Ionis Pharmaceuticals Inc (IONS) 2004 Q4 法說會逐字稿

Welcome to Isis Pharmaceuticals' fourth quarter 2004 financial results conference call.

During the presentation all participants will be in a listen-only mode.

Afterwards we will conduct a question and answer session.

At that time if you have a question please press 1 followed by 4 on your telephone.

As a reminder, this conference is being recorded, Tuesday, March 1st, 2005.

I'll now turn the conference over to Dr. Stanley Crooke, Chairman and Chief Executive Officer of Isis Pharmaceuticals.

Please proceed, sir.

Stanley Crooke, MD, PhD: Thank you very much.

Thanks everyone for joining us on today's conference call to discuss our unaudited financial results and the highlights for fourth quarter 2004, as well as the goals for 2005.

Participating with me today are Lynne Parshall, Executive Vice President and CFO;

Beth Halgen, Vice President of Finance;

Mike Treble who has recently joined us, along with Dave Ecker, leads our Ibis division; and Christina Peterson, Executive Director of Corporate Communications.

We look forward to the opportunity to review our 2004 accomplishments and to discuss our plans with you for this year.

In the past year we've continued to advance our pipeline.

We've made solid progress in all collaborations and we have expanded our leadership position in antisense technology.

What I'll do is review highlights from the past year, describe goals for coming year and Lynne will lead with a discussion of our year end financial results.

At the conclusion of our prepared remarks, of course, we'll be happy to answer questions that you may have.

Before we begin, Christina, will you review our forward-looking statements?

This conference call includes forward-looking statements regarding our business, the financial position of Isis Pharmaceuticals and the therapeutic and commercial potential of our technologies and products in development.

Any statement describing our goals, expectations, intentions or beliefs is a forward-looking statement and should be considered an at-risk statement, including statements that are described as Isis's clinical 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 as human therapeutics and developing, commercializing technology and systems used to identify infectious agents and in the endeavor of building a business around such products and services.

Actual results could differ material from those discussed in this conference call.

As a result you are cautioned not to rely on these forward-looking statements.

These and other risks concerning Isis' research and development programs are described in additional detail in Isis's annual report on Form 10-K for the year ended December 31st, 2003 and quarterly report on Form 10-Q for the quarter ended September 30th, 2004 which are on file with the U.S.

Securities and Exchange Commission.

Copies of these and other documents are available from the company.

The information contained in this conference call reflects preliminary financial results and Isis's 2004 audit has not yet been completed.

Under section 404 of the Sarbanes-Oxley Act of 2002, new integrated audit requirements will not be met until Isis has completed all the steps necessary to file its 2004 audited financial statements with the SEC.

Now I'll turn the call over to Lynne to discuss our financial results for this quarter.

Thanks, Christina.

My comments are going to be based on today's financial press release.

I'll discuss the following financial aspects of the quarter and year ended December 31, 2004.

Our loss from operations, our revenue, our operating expenses, net loss, Ibis operating segment reporting and our balance sheet, and then I'll conclude with 2005 guidance.

In line with 2004 guidance our pro forma loss was $85.4 million for 2004 which is adjusted from generally accepted accounting principles or GAAP to exclude non-cash compensation benefit of $6,000 and non-cash costs associated with restructuring activities of $32.4 million.

This compares to our loss from operations for 2003 of $76.3 million, which excluded $913,000 in non-cash compensation charges and restructuring charges of $1.8 million.

Our loss from operations for 2004 was $117.9 million, compared to $79 million in 2003 according to GAAP.

The increase in the loss from operations in 2004 was principally a result of non-cash costs associated with restructuring activities of $32.4 million.

These costs are related to our recent strategic decision to reorganize and refocus our resources to advance our most promising second generation drugs and to continue our development of antisense technologies.

We believe the cost containment measures we have implemented should significantly decrease our cash use.

