Welcome to the Ionis Pharmaceuticals First Quarter Financial Results Conference Call. Please note, this event is being recorded. Leading the call today from Ionis is Dr. Stan Crooke, Ionis’ Chairman and CEO. Dr. Crooke, please begin.

Good morning and thanks everyone for joining us on today's call to discuss our first quarter financial results and business highlights. On the call today, Beth will walk you through our financial results, and Lynne had planned to discuss the progress that we're making across our business, including our three Phase 3 drugs and our recent announcement of our new commercial partner for Kynamro. But she has got laryngitis, so she is on the phone and Sarah will go over and do this for her. I will then provide some comments on the Merck-Ionis litigation against Gilead and how this relates to advances we’ve made and continue to make in basic research and technology and how these innovations with core of Ionis is generating continued value. Then I’ll close with a brief summary of our upcoming events. Let me turn with our most recent news, Kynamro. We think Kynamro is a valuable drug. We reacquired Kynamro and found what we believe the ideal partner for Kynamro. By this Kastle deal, we have been impressed with the quality and the experience of the Kastle team, they plan to have a single focus Kynamro, the commitment is high. We believe Kastle will invest in the marketing, sales and support functions that are necessary to commercialize Kynamro to its fullest potential. And Kastle, well, leaves us the opportunity, if Kastle goes well beyond the United States, we think the financial terms are attractive, has the potential up to $95 million in in net payments, we also received 10% common equity stake in Kastle and we will receive double-digit royalties beginning next year. So this is very much a bet on Kynamro and Kastle, our perspective. Just two weeks ago at the AAN meeting, we reported new data for nusinersen from the ongoing open-label…

Yes, thanks, Stan. I remind everyone that this conference call includes forward-looking statements regarding the financial outlook for Ionis, Ionis' business, the business of Akcea Therapeutics and the therapeutic and commercial potential of Ionis' technologies and products and development. Any statement describing Ionis’ goals, expectations, financial or other projections, intentions or beliefs, including commercial potential of nusinersen, IONIX-TTRRx, volanesorsen and 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 as human therapeutics and any endeavor of building a business around such drugs. Ionis' forward-looking statements also involve assumptions that if they never materialize or prove correct could cause its results to differ materially from those expressed or implied by such forward-looking statements. Although Ionis' forward-looking statements reflect a good-faith judgement of its management, these statements are based only on facts and factors currently known by Ionis. As a result, you are cautioned not to rely on these forward-looking statements. These and other risks concerning Ionis' programs are described in additional detail on Ionis' annual report on Form 10-K for the year ended December 31, 2015, which is on file with the SEC. Copies of these and other documents are available from the company. And now, I would like to turn the call over to Beth.

Thanks, Wade. Good morning, everyone and thank you for joining us. I am pleased to report that we maintained our strong financial performance and in the first quarter with a pro forma net operating loss of $35 million and more than $700 million of cash. Our expenses for the quarter were right on track and because much of our planned revenue for the year is in the latter part of the year, we are on track to meet our guidance of pro forma net operating loss in the low $60 million range and the year-in cash balance in excess of $600 million. In our year-end call in February, we projected 2016 revenue of more than $240 million, the majority of which comes from milestone payments as our partner program advance. Our ability to generate substantial revenue from milestone payments is the natural result of our large advancing pipeline and our partnering successes. Because we are generating such a significant amount of our revenue from milestone payments, our revenue and our pro forma net operating loss fluctuates on a quarterly basis. The variations and the timing of our revenue quarter-to-quarter and year-to-year are expected and consistent with our projections. In the first quarter of 2016, we earned $37 million in revenue, including more than $16 million from the amortization of up-front payments and more than $15 million from milestone payments. Our milestone payments in the first quarter included $12.5 million from Biogen for advancing nusinersen and IONIS-BIIB4Rx, and $1.5 million from GSK when they initiated the Phase 1 study for IONIS-HBV-LRx. Under our agreement with Kastle, we are eligible to earn up to $95 million, including $15 million up-front payment, which we will recognize in the second quarter. An additional $10 million payment on the third anniversary of the deal and…

