Stan Crooke - Chairman & CEO Wade Walke - VP Corporate Communications & IR Lynne Parshall - COO Beth Hougen - CFO

Jessica Fye - JPMorgan Stephen Willey - Stifel Nicolaus Eric Schmidt - Cowen and Company Yale Jen - Laidlaw & Company

Welcome to the Isis Pharmaceuticals second quarter financial results conference call. Please note this event is being recorded. Leading the call today from Isis is Dr. Stan Crooke, Isis Chairman and CEO. Dr. Crooke, please begin.

Thank you and good morning, everybody. Thanks for joining us on our call to discuss the second quarter financial results. On the call today, Lynne will highlight some of our recent activities and then Beth will walk you through the financial results, and then I'll finally close by focusing on some upcoming events. Joining me on the call today is Lynne Parshall, Chief Operating Officer; Beth Hougen, Chief Financial Officer; Sarah Boyce, Chief Business Officer; and Wade Walke, Vice President of Corporate Communications and Investor Relations. And now, Wade, will you read our forward-looking language statement, please.

Yes, thanks, Stan. A reminder to everyone that this conference call includes forward-looking statements regarding the financial outlook for Isis, Isis' business, and the business of Akcea Therapeutics, and the therapeutic and commercial potential of Isis in technologies and products in development. Any statement describing Isis' goals, expectations, financial or other projections, intentions or beliefs, including the commercial potential of KYNAMRO, volanesorsen, ISIS-SMN Rx, and ISIS-TTRRx 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 a 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 the additional detail in Isis' annual report on Form 10-K for the year ended December 31, 2014, and in its most recent 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 would now like to turn the call back over to Lynne.

