Welcome to Isis Pharmaceuticals’ Year-end Financial Results Conference Call. Leading the call today from Isis is Dr. Stan Crooke, Isis’ Chairman and CEO. Dr. Crooke, please begin.

Joining me on today’s call are Lynne Parshall, COO; Beth Hougen, CFO; Wade Walke, Executive Director of Corporate Communications and Investor Relations. Before we begin, I’m pleased to have Beth joining us in our first meeting as CFO to present the financial highlights. Beth was promoted to Chief Financial Officer at the beginning of the year. As most of you know, Beth has been with us since 2000 and brings significant financial and accounting expertise to her new role at Isis. So congratulations, Beth. And now Wade, will you read our forward-looking language statement, please?

Thanks, Stan. A reminder to everyone that this webcast includes forward-looking statement regarding Isis’ business, the financial outlook for Isis and the therapeutic, and commercial potential of Isis technologies and products, and developments. Any statement describing Isis’ goals, expectations, financial or other projections, intentions or beliefs including the commercial potential KYNAMRO is a forward-looking statement and should be considered an at-risk statement. Such statements are subject to certain risks and uncertainties, particularly those inherent 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 drugs. Isis’ forward-looking statements also involve assumptions that if they never materialize or prove correct, could cause its results to differ materially from those expressed or implied by such forward-looking statements. Although Isis’ forward-looking statements reflect the good 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, 2011, and its most recent Quarterly Report on Form 10-Q, which are on file with the SEC. Copies of these and other documents are available from the company. Now, I’ll turn the call back over to Lynne.

Thanks Wade. Good morning, everyone, and thanks for joining us. 2012 was another successful year. Together with Genzyme, we completed the final steps of FDA approval to bring KYNAMRO to the market in the United States for patients with homozygous familial hypercholesterolemia. We continue to advance our pipeline. We reported positive clinical data from multiple drugs and we initiated numerous clinical studies in a variety of therapeutic settings, which this year will provide us with a steady stream of data. We added four new partnerships with AstraZeneca and Biogen Idec that will greatly enhance our direct discovery and development efforts in cancer and severe and rare neurological diseases. And we improved our already solid financial positions ending the year with significantly more cash than we started. In addition, we maintained a relatively flat expense level despite moving many drugs forward in later-stages of clinical development. In short, it was a very busy and successful year. Since we have had a number of conference calls discussed the positive clinical data we’ve reported last year, I’ll just spend a few minutes discussing KYNAMRO in more detail before I turn the call over to Beth to go through our financials. KYNAMRO has improved in the U.S. for patients with homozygous FH is a landmark event for these very sick patients and for Isis and for Genzyme. KYNAMRO represents an important new therapy for homozygous FH patients who have significant risk of early cardiovascular events and death, despite all currently available therapies. We’re very enthusiastic about the potential benefit KYNAMRO can bring to these patients. We’re fortunate to have Genzyme, a leader in marketing and selling orphan drugs, commercializing KYNAMRO, Genzyme’s pre-launch efforts have positioned KYNAMRO for a successful launch. Genzyme has begun training and certifying doctors under the REMS program. These doctors are…

Thank you, Lynne and Stan. As Lynne mentioned, 2012 was another successful year for Isis and with the approval of KYNAMRO, 2013 is off to a great start. I’m pleased to tell you that we significantly improved our already strong financial position by ending 2012 with nearly $375 million in cash. The $32.5 million in milestone payments, we’ve already earned this year sets us up first on 2013. In addition, we significantly outperformed our guidance by achieving a pro forma NOL of $60 million, which was $10 million left in our 2012 guidance. This improvement in our NOL was primarily due to our new Biogen Idec and AstraZeneca collaboration and the efficiency with which we are able to conduct our research and development activities. Now, that KYNAMRO has been approved in the U.S. This is the good time to spend a few minutes describing the impact of KYNAMRO on our financial statements, and help you understand how we and Genzyme will share in KYNAMRO’s commercial success. We have a profit-sharing arrangement with Genzyme for KYNAMRO, not a royalty. And what this means is that, we will earn a portion of KYNAMRO’s profit rather than a portion of KYNAMRO’s sales as we would under a more traditional royalty arrangement. Our profit share begins at 30% and increases linearly to 50% with annual revenue to reach $2 billion. While the structure we have with Genzyme is not technically joint venture, that’s probably the best way to think of this type of profit-sharing arrangement. In contrast for royalty structure where revenue is based on a percentage of the drugs top line product sales and it’s recorded with the first sale of the drug, we will record revenue from KYNAMRO on our P&L and KYNAMRO is profitable. In the initial launch here, there are…

