.  At the time of the grant of an RSU award, the Board, as it deems appropriate, may impose such restrictions or conditions that delay the delivery of the shares of common stock (or their cash equivalent) subject to an RSU award to a time after the vesting of such RSU award.

Dividend Equivalents.  Dividend equivalents may be credited in respect of shares of common stock covered by an RSU award, as determined by the Board and contained in the RSU award agreement.  At the sole discretion of the Board, such dividend equivalents may be converted into additional shares of common stock covered by the RSU award in such manner as determined by the Board.  Any additional shares covered by the RSU award credited by reason of such dividend equivalents will be subject to all of the same terms and conditions of the underlying RSU award agreement to which they relate.

Termination of Continuous Service. Except as otherwise provided in the applicable award agreement, such portion of the RSU award that has not vested will be forfeited upon the RSU award recipient’s termination of continuous service as a non-employee Director, or as an employee or consultant of Ionis or one of our affiliates.

Adjustment Provisions

If any change is made in, or other event occurs with respect to, the common stock subject to the Amended Directors’ Plan, or subject to any stock award, without the receipt of consideration by Ionis (through merger, consolidation, reorganization, recapitalization, reincorporation, stock dividend, dividend in property other than cash, stock split, liquidating dividend, combination of shares, exchange of shares, change in corporate structure or other transaction not involving the receipt of consideration by Ionis) (each, a “Capitalization Adjustment”), the Amended Directors’ Plan will be appropriately adjusted in the class(es) and maximum number of securities subject both to the Amended Directors’ Plan pursuant to the shares reserve and to the nondiscretionary stock awards, and the outstanding stock awards will be appropriately adjusted in the class(es) and number of securities and price per share, if applicable, of common stock subject to such outstanding stock awards.  The Board will make such adjustments, and its determination will be final, binding and conclusive.  The conversion of any convertible securities of Ionis will not be treated as a transaction “without receipt of consideration” by Ionis.

If there is (i) a sale or other disposition of all or substantially all of our assets, (ii) a sale or other disposition of at least 90% of our outstanding securities, or (iii) certain specified types of merger, consolidation or similar transactions (each, a “Corporate Transaction” as defined more specifically in the Amended Directors’ Plan), any surviving or acquiring corporation may assume stock awards outstanding under the Amended Directors’ Plan or may substitute similar stock awards.  If any surviving or acquiring corporation does not assume the stock awards or substitute similar stock awards, then with respect to stock awards held by optionholders whose service with Ionis or an affiliate of Ionis has not terminated as of the effective date of the Corporate Transaction, the vesting of such stock awards (and, if applicable, the time during which such stock awards may be exercised) will be accelerated in full and the stock awards will terminate if not exercised (if applicable) at or prior to such effective date.  With respect to stock awards outstanding under the Amended Directors’ Plan that have been neither assumed nor substituted and that are held by award holders whose continuous service has terminated prior to the effective time of the Corporate Transaction, the vesting of the stock awards, and, if applicable, the time at which such stock awards may be exercised will not be accelerated unless otherwise provided in a written agreement between Ionis or any affiliate and the holder of the stock award, and such stock awards will terminate if not vested and exercised, as applicable, prior to the effective time of the Corporate Transaction.

If there is a dissolution or liquidation of Ionis, then all outstanding stock awards under the Amended Directors’ Plan will terminate immediately prior to the completion of the dissolution or liquidation.

In the event of (i) a qualifying merger or consolidation or similar transaction, as described in the Amended Directors’ Plan, whereby following such transaction the stockholders of Ionis immediately prior to such transaction do not own outstanding voting securities representing more than 50% of the combined voting power of the entity (or parent of the entity) surviving such transaction, (ii) a qualifying sale, lease, license or other disposition of all or substantially all of our assets, (iii) certain entities reporting under Section 13(d) or 14(d) of the Securities Exchange Act of 1934, as amended, (the “Exchange Act”) acquire more than 50% of our voting power under certain qualifying circumstances, or (iv) a majority of our Board is replaced by individuals who are not nominated by members of our current Board or members nominated by our current Board or their nominees (each such event, a “Change of Control” for purposes of the Amended Directors’ Plan), the vesting of any outstanding stock awards under the Amended Directors’ Plan held by persons whose continuous service with Ionis or an affiliate of Ionis has not terminated prior to the effective date of the Change of Control will accelerate in full, and the stock awards will terminate on the earlier of 12 months following the date of the Change of Control or the expiration date set forth in the stock award grant.

