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ISIS Pharmaceuticals, Inc. (NASDAQ:ISIS)

Development Pipeline Update Conference Call

December 15, 2011 12:00 pm ET

Executives

Stanley T. Crooke, M.D., Ph. D. – Chairman of the Board, President & Chief Executive Officer

B. Lynne Parshall, J.D. – Chief Financial Officer, Chief Operating Officer, Secretary & Director

Brett P. Monia, Ph. D. – Senior Vice President Drug Discovery & Corporate Development

Richard S. Geary, Ph. D. – Senior Vice President Development

Sanjay Bhanot – Vice President of Clinical Development & Translational Medicine

Kristina Lemonidis – Director of Corporate Communications

Analyst

Jim Birchenough – BMO Capital Markets

Nicholas Bishop – Cowen & Company

Charles Polsky – William Harris Investors

Welcome to ISIS Pharmaceuticals development update conference call. Leading the call today from ISIS is Dr. Stan Crooke, ISIS Chairman and CEO. Dr. Crooke, please begin.

Stanley T. Crooke, M.D., Ph. D.

Thanks for joining us on today’s conference call to discuss several of our new development candidates. Joining us on today’s call are Lynne Parshall, Chief Operating Officer and CFO, Brett Monia, Senior Vice President Drug Discovery and Corporate Development, Richard Geary, Senior Vice President of Development, Sanjay Bhanot, Vice President of Clinical Development and Translational Medicine, and Kristina Lemonidis, Director of Corporate Communications. Kristina can you read our forward-looking statement please?

Kristina Lemonidis

A reminder to everyone that this webcast includes forward-looking statements regarding ISIS’ business and therapeutic and commercial potential of ISIS’ technology and products in development. Any statement describing ISIS’ goals, expectations, financial, or other projections, intentions or beliefs 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 in use as human therapeutics and in the endeavor of building a business around such drugs.

ISIS’ forward-looking statement also involve assumptions that if never materialized or proved correct could cause its results to differ materially from those expressed or implied by such forward-looking statements. Although ISIS’s forward-looking statements reflect the good faith judgment of its management, these statements are based only on facts and factors currently known by ISIS. As a result, you are cautioned not to rely on these forward-looking statements.

These and other risks concerning ISIS’ programs are described in additional detail in ISIS’ annual report on the Form 10K for the year ending December 31, 2010 and its most recent quarterly report on Form 10Q which are both on file with the SEC. Copies of this and other documents are available from the company. With that, I’ll turn the call over to Lynne.

B. Lynne Parshall, J.D.

Before we discuss the new additions to our pipeline, I want to spend a moment discussing Mipomersen. As you saw in our press release this morning there will be a slight delay before Genzyme submits to the US FDA for KYNAMRO. Genzyme is responsible for all regulatory activities and they encountered a technical glitch. Genzyme is preparing additional technical documentation relating to an analytical assay routinely required in an NDA and is planning to submit the NDA in the first quarter of 2012.

We’re disappointed in the delay of the submission but it’s a slight delay and we don’t believe that this represents any additional risk to the NDA approval. Importantly, this issue is sufficiently routine that neither Genzyme nor Sanofi felt the need to communicate it publically as it does not in any way impact their view of the success of the NDA. We believe that our investors would want additional visibility to this event and so we chose to communicate it to you, but it’s a minor bump in the road.

So, let’s move on to the exciting purposes of today’s call which is to focus on several new drugs on which we’ve just initiated development. 2011 has been a busy and productive year for us and the fourth quarter will be especially important as we report on the performance of a number of our drugs in clinical trials. We’ve reported positive clinical data from a number of our drugs in development. Mostly recently in data on our Factor XI and apoC-III drugs and I hope that you’ll be joining us for our R&D day in a few weeks on January 5th in which we’ll highlight this data and quite a number of other achievements.