Thank you, Wade, and good morning. So far this year we have taken four important steps in implementing our business strategy. We believe these represent significant achievements. We created Akcea to commercialize our lipid franchise. We licensed our novel anti-thrombotic drug to our top-choice partner, Bayer. We also expanded our relationship with AstraZeneca and added J&J as a new partner, both of which expand opportunities for technology and the resources and expertise being brought to Bayer on these expanded programs. These accomplishments will provide us substantial added value to Isis and these steps support our continued strong financial performance. One of the most important business development goals this year was to find the best partner for ISIS-FXI Rx. We successfully licensed the drug to Bayer, the leader in anti-thrombotic drug development and commercialization. Bayer plans to take our advanced anti-thrombotic drug, ISIS-FXI Rx, forward in a robust development partner and designed to maximize its value. We believe Bayer is the right partner for ISIS-FXI Rx with the resources to maximize the commercial potential of our drug and the deal is a great deal. It rewards us for the work we've already accomplished while also ensuring that we participate substantially in the commercial success of ISIS-FXI Rx. Because we believe ISIS-FXI Rx has lack-luster potential, our tiered royalty rate in the low to high 20% range was an important element to us in negotiating the transaction. It will be very important as the drug is commercialized. In short, the transaction provides us with the right partner at the right time with the right development program and the right value. Just yesterday we announced an expansion of our relationship with AstraZeneca to form our second broad strategic relationship. This expansion takes advantage of the broader capability of our technology. Together, with AstraZeneca, we plan to identify novel and attractive targets for cardiometabolic and renal disorders with the primary focus on the kidney, and to create drugs to modulate the most attractive of those targets. This new collaboration builds on our positive oncology and drug delivery collaborations with AstraZeneca. We are particularly excited that this new collaboration will expand more aggressively the application of antisense drugs in the kidney and other important organs for cardiometabolic and renal diseases. In addition, it provides to the very strong partner who is committed to moving antisense drugs forward in a large and growing area of cardiometabolic and renal disease. We benefit by teaming up with AstraZeneca from the early stage of the development [indiscernible] large therapeutic areas where we would eventually partner for our drugs and we will be able to maintain momentum with an excellent committed partner as these drugs progress through development. Upon Hart-Scott-Rodino clearance, this new collaboration will provide us with a significant $65 million up-front payment, substantial licensing and precommercial milestone payment, as well as tiered double digit royalties. [Indiscernible] when we identify the first drug candidate to move into development, we'll receive $25 million to $35 million payment. In total, this collaboration is worth up to more than $4 billion in license fees and milestones payment plus tiered double-digit royalties. Like our Biogen relationship, our new relationship with AstraZeneca builds [on our] earlier successes, that our partners are eager to expand the use of our technology in new therapeutic areas is a testament to the productivity and broad utility of our technology as well as some strong collaborative interactions we're building. This AstraZeneca collaboration, together with the J&J collaboration we completed earlier this year to develop orally delivered antisense for autoimmune disease in the GI tract, reflects the broad culpability of our RNA targeted antisense drugs and our commitment to continue to expand the application of our technology to more tissues, more routes of delivery, and more therapeutic areas. This year we also created our wholly-owned subsidiary, Akcea Therapeutics, to develop and commercialize our suite of lipid drugs. Akcea has been building development and commercial expertise and lipid and cardiometabolic diseases, and preparing for commercialization of the most advanced of their drugs, volanesorsen or ISIS-APOCIIIRx. In many ways, Akcea provides us the benefits of a strategic partnership, a committed partner who is a therapeutic area expert to conduct the final stages of development and partialize drug while allowing the core of Isis to remain focused on advancing our technology and pipeline. The added benefits of Akcea are that we are able to hand pick the team who will be developing and commercializing our drugs to make sure our drugs are their highest priority. We maintain control of the process and of course retain a much more substantial piece of the commercial success from these programs. The importance of the Akcea portfolio of drugs to provide new treatments for patients with inadequately treated lipid disorders is reflected in the fact that this portfolio has been the subject of three articles in major medical journals in the last several months, including in The Lancet and the New England Journal of Medicine. These publications are a testament to the medical community's interest in the ability of antisense technology to approach targets that are not easily approachable with other therapeutic modalities, and their excitement about the therapeutic potential of antisense drugs to specifically effect important newly identified therapeutic targets like ISIS-APOCIII and Lp(a). The Akcea pipeline is continuing to progress well. Volanesorsen is advancing in phase 3 for patients with familial chylomicronemia syndrome, and we are about to start the phase 3 trial for patients with familial partial lipodystrophy. We expect phase 2 data from ISIS-Apo(a)Rx later this year and ISIS-angiopoetin3L Rx is on track to begin clinical trials early next year. This June we recorded data from the ongoing open-label phase 2 study of ISIS-SMNRx that give us additional confidence in this drug. We reported results of an April analysis which shows in infants with SMA treated with ISIS-SMNRx continue to demonstrate increases in permanent [flatilation]-free survival. In fact, almost three-quarters of the infants in the 12 mg cohort were older than 15 months of age and continuing on study. [Ramberg] natural history data suggests that you should expect a median of inquiry survival for comparable infants from 6.1 to 10.5 months. PNCR study is a strong natural history comparator because of the overlap of investigators and sites between that study and ours provides strong assurance that the standard of care between the studies is the same. The management of babies with SMA has evolved over time and in 2007 the care of SMA infants was [indiscernible] by a set of management guidelines that were published in the consensus statement for standard of care in spinal muscular atrophy. Since then, the best practices of standard with care have not changed and the sidelines followed in all major centers taking care of these patients, such as those in the [PNCR] study and in our study. Despite their widespread adoption, these sidelines have had remarkably little effect on the [indiscernible] survival of patients, underscoring the need for new treatments. Not only are the infants in our study continuing to survive event free for longer than natural history would predict, they are also showing substantial improvements in muscle functions and are achieving development of milestones that are unexpected. For example, several infants treated with ISIS-SMNRx are now able to hold up their