The acceleration of an option in the event of a Corporate Transaction or a Change in Control event may be viewed as an anti-takeover provision, which may have the effect of discouraging a proposal to acquire or otherwise obtain control of Ionis.

No Repricing, “Cash-Out,” or Cancellation and Re-Grant of Options without Stockholder Approval

Under the Amended Directors’ Plan, the Board cannot reprice any outstanding options by reducing the exercise price of the stock award or cancel any outstanding options in exchange for cash or other stock awards without obtaining the approval of our stockholders within 12 months prior to the repricing or cancellation and re-grant event.

Duration, Amendment and Termination

The Board at any time, and from time to time, may amend the Amended Directors’ Plan.  However, except as relating to Capitalization Adjustments (described above), no amendment will be effective unless approved by our stockholders to the extent stockholder approval is necessary to satisfy the requirements of SEC Rule 16b-3 or any Nasdaq or securities exchange listing requirements or such amendment seeks to amend the prohibition on option repricing/ “cashing-out.”  The Board, in its sole discretion, may submit any other amendment to the Amended Directors’ Plan for stockholder approval.  Rights under any outstanding stock award granted before amendment of the Amended Directors’ Plan will not be impaired by any amendment of the Amended Directors’ Plan unless we request the consent of the award holder and the award holder consents in writing.

Unless sooner terminated by our Board, the Amended Directors’ Plan will terminate on June 1, 2030.

Federal Income Tax Information

Nonstatutory Stock Options

Nonstatutory stock options granted under the Amended Directors’ Plan generally have the following federal income tax consequences.

There are no tax consequences to the optionholder or us by reason of the grant of a nonstatutory stock option.  Upon exercise of a nonstatutory stock option, the optionholder normally will recognize taxable ordinary income equal to the excess of the stock’s fair market value on the date of exercise over the option exercise price.  In the unlikely event the optionholder becomes an employee, we are required to withhold from regular wages or supplemental wage payments an amount based on the ordinary income recognized.  Subject to the requirement of reasonableness and the satisfaction of a tax reporting obligation, we will generally be entitled to a business expense deduction equal to the taxable ordinary income realized by the optionholder.

Upon disposition of the stock, the optionholder will recognize a capital gain or loss equal to the difference between the selling price and the sum of the amount paid for such stock plus any amount recognized as ordinary income upon exercise of the option.  Such gain or loss will be long-term or short-term depending on whether the stock was held for more than one year.

Restricted Stock Unit Awards

Generally, the recipient of a stock unit structured to conform to the requirements of Section 409A of the Code or an exception to Section 409A of the Code will recognize ordinary income at the time the stock is delivered equal to the excess, if any, of the fair market value of the shares of our common stock received over any amount paid by the recipient in exchange for the shares of our common stock. To conform to the requirements of Section 409A of the Code, the shares of our common stock subject to a stock unit award may generally be delivered only upon one of the following events: a fixed calendar date (or dates), separation from service, death, disability or a change in control. If delivery occurs on another date, unless the stock units otherwise comply with or qualify for an exception to the requirements of Section 409A of the Code, in addition to the tax treatment described above, the recipient will owe an additional 20% federal tax and interest on any taxes owed.

The recipient’s basis for the determination of gain or loss upon the subsequent disposition of shares acquired from stock units will be the amount paid for such shares plus any ordinary income recognized when the stock is delivered.

Subject to the requirement of reasonableness, the provisions of Section 162(m) of the Code and the satisfaction of a tax reporting obligation, we will generally be entitled to a tax deduction equal to the taxable ordinary income realized by the recipient of the stock award.

PROPOSAL 6

RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS

The Audit Committee has selected Ernst & Young LLP as our independent registered public accounting firm for our 2023 fiscal year and has requested management to ask for stockholder ratification at the Annual Meeting. Ernst & Young LLP has audited our financial statements since we were founded in 1989. Representatives of Ernst & Young LLP will be at the virtual Annual Meeting to answer any questions and make a statement should they desire to do so.