Total revenue for the quarter and year ended December 31, 2004 was $11.4 million and $42.6 million respectively, compared to $9.7 million and $50 million for the same periods in 2003.

The decrease in revenue on an annual basis primarily reflects the completion of our Phase III clinical trial of Affinitak with an associated reduction in revenue.

This increase is offset in part by increased revenue from our alliances and licenses, particularly with government agencies related to our TIGER biosensor program, our partnership with Alnylam focused on discovering RNAi drugs, our license agreement with Eyetech for milestone payments associated with Macugen, and our broad antisense drug discovery alliances with Lilly from which we earned two milestone payments.

Our revenue may fluctuate from period to period based on the nature and timing of license fees and milestones earned and other deliverables under agreements with our partners.

For example our fourth quarter 2004 revenue increased over the same period in 2003 primarily as a result of the $3 million milestone we received from Eyetech associated with Macugen's marketing clearance from the FDA for the treatment of age-related macular degeneration.

A milestone payment is a one time occurrence that provides us with early precommercialization revenue based on our partner's successes.

We endeavor to structure all of our deals with well defined milestones so we have many opportunities to earn these payments at multiple points during the development cycle of a partner's drug or drugs or product.

As multiple assets move through development, milestones allow us to accelerate the value we receive from our partnerships rather than depending on and waiting for products to be commercialized.

Our operating expenses were $63.2 million and $160.5 million for the quarter and year ended December 31, 2004 respectively, compared to $31.2 million and $129 million for the same periods in 2003 according to GAAP.

Our 2004 operating expenses included $32.4 million in non-cash costs associated with restructuring activities, consisting principally of write-downs of tangible and and intangible assets, such as equipment and patents for areas that are non-essential to our current focus.

Further restructuring charges included those associated with employee termination costs and the closing of our Singapore laboratory will be incurred in the first quarter 2005.

We're closing our Singapore laboratory to further reduce our cash use.

We will continue our micro RNA program in our research labs in the U.S.

2003 annual operating expenses included restructuring charge of $1.8 million.

Total operating expenses for the year ended December 31, 2004 included a non-cash compensation benefit of approximately $6,000 related to variable accounting for stock options, compared to a non-cash compensation expense of $913,000 for 2003.

Variable accounting for stock options can result in significant increases and decrease in non-cash compensation expense related to stock options, as a result of the variability in our stock price.

As illustrated in the selected financial information in our press release, operating expenses on a pro forma basis for the quarter and year ended December 31, 2004, were $30.1 million and $128.1 million respectively, compared to $31.2 million and $126.3 million for the same periods in 2003.

Operating expenses on a pro forma basis were adjusted from GAAP to exclude non-cash compensation related to stock options and costs associated with restructuring activities for both years.

The decrease in fourth quarter operating expenses on a pro forma basis compared to the same period in 2003 included reduced spending by our Ibis division.

In the fourth quarter of 2003 we purchased a substantial amount of equipment to support various government contracts.

In the fourth quarter of 2004 we had a significantly lower volume of such equipment purchases.

The decrease in fourth quarter 2004 operating expenses on a pro forma basis compared to the same periods in 2003 was also due to the completion of our development activities for Alicaforsen for Crohn's disease, ISIS 14803 for Hepatitis C and ISIS 104838 for rheumatoid arthritis.

These reductions were partially offset by increased spending in 2004 compared to 2003 to support completion of our large Phase II clinical trials for Alicaforsen enema in patients with ulcerative colitis.

Additionally, reductions were partially offset by increased spending to support our highest priority second generation drug candidate, ISIS 301012 for high cholesterol and ISIS 113715 for type II diabetes.

Further, increased annual spending on these two drugs was the primary reason for the increased year to date expenditures in 2004 compared to 2003.

Our net loss applicable to common stock for the quarter and year ended December 31, 2004, was $57.5 million or $1.00 per share and $142.9 million or $2.52 per share respectively.

