Dr. Stanley Crooke - Founder, Chairman, Chief Executive Officer B. Lynne Parshall - Chief Operating Officer, Chief Financial Officer Kristina Lemonidis - Director of Corporate Communications

Salveen Kochnover - Collins Stewart Mark Monane - Needham & Co. Edward Tenthoff - Piper Jaffray Jim Birchenough - Barclays Capital Craig Gordon - Cowen & Co. Lucy Lu - Citi

Good day everyone and welcome to the Isis Pharmaceuticals 2009 first quarter financial results conference call. Today’s call is being recorded. Leading the call today from Isis is Dr. Stan Crooke, Isis’ Chairman and CEO. Dr. Stanley Crooke: Good morning and thank you for joining us on today’s conference call to discuss our first quarter financial results. Joining us on today’s call are Lynne Parshall, COO and CFO; and Kristina Lemonidis, Director of Corporate Communications. The purposes of the call today are to report our financial performance for the first quarter of 2009 and to give you a brief update on what’s going in the business. So, I’ll have Lynne go over the financial results and then I’ll give you an update on the business and highlights to look forward to. First, Kris, will you read our forward-looking statement.

Good morning. A reminder to everyone that this webcast includes forward-looking statements regarding Isis’ business, the financial outlook for Isis as well as Regulus, its majority-owned subsidiary, and the therapeutic and commercial potential of Isis’ technologies and products in development. Any statement describing Isis’ goals, expectations, financial or other projections, intentions or beliefs is a forward-looking statement and should be considered an at-risk statement. Such statements are subject to certain risks and uncertainties, particularly those inherent in the process of discovering, developing, and commercializing drugs that are safe and effective for use in human therapeutics and immune to ever building a business around such products. Isis’ forward-looking statements also involve assumptions that if never materialized or proved correct, could cause its results to differ materially from those expressed or implied by such forward-looking statements. Although, Isis’ forward-looking statements reflect the good faith and judgment of its management, these statements are based only on facts and factors known by Isis. As a result, you are cautioned not to rely on these forward-looking statements. These and other risks concerning Isis’ programs are described in additional detail in Isis’ annual report on Form 10-K for the year ended December 31, 2008, which is on file with the SEC. Copies of these and other documents are available from the company. B. Lynne Parshall: Good morning everyone and thank you for joining us today. In addition to a brief discussion of the financial highlights of the quarter, I’d like to provide some guidance to you that some of the line items of our P&L much as I did during our year-end earnings call in February. At that time I had provided some details about the components of our revenue. This morning I’d like to spend a few minutes explaining how those components are reflected in our first quarter revenue. Also, many of you have asked us to provide a similar level of granularity on our operating expenses; so I’d like to do that for you this morning too. Next, we have some new items affecting our P&L which are briefly discussed with you so that you can understand why some of these things were different in our financial statements this quarter. Lastly, I’d like to spend a few minutes discussing the recent successes of our satellite company strategy. Clearly one of the highlights of our first quarter was the sale of our diagnostic subsidiary Ibis to Abbott Molecular. Not only was this transaction a substantial contributor to our first quarter net income allowing us to achieve our fourth profitable quarter in the past three years, but the $175 million we received from the completion of the sale also considerably increased our cash position. We ended the first quarter in a very strong financial position with over $650 million in cash, and we’re on track to meet our guidance, which is to end this year with more than $550 million in cash and pro forma net income greater than $145 million. We’re pleased in this environment to be one of the few very well funded biotechnology companies and our business strategies enable us to maintain that position. As you are aware, our business strategy is to discover unique antisense drugs, develop these drugs to key value and function points, and the partner them. In this way we can control our size, infrastructure, and expenses by building a very large pipeline as a broad base of license fees, milestone payments, and product revenue. As I reviewed in our last conference call, the revenue we earn consists of three primary components. The first component is revenue from the amortization of upfront fees we receive from our partners. Our first quarter 2009 revenue was almost twice that of the first quarter last year, principally because of the amortization of the upfront payments we received through licensing mipomersen to Genzyme last year. Our revenue was higher in the first quarter of this year compared to last year because the first quarter of 2008 included revenue from amortization of the stock premium, but revenue in the first quarter of 2009 also included amortization of the license fee. Amortization of the upfront fee from Regulus and strategic alliances with Glaxo SmithKline which began last April also contributed to our quarter-to-quarter increase in revenue. The second component of revenue on an ongoing basis is revenue we earn from performing research and development for our partners and from licensing agreements. This amount was roughly the same in the first quarter of 2008 and 2009. The third component is revenue we earn from other stores like milestone payments, sublicensing fees, contract manufacturing, and new collaborations. Although less predictable than the first two components, revenue from these sources contributes meaningfully to our total revenue. For example, in the first quarter we earned $1 million of sublicensing revenue from Alnylam, $1 milestone payment from Achaogen, and $1.4 million from Teva for sale of ATL/TV1102 to use in clinical trials. As a result of our recent transaction with Alnylam, our second quarter revenue will include the amortization of upfront B plus research and development funding for the quarter. This is an exciting expansion of our productive relationship with Alnylam that I will go with in more detail after I discuss our operating expenses. Also, this quarter we’ve earned a milestone payment related to Alnylam’s recently initiated Phase 1 trial of ALN-VSP. As I said these items are less predictable, they are a meaningful component of revenue and with 7 pharmaceutical company partners and 11 satellite company partners, they occur fairly frequently. If our current partnerships continue to be successful, we have the opportunity to earn up to approximately $1.8 billion in additional milestone payments from drugs that are in the pipeline. We will also participate in the commercial success of these drugs through royalty or profit sharing payments not to mention the value of the stock that we earn in some of our satellite company partners. I’ll now change gears and talk a little about expense. Our P&L includes two line items under operating expenses; research and development expenses which contain the vast majority of our expenses and general and administrative expenses. Our R&D expenses include personnel cost and outside cost for development, antisense research, manufacturing, and Regulus. Our development expenses include the cost to conduct pre-clinical and clinical studies with the drugs in the pipeline. Approximately 42% of our development expenses are from mipomersen. Our development expenses are higher in first quarter this year compared to last year because of the increased cost associated with the broad mipomersen Phase 3 program we and Genzyme are conducting as we move towards our planned 2010 NDA filing. We expect our development expenses to increase modestly throughout this year as mipomersen studies progress and as our pipeline expands and matures. Our antisense research expenses include cost associated with their discovery programs. These are the programs that support the addition of new drugs to our pipeline every year. Our antisense research expenses also include cost associated with research we do for our partners primarily Genzyme, J&J, and BMS. We believe we can add three to five new drugs to development each year without increasing our research expenses from their current rate. These expenses also include investments in our core antisense technology. These are the investments that continue to improve our antisense technology platform and maintain our technology leadership. They include the programs to expand our chemistry with our new generation 2.5 chemistry and to extend the applications of our technology with new mechanisms with action such as single-stranded RNAi. In addition, these research activities extend our intellectual property control of RNA-based drug discovery well into the feature. Our manufacturing expenses include making the drug we and our partners need to conduct pre-clinical and clinical trials. As our pipeline expands we expect the cost within this function to increase slightly. However, during the first quarter of this year we’ve been busy completing an upgrade to our manufacturing facility to prepare for mipomersen launch requirement. As a result our manufacturing expenses this quarter are essentially flat compared to the first quarter last year. Last, our R&D expense line includes costs associated with the research activities of our majority-owned subsidiary, Regulus. Consistent with our earlier guidance, Regulus’ costs doubled in the first quarter of this year compared to last year’s first quarter because Regulus is still in the process of building its core team, microRNA technology. We expect Regulus expenses to continue to increase during the remainder of the year as Regulus continues to build its core team and supportive of its GSK alliance and its internally funded programs. I hope that this additional detail is helpful for you, you can also find this level of detail in our 10-Q which we expect to file by the end of this week. As I mentioned this quarter our P&L contains some changes that I want to explain in more detail. An important change to note is that we have to pay taxes this year. We have taxable income resulting from the upfront payment we received from Genzyme last year and from the gain of sale of Ibis to Abbott Molecular earlier this year. Financial reporting standards require that we allocate our estimated tax expense between continuing operations and discontinued operations on our P&L. Since the sale of Ibis to AMI was a discrete event that occurred in the first quarter of 2009, accounting standards require us to record the total amount of our estimated income tax expense related to the gain on the sale of Ibis to discontinued operations in the first quarter of this year. We’re also required to gross up this amount by the projected annual tax benefit we expect to receive as part of our loss from continuing operations this year. This means that in addition to the tax expense for the gain on the sale Ibis, discontinued operations also includes the tax expense associated with the upfront funding we received from Genzyme in 2008. As a result we reported tax expenses of $30.7 million in discontinued operations in the first quarter of 2009. In addition we recorded an income tax benefit of $717,000 on one called income tax benefit as part of our financial results from continuing operations because we will be using the tax benefits generated from our current year loss from continuing operations to offset a portion of our taxable income. For each quarter in which we incur a loss from continuing operations during the rest of this year, we will record an income tax benefit. The cumulative amount of this benefit will reduce our total tax expense until we reach our estimated annual expense of $20 million to $25 million at the end of 2009. To minimize our Federal tax