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ISIS Pharmaceuticals Q3 2007 Earnings Call Transcript

November 08, 2007 | about: ISIS

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ISIS Pharmaceuticals Inc. (ISIS)

Q3 2007 Earnings Call

November 8, 2007 10:00 a.m. ET

Executives

Stan Crooke - Chairman and CEO

Lynne Parshall - EVP and CFO

Kristina Lemonidis - Associate Director, Investor Relations

Jeff Jonas - EVP

Kate Corcoran - VP, Corporate Development

Analysts

Ajim Tamboli - Lehman Brothers

Mark Monane - Needham

Alan Carr - Needham

Emily Merchant - Summer Street Research

Ted Tenthoff - Piper Jaffray

Salveen Kochnover - Jefferies & Co

Aaron Reames - Wachovia

Joseph Schwartz - Leerink Swann

Eric Schmidt - Cowen and Company

Debjit Chattopadhyay - Boenning & Scattergood

Geraldine O'Keeffe -Fortis Bank

Gabe Hoffman - Accipiter Capital Management

Presentation

Operator

Good day everyone, and welcome to the Isis Pharmaceuticals Third Quarter Financial Results Conference Call. Today's conference is being recorded. Leading the call today from Isis is Dr. Stan Crooke, Isis Chairman and CEO.

Dr. Crooke, please begin.

Stan Crooke

Thank you, Lisa. Good morning and thank you, everyone, for joining us on today's conference call to discuss the financial results and highlights for the third quarter of 2007.

Participating with me in this call are Lynne Parshall, Executive Vice President and CFO; Kristina Lemonidis, Our Associate Director of Investor Relations. Also sitting in with us are Jeff Jonas, our Executive Vice President; Kate Corcoran, our Vice President of Corporate Development; and Beth Hougen, our Vice President of Finance and Chief Accounting Officer.

As we've mentioned, we will be hosting an Analyst and Investor Day in New York next Tuesday, November 13th. So we will keep this call relatively brief. The Analyst/Investor Day presentation will be webcast, and we hope to see a lot of you there in person.

Isis has continued to execute its business strategy with tangible successes on multiple fronts over the past quarter. In our last earnings call, we talked about the American Diabetes Association Conference and highlighted some of our research stage programs in metabolic disease. Recently, we moved the drug targeting SGLT2 into our development pipeline from that program.

We also discussed how our strategy to license antisense drugs to a number of partners has increased the breath and value of our pipeline. We highlighted new partnerships, including the license of our drug discovery effort on PCSK9 to BMS, and our technology license with Archemix. To those, we recently added licenses to two diabetes drugs and initiation a focused metabolic disease research collaboration with J&J's Ortho-McNeil.

In addition, we launched the newly formed joint venture, Regulus, and announced that the newly formed company, Altair, which focuses on pulmonary disease recently. Each of these, of course, represents growth opportunities for antisense drugs discovery and development.

We had several positive mipomersen presentations at the DALM meeting in October, and we've now initiated a Phase 3 program for mipomersen in patients with familial hypercholesterolemia.

Today, Lynne will discuss how our recent activities have affected our financial performance and outlook. At the end of our prepared remarks, we will be happy to answer any questions you might have.

First, let me turn the call over to Kristina to review our policy on forward-looking statements.

Kristina Lemonidis

Thanks, Stan, and good morning, everyone. As a reminder to everyone, this webcast includes forward-looking statements regarding our business, the financial outlook for Isis as well as Ibis Biosciences' subsidiary and its Regulus joint venture, and the therapeutic and commercial potential of Isis Technologies 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, including those statements that are described as Isis' goals.

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 of human therapeutics and in the endeavor of building a business around such products.

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

These and other risks concerning Isis' programs are described in additional detail in Isis annual report on Form 10-K for the year ended December 31, 2006, and its quarterly report on Form 10-Q for the quarter ending June 30, 2007, which are on file with the SEC. Copies of these and other documents are available from the company.

Stan, back to you.

