Stan Crooke – Chairman and CEO Wade Walke – VP. Corporate Communications and IR Beth Hougen – SVP, Finance and CFO Lynne Parshall – COO

Alethia Young – Deutsche Bank Chad Messer – Needham & Company Stephen Willey – Stifel Lisa Zhang – Goldman Sachs Eric Schmidt – Cowen & Company Michael Schmidt – Leerink Yale Jen – Laidlaw & Company

Good morning and welcome to the Isis Pharmaceuticals’ Third Quarter 2014 Earnings Webcast and Conference Call. All participants will be in listen-only mode. (Operator Instructions). After today’s presentation, there will an opportunity to ask questions. Please note, this event is being recorded. I would now like to turn the conference over to Dr. Stan Crooke, Chairman and CEO. Please go ahead.

Good morning everyone, and thanks for joining us today on our conference call which is to discuss our third quarter financial results. On the call today, Beth will walk you through the financials and Lynne will update you on the successes that we’ve had this year in our pipeline and in our partnerships. And after that I’ll close the call by talking about what you can expect for the rest of the year, actually I think we have a very busy end of the year and early part of 2015. So, we want to stay tuned for that. Joining me on today’s call are Lynne Parshall, Chief Operating Officer; Beth Hougen, Chief Financial Officer; and Wade Walke, Vice President of Corporate Communications and Investor relations. And now, Wade, will you read our forward-looking language statement please?

Thanks, Stan. A reminder to everyone, that this webcast includes forward-looking statements regarding the financial outlook for Isis, Isis’ business and the therapeutic and commercial potential of Isis’ technologies and products and development. Any statement describing Isis’ goals, expectations, financial or other projections, intentions or beliefs, including the commercial potential in 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 to the process of discovering, developing and commercializing drugs that are safe and effective for use of human therapeutics and in the endeavor 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 judgment of its management, these statements are based only on fact 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, 2013, and in the most recent quarterly reports on Form 10-Q, which are on file with the SEC. Copies of these and other documents are available from the company. Now, I’d like to turn the call over to Beth.

Thank you, Wade. Good morning everyone and thank you for joining us. We ended the third quarter in a strong financial position with a pro forma operating loss of $35 million for the nine months ended September 30 and more than $590 million in cash. With these results, we expect to improve upon our 2014 guidance of a pro forma net operating loss in the low $50 million range and cash of more than $575 million. We planned to provide estimates of our 2014 year-end results in early January. Our financial results, exemplifies the effectiveness of our business strategy which has generated more than $160 million from our partners so far this year. As our partnered programs advanced we received various types of payments from our partners, some of these payments we recognized immediately as revenues and other pre-amortized into revenue over time. When we amortized payments from our partners, we do so over the period of time we performed work for them. Through the first nine months of this year, we have already earned $46 million from the amortization of partner payments, exceeding our estimate for the year of $45 million from this component revenue. One of the most significant components of revenue for us is milestone payments we earn as our program is successfully advanced. This year we have generated more than $120 million in milestone payments from our partners. In addition to bolstering our financial results, these payments reflect significant pipeline successes. And so far this year, we have achieved milestone payments relating to four of our partnered programs with GSK including $21 million relating to our Phase III study for ISIS-TTRRx. In total this year, we have achieved milestones of $35 million as the programs with GSK have progressed. Our partnership with Biogen Idec also continues to be successful. Already this year, we have initiated the first Phase III study evaluating Isis SMNRx in intent with SMA and are on track to start our Phase III study in children before the end of the year. We’ve generated milestone payments totaling more than $30 million so far this year related to this program. We’ve also made progress in our broad neurology collaboration with Biogen Idec for which we just this week earned $10 milestone payment for a total of $20 million to date this year. For all of these expenses in our Biogen Idec collaborations, we generated nearly $70 million so far this year, and we expect to earn $27 million milestone payment from Biogen Idec before the end of the year when we begin the next Phase III study of SMNRx. From all of our sources of revenue, we’ve earned more than $129 million through September, and that doesn’t include the more than $40 of milestone payments we’ve already earned this quarter. Because of the substantial amount of milestone payments we have achieved as our partnered drugs are progressed, we have already exceeded our guidance of more than $160 million in total revenue for the year. And our expenses are tagged into budget even with three Phase III programs in progress, numerous drugs in Phase II development and a number of promising earlier stage drugs advancing. As such, we expect to improve upon our financial guidance of pro forma net operating loss in the low $50 million range, and the year-end cash balance of more than $575 million. And now, I’d like to turn the call over to Lynne.