Today we’ll focus on the new drugs we recently added to our pipeline. First, Richard will review the first of our two new cardiovascular drugs ISIS-APOARx. Brett will introduce our new anti-thrombotic drug, our Factor VII drug, and our latest drug to enter our severe and rare disease franchise, our Alpha-1 antitrypsin drug. Finally, Sanjay will discuss the newest drug to enter our metabolic disease franchise, ISIS-DGAT2Rx. And of course, at the end of the call we’ll be happy to take questions.

With that, I’d like to turn the call over to Richard.

Richard S. Geary, Ph. D.

Already this year we have reported positive data from multiple drugs in our cardiovascular franchise including positive clinical data from ISIS-APOCIIIRx, our triglyceride lowering drug, ISIS-FXIRx, our anti-thrombotic drug and ISIS-CRPRx, our CRP lowering drug. We look forward to sharing more details on these data with you in January.

It’s been a strategy of ours to create a cardiovascular disease franchise comprised of drugs that comprise all the key components of cardiovascular disease including atherogenic lipids, inflammation and thrombosis and we have done just that. Today, we add another drug targeting apolipoprotein A or LP Level A that could provide profound benefit to patients with cardiovascular disease. LPA is an independent risk factor for cardiovascular disease and has been associated with increased risk of atherosclerosis, coronary heart disease, heart attack and stroke.

Elevated levels of LPA are associated with an increased risk of heart attack. It is a component of LDL or bad cholesterol and when present it promotes premature plaque buildup or atherosclerosis. Normal LPA levels are less than 30 milligrams per deciliter. A recent publication in the European Heart Journal estimates that 20% of the population has LPA levels greater than 50 milligrams per deciliter.

Unfortunately LPA is difficult to lower. A person’s level of LPA is genetically determined, remains relatively constant over a lifetime so lifestyle changes such as diet and exercise may reduce other atherogenic lipids but have little effect on LPA levels. In addition, commonly prescribed lipid lowering drugs such as statins have no effect on LPA. Patients who reduce their LDLC with statins or other lipid lowering therapies but who still have elevated LPA levels remain at very high risk of cardiovascular events.

So today, we’re pleased to report that we are developing the first drug that specifically targets LPA. Our drug ISIS-APOARx is the first drug designed to directly lower LPA and therefore could significantly lower cardiovascular risk in a unique way and initially in a unique patient population. LPA has been an inaccessible target for traditional drug developers because it has been difficult to make a small molecule that will inhibit LPA without also inhibiting similar proteins that are vital for normal homeostasis.

By targeting the LPA messenger RNA, rather than the protein we can selectively inhibit the production of LPA and avoid any unwanted affects on similar proteins and the toxicities associated with such off target affects. We are implementing a staged development plan for ISIS-APOARx similar to what we did for Mipomersen. Our development activities will first focus on high risk patients with extremely high levels of LPA, the patients with greatest cardiovascular risk and with the greatest need.

By focusing first in a small but desperately needy patient population at extremely higher cardiovascular risk, we hope to be able to move our APOA drug toward the market rapidly. And of course, we should be able to get an idea of the activity of our drug early in development in Phase-I by measuring reductions in LPA levels in the blood. In Phase-II we plan to evaluate this drug in patients whose LDLC or bad cholesterol is adequate controlled but who still have high LPA levels.

We’re excited about the potential of a drug like ISIS-APOARx for patients who desperately need to reduce their LPA and their cardiovascular risk. ISIS-APOARx is complimentary to the other drugs in our cardiovascular franchise and we hope that this will provide physicians with another valuable tool to treat cardiovascular disease.

Now, I will turn the call over to Brett.

Brett P. Monia, Ph. D.

The next new drug to enter development ISIS-FVIIRx also comes from our cardiovascular franchise. This is the second generation 2.5 drug to enter our pipeline. We expanded our cardiovascular franchise a few years ago to include thrombosis and our Factor XI drug is the first antithrombotic drug. Just last week we reported the results from our Phase-I study in which we observed dose dependent reductions of up to 90% in Factor XI activity without any evidence of bleeding.

