Stan Crooke – Chairman and CEO Kristina Lemonidis – Director, IR Lynne Parshall – COO and CFO Richard Geary – SVP, Development

Mark Monane – Needham Salveen Kochnover – Collins Stewart Ted Tenthoff – Piper Jaffray Craig Gordon – Cowen and Company Kim Smith – Jefferies Carol Werther – Summer Street

Welcome to the Isis Pharmaceuticals year-end financial results conference call. My name is Erik. I'll be your audio coordinator for today. At this time, all participants are in a listen-only mode. We will facilitate a question-and-answer session at the end of the presentation. (Operator Instructions) As a reminder, the conference is being recorded for replay purposes. Leading the call today from Isis is Dr. Stan Crooke, Isis Chairman and CEO. Dr. Crooke, Please begin.

Good morning. Thanks everyone for joining us on today’s conference call to discuss our year-end financial results. Joining me on the call today is Lynne Parshall, COO and CFO and then to be available for questions, Richard Geary, Senior Vice President Head of Development and Beth Hougen, Vice President of Finance and of course, Kristina Lemonidis, Director of Corporate Communication is joining us as well. Kris, will you lead the forward-looking statement?

Sure. Thanks, Stan. Good morning, everyone. A reminder to everyone, this webcast includes forward-looking statements regarding Isis' business, the financial outlook for Isis as well as Regulus, a majority-owned subsidiary and the therapeutic and commercial potential of Isis technology and products in development. Any statement describing Isis' goals, expectations financials or other projections intentions or beliefs is a forward-looking statement and should be considered an at-risk statement including the statements that are described as Isis' goals. 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 as human therapeutics and in the endeavor of building a business around such products. Isis' forward-looking statements also involve assumptions that, if they never materialize or prove 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 judgment of its management, these statements are based only on facts and factors currently 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 and its most recent quarterly report on Form 10-Q which are available -- which are on file with the SEC. A copy of these and other documents are available from the company. Stan, back to you.

Thanks, Kris. The purpose of the call is to report our financial performance for 2009 and to lay out our agenda for 2010. 2009 was a great year for Isis. Obviously, mipomersen was the focal point and will continue to be in 2010 as we prepare for the U.S. and EU filings in the first part of 2011. We've just completed two Phase 3 studies that we believe show that mipomersen is the most exciting lipid-lowering drug to come along in a very long while. Later in the call, I will discuss mipomersen and hopefully clarify some of the points that have not been as well understood as we would like and help you understand why we are so pleased with this performance in the heterozygous FH trial. For now, I'll take a brief moment to review some of our other accomplishments of 2009. We've recorded progress across the board on our pipeline and our cancer program was greatly strengthened by the performance of OGX-011 in Phase 2 studies, it's licensing to Teva and the plan for Phase 3 studies to begin early this year. We also reacquired our eIF-4E inhibitor from Lilly and we plan to start a broad Phase II program this year for that important drug. We're planning to add a fifth anti-cancer drug to our pipeline this year further strengthening that franchise. Our efforts in metabolics resulted in exciting Phase 2 data on our PTP-1B inhibitor and positive Phase 1 data from our glucagon receptor program. Overall, in 2009, we advanced two drugs in Phase 2 trial and four into Phase 1 trials, plus we added four new drugs to our pipeline and we will be adding three to five new drugs to our pipeline this year as well. We've continued to execute on our unique business strategy. With the most important element in 2009 being the sale of IBIS to Abbott, we've also reported great progress with our satellite company, the success of OncoGenex, Regulus, Altair, Excaliard and Achaogen sets up 2010 as a very exciting year in terms of development activities, data and the potential for new revenue. A good example of this is the recently announced expansion of the GSK Regulus relationship to include anti-miR-122, an exciting micro RNA drug. Another good example is the announcement by OncoGenex that the EMA had agreed with their Phase 3 development plan for OGX-011, so lots of news. With that I'll turn the call over to Lynne to review our financial results.