This compared with a net loss applicable to common stock of $25.6 million or $0.46 per share and $95.7 million or $1.73 per share for the same periods in 2003.

The increase in net loss applicable to common stock was the result of the increase in loss from operations as well as a decrease in investment income due to our lower average cash balances in 2004 compared to 2003.

Further, the increase in net loss applicable to common stock was always a result of an increase in interest expense, primarily due to the effect of a higher debt balance during 2004 compared to 2003 and a non-cash loss of investments of $5.1 million principally related to impairment of our equity investment in Alnylam.

In 2003 we had non-cash loss on investments of $2.4 million related to the impairment of our investments in Antisense Therapeutics Limited (ATL) and Hybridon.

During 2004, we sold our Hybridon stock for an amount in excess of our carrying value.

The 2004 loss on investments reflect the decrease in the market value of Alnylam stock in 2004 which we believe was primarily the result of financial market conditions related to biotechnology companies.

In the past company of months Alnylam's stock has recovered and gained in value which we attribute to Alnylam's progress in pioneering research and drug discovery programs and increase recognition that Alnylam is the center of excellence in RNAi.

The Isis-Alnylam alliance established in 2004 to develop RNAi drugs provides us with an opportunity to realize substantial value for our pioneering work in antisense mechanisms and oligonucleotide chemistry.

Additionally, this alliance is an example of our strategy to participate in all areas of RNA-based drug discovery.

Now I'll talk a little bit about our Ibis division.

We believe it's the appropriate time for us to begin to discuss the financial results of Ibis division as a separate operating segment from the consolidated results of the company.

We made this decision because of the technological and organizational advancements that the Ibis division made during 2004 to advance our TIGER biosensor program.

Our future commercialization plans for TIGER technology and the significant contribution of the division has made to Isis's 2004 revenue.

Our Ibis division has invented TIGER, a platform technology that has the potential to revolutionize the identification infectious diseases.

Our Ibis division was founded to take advantage of our expertise in RNA and use that knowledge and innovation to create a fundamentally different approach for identification of bacterial and viral organisms.

Our talented scientists have applied proprietory technology to develop a biological sensor to identify a broad range of infectious organisms in a sample, including those that are newly emerging, genetically altered, and unculturable.

To our knowledge no other sensor is capable of performing this task.

To date we've successfully demonstrated proof of principle of our TIGER biosensor through the identification of variety of bacteria and viruses in both environmental and human clinical samples.

During 2004, our Ibis team add development of TIGER technology to include application developments for epidemiological surveillance and biological products screening.

In addition, our scientists continue to expand our microbial agent database to support broader applications of the technology.

These applications represent first of many we plan to develop to enhance the TIGER systems commercial value and opportunity in the government, research, medical, and diagnostics market.

The advancement of TIGER technology application development has brought us closer to realizing the commercial potential of this unique and proprietary technology.

To continue to this process we recently hired Michael Treble to head our Ibis division.

Mike's knowledge and expertise in product development and commercializing technologies and diagnostics will compliment the expertise of Dr. Dave Ecker, the scientific leader of our TIGER technology development initiative.

Historically, our Ibis division has generated revenue from grants and contracts from the U.S. government agencies, including the Defense Advance Research Project Agency (DARPA), the Center for Disease Control and Prevention, the Federal Bureau of Investigation, and the National Institute of Allergy and Infectious Diseases which is part of the National Institute of Health and the national Institute of Standards and Technology.

During 2004 we received grants and contracts for up to $29.5 million in multi-year funding from government agencies to further the development of our TIGER technology.

The Ibis division generated revenue of $2 million and $10.9 million for the quarter and year ended December 31, 2004 respectively, including revenue related to equipment purchased on behalf of the respective government agency.

The division's operating expenses were $3 million and $14.2 million for the quarter and year ended December 31, 2004, respectively.

These expenses principally included scientific labor and equipment purchase in support of government contracts and grants we have received, lab supplies and specialized bioinformatic consulting.