Stan Crooke

Thanks, Kristina. 2007 continues to be an exciting year for Isis on all fronts. Since our last conference call, we have advanced our drug targeting SGLT2 and its development. ISIS 388626 is the first antisense drug that interacts with targeting the kidneys an organ in which antisense drugs naturally accumulates.

The remarkable potency and activity of ISIS 388626 in animal models make it a particularly attractive antisense drug which complements our exciting pipeline of drugs to treat type 2 diabetes.

In September, we announced our new collaboration with Ortho-McNeil. We licensed two drugs for type 2 diabetes; ISIS 325568 targeting the glucagon receptor and ISIS 377131 targeting the glucocorticoid receptor.

We also initiated a focus research program in metabolic disease and these licenses and the research program collaborations were on very attractive terms. We've also expanded our relationship with Alnylam to create Regulus, our microRNA joint venture.

Recently we, in addition, added Altair to a growing list of drug development partners. We continue to apply our technology to explore opportunities in various metabolic and cardiovascular indications. We presented preclinical data from one of these exploratory programs in regulation of blood clotting or thrombosis at the American Heart Association Conference earlier this week.

In addition, we succeeded in securing significant funding for other programs, including funding from CHDI, to discover and develop an antisense drug to treat Huntington's disease, a debilitating and fatal disease with very limited treatment options. This enables us to continue to expand our activities focused on creating treatments for severe CNS diseases.

Our existing partners have also had a very successful year. OncoGenex continues to move forward toward Phase 3 trials with OGX-011 and recently initiated Phase 1 studies of the second drug discovered in the Isis-OncoGenex collaboration.

iCo advanced iCo-007, another Isis-discovered drug in the clinical development. Lilly is continuing its work with two of anti-cancer drugs in clinical development. And Alnylam initiated broad collaboration with Roche that involved a sublicense of our technology.

In addition, our Ibis subsidiary was awarded contracts and grants for up to $5.4 million to fund the development of a wide variety of applications for the Ibis T5000 Biosensor System.

Our success in creating new strategic partnerships is in my view, a direct bi-product of the performance of mipomersen. The value of these transactions end of our pipeline in totaled have increased dramatically, because of the proof-of-concept provided by mipomersen.

At the Drugs Affecting Lipid Metabolism or DALM meeting last month, we announced further data supporting the attractive profile of mipomersen. We show that mipomersen effectively reduces lipids in all populations tested with data presented in heterozygous FH, patients adding to the previously presented data for homozygous FH, and routine high cholesterol patients, all of these data showing potent, linear dose dependent reductions in lipids, both for alone and when added to other lipid lowering therapies.

Mipomersen has a unique profile in lowering all atherogenic lipids. Adding to previous data showing statistically significant reductions in LDL, VLDL and triglyceride, data presented at the DALM shows statistically significant reduction in Lp(a), an independent cardiovascular risk factor.

The first safety data from our long-term treatments with mipomersen show that, as predicted by long-term studies in monkeys and mice, the drug continues to be well tolerated in patients treated for five months and longer.

Preclinical data showed that the inhibition of apoB-100, the target of mipomersen results in changes in fat metabolism that actually reduce liver fat, adding additional mechanistic support for the mipomersen safety profile.

So as we wrap up our initial Phase 2 exploration of mipomersen, we are very gratified with the body of evidence supporting the development of the drug. At this stage in drug development there are several questions that you want to be able to answer affirmatively and we can certainly do that for mipomersen.

Is there evidence of efficacy? Yes, mipomersen is an extremely effective lipid lowering drug with a remarkably valuable profile. Is the safety profile expectable? Yes, mipomersen is well-tolerated in all patient study to-date. Is there a clear class to registration? Yes, LDL cholesterol lowering is a well excepted clinical endpoint. Has dosage schedule being selected? Yes, 200 million per week is right in the middle of our dose response range and appears to be a safe and will be a highly effective dose. Does the drug address a major unmet medical need? Yes, over 16 million U.S. patients are at high risk for cardiovascular disease and are not meeting LDL targets with current lipid lowering drugs. And now, we have initiated our Phase 3 program for mipomersen in patients with FH.