head and five infants are now able to sit, an accomplishment in an infant diagnosed with type 1 SMA is never expected to achieve. We also provided an update from our ongoing phase 2 study in children with SMA in which we describe sustained increases in motor function scores, including the Hammersmith motor function test and increases in additional motor function tests such as the six-minute walk test. We are particularly encouraged by the fact that there are three children treated with ISIS-SMNRx who could not walk when they entered the study but who can now walk. We are encouraged by the maturing data from ISIS-SMNRx. Phase 3 program is progressing on track. Just yesterday we earned an $8.5 million milestone payment for Biogen for advancing the phase 2 study in infants with SMA, and we continue to have constructive interactions with regulatory agencies. Another important phase 3 drug we are developing, ISIS-TTRRx, is also progressing towards completion of a pivotal study with data from the phase 3 study in patients with TTR polyneuropathy, or FAP, planned for the first half of 2017. GSK has initiated a phase 3 study in patients with TTR-related cardiomyopathy, and they are also initiating a third phase 3 study in patients with FAP in Japan. We are pleased with the growth and progress of this program and our partner's strong support. Although there are other drugs in development for patients with TTR amyloidosis, we continue to see our drug as best-in-class. For example, ISIS-TTRRx uniquely combines an effective TTR knockdown with very convenient small volume once weekly at-home dosing for patients with FAP and [FAD]. There is no need for concomitant medications like steroids when a patient is taking ISIS-TTRRx. As one of our generation 2 plus drugs, it is very well tolerated. This was demonstrated in a recent blind safety analysis of patients in the ongoing phase 3 study which shows that less than 1% of injections were resulting in injection-type reactions. This positive tolerability profile of ISIS-TTRRx has continued high rate of patient retention observed in our phase 3 study and also the high rate of enrollment into our open label extension study. Last week we reported encouraging results from an investigators study in patients with TTR-related cardiomyopathy where we observed up to 88% reduction in TTR protein. Dr. Merrill Benson, the investigator, reported apparent stabilization of cardiac disease in these patients by several measures after six months of dosing. Based on natural history, the disease in these patients would be expected to progress. The encouraging results we observed with our TTR program to date support our continuing belief that ISIS-TTRRx will be the best-in-class therapy for patients with TTR amyloidosis. Also, we just announced top-line conclusions from the phase 3 focused FH study in severe heterozygous FH patients treated with KYNAMRO. In the study the primary endpoint was met. We are pleased the patients treated with KYNAMRO experienced statistically significant reduction in LDL cholesterol. We are equally encouraged that these results and the safety and tolerability profile we observed in the study are highly consistent with our previous phase 3 experience. Genzyme and [indiscernible] report all of the focused FH data, including the effects of KYNAMRO and other lipid parameters, at an upcoming medical meeting. These [studies] provide additional confirmation of KYNAMRO's value in the treatment of patients with severely elevated LDL-C. These results show it to be valuable in facilitating [indiscernible] commercial strategies to continue to expand the market opportunity for KYNAMRO. So, as you can see, we are making substantial progress in our phase 3 pipeline. By the end of the year we expect to be [indiscernible] volanesorsen in two phase 3 studies for two separate indications. We continue to make progress on the two phase 3 studies of ISIS-SMNRx in both infants and children with spinal muscular atrophy. We are also well along in the ongoing phase 3 study of ISIS-TTRRx in patients with FAP. The [clinical] data from all these studies in late 2016 or 2017. We are also expecting that GSK is planning to initiate two phase 3 studies, one in patients with TTR-related cardiomyopathy and one in Japan in patients with FAP. And of course our [Saco] partners are making progress with their phase 3 drugs as well. OncoGenex recently completed the second and final utility analysis in our phase 3 study evaluating apatorsen in patients with non-small cell lung cancer and could have results from this study as early as the second half of 2016. They also continue to progress at phase 3 study of apatorsen in patients with prostate cancer and plan to report top-line results from this study this year and again in late 2016. And, finally, our partner at Achaogen is evaluating plomicin in a phase 3 study in patients with serious bacterial infection and plans to initiate a second phase 3 study evaluating the drug in another separate patient population later this year. Achaogen said that they could have data from the second phase 3 study as early as the second half of 2017. By the end of the year our pipeline of phase 3 assets should consist of six drugs being evaluated for 10 different indications, most of which will have data in the next year or two. We are also making progress advancing the rest of the pipeline. I won't reiterate all the news we've already presented. Rather, I'll focus on three very recent pipeline events. First, we initiated a phase 2 clinical study of ISIS-FGFR4Rx, a novel treatment for obesity. This drug is designed to act peripherally during the increased energy utilization rather than in the CNS where many side effects can occur. Thus, it represents a unique approach to the treatment of obesity. We recently completed the six-week phase 2 study of ISIS-GCCRRx in patients with type 2 diabetes. The short study was designed to provide us with additional safety information as well as evaluate short-term measures of glucose control and insulin sensitivity. In this study, the drug was safe and well tolerated. We observed improvements in certain measures of glucose control and insulin sensitivity, however, we did not observe significant reductions in [glucamine], the study's primary endpoint. We plan to present detailed data from this study at a future medical meeting and we are evaluating our alternatives for further development in patients with type 2 diabetes and in patients with Cushing's disease. We just announced the initiation of a phase 1-2 study in patients with Huntington's disease. This program demonstrates how our technology allows us to tackle diseases that have been, until now, untreatable with conventional drug technologies. Although the genetic class of this disease has been known for decades, there has been little progress in identifying the drug that directly targets the causes of this disease. Huntington's disease is a rare fatal neurological disease resulting in deterioration in mental and physical abilities. Like many genetic diseases, children of a parent who has the disease know all to well what the future may hold for them. We believe that our antisense technology is uniquely able to address this disease, and we and our partners at Roche have the focus and commitment to move this program forward as rapidly as possible in order to help these patients and their families. With 38 drugs in development, 20 of which are in phase 3 or phase 2, there will always be a substantial number of pipeline events throughout the year. We already kicked off the second half of the year with positive momentum in our business and pipeline efforts, and we expect to continue this momentum through the rest of this year and into 2016. So, with that, I'll the call over to Beth.