We believe our Factor XI drug could be a powerful antithrombotic agent that does not exhibit the increase in bleeding that is associated with other antithrombotics. We plan to start a Phase-II study on our Factor XI drug next year and as Lynne said we will tell you more about this data and our future plans in January at our R&D Day. But today, we’re introducing our second antithrombotic drug, the drug targeting a different clotting factor called Factor VII. We believe that our Factor VII inhibitor will have a unique therapeutic profile and could be useful in multiple settings such as following surgery, in patients with cancer who have a much higher risk of thromboembolic events and more generally in patients at high risk of thrombosis due to cardiovascular disease.

Thrombosis or blood clot formation is the leading cause of death associated with vascular diseases. It causes heart attacks, it causes deep vein thrombosis and it causes strokes. Blood must be ready to clot at a moment’s notice to protect against bleeding following injury and since unwanted clotting is so dangerous blood clotting is a complicated process that is carefully regulated by the body and this is what has made finding the effective and safe antithrombotic agents so difficult.

Although there are a number of currently available anticoagulants including some that represent recent advances over Warfarin and Heparin, all current anticoagulant therapies result in undesired bleeding. Therefore, a significant need for safer and more effective anticoagulants remains. So how does Factor VII fit in? Well first, it is the well accepted target for all types of clotting disorders because of its known role in the coagulation pathway and because people who have Factor VII deficiencies rarely experience abnormal bleeding.

Factor VII is a key component of the tissue factor coagulation pathway and is necessary for tissue factor to activate the clotting cascade. Second, elevated levels of Factor VII are indicative of poor prognosis in several thrombotic diseases such as pulmonary embolism and heart attacks. Third, elevated levels of Factor VII are also strongly linked to cancer associated thrombosis. We think that ISIS-FVIIRx is quite complimentary to our Factor XI drug for a number of reasons. Because Factor VII has a shorter half life, only seven hours, our Factor VII and [inaudible] drug may be particularly beneficial in more acute settings such as following surgery for example.

In pre-clinical studies we’ve demonstrated robust and rapid reductions in Factor VII activity of greater than 90% in less than three days. There’s growing evidence showing Factor VII is a key determinate of the tendency of plaques to form clots which are linked to an increase in thrombotic events in patients with cardiovascular disease therefore inhibiting Factor VII represents a novel approach to preventing clot formation in patients who have acute coronary syndrome including those patients who are undergoing surgeries to clear blocked arteries.

This data has set the stage for evaluating our Factor VII drug in numerous acute settings where a safe anticoagulant is needed. Furthermore, the role of Factor VII in cancer is particularly unique. Patients with cancer are a high risk of developing venous thrombosis. They’re also more likely to develop complications from anticoagulant treatment. In fact, cancer associated thrombosis is the second leading cause of death in cancer patients.

Tissue factor expressions which is the receptor for Factor VII is the key to cancer associated thrombosis and circulating cancer cells express tissue factor on their surface which does not occur on normal cells. The presence of tissue factor on cancer cells in blood leads to the activation of clotting cascades. Therefore, inhibiting Factor VII should be uniquely effective in preventing thrombosis in patients with cancer.

So we are excited about the potential of our Factor VII drug which could have therapeutic applications in acute cardiovascular settings, in cancer associated thrombosis and in other settings as well. We plan to begin Phase-I studies on our Factor VII drug next year. As we have demonstrated with our Factor XI drug, we will be able to measure FVIIRx activity in Phase-I by measuring Factor VII in the blood and we’ll also gain important experience on the bleeding profile for this drug.

In short, if the drug performs as predicted in Phase-I we expect to achieve solid proof of concept and potential value. So we’re excited about moving forward two unique drugs in our thrombosis program that could provide significant therapeutic benefit in a wide range of thromboembolic diseases.

