Stan Crooke - Chairman and Chief Executive Officer Lynne Parshall - Chief Operating Officer Beth Hougen - Chief Financial Officer Sarah Boyce - Chief Business Officer Paula Soteropoulos - Chief Executive Officer, Akcea Wade Walke - Vice President, Corporate Communications and Investor Relations

Jim Birchenough - Wells Fargo Chad Messer - Needham & Company Eric Schmidt - Cowen & Company Kerry Tang - Goldman Sachs David Lebowitz - Morgan Stanley Paul Matteis - Leerink Partners Jessica Fye - JPMorgan Yale Jen - Laidlaw & Company Stephen Willey - Stifel Debjit Chattopadhyay - Janney Doug Adams - Tocqueville Asset Management

Welcome to Ionis Pharmaceuticals’ Year End Financial Results Conference Call. [Operator Instructions] Please note that this event is being recorded. Leading the call today from Ionis is Dr. Stan Crooke, Ionis Chairman and CEO. Dr. Crooke, please begin.

Thank you and good morning everyone. Thanks for joining us on today’s conference call to discuss our 2016 year end financial results and business highlights. 2016 was a year of substantial accomplishments for us. We ended 2016 stronger than ever before and that sets us up for an exciting 2017. On the call today, Lynne will review our accomplishments and Beth will discuss our financials. To start, I will just summarize some of the key accomplishments for 2016. Of course, the most important highlight was that SPINRAZA was approved in record time with a broad label and the launch is off to a very good start. The first volanesorsen Phase 3 study COMPASS was completed and treatment with volanesorsen reduced triglycerides by 71% and then the FCS patients in the study reduced triglycerides by more than 1,500 milligrams per deciliter. We plan to report data from the Phase 3 FCS study APPROACH in March. Akcea has made excellent progress in getting ready to launch volanesorsen. We and Akcea formed a collaboration with Novartis to develop and cocommercialize AKCEA-APO(a)-LRx and AKCEA-APOCIII-LRx. IONIS-TTRRx is on schedule for Phase 3 data in the second quarter and we took important steps to understand and resolve the serious platelet events that were observed in two of our Phase 3 studies. We reported significant progress in understanding the unique characteristics of the patients with severely elevated triglycerides and the patients in the TTR amyloidosis study that contributed to these serious platelet events. Both volanesorsen and IONIS-TTRRx studies are continuing on track and we published edits showing that these serious platelet events were not a class effect of our 2-prime methoxyethyl and antisense drugs. Finally, we achieved pro forma operating profit for the year. As we begin 2017, we believe we have all the elements in place for long-term financial growth. We have SPINRAZA, a drug with incredible potentials, now launched. We have two more drugs finishing Phase 3 that could be on the market next year. We are advancing a broad and diverse pipeline of first-in-class and best-in-class drugs. We have a highly efficient platform and business strategy, which will allow us to advance our large pipeline of drugs without significantly increasing our R&D expenses. Joining me on today’s call are Lynne Parshall, Chief Operating Officer; Beth Hougen, Chief Financial Officer; Sarah Boyce, Chief Business Officer; Paula Soteropoulos, Chief Executive Officer at Akcea; and Wade Walke, Vice President of Corporate Communications and Investor Relations. Now Wade, will you read our forward-looking language statement?

Yes. Thanks, Stan. A reminder to everyone that this conference call includes forward-looking statements regarding the financial outlook for Ionis, Ionis’ business and business of Akcea Therapeutics and the therapeutic and commercial potential of Ionis’ technologies and products in development. These statements describing Ionis’ goals, expectations, financial or other projections, intentions or beliefs, including the commercial potential of SPIRANZA, IONIS-TTRRx and volanesorsen, 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. Ionis’ 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 Ionis’ forward-looking statements reflect the good faith judgment of its management, these statements are based only on facts and factors currently known by Ionis. As a result, you are cautioned not to rely on these forward-looking statements. These and other risks concerning Ionis’ programs are described in additional detail in Ionis’ annual report on Form 10-K for the year ended December 31, 2015 and it’s most recently quarterly report on Form 10-Q, which are on file with the SEC. Copies of these and other documents are available from the company. Now, I would like to turn the call over to Lynne.