liability we will use our NOL carry-forwards to offset a majority of our taxable income. Internal revenue code sections 382 and 383 limit the amount of taxable income that a company with historical losses like Isis can offset with NOL carry-forward when the company has experienced a significant change in ownership. Working closely with our tax consultants we’ve recently completed the section 382 analysis and we’re pleased to say that we expect to be able to use all of the NOL carry-forwards we’ve accumulated through the end of 2008, approximately $772 million. However, given the California tax law changes that went active at the 2008-2009 California Budget, we’re unable to use our NOL carry-forwards to offset taxable income for California this year. We expect, however, to use a portion of our R&D tax credits to offset California tax expense to the extent allowed. In addition, this quarter we’re required to adopt a new accounting standard called FSP 14-1 with regard to our standing convertible debt. This standard is somewhat complicated; so I’d like to explain it here. This new standard requires us to separate the debt and equity components of our convertible notes. The debt component is calculated to reflect our borrowing rate for debt instruments without a conversion feature, which means that now our convertible debt is recorded as a discount because the 2-5/8% interest rate we pay is less than the rate at which we could borrow without our conversion feature. FSP 14-1 then requires us to amortize the discount over the expected life of the debt as additional non-cash interest expense. FSP 14-1 also requires us to retrospectively apply this accounting change throughout the historical periods we present in our financial statements. So, there are changes in our historical numbers caused by this new accounting standard and as a result of the application of FSP 14-1 the amount of non-cash interest expense related to this amortization included in our interest expense line for the first quarter 2009 and 2008 was $1.7 million and $1.5 million respectively. This new standard does not affect our cash, but it does decrease the carrying value of our $162.5 million convertible notes to $119.7 million at March 31, 2009, and $118 million at December 31, 2008, with a corresponding increase to shareholder’s equity in each period. Thank you very much for bearing with me throughout that; I know this is complicated, and so if you have additional questions after reading our 10-Q, please feel free to call. Now, with the accounting details out of the way I’d like to focus on our main message. Our business strategy is working. Our strong financial position is a result of the execution of our business strategy both with our large pharmaceuticals partners and our satellite companies. Our strategy enables us to build value through our successes and the successes of our partners. Already, this year we’ve achieved three important goals related to our satellite company strategy which provides us with the opportunity to advance our technology outside of key areas of focus and maximize the value of our inventions and technology. First, we have pardoned our technology partnerships to maintain our leadership in all applications of antisense technology like completing a new initiative with Alnylam to accelerate our efforts in single-stranded RNAi therapeutics. We benefit by having a partner like Alnylam to help us advance in fund discovery and development of the technology where we retain the opportunity to discover and develop single-stranded RNAi antisense drugs ourselves. Second, our satellite company partners continue to advance drugs that we discovered with the drive from technology we licensed to them; these drugs broaden and mature our pipeline. A recent example is ACHN-490, a drug designed to treat patients with bacterial infection for which clinical trails were recently initiated by our partner, Achaogen. Finally, these partnerships continued to benefit us financially. In the first quarter of 2009 we received $2 million as sub-license revenue and we completed the sale of our diagnostic subsidiary Ibis to Abbott Molecular at the beginning of the year for a total price of $215 million, and already in this quarter, we’ve completed a new partnership agreement in single-stranded RNAi with Alnylam and we’ve earned an additional milestone payment from Alnylam for ALNBSP. We’re fortunate that our cash position allows us to opportunistically support our satellite companies. For example, we and Alnylam each invested $10 million in a recent financing for Regulus. We also participated in the financing that iCo completed in the first quarter to fund the ongoing clinical trials of iCO 007 to treat diffuse diabetic macular edema. It’s been a successful quarter and our achievements have provided the financial strength for continued success as we progress through 2009. With that, I’d like to turn the call back over to Stan to give you an update on the business and to highlight some events to look forward to. Dr. Stanley Crooke: The year 2008 was a year of excellent accomplishments for us, so the first quarter had a big act to follow. Nevertheless, the first quarter of 2009 was an exciting and important quarter for us. There were several accomplishments during the first quarter that Lynne just walked you through, but what I like to do is spend a few minutes on the science and the innovation that are the foundation of our unique business strategy and all of the progress that we’ve made. I think this is the right context in which to consider these accomplishments. We pioneered our antisense technology and remain committed to innovation and advances in the technology. Innovation at Isis is broad, it’s deep, it’s constant, it’s just a way of life, and we patented everything that we can along the way. As a result of the technological foundation we build, many of our partners have come to us because they wanted the license aspect of our technology; a great example of this was our relationship with Alnylam. In 2004, we licensed our technology to Alnylam for use and creating double-standard RNAi drugs. We