So, now, I'll turn the call over to Lynne.

Lynne Parshall

Thanks, Stan. As usual, I am assuming you all had an opportunity to read the press release we issued earlier this morning, so I will not reiterate what's detailed in the release. Please feel free to ask questions at the end, on any points from the release that need clarification.

The financial impact of our recent activities has been very important in solidifying our financial position. We received $15 million upfront from BMS and we will receive $9 million in Research Funding over the next three years, plus milestones and eventually royalties as PCSK9 drugs move forward.

We received $45 million upfront from Ortho-McNeil, as well as $5 million for the initial milestone for the glucocorticoid receptor drug and will receive $7 million in research and development funding over the next two years plus milestones and eventually royalties as a drug to treat metabolic diseases that are part of this collaboration advance.

We will receive nearly $10 million in funding from CHDI to discovery drugs to treat Huntington's Disease. Ibis received contracts and grants for up to $5.4 million to fund the wide variety of application development for Ibis T5000.

We were awarded with an SBIR grant for up to $1.5 million to fund our optimization and discovery efforts in creating single-stranded drugs that trigger RNAi pathways.

Alnylam funded the initial $10 million worth of expenses for our newly created joint venture Regulus. We received 18% of the equity of the newly formed Altair and we'll receive research funding milestones and eventually royalties as it proceeds to developed drugs to treat respiratory diseases.

iCo paid us $1.25 million milestone in equity for initiation of the Phase 1 study of iCo-007 for diabetic macular edema. Alnylam paid us $26.5 million related to their alliance with Roche, as part of our technology licensing agreement granting Alnylam right to practice and sublicense our technology related to double-stranded RNAi drugs. And Archemix granted us equity and will pay us milestones, royalties and a portion of sublicensing revenue generated from its progress with aptamer drugs that exploit our inventions in oligonucleotide chemistry.

All of this progress has had a very positive effect on our financial outlook and continues to exemplify our execution of our business strategy of entering into promising partnerships and advancing our technology platform though our own efforts, as well as, in collaboration with partners working on complementary applications.

Now, I'll provide a just a little more explanation about what you are seeing on our third quarter financial statement. As you know, in association with the Ortho-McNeil transaction, we purchased Symphony GenIsis at the end of the third quarter.

While the significant upfront payments of $45 million, plus the glucagon receptor Phase 1 milestone payment of $5 million in the initial research and development funding from Ortho-McNeil are not reflected in our third quarter cash balance, because they were received in October. The purchase of Symphony GenIsis was completed during the third quarter, so the numbers we are reporting reflect reductions in cash related to the purchase as well as shares issued for the same purpose.

We purchased Symphony GenIsis for $120 million, of which approximately $80 million was in cash and the remainder was paid with approximately 3.4 million shares of Isis stock. The shares issued to Symphony Capital have all been sold, so Symphony is no longer a 5% shareholder.

By purchasing Symphony GenIsis well before the completion of the four-year term of the collaboration, we saved approximately $75 million, and regained full ownership of mipomersen, which has significantly increased in value since we put our collaboration with Symphony in place in April of 2006.

In other words, the Symphony GenIsis partnership did exactly what we intended it to do. As Stan mentioned, mipomersen's Phase 2 performance has certainly been gratifying, and we believe that it's had a very positive impact on the value of all of our antisense programs. All together, the partnering successes we are experiencing in 2007 have had an important impact, both in our cash position as well as our net operating loss projections.

We began the year with the guidance that our pro forma 2007 net operating loss, excluding non-cash compensation expense, will be in a mid-to-high $60 million range.

And that based on reasonable assumptions from new sources of revenue and cash, we believe that we had sufficient resources to meet our anticipated funding requirements through at least the middle of 2010.

When we reported second quarter results, we adjusted our guidance for net operating loss for the mid-to-high $40 million range, and extended our cash guidance to estimate that based on reasonable assumptions from new sources of revenue and cash. We believe we have sufficient resources to meet our anticipated funding requirements through at least the end of 2010.