Thanks, Stan. As you heard from Stan, 2009 was another successful year for us across all areas of our business including our most advanced drug, mipomersen. We also had a very successful year financially and I'm pleased to say we exceeded all aspects of our 2009 financial guidance. As usual, I'm assuming you've read the details of the year-end financial results in our press release so I will just cover the highlights. 2009 was our second consecutive profitable year largely due to the sale of our Ibis subsidiary to Abbott in January. We ended the year with a pro forma profit of $167 million, significantly higher than our guidance of $145 million. Both of these, I announced, include $20 million of tax expense, primarily related to the gains we recognized on the sale of Ibis and upfront payment we received from Genzyme in 2008. We exceeded our guidance principally due to the expansion of our collaboration with Alnylam and OncoGenex license of OGX-011 to Teva. Our pro forma net operating loss of $14 million was also significantly better than our guidance with pro forma NOL [ph] in low to mid $20 million range. And finally, we ended 2009 with almost $575 million in cash, exceeding our guidance by nearly $25 million. 2009 was the fourth consecutive year in which we ended the year with more cash than that with which we began. As many of you know, we've followed who have followed us over the years, we tend to be conservative in the guidance we provide. We've never missed a target. The breadth and depth of our technology platform in our relationship result in a fairly steady stream of opportunities for financial benefit as we had with Alnylam and OncoGenex last year. This is the value of our unique asset base and unique business strategy. The consistent financial success we've had over the past few years demonstrates that our business strategy is working. Our business strategy builds on our strengthen drug discovery and early development. This allows us to stay small and focused, thereby limiting our cash needs. We then maximize the value of the drugs we discover by putting them in the hands of quality partners with late stage development and commercialization expertise. In 2010, we will continue this strategy to build a broad base of licensing milestone payments and royalty income with a goal of optimizing long-term value for our shareholders. 2010 will be a very busy year for us, moving drugs in our pipeline forward. We start the year with 22 drugs in our pipeline and we plan to add three to five new drugs this year. Of course, with all these drugs, our development activities will increase. Mipomersen leads our clinical efforts and together with Genzyme, we will complete the broad Phase 3 development program this year. This development program is focused not only on the first mipomersen filings and indications but also on broader future commercial opportunities. In addition to our mipomersen activities, we plan to begin broad Phase 2 programs on three of the drugs in our pipeline this year, including our CRP and SGLT2 drugs. We also plan to begin a broad Phase 2 program this year for our eIF-4E drug in several different types of cancers. These programs are consistent with our strategy to conduct broad Phase 2 evaluations to maximize the value of our drugs before we license them. We believe that investing in our pipeline is the best investment we can make. Last year, we added four new drugs to the pipeline and this year we will be moving these programs towards the clinic. Importantly, we're broadening our reach to include more efforts and new therapeutic areas like cancer and neurological disease as well as new roots of administration like aerosol and topical. For those of you, who were able to join us in December for our Analyst Day, I hope you enjoyed looking under the hood at some of the exciting late stage research programs we're moving forward. We continue to invest in our core technology which continues to enhance the performance of our drugs. When we moved from first generation to second generation chemistry, we dramatically expanded the opportunities for antisense drugs. This year we expect to implement an improved chemistry platform for our drugs called generation 2.5 that should increase the productivity, expand the available roots of administration and enhance the commercial potential of our drugs. So as you can see, we have a busy year ahead in 2010. While we're continuing to prudently manage expenses with the increase in our Research and Development activities that I've just described, particularly the increase in clinical activity. We expect our pro forma operating expense will increase in 2010 by 10% to 15% over last year or approximately $15 million to $20 million. Our 2010 guidance is also affected by an anticipated decrease in revenues from 2009. We're projecting reduction in revenue in the range of $20 million to $25 million primarily because revenue from deals we did in 2007 is ending as those collaborations end in accordance with their terms. As I’ve summarized before, our revenue consists of several different components including amortization of upfront fees we received from our partners, R&D revenue, we earned from our partners, milestone payments, sublicense fees plus revenue we earned from other miscellaneous transactions. The revenue we recognized from the amortization of upfront fees is very predictable but it fluctuates from year to year as partnerships progress through different stages of maturity. For example, during 2010, we will continue to generate revenue from our existing agreements with Genzyme, BMS and Alnylam. Although revenue from BMS will end in Q2 as we finish amortizing the upfront fee we received in 2007 and BMS takes over the PCSK9 development activities and expenses. In addition, late last year, we finished amortizing the revenue associated with the upfront payment, we received from Ortho-McNeil in 2007 which will also result in less revenue this year than last year. Our revenue fluctuates based on the nature and timing of other types of payments we receive from our partners which is also affecting our 2010 revenue projection. For example, if OncoGenex had completed its license of OGX-011 to Teva in early 2010 rather than very late 2009, we would still have met our 2009 guidance from the $10 million sublicensing revenue we earned, would have improved our 2010 guidance. We're fortunate to have the financial resources to advance our drugs and technology without the need for additional funding from partners or financing. This allows us to retain control of our drugs longer, move them forward more rapidly, be more transparent about data and license them with more robust data packages. All of this translates into higher value for our drugs when we license them. As a result, we're being very selective in the partnering transactions we may consider in 2010 and have not included revenue from significant new sources in our NOL or cash guidance. However, historically we've been successful in partnering and we may create new partnerships if they provide us with strategic benefits and are consistent with our goal of controlling our drugs through Phase 2 proven concept and of course, any new transaction we create will positively impact our guidance. In addition, beginning in the first quarter of 2010 as a result of a new accounting standard, we will no longer consolidate Regulus' financial results. Instead, we will include our share of Regulus revenue and expenses below our operating results in the other income section of our P&L. And we will present our share of Regulus’ net assets on a separate line on our balance sheet. Although this accounting change will have a nominal effect on our NOL, it means we will no longer include Regulus cash in our cash balance. Under the new accounting standard, our 2009 ending cash balance would have been approximately $544 million. So based on all of these investments and partnering plans and the change in accounting for Regulus, we're projecting a 2010 pro forma net operating loss in the mid $50 million range. We also expect to end 2010 with more than $425 million in cash. As I mentioned earlier, the primary factors for the change in our guidance year-over-year are an increase in our operating expenses to fund our significant clinical activities and a conservative projection of revenue that does not include any new transactions. Last year, we provided net income guidance because of the significant gains on the sale of Ibis to Abbott. This was the first year we did this and we did it to highlight the Ibis transaction because we are not projecting a transaction that has that type of one-time impact on 2010, we're going back to the guidance metrics we've consistently used over the years, pro forma operating income or loss and year-end cash. Again, because of the nature of the revenue and expenses we're projecting we do not expect to have a significant tax expense in 2010 as we did in 2009. Any significant new transaction we complete could have an impact on our guidance. We have many events to look forward to this year. We will complete and report a number of studies including two Phase 3 mipomersen studies. In addition, many of the drugs in our pipeline are moving forward in clinical trials and we look forward to sharing data with you on those later this year also. With that, I'll now turn the call back over to Stan.