Thank you, Wade and good morning. The approval of SPINRAZA for patients with SMA is a tremendously exciting achievement for us. We have begun to generate revenue from SPINRAZA sales and are looking forward to those revenues growing substantially as the U.S. launch proceeds and as our partner, Biogen, gains approvals in other regions. That the FDA approved SPINRAZA in record time, in only 3 months with the broadest possible label, is a testament to the efficacy, safety and tolerability that SPINRAZA demonstrated in multiple clinical studies in multiple patient populations. With SPINRAZA now approved for the first time, patients with SMA and their families have a treatment option and hope of a longer and better life. We know there is broad awareness of SPINRAZA within the SMA community, including families and physicians and Biogen is actively working with these groups to expedite treatment. The launch of SPINRAZA is proceeding well. The initial demand for the drug, as you would expect, is significant. SPINRAZA is truly a breakthrough drug with tremendous potential. We are pleased with the urgency with which Biogen is undertaking this launch. For example, we received FDA approval just before the holidays on December 23. And by December 26, there were already teams in the field working with physicians to ensure the patients had access to SPINRAZA as rapidly as possible. Biogen is also working to make patient access to treatment as smooth and streamlined as possible and they are making excellent progress. In addition, they are working diligently with payers as reimbursement policy decisions are made. Further, expanded access programs are established in multiple regions and an expedited regulatory review is underway in the EU. Biogen has also submitted applications for marketing authorization in Japan, Canada and Australia and is planning to file additional applications in other countries this year. The clinical program for SPINRAZA produced a robust set of data demonstrating consistent benefits from treatment in patients with all forms of SMA. Biogen recently reported new data from the Phase 3 ENDEAR study at the British Paediatric Neurology Association Conference. In an end-of-study analysis of SPINRAZA treated infants achieved significantly greater event-free survival and improvements in motor milestones scores compared to untreated infants. In the CHERISH study, treated patients with later onset SMA also demonstrated improved motor function scores compared to untreated patients. Late last year, Biogen also presented data at the World Muscle Society from the NURTURE study in presymptomatic infants with SMA. In this study, infants who began treatment before 6 weeks of age were all still alive without the need for permanent ventilation and achieved motor milestones on essentially the same timeline as their healthy counterparts. We are encouraged that we have seen no evidence of any effect to plateau in any of the studies conducted to-date. We and Biogen plan to present additional data from ENDEAR and CHERISH at the AAN meeting in April. Over the last year, we reported positive clinical data from half a dozen drugs, evaluated nearly a dozen clinical studies, including numerous Phase 2 and Phase 3 studies. These include data from the ENDEAR, CHERISH and NURTURE studies of SPINRAZA, the Phase 3 COMPASS study of volanesorsen, the Phase 2 study of IONIS-FXIRx and patients with end-stage renal disease, or ESRD, and the Phase 2 study of IONIS-GCGRRx in patients with Type 2 diabetes. We added 5 new drugs to our development pipeline, including our first drug using both Generation 2.5 chemistry and our LICA technology, which we are developing with AstraZeneca and our first oral locally acting drug for GI autoimmune diseases, which we are developing with Janssen. And 2017 is off to a great start. In the first week of January, we and Akcea formed a collaboration with Novartis to develop and co-commercialize AKCEA-APO(a)-LRx and AKCEA-APOCIII-LRx for patients at risk of cardiovascular disease because of high levels of LP(a) or triglycerides. Novartis is a leader in developing and commercializing cardiovascular therapies and we feel they are an excellent partner to ensure these innovative drugs reach their commercial potential. This collaboration should accelerate the development path for both drugs by allowing us to advance into large Phase 3 cardiovascular outcome studies more rapidly than we would have otherwise thus enabling the potential use of these drugs in broad patient populations. Akcea plans to co-commercialize each drug using the focused sales force they are building to commercialize volanesorsen. The economics of this transaction are attractive, potentially worth up to over $1.6 billion, plus royalties, up to the low 20% range. This includes $225 million in near-term payments, $100 million of which we have already received and $75 million we expect to receive this quarter. Earlier this month, we announced that our partner, Bayer, increased its next payment to us from $55 million to $75 million to advance both IONIS-FXIRx and the LICA drug IONIS-FXI-LRx. Bayer’s decision is based on positive data from our Phase 2 study of IONIS-FXI-LRx in patients with ESRD and the strong data from drugs in our LICA program, showing significantly enhanced potency, which supports the potential to dose monthly or even less frequently. To move this program forward as quickly as possible, we plan to conduct a Phase 2b study evaluating IONIS Factor XIRx in patients with ESRD to optimize the Phase 3 program. We will also be developing IONIS Factor XI-LRx through Phase 1. After these studies, Bayer will be responsible for global development and commercialization of both drugs. We are pleased that Bayer has decided to advance and expand the Factor XI program, as it addresses a very large therapeutic need for which we believe both of these drugs can provide benefit. With these two drugs, we believe we can continue to pursue indications in patients with ESRD while opening up opportunities to address broader patient populations. We believe both the new Novartis collaboration and the expansion of our Bayer partnership demonstrates potential for antisense drugs to be used in large patient populations in multiple therapeutic areas. Turning to volanesorsen, in March, we and Akcea plan to report data from our Phase 3 APPROACH study in patients with familial chylomicronemia syndrome or FCS. First, I would like to tell you a little more about FCS and the significant burden it represents in these patients’ lives. FCS is an inherited orphan disease characterized by extremely elevated triglyceride levels resulting in recurrent, often severe episodes of abdominal pain which can result in hospitalization. Patients with FCS live with the risk of life-threatening pancreatitis and many suffer from diabetes, liver dysfunction and memory and cognitive impairment. To avoid severe symptoms, including attacks of pancreatitis, patients must maintain a drastically reduced diet, limited to approximately 10 grams to 20 grams of fat per day, which is equivalent to less than 1.5 tablespoons of olive oil. Even with this restricted diet, triglyceride levels remain extremely elevated. Any excursion from this extreme diet can result in severe symptoms, leading patients to live with constant fear. Patients feel socially isolated and depressed as a result of their restricted diet and the daily challenges of their disease. In addition, frequent pain and hospitalization has led to repeated absences from work and often the inability to hold a full-time job adding to their sense of isolation and the burden imposed by their disease. Turning to our clinical program, in December, we reported positive Phase 3 data from the COMPASS study, demonstrating a 71% reduction in triglycerides at week 13, which was sustained through to the end of the 26-week treatment period. Importantly, in these volanesorsen treated patients with FCS from the study achieved a mean absolute reduction in triglycerides with more than 1,500 milligrams per deciliter. These data were consistent with earlier Phase 2 data in FCS patients and give us confidence as we look forward to reporting data from APPROACH. We and the Akcea team are well along in preparing to file for marketing authorization for the treatment of FCS this year in the U.S., EU and Canada. Importantly, the FDA and EMA have both granted orphan drug designation to volanesorsen for the treatment of FCS. The Akcea team has also made substantial progress in their preparations to launch volanesorsen in 2018. In the second quarter, we are planning to report data from our Phase 3 NEURO-TTR study of IONIS-TTRRx and patients with familial amyloid polyneuropathy or FAP. In this study, we are using cardiac imaging to evaluate a large subset of patients who also have cardiac involvement. As a result, we will have an opportunity to evaluate the effects of IONIS-TTRRx on the progression of these patients’ neuropathy and their cardiomyopathy. We and our partner GSK, are also well along in preparing to file before year end for marketing authorization for IONIS-TTRRx. The FDA and the EMA have both granted orphan drug designation to IONIS-TTRRx and the FDA has granted a fast-track status. The growth in SPINRAZA sales, the important Phase 3 readouts from the first half of the year and the planned regulatory filings on the second half of the year represent key catalysts for 2017. In addition, our large and diverse pipeline should provide continuous news flow throughout the year. And now, I would like to turn the call over to Beth.