Thank you, Lynne. The successes in our business that Lynne described have resulted in another quarter of strong financial results. We ended our first six months of this year with a pro forma operating income of $62 million and pro forma net income of $46 million. Our operating results in the first of this year were significantly improved over the same period last year in which we reported a pro forma net operating loss of $22 million. Further, our profitable second quarter is the third straight quarter in which we reported pro forma operating income. We are also profitable on a GAAP basis. Our results for the three and six months ended June 30 benefited from the more than $90 million in revenue we recognized from our license of ISIS-FXI Rx to Bayer. We ended our second quarter with more than $750 million in cash as a result of the more than $165 million we received from our partners in the first six months of this year. And so far in this quarter we generated nearly $100 million of cash, including $65 million from the expansion of our AstraZeneca relationship and more than $30 million from milestone payments. Our ability to consistently generate substantial amounts of revenue and cash from our partnering activities and the success of our partner programs demonstrates the power of our business strategy. To recap our financial results for the first six months, we earned $183 million in revenue comprised of $91 million from the license of ISIS-FXI Rx, $26 million from the amortization of upfront payments including revenue from our J&J collaboration, and $57 million from milestone payments reflecting the progress of our partnered program. Our revenue for milestone payments included $41 million from Biogen for advancing ISIS-SMN Rx, progressing a fourth drug into development, and validating two undisclosed targets. Plus, we earned $50 million from GSK for continuing to advance ISIS-TTR Rx. Our results for the first end of this year do not include revenue from the amortization of the $65 million upfront fee from AstraZeneca which we expect will be approximately $5 million in the second half of this year and $11 million per year over the term of the collaboration. Our results also do not include the $33 million in milestone payments we've earned so far in this quarter. Generally, our revenue consists primarily of revenue from the amortization of upfront fees plus milestone payments. In most of our partnering arrangements, our partners pay us an upfront fee and partial consideration for the work they want us to give back before they license a drug from us. As a result, the county rules require us to amortize the upfront these we receive over the period of our work. We also earn revenue from a partner when a partner program achieves an important milestone, such as designating a development candidate or initiating a clinical study. In the second quarter we licensed ISIS-FXI Rx to Bayer and because of that the county rules required us to recognize a significant amount of the upfront payment immediately rather than amortize it. As a result, in the second quarter we recognized more than $90 million of $100 million upfront fee. This substantial amount of one-time revenue was an important contributor to our financial results in the first half of this year. Consistent with our guidance, our pro forma operating expenses increased by about $14 million over the first half of last year, primarily because of the phase 3 studies we are currently conducting, three of which we hadn't even started at this time last year. This is a modest increase to support the large number of phase 2 and phase 3 studies plus numerous earlier phase studies we are conducting. As we look ahead to the rest of this year we have many opportunities to generate revenue and cash, although we do not anticipate that any one event will be as substantial as the revenue we earned from licensing ISIS-FXI Rx. Nonetheless, we're projecting significant revenue in the second half of 2015 and we are off to a strong start. In addition to the approximately $12 million to $15 million in revenue we earn each quarter from the amortization of past upfront fees, we'll earn $5 million of revenue in the second half of this year from the amortization of the upfront payment from AstraZeneca. Plus, we have already earned $33 million in milestone payments this quarter, including $22 million from Roche for initiating the phase 1-2 study of ISIS-HTT Rx and $8.5 million from Biogen for advancing the phase 3 end-year study of ISIS-SMN Rx in infants with SMA. We also have the ability to earn more milestone payments as our partnered programs advance, and all of this adds up to the potential for significant revenue in the second half of this year. In the second half of this year we are projecting an increase in our operating expenses over the first half of this year. An important part of this will be our expenses for Akcea as they continue to build the commercial infrastructure and advance the pre-commercialization activities necessary to successfully launch volanesorsen within the next couple of years. We also expect our research and development expenses to increase as the volanesorsen phase 3 study for patients with FCS continues and as we begin the phase 3 study for patients with [SPL]. Our other phase 3 programs will also continue to advance, and we have numerous earlier [studies] that we plan to begin during the second half of this year. Each year we advance the drugs in our pipeline, move additional drugs into development, and advanced the reach of antisense technology with only modest increases in expenses. We are able to consistently increase our research and development activities without substantially increasing our expenses because we augment our resources with those of our partners. This is an important benefit of our business strategy. Our new AstraZeneca collaboration is an excellent example of this benefit. We leverage our partner's resources and expertise to amplify the value we've created. Our partners are conducting research and development alongside our researchers on our programs and drugs. We have access to our partner's accumulated expertise in different areas, their connections with academic collaborators and key opinion leaders, and their substantial pre commercial and commercial resources. The work our partners are conducting is work we don't have to perform and therefore do not have to pay for. This combined with the money we receive from our partners provides us with strategic value throughout our collaboration and beyond. Turning now to our cash position. We ended the quarter with more than $750 million in cash, adding to that so far in the third quarter we have generated nearly $100 million in payments from our partners. Because of the substantial amount of cash we have generated so far this year and our prospects for the rest of the year, we are revising upward our cash guidance. We now project that we will end the year with more than $750 million in cash, an increase of $120 million over our original guidance. Our new cash projection means we expect to end the year with more cash than we had at the end of 2014. Our successes so far this year have also set up some nicely to improve upon our pro forma NOL guidance. We are now projecting to end the year with a pro forma operating loss in the low $30 million range which is a more than 40% improvement over our original NOL guidance. And now I'd like to turn the call over to Stan.