Thanks Beth. We predicted that 2014 would be an important year with multiple events that would add value relating to the drugs in our pipeline. And so far the year has been just that. The most recent of our data presentations, has been the Phase II data on ISIS-SMNRx, our drug that is now in Phase III development to treat patients with spinal muscular atrophy. These data while early in from uncontrolled studies are encouraging. We reported that the World Muscle Society Congress does a median event-free age of the ISIS-SMNRx treated infants with SMA in our study compared favorably to that of infants with SMA and the recently published PMCR natural history study. We observed time and dose dependent increases in muscle function scores in both children and infants with SMA. We also observed most of these infants achieved increases in muscle function scores and most infants achieved new motive milestones like touching their toes. What is particularly encouraging to me that the data from the program today is, the consistency of the increases in muscle function scores across multiple independent motor function measures and across different SMA patient populations plus the dose and time dependency of these increases. These data combined with the safety and tolerability profile support the Phase III program we began this year. In addition at World Muscle, we were able to present a detailed data that support that ISIS-SMNRx appears to be working through the mechanism for which it was designed. We were able to show that ISIS-SMNRx is distributed broadly throughout the spinal cord and in neurons of ISIS-SMNRx treated infants. Our concentration is greater than those of which observed biological activity in our animal studies. We also saw greater amounts of full-length SMN2 messenger RNA and greater amounts of SMN-Protein in tissues from ISIS-SMNRx treated SMA infants compared to the amounts observed in tissues from untreated SMA infants. In addition to the encouraging data we reported on ISIS-SMNRx we reported positive Phase II data from our anti-coagulant drug ISIS Factor XIRx. We showed for the first time that reducing levels of Factor XI in patients who are undergoing total knee replacement surgery significantly lowered the incidence of venous thromboembolic events without increasing the rate of bleeding events. These are the first data showing inhibition of Factor XI can have an attractive anticoagulant profile with an attractive safety profile. We plan to report the full data from the Phase II study at a medical meeting this year. Going forward, we plan to initiate, initially evaluated additional therapeutic settings in which I suspect our XIRx could be used in patients with limited therapeutic options. These include patient populations in which relatively small studies can be conducted, such as in patients with Atrial fibrillation to an end-stage kidney disease. For these patients who at a higher bleeding risk, there are few antithrombotics on the market that they can take. Beyond that we believe that ISIS Factor XIRx may be able to be used broadly with the potential to change the therapeutic landscape for the treatment of thrombosis. In June, we reported positive Phase II results from our glucocorticoid receptor targeting drug ISIS-GCGRRx in patients with type 2 diabetes. In this short 13-week study, we reported statistically significant reductions in multiple measures of glucose control including HbA1c reductions of greater than 2 percentage points of the highest dose. Given the encouraging results we observed, we’re optimizing the dose and dosing schedule to support our longer-term studies of ISIS-GCGRRx. In addition, we continue to enroll patients in our Phase III study of ISIS-TTRRx, ISIS-TTRRx is a drug we’re developing with our partner GSK for the treatment of a severe and rare disease TTR Amyloidosis. We designed ISIS-TTRRx to block the production of transthyretin protein. In our Phase I study and healthy volunteers we have searched significant reductions in TTR protein of greater than 80%. In the ongoing Phase III study, we’re evaluating weekly subcutaneous doses of ISIS-TTRRx in patients who have the familiar polyneuropathy form of the disease. We have a growing number of patients who completed all 15 months of treatment in this study and are receiving drug in an open label extension study. We’re also finalizing our plans to evaluate ISIS-TTRRx in patients with the cardiomyopathy form of the disease. As we started the Phase III study of ISIS-TTRRx, we’ve earned $45 million of the $70 million in milestone payments, GSK has committed to paying as this program advances. These milestone payments along with GSK’s contributions to the program represent a substantial commitment from GSK to this program and its competitive position. Over the past several years, our pipeline has matured from a pipeline of predominantly early-stage drugs and to a pipeline of predominantly Phase II and Phase III drugs, some of which are potential commercial opportunities in the next few years. The efficiency of our antisense technology platform has enabled us to create a robust and broad pipeline of drugs with a small focused innovative organization. In fact, we average one drug in development for every 12 employees at ISIS. And we continue to add three to five drugs to the pipeline each year. We believe its efficiency is unsurpassed in the pharmaceutical industry. Our pipeline now contains six drugs in Phase III development over a dozen drugs in Phase II development and a number of promising earlier stage drugs. Thanks in part to the contributions of our partners our pipeline spans a wide range of therapeutic areas. We have drugs to treat patients with cardiovascular disease, diabetes, cancer and a number of severe and rare diseases. As our pipeline has expanded and matured, so has our business strategy, which was designed to allow us to fully leverage our antisense technology platform and maximize the short and long-term value we’re creating for our stockholders. Last year we made the decision to retain some of our drugs into late-stage development, including into or even through Phase III clinical studies. ISIS-APOCIIIRx, our drug to treat high triglycerides is our first drug we’ve advanced into Phase III development since making this decision. The Phase III study and our initial indication at CS is underway and we’ve also initiated three commercial activities to create a launch-ready commercial and reimbursement package alongside our clinical data package. Our development strategy for ISIS-APOCIIIRx is to develop this drug initially for patients with FCS and patients with severely high triglycerides. ISIS-APOCIIIRx is the leading drug in a franchise of drugs we’re developing to treat a broad range of lipid disorders. Together these drugs have the potential to provide physicians with targeted treatments for each of their patient’s particular lipid disorders. The next drug in this franchise ISIS-APO(a)Rx a drug targeting APO(a)Rx, a drug targeting Lp(a). We’re currently evaluating ISIS-APO(a)Rx in a Phase II study for patients with very high Lp(a). Patients with high Lp(a) have very hard cardiovascular risks even when their other lipids are well controlled. These two drugs together with ISIS-angiopoietin-like 3Rx, our drug in Phase I for patients with hyperlipidemia including patients with homozygous or severe Heterozygous Familial Hypercholesterolemia comprised the foundation of our franchise targeting lipid disorders. The invention of our more potent LIgand-Conjugation technology provides the opportunity to create follow-on drugs for the drugs in our lipid franchise. The enhanced potency of the LIgand-Conjugated follow-on drugs means that these drugs could be dosed either less frequently and/or with smaller doses using a patient firmly advised. In other words, these more potent follow-on drugs could be even easier and more convenient for patients to use. We intend to address the rare disease indications which should have a rapid test to market with the current drugs in this franchise, while developing the follow-on drugs for use in broader patient populations. We believe this approach could provide a comprehensive solution for physicians treating patients with a variety of lipid disorders. By successfully executing our business strategy, we build a company with a robust pipeline of near and long-term commercial opportunities and our efficient technology enables us to continue to produce drugs with significant commercial potential. As many of you know, ISIS has a long history of using innovative approaches to drive value creation. We’ve established strategic partnerships in drug development areas that are higher risk or can benefit from partner expertise and resources, while retaining some of our most promising severe and rare disease opportunities longer. The success of our business strategy along with the productivity of our technology supports our decision to take the next step in the evolution of our business strategy. We’re implementing this next step in order to maintain further control of these important programs and to provide the necessary pre-commercial and commercial resources these programs need to be successful. This also gives us the opportunity to retain a greater portion of the commercial revenue from these drugs. In the next few months, we’ll be setting up the subsidiary which we will wholly own and control to conduct late-stage development and potentially commercialize our lipid drugs. The subsidiary will control development for all three of our current lipid drugs and the arrangement will allow the core of Isis to focus on what we do best, to maintain our leadership position in antisense technology and use the power of this technology to discover and develop new drugs. Our new subsidiary will ensure that we approach the commercial planning for our lipid franchise with the same level of rigor and excellence. As I already mentioned, for our most advanced drug in the lipid franchise, ISIS-APOCIIIRx, activities to prepare for commercialization are already underway and the new company will assume responsibility for completing these activities. As you can imagine, Stan and I are very excited to take this next step in the evolution of Isis, as that’s something we’ve been working towards for 25 years. Before I turn the call back over to Stan, I want to highlight another successful component of our business strategy, our satellite company strategy, which also allows us to further leverage our technology in areas of RNA therapeutics that are outside our core focus. We also benefit financially from the successes of our satellite companies. For example, we co-founded Regulus therapeutics with our colleagues at Alnylam to apply antisense technology to a family of new and exciting RNA targets called micro-RNAs. By providing Regulus access to suite of drug technologies from us and Alnylam, we believe that Regular could focus on the key issues surrounding in new clients of molecular targets, target biology. Together with its world-class scientific advisory board, Regulus has been on the forefront of understanding micro-RNA biology and choosing the targets they believe are most likely to impact these important diseases. Just last month, Regulus reported clinical data on its first drug to enter clinical development. Regulus showed its antimere drug targeting Hepatitis C virus, disabled to significantly reduce viral load in patients with Hepatitis C after a single dose. These results more than doubled the value of Regulus on the public markets and significantly increased the value of our equity ownership in Regulus. In response, we sold a small portion of our equity in Regulus last month generating more than $20 million in cash raises. And since we continue to be a top shareholder in Regulus, our remaining equity position represents an even greater asset. For us, this type of win-win scenario is one we can create again and again. The benefit of our satellite company strategy has allowed us to create and participate in a myriad of opportunities of staying focused on our core antisense technology and pipelines. So, as you can see, it’s been a productive and busy year. We look forward to continuing this momentum throughout the remainder of 2014 and into next year. And with that, I’ll turn the call back over to Stan.