Thank you, Lynne. Good morning. 2016 and now 2017, are pivotal years as we move towards sustainable profitability. As a result of our achievements in 2016, particularly the approval of SPINRAZA, we significantly improved upon our revenue, pro forma operating loss and cash guidance. We ended the year in the strongest financial position in the company’s history with pro forma operating profit of $26 million and more than $665 million in cash. Our 2016 pro forma operating profit was driven by $347 million of revenue from our partnered programs and drugs. These results are substantially improved over our financial guidance of a pro forma operating loss in the low-$60 million range, revenue in excess of $240 million and year end cash of more than $600 million. Our annual results were strengthened by our fourth quarter pro forma operating income of $56 million. We also recorded pro forma net income of more than $40 million in the fourth quarter, supporting a pro forma net loss of $14 million for the year. The substantial increase in our revenues reflects the pipeline advances we made throughout the year. We finished 2016 with $347 million of revenue, a 45% increase over our guidance and more than a 20% increase over 2015. Our 2016 revenue was comprised of $272 million from license fees and partner payments, $61 million from the amortization of upfront payments and $14 million from the manufacturing services we performed for our partners. $170 million of the licensee fees and partner payments were related to SPINRAZA. In addition, we earned more than $90 million from five of our partners associated with progress on nine different drugs. So we can consistently generate revenue and cash from multiple partners and numerous drugs as a reflection of the success of our partnering strategy. This strategy supports our ability to remain financially strong while expanding and advancing our pipeline and continuing to advance our technology. Our pro forma operating expenses for 2016 were $321 million and as anticipated, increased slightly compared to 2015. The increase was due in large part to the numerous Phase 3 studies we were conducting. In addition, Akcea continued to build its commercial organization and infrastructure to prepare to launch volanesorsen. In 2016, we received more than $190 million of cash from our partners and ended the year with $665 million in cash, $65 million more than our original guidance. Our year end cash does not include more than $100 million that we earned at the end of 2016 and received this year. Additionally, already this year, we have generated more than $250 million of cash, primarily from Novartis and Bayer. Now that SPINRAZA has been approved in the U.S., I think this is a good time to spend a few minutes describing our financials and how they will change. As a reminder, our revenue today is consisted of several components, including amortization of upfront fees we received from our partners, license fees and milestone payments as our partner programs advance and sale of drug to our partners. We refer to these types of revenue from our partnerships as R&D revenue. And the nature of our partnerships ensures that we have a steady stream of R&D revenue. Importantly, over the past 5 years, we have consistently increased our R&D revenue, which has driven substantial improvements in our operating results over the same period. From 2011 to 2016, we increased our R&D revenue by more than 250%. While in any year, the specific sources of our R&D revenue change, the consistent growth we have achieved over the last 5 years demonstrates the sustainability of this component from our operating model. The efficiency of our technology, coupled with our partnering strategy, in which our partners contribute not only funding, but also conduct important work to advance our drugs, ensures that we can advance our large pipeline with a relatively modest cost structure. We are pleased to add commercial revenue from SPINRAZA royalties to our substantial base of R&D revenue. We earned tiered royalties on SPINRAZA sales. This means that as SPINRAZA sales grow, so will our portion of those sales. The revenue we earned from these royalties is nearly all profit to us. We expect that our operating expenses will be essentially flat compared to 2016. We plan to continue to increase our commercial expenses as Akcea prepares to launch volanesorsen globally in 2018. However, we expect our R&D expenses to be lower in 2017 compared to 2016 as we conclude costly Phase 3 programs. Because of the efficiency of our technology, even with declining R&D expenses this year, we will continue to advance our earlier stage drugs and add new drugs to our pipeline. This is an important year for us. With the addition of commercial revenue from SPINRAZA royalties to our strong base of R&D revenue, which funds most of our operating expenses, we expect to be breakeven or profitable at the operating line this year on a pro forma basis. As the year goes on and we have more visibility on SPINRAZA sales, we would plan to provide more specific guidance. We anticipate the earliest we will provide more granularity on our financial guidance is on our second quarter earnings call. All of this translates to being cash flow positive in 2017. So far this year, we have generated more than $250 million and we are projecting to end 2017 with more than $825 million in cash. Beyond 2017, we look forward to continued growth and commercial revenue from SPINRAZA royalties and the addition of volanesorsen product sales and IONIS-TTRRx royalties. We believe that we have the key elements in place to achieve sustained, long-term financial growth. We have multiple drivers of revenue, we have an efficient technology, and we have a partnering strategy that maximizes the near and long-term potential of our drugs and supports prudent management of our expenses. We believe this combination will support our continued financial strength. And now I will turn the call back over to Stan.