just expanded that relationship to include single-stranded RNAi drugs. From this successful working relationship we received over $55 million in upfront payments, sub-licensing fees, equity today, and the new relationship derived from work we have done on the RNAi pathway. We use our expertise in all of the nucleotide chemistry, RNA biology, and entomology to dissect the RNAi pathway and discover stabilized single-stranded RNA-like antisense drugs that work via the RNAi mechanism. Single-stranded RNAi represents a novel strategy to form RNAi pathway, and given the progress that we’ve made, it’s now time to expand our efforts and broaden the applications for these inventions; we believe Alnylam is the perfect partner for this. Single-stranded RNAi drugs are very different from traditional double-stranded RNAi drugs. Because they’re single-stranded, we expect them to distribute to tissues without any special formulations, they will be simpler and less costly to make and we also believe they will be better tolerated. In addition to single-stranded RNAi, we’re also making great progress in learning how to exploit other antisense mechanisms such as alternative splicing; alternative splicing accounts for significant fraction of the diversity in proteins in humans. On average, a single human gene can make four or five proteins by alternative splicing of its pre-mRNA. Moreover, disorders in alternative splicing have been shown to result in many diseases such as spinal muscular atrophy. We hope to have a development candidate based on this effort in the very near feature. We also continue to make improvements to the chemical foundation of our drugs. We’re making excellent progress on introducing new proprietary generation 2.5 chemistry that should increase the potency of our drugs by ten-fold or more compared to the very potent generation 2.2 drugs that are already in the clinic. To put that in perspective for you, the clinical Phase 3 dose for mipomersen is 200 mg per week; so we expect the generation 2.5 drugs to be dosed at around 20 mg a week or lower. Of course, every innovation we make in the chemical foundation of our drugs is broadly applicable across our entire drug discovery platform. Now, let’s focus on how the drugs in our pipeline are advancing. We’re on track to reach our goal to add three to five new drugs into development in a diverse range of diseases this year and every year. Already, this year we’ve added one drug to our pipeline; we expect to add two to four more, including drugs to expand our existing therapeutic focus in the new areas such as thrombosis and obesity. Of course, we can’t talk about our cardiovascular program without talking about mipomersen. Everybody is waiting for us to report data from the Phase 3 homozygous FH study. As you know, we’ve previously indicated that we would provide top-line results from this study in the middle of the year. Recently, Genzyme refined the timing to be this quarter, so you can expect results from this trial to be recorded in the very near feature. Yesterday, in their analyst meeting, Genzyme also provided more precise information on the regulatory strategy and commercial opportunities in mipomersen. I want to just hit the high points of the important information that they provided yesterday. First, in 2010 we plan to complete our first filings for homozygous FH in both the US and Europe. Data from the severe hypercholesterolemia trial should be available at the time of this submission and may be the basis for a broader indication. In the US and Europe, Genzyme estimates that there are 25,000 to 30,000 patients from these categories. The second filing is planned in 2012 in the EU only, and we will focus on patients with heterozygous FH. From a commercial point of view, Genzyme plans to focus on the highest risk heterozygous FH patients in this expanded indication. These are patients with very high LDL cholesterol levels in the range of over 160 or higher on maximum lipid lowering therapy. In the EU, Genzyme estimates this population to be about 20,000 to 25,000 patients. Genzyme plans to file to treat patients at high cardiovascular risk who are unable to achieve their LDL targets. Genzyme estimates that there are 1.2 to 1.4 million patients who are at high cardiovascular risk and have an LDL above 150 despite the use of currently available therapies. Genzyme will await data from our outcome study prior to making additional submissions to potentially expand the indications. We designed our Phase 3 program to support these filing plans. The study of homozygous FH patients in which we enroll 51 patients is complete and ready to be analyzed. We have three other Phase 3 studies ongoing in severer high-cholesterol heterozygous FH and high-risk high cholesterol patients in which we will evaluate effects of mipomersen on up to 375 additional patients. In each of these studies, 200 mg per week of mipomersen are administered for 26 weeks and then the percent reduction in LDL cholesterol at week 28 is evaluated. In addition, we have an ongoing study of mipomersen in statin-intolerant patients. We plan to have all these studies completed before the first NDA filings for mipomersen. We are pleased to confirm for you that us we continue to dose more patients and expand in their safety experience, that the safety of mipomersen remains consistent with our Phase 2 experience. This is particularly gratifying as we now have treated more than 400 subjects. All of the new studies required 26 weeks of dosing and we have growing numbers of patients how have been treated for longer than six months with a few treated for as long as two years. Now, let’s look at the rest of the drugs in our cardiovascular program. It seems almost every day that new opportunities for a selective CRP inhibitor are identified. Very recently, it was demonstrated that CRP appears to increase tumor growth and reduced hepatosis. It is also known that CRP levels are increased in a variety of cancers. Our focus on CRP thus is not only in cardiovascular disease but we are looking at many other diseases including inflammation, cancer, renal