Stanley T Crooke – Chairman and Chief Executive Officer D Wade Walke – Executive Director-Corporate Communications and Investor Relations B Lynne Parshall – Chief Financial Officer and Chief Operating Officer

Salveen K. Richter – Canaccord Genuity, Inc.

Welcome to the Isis Pharmaceuticals' Third Quarter Financial Results Conference Call. Leading the call today from Isis is Dr. Stanley Crook, Isis’ Chairman and CEO. Dr. Crook, please begin.

Good morning and thank you for joining us on today's conference call to discuss our third quarter financial results. Lynne will discuss our financial results and after that, I’ll give you a brief update on pipeline progress and planned activities for the rest of the year. Joining me on today's call are Lynne Parshall, COO and CFO, Beth Hougen, Vice President of Finance, Richard Geary, Senior Vice President of Development, and Wade Walke, Executive Director of Corporate Communications and Investor Relations. Wade, will you please read the forward-looking language statement? D. Wade Walke: Yes thanks Stan. Good morning everyone. A reminder to everyone this webcast includes forward-looking statements regarding Isis’ business, the financial outlook for Isis and the therapeutic and commercial potential of Isis’ technology and products in development. Any statement describing Isis’ goals, expectations, financial or other projections, intentions or beliefs including the plan commercialization on KYNAMRO 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 as human therapeutics, and in the endeavor of building a business around such drugs. 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, 2011 and its most recently quarterly report on Form 10-Q, which are on file with the SEC. Copies of these and other documents are available from the Company. Now, I’ll turn the call over to Lynne.