And then early last month, we further adjusted our net operating loss guidance to the mid-to-high $20 million range. And of course, back last January, we refinanced our convertible debt to extend the maturity and further strengthen our balance sheet.

We'll now be happy to take your questions. Operator, could you please begin the Q&A session.

Question-and-Answer Session

Operator

Thank you. (Operator Instructions)

And our first question comes from Ajim Tamboli with Lehman Brothers.

Ajim Tamboli - Lehman Brothers

Hi. Good afternoon. I guess with the changing cash balance, Lynne, do you mind just going through what the pro forma balance is and what that includes?

Lynne Parshall

We don't have a pro forma cash balance. Our actual cash balance was right around $146 million at the end of the quarter. That does include the reductions in cash associated with the Symphony GenIsis repurchase, but does not include the cash that we received from OMI, which we received at the beginning of the fourth quarter.

So, cash we received from OMI was $45 million for the licensee, $5 million for the glucagon receptor drug Phase 1 initiation milestone, plus additional money associated with the initiation of the R&D collaboration.

Ajim Tamboli - Lehman Brothers

Okay. Thanks for clearing that up. And then, I guess, just a question on the space overall perhaps for Stan. Clearly, more interest and part of that is simply due to your Phase 2 data, proof-of-concept data. But what are the factors of getting large pharma partners involved in this space and what's driving that interest level?

Stan Crooke

First, you're right. I think there is a great deal of more interest in antisense technology today than even a year ago. And it's not just large pharma, it's smaller companies, and it is venture capitalists, very high end venture capitalists that are now interested in applications of antisense technology.

I think the answers are really pretty simple. First, antisense works, works in cells, works in animals, and mipomersen unequivocally prove that it works in man the way it works in animals. And second-generation antisense drugs have proven to be dramatically better.

And probably the most interesting feature of the BMS and J&J transactions is that both those transactions are focused on chronic diseases where drug safety is crucial. And so I think all of that speaks well to the technology.

Second, we've shown that second-generation antisense drugs were up against un-druggable targets. And so there is great deal of interest in targets that can't be attacked using small molecules or monoclonals.

And third, we demonstrated that we can deliver these drugs by essentially all routes. And so, Altair is a company that was formed by us with our drug and technology to exploit aerosol applications.

And finally, the RNA world, in terms of just science that's going on continues to resolve in extraordinary insights into how the body works and everyone of those insights generates new potential targets for antisense drugs including microRNAs. Hope that answers the question, it was a baseball and long-winded.

Ajim Tamboli - Lehman Brothers.

It does. Thanks for taking the questions.

Stan Crooke

You bet.

Operator

And our next question comes from Mark Monane with Needham.

Mark Monane - Needham

Good morning, and thank you. From New York City, I have Alan Carr here as well. A question one Phase -- first of all, congratulation on being a Phase 3 company.

Stan Crooke

Thank you.

Lynne Parshall

Thank you.

Mark Monane - Needham

Can you tell us a little bit more about the decision on which population to include in the familiar hypercholesterolemia group, of course, there is still be heterozygous the homozygous, how you, are you approaching this separately or together in the Phase 3 trail?

Stan Crooke

Well, Mark, we have had our end of Phase 2 meeting with the FDA, and we are continuing to have productive conversation with the FDA, which are taking sometime to complete. Primarily, we believe because of the FDA scheduled, due to the pressing business that that division is dealing with. So, we haven’t gotten yet definitive answers to all of the questions we ask. When we receive definitive answers to all of our questions, we'll share our plans, for our entire Phase 3 program in more detail with you.

I should add to that one additional comment. As you know, this show efficacy for mipomersen, we don’t need large numbers of patients. However, we've said, actually several times that when we file our NDA for familiar hypercholesterolemia, we plan to meet or nearly meet ICH Guidelines for safety exposure. I think that's a crucial thing to remember.

We intend to have or nearly meet the ICH Guidelines, which means the total exposure of about 1,500 subjects with significant long-term exposure. So, we are not scooping on the investment to deal with long-term safety. And we are intending to have that information in time for the FH, NDA.