disease, and others. Our Phase 1 trial for a CRP drug is in progress and we are getting ready to initiate our broad Phase 2 program. Later this year our partners at BMS plan to begin Phase 1 studies on our PCSK9 inhibitor, another drug designed to lower bad cholesterol. We also expect to expand our cardiovascular franchise by moving new drugs into development for new therapeutic areas such as factor XI to treat thrombosis and APOC3 to selectively reduce triglycerides. Now, let’s focus on the metabolics program. In the middle of the year, we expect to have data from our Phase 2 study evaluating Isis 113715, our novel in-sensitizer targeting pdb1b. This is a study in combination with sulfonylureas in patients with type 2 diabetes. We recently initiated a Phase 1 study on our SGLT2 inhibitor, the first of our drugs to design to inhibit a target express in the kidney. As I mentioned in the last call, we are moving beyond treatment of type 2 diabetes to the identification of peripherally acting anti-obesity agent. In the past, anti-obesity agents have mostly been centrally active resulting in a variety of CNS side effects. Our drugs don’t cross the blood-brain barrier giving them an advantage. We hope to have our first anti-obesity development candidate this year as well. We continue to explore therapeutic opportunities for antisense drugs to treat severe neurodegenerative diseases. We expect our SOD1 inhibitor to enter clinical trials this year in patients who have severe and aggressive ALS. This is a very important drug that addresses the mutation and SOD1 at least for the most common and severe form of familial ALS. We look forward to adding new drugs to development to treat important diseases like Huntington’s, Parkinson’s, and others. We also expect to add drugs to development from our new anti-cancer program. We have re-invigorated our internal program as our partners continue to present promising results on the anti-cancer drugs that we licensed to them. Within the past year, our partners in OncoGenex have presented promising clinical data on anti-cancer antisense drugs demonstrating the significant potential for use of antisense drugs to treat a variety of cancers. To take a quick look at some of our other partner drugs, this year, Altair plans to present Phase 1 data on an inhaled antisense drug to treat asthma; iCo intends to complete their Phase 1 study on iCo 007 in patients with diabetic macular edema this year as well. OncoGenex will present Phase 2 survival data on OGX-011 at ASCO next month as well as Phase 1 data on another anti-cancer antisense drug, OGX-427. On the full roster, when you consider the drugs I have highlighted plus the other drugs that I haven’t had time to mention but is in development, you can see that we have drugs to treat many diseases and that they will be encountering important milestones along the way for developing drugs to treat patients with diseases that range from severe acute diseases to chronic disease such as type 2 diabetes and high cholesterol. We have a very diverse robust product portfolio and we’ll be expanding that on an ongoing basis. Hope all these things gave you an idea of the breadth of our technology, our commitment to maintaining leadership in antisense technology, and the breadth of the pipeline. All of that when combined creates enormous value for the company and for our shareholders we believe, and we look forward to keeping you updated about that as we continue. So, in summary, we started 2009 in a strong fashion. We expect 2009 to be another successful year for the company. And with that, we’ll open it up for questions now.

(Operator Instructions). Our first question we go to Salveen Kochnover - Collins Stewart. Salveen Kochnover - Collins Stewart: Stan, are there any plans to conduct MRI studies for mipomersen in patients with high baseline steatosis levels. Dr. Stanley Crooke: Yes, Salveen, there are plans to do that. One arm of the CS10 study was designed to do that. So, these are people with high triglycerides. Probably more importantly in our large study we’re looking at again patients with high cholesterol and high risk. We are allowing patients with diagnosis and elevated triglycerides into that trial and we will be evaluating the effects of the drug in those patients. Remember that in animals we have shown that long-term treatment of fat-fed animals actually reduces liver steatosis, and so over time we want to take the opportunity to look at whether we can reproduce what we saw in mouse and monkey in man. If we are able to do that, clearly that might be an event that certainly will enhance the profile of mipomersen and possibly be another indication for it. Salveen Kochnover - Collins Stewart: When might we see this data? Dr. Stanley Crooke: It is hard to say. Enrolling patients in studies where you are requiring that they have multiple MRIs and be treated for 26 weeks and longer, it’s tough to enroll, and I think it’s little early for us to know exactly how many of those patients we will have in each of these studies. Salveen Kochnover - Collins Stewart: Another question on 113715; the Phase 2 data, could this be the value inflection point here for you to partner the drug or do you think additional studies might be required before you license it? Dr. Stanley Crooke: Could be a value inflection point. Remember that the profile for this drug is really unique. We believe based on the initial Phase 2 data and the animal data that it will lower glucose, lower LDL, be weight neutral, or potential cause weight loss, and we hope that it increases adiponectin. It has no drug-drug interactions and is a unique mechanism for insulin sensitization. It doesn’t involve a transcription factor. So, it has a great profile. Our strategy will be to look at the data we have, see if we feel they’re good enough with three months of treatment to license that on an attractive set of terms. If not, we’ll go forward and do the study that we really want to do which is 6 months treatment, probably both in combination with metformin and sulfonylurea. So, it is going to be data driven and we will see how it looks.