Thanks Wade. Good morning everyone and thank you for joining us. 2012 has been a very successful year so far leading our achievement is of course KYNAMRO. We’re pleased with the FDA Advisory Committee voted in favor of approving KYNAMRO in the U.S. for patients with severe forms of FH. These are patients who had extreme risk of a fatal cardiovascular event despite all the medicine has to offer today. We believe that KYNAMRO can make sound difference for these patients. To that end, we’re working with Genzyme on the next steps for KYNAMRO approval for homozygous FH in the U.S. Genzyme continues to make progress with the European regulatory agency as well, although the process has taken a bit longer than anticipated. The teams continue to ensure that all of the Agency’s questions are answered thoroughly. Although no final decision has been made by the EU regulators, we currently believe that the label for KYNAMRO in Europe maybe somewhat narrower than what we originally proposed and maybe more inline with what we expect to receive in the U.S. We remain on track to hear back from the European Agency by the end of this year. The ongoing focus of FH study, which is under an SPA with FDA, is designed for broadening the KYNAMRO indication. This study is an important element to support for long-term growth potential with KYNAMRO in the patient populations beyond homozygous FH. Genzyme we believe the initial commercial market for KYNAMRO in homozygous FH will be significant and expansion into the severe heterozygous FH population has the added potential to make KYNAMRO, a very significant commercial success. Beyond KYNAMRO, we have an exciting and robust line up of noble first-in-class drugs and over the next three months we expect to report clinical data on a number of these drugs; expand our pipeline by adding several new drugs and continue to mature the pipeline with the initiation of later stage clinical study. And Stan will provide more color on these exciting out coming events later in the call. We ended the third quarter in a very strong financial position with more than $340 million in cash, which places us on track to meet our year-end cash guidance of more than $300 million. We also ended the quarter with pro forma NOL with $36 million, which has significantly improved over the same period last year. Our strong financial position is primarily due to the $41 million, we received from our Biogen Idec partnerships. The $25 million milestone payment from Genzyme for the NDA acceptance and $31 million net proceeds from our convertible debt refinancing. These transactions allow us to meet or exceed our cash guidance despite a slight delay in the $25 million milestone we expect to receive in our late 2013, when KYNAMRO is approved in the United States. So far this year, we've earned more than $82 million in revenue; this includes revenue from the KYNAMRO milestone payment for NDA acceptance, amortization of the $41 million from our tuned deals with Biogen Idec. Payments from Alnylam associated with our share of transactions they’ve completed, and approximately $11 million in revenue from the sale of KYNAMRO to Genzyme to support the initial commercial launch. Our expenses for the first nine months of 2012 are right where we have projected. We predicted a modest 7% increase in expenses through this year and we’re on track to meet this, we're moving a number of programs to aggressively forward to later stages of development. Already this year we would have four drugs in our pipeline into Phase II studies, and have done the preparatory work to initiate the Phase III study this year for ISIS-TTRRx. So, other than the small timing change for the KYNAMRO approval milestone, we’ve met all of the financial goals we set for ourselves this year including completing the GSK amendment for TTR, which provides us with significantly enhanced economics. However due to changes in the accounting treatment, we will amortize the amounts we’ll earn from GSK for TTR this year rather than taking them immediately into revenue as milestone, because of the timing change for the second KYNAMRO milestone and the accounting change for the GSK transaction, we’re adjusting our NOL guidance to the mid $70 million range. Additionally the refinancing of our existing convertible debt was the key financial goal for us this year. In August we took advantage of the attracted terms for debt offering to complete a successful private placement of approximately $201 million of 2.75% convertible senior notes. We’re extremely pleased that we priced at the high end of the conversion premium with the competitive interest rate, while placing the notes with high quality investors. The goal of this offering was to raise sufficient capital to redeem our then existing convertible debt, which we do in early September. Because of the significant interest in Isis and this financing, the bankers exercised their overall lock in option, at the same time, we completed the offering. I thought it might be helpful to give you some guidance on the accounting for our new convertible notes even though it’s consistent with the accounting we’ve used for our previous convertible notes. Accounting rules require a separate the debt and equity components in these notes. The debt component reflects our borrowing rates for debt instruments without a conversion feature, which means that we recorded our convertible debts at a discount, because the 2.75% interest rate we pay is less than the rate of which we could borrow without a conversion feature. We then amortize this discount over the expected life of the debt, for seven years as additional non-cash interest expense. The amount of non-cash interest expense related to this amortization of the third quarter 2012 was $778,000. This accounting treatment does not affect our cash, but it does decrease the carrying value of our $201 million convertible notes to $142.5 million at September 30, 2012, with a corresponding increase to shareholder's equity. Thank you for bearing with me through that, I know it's complicated, so if you have additional questions after reading our 10-Q, please feel free to call. I will now spend a few minutes reviewing Regulus, and what the recently concluded IPO means for us. First of all, we're very pleased with the progress Regulus has made since we co-founded the Company in 2007. The excitement around MicroRNA is still strong is evidenced by Regulus strategic partnership with high quality pharma partners like Sanofi, GSK, Biogen Idec and AstraZeneca. We look forward the Regulus moving into this next phase of development as a public company and advancing MicroRNA targeted advancement into development. We remain a significant shareholder with a total of approximately 7 million shares of Regulus common stock or approximately 17% ownership on a fully diluted basis. Our investment in Regulus is currently valued at approximately $35 million, a significant gain over the $13 million we've invested and importantly we believe the Regulus IPO enables it to be financially independent. Our accounting for our investment in Regulus will change beginning in the fourth quarter because our ownership in Regulus has dropped below 20%, as a result we’ll no longer use the equity method of accounting. This means we'll no longer record our portion of Regulus losses on our P&L, instead we'll account for our investment of Regulus at fair value by adjusting the value of the stock we own to take into account fluctuations in Regulus stock price each reporting period. We'll also be looking at significant gain on the fourth quarter to reflect the change in our ownership. Let me conclude by highlighting the values some of our recent partnering accomplishments. Our business strategy provides us with numerous ways to generate cash and revenue, while prudently managing our expenses. Our strong balance sheet is evidenced in the success of this strategy. This year, we established a relationship with Biogen Idec, for our drugs to treat patients with spinal muscular atrophy and muscular dystrophy, bringing in $41 million in cash. Biogen Idec also provides us expertise in the field of neurodegenerative diseases, which is allowing us to expedite development of these promising programs. We look forward to continuing to move these important medicines forward. Yesterday we announced that we have amended our agreement with GSK to accelerate development of our drug for patients with TTR Amyloidosis. This agreement provides us with significantly improved financial terms and is consistent with two strategic goals. To advance our drugs to the market more rapidly and to participate more substantially in the commercial success of our drugs. As part of the amendment, GSK has committed $2.5 million, in an upfront payment prior to the initiation of Phase III TTR study and $7.5 million from start of the study. Under the new deal we have the opportunity to receive $50 million more in milestone payments during the Phase III study than our original transaction. In total, we have the opportunity to earn more than $230 million in pre-commercialization payment from GSK for our TTR drug. In addition, we increased our commercial participation by adding five sales