Thanks Lynne. It has been another important and I think very positive year for Isis. Perhaps most importantly the pipeline has continued to deliver positive results and continue to mature and to expand. And as Lynne said, we’re all very excited about taking the next step in evolving our business model as well. This evolution of our business strategy with the formation of the first of the company’s design to complete late-stage clinical development and potentially commercializing some of our drugs is an important step for us to take. And so, as we bring 2014 to a conclusion, I think we end the year significantly stronger than we began it and I thought we were in a strong position when the year began. We have a very mature robust pipeline of first-in-class or best-in-class drugs and many of them have delivered very positive results this year. We have one drug for every 12 in place at Isis. We have successful development partnerships that have let us take advantage of our partner resources, our partner’s expertise and of course dollars. And as Beth said, we will be revising our guidance positively because of the success in these endeavors. We continue to advance antisense technology and the rate at which we’re advancing it is expanding as we are in a very substantial rate of growth of understanding how these drugs really work. And that comes from a prolonged investment in core antisene research. We’ve also established important collaborations along the way that continue to enhance the technology and expand its applications in broader and broader ways. We have a satellite company that’s been very successful. And the most recent evidence of course is the success of Regulus. In Regulus, we have a satellite company that is advancing our technology to develop the drug that affect micron-E regulation. We benefit financially. And we have significant ownership in Regulus, so we’ll continue to benefit. We’re also eligible to see royalties on drugs developed by Regulus, such as RG-101 which of course was the parent drug was of course invented at Isis. And today we’re evolving our business strategy. And we’re evolving it to the next stage by creating a new wholly owned subsidiary to develop and potentially commercialized drugs in our lipid franchise. By doing this we retain control. And our intent is to earn a greater portion of commercial revenues from these drugs. Our lipid franchise drugs are particularly well suited to be part of this new regulation because all three drugs address lipid disorders, all three drugs are designed to treat patients with rare diseases and then expand into larger patient populations and all three drugs create a knowledge base with that we think represents true value. So, we look forward to the end of the year and into early next year. And as we do that, we think we have quite a number of still exciting events to come. We plan to initiate the Phase III study of ISIS-MNRx in children with SMA. The Phase III study in infants is well underway. We and Biogen Idec remain committed to advancing ISIS-SMNRx toward the market and we are planning additional studies as part of our comprehensive clinical program to help bring benefit to these patients with SMA. We will be reporting the full Phase II data from our novel anticoagulant ISIS-FXIRx. As you know, we reported top-line data in May and we’ll have the final data from both the 200 mg and 300 mg cohorts to report in detail shortly. We believe that this said drug has the potential to be a very broadly used anticoagulant and to be a significant breakthrough in the anticoagulant field. We plan to report Phase II data in patients with type-2 diabetes from two of our drugs in our metabolic franchise, our PTB1B inhibitor which is a novel insulin sensitizer which we think is an important class that needs to be refreshed. And we think our PTB1B inhibitor may do that, and our Glucagon receptor inhibitor. These drugs along with our Glucagon receptor inhibitor drug are part of this very substantial portfolio of drugs designed to treat patients with type-2 diabetes. Our partners AstraZeneca planned to report data from our anticancer drug, I suspect three which is being evaluated in patients within advanced lymphomas and metastatic liver cancer a little later this year. We plan to report data from our Phase I studies on ISIS-PKKRx and ISIS-angiopoietin-like 3, angiopoietin-like 3 is another addition to our lipid franchise and our PPKRx is designed to treat this rare disorder that’s associated with activation of PKK. And of course we also will be reporting new data on our marketed LDL drug, KYNAMRO which we think are very exciting. We’ll continue to advance our pipeline and add new drugs into development. So, we think we’ve had another great year in 2014 and we think the last couple of months are going to be very exciting as we rollout the data that we have on these additional drugs and we bring new drugs into development. And with that, I’ll bring the call to a conclusion and Kate, if you can prepare us for questions.