We’ll go next to Mark Monane - Needham & Co. Mark Monane - Needham & Co.: Thank you for the comprehensive review of both clinical updates and financial description. A good review of course leads to further question. My first question is on mipomersen; it seems like the company’s strategy is really focused on 2010, a number of different studies will be available than. Let me see if I got it right; we’ll have the first Phase 3 of the homozygous FH as well as the severe cholesterol patients in 2010; is that right, is that the apheresis population? Dr. Stanley Crooke: They used to be called apheresis. Just to summarize, Mark we will of course have all the Phase 1 and Phase 2 experience; we’ll have the homozygous FH study, the heterozygous FH study, the high-risk high-cholesterol study, and we’ll have the statin intolerance study which is not a Phase 3 study, but we’ll have all that available to us as well as the experience that we have in our MRI study that we’ve talked about when we file in the second half of 2010. One other point as Genzyme mentioned yesterday and I think the it’s quite important that our regulatory strategy has now matured; I think, we have a clear idea of how we’re handling the EU and the US. We expect to get homozygous FH plus severe cardiovascular risk, severe high cholesterol in our first approval. Genzyme believes that those patients constitute 25,000 to 30,000 in number in the US and Europe, and then a second filing in the EU only which will expand the use of mipomersen into heterozygous FH patients, strictly those at high cardiovascular risk. Mark Monane - Needham & Co.: Is Genzyme and Isis preparing some pharmacoeconomical studies to go along with that especially when you think about approval ex-US; will we see some of that data as well? B. Lynne Parshall: Yes, the measures that we laid for the first filings, Mark, are built into the ongoing studies. There is, for the first filing, not any special additional study that’s being conducted. Mark Monane - Needham & Co.: I didn’t hear you talk very much about the CNS franchise. I guess that includes ALS, Huntington, and the Teva program; can you give us an update there? Dr. Stanley Crooke: There were quite a number of drugs I didn’t talk about. It’s not that I’m not interested and excited about. It’s just that we wanted the financial stuff required so much time to go through and we wanted to end this thing in 30 minutes. ACL CB1102 continues to progress. Remember what they had to do after the very positive Phase 2 data that they got was to conduct longer-term animal safety studies to get ready for longer-term Phase 2 trials. So, there not much to talk about there other than that the animal studies are in progress and they are getting ready to move forward. With regard to the rest of the CNS program, SLV is the first, but we are making great progress in the other areas; I think, Genzyme highlighted some of that yesterday in their analyst meeting as well. The disease and the drug that I am most excited about in the portfolio is our drug for spinomuscular atrophy. This is a drug that induces alternative splicing. So, it’s a disease caused by the failure to process your pre-mRNA for that protein properly, and the results that we have in animals are really remarkable. So, that’s moving along as well as the Huntington’s and Parkinson’s. So, that’s moving nicely. I didn’t mention the J&J drugs, glucagon and glucocorticoid, they’re moving along and you should be hearing about those compounds in the coming months as well. Mark Monane - Needham & Co.: Lynne, the $11 million signing payment from Alnylam considering the single-stranded SiRNA, will that be dealt with in the revenue line in the second quarter under licensing fees; did I get that right? B. Lynne Parshall: No, Mark. It will be in the first budget amortization of our current licensing fees when I talked about them and it will be amortized over the 3-year period of the research collaboration. Dr. Stanley Crooke: Remember that that deal also includes Alnylam funding a minimum of $3 million a year to support research in the area.

We’ll go next to Edward Tenthoff - Piper Jaffray. Edward Tenthoff - Piper Jaffray: Just where Mark left on the single-stranded RNAi deal; Stan, at a high level, can you really differentiate how single-stranded RNAi differs from antisense, and excuse me if that’s a very basis question, but my premise was that antisense beyond simply hybridizing mRNAs might also engage the risk mechanism. In a sense that you’ve just made Alnylam an antisense company and does this mean that double-stranded RNAi is not working? Dr. Stanley Crooke: In my view Alnylam was always an antisense company. Antisense; around the definition of the term, it’s amusing to me to hear people who weren’t involved in defining the term redefine it. Antisense refers to the creation of oligonucleotide-based drugs that hybridized RNA. Once hybridized RNA, then a variety of things can happen to that RNA. One thing that can happen is you can recruit RNA phage and cause degradation, and if you want to do that you have to design your drug specifically so that’s what that enzyme it recruits. Another thing that can happen is you can recruit risk RNAi pathway, and if you want that to happen, and of course then RNAi degrades the RNA. If you want that to happen, you have to design your drug specifically chemically to do that. So, the processes for making antisense drugs involve both the design so that they bind well to the target RNA and designs that support the kind of mechanism after binding that you want. So, in that sense, the RNA phage and SiRNA are quite similar in that in both cases you are administering the drug, an antisense agent, that binds the target RNA; one recruits an enzyme that causes the RNA to be degraded as the duplex looks like a DNA/RNA duplex and the other recruits a different enzyme that looks like RNA/RNA. So, the way to think of double-strand RNAi is that the fifth strand is just a drug delivery device. It meets all the definitions of a drug delivery device. We use it to stabilize the drug and get it into the RISC complex. We felt that another way to take advantage of this since the active material in a double-stranded RNA is antisense; the antisense strand will be to get rid of the sense strand and stabilize the single strand and use it that way. The benefits of that of course is single strand, and single-stranded drugs are very different from double-stranded and we know how they behave. We know that they distribute without special formulations and so on; so that’s what we’ve been working on. We’ve made a lot of progress, there’s still a lot of work to do before we know how broadly effective it will be, whether it will be robust enough to really be of great value, and I think John has said it best, Alnylam will continue to focus primarily on double-strand RNA drugs, but this simply adds another approach to the way they’re working and amplifies their opportunity to be successful here as it does for us. Edward Tenthoff - Piper Jaffray: Thank you very much for that update, that’s very clear.