Now, I would like to move on to our latest drug to enter our severe and rare disease franchise. We have successfully achieved many milestones with our partner GSK. We have completed a Phase-I study for ISIS-TTRRx and we plan to share those very exciting data with you soon. Now, we’ve added a new drug which inhibits Alpha-1 antitrypsin into our development pipeline.

We are focused on severe rare disease because these diseases are devastating and often fatal. A patient’s quality of life is significantly reduced as the disease progresses and often these patients have very limited therapeutic options so new drugs are desperately needed. Furthermore, because many severe rare diseases involve a genetic abnormality they are often passed from parent to child creating a legacy of the disease which has profound effects on the family.

We believe that [antitrypsin] drugs could change the way these disease are treated for the benefit of their patients and families. Drugs for severe rare disease also represent a very attractive addition to our pipeline because there’s an opportunity for more flexible development paths to the market and of course, we already have a great highly experienced partner in this area in GSK. As we began our collaboration with GSK in early 2010, we have been able to rapidly move two drugs into development.

We plan to start a Phase-II/III registration program for our TTR drug next year. Again, we will discuss this data with you in more detail at our R&D Day in January. But now, let’s turn our attention to ISIS-AATRx. This drug has the potential to for the first time offer an effective treatment for patients with a severe liver disease. This disease is called Alpha-1 antitrypsin or AATD. It affects approximately 100,000 people in the US and there’s likely a similar incidence worldwide.

Most of you probably think of AATD as a lung disease that often results in emphysema. What is less well appreciated is the fact that AATD can lead to severe liver disease as well. In emphysema the disease results from a genetic mutation in the Alpha-1 antitrypsin gene causing a deficiency in levels of Alpha-1 antitrypsin or AAT. Normally, this protein which his produced in the liver and circulates in the blood prevents degradation of lung tissue by inhibiting an enzyme that causes damage in the lung.

In Alpha-1 antitrypsin deficiency normal AAT protein is replaced by the mutant AAT which accumulates in the liver and this causes liver dysfunction, causes cirrhosis and can lead to liver cancer. Approximately 10% of infants and 15% of adults with AATD experience liver damage. Liver transplant is the only treatment option for these patients however, availability and expense prevent most patients from getting liver transplants and patients who are able to obtain a liver transplant have to be treated with immunosuppressant drugs to avoid rejection which of course, can lead to other serious health problems.

Obviously, patients with AATD liver disease need a better therapy than liver transplant. We believe that ISIS-AATRx can stop the production of the abnormal AAT protein and prevent the consequent liver damage. AAT is a good target for [inaudible] drugs. It is produced in the liver. AATRx is designed to inhibit the production of AAT protein in the liver. Therefore, our drug is designed to stop the accumulation of abnormal AAT protein in the liver and as a result halt disease progression.

In fact, we have demonstrated exactly that in [animal models] of AATD associated liver disease. We plan to initiate a Phase-I study with AATRx in healthy volunteers next year. Since AAT protein circulates in the blood in addition to assessing safety we should be able to measure AAT levels in the blood to generate early proof of value just as we have done recently with our APOCIII and Factor XI drugs.

In our Phase-II studies we will also be able to measure reductions of AAT protein in blood, this time in patients and we’ll also look at levels of liver performance. In summary, our development path for our AAT drug will provide early proof of value in our Phase-I study. We will then use this information to form a Phase-II/III program to move ISIS-AATRx as rapidly as possible towards the market. We’re looking forward to moving this drug through development with our partners at GSK.

With that, I would like to now turn the call over to Sanjay.

Sanjay Bhanot

The last drug I would like to discuss is the newest addition to our metabolic franchise ISIS-DGAT2Rx. As you may recall, we expanded our metabolic franchise to add a briefly acting anti-obesity drug. This drug which target Fibroblast growth factor receptor 4 or FTR4 will begin dosing in a Phase-I study soon. We have also made significant progress on our Type II diabetes drugs moving three drugs this year and preparing our Phase-II PTP1B study which will begin next year.