(Operator Instructions). The first question comes from Alethia Young from Deutsche Bank. Please go ahead. Alethia Young – Deutsche Bank: Hi, great. Thanks for taking my question and congrats on all the progress you’ve had with milestone this year and also development on the platforms. Two questions, one, just I wondered if you could talk a little bit about in 2015 or so or longer term like how you think about the technology and its evolution in little bit more detail than you kind of highlighted? And also, on Hepatitis B, just kind of walk us through how you’re thinking about that market and potentially kind of developing new drug there with Glaxo?

Yes, hi. We continue this, I’m not clear, I’m not sure I understand your first question, is it about where I think the technology is going or? Alethia Young – Deutsche Bank: Yes, exactly. So basically like, kind of I know it’s always an evolving technology with some of the things that you’ve learned over this year that you will be applying like with new drug coming, with your new therapies and next generation technologies and delivery and things like that?

Absolutely. We continue to advance screening. And these drugs are like small molecules, the more and better you screen, the better your drug has performed. And we’re continuing to see steady improvement in potency and in tolerability. Injection side reactions and flu-like syndrome truly are far less of a problem if there are any problem at all compared to KYNAMRO. And that continues to advance and we’re learning better how to manage subcutaneous injections and that’s bringing real benefit. So that’s very tangible and very immediate. A second place that we’re very focused is broadening the ability of antisense technology to increase the production of proteins. In principle, one limitation of antisense technology was always that it would be mostly the equivalent of an antagonist therapy which of course most drugs are antagonists but not all. And we’ve had spicing as a means to increase protein production and we’re working on new mechanisms there that we’re very excited about. We continue to advance our understanding of how these drugs distribute in various organs like the kidney and the lung. And as we do that, we then sort of taskforce those organs and we can take advantage of all kinds of targets in those organs that we couldn’t before. Generation two 25 Chemistry is advancing. We now have three generation 25 drugs in the clinic. The antigen receptor drug for patients with prostate cancer is moving along nicely and to date has been very well tolerated. And our DMPK which is generation 25 and designed for a target in muscle which expands the opportunities to another organ system for us is also doing very well. So, we’re expanding the repertoire of mechanisms for expanding the ability to deliver these drugs, we’re expanding the number of tissues in which the drugs work. And we’re constantly advancing the knowledge that we have about the molecular events that allow these drugs to work specifically as they do. And we take advantage of those things every day, that’s off the top of my head sort of what I would – how I would answer that. Does that safe your appetite? Alethia Young – Deutsche Bank: Yes, it was very helpful. Thank you.

And can you repeat the second question, I forgot it. Alethia Young – Deutsche Bank: Sure. Yes, just Hepatitis B I guess kind of broad sense of how you’re thinking about kind of the clinical development and when we might see data like throughput concept there?

Well, the first thing to remember is that this is a partner drug with GSK. So, we work cooperatively with our partners at GSK who know a lot about Hepatitis B. We’re excited about what we’re seeing with the Hepatitis B drug. And but I think it’s a little early to talk about exactly when we’re going to present information because that will be a joint decision between us and GSK. The notion here obviously is to eradicate Hepatitis B as Hepatitis C is being eradicated. And we think the approach that we’re taking has the potential to do that, and particularly with lipo conjugated Hepatitis B drug. Alethia Young – Deutsche Bank: Great. Thanks for answering my questions.

The next question comes from Chad Messer from Needham & Company. Please go ahead. Chad Messer – Needham & Company: Great, thanks for taking my question. If we could, I’d like to maybe just revisit this concept of creating a subsidiary to develop and potentially commercialize your lipid asset. Is, should we think about this as more of an organizational kind of facility or kind of shack aside these activities so they’re out of the way or is this a little bit more strategic potentially enable different partnering or funding type activities around those assets in the future? And then I had a follow-up on the diabetes program.

