On December 11, 2019 Ionis Pharmaceuticals, Inc. (the "Company") reported that it entered into separate privately negotiated exchange and/or subscription agreements with certain new investors and certain of the holders of its 1.00% Convertible Senior Notes due 2021 (the "2021 Notes") to exchange $375.6 million in aggregate principal amount of the Company’s 2021 Notes (the "Exchange Transactions") for $439.4 million in aggregate principal amount of the Company’s 0.125% Convertible Senior Notes due 2024 (the "Notes"), and to issue and sell an additional $109.5 million in aggregate principal amount of the Notes (the "Subscription Transactions" and, together with the Exchange Transactions, the "Transactions") (Filing, 8-K, Ionis Pharmaceuticals, DEC 11, 2019, View Source [SID1234552570]).

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On December 19, 2019 and December 20, 2019, the Company issued a total of $548.8 million aggregate principal amount of Notes in the Transactions. The Notes are general unsecured obligations of the Company and bear interest at a fixed rate of 0.125% per year, payable semiannually in arrears on June 15 and December 15 of each year, beginning on June 15, 2020. The Notes are convertible under certain circumstances and may be settled as described below. The conversion rate is initially 12.0075 shares of the Company’s common stock per $1,000 principal amount of Notes (equivalent to an initial conversion price of approximately $83.28 per share of the Company’s common stock). The conversion rate and the corresponding conversion price will be subject to adjustment in some events but will not be adjusted for any accrued and unpaid interest. In addition, if certain corporate events occur prior to the maturity date, the Company will increase the conversion rate for a holder who elects to convert its Notes in connection with such a corporate event in certain circumstances. The Company may not redeem the Notes prior to maturity, and no sinking fund is provided for the Notes. The Notes will mature on December 15, 2024, unless earlier converted or purchased.

The Company did not receive any cash proceeds from the Exchange Transactions. In exchange for issuing the Notes pursuant to the Exchange Transactions, the Company received and cancelled the exchanged 2021 Notes. The Company estimates the net proceeds from the Subscription Transactions were approximately $99.2 million after deducting estimated offering expenses for the Transactions. The Company used a portion of the net cash proceeds from the Subscription Transactions to pay the costs of the previously disclosed convertible note hedge transactions and intends to use the remaining net cash proceeds for general corporate purposes.

Indenture

The Company issued the Notes pursuant to an indenture, dated as of December 19, 2019 (the "Indenture"), by and between the Company and U.S. Bank National Association, as trustee.

Holders of the Notes may convert their Notes at their option at any time prior to the close of business on the business day immediately preceding August 1, 2024 only under the following circumstances: (1) during any calendar quarter commencing after March 31, 2020 (and only during such calendar quarter), if the last reported sale price of the Company’s common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price on each applicable trading day; (2) during the five business day period after any five consecutive trading day period (the "measurement period") in which the trading price per $1,000 principal amount of Notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price of the Company’s common stock and the conversion rate on each such trading day; or (3) upon the occurrence of specified corporate events. On or after August 1, 2024 until the close of business on the second scheduled trading day preceding the maturity date, holders of the Notes may convert their Notes at their option at the conversion rate then in effect at any time irrespective of the foregoing conditions. The Company will settle conversions of Notes by paying and/or delivering, as the case may be, cash, shares of the Company’s common stock, or a combination of cash and shares of the Company’s common stock, at its election, as described in the Indenture.

The Company may not redeem the Notes prior to maturity and no ‘‘sinking fund’’ is provided for the Notes, which means that the Company is not required to redeem or retire the Notes periodically.

If the Company undergoes a fundamental change (as defined in the Indenture), subject to certain conditions, holders of the Notes may require the Company to purchase for cash all or part of their Notes in principal amounts of $1,000 or a multiple thereof, at a purchase price equal to 100% of the principal amount of the Notes to be purchased, plus accrued and unpaid interest to, but excluding, the fundamental change purchase date.

The Notes are the Company’s general unsecured obligations and rank senior in right of payment to any of the Company’s indebtedness that is expressly subordinated in right of payment to the Notes; equal in right of payment with any of the Company’s liabilities that are not so subordinated (including the 2021 Notes); effectively junior in right of payment to any of the Company’s secured indebtedness to the extent of the value of the assets securing such indebtedness; and structurally junior to all indebtedness and other liabilities (including trade payables) of the Company’s subsidiaries.

The events of default, which may result in the acceleration of the maturity of the Notes, include, among other things:

failure to pay interest on the Notes when due and the continuance of such default for a period of 30 days;

failure to pay the principal on the Notes when due;

failure to comply with the Company’s obligation to convert the Notes in accordance with the Indenture upon exercise of a holder’s conversion right and such failure continues for a period of three (3) business days;

failure to provide timely notice of a fundamental change or a specified corporate transaction;

failure by the Company to comply with its obligations under the Notes or the Indenture for a period of 60 days after notice if given in accordance with the Indenture;

certain defaults under loan agreements or other instruments (other than the Indenture) evidencing indebtedness for borrowed money of the Company or any significant subsidiary of the Company in excess of $100 million; and

certain events of bankruptcy or insolvency involving the Company or any significant subsidiary of the Company.