ISIS-DGAT2Rx further broadens this franchise. This is a drug that based on its mechanism would have a profound effect in reducing fat in the liver making it an ideal candidate for the treatment of patients with non-alcoholic steatohepatitis or NASH. Because increased liver fat is strongly associated with insulin resistance, if ISIS-DGAT2Rx can reduce liver fat it should also improve insulin sensitivity and thus it may also provide therapeutic benefit for diabetic patients.

Many patients with metabolic disease accumulate fat in their liver which often leads to NASH. If NASH progresses it leads to severe liver dysfunction, cirrhosis and requires a liver transplant. More than 20 million people in the US suffer from NASH and this number will grow as the rate of obesity continues to climb. Current treatments for NASH are primarily lifestyle changes with no effective therapies available to inhibit the progression of fat accumulation in the liver.

There is a significant need for a drug that can halt the progression of NASH. ISIS-DGAT2Rx could offer us the opportunity to be the first drug in a new treatment area NASH. Targeting diacylglycerol acyltransferase-2 or DGAT2 is a great example of the advantage of ISIS’ technology. Small molecules cannot selectively inhibit DGAT2 in the liver. Inhibition of DGAT2 in tissues beyond the liver such as the pancreas and skin can be toxic.

By taking advantage of the tissue’s specificity of [inaudible] drugs which distribute preferentially to the liver we can selectively inhibit DGAT2 in the liver but not in the other tissues thereby avoiding potential toxicities associated with DGAT inhibition in these other tissues. In animal studies inhibition of DGAT2 reduced fat in the liver, lower plasma triglycerides and cholesterol and improved insulin sensitivity. These beneficial effects occur because DGAT2 is the key enzyme required to make triglycerides and triglycerides when they accumulate lead to fatty liver and control metabolic events in many ways.

When you inhibit DGAT2, you reduce triglycerides synthesis in the liver, increase fat oxidation, both of which leads to a reduction of fat in the liver. Interestingly, perhaps the most recent observation that is important to our DGAT2 program comes now from DGAT2 studies but from Mipomersen. In our long term open label extension study, we evaluated liver fat in patients. From this study we know that we can easily measure liver fat using MRI techniques.

This provides us with the confidence that we will be able to design our Phase-II studies to provide us with clear Phase-II proof of value data. So in summary, we’re really excited about DGAT2 moving aggressively into development with a very clear path to generate Phase-II proof of concept data. With that, I’ll turn the call over to Stan.

Stanley T. Crooke, M.D., Ph. D.

As you can see, we made quite a bit of progress in our research programs this year and this progress is reflected in the four drugs that we’ve added to our already broad pipeline. We believe these drugs can bring substantial benefit to patients that have significant unmet medical needs. Each of the targets we discussed today is largely inaccessible to other more traditional approaches. This is of course, the advantage that our technology offers.

We look forward to advancing these drugs in clinical development over the next year and of course, we look forward to sharing data from some of the other drugs in our pipeline with you in a few weeks at our R&D Day in New York. With that, I’m going to open up the gall for questions.

Question-and-Answer Session

Operator

(Operator Instructions) Your first question comes from Jim Birchenough – BMO Capital Markets.

Jim Birchenough – BMO Capital Markets

Just a question on the LP Level A program, what do you think the regulatory requirements would be for approval of an antisense targeting LP level A? And, is there some I guess change that FDA would want to see the definitive study of taking a group of patients optimized for LDL management but with high LP Level A, treating them with the antisense and then looking at cardiovascular outcomes? Can you maybe discuss the regulatory path there?

Sanjay Bhanot

Yes, we believe that we should be able to proceed as we have with Mipomersen because there are clearly defined patients who have primarily and LP Level A disease. And there is a great deal of literature that supports that those people have highly exaggerated cardiovascular risk. So our plan is to focus our early development on patients who have genetically determined extremely high levels of LP Level A just as we have focused the early development of Mipomersen on patients with FH.