Thanks, Beth. I guess I’ll say it for the third time, having KYNAMRO approved was a great way to start the year. Gaining approvals for a drug for the FDA for chronic use is, in my view, the most challenging and rewarding task in drug development. It’s a goal that we’ve worked on – worked toward for many years and it’s just the beginning of what we hope will be many, many more Isis drugs to recent market. The KYNAMRO approval demonstrates a second generation antisense drug given systemically for chronic disease in which safety is paramount can be developed and approved. It confirms that our technology is a productive platform for drug discovery and development taking its place alongside small molecules and protein therapeutics. We successfully implying this technology to build portfolio of 28 promising drugs to treat a wide range of diseases, including severe and rare diseases like homozygous FH. We plan to continue this growth by adding three to five new drugs every year. We’re particularly pleased that our TTR Phase 3 study is now underway. We and just GSK chose to slightly delay getting the trial started, because we started additional clarity from the FDA on the statistical analysis plans for this study. We continue to be very, very encouraged by the support that we’re receiving from both the FDA and European authorities and we’re working very closely with these agencies as we develop TTRRx. So many drugs, many of which are in Phase 2 or 3 clinical trial, clinical development, we have a number of important events to look forward to over the next year or so. I’m going to just spend sometime going to some of these opportunities for you. Next month at the American Academy of Neurology, Claudia Dreifus from Columbia University Medical…

(Operator Instructions) Your first question comes from the line of Salveen Richter with Canaccord. Andrew Goldsmith – Canaccord Genuity: Hi, this is Andrew Goldsmith on line for Salveen. Thank you so much for taking my call. First question, the data coming for the SMA, how should we think about the expectations for single dose versus multidose?

Well, we certainly never expected any suggestion of activity with a single dose. We believe that to all to the course of the disease, multiple doses will perform much better than single doses. And so, we’re encouraged by what we’re seeing and hope that those results are predicting that as we dose over time. The performance of the drug will continue to improve. Andrew Goldsmith – Canaccord Genuity: Okay, great. And then maybe I could just ask one on KYNAMRO. The sales to Genzyme that you’re booking that’s separate from the profit sharing, correct?

Yeah, that’s just drug supply. Andrew Goldsmith – Canaccord Genuity: Okay. And that will just flow into the revenue separate from the profit-sharing.

Yeah, Lynne can probably give you a little more detail on that.

No, no, it’s exactly as you said, Andrew, that our sales of drug to Genzyme just flow directly into our revenue and are not part of the profit-sharing. Andrew Goldsmith – Canaccord Genuity: But that should be pretty minimal compared to the profit-sharing?

Yes, although it certainly matters to us in 2013. Andrew Goldsmith – Canaccord Genuity: Okay, great. Thank you very much.

Your next question comes from the line of Jim Birchenough with BMO Capital Markets.

Good morning. This is Nick standing in for Jim. Thanks for taking my questions. Just a quick follow-up on (inaudible), what should we be looking for in terms of muscle function readout? And then I have a follow-on question after that.

I think what I like to do is to say that the – there are several measures of muscle function, the most important is the Hammersmith scoring. There are also measurements of neuromuscular function that relate to electrophysiology. And I think the things that you should pay attention to are the answers to the questions that we asked first. “Is the drug well tolerated?” That’s a critical question to which we didn’t know the answer until we did this study. Second, due to the data support, the notion that the drug to be given vary and frequently; and then third is there cause for encouragement that there maybe benefit, and I’ll leave it with that. Remember, this is a Phase 1 uncontrolled study of single doses.

Okay, thank you. And maybe another quick question and I’ll jump back in a queue. For the STAT3 drug, are you expecting to see any dates with ASCO, and also last week, I came across publication from (inaudible) identifying expression of something that I referred to is IKBKE in non-small cell lung cancer and that was not regulated by STAT3 suggesting that STAT3 might be a target for a subset of non-small cell lung cancer patients. Can you just briefly let us know how interested AstraZeneca were is in trying to identify subsets of patient where STAT3 might be relevant?