Thanks, Beth. We have said this many times in recent weeks and on today’s call, but it’s worth repeating. All of us feel privileged to be associated with SPINRAZA. It exemplifies what’s best about science, innovation and medicine. SPINRAZA brings benefit where there has been no hope before. SPINRAZA also illustrates the potential of our antisense technology to address other serious debilitating neurological diseases. Within our collaboration with Biogen, we have 8 programs advancing in late-stage research and in development. The growth of the collaboration highlights the success, productivity and breadth of the opportunity that we are pursuing with Biogen. It also highlights the efficiency of our technology. We are confident that SPINRAZA is just the first success that will result from this collaboration. Entering 2017, we continued to advance our broad and mature pipeline while enhancing the quality of the drugs in the pipeline. With Generation 2 plus drugs – 10 of those, 6 Generation 2.5 drugs and now our first generation 2.5 LICA drug. Each of these advances results in increased potency and safety margins while improving convenience and tolerability. Now, let’s discuss our goals for 2017. They are ambitious, but we are confident in our ability to execute on it. We plan to be breakeven or profitable on a pro forma basis at the operating line. We look forward to regulatory approval for SPINRAZA in Europe and to additional regulatory filings and approvals in other countries to bring SPINRAZA to patients around the world as rapidly as possible. We plan to report data from our Phase 3 programs on volanesorsen and IONIS-TTRRx and we expect to add 3 to 5 new drugs to the pipeline, report data from multiple clinical programs and continued to advance our technology platform. We now have the key elements in place to achieve sustained, long-term financial growth. We have both the drivers of revenue, a mature, broad advancing clinical pipeline and an innovating, more efficient drug discovery platform that enables us to continue developing new drugs that have potential for significant commercial success in both rare and more prevalent diseases. And because of the efficiency of our technology and partnering successes, we can do all this while prudently managing our expenses. All of these elements bring us closer to our goal of becoming a profitable, multi-product organization delivering medicines to patients with serious diseases. With that, I will now open up the call for Q&A. Andrea, if you can set us up, please.

[Operator Instructions] Our first question comes from Jim Birchenough of Wells Fargo. Please go ahead.

Hi, guys. Thanks for taking the questions and great to see the leverage from the business model emerging. Just a few questions. On the programs for the volanesorsen and TTRRx, could you maybe comment on the open-label extension program for those two trials? And what you are seeing and how that might translate into persistence on therapy in the real world? And then I have got a follow-up.

Well, in both studies, the significant majority of patients, have rolled over into the open-label studies and are continuing.