Thanks, Beth. We are well along in preparation of NDA packages for all three of our Phase 3 drugs in anticipation of Phase 3 data for each of them in the first half of next year. As Stan mentioned, two weeks ago at the AAN meeting, we provided an update from our ongoing Phase 2 open-label study in infants with Type 1 SMA. When we began the study, we hoped to delay the progression of SMA to keep these babies from losing more muscle function and succumbing to respiratory failure. What we are observing in this study has greatly exceeded our hopes. We are observing the infants in this study treated with nusinersen are not only living longer than natural history would project, but also improving. We have yet to reach a median event-free age in this study. All of our infants continuing in the study are now toddlers. They are all over the age of 2 and several over 3 years old. And these children are doing things that you would never expect from an infant with Type 1 SMA. These infants are living longer without requiring permanent respiratory assistance. We are also observing increases in their muscle function measured by CHOP INTEND scores that correlates with the achievements of new and unexpected development milestones. When we last updated, we had infants in this study sitting unaided. This is remarkable for babies diagnosed with Type 1 SMA, who are never expected to sit. As of the latest data analysis in January, even more babies are sitting unaided. But remarkably, we now have babies crawling, standing and even walking. We also provided for the first time at AAN, a look at the electrophysiological measurements we are collecting in the study. We have observed increases from baseline in CMAP after two…

Thanks, Sarah. We have three Phase 3 drugs. They are all first in class, they are all new chemical entities, better in development for three different uses where we are completing Phase 3 clinical trials at the same time, this achievement that we're tremendously proud of, one that very if any biotech companies have achieved. There are solid reasons, possibly optimistic about each of these Phase 3 programs. First, consider [indiscernible] and we're comparing our Phase 2 results to historical controls, being the physicians treating these patients are excited about what we're seeing, These data give us confidence that the Phase 3 trials will confirm optimism. Now focus on volanesorsen, drug designed to treat patients with extremely elevated triglycerides. Primary endpoint in our Phase 3 trial for volanesorsen is triglyceride reduction. In our Phase 3 program with an extensive amount of data that shows that volanesorsen substantially reduced triglycerides in every patient population we studied from patients with moderate to extremely high triglycerides including dramatic reduction in patients with FCS. Phase 2 data set then supports our optimism that the Phase 3 trials from volanesorsen will be positive as well. And we have a similar position on IONIS-TTRRx. Note the cause of TTR amyloidosis is a TTR protein, protein that causes amyloid acts to form and to grow. As shown in normal volunteers and patients in 80% average reduction of TTR protein. Moreover in Dr. Benson's study in patients with cardiac form of TTR amyloidosis, these significant reductions in TTR are correlated with patients. Again, multiple data sets support our optimism with the Phase 3 trial of IONIS-TTRRx will be positive. But as we look ahead, we have the opportunity to show benefit with not just one Phase 3 drug, three Phase 3 drugs and our three new chemical entities…

[Operator Instructions] The first question comes from Jim Birchenough with Wells Fargo Securities. Please go ahead.

Just on the S&A program, Stan perhaps in terms of nursing and getting it to patients as quickly as possible, can you maybe discuss some of the regulatory options and whether an accelerated call filing is possible or whether there is some way to shorten the review cycle once you have phase 3 data, just interested in what measures are open to shorten that time to get this to the patient?

I’m just a bit uncomfortable getting into any detail about this given the fact that we’re engaged in a variety of conversations with regulatory agencies around the world and of course I don’t want to get into kind of argument. I think what I can say is that we’ve continued to have these productive interactions and we have asked that we believe assures earliest filing and as much as we possibly can, the most rapid and productive interactions that would lead to the earliest approval that's really all I feel comfortable touching just now and Lynne with her laryngitis may have less to say, you want to add or subtract anything Lynne?

No, I was just going to say exactly what you did, and thank you.

I tried, I can’t pull out detail Jim.

That's understandable, so maybe just a second question on TTR program and the update we’re going to get shortly from either those updates would we get some visibility on what the issue might be holding back the cardio TTR program and is there any additional detail you can just provide on that?

We will be providing an update in July on the open label cardiac study done by Dr. Benson and we’re encouraged by what we’re seeing. And I should also add of course that familial polyneuropathy study continues nicely. The concern therefore focuses and derives from monitoring and questions that the cardiovascular division or cardio renal division of the FDA asked. We’re making sure that this very long outcome study going to be possible. Little concerns do focus on platelet reductions we have seen some platelet reductions in patients treated with TTR, included essentially all of the negative earning possible, hard to understand the mechanism. What I can tell you right now is we believe those events are quite manageable and monitorable as we are doing in the FAP study and that we think there is potential for some interaction between amyloid protein TTR, although proteins are known to associate with platelets that cause issues and the fact that we are affecting those protein levels and that work is still in progress and so that's about as much as I can say today.