milestones and then of course we will receive double-digit royalty payments. We were able to re-negotiate the agreement to achieve more favorable terms for ISIS-TTRRx, because of the encouraging activity and safety data we observed in our Phase I study and the commitment of both companies to move this program forward in the most expeditious way. We and GSK agreed that this amendment would benefit the program, by moving directly from a positive Phase I study to a Phase III study and provide accelerated development path while lowering the overall development costs of the program. Our ability to accelerate development and obtain a larger economic state in our TTR drug you see another example of our continued commitment to maximize the value of our innovations and ensure that these important new medicines are made available to patients in need. So in less than three years we’ve progressed from a standing start in the new program with a new partner to beginning a Phase III study that could bring this important new medicine into the market. Another component of our business strategy is our satellite company strategy, which allows us to advance drugs, and technologies that incorporate our intellectual property and areas that are outside of our core focus. This strategy also provides tangible value to our shareholders with little investment from us. Regulus is a prime example of our satellite company strategy. Our investment in Regulus is currently worth about $35 million and our equity in ownership ensures that we retain a significant opportunity to benefit from advances in the company and the technology. In addition to Regulus our intellectual property license to Alnylam continues to generate money for Isis. This year we received $2.7 million from Alnylam as a result of Alnylam’s partnership that included our intellectual property and we have the opportunity to continue to benefit through royalty payments and a portion of future milestone payments Alnylam receives from its partners in these collaborations. And finally, our investment in Excaliard continues to provide significant value, that Pfizer avails this Excaliard’s current drug in clinical development. This is a drug we licensed to Excaliard early in the research and development process. So our investment in the drug was minimal. We have the potential to receive nearly $25 million from Pfizer including the nearly $5.5 million we’ve already received in royalties on what could be a potential multi-billion dollar market opportunity. This is a great return on our investment which was essentially zero. In summary, we continue to successfully execute our business strategy. We’re realizing tangible value from our satellite company strategy and our pipeline is maturing towards its critical events for licensing and commercial opportunities. So with that I’d like to turn the call back over to Stan. Stanley T. Crooke: Thanks Lynne. So in 2012 we’ve had a number of successful, KYNAMRO our flagship drug is (inaudible). We think the positive panel vote and the progress made to bring KYNAMRO to the market or report sense for patients who are in desperate need for KYNAMRO, and for our technology. These patients need to be treated very early in life, and continue on treatment for their entire life. So despite the fact that these patients have the severe disease, it’s essential that the drug used for treatment is that this disease be safe enough to be used throughout their life. then we expect to achieve approval for these patients’ concerns that our technology produces medicines with safety profiles that are more than adequate for the indications we’re pursuing. : And I’ve got particular importance for the technology is that we conducted a focused clinical trial on KYNAMRO that evaluating all the markets of systemic information that we can assay. With very careful time courses around each dose of KYNAMRO, we found that KYNAMRO caused no systemic information in human beings. This is not only great news for KYNAMRO, but of course, it’s also great news for the technology. We’re also very pleased with the results from the questions of these studies, the conclusions of the independent lipidologists and the independent CRO will conduct at the trials where the studies were clean. Meaning that there were only incidental observations being not related to KYNAMRO, we and Genzyme agree with those conclusions. Again, this is great news for KYNAMRO and great news for the technology. So 2012 has been a fine year for us on several fronts. We will end the year with a strong cash position, a pipeline promising new medicines and a technology that’s creating novel first-in-class therapies. With the business novel that focuses on innovation, and maximizing partnering opportunities, 2013 promises to be more exiting. We remain committed to innovation and development of new medicines, while maintaining a manageable cost structure in a small innovation focused organization. We currently have 25 first-in-class medicines in our pipeline. Before the end of the year, we’ll add several more. This year, we move four drugs into Phase II. These are drugs that target cardiovascular, inflammatory and severe rare diseases and cancer. We began Phase II study for apoC-III drug, which we are developing to treat in orphan like population of patients with extremely high levels of triglycerides, and as a consequence, a much greater risk of acute and reoccurring pancreatitis. We began the next stage of development for our SMA drug. SMA is a disease that affects infants and young children to which there are no therapeutic options. And it’s most severe form, SMA is fatal. We began the Phase I study, late last year in children with SMA. We and Biogen Idec were sufficiently encouraged by the performance of our drug in this study, that we’ve now moved, we’ve now initiated Phase II study in these children. This Phase II study is an important step in advancing to our Phase III program in these infants and children, and we plan that to start late next year. Last week, we announced the initiation of the Phase II study for our Factor XI drug in patients who are undergoing total knee replacement to evaluate its effectiveness in reducing thrombotic events without increasing bleeding. In our Phase I study, we demonstrated that we could lower Factor XI and reduce clotting with no increase in bleeding or even bruising. We’re very excited about the range of possibilities for this drug as it’s broadly applicable antithrombotic agent with a better safety profile of that existing agents. In addition, because drugs based on our technology don’t interact with drug of capitalizing enzymes. we’ve observed no drug-drug interactions for our Factor XI drug. This is of course, as we expected. This further enhances the profile of our Factor XI medicine. Our Phase II study should provide us a robust data package to highlight the attractiveness of this novel approach to treat thrombosis. In the last quarter, we began the Phase II study in patients with advanced cancers, including lymphoma for our STAT3 drug. We recently presented results from our initial clinical trial. And we’re encouraged enough to support that we’re encouraging enough to support going into the Phase II. In that study, our drug produced clear responses in some patients who had failed several rounds of chemotherapy. This is especially exciting as STAT3 is the first drug in patients to incorporate our generation 2.5 technology. We expect to report the full results from the initial study on the medical meeting later next year. So we will end this year completing registration for KYNAMRO with OGX-011 in Phase III trials, molecule drugs in Phase III trials and the pipeline that will expand from 25 drugs and develop as fast as we need 27 or 28. As Lynne mentioned, we also have a full agenda for the remainder of the year as well. So to sum up, we have maturing pipeline with more than a dozen drugs in later stage development. we’re completing the registration activities for KYNAMRO, completing clinical trials for our metabolic drugs, making progress on two important clinical trials with our CRP drug, completing the necessary steps to initiate the Phase III study for TTR drug, which we plan to start before the end of the year. And we expect to add several first-in-class drugs to treat a variety of diseases, including severe and rare diseases to our pipeline before the end of the year. Our partners continue to advance our antisense drugs. OncoGenex is progressing in its Phase III program for OGX-011 and Pfizer plans to initiate the next clinical study for EXC 001. As we’ve done this year, next year we’ll continue to advance the drugs in our pipeline, including advancing our SMA and apoC-III drugs into Phase III studies to support marketing registration. We have an exciting pipeline with many opportunities to share data with you next year. All of this is clear evidence that we are following up on the successes of KYNAMRO by progressing our broad and deep pipeline of normal first-in-class antisense drugs through clinical development and towards commercialization. With that, I want to thank all of you for joining us today. And we’ll open up for Q&A. Sue, if you can set us up please.