And then just, Stan, a question on the pipeline beyond those two drugs, can you give us an outline of how you expect the Factor XI program to rollout? What should be the next event we watch for in that collaboration with Bayer?

We will initiate the key next Phase 2 study in patients with end-stage renal disease and that should enroll rapidly we hope and results should be available in a reasonable time. And at the same time, we are already progressing very nicely on the identification of a LICA form of Factor XI. And so in due course – it’s a little difficult to predict exactly when you will see us announce the beginning of Phase 1 studies on the LICA form of Factor XI.

And then just a final question on SPINRAZA as we have seen some of the reimbursement decisions come out, it seems like publication of the Type 2/3 data from CHERISH is important. Should we expect that shortly and how might that impact reimbursement?

Well, there will be presentations at the AAN and we will update all of that. And we are actually very pleased with the pace at which reimbursement is taking place and are getting great reports about how all that’s going and I will let Sarah amplify on that.

Yes. I think, Jim, perhaps speaking to the importance of the CHERISH data where we have seen some of those payer policy decisions that had essentially been a door left open with regard to expanding that policy and coverage on having seen the CHERISH data. And we know that the Biogen team is working extremely hard right now with the payers, with the physicians and with the patients to make sure the people who need access can get it and that’s something that they are executing and doing right now.

And they will be reporting data at AAN.

AAN, yes.

So I think that’s the next key step in the payer process.

Yes, absolutely.

Okay, thanks for taking the questions.

Thank you.

Our next question comes from Chad Messer of Needham & Company. Please go ahead.

Great. Thanks for taking my question. For volanesorsen, can you comment on the sort of size and makeup of the commercial team sort of where you are today and where you think that has to go throughout the year to support a launch in 2018?

Well, we have made really strong progress there. We are really happy with where Akcea is and I will let Paula give you more specifics about what she is thinking.

Sure, Stan. Thanks, Chad for the question. So as you know we have talked about this that we plan to commercialize volanesorsen ourselves globally with a very specialized and comprehensive patient-centric approach. So, this orphan commercial model will include the small, highly focused sales force in each country complemented by medical affairs, patient healthcare provider services like disease education, market access reimbursement, dietary nursing support, and of course, to provide easy platelet monitoring to support for these patients. So, if we think about the three regions that we are initially filing and launching in, which is U.S., Canada and Europe, we are looking at an integrated team with all of these – it’s about 75 to 100 people combined in those three regions. So again, just – they are not just field sales, but the full complementary integrated team.

Great, thanks.

Our next question is from Eric Schmidt of Cowen & Company. Please go ahead.

Thanks for taking my questions and my congrats also on the progress. Maybe just a follow-up to Jim’s question on SPINRAZA reimbursement, it sounds like that’s in good stead. So if that’s the case, what would you say is rate limiting to getting more patients on the drug?

And constantly obviously Biogen, as we know is working very hard on the launch. What Biogen has talked about is kind of the logistical challenges with regards to having patients treated with SPINRAZA and that’s very much on a center-by-center basis. And what they are doing is working through directly with those centers to solve those, some of them obviously those – a demand – very high patient demand. And then we also have a very motivated physician population as well. So, it’s a matter of working through case-by-case, be it in times of availability of the suite to be able to get the procedure or even just the simple factor as processing and scheduling patients coming in and out of the office. So, it sounds like logistical challenges that they are really working through and solving right now.

Okay, thanks for the color. Maybe one for Paula, if you are fortunate enough to get positive data on volanesorsen and FCS here shortly, what would be rate-limiting to the filing? Is there anything else that needs to happen on this drug, stability, manufacturing anything like that could slow down an NDA?

Eric, nothing, nothing that would be slowing down, really is getting more time to fully analyze the data and put the package together – put the packages, I should say, because we are looking to simultaneously as closely as possible file U.S., Europe and Canada at the same time. All of that has their processes, there is pre-NDA meetings, there is rapporteur meetings, all of those in sequence just need to happen, but nothing else like manufacturing or anything like that everything else will be ready to go.

Great, thanks a lot.

Our next question is from Salveen Richter of Goldman Sachs. Please go ahead.

Hi, congrats on all the progress and thanks for taking my questions. This is actually Kerry on the line for Salveen. I have a couple. First of all, can you provide us with an update on how the SPINRAZA launch is going in terms of how many SMA centers have prescribed the drug and also what kind of mix of patients are you getting? And then just on the volanesorsen program, when you do commercialize this drug, which specialists and how many do you plan to target and what proportion of the FCS population is treated by these doctors? And then I just have one follow-up question on the platelet monitoring that you mentioned. After this drug launches, how frequently do you anticipate this to occur? Thank you.