Thanks, Lynne. As Lynne outlined, we have a busy year to look forward to in 2010. Over the past three years, we have built a strong financial position and as a result, we can invest more in our earlier stage assets rather than partnering. This enabled us to move the drugs quickly to Phase 2 proof-of-concept before licensing them and to achieve better licensing terms. We are pleased today to report positive Phase 1 data from our glucagon receptor drug. In this study, normal volunteers were administered a glucagon infusion which of course caused an increase in blood glucose level and at a dose of 400 milligrams a week after six weeks of dosing, our glucagon receptor antisense drug decreased blood glucose following a challenge in a highly statistically significant fashion and that’s a P 0001 [ph]. This exciting result confirms that the activity we saw in animals is likely to be replicated in patients with diabetes. We're also pleased that the drug was well tolerated at all doses. This study validates the potential of a glucagon receptor antisense drug to be a novel treatment for Type 2 Diabetes. Remember in animals, inhibition of glucagon receptor displayed robust activity reducing glucose production in the liver and increasing glucagon thus having a potential to be a disease modifying drug. Ortho-McNeil, however, wanted a more potent drug as a result, we performed additional screening and identified several inhibitors that are significantly more potent than the drug we have in the clinic today. As a consequence, we have a better drug and with a better therapeutic profile and better commercial potential. For us, this was an important exercise because it demonstrated that by doing even deeper screening than we typically do, we can find even more potent drugs. So we will be moving this more potent glucagon receptor drug forward in development. We'll also be advancing our glucocorticoid receptor program which is in preclinical studies which in preclinical studies reduced levels of blood glucose and demonstrated a dramatic and favorable effect on lipid levels including cholesterol and triglycerides while it reduced body fat. So our collaboration with Ortho-McNeil has ended as scheduled and they chose to return the programs to us rather than develop the more potent inhibitors that we've identified for the targets. We are actually pleased to have control of both programs again and we remain very committed to them. So you should expect to hear quite a bit more about the progress of both these programs in the future. Now, let me move to mipomersen. What I want to do is try to clarify some of the confusion that stemmed from our announcements last month. We've now completed two Phase 3 trials that in our view show that mipomersen is the most exciting lipid-lowering drug in development and the most exciting lipid-lowering drug in development in a long while. We and Genzyme are tremendously excited about its potential. We were flattered to see that mipomersen was selected by Med Ad news in February from the entire pharmaceutical and biotechnology industry of drug as one of the five future blockbuster drugs to have the potential to generate peak annual sales of a billion dollars or more. I'd like to take this opportunity to briefly discuss a few of the points that seem to be confusing out of the heterozygous trial. I want to begin by first describing again the patients we expect to use mipomersen and what the potential for the -- potential markets for the drug are. Second, I want to describe the stepwise development path we're pursuing and its many advantages. Third, the efficacy that we observed in the heterozygous FH trial and then fourth, liver safety including MRI and why we are so encouraged by the data we have so far. Let me repeat that. The liver safety including the MRI's and why we are so encouraged by the data we have so far. And fifth, the plans to enhance patient acceptability of mipomersen. And finally I want to just mention the planning for outcome studies that we in Genzyme are involved in. Now, let's focus on the patient population and the development path and what the market opportunity actually looks like to us. Mipomersen is intended to be added to existing lipid-lowering drugs in patients with severe cardiovascular risk. In practice, what this means is that even for the largest patient population we plan to treat, we will be treating patients who have had a heart attack or a stroke or patients who know they are likely to have a cardiovascular event and despite best efforts still have LDL cholesterols that are too high. These patients have both very high cardiovascular risk and uncontrolled cholesterol. So when you think of mipomersen's profile, I think you should ask whether you would take this drug if you had a heart attack and you had an LDL cholesterol of let's say around 150. Despite the fact, you were taking all the therapies your doctor had recommended, doing the exercise, eating in the diet and doing everything else that you could possibly do to protect yourself. I think the answer to that question is yes, it certainly is for me. So we're developing mipomersen in a stepwise fashion. The first patient population we plan to treat is patients with severe high cholesterol who have very significant cardiovascular risk. These are patients with LDL's above 200 despite the fact that they are on maximum lowering treatment, LDL's above 200 despite the fact they are on maximum lipid lowering treatment. This patient population includes but is not limited to the homozygous FH patients. Genzyme estimates that in this first indication there are 25 to 30,000 patients who could use mipomersen in the U.S. and Europe and of course there are patients outside the U.S. and EU as well. Now, if you assume as the experts we talk to do that the greater than 100-milligram per deciliter drop in LDL cholesterol which, of course, is what we got in our homozygous FH trial could reduce cardiovascular risk by more than 40%, you could see that mipomersen's value could be very high. One way to look at the size of this first market for mipomersen is to remember that all the patients, all the patients in this first group are eligible to receive apheresis, a process like dialysis that takes cholesterol out of your blood. If apheresis, if you can get it and if you're willing to endure it and you can stand the time it takes, costs, the range, in the range of $100,000 a year for the procedure itself, not counting all of the added costs associated with the time lost from work and everything else. Now, you can pick the fraction of patients you think might take mipomersen in this group but we think that fraction is likely to be very high. And if you pick any reasonable number of those patients, at any price that you feel that reflects the value that mipomersen is bringing, you can see that that market opportunity could be very large, just as the Med Ad news article suggested. Now, the second indication we're planning is heterozygous FH patients. Genzyme plans will target those patients with heterozygous FH who have very high LDLs, that is greater than 150 or so and who are at very high cardiovascular risk. These are patients like those in our recent trial. Genzyme estimates that about 25,000 patients in Europe alone would be candidates who use this drug in this second indication. For this patient population, again, we believe the health benefits of decreasing LDL and considerably reducing cardiovascular risk can be very significant. As you know, the cost of any cardiovascular event is very high. The potential to reduce cardiovascular events is very valuable both to patients and to providers. When you think about these first two indications and the patients they represent, it's worthwhile to realize that many of these patients have the shorter life expectancy than patients with many types of cancer who are receiving chemotherapy. We're talking about bringing great value to patients at