Thanks, Beth. We've led the creation of a new platform for drug discovery that is fully valid yet continues to advance ever more rapidly. We've also demonstrated that the technology is more efficient than other approaches for drug discovery and development. And so armed with antisense technology we have focused and are continuing to focus on creating a pipeline of first and best-in-class drugs. This means we focus our technology on developing drugs that address novel targets, the strategy is represented throughout our pipeline. Thus, the publication of three New England Journal of Medicine papers and The Lancet paper in the last half year or so is particularly gratifying. The two New England Journal of Medicine papers on volanesorsen and The Lancet paper on ISIS-APO(a)Rx highlight the importance of Apo(c)3 and Lp(a) as contributors to cardiovascular disease and demonstrate once again the excitement in the cardiovascular community about the advancements we are making in the management of under treated lipid risk factors. Our New England Journal of Medicine paper on our novel anti-thrombotic drug ISIS-FXI Rx showed for the first time that anticoagulation and bleeding have been separated. Obviously, there was a lot of excitement about the drug with interest from many and large pharmaceutical partners, including Bayer to whom we ultimately licensed the drug. Bayer was the ideal choice to exploit this potential of this novel anti-thrombotic drug as they are expert in and fully committed to the anti-thrombotic space. Of course it's not just these drugs that demonstrate the value of focusing our technology on truly novel groundbreaking targets, but it's our entire pipeline, including ISIS-SMN Rx, ISIS-HTTRx, and ISIS-DMPK-2.5Rx. We think the true value of a pipeline is usually best defined by its level of innovation and our pipeline is highly innovative and will continue to be so as we add new drugs focused on novel targets into development. The fact that others follow our lead is further evidence of our leadership and our continued innovation. We also continue to advance our technology. Yes, we do have a fully validated technology we are advancing at an ever more rapid rate. This is evidenced by the results we've published on our gen 2-plus drugs demonstrating that by advancing our screening methods we can generate and create more potent and better tolerated drugs with the same generation to chemistry. With gen 2.5 and LICA, we have two different chemistries that can give us individually up to a tenfold increase in potency. Our pipeline today we have eight LICA drugs and will continue to add more LICA drugs to our pipeline. We have four generation 2.5 drugs. Remember the generation 2.5 drugs enhance potency generally, so they can be used not only in the liver but also in other tissues such as skeletal, muscle, and tumors. With generation 2-plus drugs, the average dose to achieve a 50% target reduction in the liver is about 125 mg a week with a generation 2.5 and our LICA drugs, an increase of tenfold means that we can now reduce the dose to 10 mg to 15 mg per week. Next year we plan to move our first drug that combines both generation 2.5 and LICA chemistry in the same molecule into the pipeline. The combination of these two chemistries means that theoretically we can get to doses as low as 1 mg to 3 mg per week. Reducing the dose results in drugs that are better tolerated, can be given less frequently. Greater potency allows us to expand the number of tissues in which antisense drugs can be effective. We're able to improve on a class of drugs that already gives us the significant potency of 125 mg a week is truly remarkable. This is the future opportunity for antisense technology are enormous and continue to expand. We also continue to expand the mechanism of actions that we utilize, the tissues we target and the routes of administration we use. Our recently announced collaboration with J&J is a good example of how we expand in advanced technology in areas that are outside of our core focus. With J&J we are expending the utility of our technology by pursuing oral delivery of our drugs to treat diseases of the gut locally. Yesterday, with the expansion of our relationship with AstraZeneca, we are building on the preliminary work we have done in the kidney, armed with information about how our drugs behave in the kidney, together with AstraZeneca we plan to create a suite of drugs to target in the kidney, as well as other tissues throughout the body to treat cardiometabolic and renal disease. The breadth of interest in our technology and our pipelines our various partners further demonstrates our leadership in R&A targeted therapies. We have partnerships today with Biogen, GSK, AstraZeneca, Roche, J&J, and Bayer. The interest to expand these relationships is high, and the interest from potential new partners continues to grow. In the second half of this year we have a number of opportunities to highlight how the advances we are making in our technology lead through to successes with their drugs as we begin to report more data from our generation 2.5 and LICA drugs. We plan to report data from our phase 2 study of ISIS-APO(a)Rx in patients with elevated Lp(a) levels. Specifically targeting Lp(a) is an important component of our lipid franchise and one that is of particular interest to the medical community as evidenced by the publication of the phase 1 data from this program in The Lancet two weeks ago. Together with AZ we plan to report data from our generation 2.5 androgen reception drug in patients with prostate cancer. And of particular interest will be the first clinical data we report from the drug that incorporates our LICA technology. We hope this will be the first clinical demonstration of the enhanced potency of this chemistry for our antisense drugs. We also have a number of clinical trial initiations to look forward to later this year. Together with Akcea we plan to initiate a phase 3 study for volanesorsen in patients with FPL. The second ultra orphan indication potentially more than doubles the initial commercial opportunity for volanesorsen. We plan to initiate additional phase 2 studies on up to five drugs, including the phase 2 study of ISIS-FXI Rx in patients with compromised kidney function. We have a number of earlier stage drugs that should enter clinical development as well, including ISIS-DGAT2Rx for patients with NASH and other metabolic disorders. And of course we expect to continue to add new drugs to the pipeline. Now, before I end, let me touch briefly on the evolution of our business model and the performance of our business strategy. A significant goal for us has been to create a few strategic partnerships. We just established our second strategic relationship with the expansion of relationship with AstraZeneca and as we did with Biogen, our relationship with AstraZeneca began with a focus on specific targets. In the case of AstraZeneca, we were focused on targets to treat various types of cancers. We then expanded our focus to consider general properties of our drugs with regard to distribution and now we have expanded substantially to focus on the kidney and cardiometabolic and renal disease. One of the processes that we prefer to use to establish a strategic relationship is like we have done with AstraZeneca and Biogen, we get to know our partner, they get to know us, and then the broad capabilities of our technology and as a consequence we confirm we can work well together. Most importantly, we can be confident that our partner will take good care of the assets that we eventually will license to them. In the coming years we hope to establish additional strategic relationships. We think this approach enhances our partnerships, limits the amount of time we have to spend identifying and educating potential new partners, and ensures we have a partner who is as committed as we are to advance our drugs and technologies. We think of Akcea as the equivalent of a strategic partner. Although we created Akcea and we own Akcea, it has been given a single-focus task, complete the development and commercialization of our exciting suite of novel drugs to manage under treated lipid risk factors. So it is essentially a commercial partner for a select group of our drugs, just as is Biogen and AstraZeneca. And, as Lynne mentioned, Paula and her team are off to a great start. To wrap up, we've had an excellent first half of the year and the third quarter is already off to a great start. We are today in an even stronger financial position than we were at the start of this year and we have added a second strategic partner to our roster, and we continue to lead in the development of targeted therapeutics. We have a large late-stage pipeline of drugs about which we plan to report data to support regulatory filings late next year or in 2017 and we have numerous first-in-class drugs that are advancing in various stages of development. We are also pleased with the performance of KYNAMRO in the phase 3 study focus FH. These data are certainly encouraging and consistent with our hopes and expectations. Of course we continue to advance the technology. With all the applicability of our technology to many targets, tissues, diseases, means that we are only beginning to address all the addressable opportunities for our technology. The more we expand it's applicability the more these opportunities continue to grow and we look forward to continuing to share our progress in all these venues with you in the remaining part of the year. With that, I will open the call for questions. Denise, if you can set us up, please.