Although our bylaws do not require stockholders to ratify our independent registered public accounting firm, the Audit Committee would like our stockholders’ opinion as a matter of good corporate practice. If the stockholders do not ratify the selection of Ernst & Young LLP, the Audit Committee will reconsider whether to keep the firm. However, even if the stockholders ratify the selection, the Audit Committee may choose to appoint a different independent accounting firm at any time during the year if it believes that a change would be in the best interests of our stockholders and Ionis.

The affirmative vote of the holders of a majority of the shares present or represented by proxy at the Annual Meeting and entitled to vote on the matter will be required to ratify the selection of Ernst & Young LLP. If you indicate on your proxy to “Abstain” from voting, it will have the same effect as an “Against” vote for this Proposal 6. Broker non-votes will have no effect on the outcome of the vote..

Independent Auditors’ Fees; Pre-Approval Policies and Procedures

The Audit Committee has adopted a policy and procedure for the pre-approval of audit and permissible non-audit services rendered by our independent registered public accounting firm, Ernst & Young LLP. The policy generally pre-approves specific services in the defined categories of audit services, audit-related services, and tax services up to pre-determined amounts. The Audit Committee may pre-approve services as part of its approval of the scope of the engagement of the independent auditor or on an individual explicit case-by-case basis before the Audit Committee engages the independent registered public accounting firm to provide each service. The Audit Committee pre-approved all of the services described below.

Audit Fees

For the fiscal years ended December 31, 2022 and 2021, Ernst & Young LLP billed us approximately $1.9 million and $1.7 million, respectively, primarily related to the integrated audit of our financial statements and reviews of our interim financial statements. In addition, Ernst & Young LLP billed us approximately $180,000 and approximately $400,000 in 2022 and 2021, respectively, related to corporate transactions.

Audit Related Fees

For the fiscal years ended December 31, 2022 and 2021, there were no audit related fees billed by Ernst & Young LLP.

Tax Fees

For the fiscal years ended December 31, 2022 and 2021, Ernst & Young LLP billed us approximately $120,000 and $365,000 for each year, respectively, primarily related to professional services on tax projects, of which approximately $46,000 in 2021 was related to the Akcea Merger.

All Other Fees

During the fiscal years ended December 31, 2022 and 2021, all other fees billed by Ernst & Young LLP were approximately $11,000 and $4,000 for each year, respectively. These fees were for a subscription to an online accounting and tax information service. The Audit Committee has determined that the rendering of all non-audit services by Ernst & Young LLP is compatible with maintaining the auditor’s independence. During the fiscal year ended December 31, 2022, none of the total hours expended on our financial audit by Ernst & Young LLP were provided by persons other than Ernst & Young LLP’s employees.

THE BOARD UNANIMOUSLY RECOMMENDS A VOTE “FOR” APPROVAL OF PROPOSAL 6.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

This table outlines the ownership of our common stock as of March 31, 2023 by:

Except as otherwise indicated below, the address of each beneficial owner listed in this table is c/o Ionis Pharmaceuticals, Inc., 2855 Gazelle Court, Carlsbad, California 92010.

*Less than one percent

Abigail P. Johnson is a Director, the Chairman, and the Chief Executive Officer of FMR LLC. Members of the Johnson family, including Abigail P. Johnson, are the predominant owners, directly or through trusts, of Series B voting common shares of FMR LLC, representing 49% of the voting power of FMR LLC. The Johnson family group and all other Series B shareholders have entered into a shareholders’ voting agreement under which all Series B voting common shares will be voted in accordance with the majority vote of Series B voting common shares. Accordingly, through their ownership of voting common shares and the execution of the shareholders’ voting agreement, members of the Johnson family may be deemed, under the Investment Company Act of 1940, to form a controlling group with respect to FMR LLC.

Securities Authorized for Issuance Under Equity Compensation Plans

The following table sets forth information regarding outstanding options and shares reserved for future issuance under our equity compensation plans as of December 31, 2022:

EXECUTIVE COMPENSATION

Compensation Discussion and Analysis

2022 NEOs, 2022 “Say on Pay” Vote and Summary of Recent Compensation and Governance Changes

Named Executive Officers. At December 31, 2022, our Chief Executive Officer, Chief Financial Officer, and our three other most highly compensated executive officers, called our “named executive officers” or “NEOs,” were as follows:

“Say on Pay” Vote. In June 2022, we held a stockholder advisory vote on the compensation of our named executive officers. Our stockholders overwhelmingly approved, on an advisory basis, the compensation of our named executive officers, with approximately 85% of stockholder votes cast in favor of our “say on pay” resolution. In evaluating our general compensation practices during 2022 and in early 2023, we were mindful of the strong support our stockholders expressed for our compensation philosophies and practices. We remain committed to considering stockholder feedback on an ongoing basis and ensuring that our compensation practices align with market trends.