Of course I should also mention that we plan to host an Analyst and Investor Day next Tuesday in New York. And at that meeting, we will be providing additional data on mipomersen including an integrated safety analysis of our total experience in Phase 1 and 2 studies in human beings.

And we believe that those data continued to demonstrate that mipomersen has a very encouraging safety profile. So stay tuned. We will provide a much more detailed answer to your questions when we have gotten definitive answers to all of the questions that we ask the FDA.

Mark Monane - Needham

And have you start -- a concrete question. Has the first patient gotten dosed?

Stan Crooke

Yes.

Mark Monane - Needham

Have gotten dose in the Phase 3 trial?

Stan Crooke

Yes.

Mark Monane - Needham

Yes, okay. Here is Alan Carr's quick question.

Alan Carr - Needham

Yeah. I also wanted, I guess a broader question that you've obviously made substantial progress with mipomersen in targeting the liver, but I was wondering what sort of challenges and maybe technical characteristics that might change when you go after the [long] or the kidneys. You mentioned that you have a program moving forward against SGLT2 and then there is the partnership with Altair, so…..

Stan Crooke

Well, Alan, we don’t really target any organ. These drugs do what they do, or to quote Kurt Vonnegut, they do doodly do, what they must, muddily must. And so the organs that, to which they distribute that low doses are liver, kidney bone marrow, fat cells, spleen, and organs where there are leaky vessels like cancer and [brain] tissues. We used that information in the design of our research programs.

So, while this is SGLT2 is the first drug that works, I guess a target that's expressed primarily in the kidney, that we taken in demand, it's by no means the first that we've looked at in animal, that has a target in the kidney. All we're doing is using what the drugs do naturally, in the design of our research programs.

So, we expect that the behavior of the drug in man will be the same as it has been in animals and the same as all the other drugs have been. Obviously, we can't know that for sure, until we get the clinical trial started.

Now, with the pulmonary disease approach at Altair and at Isis, there we use local delivery. And we've shown actually for quite some time now that these drugs are ideal drugs to administer by aerosol for local applications in the lung. They particalize nicely, they reach all the areas in the lung, and they are very stable, and of course, they are very potent when delivered by aerosol to the lung.

Alan Carr - Needham

Thanks you very much. Thanks for the added information.

Stan Crooke

Thank you.

Operator

And our next question comes from [Emily Merchant] with Summer Street Research.

Emily Merchant - Summer Street Research

Hi. Thanks for taking my call.

Stan Crooke

Sure.

Emily Merchant - Summer Street Research

I'm just wondering, moving forward, how things stand with your development of a partnership for mipomersen, and if you're going to have an upcoming publication?

Stan Crooke

The partnership conversations are going very, very well, and we are on track to meet our plan, which is to have a choice of partners and then license it to the best partner before we begin Phase 3 trails in routine or polygenic high cholesterol. There are additional presentations on mipomersen that will be scheduled over the next many months, and there will be publications put together.

One of the interesting features of putting publications together for mipomersen, is that we have to delay final analysis, because we follow these patients for five months after treatment stops, at least five months. And so that means that it takes some time to put final data together.

Emily Merchant - Summer Street Research

Okay Great. And additionally, I'm just wondering where things stand with your cooperation with Lilly?

Stan Crooke

Well, the Lilly collaboration continues. They are developing both survivin and eIF-4 anticancer drugs, and they are progressing according to their plan of with those drugs.

Emily Merchant - Summer Street Research

Thanks for taking my question.

Stan Crooke

Thank you.

Operator

And our next question comes from Ted Tenthoff with Piper Jaffray.

Ted Tenthoff - Piper Jaffray

Great. Thank you very much, and Stan, thanks for the literary reference earlier. You made my morning. A quick question. You mentioned, and we have been seeing certainly in New York at the DALM meeting, and we will see next week likely at the Analyst Day. But maybe you can dig in a little bit more into the statement of protection versus hepatic steatosis with mipomersen.

What is your understanding, thinking about that mechanism of action? Because I do think it flies somewhat counter to a lot of experts' opinion out there. So, I just wanted to get kind of year-over-year a little preview on that, about how and why you think and what data you have to support that we may actually see this protecting the liver from an accumulation of fat?