The second part of the question is no, I don’t think that the FDA will require that. Remember, first of all that statins have essentially no effect or may even make LP Level A worse. So there is really no drug other than Niacin that’s used today and Mipomersen that actually lower LP Level A. So I think we have a clear development path to an indication that should not require an outcome study. Then eventually as we move towards larger and larger groups of patients, of course, we’ll have to do like we have with Mipomersen and do more extensive safety databases and so on. But we were very clear that we have a Mipomersen style development process.

Jim Birchenough – BMO Capital Markets

Maybe just as second question on the Alpha-1 antitrypsin program, how well do you understand the natural history of that disease in terms of fibrosis of the liver? What’s the optimal point to intervene? And again, what do you think the regulatory end point is there?

Brett P. Monia, Ph. D.

That’s an important question and it’s a topic that we are working through right now with our partners at GSK with the Alpha-1 Antitrypsin Foundation and also with the regulatory authorities as we speak. At the current time studies are in progress evaluating the natural history of Alpha-1 antitrypsin live disease using non-invasive techniques to actually monitor liver function in patients. Those studies are expected to make a great deal of progress and be completed by the time we enter patients.

We think that we’ll be able to identify patients, particularly a high risk based on biomarkers that are being developed to identify those patients, and to be able to use non-invasive techniques and possibly coupled with pre/post biopsies to actually demonstrate that we’re blocking fibrosis progression in these patients and thereby reducing their risk that they’ll progress to cirrhosis. So this is an evolving topic right now but discussions are well underway with both regulatory folks, GSK, as well as also with the Alpha-1 Foundation. But, we’re excited, we think we’ll be able to do relatively short term studies to demonstrate proof of concept in patients using these techniques.

Stanley T. Crooke, M.D., Ph. D.

I’d be interested in seeing how you feel about this in some census the process of Alpha-I Antitrypsin produced liver disease is very similar to the TTR liver disease process in which you’re making a protein that is mutated and therefore misfolds and ends up precipitating in the liver and causing liver damage. At least my sense, and I hear your comments Brett, my sense is we’re going to learn a lot from the TTR program as well and with the TTR program we believe we’re going to be able to measure directly liver function and we think because we’ll be inhibiting the production of both the mutant and the normal protein that we may be able to reverse the disease.

Brett P. Monia, Ph. D.

Yes, absolutely Stan. And in fact, one big advantage we have for the Alpha-1 program is that there are excellent [Animal Models] available that really replicate the pathology of the disease in humans. It’s based on the transgenic mouse that over express the human mutant gene exactly the same gene that causes this disease in humans in mice and produces a very similar pathology. We have shown exactly that we can not only improve liver function in these animals by lowering Alpha-1 levels in these animals but we reduced the amount of inclusions and reverse the levels of the inclusions and reverse fibrosis in these mouse models as well. And, we’re doing that in relatively short periods of time on the order of a couple of months or so.

Sanjay Bhanot

The final question that you asked Jim which is what is the optimal time to intervene, I don’t think anyone knows. I’m assuming that these patients have a lifetime burden of abnormal AAT and we’re going to be treating adults, at least initially, so we’ll be capturing these people after they’ve had some time to accumulate this abnormal protein in the liver but before they are to a situation in which they need a liver transplant.

I think in that patient group we have the opportunity to see therapeutic benefit which should be pretty easy to measure with liver function tests and other markers and potentially the opportunity to see regression of lesions that we may be able to realize in a variety of ways including MRI and biopsy.

Operator

Your next question comes from Nicholas Bishop – Cowen & Company.

Nicholas Bishop – Cowen & Company

I had a couple on the LP Level A program. Stan, you mentioned that there’s not really any strategy to modulate LP Level A in humans today. I was wondering if there’s any evidence from animal models perhaps that changing the level of LP Level A can alter cardiovascular risk?

Stanley T. Crooke, M.D., Ph. D.