And then Stan maybe just to follow-up quickly on that, I think what I'm hearing is that this is unique situation involving the interaction of the antisense with the amyloid and amyloid with the platelet but something I'm presuming you haven’t seen in any of the program as you’ve been developing your antisense over the last several decades?

With the [indiscernible] chemistry which is what chemistry is that’s in the TTR drug. They are now, I would guess more than 10,000 patients that have been treated and we have many thousands of patients that we have treated that our safety database. They also have patients who have been treated now for longer than five years on amro. And so on in a database of that size of course you're going to see some platelet reductions in this, there are all kinds of platelet reduction go on in clinical trials but the observations in the TTR study appear to be limited to the TTR disease situation, I think one of the things that everyone should recall is that as we advance our technology into a wide range of diseases very sick patients that cover drug disease interactions that you have to deal with, this is manageable in a TTR patients and we are just that.

The next question comes from Chad Messer with Needham & Company. Please go ahead.

A couple more on TTR, with the cardio program you’re enrolling patients with both familial and wild-type. I presume there is an analogous situation in neuro, wanted to know if you're going to do anything to address those patients. And then if I can just add another one on TTR, you now with your partner GSK, you kind of broadly going after all the TTR patients but sometimes back you made a decision to focus in neuro, just wondering if there is a rationale at the time for going after that sub-population.

I think let me make sure I understand your question but in the outcome study, GSK plans to initiate in the cardiac form of the disease, you’re right, it will be both the familial as well as wild-type and the decision to do that was based on a great bit of work that GSK did to others that demonstrated that once the diagnosis will fade, there might be some difference in the agents. Once the diagnosis was made the clinical course was very similar. In the FAP study, we have a significant fraction of patients who do have cardiac form of the disease and they will be evaluated definitely as a subgroup, a specified subgroup phase 3 study and know. If I understand the question that you asked final question that you asked about the history, it goes like this, we initiated the FAP study immediately after Phase 1. And we want to get some early evidence in that study of results as particularly GSK wanted that before beginning cardiac study. And there was also a good bit of work going on to evaluate what was the best course with the cardiac patient. So that time was very well spent because GSK decided that initiate a large outcome study just to first hard endpoint cardio vascular outcome study needed to be conducted in this patient population. But it was staggered, it was done I think as you expect issue information and help with the design of what would be an optimal cardiac study. But did I get your questions right Chad?

Yeah mostly, I guess I was just wondering if there was something about the end points in neuro that you thought might be easier or easier to hit or more well understood and I think maybe to summarize what I'm hearing you saying, correct me if I'm wrong there was more to learn about the planning of a cardio study and so waiting there may be made more sense?

Well, some, yeah, remember we have a partner and these investments are very substantial, we move from Phase 1 to Phase 3, FAP and so the decision was to gain some experience before investing in this very large cardiac outcome study. And to use that time to design the most wholesome approach to any broad approval in the cardiac indication. So it was a bit of a decision having to do with costs and risks and the amount of information that you like to have before you go all in.

The next question comes from Jessica Fye with JP Morgan. Please go ahead.

Maybe going back to the regulatory side with SMA, Stan you talked about the risk of filing too soon without completely understanding what the regulators want to see as it could ultimately result in a longer time interventional approval compared to getting it right the first time. Within that framework, can you give us any color on whether the FDA agrees on the natural history information that you’ve gathered about whether that’s reflective of the current standard of care. And then second on LP(a) program in aortic stenosis, it looks like there is evidence that patient progress faster in their stenosis when they have elevated LP(a). But can you talk about any evidence that the elevated levels are truly colossal, so that we can have greater confidence than bringing them down would help slow that progression? Thanks.

We have had a series of conversations with regulatory agencies and while there are always questions about historical controls, I think there is general agreement that the standard of care in our study is as close to equivalent standard of care that was in the natural history study that we used as a comparison that could possibly be. And the study was done in the same centers by the same physicians and almost contemporaneously. And the other thing to remember is that the clinical course has not changed several years. So I think I would not want to apply that imply that regulatory agencies are ever thrilled about having the historical controls as an approach but as - in that context I think the historical controls are considered high quality and appropriate historical controls. And then, your question about - did I answer that question, Jessica?

Yes, thank you.