I’ll answer it very briefly and then Lynne will give you a much more detailed answer I assume. And then maybe I’ll come back. It is a strategic move for us that we’ve been contemplating for some years. And it’s a part of the organizational design that we had in mind when we founded Isis 25 years ago, so it is, you should think of it as a strategic step for us. Lynne, you want to amplify on all that?

Yes. And I was going to say yes to both of your questions. One of them is, it is important for us organizationally to not do things that would deflect from the very focused research and development that the core of Isis is doing. So, organizationally separating the commercial and pre-commercial functions and late-stage development functions from our early-stage research and development work is important. But it also does give us significant additional strategic flexibility to have a captive marketing and selling partner that we look at likely would any other pharmaceutical company partner that we have tremendously more intellectual involvement, tremendously more controlled. And we believe that this will facilitate a very positive outcome for these drugs moving forward. Chad Messer – Needham & Company: So, any plans to have, this is like dedicated employees or management for this flight?

Yes. It allows us to I think also be more effective in recruiting really top flight people to top-flight commercial people to run such an organization. So and it gives us lots of flexibility, we can still partner through it, we can – just – there are all sorts of permutations that you can imagine that we’ve thought through. And I don’t want to go into detail on this, on this call. The thing that it is really important to us is that the core of Isis stay focused on where real value, the most value is created which is advancing the technology, early drug discovery and early develop. We think by staying focused and simple and having really the only thing of value that we do is those drugs, we don’t – that group that’s all it thinks about. We think that’s tremendously important culturally and organizationally. And so, if you want to think about our long term strategy, as I’ve said several times, we have in mind over time several strategic late development and commercialization partners. Some of those can be like Biogen and we’re thrilled with the relationship with Biogen, some can be GSK or AZ. But another flavor of that is captive, semi-captive organization that we create that becomes a strategic development in marketing partner. Think of it as more of a consortium a way of saying yes to more things. Then sort of fully integrated company which is very often a way to say no. Does that help at all, I hope. Chad Messer – Needham & Company: Yes, no, that’s helpful. I appreciate that. I expect we’ll be hearing more about this subsidiary as we go forward. If I just may on a couple, you’ve said, diabetes readouts that we’re having come up, and I apologize because my memory is a little sloggy. But I know that you had a PDB1b asset that you reported some – I think encouraging data on, you left that one aside for the one you’re developing now which I believe you said is much more potent. Given that you walked down this road before and opted to go with something more potent. Can you give us an idea of what you’re looking, what you would consider success in the Phase II, I mean, how much better you would expect it to be or what would you consider a good read-out? And can you just remind us a little bit of what the trial design was?

Yes, PDB1b is an interesting target that regulates insulin signaling and by being a faster pace like P10, only it’s different from P10. And we have shown in animals and in human studies with the earlier version and this one that we can lower PDB1b and that appears to improve the cost management. It also increases the adiponectin and that maybe associated with weight loss. And we’re hopeful since it’s not a transcription factor that we’ll doing have it, will have a much safer profile than with long-term treatment such as – then say things like the P-parts. So, our positioning on this drug will be as a new entry into insulin sensitizing. And we think there is room there for a better insulin sensitizer. This study is a six-month randomized double-blind placebo-controlled trial which we compare PDB1b in patients taking metformin to metpformin alone. And what we hope to see is meaningful reduction in Hemoglobin A1c, and we hope to see increases in adiponectin and trends toward benefit in weight loss. But of course until we unblind the study we won’t know exactly what we have. Glucocorticoid receptor drug, as you know there are good many diabetics that have a big glucocorticoid drive should they’re diabetes. And so, this is a compliment to glucagon as another way of adjusting the thermostat in how glucoses is managed. And there again, we’re hoping that’s a three-month study and we’re hoping to see meaningful improvement in testing course, meaningful improvement in the shorter-term managers fructosamine and the like as well as good trends in Hemoglobin A1c. And for that drug, we’re positioning it more toward people have a more glucocorticoid drive to their diabetes there are of course some that have high estrogenic glucocorticoid drive who have by via side-effects. There are other patients that have that drive as a dominant drive or as a contributing drive. Chad Messer – Needham & Company: Great, thanks. And I know you’ve spoken before about, given these diabetes assets as ones that you’d like to partner before you take forward to Phase III. How are the discussions going, have there been any more you can say about that?

There is interest as you would expect. I mean, diabetes is a tough field there have been companies that have exited. And but we have significant interest in all three assets. And we’re considering various options. I would also say that the central challenge in diabetes has been the regulatory stance that all diabetes drugs are for all diabetes patients. And I’m hopeful that at some point in the future that will change. And that we’ll be able to achieve sort of but we’ve achieved in the lipid field with thinking about homozygous FH and to be a heterozygous FH is a different set of patients in a different patient population from the routine LDL problem patients are easily handled by patents. That’s for the long-term. And we’ll see how that goes over time. Lynne you want to add anything to that?

No. Chad Messer – Needham & Company: Thanks for answering all my questions.

The next question comes from Stephen Willey with Stifel. Please go ahead. Stephen Willey – Stifel: Yes, hi, thanks for taking my questions. Just, with respect to the wholly owned sub-strategy I don’t know how much traditional color you guys want to provide. But just kind of curious as to what stocks might be at this point in terms of timing and whether or not initial capitalization would be mostly internally derived to be Isis or just only draft?