In general, when Ibis purchases equipment it records expenses associated with the purchase and corresponding revenue.

Ibis's revenue and operating expenses may fluctuate on a quarter to quarter basis due primarily to the timing of the equipment purchased in support of our government contracts and grants.

During the quarter and year ended December 31, 2004, the Ibis operating segment generated net operating losses of $995,000 and $3.3 million respectively.

Now to our balance sheet.

We ended the year with cash, cash equivalents and short-term investments of $103.9 million and working capital of $82.2 million.

At December 31, 2003, we had cash, cash equivalents and short-term investments of $215.5 million and working capital of $194 million.

Cash, cash equivalents and short-term investments decreased primarily as a result of cash used in operations, our equity investment in Alnylam and retirement of partner debt.

We're pleased to have met projected NOL goal for 2004.

Looking ahead we project our 2005 net operating loss excluding cost associated with restructuring activities and non-cash compensation expense from stock options to be in the lower $50 million range.

Based on our current operating plan with reasonable assumptions for new sources of revenue and cash, we believe our resorts will be sufficient to meet our anticipated requirements through at least mid-2007.

Importantly, the cost containment measures we've recently implemented are consistent with accomplishing our corporate and clinical goals for this year.

On January 10th we announced reorganization of the company.

Through this reorganization we're stream-lining our efforts and moving our most exciting second-generation drugs forward in development to value inflection points where it's most likely to obtain best terms from licensing partners.

Cumulative data from numerous clinical trials show that our and our partner's second generation antisense drugs are performing well.

We consistently demonstrated these drugs inhibit their intended target, resulting in then desired pharmacological effects, such as cholesterol lowering with ISIS 301012 or the killing of prostate cancer cells with OGX 011.

Through our investment innovation and passion we created antisense technology, a technology that allows us to repeatedly produce new drug candidates -- many more than we could fund on our own.

It's our job and in the best interest of our shareholders that we take advantage of the technologies, productivity and the number of drug assets that we own in order to recognize the full value of what we've created.

Therefore, our goal is to license our drugs as early in the development process as possible on as attractive terms as possible.

Through this approach we will be able to decrease our development expenses and our risk on any one product and apply those resources towards moving the numerous product opportunities from our drug discovery research programs into our pipeline.

This continuous cycle of drug development to partnering, to the introduction of new drugs that replenish our pipeline, will not only grow the number of antisense drugs in development, but allow us to continue to participate in commercial success of numerous drugs.

In 2005 we plan to continue to extract value from our TIGER biosensor technology and our intellectual property states both of which generated substantial revenue in 2004.

Revenue generated from these assets provides additional funding for clinical development program and supports the overall progression of pipeline.

We believe TIGER has great potential, not only in the government sector but also in the non-government commercial market.

We're very pleased with the technology's development progress and look forward to sharing the commercial business plan for our Ibis division in the next few months.

Our patent portfolio and RNA-based drug discovery expertise continue to be the foundation for our ability to enter into revenue generating licensing transactions and drug discovery and development partnerships.

This is estate represents the strength of our scientific innovation and the broad utility of our investments within the pharmaceutical and diagnostic industries.

Most importantly, our patent portfolio protects our product in development from competition and protects our leadership role in the antisense field.

I would now like to turn the call over to Stan, who will review our development goals for the next 12 to 18 months and the progress we've made in 2004.

Stanley Crooke, MD, PhD: Thanks, Lynne.

Our long-term goals remain as they have been, which are to complete the development of the antisense platform, convert that platform to many drugs that provide benefit to patients and commercial success and benefit to our shareholders.

In addition, of course, we are going to complete the development of TIGER and see that to commercial reality.

The objectives that we have for 2005-2006 are all focused on those long-term objectives.

Now, what we want to do is design development programs to identify targets and clinical opportunities in which we can create development programs that rapidly demonstrate that the clinical profile and strong commercial potential of each of the drugs in our pipeline.