Recent Compensation and Governance Changes. We have recently made several notable compensation and governance-related changes that we believe appropriately address feedback we have received. We believe these changes continue to align the Company with peer companies and incentivize management to enhance long-term stockholder value. Specifically, as discussed in greater detail in the pages that follow, we: 

In addition, at the 2023 Annual Meeting of Stockholders, we are asking our stockholders to ratify increasing the vesting term of future initial equity awards granted to our non-employee Directors upon joining the Board such that all initial awards will vest equally over three years instead of vesting at one year.

Business Overview and 2022 Achievements

Our Medicines and Technology. Ionis was created with the belief that we could find a better way to design and develop medicines to address diseases that traditional pharmaceutical approaches could not address. This belief, and our unwavering commitment to the scientific process, has enabled us to discover and develop medicines that we believe will fundamentally change the standards of care.

We currently have three marketed medicines: SPINRAZA, TEGSEDI and WAYLIVRA. We also have two medicines currently under regulatory review, that if approved, will add to our commercial portfolio. These medicines are eplontersen to treat patients with polyneuropathy caused by hereditary transthyretin amyloidosis (“ATTRv-PN”), and tofersen to treat patients with superoxide dismutase 1 amyotrophic lateral sclerosis (“SOD1-ALS”). The FDA accepted the new drug application (“NDA”) for eplontersen in March 2023 and accepted the NDA for tofersen in July 2022. Additionally, the European Medicines Agency (“EMA”) accepted the Marketing Authorization Application (“MAA”) for tofersen in December 2022. The FDA has given the application for eplontersen a Prescription Drug User Fee Act (“PDUFA”) action date of December 22, 2023 and the application for tofersen a PDUFA action date of April 25, 2023. In addition to our commercial medicines and medicines under regulatory review, we have a rich innovative late- and mid-stage pipeline primarily focused on our leading cardiovascular and neurology franchises. We currently have seven medicines in Phase 3 development. In addition to our advancing pipeline, in 2022 we expanded and diversified our technology when we advanced new medicines into preclinical development that improve muscle targeting and utilize mesyl phosphoramidate (“MsPA”) backbone chemistry. We also entered into a collaboration with Metagenomi to add next generation gene editing capabilities to our technologies.

Our Commercial Vision. Our commercial vision is centered on maximizing the value of our innovative medicines. Today, we are focused on commercializing medicines primarily within our cardiovascular and neurologic disease franchises. We also plan to commercialize medicines from our emerging specialty rare pipeline that address underserved medical needs and provide an attractive market opportunity. Today, we have three near-term commercial opportunities, eplontersen, olezarsen and donidalorsen, which we are advancing towards the market. In 2021, we entered into an agreement with AstraZeneca to jointly develop and commercialize eplontersen, which we believe positions eplontersen to maximize value for patients and shareholders while also enabling us to bolster our commercial organization and accelerate our preparations for our near-term product launches. As we approach our first launches, we have accelerated our commercial build out over the past year. After our planned launch with AstraZeneca of eplontersen for ATTRv-PN, we are well positioned for our first independent launches with olezarsen and donidalorsen, assuming positive data and approved regulatory submissions.

Our Financial Strength. Our financial strength has been an enduring quality of Ionis for many years. Our multiple sources of revenue and strong balance sheet enable us to continue investing in our strategic priorities to achieve commercial readiness for multiple late-stage programs and advance our innovative pipeline. By continuing to focus on these priorities, we believe we are well positioned to drive future growth and to deliver increasing value for patients and shareholders.

Our accomplishments last year led us to meet our 2022 financial guidance, achieve revenues of $587 million and end the year with $2 billion in cash.

⁸ We use “non-GAAP” in place of “pro-forma” when discussing our financial results that exclude non-cash compensation expense related to equity awards, costs related to the Akcea Merger, and costs related to our restructured commercial operations and the related tax effects because we believe that non-GAAP financial results better represent the economics of our business and how we manage our business. For a detailed reconciliation of non-GAAP and GAAP measures, see Appendix C.