high risk of potentially life threatening and expensive cardiovascular events. We're talking about bringing value to patient's lives with a more than acceptable safety profile and bringing reduced health costs to payers. The final group of patients we're eventually targeting with mipomersen is patients of high cardiovascular risk who again have uncontrolled LDL, despite taking maximum lipid-lowering drugs. There are about a million of the 40 million people using statins in the U.S. and Europe who are candidates for this indication. Now that million is a large number but it's only 5% of the total statin users, even when mipomersen is at its maximum use and these patients like those in the other markets have serious cardiovascular risk. The step wise development path that we're pursuing is designed to reduce risk, maximize long-term opportunities and get mipomersen to the market as rapidly as possible for those patients who are in the most need. In the first filings, we're asking simply for mipomersen to be approved in patients who have a high probability of dying of cardiovascular deaths. In our first filings, we are asking simply for mipomersen to be approved in patients who have a high probability of dying a cardiovascular death. We will submit our second filing after we acquire more exposure experience and this filing is similar to the first in that the people to be treated have significant cardiovascular risk. Only after that, will we seek the next patient population, as in U.S. requires an outcome study. And when you think of mipomersen, it's important to consider the patients that we're targeting and the regulatory plan that we're pursuing. We believe that the safety and efficacy profile we've seen today is sufficient for all these high cardiovascular risk patients. The studies to be done, subsequent to the first submission are to add to patient exposure so that we can assure ourselves and regulatory that the drug is safe in long-term use in large numbers of patients. We will already have all of the efficacy data we need for all of our future filings when we make our first filing. Let's quickly review the efficacy we saw in our recently announced study. In the heterozygous trial, the placebo group displayed a 5% increase, a 5% increase in LDL. The mipomersen group displayed a 28% decrease. So the treatment effect was 33%. The average LDL cholesterol to patient in the study was 150 milligrams per deciliter, despite being treated as aggressively as they could tolerate. Thus mipomersen reduced LDL in these patients on average to 104 milligrams per deciliter. That is the lowest LDL ever achieved in such patients in a clinical trial. And 45% of those patients were below in LDL cholesterol of 100. That's a target that none of these people ever believed they would achievement. Plus, as I mentioned, the overall lipid changes were equivalent to the changes we reported for homozygous FH patients, meaning that the benefit of mipomersen goes well beyond just LDL cholesterol lowering. There is no question, no question that we have excellent activity with mipomersen. Consider this -- in the homozygous FH trial, we report the greatest reduction in LDL and the lowest LDL on treatment, ever seen in a Phase 3 study in that difficult to treat patient population. We did it again in the study we just announced in patients with heterozygous FH. These patients were in desperate need of new therapies. Mipomersen is their hope, there are no meaningful drugs in development for these patients except mipomersen and we're on track to bring mipomersen to them. So now let's focus on liver safety. I'm going to divide this discussion into two sections, ALTs and liver fat. ALT elevations are biochemical changes that are observed with alcohol consumption, commonly used drugs like acetaminophen and other widely used drugs including some herbal remedies. They are also associated with statins, Niacin, azitamide and every other drug used to lower lipids. By themselves they are not considered worrisome. The higher the doses of drugs and the more types of drugs that are lipid lowering drugs that are on board, the more ALT abnormalities you'll observe. Said another way, every drug used adds to the instances of ALT elevations. As Dr. Cromwell said in our Analyst day in December, he sees liver enzyme elevations every time he adjusts a patient's lipid medication, up or down. Anytime you adjust lipid medication, you see ALT elevations. They are just part and parcel of lipid management, something that physicians, treating these patients are used to observing and managing. What's important to remember is that we have never seen any biochemical evidence of impaired liver function in any study we've done with mipomersen, in any patient population that we've looked at, at any dose. The FDA has defined a set of liver effects that they are concerned about as possibly signaling the potential for severe liver damage and liver failure. These are called highs laws cases. We have never had a highs laws case in any of our studies. In the heterozygous FH trial, we had five of 83 mipomersen patients treated who had ALTs elevations that mattered. By that I mean that their ALTs were greater than three types upper limit of normal and they were still there one week after the first observation. That's a 6% incidence. That's in the range observed with high dose statins by themselves. I'm sure you remember from the press release that we reported a total of 12 ALT elevations in the mipomersen group. I just discussed five of those 12 patients. The remaining seven had readings greater than three times upper limit of normal that did not repeat a week later. This is great news. In these very needy patients when adding a powerful lipid lowering agent like mipomersen to other agents that raise ALTs, we saw no evidence of liver toxicity and in only 6% of the patients with their meaningful biochemical signal. Moreover, we know we are able to continue dosing through ALT elevations and we also know the elevations resolve all patients who stop taking the drug, meaning these ALT elevations are quite manageable. One more point. We now know that the ALT elevations are found in patients who have the most significant and most rapid reductions in HBV. That's very encouraging because it shows us the ALT are manifestations of the pharmacology of mipomersen. And it says they will be very easily managed by dose adjustments. Now, liver fat. Many people have fat in their livers and that doesn't mean they are at risk of any type of adverse hepatic event. Without any evidence of inflammation, liver fat does not typically result in liver injury. In patients with high cholesterol, you might expect 40% or more of these patients to have elevated liver fat, so small increases in liver fat are not a concern. The observations of ALT elevations and liver fat in the clinic are completely consistent with what we've observed previously and appear to be associated with the rapidly significant lipid lowering that occurs in the liver and of course then throughout the body. Now let me talk about the heterozygous FH trial. Wherefore the first time in a multi-centered trial, we tried to estimate liver fat on all patients at entry and exit. We used MRI measurements. MRIs provide a rough approximation or semi-quantitative measurement of liver fat. We can look at MRIs on all patients at entry and completion of the heterozygous FH trial. The analysis of these MRI images is complex. It is in progress, it will not be completed for some time. We don't have all of the data analyzed yet, but here is the important thing. In the results that we've analyzed to date, we have observed only minor increases in the median levels of liver fat, measured both in the placebo and the mipomersen group. In the opinion of our MRI expert, the principal investigator of the study Dr. Stein, the other investigators, consultants and others, the changes in median MRI measurements were of