[Operator Instructions]. Your first question is from the line of Jessica Fye from JPMorgan.

Thanks for the question. My question is on TTR and specifically FAC. Did you said there were multiple measures across which patients in the Benson study showed disease stabilization? I saw the comment on left ventricular wall thickness, but were there other measures that you looked at and saw stabilization there? And then also just with respect to the left ventricular wall thickness, I think you mentioned the progression to be expected after six months but can you just quantify what change you would expect after six months in untreated patients? Thank you.

Jessica, I'm certainly no expert in this area, but there were several measures that Dr. Benson used in measuring cardiac performance including left ventricular wall thickness and valvular performance and so on. And I can send you the abstract and we can set up an opportunity for you to talk to Dr. Benson. There is a paper that Dr. Benson published last year I think it was that showed significant progression and the numbers don't mean much without putting them in some sort of context, but as I recall there were many patients who had double-digit increases in ventricular wall thickness. Lynne, do you want to add anything to that?

No, but would be happy to send copies to both [texts sent to] publication as well as the recently presented data, Jessica, and then we can set up a talk with somebody here or talk to Dr. Benson.

I think the simplest answer to the question is the experts we've talked to were very impressed to see stabilization because they would have expected meaningful progression in the six months. It's a pretty aggressive disease as I understand it.

Thanks. Maybe just two quick follow-ups if you don't mind. I guess on SMA just with respect to the competitive landscape, do you have any views on gene therapy and how that could potentially kind of factor into the treatment paradigm over time? Whether your product could be used in conjunction or in patients who have had gene therapy? And then the next one is just on the Astra collaboration since it includes cardiovascular, I guess how do you structure that to avoid sort of competing with Akcea? Thanks.

Well, with regard to SMN, I think the most important thing I have to say about that is the performance of our drug. We continue to be tremendously impressed with the data that we are observing. The proof of mechanism, the improvement in survival, the evidence of a benefit in muscle performance in a variety of measures, the benefit in both infants and children, these are remarkably consistent results that get stronger every time we look. The exceptional safety profile that we have seen to date I think is also tremendously important. There have been other drugs, such as the PTC and Novartis and others and as I understand it the PTC drug is on clinical hold and the Novartis drug, as I understand it, works through a similar mechanism. Gene therapy is early and we are glad to see that progressing. We think that SMNRx has tremendous advantages, including how positive the data we generated are and how meaningful the studies that we have done. So we don't look at the moment at gene therapy as an important competition. We can imagine that the two agents being used together, but at the moment we are very encouraged by what we are seeing and we hope we are changing the fundamental course of the disease and I think we will have to just see how that looks over time, how much additional benefit we need to look for. Any other comments from you Lynne or Sarah?

No.