Summary of Compensation Practices

Below we summarize some of our compensation practices, both the practices we implement because we believe they are consistent with our vision and building long-term stockholder value, and those we choose not to implement as we believe they are counter to our vision and building long-term stockholder value.

General compensation principles	We design our compensation structure to drive the creation of long-term stockholder value and mitigate unnecessary or imprudent business risk taking. Specifically, we: ●     Use a combination of compensation vehicles that provide a balanced mix of fixed and variable cash incentives, and long-term stock incentives; ●     Require a 12-month minimum vesting period for equity awards; ●     Set explicit and demanding objectives at the beginning of each year from which we measure performance for the year; ●     Set a strict budget for equity awards and salary increases; ●     Do not provide perquisites for any employees; and ●     Do not provide “gross-up” payments, other than for relocation.
Align executive compensation with Company performance and design performance based awards to drive creation of long-term stockholder value	We tie a significant portion of our executive officers’ compensation to Company performance and design performance-based awards to drive the creation of long-term stockholder value. For example, we: ●     Allocated 65% of our Chief Executive Officer’s 2022 compensation in the form of performance-based compensation, which we consider to consist of cash bonuses, stock options and PRSUs; ●     Revised our PRSU structure for grants made in 2023 and going forward such that: ○    awards will have a single vesting period at the end of three years; and ○    the relative TSR percentile rank for maximum payout of the awards increased from the 75th percentile to the 90th percentile. ●     Place a maximum limit on cash bonuses and do not guarantee a cash bonus – cash bonuses can be, and have been, zero; and ●     Empower our Compensation Committee with the ability to exercise downward discretion with respect to the Company Performance Factor (used to determine cash bonuses) for our executive officers based on Company performance, which occurred in 2021.
Stock ownership and holding guidelines	We maintain stock ownership and holding guidelines that require our executive officers and non-employee Directors to meet certain ownership thresholds. We increased such ownership requirements for our non-employee Directors in 2023.
Clawback policy	We use an executive “clawback” policy that applies to all Section 16 officers.
Disallow hedging and pledging	We do not allow pledging, shorting, or hedging against our stock by Directors or employees.
No option re-pricing or cash buyouts	We do not reprice or “cash-out” stock options without stockholder approval.
Engage an independent compensation consultant	The Compensation Committee has retained a compensation consultant whose relationship with the Company was confirmed to be independent for 2022.   The compensation consultant, among other things, assists us in selecting an appropriate peer group and annually reviewing our compensation levels, policies, practices, and procedures for our employees and non-employee Directors compared to our peer group.
Use a “double trigger” for change of control for our executive officers	We use a “double trigger” for cash payments and equity acceleration for change of control for our executive officers.
Hold a “say on pay” vote annually	Provides an effective way for us to obtain information on stockholder sentiment about our executive compensation program each year.

Compensation Overview and the Role of the Compensation Committee

We have designed our executive compensation program to attract and retain executives who can help us meet our business objectives and to motivate our executive officers to enhance long-term stockholder value. The Compensation Committee, with input from an independent compensation consultant, manages and oversees our executive compensation program. At the end of each year, and as otherwise required, the Compensation Committee recommends that the Board approve the total compensation for our Chief Executive Officer and approves the total compensation for our other executive officers.

The Compensation Committee’s responsibilities include:

Independent Compensation Consultant

The Compensation Committee has the authority and budget to hire an independent compensation consultant as it deems necessary. The Compensation Committee has retained Aon’s Human Capital Solutions practice, a division of Aon plc (formerly known as Radford) (“Aon”) as its independent compensation consultant. For 2022, Aon primarily provided the Compensation Committee advice in the following areas:

Compensation Consultant Fees

As described above, the Compensation Committee has engaged Aon to provide the committee with peer company and industry compensation data and advice regarding executive officers’ compensation. In 2022, we paid Aon approximately $173,000 for Aon’s consulting services directly related to Compensation Committee support.

In addition, management of the Company engaged affiliates of Aon for other services in 2022 that were not related to Aon’s Compensation Committee consulting services. Our Human Resources department obtained general benchmarking survey data and performance analytics data from an affiliate of Aon, for which we paid approximately $40,000 in the aggregate in 2022. Additionally, our Finance department engaged an affiliate of Aon for insurance brokerage services, for which we paid approximately $780,000 in 2022. Although the Compensation Committee was aware of the nature of these additional services, the committee did not review and approve such services, insurance premiums or policies, as those were reviewed and approved by management in the ordinary course of business in consultation with the Audit Committee of the Board.