The goal of any clinical development program is to conduct a series of studies to answer key questions about the drug and then as time goes on to flesh out its target profile, preparing it for licensing and marketing.

So now on to our goals.

Isis 301012 is an inhibitor of apoB-100 It's a drug that we're tremendously excited about.

It's a drug that we have already shown is active in human beings at very attractive doses in lowering apoB-100 and bad cholesterol.

Our primary task in 2005 is to continue the development of this drug, it's a sub-cutaneous form, and also move the oral along.

To do that we plan to understand the optimal dose schedule for the drug as a single agent.

Remember that this drug can be administered as infrequently as perhaps quarterly, so understanding the dose and schedule in patients with high cholesterol is a crucial task that we need to undertake.

We need to prepare to initiate combination studies with Lipitor and with other drugs because clearly cholesterol lowering is a goal that's not achieved with current drugs and 301012 will often be used in combination with more traditional drugs.

Third, we need to advance 301012 into additional trials in patients with high cholesterol to evaluate the effects of longer term dosing.

We're also making progress in our oral formulation program and we plan this year to define first the oral bioviability of ISIS 301012.

Remember that we've previously shown with members of the same chemical class that we can achieve significant oral bioviability with solid dose forms in men, and because we can measure the target apoB-100 in blood and cholesterol so readily, we plan to take advantage of the opportunity to demonstrate that the oral product not only is orally bioviable, but is capable of producing pharmacology as a sub-q produced earlier last year.

So we will be looking at apoB-100, the target for the drug as well as LDL, VLDL and other components of cholesterol in man.

Our future clinical plans are designed to accomplish those goals.

This year we'll complete and report data from the ongoing Phase 1 single agent study in normal volunteers that demonstrated such exciting activity with the drug.

That study is newly completed and we will wrap it up and report the data in more detail in a scientific meeting this year.

We also intend to initiate a Phase II trial to evaluate as I said the dose and dose schedule for ISIS 301012 in patients with high cholesterol with longer dosing.

Additionally, we will initiate the -- a trial in which patients are taking statin.

And finally, shortly we will initiate a trial of the oral formulation that in essence will replicate the experience that we developed last year with the first study with the sub-q drug.

As you may recall as I mentioned in 2004 we did report positive data with the sub-q drug.

In normal volunteers who had borderline elevated cholesterol, in that study Isis 301012 dosed for just a month produced a dose-depend, rapid, prolonged reduction of apoB-100, low density lipo protein LDL, very low density lipo protein VLDL and in total cholesterol.

And we're very pleased about that, as I mentioned, we will be reporting the final results of that trial this year.

We also reported that we had demonstrated that the oral formulation of Isis 301012 was able to reduce cholesterol in animals, so this is the same formulation that we'll be using in man and we were able to demonstrate not only that it was bioviable but it was absorbed and available in sufficient amounts that it could reduce cholesterol and apoB-100 in these animals.

Of course, that adds to our confidence as we move into the human trials with the oral form of 301012.

ISIS 113715 is an inhibitor of PTP-1B.

PTP-1B is a very exciting target in the treatment of type II diabetes.

It's a novel insulin sensitizer and we have reported results from a wide range of animal clinical -- or animal trials that demonstrate this drug as a unique profile and has an unique opportunity to do something great for people with type II diabetes.

Now, what we need to accomplish in 2005 with regard to ISIS 113715 are first, to demonstrate safety of the drug as a single agent in patients with type II diabetes and to gain experience out of that trial that would support even longer term dosing.

Second, we need to define the optimal dose and schedule to support clinical trials in larger groups of patients with type II diabetes.

Third, we need to advance into additional trials to evaluate longer term dosing because longer term dosing is important in the treatment of type II diabetes.

Finally, we need to explore the characteristics of the drug in patients who are taking oral anti-diabetic therapies.