Now on to AZ. The AZ collaboration is focused very differently from Akcea. Akcea is focused entirely on lipid risk factors. The AZ collaboration's major focus is expanding our reach more substantially into the kidney. Now, we know quite a little bit about the kidney already. We have some good basis for understanding what we can do in the kidney, but what we are going to be doing is really understanding the kidney at the level we understand the lung, understand the liver, fat cells and so on. So most many of the targets are kidney targets and so it's really very easy to separate AZ from Akcea. The targets that we're working on our own account and targets that we may partner with others because by and large our collaborations are focused around specific targets even though they may be strategic in character because they have strategic goals such as understanding the kidney and a significant number of targets as part of the collaboration. Next question, please.

Your next question is from the line of Stephen Willey from Stifel.

Maybe just a couple on some pipeline programs. I know the Benson poster that was referenced in the previous question also included patients that also had the wild type form of the disease, SSA. Just curious whether or not you guys know if Glaxo's phase 3 development plans will include both the SSA and also the FAC patients within a single phase 3 trial design?

Steve, I'd like to reserve comment on that until the study is underway. It is a question that has been carefully considered and we will be in position to answer that in just a couple of months. Lynne, do you want to add anything to that?

No. GSK believes that the design of their study is an important competitive advantage, so until they are just ready to start it they have asked us not to talk about the details. We are very pleased with the study design.

Okay. Would you imagine that it would be easier to include both if Glaxo were to select an event-driven end point versus something that measures functionality?

Yes, I would imagine that.

Okay. And then a question on the AR program, which I believe is scheduled for I think a year-end read out I am just kind of curious as to if we will be getting any of the phase 2 expansion cohort data? And I know within that expansion cohort there are subsets of patients that you are going to be looking at who are either Zytiga or Xtandi non-responders and/or relapsers. I am wondering if you will also be getting any kind of genomic data from those patients, if you'll have kind of post-relapse, post-progression biopsy data that is made available for you to be able to kind of correlate some of these signatures in the engine receptor to efficacy?

In the study we will have safety data these quite high doses that have been studied. We will have response information, basically PSA, and we will have additional information about the characteristics of these patients. They are all very advanced and all of them have failed multiple courses of therapy. And I'm not sure right now, Steve, because it's being managed by AZ, what additional information will be in there. We are encouraged by the results that we are seeing both in terms of safety and efficacy. Lynne, do you want to add anything to that?

No. The study is generating lots of hopefully useful and interesting information, but what AZ is going to present at the next data point I am not entirely sure because they are managing that, as Stan said.

Okay. And then maybe one last quick one on DMPK. I know that there is some exploratory biomarkers that will be evaluated in conjunction with the phase 2 portion of that study. Just wondering if you could maybe provide us a little bit of color as to what some of those exploratory biomarkers are and maybe some of the directional changes you will be hoping to see? Thanks.

Steve, I'd like to do that in the next call we have if you don't mind. I think we are hoping to do a little more detail on that in the coming months and I think it would be easier to do it that way.

Your next question is from the line of Eric Schmidt from Cowen and Company.

Thanks for taking my question. Congrats on the progress. Lynne, you mentioned a couple times constructive dialogue with the FDA regarding SMNRx, or maybe you mentioned regulators, I'm not sure. Can you give a sense of what there is to be discussed and what the back-and-forth is about?

All I'll say, because you know we don't do detailed information about ongoing dialogue with regulators, and I did say regulators. We are committed to getting ISIS-SMNRx available commercially for patients and their families as rapidly as we can, consistent with conducting a robust development program. And we are finding that the regulatory environment is supportive of that.

So no update on whether you'd consider filing based on the pre-phase 3 data results?

No update on that.

You also alluded to some commercial prep that Biogen is doing on behalf of the product. What sort of activities are they running?

They are doing all the things you would expect a good commercial partner to be doing for a drug that is in phase 3. So they are doing patient identification, they are looking at caregiver burden, they're prepping for pharmacoeconomic -- support pharmacoeconomic dossiers. So, all of the things that you would expect that they would be doing we're very pleased with the high level of activity and actually the quality of the activity of the Biogen commercial group is bringing to bear in the program.

They are investing in the understanding the ex-US opportunities in more detail as well which we think is quite important. Here again I want to emphasize we benefit from a very progressive and very supportive and very well run patient advocacy group in Cure SMA.

So when might we get an update on filing timelines for the product, either Stan or Lynne?

Currently, we plan to have data from the two ongoing phase 3 studies in late 2016, early 2017. Our current plan is to file based on those.

Okay. Maybe just one quick last question for Beth. Can you give us a broad range of 2015 revenue guidance so we can all sort of amalgamate around the same level?

Hey, Eric. Thanks. When we think about the full year, if you think about the second half of the year being comparable to the first half of the year and then add on top of that the Bayer factor XI revenue, that will get you in a sort of general range to think about revenue.

Very helpful. Thank you.

Beth, you did mention that there wouldn't be an event of the scale of the $90 million revenue that we recognize from Bayer in the second half of the year.