And with regard to aortic stenosis, you're absolutely right I think the data support the notion that patients who have elevated LP(a) and aortic stenosis have a more rapidly progressing clinical course leading eventually to either valve replacement or congestive heart failure. And the evidence that [indiscernible] is also both genetic that is they are genetic studies have suggested and mechanistic. Bulk of the lipid community at least I talk to feel that the principal problem is oxidized phospholipids, which stimulate the anti-inflammatory response wherever they accumulate including vessels and valves. And APO(a) is the principal oxidized phospholipid lipoprotein. And so there is evidence certainly that suggests that APO(a) is causing, when you blaze your ground with new targets and new opportunities, in the end you ultimately prove the truth of that the drug that works and so that's what we're doing. And obviously if you have additional questions, we can set you up with [indiscernible] two of the world leaders in scanning APO(a) and it’s physiologic effects.

The next question comes from Steve Willey with Stifel. Please go ahead.

Hi this is Philomena Kamya in for Steven Willey, thanks for taking the questions, we were just wondering when we can expect an update from the STAT3 program?

We've updated it some and it’s progressing. As I said, one of those stages in which you’re making progress, but there is not a cut point or an end point that is appropriate one to bring all the data together. What I would say is, we and AZ are encouraged by what we’re seeing and the trials are progressing. Lynne, do you want to add anything to that if you can?

No. The study is ongoing and I think we plan to have data next year on that.

We have seen very interesting results with complete responses and we’ve discussed the issues on looking at both the [indiscernible] activities as well as the direct anti-tumor effects and the decision to move in combination with that.

Understood. And just as a second question, there is actually a collaboration with Biogen, can we expect the disclosure of the target for BIIB, 4, 5 and 6 soon?

Well, they will be disclosed, but the decision about exactly when we will be able to talk about what those targets are is Biogen’s.

May I add one thing Stan? The one thing that you might do is look at the various presentations that we made at AAN and that may give you some strong clues as to what those targets could be.

We mentioned at the AAN that we had systematically evaluated where those go after in [indiscernible] and as we learn, they were very broadly distributed. We moved more aggressively into a wide range of diseases and we emphasized that we were moving just some of the very large categories of diseases, just Parkinson’s and Alzheimer’s and other types of neurodegenerative disorders. So it would be a perfectly reasonable thing to assume that those Biogen drugs are targeting diseases like those.

Okay, great. Thank you very much and congratulations on the progress made thus far.

The next question comes from Eric Schmidt with Cowen and Company. Please go ahead.

Good morning. Thanks for taking my question. Stan, on the TTRRx program now, you’ve indicated that the monitoring issue related to thrombocytopenia, can you give us a sense of the scope of the thrombocytopenia that you observed in that population. Was it a substantial percentage, was there any grade 3 or grade 4 events?

I don’t want to get into more detail in a study that is ongoing and blind, give you numbers that I know will change as we progress. These TTR patients are very sick, have multiple organ failures. They have problems in renal function, platelets and many other things that are ongoing as a result of the disease process. And we have had a handful of -- less than that of, meaningful declines in platelets that of course we’ve been monitoring carefully. That is really all I’m comfortable saying. Lynne, do you want to lend on that at all?

No.

Okay. Maybe in terms of the question that he was asking about this being a potential platform issue or the concern out that this could be a platform issue, I know you have a very large safety database of generation 2.0 patients that have been treated, can you give us a sense of the incidence of ITP in that database, have you looked at that?

Well, we haven’t. ITP really just boils down to finding platelet antibodies and no other cause of platelet reduction. And we have not had sufficient, there have been declines in platelets across a big database, but there hasn’t been sufficient platelet issues that we’ve focused significantly on until we begun encountering these issues. So they’re very limited. And we’re, there will be variations depending on the disease and the sequence and so on and that effect. We think the problems that we’re experiencing are related to the drug disease interaction.

Is there a preclinical model that could inform that hypothesis that you see it, again, I don’t know if there is even a lot of TTR where you can still clear?

And there have been studies that have shown that amyloid protein interacts with platelets and activates them and that sort of thing and of course we do most of our -- we do our large scale testing in monkeys and in monkeys, you have all kinds of complicated issues that complement so on. So it’s in nature that we have to primarily get into clinic and that’s what we’re doing.

Okay. Thanks. Maybe just a quick one for Beth, obviously, it looks like the 2016 revenue is second half weighted, but are there particular lumpy or large milestone payments that you are expecting that we could get a read on just to provide a little bit more visibility on the incoming revenues?