We’ll go next to Jim Birchenough - Barclays Capital. Jim Birchenough - Barclays Capital: A few followup questions, number one, in terms of the efficacy for the homozygous FH trial, obviously a 20% hurdle for statistical significance, could you maybe talk, Stan, about what will be clinically relevant results to think that’s enough to get broad adoption in the market? Dr. Stanley Crooke: I think John Butler did a really good job yesterday in dealing with that issue, and the short answer is that a 20% reduction in LDL and homozygous FH patients is hard to come by, and if you think about the people, I have no idea what the average LDL coming in in the study is, but it wouldn’t surprise me if it were 400 or 500, certainly it’s high, so a 20% reduction, that’s a big number; we absolutely are confident that a 20% reduction would be both approvable and highly clinically significant in this patient population and that’s in fact why we designed this study with that as sort of the minimum that we wanted to measure. Jim Birchenough - Barclays Capital: I guess I asked the question because in Phase 2 I think you showed a 30% to 50% range in terms of LDL reduction, any reason why we would see something less than that in this Phase 3? Dr. Stanley Crooke: Well, in Phase 2 we showed a dose-dependent reduction and that we could take LDL down as low as we wanted to. We picked 200 mg because it was in the middle of the dose response range, and remember, this drug is a very long half-life drug, so at 13 weeks we are about two-thirds of the way to steady state. So, we expect that the longer you dose the drug the better it’s going to perform. In the Phase 2 study, single agent combination at 200 mg, if I remember correctly, we got about a 42% reduction in LDL, somewhere in that range, and we saw that the drug behaved equally well as a single agent or in combination and equally well independent of whether it was subject to volunteers, routine high cholesterol or patients who had familial hypercholesterolemia. So, we’re very optimistic that we’ll have very similar results in our Phase 3 trial homozygous FH, but we will feel highly victorious if we get results 20% and above. Jim Birchenough - Barclays Capital: Stan, may be just on the safety side of the drug or the side effect profile, there was some mention yesterday during Genzyme’s presentation of side effects like fever, flu-like symptoms, injection site reactions, and they were characterized as generally mild to moderate, but some patients were with more severe symptoms and they suggested that there were measures being taken to try and mitigate those symptoms going forward, could you may be talk about that, how serious infusion reactions are with mipomersen and how easy are they to deal with? Dr. Stanley Crooke: The drug is given subcutaneously. So, if you go back and look, early on in Phase 2 we showed a side effect table, and there were had headaches, nausea, fever, and so on, all the things that you see with a drug, and so, there are some subjects who have had these constitutional symptoms; it’s very difficult to sort out what are drug related and what are not; obviously, it’s the same with every drug. There are mild to moderate when they occur. They occur in some subjects, not others, and there has been no change that we can identify in the performance of the drug in the Phase 2 studies versus the CS5 for example, the Phase 3 with homozygous FH, and of course what we’re trying to do now is focus on how to make this drug as commercially attractive as possible. So, we’re working hard to mitigate all the minor lucent side effects that this drug has as we get ready for commercial, and we’re looking at ways to minimize injection site reaction, ways to minimize anyone who has a flu-like syndrome or anything like that, and that’s why we’re talking about it. It’s trying to get ready for the commercial opportunity and minimize those things for people as we contemplate putting it on the market. Jim Birchenough - Barclays Capital: Finally Stan; is there an open label extension to this Phase 3, and if there is, what percent of patients are continuing on beyond the 26- to 28-week period? Dr. Stanley Crooke: There is an open label and I don’t have the specific numbers, but the roll over into the open label study is quite high and that’s what you’d expect. Remember that one-third of the patients are on placebo. Jim Birchenough - Barclays Capital: They do have the option to cross over to mipomersen? Dr. Stanley Crooke: Yes, that’s what happens. They know that they can go on to mipomersen at the end of that. Lynne may have more specific information for you. B. Lynne Parshall: I don’t know the exact percentage, but it is a high number of the patients who are rolling off there. Dr. Stanley Crooke: We’re very pleased with what’s going on.

We’ll go next to Craig Gordon - Cowen & Co. Craig Gordon - Cowen & Co.: A couple of question; in the EU it was mentioned yesterday by Genzyme that an expanded safety database would be needed prior to the heterozygous FH filing. Can you give more clarity exactly what the EU is looking for there? Dr. Stanley Crooke: I’m a little uncomfortable getting too specific because I think that’s an appropriate question for Genzyme, but we’re confident that by the time we file for heterozygous we will have a safety database that meets their needs. Remember in the EU, the international guidelines are 1500 or more subjects and there are specific requirements for long-term, 6-month, and 1-year treatments, and we will exceed guidelines for long-term treatments and we just need to flush out the numbers of the extent of treatment, and that’s a very straightforward process that we’re confident we’ll do. Craig Gordon - Cowen & Co.: I believe it was also mentioned in an ongoing homozygous study that MRIs are being performed of the liver, baseline; is that correct? B. Lynne Parshall: Yes, that is correct. John displayed that yesterday in his presentation and we are in the Phase 3 studies performing baseline MRIs, and that’s what we’re doing in every one of the Phase 3 studies, but in a number of them we are. Dr. Stanley Crooke: Remember that in the early studies we didn’t do baseline MRI because it’s extensive and it’s time consuming and hard; and you expect a pretty high fraction of these people that have some steatosis. So, in CS5, the pivotal homozygous FH we do that baseline MRI values on all the subjects. Craig Gordon - Cowen & Co.: Are you going to be following these MRIs up in terms of let’s say at the end of 6 months post study or are you just looking at baseline; what do you plan doing with this data? Dr. Stanley Crooke: The baseline data just provides the baseline information and then we can look in more detail if there’s something in the patient’s behavior that causes us to want to look. Craig Gordon - Cowen & Co.: So there’s no future plans to do followup MRIs on the patients that baselines have been done? Dr. Stanley Crooke: Remember we’re doing a specific MRI liver fat study and we’re adding patients to our high-risk high-cholesterol study. Again, we’re allowing people with higher triglycerides in and again the diabetes, and were following those people with serial MRIs. B. Lynne Parshall: Yes, we’re doing baselines and 6-month MRIs.