Stan Crooke

The data we have derived from several years' of studies in mice and monkeys, and they include high-dose toxicity studies for a year in monkey and six months in the mouse. And the data are unequivocal. That is with long-term treatment with ISIS 301012 or mipomersen, contrary to our expectations and expectations of people who have studied apoB-100, we see a statistically significant decline in liver fat in fat-fed animals.

We also see no evidence of liver toxicity at doses as high as 75 milligrams per kilogram per week in the mouse and 30 milligrams per kilogram per week in the liver in the monkey. Those are the data. Actually they are unequivocal, and they do differ from what might have been expected, based on the belief that inhibiting apoB-100 would result in fat accumulation, because it can’t be exported.

Now, the data that we have reported in several forums show that about two weeks after dosing starts with mipomersen in mouse and monkeys, we see changes in transcription of genes in the liver. These genes are involved in fat synthesis and fatty acid oxidation. And the net impact of those is that you see a decline in production of fat in the liver and an increase in the oxidation of fat in the liver.

Those data explain very clearly, why we get the results that we see. There are changes secondary to inhibiting apoB that result in a reduced liver fat content in mice and monkeys. We are very comforted by the fact that the transcriptional profile that we see in the mouse are replicated in the monkey. So, it's not a single species. And in fact, the same thing appears to happen both in a mouse and a primate.

So, our belief is that apoB-100 is the primary exporter of fat in the liver. And that when lower apoB-100, that is sensed by the liver and it quite sensibly turns off liver fat synthesis and increases fat oxidation.

Moreover, we have in collaboration with Lipomics developed metabolomic assays that can be used within blood. And those metabolomic assays confirm the transcriptional changes that we see when we take the liver and examine transcriptional changes.

And so, we hope that we'll be able to use these assays in man to confirm that the same transcriptional events are taking place in man, as are taking place in mouse and monkey. I would say that if you ask an expert who hasn't looked at our data, he would say what we might have said three years ago, that we might expect to see liver fat accumulation. I think if you ask an expert who has actually looked at our data, he will say exactly what I just said.

Ted Tenthoff - Piper Jaffray

And I think data is changing. And just, I guess the final connective point would be the MRI data, and when do you anticipate seeing that, and what is the endpoint of that study, that timeframe?

Stan Crooke

That study has changed quite a bit. It was originally designed as primarily a safety study, and now we are hoping to demonstrate the same results that we saw on animal. So it's become almost a profile expansion study. It's much larger and it's going to take some time. As you know, to recruit patients who are wiling to undergo multiple MRIs is challenging and there are a limited numbers of sites that have the expertise to do that. So, we can't give you guidance here about when that study will be done.

Ted Tenthoff - Piper Jaffray

Fair enough. I'll look forward to the data. Thanks so much, Stan.

Stan Crooke

It is progressing well.

Operator

(Operator Instructions)

And our next question comes from Salveen Kochnover of Jefferies & Co.

Salveen Kochnover - Jefferies & Co

Hi, Good morning. Thank you for taking my question. You know, could you comment whether the patients that have been dosed in the Phase 3 FH trail, whether they are homozygous patients?

Stan Crooke

Our preference is to say simply that we've begun the Phase 3 program, and that we'll provide a much more detailed update when we have definitive answers from the FDA to all the questions that we've asked.

Salveen Kochnover - Jefferies & Co

Okay. And then in terms of the, will we see the 200 milligram dose of mipomersen for three months in the polygenic population, will we see results from that at the [RNA] meeting next week?

Stan Crooke

What we said is that we will present the 200 milligram three months data this year. And we've also said that we will be reporting new data next week at our Analyst Day, including a full analysis of the integrated safety from our Phase I and Phase II experience.

Salveen Kochnover - Jefferies & Co

And then, in terms of, [Ibis] placements, are you still on track for eight placements, at least eight placements by the end of the year of T5000?

Stan Crooke

Yes.

Salveen Kochnover - Jefferies & Co

Thank you.