Yes, I haven’t seen that publication. But I think the general answer is probably the best answer. STAT3 is considered a critical regulatory of cell behavior and its up regulation is associated with a good many other selling or manifestations that are generally considered to be stimulating cell growth and metastases, and emergence of a malignant phenotype. We worked on STAT3 initially because we believed that it has a real potential to be very broadly useful in cancer and we and AstraZeneca certainly do believe that. One of the reasons that we wanted to partner that drug early is that what really needs to happen with STAT3 is that we need a very broad look in Phase 2 and potential cancers where they can benefit. So what you’re seeing right now is that we have observed interesting, potentially important activities in non-small cell, that mean in non-Hodgkin’s lymphoma and as a consequence, we are expanding our work in that area. AZ is beginning a study in – Lynne just gave me a face, I can’t tell you that. So I guess the answer that I’m going to give you is that we and AZ are anxious to move the drug into broad Phase 2 endeavors that will look at a wide range of tumor types and lymphoma, simply the first.

Can I just add one thing? I’m not going to subtract from anything Stan has said. But one of the key factors that let us chose AstraZeneca as our first partner in our cancer program was the fact that they are extremely interested and have access to lots of data about subset patient populations in a variety of different, with a variety of different targets including STAT3. And so there’s a lot of work going on, exactly as you suggested, Nick and identifying subset patient populations in which STAT3 would be a particularly valuable tool and AstraZeneca is planning a robust Phase 2 program to explore those.

Yeah, in lymphomas, for example, there is a wealth of new evidence showing that STAT3 activation, mutations that activate STAT3 are associated with much worse outcome. And so, it’s not surprising, it’s gratifying, but not surprising that we’ve seen the early activity. And I don’t know if there is an ASCO presentation, Lynne you?

I don’t, we can get back to you.

I just don’t remember.

Okay. Thank you.

Your next question comes from the line of Chad Messer with Needham & Company. Chad Messer – Needham & Company: Yes, thanks. Thanks for taking my question. So, if you look at a lot of the great partnerships you have, Biogen, Genzyme, a lot of these for rare diseases, genetic diseases more orphan type things. But in the list of some of the upcoming potential new partnerships that you could start pursuing in the next year or two, there is a lot of very large and broad indication. So inflammation, cancer, thrombosis, how does that affect? What you are looking for both in a partner and in partnership terms? And then if I may out of sort of the near-term partnership opportunities, which one do you think represents the greatest to value to Isis’ shareholders?

Thanks for the question, Chad. One thing to – I just feel I need to remind people is when you look at deals that we have today, you’re looking at a cross section and you have to look back to when we did the deals and what our circumstances were when we did those deals. Our goal in 2012 was to partner our neuro program and to partner our cancer programs. The reason that those were our major goals are, first, our neuro program while exciting was very new and was associated with meaningful risk that we couldn’t judge that begin and end with the fact that we’re giving these drugs directly into the spinal fluid. And there are also other risks that are associated with just challenges of doing work in the central nervous system. And what we wanted for that constellation of activities is a partner who was really excited about the technology and knew this space that would work cooperatively with us. We think what we achieved there is really remarkable and we think the three transactions we’ve had with Biogen and the progress made is just wonderful performance. The second space was cancer. And again, the thinking there was that we needed to invest very broadly in Phase 2 trials for STAT3 which to do it well would be maybe $40 million or more dollars. And we needed a partner that was committed to doing that with us to support that and to share some of the risk. We got that done. Now that we have all that behind us and we’re financially secure and we’re expecting to see revenues from KYNAMRO, our approach is to retain many of our drugs longer and the goal of course is to be able to do transactions that give…

Lynne, you want to add to that?

Yeah, I guess the only thing I said just in terms of thinking about which of those are things that are coming up soon. Obviously, we expect to have data in the next 12 to 18 months, not only from multiple Phase 2 studies with the CRP drug, but also for Factor XI. And those are drugs with really extraordinarily large commercial opportunity potential when multiple different indications – and so one of the things in addition to obviously getting economics that reflect the size of the commercial opportunity, one of the things that I’m really going to require from a partner is a very robust investment in Phase 2b, Phase 3 programs that we can make sure that the partner is investing in the breadth of potential that we think these drugs have the opportunity to achieve.