Okay, and then one other question, do we have any other details or timelines on the updates for the cardiovascular outcomes trial to address the larger patient population? Dr. Stanley Crooke: Nothing more than what Genzyme provided yesterday; we are doing hard work on planning the study and a lot of the planning will be driven by results that we get from the current trials that are in progress, and so, we’re making good progress, I feel like the design is coming together pretty nicely.

We go next to Lucy Lu - Citi. Lucy Lu - Citi: In second half next year when you submit NDA for the homozygous population, you also have data from the apheresis eligible; I’m just wondering based on the conversations with FDA, what will determine whether or not you can include that patient population in the label, and if not, what additional data or information do you need to provide to include that patient population? Dr. Stanley Crooke: I think as Genzyme said yesterday, we’re confident that we will be able to include those patients in the label. After all, the guidance from the FDA was that they were willing to consider approving the drug in patients at very high risk, and all of these patients that we’re talking about are at severe cardiovascular risk. Lucy Lu - Citi: And then Stan, in that study what percentage of patients were actually apheresis part entering this study versus those who are just eligible for apheresis but they were not on apheresis before? Dr. Stanley Crooke: The study that we once called apheresis eligible we’ve changed to just look at people with severe cardiovascular risk and very high cholesterol despite maximum tolerated lipid lowering therapy. The homozygous FH study is still blinded, but if I remember correctly, I don’t think we allowed people who were on apheresis in that study, isn’t that right Lynne? B. Lynne Parshall: That is correct; there were no patients in either of the two studies in the homozygous FH study or in the severe high cholesterol study who can be on apheresis during the study. I don’t happen to know what patients may have been on apheresis at some point in the past. Dr. Stanley Crooke: Yes, we wouldn’t know. I would expect a relatively small number because it is tough to get apheresis and the reason that you don’t want to include people who are on apheresis obviously makes it very difficult to evaluate performance because you have this intermittent reduction in lipids and all of the associated problems that come with apheresis.

With a followup question we return to Jim Birchenough - Barclays Capital Jim Birchenough - Barclays Capital: Just two followups, just on this issue of what may or may not be in the label, if it turns out that you just get the homozygous FH claim in the label, have you done some work with payers and physicians to get a sense of what they would do with the drug because I’m just wondering if you have a drug that’s very effective in homozygous FH and is data supporting substantial reductions in higher risk patients, do you think you’re still going to get adoption outside of the label; I’m not saying you’re going to promote to it, but do you think you’ll get adoption beyond homozygous FH commercially based on feedback you’re getting?

First of all, I don’t think there’s a significant risk that we won’t get a label that is broader, and certainly, we haven’t done any specific work looking at the question you asked, but as a physician, I think you know and I certainly believe that the drug has been shown to be effective in patients who know they’re going to have another heart attack or two or three, we think would be used. Jim Birchenough - Barclays Capital: And then just a followup on the 113715 data that we’re expecting, what’s the threshold stand for moving that program forward, what kind of reduction in HbA1c or fasting blood sugar do you need to see? Dr. Stanley Crooke: I think what we really want to see is on top of sulfonylureas, after just 13 weeks of treatment, a 20% or thereabout reduction in glucose with a profile that’s consistent with what we saw in Phase 2A, which is reduction in LDL and weight neutral, or if we saw weight reduction, that would really excite us. We also want to look at how smooth the glucose effects are, do we get good glucose control throughout the day and postprandial versus not postprandial glucose; it’s a profile question and what you should expect after 13 weeks for drug that takes 6 months before it gets to a steady state, those are all issues; I think we have to look at the profile and just see what it’s safety looks like. The other big question that we have going into the study is, would the drug be well tolerated in people who had much more mature diabetes and who were on another diabetes drug, so safety, glucose reduction of 20% or thereabout, good through the day control of glucose, if we get a healthier reduction and then if we get any signs of weight management despite the fact that it is not a study designed to look at weight loss, I think we’d be very happy with that profile.

Ladies and gentlemen, we have no further questions on our roster. Therefore, Dr. Crooke, I’ll turn the conference back over to you for any closing remarks. Dr. Stanley Crooke: Thanks everyone for being on the call. We appreciate your bearing with us on all the financial explanations that we needed to provide. We look forward to sharing the next round of information with you in the near future.

Ladies and gentlemen this does conclude the conference call. We appreciate your participation.