Operator

And our next question comes from Aaron Reames of Wachovia.

Aaron Reames - Wachovia

Yes. Thank you for taking my questions. First question I had is, have you initiated 26-week dosing study in the polygenic population, I think, that's where you're going to follow patients for a year.

Stan Crooke

We are in progress. And our position is that we will provide a more detailed explanation of all the activities that we have in progress, once we have the definitive answer from the FDA.

Aaron Reames - Wachovia

Okay.

Stan Crooke

To all of our questions.

Aaron Reames - Wachovia

Got you. I guess next week we will see an update of the open-label extension program as well?

Stan Crooke

We will present an integrated safety analysis of our Phase 1 and 2 experience. I don’t believe that we'll be cutting the open-label extension study in to little slimy sectionsover the next bit. What we want to do is accumulate substantial data in the open-label extension, meaning quite a number of patients treated quite a long time, before we present anymore information on that study.

Aaron Reames - Wachovia

Then, I guess just maybe a more general question there. To meet the guidelines of having long-term exposure in 1,500 patients, I guess will you be expanding programs dramatically here in the near-term, to be able to meet that type of goal. And I would imagine then, it would be across to a number of different patient populations, is that an accurate assumption?

Stan Crooke

We will meet or nearly meet the ICH Guidelines before safety and, of course, the bulk of that safety experience will come from routine high cholesterol patients because they are just so many more of those patients. Our plans have always been to do that. So, our plans have included a significant number of studies in the next year, in addition, to the studies that we've already completed that will flush out our safety profile numbers.

Aaron Reames - Wachovia

Thank you.

Stan Crooke

Okay.

Operator

And our next question comes from Joseph Schwartz with Leerink Swann.

Joseph Schwartz - Leerink Swann

Hi. Good morning, and congratulations on all the progress. Just wondering if you could update us on the status of 113715 in diabetes, when might we see that data, and what would you consider potential scenarios for the data and further development?

Jeff Jonas

This is Jeff Jonas. That study is progressing well, and right now we anticipate in ['08] in the first half of next year that we will have data to look at. It's enrolling well, and obviously we are encouraged by that. And it could be our future plans. But beyond that, it will depend on, obviously the results of the study. But, we are optimistic that we'll have number of options to pursue when we outline the trial.

Joseph Schwartz - Leerink Swann

Okay. And just to like revisit the partnership process, is there any way you can give us some additional color on the steps of the talks with various parties without listing any names, of course, just what has already happened and what needs to happen and when that all might happen?

Stan Crooke

We've indicated, Joe, and I can just really reiterate what we said. That we are running an auction process, we are pleased with the response of the auction process. That auction process means multiple companies who have expressed interest, we provide a summary of the experiences we have with mipomersen, and then those that want to participate further must engage in additional steps prior to our granting due diligence. That process is underway and going well, and we are very pleased with the level of interest.

Joseph Schwartz - Leerink Swann

Okay. Good enough. Thank you

Operator

Our next question comes from Eric Schmidt with Cowen and Company.

Eric Schmidt - Cowen and Company

Thanks. Congratulations on starting the Phase 3. Stan, I guess I am just a little bit confused. It sounds like you're still waiting for some FDA sign off on the trial design. But you've started the study. So I take it from that that you must feel relatively confident in certain aspects of the study, the entry criteria, the fact that you are going to be dosing at 200 mgs every week, etcetera, otherwise you wouldn't have multi-patients. Is that correct?

Stan Crooke

We had a list of quiet a number of questions is that pertain to the overall Phase 3 development program that go beyond a simple question about the design, for example of a homozygous FH trial. We are awaiting definitive answers to all of those questions. But we have begun the FH program, and I think I'll just leave it there.

Eric Schmidt - Cowen and Company

Okay. So you're relatively confident in certain aspects of the program and that's what led you to start the enrollment?

Stan Crooke

I want to leave our answer where it was. I think that is the most prudent answer I can give you.

Eric Schmidt - Cowen and Company

Okay. And Lynne, just a housekeeping question on the revenue recognition from Ortho, have you figured out now the timing over which you recognize that $52 million.