no clinical significance. The changes in the median MRI measurements were of no clinical significance, so we were tremendously encouraged by this. But the analysis is incomplete, so obviously we shouldn't be discussing it any further. Unfortunately, there was a lot of speculation on the incomplete MRI data, so we're discussing it actually more than we like. But I hope I've clarified the situation a bit for you and that you're as encouraged as we are. Remember, we've now done two randomized trials where we studied liver fat effectively. One is published and was at a single center using MRS, the gold standard. It showed no significant increase in liver fat, no clinically significant increase in liver fat. In this study that we just finished, the preliminary analysis suggests the preliminary result. So let me wrap up liver safety. First based on all the data we have today, including two positive Phase 3 studies. We believe that mipomersen will provide benefit to the patients we are targeting who have a high level of cardiovascular risk and need additional therapies to help them reduce their LDL cholesterol. We have looked at the side effects that we've observed are manageable. We're working to gain a further understanding and ongoing studies addressing patient Management and dosing and we're encouraged by the data we have. It's not just us, Genzyme, our investigators, consultants and other members of the cardiovascular community who are all encouraged by the emerging profile in mipomersen. What about the work we're doing to enhance mipomersen's profile? We continue to work on a variety of factors that relate to long-term use of mipomersen and its compliance as we move closer to the market. We had a great result in the heterozygous study with only a 12% dropout rate. Now that's in the range you'd expect for an orally administered drug in the clinical trial like this. To put that in the commercial context for you, clinical trials for other subcutaneously administered drugs like Enbrel had dropout rates in clinical trials that were in the range of 20% or greater and yet the total market for these drugs is still enormous. While the details of the dropouts will be left for the data presentation of the scientific meeting, I can tell you again what we said in our press release. That, the safety looks similar to that observed in the homozygous patient study and the reasons for the dropout are similar. So you'll recall that only one of the patients in the homozygous study dropped out for an ALT stopping rule. You should not expect anything significantly different when we report the full results of this study. Longer term trials, we now allowing patients to dose themselves and pick the sites of injection they prefer. That really helps because patients don't like coming to the clinic to be injected and they like to pick the site they would prefer to be injected. Second, we're providing much better information on what to expect to our physicians, nurses and patients. For most of the clinics and the patients, this was their first experience with the SubQ Drug, so this information helps. Third, we're completing work on pre-filled syringes and beginning to look at alternatives like pens and needleless injectors for the future. These activities are designed to give us product profile on options for product presentations for the future. Fourth, we're starting low, once a day dosing. Because we want the first submission to be simple, we've always planned and continue to plan to submit with only the 200-milligram per week dosing, but in subsequent filings, we want to be able to offer patients the choice of 200 milligrams per week or 30 milligrams per day or even monthly or bimonthly doses. This is an opportunity. It's an example of good life cycle management of a major product from the get-go. There is no negative connotation. The reason I say this is that some of inhibitors [ph] activity, some has suggested we're giving a lower dose. We're not. It was a part of the plan and is moving along as scheduled. Finally, all of the information we're obtaining fits into our planning for outcome studies. We believe we have a major commercial product when you consider just the indications achievable without an outcome study. We're focused on and committed to designing a successful outcome study that supports expansion into that final market that we talked about. In summary, mipomersen is a unique, first in class drug designed to meet a clear and significant unmet need. mipomersen is remarkably efficacious. It has produced results never before seen in-Difficult-To-Treat Patients, the effects of mipomersen on lipid profile are unique and predictable and dose dependent. Mipomersen's safety profile to date is more than sufficient to meet the needs of the patients we plan to treat. We are pursuing a prudent, stepwise development plan that gets mipomersen to the market as soon as possible, for the neediest patients while maximizing the long-term potential in risk. We're making great progress on implementing that plan. There is, in our opinion no meaningful competition for mipomersen in this market. We and Genzyme believe we have a great drug and we're delivering on an excellent plan. Going forward, we plan to communicate more frequently and hopefully more clearly, both companies. And I hope that we've begun to process here and help to clarify mipomersen at least a little, just now. As you can see we have a busy year lined up ahead for mipomersen. However, with 22 drugs in our pipeline, we have a good number of other upcoming events to look forward to. There will be clinical data from several drugs in our pipeline including partner drugs like AR645 and iCo-007 and internal programs like CRP and SGLT2. We also have many activities in our pipeline this year. OncoGenex will begin and Teva will begin Phase 3 studies with OGX-011 patients, in patients with cancer. Five of the drugs in our pipeline will begin Phase 2 studies. Two drugs will begin Phase 1 studies, we'll be adding three to five new drugs this year and we continue to expand into new disease areas like degenerative disease and cancer. And of course we think that provides additional balance to our portfolio. We'll continue to master technology. With the key next step for us being the implementation of generation 2.5 chemistry, the goal that we hope to accomplish in 2010. We're able to do that. That will help facilitate all delivery and reduce the dose of antisense drugs that we're giving by probably tenfold or more. If we can deliver antisense drugs in a commercially feasible way orally, we will have achieved the final frontier for antisense. Of course we'll continue to advance aerosol and other roots of administration as well. We need as is obvious to continue to advance our understanding of new mechanisms as well, like splicing and we'll take advantage of the expanding knowledge of the RNA world where antisense technology is uniquely positioned to address the thousands of new targets that are emerging. Whether these targets are micro RNAs or large RNAs or non-coating RNAs or regulatory RNAs or in fact some complicated RNA, new RNA pathways, antisense technology is the technology that can be used to exploit them. We will continue to successfully implement our business strategy. That means making our current collaboration successful and making new investments that make sense in satellite companies and other opportunities to continue to advance our pipeline and technology. We will entertain only transactions that are strategically relevant. That's our agenda. You should look forward to us to doing strategically sensible transactions that will add value. Not just dollars. As well as advance the technology in our pipeline to further create value for Isis and our shareholders. We think this is going to be another exciting year. I want to thank all of you for joining this call. And, Eric, if you can set us up for Q&A, that would be helpful.