Aon maintains certain policies and practices to protect the independence of the executive compensation consultants engaged by the Compensation Committee. In particular, Aon provides an annual update to the Compensation Committee on the financial relationship between Aon and the Company and provides written assurances that, within Aon, the compensation of the affiliate consultants who perform executive compensation services for the Compensation Committee is determined separately from Aon’s other lines of business and from the other services it provides to the Company. These safeguards were designed to help ensure that the Compensation Committee’s executive compensation consultants continued to fulfill their role in providing independent, objective advice.

Compensation Philosophy

Our compensation philosophy supports and rewards the characteristics and behaviors we believe will make us successful and create long-term stockholder value:

Pay for Performance. We incorporate a number of features into our compensation structure to mitigate the risk that our compensation policies and practices could encourage unnecessary or imprudent business risk taking. We use a combination of compensation vehicles that provide a balanced mix of fixed and variable cash incentives, and long-term stock incentives. Our Performance Management By Objective (“MBO”) awards are not guaranteed (i.e., are 100% at risk) and include a multiplier, or performance factor, based on Ionis’ and the employee’s performance (respectively, the “Company Performance Factor” and the “Individual Performance Factor”). Therefore, if either Ionis or the employee performs poorly, the Performance MBO can be, and has been, zero. For example, for 2021 performance, the Compensation Committee exercised downward discretion with respect to the Company Performance Factor for our executive officers based on Company performance and awarded our Company’s executive officers a Company Performance Factor of 95% and all other employees a Company Performance Factor of 110%, due to a few key Company disappointments during the year. For 2022 performance, the Compensation Committee awarded a Company Performance Factor of 125% in recognition of the Company’s achievement of most of its goals for the year across all aspects of our business.

For PRSU grants made before 2023, one third of such PRSUs may vest at the end of three separate performance periods spread over the three years following the date of grant (i.e., the one-year period commencing on the date of grant and ending on the first anniversary of the date of grant; the two-year period commencing on the date of grant and ending on the second anniversary of the date of grant; and the three-year period commencing on the date of grant and ending on the third anniversary of the date of grant) based on the Company’s relative total shareholder return (“TSR”) as compared to a peer group of companies and as measured, in each case, at the end of the applicable performance period. In addition, PRSU grants made before 2023 include an alternative three-year payout mechanism (the “Alternative Calculation”) that requires an alternative payout calculation at the end of the final three-year measurement period assuming the only measurement period for all shares under the award was the three-year period. If the Alternative Calculation is greater than payouts under the sum of years one, two and three, then such PRSU award will pay out to achieve the number of shares payable under the Alternative Calculation. For PRSU grants made before 2023, performance below the threshold level results in a payout of zero shares, performance at the threshold level (25th percentile) results in a payout of 50% of target shares, performance at the target level (50th percentile) results in a payout of 100% of target shares, and performance at the maximum level (75th percentile) results in a payout of 150% of target shares.

Importantly, all of the PRSU grants made since inception of our PRSU program include the following limitations:

The PRSUs granted to all of our executive officers in 2022, including our NEOs, paid out to our NEOs in January 2023 as follows:

The PRSUs granted to our CEO in 2020 and 2021 paid out in January 2023 as follows:

2022 NEO Compensation: Performance Based vs. Non-Performance Based

We are committed to ensuring that a significant portion of our NEOs’ compensation is tied to Company performance. The charts below illustrate the proportion of our CEO’s and average NEOs’ (excluding the CEO) 2022 total compensation that was allocated among performance based compensation and non-performance based compensation. We consider cash bonuses, stock options and PRSUs to be performance based compensation, as the realization of the amount of such bonuses, and value of such options and PRSUs, are directly related to one or more measures of Company performance.

2022 CEO Compensation: Performance Based vs. Non-Performance Based

The performance based compensation reflected below includes the CEO’s cash bonus for 2022 performance ($837,688), fair value of stock options granted in 2022 ($1,761,806) and fair value of PRSU awards granted in 2022 ($2,145,668). The non-performance based compensation reflected below includes the CEO’s 2022 base salary ($824,800) and fair value of RSU awards granted in 2022 ($1,678,645).