So why don’t I start perhaps on answering your SPINRAZA question and then over to Paula in relation to volanesorsen. So, Biogen right now is working on the – on executing the launch. I think really on a day-to-day basis, some of those numbers about the centers who are prescribing and the breakdown of the patients that varies on a day-to-day basis and it’s really something best addressed by Biogen. I would hate to mistaken. They are the teams, that is doing a tremendous job on the launch right now. So, it’s best addressed by them. And on volanesorsen…

With regard to monitoring platelets, we don’t want to pre-guess what that’s going to be before our conversations with regulatory agencies. So, we think what’s really important is that these patients should be seen regularly and we are making a lot of progress in making sure that platelet monitoring will not be significantly intrusive. Paula, maybe you can answer the other question about volanesorsen?

Sure, sure. And so the specialists that focused on this type of disease are lipidologists, and many of those can be specialized endocrinologists and also pancreatologists. In each region, it is slightly different. In Europe, for example, the lipid centers are really, truly a hub of the patients in general. And of course, it varies by country. We do generally get referred to those lipid specialists. There is about 75 lipid treatment hubs across Europe. Again, each country is slightly different in the way they practice and who lipidologists are. Again, they could be specialized endocrinologists, etcetera. In the United States, again the target call point is lipidology, specialized endocrinologists and pancreatologists, who do get consulted when a patient is in the emergency room or ICU undergoing pancreatitis. And there is – in terms of lipid treatment centers, there is about 45 in the United States. And as we think about the best treatment hub, but as we think about these specialists in the United States, which is probably a couple 100 lipid specialists and another 300 to 400 endocrinology specialists that we will be targeting. And then you commented on the percent of patients that are seen by these physicians. As a typical rare disease that doesn’t have any treatment option available, many times these patients and again, typical – these types of rare diseases don’t ever get a formal diagnosis. So they will be seen in the emergency room with pancreatitis. Their triglycerides are always checked. And then the other causes are ruled out like alcoholism or gall bladder disease and many times with patients which have [indiscernible] genetic driver of genetic cause to your pancreatitis, but not given the name. And a lot of the work that we are doing is education and highlighting how easy it is to diagnose these patients and the need to actually have them referred to a treating specialist. So, this is why the pre-commercialization work that we are doing in education then frankly with the drug on the horizon that will drive more physicians to formally diagnose patients which patients really do need a formal diagnosis. It validates a lot of the things that they go through everyday with living with this disease. Does that answer your question?

Yes, that was very helpful. Thanks.

Next please.

Our next question comes from David Lebowitz of Morgan Stanley. Please go ahead.

Thank you very much for taking my question. I had a quick question on the upcoming Phase 3 APPROACH data. If you could just give us a quick run through of the key endpoints in the trial and what needs to be achieved and ultimately what you plan to disclose in the top line release? And just additionally on that, what type of granularity do you expect to give us on the AE profile and management of thrombocytopenia?

Well, the primary endpoint is triglycerides. And within triglycerides, we will be looking at percent reduction, absolute reduction and then we will be looking at the traction of patients that get below specific levels of triglycerides, where that they are associated with significant reductions in pancreatitis risk. We have a number of other exploratory endpoints that we will be looking at and we will be talking about those later. And we will provide sufficient granularity that I think you will be able to make a judgment about the safety and tolerability of the drug with regard to safety.

Thanks for taking my question.

You bet.

Our next question comes from Paul Matteis of Leerink Partners. Please go ahead.

Great, thanks. Paul Matteis from Leerink Partners. A couple of quick questions if you don’t mind. One, I am curious if you are expecting an advisory committee for volanesorsen and FCS? And then two, I would love to just talk a little bit about the HTT program, can you expound upon the strategy there, the type of HTT knockdown you are going for or I guess the magnitude? And then specifically, how confident are you that the oligo itself can get distributed broadly enough in the brain to confer a clinical benefit since it’s a different disease than an SMA? Thanks a lot.

So let’s see, volanesorsen that was the first question. I think it’s too early to comment on whether there will be an advisory committee or not. First step is to un-blind the Phase 3 data and have our pre-NDA meeting and then we can begin to talk about that. What was the second question, I am sorry?

HTT program and what magnitude of knockdown we are looking at and are we confident in distribution in the brain?

So HTT is actually very exciting to us and to Roche and we are quite confident that we are getting very significant distribution throughout the brain. That was one of the steps that we took as we did the early evaluation of the technology to determine where we would take the technology. Would we stay simply in the spinal corridor or would we move elsewhere? And we know, in fact, that these drugs distribute quite broadly and to the areas where we need to get them for HTT or we would not develop the drug for HTT and expose patients with HTT to the drug. And we also have shown in the SMA infants in the autopsy study that we get significant distribution through all the brain areas like we see in other animal systems – in other animals as well. And we are looking at reduction of both mutant and normal HTT and we think a fairly moderate reduction in HTT can lead to very substantial benefit and that trial is actually going very well. And we are looking forward to sharing more information with you about HTT later in the year.