I’ll let Richard answer that but the answer is absolutely. More importantly, there are mountains of data in humans that show clearly that LP Level A is an independent cardiovascular risk factor and it’s a powerful risk factor. So you take somebody and fix his LDL and if he’s got a very high LP Level A, he’s going to have a heart attack. So I think the role of LP Level A in cardiovascular disease is very well established and the mechanism is well established. It appears to carry oxidized lipids and it’s the oxidized lipids tied to LP Level A that appear to promote the inflammation and the plaque formation. Richard would have done a better job answering that.

Richard S. Geary, Ph. D.

I’m not so sure, that was very good. I think the strongest data is in the humans but just like the AATRx work or the Alpha-1 antitrypsin, we have a transgenic model where human LP Level A is over expressed in a mouse model which we then treat with the clinical candidate and completely take out the LP Level A. That of course, in these animal models has then been shown to reverse the atherosclerosis development. So there is both animal model data utilizing the animal gene in LP Level A in that situation and there’s a tremendous amount of data, both genomic and the experiment of nature and people that is very, very strong and the literature is very clear about this.

In fact, the European group which puts together the guidelines for treating lipid disorders has identified LP Level A as an issue. If you’re over 50 milligrams per deciliter in their directive, or in their guidance, these people are recommended to be put on the only thing that’s known today to take LP Level A down on the market and that is niacin, very high doses of niacin which are limited in their effective, about a 30% reduction can be achieved with niacin or apheresis which once again, is the same population or a similar population to what we have in the FH population going on to a very difficult invasive technique.

Stanley T. Crooke, M.D., Ph. D.

One final note that I keep mentioning and I don’t have to mention it to lipidologist and cardiologist because they’re very excited about it, but it hasn’t seem to catch the imagination of investors and that is Mipomersen lowers LP Level A by about 30% or so. So one of the things that excites people about Mipomersen a lot, I mean the lipidologist anyway is that it will be the first LDL lowering drug that also lowers LP Level A. There is no question that this is an exciting target to the cardiovascular community and we think we’ve got a very clear route that mimics the Mipomersen route to get it to market.

Nicholas Bishop – Cowen & Company

Just one other question on the LP Level A program, I wonder if you can help us get some sense of what the size of the population that you’re targeting initially is? How many patients are there with extremely high levels of LP Level A?

Richard S. Geary, Ph. D.

It’s on the order of tens of thousands in the US. It would be orphan for the very high, that is over 100 milligram per deciliter. For those over 50 milligrams per deciliter it’s known that’s 20% of the population in the US so that’s a much larger population of at risk patients. So there’s the smaller population, orphan size that are very high risk and then the high risk above 50.

Nicholas Bishop – Cowen & Company

Just to clarify that 50 milligrams and up group is 20% of what? Not the entire US population?

Stanley T. Crooke, M.D., Ph. D.

20% of the entire population, that is correct.

Operator

(Operator Instructions) Your next question comes from Charles Polsky – William Harris Investors.

Charles Polsky – William Harris Investors

On the Alpha-1 Antitrypsin, I heard at length the potential for reducing pathology in the liver, what does the knock down of the pathogenic protein do for the lung dysfunction?

Brett P. Monia, Ph. D.

We will be treating primarily patients who have deficiency in the Alpha-1 protein on both alleles. In other words they are completely knocked out of the Alpha-1 gene and therefore what that means is that the protein does not get secreted from the liver and therefore we will not be impacting the lung function. It already is deficient and not reaching the lung. These patients are already on either in the last days protein replacement therapy to treat their lung dysfunction and therefore we will not be putting these patients at any greater risk for lung problems.

Removing the aggregated or accumulated protein in the liver we don’t expect to produce any toxicities in the liver. In fact, that is the cause of the liver toxicities and by removing it will benefit the patient. So we don’t see any issues with that. In Phase-I trials in which we would treat normal volunteers and of course we’ve had extensive conversations with a broad range of hepatologists on this topic and we don’t think we’ll be placing those subjects at any risk because as Stan mentioned, this is a long progressive disease that takes a long time for it to really kick in and cause lung problems. Our Phase-I studies will just be on the order of about four weeks or so and normal volunteer studies will be fine.