Lynne you want to?

Stan, you want me to answer that. We’re moving forward with this right now. And obviously all the legal stuff takes some period of time. But this is, we’ve made this decision and we do, we’re moving forward to implement it. Initially of course the capitalization is going to be provided by Isis but these are all drugs that we were moving forward using our own capital. Anyway, so it really doesn’t change anything about the money that we’re spending or what you can look forward to in terms of forecast. Over time, of course we’ll look at available options but this is something that we’re implementing right away. Stephen Willey – Stifel: Okay. So I guess it sounds…

And we’re also, I’m sorry, go ahead. Stephen Willey – Stifel: Go ahead Stan.

We just say that we’ve been planning this for a long time, and waiting whether we do this now or wait a little while, whether we partner one or two, whether we keep the franchise. And this doesn’t, moving into the direction we are, doesn’t change, it doesn’t decrease any of the optionality that we have with this franchise. It just improves our ability to execute. And we’ve also been thinking about the kind of leadership that we want for it and we’re moving along with that as well. Stephen Willey – Stifel: Okay. So, I guess, maybe this is kind of as characterized at least for now is maybe kind of a structural and organizational change that maybe that allows you to be opportunistic at a later time point?

I would say that’s fair. It is just an organizational change that we’re making now it doesn’t change what we need to do and how we’re doing it. But it then provides the sub-streak. It should take additional steps that could be in a number of different directions.

Yes. I guess the other thing that I would add to that is, it does give us the framework in which to bring in really high-quality resources to support pulling together very detailed commercial and pre-commercial plans, work on reimbursement packages and bring in a set of skill sets which will be new to Isis and to do it in a way that I think is going to be very positive.

And from an organizational perspective, there are two ineptitudes. One to the core of Isis, stay the course, don’t change anything you’re doing, there will be no – that one more opportunity to say no. We are looking for ways to say to yes to drugs and experiments and the people and the ideas. And to the commercial subsidiary, we’re dead serious about this and we want to recruit the very, very strongest business leaders that we can. And we think this is a way that we can do that, better than any other way we could think of. Stephen Willey – Stifel: Understood. And then just, pipeline question, I guess specifically with respect to STAT3, I think there was maybe some notion that we may have or would be getting either DLBCL data by the end of this year and/or HCC data from Zeneca also by year end. And I guess it doesn’t look like those appear to be year-end events. And maybe just give us a little bit of color around where those two programs are and I guess, specifically on the DLBCL side, I think this was a study that initiated the enrollment almost couple of years ago. So I was just kind of curious as to where you are in that process?

I’m sorry for the confusion. We’ll see data this year on the liver. And the DLBCL, we actually are making very exciting progress. And we’re learning a lot about this drug’s effects both on stromal cells and the lymphoma cells. And so, we announced just recently the milestone that we got from AZ, that’s a direct reflection of having looked at the data and looking where we’re taking that drug in those patients. And I think the place that we’re – the direction we’re moving I’m really very excited about. And it fits very nicely with AZ’s cancer pipeline and everything. I can’t say more than that right now. But I think we and AstraZeneca remain excited about both, the liver and the lymphoma as well as some other opportunities with the drug. It’s moving. These type of things take time tough that’s all I can say about them now. Lynne, do you want to add something?

Well, I would just add two things. First of all that we have already presented some of the data from the ongoing lymphoma study, you’ll remember we presented data from the initial portion of this study which was all comers, all tumor type study. The PRs that we saw in the diffuse large B cell patients in that portion of the study were what caused us to initiate the expansion cohort of that study in lymphoma patients. And so, now we’re in that second phase of the study and finishing it up. And I would echo what Stan said, which is based on the data that we’ve gotten so far. AstraZeneca paid us a milestone earlier in the week to continue to move the program forward.

I think that’s more important – I think the most important thing is the investment, and the breadth of the investment is broader. And I think much more interesting. And the HCC data, these are early HCC but you’ll see them before the end of the year.

Yes, and they’re presenting the in the ORTC so which they’ve said. Stephen Willey – Stifel: And then, and the milestone payment that you received from AstraZeneca, was that related to DLBCL, I believe that was that milestone payment was structured in kind of correlation to threshold respond rate, am I correct?

That’s correct. It is related to the DLBC. Stephen Willey – Stifel: Okay. And then, if I could just sneak in one other one, Stan, you talked about lipid conjugated drugs. I’m just wondering if you actually provided any clarity around what the lipid conjugate is.

If I said lipid I didn’t mean it. It’s ligand. And then there are a variety of ligands that we’re learning that we can use to target the liver of course, and there are other interesting observations that we’re making about other tissues. And it’s a fairly competitive area and I think that’s about as much as we want to disclose. Stephen Willey – Stifel: Understood. Thanks.

Other than, it does give us about a 10-fold increase in potency. Whether, and so if you think about our average dose, our IV-50 and Mann now with generation 2 is 100 mg or 150 mg, no longer is it 200 mg, maybe 100 mg. And so, seven to 10-fold we take that down to 10 mg a week or 40 mg a month. And our 25 chemistry is about 10 times more potent that 2 plus or minus. So another 10-fold on that takes you down to some mighty, mighty, mighty little doses.