2022 Average NEO Compensation: Performance Based vs. Non-Performance Based

The performance based compensation reflected below includes the NEOs’ (excluding the CEO) average cash bonus for 2022 performance ($331,003) and average fair value of stock options granted in 2022 ($787,120). The non-performance based compensation reflected below includes the NEOs’ (excluding the CEO) average 2022 base salary ($534,651) and fair value of RSU awards granted in 2022 ($1,100,109). Beginning in 2022, the NEOs (excluding the CEO) receive 20% of their total equity awards in the form of PRSUs.

Internal Pay Equity

An executive officer’s salary plus bonus represents the officer’s total cash compensation. Our philosophy has been to have the CEO’s total cash compensation be between 20-30 times the lowest levels of compensation received by an employee. Historically, the total cash compensation of our CEO over a rolling three-year period has been, on average, approximately 30 times that of the average cash compensation for our lowest level employees, and two to three times greater than the average of that of our other executive officers. Our CEO’s total cash compensation over the last three years was on average approximately 19 times greater than the average cash compensation for our lowest level employees, and 1.57 times greater than the average of that of our other executive officers.

We cover the specific elements of our compensation structure in more detail below.

Overview of Our Compensation Program

Drug discovery and development across a portfolio of many medicines is a long process that spans many years, where decisions we make today can have a positive or negative consequence five years, ten years, and even further into the future. As such, it is essential we set goals that incentivize our employees to execute our long-term strategy, because we believe our long-term strategy should continue to reward our stockholders into the future.

Importance of Tenure; Our Investment in Knowledge-Rich Employees

To recognize our employees, including our named executive officers, who deliver long-term productivity to the Company, Ionis has implemented two awards. In 2019, we implemented the “Career Achievement Award” to recognize our distinguished, long-tenured, senior-level contributors, including Board members, who made extraordinary contributions that helped determine the Company’s future, with a $50,000 cash award. In 2018, we implemented the “Commitment to Ionis Award” to thank employees for their commitment to the Company. The amount of the Commitment to Ionis Award correlates to the employee’s length of service with the Company and is paid on the employee’s milestone anniversary. The table below shows the Commitment to Ionis award for each corresponding milestone anniversary. We recently added 15-year and 25-year milestone anniversaries for which Commitment to Ionis Awards will be awarded and every employee who had a 15-year or 25-year service anniversary between 2018 and 2021 received a one-time “catch-up” award in 2022 for one-half of the amount of the applicable milestone award. In 2022, Dr. Geary was awarded such “catch-up” award to recognize his 25 years of service to Ionis.

Elements of Executive Compensation

Our executive officers’ total compensation consists of four elements:

The PRSU awards are the only element that does not apply to all employees.

We consider many factors in determining the amounts we grant to our executive officers for all of the compensation elements listed above, with the exception of element 4. These factors include:

We do not have specific weightings assigned to these factors, as the importance of each factor can vary among the executive officers and from year to year.

Peer Group

The Compensation Committee considers relevant market pay practices when setting executive compensation to ensure our ability to recruit and retain high performing talent. As such, on an annual basis, the Compensation Committee compares the compensation opportunity for our executive officers to similarly situated executives at the 25^th, 50^th and 75^th percentiles of the Peer Group as a “market check” to ensure, in its judgment, that the executive officers’ compensation remains appropriate. The Compensation Committee also reviews our compensation policies, practices, and procedures compared to the Peer Group to benchmark compensation for both our executive officers and non-employee Directors. While the Compensation Committee uses these data to inform and shape decision-making, it does not strictly adhere to quantitative benchmarks. The Peer Group data is just one factor considered in the annual compensation approval process, in addition to the factors described above under “Elements of Executive Compensation.”

The Compensation Committee, in consultation with its independent compensation consultant, evaluated and selected a peer group of 18 life science companies for evaluating Ionis’ 2022 compensation (the “Peer Group”). The Compensation Committee reviews the compensation of our named executive officers and non-employee Directors against the Peer Group’s executive compensation to ensure that our compensation is competitive and to inform and shape its decision-making when setting compensation.

The Peer Group, which the Compensation Committee reviews on an annual basis, consists of companies that generally:

The Peer Group generally does not include companies headquartered outside the United States (because compensation and benefit practices are generally different outside the United States, the comparable compensation data for the named executive officers and non-employee Directors is not available and cost of living is different) or companies in industries whose compensation programs are not comparable to our programs, such as non-life science companies.