Thank you very much. (Operator Instructions) The first question comes from the line of Mark Monane with Needham. Please proceed. Mark Monane – Needham: Good morning from New York City. Thanks for the comprehensive review. It was a really good foundation for understanding mipomersen going forward. The question that I have to deal with is additive efficacy and additive safety or concern or any safety concerns. Sometimes when you add a drug, you get a beneficial effect, sometimes you don't get as much as beneficial effect as you did in the single agent, there might be some antagonism, sometimes you get synergy. How are you thinking about mipomersen's added efficacy, let me start with that in terms of in addition to the other agents that are being there. Is it simply looking at the numbers or is it a potential dose reduction for the other drugs that may be associated with side effects? How are you thinking about that?

Well, I think we've shown that the efficacy of mipomersen is the same as a single agent or in combination with moderate or high dose lipid-lowering drugs. So we know that we get the same efficacy in any setting that we've looked at including normal volunteers to people who are severely ill. And we are adding it to patients who have already, who are already on maximum lipid-lowering therapy and are no where close to their target. So, we believe that the safety that we've seen today supports the notion of adding mipomersen at its Phase 3 dose, 200 milligrams a week, to full doses of other drugs to help these patients get closer to their LDL targets. In the heterozygous FH trial, we had 45% of the patients get to an LDL of 100, which as you know, is a target that everyone would like to get to if they've had a cardiovascular event and in the homozygous trial, we had people drop by more than 100 milligrams per deciliter. So the drug is to be added to full doses of the other drugs and we think the safety profile that we've seen supports that. The only exception to that is in patients who are unable to take statins. And as you know Mark, there are quite a large number of people who can't take statins because of principally the worry of the severe muscle toxicity that statins have. So that would be the only exception. What's also important about mipomersen to realize is that we've seen no significant toxicities. With mipomersen, we have no drug-drug interactions, we have no central nervous system toxicity that we've identified, no cardiovascular toxicity and no muscle toxicity. So in that sense, mipomersen is an ideal drug to be added to patients who are typically taking 10 to 15 drugs on top of mipomersen. Mark Monane – Needham: Now, the label dose, sticking with efficacy and I'll move to safety in a minute. In terms of efficacy, 200 milligrams would be the label dose. Does your market research indicate that some physicians may use the 300 dose which we know we have data on that is increased efficacy there or alternatively use the 100 dose, which again we know there is information on decrease in cholesterol in that population.