I’ll just add one final comment. I think we’re now in the financial position that we don’t need to partner and we are in the financial position that we can retain our drugs until we are confident that they’re at a significant value infection point. And the level of interest that we have in the technology of the drugs is extremely high. And so we are going to be very selective about when we do deals, what deals we do and who we’re dealing with. Chad Messer – Needham & Company: All right, thanks a lot to the added information, guys.

Your question comes from the line of Nicholas Bishop with Cowen and company. Nicholas Bishop – Cowen and Company: Hi, good afternoon. Thanks for taking my question, all right. I just have two questions on the SMN program. I wondered about the timing of the initiation of the two, kind of pivotal studies in infants and children. If I remember in your past expectations correctly, it seemed as though you’re sort of expecting to start both of those around the same time at the end of the year. Now it seems, if I’m understanding things correctly, the childhood trial maybe starting a little later. And I’m wondering if you could just comment on sort of what has changed with respect to that trial. And then a second related question is just the extent to which you sort of agree with the FDA on what exactly the endpoints of the infidel onset and child onset studies will be and if you can kind of share progress there with us?

So in terms of timing of the program, the childhood onset program was always scheduled for early 2014. The initiation of the infant is you’re absolutely right. The initiation of both programs is usually pretty contemporaneous with the infant program in late 2013. So they looked on the Gantt chart like they were roughly in the same time frame. In fact, we had some acceleration of our infant programs, and so we expect it to start earlier in the year. That is a study that’s going to start with the dose escalation front end, which would technically be a Phase 2 piece and roll into a Phase 3 study and that’s a study that have death or 16 hours or more ventilation as the endpoint. And so the childhood onset study has not changed at all in timing. But we have accelerated to some extent, the infant program. We’ve had tremendous interactions with the FDA and as well as with European regulatory authorities and things that we do have agreement on what the endpoints were for both of these studies are going to be. Nicholas Bishop – Cowen and Company: Okay. I guess on the childhood one in particular, can you provide anymore granularity on exactly what you need to show in order to be successful on that trial?

What we need to show is the statistical significance in our primary endpoint. Our primary endpoint will be Hammersmith for that study.

And that’s been fully negotiated with the regulatory authorities and highly cooperatively negotiated. Nicholas Bishop – Cowen and Company: Okay.

Nicholas Bishop – Cowen and Company: Okay. That’s a great point.

We will go with adding some detail for you in March. Nicholas Bishop – Cowen and Company: Thanks.

Your next question comes from the line of Steven Willey with Stifel Nicolaus. Steven Willey – Stifel Nicolaus: Yeah, thanks for taking the question. Just a quick question on the STAT3 deal structure with Zeneca; and if I remember correctly, the milestone that they pay in DLBCL in the on-going Phase 2 is correlated to drug performance i.e. patient response. So I guess I’m wondering as you look into these other tumor types, our milestones and kind of opt into no goes also predicted on certain response threshold criteria. And as you think about moving into solid tumors where responses are not a very good surrogate of outcome, does that kind of mean that you want to stay focused on some of these hemolytic indications relative to solid tumor.

You’re correct on the lymphoma milestone. The first lymphoma milestone, it is tied to the performance of the drug. And that’s a product of negotiation, of course and our belief that drug is going to perform well and that’s a bet we’re making. With regard to the others, other indications and other milestones, they’re not tied to performance of the drug, but rather decisions to proceed into various phases of clinical trial. And our focus is broad. Certainly the hemoch opportunities are real. But we think that there are significant opportunities in the solid tumors and of course, they will require outcome measures and that’s another reason why we wanted AZ as partner. Steven Willey – Stifel Nicolaus: Okay. And any from me, but APOC…

Steve, can I add just one little piece to that. Steven Willey – Stifel Nicolaus: Yes, please.