The next question comes from Navdeep Singh from Goldman Sachs. Please go ahead. Lisa Zhang – Goldman Sachs: Hi, this is Lisa in for Navdeep. Thanks for taking the question. Just one on TTR, how is enrollment for your Phase II, III trial and SAP progressing. And kind of, can you just share us with what are some findings from the TTRRx trial in SAP that would then enable you to then advance into FAC? And can you just remind us again how TTR is well differentiated from competing agents notably online ones? And then I have one follow-up.

Well, we just reported that GSK paid an $18 million milestone. And that milestone represents a much more substantial commitment than just $18 million. So, I think obviously this is a blinded Phase III study so I can’t share any information with you about it other than its going well. And that we’re seeing good tolerability. And we and GSK is working toward a final decision on exactly how we handle the heart. With regard to the competition, the drug that Alnylam has that’s farthest along obviously is a drug that requires administration with their lipid nano-particles. And we think with the fact that before every dose one has to administer steroids, H1 and H2 antagonist and aspirin and so on, makes that not, it’s not – we don’t think it will be a desirable choice. The galNac-conjugated drug that they’re developing behind it is certainly a competitive agent and we’re watching it very carefully. Lynne, do you want to add anything to that?

No, that’s what I would say. Lisa Zhang – Goldman Sachs: Okay. I mean, just very consolably you just said, I mean, are there any findings from the recent data that Alnylam put out like that better informs you on kind of how you’re thinking about developing TTR in both of AP and SAP?

No, frankly we didn’t find a lot of findings. Lisa Zhang – Goldman Sachs: Okay.

But I know maybe others thought they did. But that was nothing that we learned from that. I think there are studies that have been instructive, some of the experience, some of the quasi natural history experience with some of the other drugs, I think has helped us refine our thinking about the rate of progression and how many patients might be needed in things like that. But I don’t think I learned anything from the Alnylam for, did you Lynne?

No, Stan, I would echo what you said. I think the new interesting pieces of data which are all, additive, to data that we and Alnylam both had when we initiated our Phase III studies. Our, what natural history data you’ve been glean from Phase III studies of what natural history data you can glean from the Alnylam study. And those are all instructive and I think one of the things they teach us is that the rate of progression in this disease maybe even faster than any of us had thought, which is good news for the clinical trials. Lisa Zhang – Goldman Sachs: Okay.

I mean, not that we wish that on patients but…

I’m sorry, I didn’t mean to.

Just make the clinical trials a little more manageable. And enrollment is moving along nicely. Lisa Zhang – Goldman Sachs: Okay, great. Thanks.

And we have quite a number of patients who have finished the primary study and are already in the open label extension study. Lisa Zhang – Goldman Sachs: Okay, great. Thanks for that tidbit. And then lastly on SMNRx, when you would anticipate to provide the next update on the Phase II dataset, if you do choose to. And then, to the extent that you can provide, have there been any additional events in the SMA infants and WMS? And lastly –

We’re not going to be doing that. Lisa Zhang – Goldman Sachs: Okay.

I’m not going to answer the question of have there been new events this week. We will update the infant study and the childhood study at an appropriate time. What I can say is we remain tremendously excited about what we’re saying. Lisa Zhang – Goldman Sachs: Okay. And then, what are the remaining gating factors to initiating the Phase III trial in infant and children?

It’s just paperwork. Lisa Zhang – Goldman Sachs: Okay, great. Thank you.

Lynne, do you want to subtract anything from what I just said?

No. As we’ve said, the Phase III clinical trial with infants of course has already started, the Phase III clinical trial in children will start before the end of the year which means essentially everything is done. Lisa Zhang – Goldman Sachs: Okay, great. Thanks again.

And the next question comes from Eric Schmidt from Cowen & Company. Please go ahead. Eric Schmidt – Cowen & Company: Thanks for taking my question. Another clinical update just on APOCIII and the Phase III and patients with high triglycerides, where are you in the FDA discussions there and what’s the timing for starting that trial?

Well, we’ve concluded all, of our end of Phase II meetings with both the U.S. and Europe. And as things are just getting underway. Eric Schmidt – Cowen & Company: So, is there a timeline to start that trial?

We’ve initiated the FCS study already and we’ve said we’re starting a severe study late this year, early next year. Eric Schmidt – Cowen & Company: Okay, thank you. And I just want to be clear about the three drugs going into the new subsidiary. That’s not KYNAMRO, I assume, but it must include APOCIII, APO(a), and Nch PPO?

We’ll be, so we’ve finished as you know we’ve – we’re in Phase III with a placebo-III. We had very exciting results we hope, which we presented top-line, we hope to publish shortly or soon with APO(a) in the normal volunteer. What was important there is we show that reduced all forms, large or small of APO(a) and we’re very, very potent. And we’ve completed now the Antropoti like-3 Phase I and we’ll be reporting those data needless to say since we’re talking about and we’re encouraged by what we’ve seen. So, all three of those drugs are the drugs that we’re talking about not KYNAMRO of course, that’s licensed to Genzyme Sanofi. Eric Schmidt – Cowen & Company: Great. Thanks a lot.

Your next question is from Michael Schmidt of Leerink. Please go ahead. Michael Schmidt – Leerink: Hi, good morning. Thanks for taking my question. I just had a follow-up on the TTR program. If I’m correct, I think the SAP study was structured as a Phase II-III study with interim analysis, and a powering assumption, that it would allow you to re-power the study. And I was wondering in the, I guess if the Glaxo milestone was triggered by an interim analysis by any chance in this trial?