Thank you. (Operating Instructions) Please stand by for your first question. Your first question comes from the line of Salveen Richter, Canaccord. Your line is open, please go ahead. Salveen K. Richter – Canaccord Genuity, Inc.: Sure, thanks for taking my questions. Just wondering with the amendment of your, Glaxo partnership relating to TTR, were all of the increased milestones related to accelerated development, or did Glaxo gain additional rates to the drug. And then just also wondering the $2.5 million and $7.5 million milestones that you are supposed to get by the end of quarter, should we expect that to be amortized and over whatever period?

So GSK did not get any additional rates to any additional programs. They enhanced the economics…

(Inaudible)

Or any additional rates to this program. The enhanced economics reflects the fact that we are accelerating the development of the program. We hope to be able to put the drug on the market faster with a more efficient and effective development plan. In other words, taking the very positive Phase I results that we have are going directly into our Phase III study, instead of going Phase I, Phase II, Phase III, which would have been more expensive and importantly taken a lot long longer to complete. And so we’re awarded for that increased efficiency, both in terms of additional pre-commercialization milestone, additional milestones while the Phase III trial is ongoing and additional post-commercialization sales milestones. You will remember that we had $10 million milestone under the original agreement that we would get at the beginning of the next study. That $10 million, $2.5 million of it’s being accelerated and we earned that when we signed the amendment. The other $7.5 million will get when the study starts. And those two payments, the $2.5 million and the $7.5 million that we plan to get this year will be amortized over the two and a half year period of the performance for the work under the amendment. Salveen K. Richter – Canaccord Genuity, Inc.: Okay. And then just a follow up question, regarding KYNAMRO, in the FDA documents, there was a comment about how that you could look at efficacy and determine a threshold LDL reduction over a certain time period, and we didn't see that reduction potentially discontinuing the drug. Do you think that’s going to actually play out in the label?

No. I think just to practice medicine. The facts are, what we saw was, I think actually very reasonable variability in the homozygous FH trial certainly no greater variability than we’re seeing with other drugs in this patient population. And you’ll remember that we showed that the vast majority of the sort of small responders were more of late responders, they occur, we saw them begin to respond a little later than some other patients. So what we believe is that the label where reasons we’d expected and physicians will treat their patients, and monitor the performance of the drug, now if they don't see good performance by 6 to 12 weeks. And they will make changes to the drug and we expect good performance in the vast majority of patients. Salveen K. Richter – Canaccord Genuity, Inc.: Okay. thanks, Stan.

You bet.

Thank you. You have no questions at this time. (Operator Instructions)

As there are no further questions, I want to thank everyone for their participation. We do have a very full agenda for the end of the year, we will keep you posted on the progress that we make, and then and they get sets up for an exciting year for the pipeline and the technology in KYNAMRO, in 2013. Thanks so much.

Thank you for your participation in today's conference, this concludes the presentation. You may now disconnect. Have a good day.