We'll be submitting 200 and the drug will be approved for a 200-milligram a week dose for the initial indication. We look at this sort of like the historic approach to statins where the first doses of statins were defined and then over time, the dose range was expanded with additional data and we would expect similar sorts of behaviors. After all, each patient is different and each patient requires different kinds of interventions. But our per submission will be 200 milligrams, we believe that's a prudent dose. It's half the maximum dose that we've given. We know that in Phase 2 studies at 400 milligrams, we were able to ablate apoB that is to take it to undetectable levels in patients. So we know there's plenty more efficacy that could be gotten from the drug as if physicians prudently tried to adjust the dose upward and similarly we could adjust the dose downward in patients who are unusually sensitive. We've not allowed any of that in Phase 3 trials because we wanted all of our data to be in 200 milligrams and we wanted a safety database, which will be very large for an indication like we're talking about, to be specifically at the dose we're talking about. Mark Monane – Needham: Fair enough. And speaking of dose, we know from experience from another chronic medication, anti-hypertensives that if you give a bigger dose you get a lower blood pressure, but you also get more side effects and the question here is did the patients who had the greatest LDL reduction, did they have the most or higher frequency of ALT alterations? So, was any changes in the liver pattern related to efficacy?

Well, what we believe today and I think the data that will show with the heterozygous trial are consistent with the other trials is that the patients who have the highest level ALTs, again even there no liver toxicity we can identify, are the patients who have the most rapid and profound reductions in apoB. That as you would expect because as we think this is just pharmacology and it certainly does suggest that one could watch apoB as one is treating a patient and if one sees a 60% or 70% drop in apoB, temporarily lower the dose. But as you know, these are Phase 3 trials that are blinded and rigidly controlled so none of that has been allowed. Richard, do you want to add anything to that?

No. That's very complete, thanks. Mark Monane – Needham: That was helpful and then lastly, when I went to medical school and you went to medical school, chronic therapies were thought to all be oral and since that time, we've seen a number of drugs that have come out that have been very successful that are subcutaneous including Epogen, Enbrel, Boniva. Can you talk about the experience of dropouts that you saw in your trial and relate them to other experiences that we see in using subcutaneous medicine, especially when this is a first subcutaneous medicine in the market for that indication?

We projected in our -- thanks Mark, we projected a dropout rate of 20% to 25% in our trials and that was based on experience from other subcutaneous drugs in six-month trials. And we actually expected more dropouts than something like in Enbrel, because this was the first time most of these lipidologists and patients had been exposed to a subcutaneous drug and the patients don't have pain to motivate them to continue taking drug. I think one of the things most important to remember is that pain is a tremendous motivator for many of those drugs and Epogen and so on you have life threatening infections as a big motivator. So today, we've been surprised at the dropout rate as being as what it has been, 16% or 17% in the homozygous trial and 12% in this trial. So we are confident based on the total experience of other drugs that have administered subcutaneously that these dropout rates are consistent with a very successful product. We're not satisfied with that and we know we can do better and we're starting to do better. We're providing better information to patients and physicians and that helps. We're being more flexible and letting patients in these long term open label studies dose themselves and pick the site that they want. We're working on the product presentation as we should. We certainly hope that we have a prefilled syringe and eventually we will look at -- we may move to a needleless injector and we want to offer patients the options of daily dosing versus weekly dosing. Again, we think some patients may like giving themselves a small daily dose every day. Others may like giving themselves a larger dose on Sunday. All of these things are designed to optimize the drug once commercialized for larger and larger number of patients and to keep patients on treatment longer and I think I look at it as just another extraordinary benefit of this stage parameter development plan that we've been talking about for the last five years. We have the opportunity to get to the neediest patients first and then over time work our way to the next neediest and next neediest in the same – in that very same time frame, the process allows us to improve the presentation and performance of the drug as a commercial entity. It just seems like the ultimately sensible way to develop a drug like this. I hope I've helped that Mark and maybe we should move on now. Mark Monane – Needham: Yes. Thank you. Look forward to the Summer.

Very helpful questions. Thank you.

Your next question comes from the line of Salveen Kochnover with Collins Stewart. Please proceed. Salveen Kochnover – Collins Stewart: Good morning. Thanks for taking my questions. I guess, Stan, maybe in the homozygous and heterozygous trials, can you just let us know if the patients who had ALT elevations above five times the upper limit of normal. Did they have significant rapid and large decreases in apoB versus the other patients in the trials?

Absolutely. I'll say it again just as clearly as I can possibly say it. We now have data that confirms that the folks who get the largest increases in ALT typically are people who have most profound and rapid reductions in apoB. There's a lot that goes on in these trials and you'll see, despite the fact that the protocol doesn't allow it we've had patients that stop-and-start their statins and do other things. So you get a lot of other shenanigans going on that you have to sort out, but we're confident that the mipomersen related increases in ALTs that seem to be the larger and matter are tied to this profound pharmacology that we produce. That's really great news. Salveen Kochnover – Collins Stewart: Okay. And when will we see the next data read out on the MRI measurements evaluating liver?

We don't know yet and the analysis is really complicated because there are multiple MRI's and multiple centers and they have to be normalized and a whole bunch of work that has to go into making sense of them. So it will be a while and I can't give you a date and frankly, I think we’re not for the unnecessary and almost hysterical speculation, we wouldn't be talking about them at all. What I want to say about liver fat is that we've done two effective studies, the first published clearly didn't demonstrate anything significant and second it's still in progress, but has caused us knowing the idea about the change in liver fat. On the other hand, this drug lowers LDL. We certainly wouldn't be surprised if we see people have some mild increase in liver fat. If we ran into someone, for example, who couldn't oxidize his fat, someone who had a lipid deficiency and the deficiencies in enzymes that metabolize fat and liver, that person would be more sensitive to mipomersen. That's not a big issue and I think our clinical data are consistent with our observations in animals and certainly consistent with the predictions that our animals gave us that we would see no -- we would not see anything that look like an MTP style liver fat increase and we're not. And as much as I'd like to go into more detail, I really can't. That as much as I can give you on this. Salveen Kochnover – Collins Stewart: Sure, if I could just ask a regulatory question. So when do you tend to have the Phase 3 meeting with the FDA about mipomersen and at what point are you going to determine whether you can file for severe or apheresis eligible patients?