Obviously based on early, but really encouraging Phase 1 data that we saw with STAT3 drug where we just thought two of the diffuse B cell patients with PRs that have been very durable. We can envision if those data are borne down in the Phase 2 study, a rapid path to the market. And that’s why we have the opportunity to earn up to $50 million milestone if the drug performs in a way that could put it on a very rapid path. And so we’re obviously in the middle of that study and neither we nor AZ can predict how it’s going to turn out. But we get rewarded substantially if the early data are born out, in this ongoing study. Steven Willey – Stifel Nicolaus: Okay. And would you envision there being kind of any work on the bio marker front or the diagnostic front with respect to trying to develop something, looking at STAT3 activating mutations that you could kind of continue this thing within the clinic?

We are. We’re of course, attempting to look STAT3 levels. We also know that if you reduce STAT3, it will affect a variety of other things that are potential to be measured in plasma. And AZ is working on other bio markers as well. It’s all a part of the clinical work that needs to get done early on with an anti-cancer drug like STAT3. It’s another thing I think that AZ brings that’s a real benefit to the program.

The ability top create companion diagnostics was very important to them and they’re actively working on that. Steven Willey – Stifel Nicolaus: And then, just a quick question on ApoCIII; you’re going to have the data. It sounds like mid-year in patients with hypertriglyceridemia and you’re also going to have data coming up. It sounds like towards the end of the year in patients that are a little bit more moderate and then also have diabetes which I presume would be a larger market opportunity. So I guess I’m just kind of wondering how you balance that decision as to whether or not you try to move forward independently and what might be a market that you could run on Phase 2I in yourself as opposed to getting year-end data that looks like this drug might have a bigger roll in a much larger patient population?

First of all, we’re tremendously excited about the ApoCIII and we’re tremendously excited about what we’re seeing and we’re really looking forward to presenting the data in both studies. And we will go into much more detail about this later in the year. So I don’t want to get in front of that. What I will tell you is that severe hypertriglyceridemia; greater than a 1000 that is retained after a four week diet control is an indication that we can pursue ourselves. There are other relatively rare diseases where we think this drug has a chance to be very effective, all associated with super-high triglycerides. And again, those are opportunities we can pursue ourselves. The broader opportunity which would be just reducing triglycerides in people who have somewhat elevated triglycerides, particularly the people with diabetes, would almost certainly require an outcome study and that would be something that we would pursue with a partner. And we’ll describe the development path for you a little later in the year and we’ll make a decision about partnering, when and with whom as a function of the dollars and the other benefit that our partner brings to us, and we’ll try to make the best decision for that drug and us and our shareholders that we can when that time comes. I don’t know if I answered your question, but that’s the best I can do today. Steven Willey – Stifel Nicolaus: Fair enough. Thanks.

Your next question comes from the line of Ted Tenthoff with Piper Jaffray. Ted Tenthoff – Piper Jaffray: Great, thank you very much. Two quick housekeeping questions if I may; I guess just on the amortizations, I’m wondering how long are you recognizing these upfront – is there a specific amount or is it kind of each deal like the AstraZeneca, you got $25 million for example. How long is that amortized over and is that the same for Biogen or is each deal different?

Each deal is different. It’s amortized over the duration of the partnership. Milestones, of course, are recognized as 100% revenue at the time they’re paid. Ted Tenthoff – Piper Jaffray: So what is the amortization period for the AZ and for the Biogen deals then?

I don’t know. Beth may, but she may know. But I mean, again, it will be whatever the duration of the partnership is projected to be, for three, four years…

Yeah, for each of the partnerships, it’s different. And Ted, it’s complicated, because under the new accounting rules for a partnership like AZ that has multiple components, the STAT3 is one component and the research is a separate component. The amortization is different for each of those, but it’s not that complicated. But it’s a detailed conversation. So if you want us to follow-up with you on the phone, we can walk you through it in detail. Ted Tenthoff – Piper Jaffray: Fair enough, that is enough. And I think I had another one, but it is either [asked] got it, but keep up the great progress. You guys have a lot of things going on in these, I’m finding these calls very informative, so I appreciate it.

Thank you.

(Operator Instructions) Your next question comes from the line of Carol Werther with Summer Street. Carol Werther – Summer Street Research: Thank you for taking my question. I also have like a housekeeping question with regards to how you’re going to account for KYNAMRO, with sales to Genzyme, Sanofi, are those at cost plus?