Okay. Thanks Stan.

You bet.

Our next question comes from Jessica Fye of JPMorgan. Please go ahead.

Hey there. Thanks for taking my questions. First one is just a TTRRx question, can you help us think about a scenario where you have positive data in the NEURO-TTR study and we know you have patients with cardiomyopathy in there, I guess just how you would think about real-world use in cardiomyopathy patients once the product is available. And then second is a longer-term financial question is if we look at over the coming years and I realize there is probably imperfect feasibility here, but should we think of this year as the first of many years with pro forma operating profitability or is it possible there is sort of like lumpiness in milestones, for example, that could lead us to kind of swing back and forth around that breakeven mark for a period of time? Thank you.

Well, on HTT – I am sorry, on TTR, we will be looking at the benefit we see in the polyneuropathy form of the disease and then we will have a look at the cardiac form of the disease. And I think how the drug will be used in the real-world will be a function of those data principally. And I think we just have to wait until the Phase 3 studies are done before we talk about what the strategy to use that information would be and then how that would affect how the drug might be used. With regard to the financial question, I am going to let Beth handle that.

I just want to say one thing about TTR, sorry, just to amplify a little bit about what Stan said about TTR. In our ongoing study, of course we had a predetermined subset of patients who came in with polyneuropathy, which is the basis for the study, but also with cardiac symptoms. But we did do imaging on all of the patients coming into the study. And what we found is that many more patients actually had early symptoms of cardiac involvement with their disease – early evidence of cardiac involvement even though they didn’t have over symptoms. And so we do think it’s a very, very interesting data about the multi-organ involvement of these patients who really all have different manifestations of the same disease.

Okay, got it.

And this is Beth. Hi Jess. So in looking forward, we think that this year is a pivotal year, as I said. We think we have crossed that threshold and are projecting operating profitability. We also look at to the future with growing SPINRAZA royalties as Biogen achieves approvals in other parts of the world with the potential for adding commercial revenues for volanesorsen and potentially IONIS-TTRRx on top of those growing SPINRAZA royalties. And on all of that commercial revenue sitting on top of a very substantial consistent base of R&D revenue that essentially covers our operating expenses and so we look forward to not only continued growth in operating profits, but given that 2016, we have reported a pro forma net loss of $14 million, we are also looking forward frankly to sustain and growing earnings on a net income basis going forward in the future.

Okay, got it. And will you be giving the SPINRAZA royalty number as kind of we move through the year or get to next year or is there some point when you feel comfortable giving us that number?

In terms of our guidance, we will give more granularity as we get a little bit further into the year. Again, we just can’t get ahead of Biogen with that.

Okay, understood. Thanks.

Our next question comes from Do Kim of BMO Capital Markets. Please go ahead.

Hi, thanks for taking my question. This is actually Alex on for Do. Can you provide a little more detail for the in-focus study for FCS and how many centers are participating in the study, have you been satisfied with the quality of the data received so far and when should we expect to see a presentation of the data?

Paula?

Yes, sure. So the – just to remind folks what in-focus is, it is a real-world study survey of FCS patients on the burden of disease, looking at their physical, psychosocial, emotional burden on their disease, because there really is a limited understanding out in the literature of the disease. So it was important for us to be able to quantify some of the things that we hear from physicians and patients that these patients go through. And so we are – so right now we have about 137 or so patients that have enrolled and completed this study. They are mix between the United States, Europe and a couple of other geographies. We are putting together an initial publication on an interim look and that should be something that will be published within, I would say by the end of March. I can’t remember the exact timing of the target. But just to give you a flavor of what we are seeing is that the data is really giving us quantifiable numbers on how often patients are having pancreatitis for example, how long their hospital stays are, but also some of the daily manifestations that they go through in terms of abdominal pain, chronic fatigue and brain fog. All of these are caused by the microns [ph] which causes very viscous blood. And the other thing we are seeing is a significant amount of patients who are either underemployed or unable to work because of their disability and also a range of patients that are fairly young in age. So those are the types of things that we will be coming through on that data.

The other point to add to that is we also benefit from the natural history study that Dr. Gaudet is completing in Montreal. He has followed more than 80 patients for as long as 30 years. And it was that database that he presented in the summer that was – first identified the platelet variations. And so he, we hope, will be publishing a lot of information from that very substantial – I think it’s the largest, most substantial and most thorough analysis of what life is like for these patients that’s ever been done. And what’s very comforting to us is to compare the information he has that he will be publishing, to the basic conclusions that Paula and her team have drawn from the in-focus study and they are highly, highly complementary and coincident. So we are about to move from a position in which very little was known about the natural history of the disease to, I think a fairly good understanding of the impact of this disease on these patients.

And Stan, if I may have one...

One other point that I think is worth mentioning is that in the last year only really significant patient advocacy groups have been formed and begun to have a voice around this disease, FCS. So I think we are very encouraged by the fact that we have natural history data available to us and the growing awareness around the world in all of the communities that are relevant of the impact of this very serious disease.