Lynne Parshall

Well, the $50 million, which constitutes the upfront license fee, plus the first milestone will be recognized over the two-year period of the R&D collaboration. The additional $2 million is R&D payments just from the first quarter of the collaboration, and that will be recognized over the first quarter of the collaboration. And we will continue to get that R&D funding on a quarterly basis.

Eric Schmidt - Cowen and Company

Thanks a lot.

Operator

Our next question comes from Debjit Chattopadhyay with Boenning & Scattergood.

Debjit Chattopadhyay - Boenning & Scattergood

Thank you for taking my question. I was just wondering if the Ibis monetization plans are still on track for, say, some time early next year.

Stan Crooke

Yes.

Debjit Chattopadhyay - Boenning & Scattergood

The second question is, for mipomersen once a week injection with a half life of, say, 30 days. Could we go down though not in the current clinical program, but assuming the drug gets approved, could this be changed to, say, once every two weeks or once a month or something like that?

Stan Crooke

Yes, it can. The basic properties of the drug are that it has a 30-day or longer half life, and therefore to dose once a month is theoretically feasible. We're focused on once a week dosing at 200 milligrams a week as our initial dose and schedule.

We are confident, based on the data we have and the modeling we've done, that once-a-week 200 milligrams will give us approximately 50% reduction in LDL on top of the reductions achieved by statins or statins plus ezetimibe.

At some point, we will look at other dose schedules, and probably the most attractive other schedule is once a month. Once every two weeks is in many ways less attractive than once a week, because it becomes more complicated to remember when to give your self the dose, that sort of thing.

But our primary focus for the initial indication and the initial NDA is once a week at 200 milligrams per week with no induction or loading dose. One of the things that I think has gotten lost in the conversation is about the safety of mipomersen. Is how remarkable it’s safety has actually been, given the fact that we've used loading and induction doses, which of course represent the maximum stress that we could put on a persons liver. Clearly, in our longer-term trials, we won't need to do that, and we believe all of that is very encouraging that we'll see even better safety as we go that schedule.

Debjit Chattopadhyay - Boenning & Scattergood

The next question I have is in terms of formulation, obviously you could delivery that on aerosol, but could you formulate this in terms of a tablet, because clearly that would be an advantage of having tablet as opposed to an injection?

Stan Crooke

We have reported oral data in humans with mipomersen, I think about a year or so ago. And in that data we saw slightly less than 10% oral viability, and we saw the level of reduction of apoB, and LDL you would expect for that. We have said that, while that is proof-of-concept, it probably isn't a commercially viable formulation because of cost.

And we believe that the best strategy for that is a follow-on product for mipomersen, which will be one of the generation 2.2 drugs, will be the drug that we developed orally. We liked that idea, because it will give us a follow-on product to extend the apoB franchisee and at that stage we believe we'll have sufficient viability and potency with that it would be cost competitive with existing medications.

Debjit Chattopadhyay - Boenning & Scattergood

And my last question is regarding the SGLT2 on PTB1B, weren't SGLT2 be a more, say, benign target as opposed to PTB1B, which could influence a lot of other things downstream?

Jeff Jonas

I guess, I understand the theory, but the data in human so far for PTB1B I suggest that this drug, it’s quite well-tolerated. With that SGLT2, obviously, the animal data also suggest that both it will work and is also well tolerated. So and both these agents, as you know are highly specific as most antisense molecules are and potentially complementary. So, we don’t really think that that's likely be a risk for either of these agents.

Stan Crooke

You’re probably referring to some of those small molecule experience with attempts to selectively inhibit PTB1B, those small molecules have failed for the reasons this molecule sale usually and that is they are not specific enough, in that PTB1B family there are many phosphatases and if you aren’t specific for PTB1B, you have the potential reproduce a wide range effects, many of them very detrimental. With selective PTB1B inhibition, we haven’t seen those side effects.

Debjit Chattopadhyay - Boenning & Scattergood

Thank you very much.

Stan Crooke

Yes.

Operator

Next question comes from Geraldine O'Keeffe with Fortis.