That's correct. So, Eric, I'm sorry, let me be clearer. If you take the first half without Bayer, that will give you a sense for the second half of the year revenue and then add Bayer on top of that.

Your next question is the from the line of Yale Jen from Laidlaw & Company.

Just along the lines of housekeeping side, what kind of operating expenses for the full year you are anticipating? The last guidance was $275 million. Any changes there or expansion there?

Hi, Yale. It's Beth. As we've said, we are expecting our expenses both in research and development and in the gene A lines to go up, and I just gave a sort of general sense of where you could expect revenue and where you are projecting NOL in the low $30 million range. That should be able to give you a sense of where those expenses are going to run.

Okay. Great. That's very helpful. Just a general question. Given the new collaborations you have, are most of those going to use the generation 2.5 antisense as a basis for their study or is there any situation you would think the earlier version will be more suitable? If that is the case, what would be the situation -- general situation to use the earlier version antisense?

All collaborations have access to the breadth of technology and so the way I think about it, Yale, is not so much about what the partnership is but rather what the target is, what the organ is, what the patient needs are, and then we use the solution that appears to be the best for the task. In the kidney, for example, I think most of the focus will be on generation 2.5 just as in the tumor and in skeletal muscle for example, focus will be on generation 2.5 because those are tissues where we think we need the added potency. In other tissues you may use generation 2+ perhaps in fat, for example. In the liver by and large we are switching essentially entirely to LICA. And, as I mentioned, we are now moving a set of opportunities along in research that would include the 2.5 LICA. There again what we try to do is we ask what is it that we are trying to accomplish for the patient and what is it that we -- what tool in our chest is going to allow us to do that the best way we can. Does that help you understand it?

Sure. That definitely is helpful. Last one is a little update on the pipelines. Two sort of products here. First, is the GCCR currently under review in terms of whether the future might be? And the second one is in terms of FGFR4 in obesity phase 2 data when that may be available? Thanks.

So, GCCR, glucocorticoid, the data we just got, we think we have activity there and what we need to figure out is what is the real value of what we have both in diabetes and in Cushing's? And so right now we're in the process of meeting with a variety of experts to decide whether we're going to continue to develop the drug, whether were going to develop the LICA formulation of the drug, or whether we think we have other targets that we like better. And so all of those things are in consideration right now.

What about the data for the obesity phase 2? Would that be next year?

It's a little early to tell. That is a very specialized study and a very specialized center, and so I think you need to give us a couple of three months here to see how that study appears to progress before we put too tight a timeline on it. It's a very sophisticated study in which we're actually looking at the effects on basal metabolic rate, energy utilization and so on. Very considerable detail. So, I think it's a little hard to predict exactly when that is going to finish right now.

Your next question is the from the line of Robyn Karnauskas from Deutsche Bank.

This is [Ali] on for Robin. Thanks for taking our questions and congrats on all the progress. So, in terms of your future plans with the metabolic franchise and the new technology, can you just speak a little bit towards that?

Yes. I think again it will depend on where the target is expressed, what the nature of the target is, and what we think the patient need will be. And so there are metabolic diseases that appear to be to some significant extent fat cell-driven. There are others that are driven, such as NASH, by liver cell function. Still others are driven more by muscle function and possibly there are others that are driven by targets in the kidney. And so how we use our technology in metabolic diseases will be dictated by the nature of the target and where the target is expressed, in some cases the target is expressed in multiple organs of course. In general, our drive is to reduce doses. Reducing doses increases tolerability, improves safety, gives us a bigger range of options and so if we need to get greater reduction for a particular target than another we have that flexibility. Reduces cost of therapy and just provides the opportunity to move to monthly to even quarterly dosing at some point. So all of those things are wrapped up in this consideration as we continue to incorporate the advances we have made in the technology into specific targets of specific diseases and specific therapeutic areas. Did I come close to answering your question there?

Yes, that's helpful and just a quick followup. Just if you could talk about how you think about specific liver targets, such as NASH, do you have any updated thoughts there that relates to the new technology?

We are moving our first specific NASH drug, well it's focused on NASH but it also has the potential to have benefit in diabetes and metabolic syndrome and other areas, triglyceride management. And as a general rule most of those targets have been primarily of interest in the kidney and so you will see 2+ LICA drugs as our primary focus and may at some point may see 2.5 LICA. With regard to specific types of targets that we might select, DGAT2 as a good example. It is a very specific enzyme in glucose metabolism that we think is much more interesting target than let's say DGAT1, and so we will take advantage of the specificity of antisense to very selectively target targets that are in various pathways that we think we will be able to inhibit without some of the side effects and some of the other problems that occur with some of the agents that are currently in development that target transcription factors and the like which I think have the potential to have a good number of side effects because of the pleiotropic effects that they have.

Ladies and gentlemen, this will conclude our answer and question session. I would like to turn the conference back over to Dr. Crooke for any closing remarks.

Thank you very much, everyone, for your continued interest and we look forward to updating you as we progress. I think the second half of the year for us looks to be like another very exciting time. Thanks very much.

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