I'll let Lynne handle that.

We're going to -- Genzyme of course is in charge of all of the regulatory activities for Mipomersen, but the plan as you would expect is to get the remainder of the Phase 3 data and then talk to the FDA about our filing strategy.

And remember, we'll have the other Phase 3 trials done here in the middle of the year. Salveen Kochnover – Collins Stewart: Okay. Thank you.

We have time for I think just one or two more questions.

Your next question comes from the line of Ted Tenthoff with Piper Jaffray. Please proceed. Ted Tenthoff – Piper Jaffray: Great. Thank you very much. It was helpful to go through mipomersen in such detail. On the J&J compounds, can you just go back through that. So they've elected to return them to you. Do you have an ongoing relationship with J&J then and what are your plans for developing those. How do they, kind of, fit in the overall priorities?

The J&J collaboration ended on schedule and we were very pleased with the fact that the data we have in the clinic suggests that the glucagon receptor is a great target. And we expect that if we took that particular drug into long-term trials in diabetics, we would see efficacy at around 100 milligrams to 150 milligrams per week. J& J wanted -- wasn't willing to make that projection and wanted a slightly more potent drug. We've got one, we've got several and so we're highly committed to both programs and very excited about it and glad to be back in control of the situation. Remember, our strategy in general is to keep our drugs through Phase 2 now. So getting drugs back is not a bad thing for us. Ted Tenthoff – Piper Jaffray: So, is there any ongoing relationship?

No, no, the collaboration ended. It was a two-year collaboration and has completed. Ted Tenthoff – Piper Jaffray: Great. Thank you very much.

Yes.

Your next question comes from the line of Eric Schmidt with Cowen & Company. Please proceed. Craig Gordon – Cowen and Company: Yes. Thank you for taking my question. This is actually Craig Gordon filling in for Eric Schmidt. So just so we were clear on the 2010 financial guidance, while you projected pro forma net operating loss of $50 million. You expect to burn about $150 million in cash as of now. What is the composite of most of that? Is that mipomersen? Is that mipomersen plus the cancer program? Can you just give us an idea of where that increase, where that cash burn is supposed to go into? Thanks a lot.

Most of it is going to clinical development and about half of our clinical development expenses roughly are mipomersen. We're starting three Phase 2 programs this year for eIF-4E, the CRP inhibitor and SGLT2, plus we have the four new drugs, the three of the four new drugs that enter the pipeline last year that are all in tox studies and moving towards the clinic and will put one or two of those into the clinic, our plan is by the end of the year. So it is a small increase in research expenses, but principally reflecting increases in our clinical development expenses.

And remember, as Lynne said, we in those projections have no new transactions and as Lynne said any transactions that we did will change our projections. Craig Gordon – Cowen and Company: Thank you very much.

May I also just say when you take out the Regulus cash, actually the difference is less than $150 million. Craig Gordon – Cowen and Company: Great. Thanks.

We have time for one more question and then we are going to have to go.

Your last question comes from the line of Eun Yang with Jefferies. Kim Smith – Jefferies: Hi. Thanks for taking my question. This is actually Kim Smith [ph] filling in for Eun Yang. A question on the alternate dosing study and the statin intolerant study, can you comment on how enrollment is going and when results might be expected?

The statin intolerant study is moving along well. Richard, I don't know exactly, it will be finished this year.

We just haven't given formal guidance on when we're going to…

So I'm not giving you formal guidance, but it's moving along well. And the low dose, the daily dose 30 or 210 milligrams a week studies are Phase 1 study initially looking just getting the experience with daily dosing and they're getting under way. Okay. I think we're at the hour and I think we have time for one more question.

Your next question comes from the line of Carol Werther with Summer Street. Please proceed. Carol Werther – Summer Street: Thanks for taking my question. Stan, you said the changes in liver fat were not clinically significant. What kind of change is clinically significant?

Well, with MRS, I would say -- an increase in liver fat to greater than 6%, Richard?

Yeah. That's upper limit of normal. I think clinical significance is probably more like 20%.

So, as Richard said, with MRS, you can be considered to have slightly abnormal liver fat at above 6% or thereabouts. And you get clinically significant liver fat at say 20% or so. I don't want to talk like I'm an expert about this, but that's what I'm told. And MRIs… Carol Werther – Summer Street: That's helpful.

MRI's are a little more complicated and I want to wait and talk about how to read such things until we talk about the MRI's in more detail and we understand them a little better. Carol Werther – Summer Street: Okay. Thank you.

If you look at, for example, the MTP inhibitor data, where at any effective dose, any dose where they get lipid lowering of any substance, they typically will have people with 25% or 30% liver fat. That's, if you had that in a lot of patients that would be worrisome in my view. Carol Werther – Summer Street: Thank you.

Okay. And with that, I think we're going to bring the call to a close. Thank you everyone for participating and look forward to chatting with you as the year progresses.

Ladies and gentlemen, thank you for your participation in today's conference. This concludes our presentation. You may now disconnect and have a good day.