Stan, I just wanted to – one point which I would wanted to mention about the in-focus study. These 137-plus patients are – these are not patients in our current volanesorsen study. These are new patients.

Thank you. Next question.

Our next question comes from Yale Jen of Laidlaw & Company. Please go ahead.

Good morning. And thanks for taking the question and add my congrats on the performance as well. Just to go beyond the SPINRAZA, volanesorsen and the TTR, what may be the highlights for other program for remaining of this year in terms of either data releases or developments we should be paying attention to?

Well, it’s – the issue is we have a very large pipeline. And so of course, the things that are in Phase 2 come to mind; Factor XI APO(a)-LRx, APO-CIII-LRx and then a number of rare disease drugs that are forthcoming and then the performance of LICA – we should be adding significantly more information about the performance of the LICA drugs across the board. We have seen consistent behavior there. And we will be adding new drugs that broaden the pipeline as well. And we will provide a good bit more information about that in the coming months.

Okay, thanks. And then maybe a question for Beth, just a little bit breakdown in terms of the $250 million you received so far for this quarter, in terms of roughly how much will be booked at – for the quarter, how much might be just co-amortization or other accounting measurements? Thanks.

Sure. So the $250 million that we have already generated from Novartis and Bayer roughly breaks down as $175 million from Novartis. $80 million of that goes against equity because it was part of the equity purchase they made in our stock. $20 million of that is premium on that equity purchase and that will be amortized into revenue over the period of the work we do under that collaboration. The $75 million upfront payment will also be amortized into revenue over our work. And then the $75 million from Bayer, a portion of that will likely be booked into revenue this quarter as a result of the license that Bayer took to the LICA for Factor XI and the rest will be amortized into revenue over the course of the work that we do for that collaboration.

Okay, thanks. I appreciate it.

Sure.

I know we are running long. We have got a couple more questions. Next question, please.

Our next question is from Stephen Willey of Stifel. Please go ahead.

Yes, thanks for taking the question. I will keep it brief, just one. So just curious, I guess as we think about a TTR release, you talked about the cardiac imaging that’s being conducted in that study, I am just wondering if we should anticipate that a top line release would have any commentary around potential cardiovascular benefits and if so, whether or not that would contain any additional information beyond echoes? Thanks.

Yes. We expect to have top line information about the echoes. I don’t think we will be getting into much more detail than that.

Alright, that’s helpful. Thank you, guys.

Our next question comes from Debjit Chattopadhyay of Janney. Please go ahead.

Hi, thanks for taking my question. Just could you help us understand the mechanism of action around the growth retardation that you have seen with SPINRAZA and how it might impact the uptake in type 2 and type 3 patients? Thanks so much.

I don’t think we have seen any growth retardation. The facts are the infants are alive, which is – would not be the case without it. And the vast majority of infants continue to get stronger and grow and add weight in contrast with before treatment, without treatment they do, which is lose weight and eventually die. So I am not aware of anything other than those data. Thank you. Next, final question.

Our next question comes from Doug Adams of Tocqueville Asset Management. Please go ahead.

I hope you have saved your – saved the best question for last. The – I know on the glucagon receptor agonist results of Phase 2, you had said that the corporate strategy was to partner that asset and I know you can’t talk about any kind of negotiation, but could you just give us a context whether there is a fair amount of interest in terms of inbound interest on that asset or do you think you will reach your strategic goal of partnering that asset successfully?

There is some interest. I would not call it great. I think diabetes is very complex, and we do have a good looking drug. And where we are targeting it is in end stage diabetes. And so that requires an interest in filling that niche. I think we will get glucagon partnered in an appropriate way and I think I will just leave it there.

I do have another question about the two mechanisms that you are increasing protein production through the messenger RNA and could you give us a little color as to your efforts in terms of the disease indications you might be pursuing early in terms of using antisense as a way of actually increasing protein production?

We are actually looking at the opportunity to increase protein production in several of our programs, including an aerosol program or two. And we are seeing encouraging information. And I hope before the end of the year, we will be able to tell you about – more specifics about what diseases we are proceeding toward. But generally, we are – we continue to be very encouraged and very excited about what we are seeing.

Thank you and congratulations on all of your success this past year and the start of 2017.

Thanks Doug. By the best way to end the call, so just to close, our goal has been to revolutionize medicine and save lives as we perfect antisense technology. I think we are doing that with SPINRAZA and we think that’s just the beginning of what we can accomplish. We expect to accomplish this while being breakeven or profitable at the operating line on a pro forma basis and increasing our cash this year. And as Beth said, we think 2017 is a pivotal year in which we move towards sustainable profitability at the operating and the debt line. We look forward to telling you more about our accomplishments throughout the year. Thanks so much.

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