There may have been a thought about having an interim analysis for re-powering but I think we chose not to do that, isn’t that right Lynne?

It is built into the protocol. But we are choosing not to take advantage of it. Michael Schmidt – Leerink: I see. Okay.

And to your question about Phase II-III, of course you remember that we went directly from Phase I study to a Phase III study with the agreement of the U.S. and the Regulatory Authorities because of the potent TTR reduction we saw. And so, we technically are calling this a Phase II-III because it is our in-patient study. But because of the extensive safety experience we have with our class of drugs, we were able to do that with regulatory approval.

And so, it is very much a Phase III as being run like the Phase III.

Exactly.

But for example, obviously the DSMB meets regularly and met before GSK issued the most recent milestone payment. Michael Schmidt – Leerink: Got it, okay, understood. And then I guess just to follow-up what do you think the timing is on the FAC trial initiation?

We’re finalizing plans for that now and until we gets plans finalized, telling you when it’s going to start is difficult. But we understand it’s an important indication as goes to GSK, they want to make sure they design the very best study. Michael Schmidt – Leerink: Okay, understood. Thank you so much.

And the next question comes from Yale Jen of Laidlaw & Company. Please go ahead. Yale Jen – Laidlaw & Company: Well, thanks for taking the questions. The first one is a little bit housekeeping, question that given your guidance for the annual net loss of approximately $50 million, am I assuming that for the fourth quarter you might get maybe high $70 million to $80 million revenue made-up mostly by milestone payments? And if that’s the case that seems to be one of the largest ones of the many quarters that you have.

Well, it is your assumption, I can’t argue with that. And it’s not a wildly incorrect assumption. I think it’s a fair thing to say, right Lynne?

Yes. I don’t know what. So, as Beth said, we’re – we’ve already exceeded our revenue guidance for the year. We have some big milestones coming up including the large milestone we’re expecting to achieve when we initiate the Phase III, the second Phase III clinical trial for SMNRx. And we’ve already achieved $40 million worth of milestones this quarter.

So, if you add $40 million and $27 million, that’s why I would say it can’t be that you’re wildly off. Yale Jen – Laidlaw & Company: Okay great. That’s very helpful. Another just follow-up on the lipid subsidiary that you are going to establish, giving that you might have this in the structural organization sort of enhancement, would you anticipate starting more clinical development, starting up a new product in this area going forward?

If. Yale Jen – Laidlaw & Company: Besides the three drugs that you are currently in the subsidiary?

Right now the drugs that we have in our lipid franchise fit beautifully together. They all address an individual lipid cardiovascular risk factor which is underserved. They all can be used in combination with other drugs and with each other. They all take advantage of the same knowledge base and skill-set and they take advantage of the relationships that we built with the KOLs. And they are wonderful tools to really dissect the contributions of various lipid components to various types of cardiovascular disorders. And so, they are exciting to people in the field. That’s sort of my definition of the modern franchise. And so, that it just makes sense to think of them as a group of drugs. The subsidiary is being set-up, so that it can pursue those drugs and evolve. And it may evolve in many different kinds of directions as companies do. On the other hand, we have lots of other interesting franchises of drugs, diabetes drugs, represents a franchise, a knowledge based franchise. And a variety of other drugs are representative of that too. So, if we’re going to take it one step at a time, we’ll see how this evolves. And if it does what we hope it does for us and for our shareholders and for patients. Then you could see it replicated or change, we’ll see how it goes. I don’t know. Lynne, do you want to amplify on that?

No. Yale Jen – Laidlaw & Company: Okay, last question. Thanks for the answer. And the last question just for GCCR, I know it’s probably a study, current study in Cushings syndrome. Do you have any timeline on that?

We’re just finishing the current trial. And what we want to do is get this trial finished and then see, what – it’s only three months. So it’s not going to be a definitive trial but it’s going to teach us a lot. And then we’ll decide how we want to focus whether we want to focus heavily on Cushings or whether we want to focus on some subset of diabetes or exactly. And I think as we see the data, we’ll make some of those decisions. Yale Jen – Laidlaw & Company: When would that might be reported or?

It’s late this year or early next year probably more next year. Yale Jen – Laidlaw & Company: Okay, great.

I think the early part of next year, given that. Yale Jen – Laidlaw & Company: Okay. Great, thanks. I appreciate it.

And we have a follow-up from Stephen Willey from Stifel. Please go ahead. Stephen Willey – Stifel: Yes, thanks for taking the follow-up. Just with respect to earlier milestone related question I asked. So, the AstraZeneca milestone payment that you received in conjunction with STAT3, that could have been high as $50 million, am I correct in assuming that?

Lynne, do you want to deal with that?

Yes, that is correct. Stephen Willey – Stifel: Okay, thanks.

And it’s, would you want to say anything more about how that fits with the next milestone or anything like that?

Yes. So, so, well, we have a whole series of milestone payments, the next – one of which would be on the initiation of the Phase 2 clinical trials which is $17.5 million. Stephen Willey – Stifel: Okay. Thanks.

Okay.

I think we’ve run pretty long. And so I think it’s time to bring the call to a conclusion. I thank everyone for your interest and your questions, a lot of good questions and look forward to sharing more information with you as the year progresses about all the drugs that we talked about. And keep you posted on the progress that we make with regard to our subsidiary, our lipids subsidiary that we hope to form. Thank you very much.

The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.