In June 2022, the Compensation Committee reviewed the Peer Group using the criteria listed above and publicly available data as of May 2022. The Compensation Committee noted Ionis’ 30-day average market capitalization was approximately $5.3 billion and trailing 12-month revenue was approximately $810 million. As part of this process, the Compensation Committee looked at companies in Ionis’ industry with an emphasis on companies with 30-day average market capitalizations of between $1.5 billion and $15 billion and trailing 12-month revenue between $375 million and $2 billion. The Compensation Committee also looked at companies that identified Ionis as a peer, so called “reverse peers.” Based on this evaluation, the Compensation Committee added Ironwood Therapeutics to the Peer Group because it fell within the target market capitalization and revenue ranges and is in Ionis’ sector. The Compensation Committee also added Sage Therapeutics to the Peer Group because it fell within the target market capitalization range and is in Ionis’ sector. The Compensation Committee removed BeiGene and Bluebird Bio because they both fell outside the target market capitalization and revenue ranges.

The following table lists the companies in the 2022 Peer Group, along with Ionis’ rankings among these companies, based on market capitalization and financial data reported by each company at the time the Compensation Committee selected the Peer Group in June 2022.

Our Productivity and Strength

In 2022, we had a number of achievements that demonstrated our productivity and strength:

Our efficient platform and the dedication of our employees has enabled us to accomplish robust results and set us apart from our peers.

Advancing Our Pipeline

We now have seven Phase 3 medicines for nine indications advancing toward the market. We also have a prolific mid-stage pipeline of medicines advancing towards Phase 3 development, many of which are expected to reach pivotal trials in the near term. Based on our anticipated near- and mid-term catalysts, we are well positioned to drive increasing and meaningful value for patients and stockholders.

Compensation Allocation/Pay Mix

A key element of our compensation philosophy is to monitor and adjust our pay mix for our senior management team so the pay mix is less heavily weighted on fixed compensation (salary) and more heavily weighted on at-risk cash compensation and long-term equity incentive compensation. As part of the Compensation Committee’s review of our total pay mix for executive officers, the Compensation Committee focuses on the following:

An annual review of our total pay mix helps Ionis compete for and retain talent in the competitive marketplace and maintain compensation equity and balance among positions with similar responsibilities. The target pay mix for our executive officers is a result of the compensation targets that emphasize long-term compensation versus short-term compensation. Actual salary levels, annual Performance MBO awards and long-term incentive awards vary based on one or more of the following: an individual’s responsibilities, tenure in a particular position, experience, individual performance, and Company performance.

Pay Mix Chart

The following chart illustrates the portions of actual total direct compensation for the named executive officers that are composed of base salary, annual Performance MBO and long-term equity ($ shown in thousands) for 2022:

2022 Compensation Decisions and Results

Each year all of our employees are eligible to receive an appropriate merit salary increase. The Compensation Committee sets a Company-wide merit increase budget percentage based on Ionis’ performance and external factors such as the average merit budget of comparable companies and general economic conditions such as inflation. The actual merit increase award for each employee, including our executive officers, will vary depending upon the respective employee’s contributions to Ionis. For example, the Company-wide merit budget for increases effective in January 2022 was 3.5%, with a potential range of individual merit award increases of 0% to 10%. However, regardless of individual employee variances, we do not exceed the Company-wide approved merit budget.

The Compensation Committee evaluates each executive officer’s performance to set, or for the CEO, recommend Board approval of, such executive officer’s annual merit increase. As part of this process, the Compensation Committee reviews the written reports prepared by the CEO evaluating the performance of each individual executive officer. The Compensation Committee carefully considers these reports since our CEO is in the best position to evaluate our executive officers’ day-to-day and overall performance. The Compensation Committee meets in executive session and evaluates the CEO’s performance, primarily based upon the CEO’s achievement of our key corporate objectives for the year. At the end of this process, the Compensation Committee recommends Board approval of the CEO’s merit increase and approves the merit increases for the remaining executive officers. The Board then meets in executive session and approves our CEO’s merit increase. Our CEO has no role in determining his own compensation.

The executive officers’ new salaries for each year are generally calculated as follows:

2022 Base Salary Calculations