Charles Polsky – William Harris Investors

Just to follow on to that, if you were to use say like an exon skipping technology I think like from Urkel, could you maybe introduce the functional form if you were to intercept these people earlier?

Brett P. Monia, Ph. D.

We’ve discussed that and we’ve looked at the molecular biology of the mutations of the Alpha-1 antitrypsin gene and I would not rule out the possibility but right now it looks like a very, very challenging endeavor to make that work just based on the nature of the mutations and where they lay within the gene.

Stanley T. Crooke, M.D., Ph. D.

It’s a set of mutations that don’t cause mis-splicing primarily, they cause mis-folding of the protein. Remember, that we have splicing altering drug staring in patients with spinal muscular atrophy right now. It’s an area that we’re experienced with and the challenge is to find a cooperative molecular biological defect. AAT really most of the AAT doesn’t have that cooperative cause.

One point that I think is worth mentioning is the benefit that we’re getting from all of these clustered programs and franchises, if you think about a number of the drugs that we’re talking about right now, they relate and directed towards improving liver function. All of that is tied really to the beneficial learnings that we’ve gotten out of Mipomersen that says that what we used to think was really quite daunting, measuring liver fat or measuring proteins in the liver and other things is actually pretty easy, is pretty straightforward.

I think the NASH opportunity is one of the most exciting things we have on our plate and made possible by the experiment that we did with Mipomersen which I believe probably is the largest group of subjects evaluated serially for liver fat with serial MRIs. So it’s the value of doing work and learning I guess.

Operator

Your final question comes from Jim Birchenough – BMO Capital Markets.

Jim Birchenough – BMO Capital Markets

Just a couple of follow up questions, number one, when you look at the injection site reactions that you get with any antisense and you think about this next wave of candidates you’re coming forward with, are you able to knock down your targets with lower amounts of drugs so you see less injection site reactions? I’m just wondering how that’s being managed as you bring forward this pipeline?

Stanley T. Crooke, M.D., Ph. D.

We’re going to show you some information about that at our R&D Day. Here’s the thing, we continue to evolve the screening technology, the methodologies that we use to screen so the Generation 2 drugs that we’re making today are meaningfully better than the drugs with the same chemistry that we made even three years ago. We’re seeing really quite significant improvements in potency and tolerability.

With this new crop of drugs that we’ve been reporting on this year in the clinic, we’re seeing very little ISRs, very little injection site reactions, virtually no flu like syndromes and we’re seeing potency that is significantly better so we’re not very worried about it anymore. Remember, that I think we’ve done Mipomersen a disservice by exaggerating the injection site reaction by emphasizing it and over reporting it. The injection site reactions with Mipomersen are very modest and our long term studies showed that patients continue on Mipomersen quite well.

Jim Birchenough – BMO Capital Markets

Maybe a final question and this maybe better suited for your broader R&D Day, but there’s no shortage of things you can target with antisense so how do you think about return on investment and when you look at investing in Alpha Antitrypsin or LP Level A versus other things, how do you determine where the incremental dollars are spent? There is some concern we’ve heard regarding cash burn and so how do you address that return on investment question?

Stanley T. Crooke, M.D., Ph. D.

If I might, Jim I’d like to defer that conversation to the R&D Day. We are going to address that very clearly and show you examples of the decisions that we can make because we have at technology that can generate the pipeline size of interest that we have. If you can just hold on to that until January 5th I hope we’ll answer it very clearly for you.

If there are no more questions I think that we’ll bring this call to a conclusion. I want to thank everyone for your attention and thoughtful questions and encourage everyone to join us either in person or via webcast for our R&D Day. We have a lot of exciting news to share with you. We think you’ll be very, very excited about where we are and what we’re doing.

Operator

Ladies and gentlemen that concludes today’s conference. Thank you for your participation. You may now disconnect. Have a great day.

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