Our sales to KYNAMRO to Sanofi are based on negotiated price. But it’s basically a fully burdened cost that includes over, overhead and everything else associated with making the drug. Carol Werther – Summer Street Research: Okay.

And Carol, as I said, we’ve been selling drug to Genzyme for several years now, and so those have been recognized as revenue during that period. Carol Werther – Summer Street Research: Oh, good, that’s helpful. And then with the P&L – the KYNAMRO P&L, so I’m assuming since it’s not a royalty, there is no lag that whatever sales Sanofi reports is what occurs in that quarter?

That’s right. We get paid on a quarterly basis based on actual revenue and expenses in that quarter. Carol Werther – Summer Street Research: Okay. And then I’m assuming you’re supporting – I know you’re support a launch with them, but that doesn’t mean you’re hiring employees, does it?

Oh, heavens no. They’re doing all that. Carol Werther – Summer Street Research: Okay.

And our share of cost is just in the development sharing. So principally, those costs that we share are on the Focus FH, which is the development program that is still going.

Actually there’s an important point that Stan made that we probably didn’t make during the script, which is, as we go through these extensive investments in launch that Genzyme is making, we don’t share any of those expenses. So until the drug is profitable, those are all Genzyme and Sanofi expenses, not ours. And they don’t accrue, so that we have to pay them back later. We have no responsibility for those expenses. Carol Werther – Summer Street Research: Okay. And then my last question is, so the Focus FH study, do we have any idea when it might complete enrollment?

Well, we’re hoping to finish enrollment this year. I can tell you that the enrollment is going well. And in that study, we’re also sort of trying to run it more like a real world – real medical practice situation rather than our rigid Phase 3 program. In that, I mean we do allow a sort of slower onset of dosing and dose adjustments to help manage minor side effects. And so we’re certainly very optimistic that the profile of the drug that will emerge from that is, it will be a much more accurate predictor of the profile of drug in commercial use. Carol Werther – Summer Street Research: Okay. Thank you very much.

Your next question comes from the line of Doug Adams with Tocqueville Asset Management. Doug Adams – Tocqueville Asset Management: That was a reasonable similarly as our name, but…?

Adams, this is right. Doug Adams – Tocqueville Asset Management: Yeah. The Adams part was pretty easy. I have a number of questions. I guess first of all, I was very impressed with your cash management last year. They end up with bigger balance than you guided to was great work for 2012. And so for your guidance on 2013, I was curious as to how much if any of the STAT3 milestone might be pegged into your ending balance being above $325 million or and I assume that you have not included any potential partnerships from any of the drugs that you’re waiting Phase 2 for. Can you give us sort of some guidance in terms of what you have in terms of your revenue expectations and what would be incremental to that as we progress through the year?

What we do is probabilize milestones and other things. And so and we take a very, very conservative approach when we build our financials. So as I recall, I think the zero linear for the STAT3 milestones. So that would be all upside. And again taking a conservative approach to the financials, we don’t include any revenue from new partnerships. So the new partnerships would be upsides. Doug Adams – Tocqueville Asset Management: Okay. And then given the progress you’ve made in your pipeline and you’re having so many in the pipeline. I hate to ask a question about new drug discovery. But I am a little curious with the recent announcement on the biomarker for Huntington’s. And also some of the data that you had previously had been push published. I was curious as to how close are you in terms of selecting a drug for that indication?

Close. Doug Adams – Tocqueville Asset Management: Okay. And then lastly, in terms of the three to five drugs that will come into the pipeline this year, are you anticipating those to be, those that are already within the partnered relationships, or will any of these be new, fully owned Isis candidates?

That will be new, fully owned Isis candidates and there will be partnered. Doug Adams – Tocqueville Asset Management: Okay. Thank you. That’s all the questions I have.

Thank you.

At this time, I’d like to turn it back over to management for closing remarks.

Well, if there are no more questions, I want to thank everyone for your attention and for the thoughtfulness of the questions that you asked. We think 2013 is going to be a great year for us and for our investors and we think we’re just at the tip of the ice berg of value that antisense technology is going to create. So we’re looking forward to this year with really keen anticipation, we look forward to sharing it with you. Thank you.

Thank you. This concludes today’s conference. You may now disconnect.