Sure, Eric. The three in particular that we’ve been guiding folks to are of course the $55 million milestone from Bayer that we would earn on the completion of the Phase 2 study in the dialysis patients. And that will be late this year we would anticipate. There is a $25 million milestone payment that we could earn from AstraZeneca for advancing the first drug into development under the cardiorenal collaboration with them and that would be second half. And then the third large milestone payment is $10 million from Johnson & Johnson for moving a first drug under that collaboration into development. And then of course there is a number of other important and fairly significant milestone payments under Biogen and both research and drug development that could come in throughout the course of the year.

Perfect. That’s helpful.

Eric, we’ve been doing this for a long time. It was this model and we’re highly confident that we’re going to meet or exceed our financial guidance.

The next question comes from Salveen Richter with Goldman Sachs. Please go ahead.

Thanks for taking my question. Just with regard to TTR again, so in terms of the platelet issue, would that be particularly problematic in patients with cardiomyopathy whether either in conjunction with polyneuropathy or is that primary manifestation.

We don’t think so. We think the difference is a different division of the FDA, but there is no reason to believe that the situation will be different patient populations. And so we don’t think so.

Great. And then could you help us frame expectations for the Factor XI data coming in the second half, where should we look for it and what exactly, how many patients exactly we’re looking for here??

Remember, this is a study to set the stage for the large studies that Bayer will be conducting in patients with [Technical Difficulty] function. And so the main goal of the study is to understand the pharmacokinetics, so we could define dose and dose frequency because there are difference in clearance rate, patients who have failure and are undergoing dialysis and those sorts of things. So, our primary goal is safety and to help us pick dose or doses charged studies. We’ll be looking at patients who need anti-thrombosis and that renal function. So that’s what we’re doing. I can’t remember the exact numbers, it’s I think 40 or 50 patients. Lynne, do you remember?

It’s between 40 and 50 patients. Yeah.

And it’s going along nicely. And I think we are very confident today that we will have all the information we need from the study based on what we’re seeing to help us pick a good dose and a good dose schedule, both for the upcoming studies. So we think we’re very optimistic, it’s going to give us exactly what we need.

The next question comes from Yale Jen with Laidlaw & Company. Please go ahead.

Good morning and thanks for taking the questions. Many of those have been answered. So I have two big ones. The first one is that in terms of the patient recruitment for the Nusinersen Phase 3 study in infants, we know that you guys guided that patient recruitment should be completed this quarter, is there any update on that or anything in terms of status?

It’s progressing as we described.

Again, you anticipated to complete this quarter as your previous guidance.

Yes, yes. It will get done.

Okay. And the next question is for the Dr. Benson’s presentation for the TTR, and what venue this presentation will be presented?

I can’t remember, but I imagine, Sarah or Lynne, it does.

Yeah. It’s at the ISA meeting, which is the International Society of Amyloidosis that’s held over the 4th of July weekend.

Okay. Great. And the last question here is one of the programs have not been mentioned too much which is for the [indiscernible] I guess that the Phase 1/2 study was started in the third quarter, would you have any other comment or maybe any color on this program?

Not today. It’s progressing.

The next question is a follow-up from Jim Birchenough with Wells Fargo Securities. Please go ahead.

Hi, guys. One of the program you haven’t spent a lot of time on discussing and maybe Stan with GSK is a partner, Hepatitis B is an emerging area of focus and just wondering if you can talk about the targets you’re pursuing in that collaboration and how you think about that program fitting in with other developments in Hep B drug developments?

No. We’re excited about it and GSK is very excited about it. There are a couple of drugs in that program and unfortunately Jim, it’s a very competitive area and so GSK is anxious that we not discuss it in any more detail.

Got it. And I hate to do this, but just going back to the platelet issue in the TTR program, I think it’s important to understand what this isn’t and so just wondering is there an issue of antibody generation to the antisense that’s interacting with the platelet, is there any direct antisense effect on platelets that you’ve seen in the past, just trying to rule out things that might be concerning more broadly?

We have not ever identified, not ever, I don’t, I direct to anti platelet anti ASO antibody.

This concludes our question-and-answer session. I would like to turn the conference back over to Dr. Crooke for any closing remarks.

Well, thank you very much everyone and appreciate all the thoughtful questions. We continue to make broad progress and we’re looking forward to the completion of these Phase 3 programs successfully again, updating you in more detail on the Phase 2 pipeline and the progress and the technology in coming months. Thanks very much.

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