To achieve those goals we will complete and report results from an ongoing Phase II single-agent trial in type II diabetics.

We will initiate dosing in patients who are also taking oral anti-diabetic therapy.

Now, remember, we've already reported positive results from Phase I study in normal volunteers.

In that study, just as we saw in normal monkeys, ISIS 113715 was able to increase insulin sensitivity even in normal volunteers.

Furthermore, in no animal study and none of the humans we've treated to date have we seen any evidence of hypoglycemia or excessively low blood sugar which is one of the many adverse effects observed with currently available treatments for type II diabetes.

So we're very excited about this drug and we're looking forward to completing the initial Phase II trial and advancing development of this drug.

We think this is an important drug, both in our portfolio and in the management of type II diabetes for the future.

Now let's talk about Alicaforsen enema for the treatment of ulcerative colitis.

In late December last year we reported findings from three Phase II clinical trials of Alicaforsen that added to other Phase II information that we had previously recorded.

And was consistent with data that we had previously reported.

In those trials it's well tolerated and was not absorbed after rectal administration to a significant degree and it improved signs and symptoms of the disease in patients with ulcerative colitis.

Alicaforsen enema not only out performed placebo but it also out performed standard of care.

These Phase II data in combination with the earlier Phase II data from randomized double blind placebo controlled trials provide a great deal of optimism to us that the Alicaforsen enema has the potential to be be an important new drug in the marketplace for the treatment of ulcerative colitis.

Furthermore, we believe it represents a relatively near term product opportunity.

Our goals for Alicaforsen enema in the near term are to meet with the FDA and refine our Phase III development program for the drug, and second, to identify a marketing partner with late-stage development and commercial expertise.

We want to offer more compartment to develop and implement a successful Phase III development program and most importantly successful commercial strategy.

We are, as I said, very optimistic about the potential for Alicaforsen in enema and look forward to keeping you up to date on the progress that we make.

Now to support our goals of moving multiple antisense drugs forward and adding new drugs to our pipeline, we intend to advance two new drugs from our cardiovascular, metabolic, or inflammatory disease research programs into development this year in addition to the drugs that we are currently developing.

As you know, we have a consistent track record of adding new drugs to our pipeline.

That turns out to be one of the great strengths of antisense -- we can make more drugs than we can develop.

And last year, we added ISIS 345794 to our development pipeline.

This drug targets STAT-3, a protein that regulates cell division and growth and prevents cancer cell death.

With this drug, we have demonstrated activity in a range of animal models of cancer and exciting biological profile.

This compound has increased clinical development for a number of different kinds of cancers.

Now I want to move to our partnered second generation antisense drug development pipeline.

The progress that we've made within our current collaborations is exciting to us and we think we're making great progress in establishing new ones.

Our goal here is to participate with our partners in advancing their products through the clinical development process toward commercialization and assuring that these products meet their potential.

First to our alliance with Lilly.

We're pleased with the progress that we've made in our drug discovery collaboration with Eli Lilly.

As you may recall, in mid-2004 we extended our anti-cancer antisense collaboration with Eli Lilly and the anticancer antisense drug discovery portion of our alliance with Lilly has been I think particularly successful, as evidenced by first the initiation of a Phase I trial with LY 2181308 in patients with cancer.

This is first drug from our alliance to enter the clinic and for the accomplishment of this milestone we earned a $1.5 million dollar payment from Eli Lilly.

The antisense drug that we're talking about here targets survivin, which is a molecule that supports the survival of cancer cells and prevents what would normally happen, which is programmed cell death.

So this trial is in Phase I trial today and we're looking forward to results of those trials.

We also licensed LY 2275796 to Lilly in September 2004.

This drug is the second antisense anticancer drug to emerge from the Isis-Lilly collaboration and it targets a protein called eIF-4.

This is a protein that's involved in selecting which proteins get translated and that appears to play a major role in tumor progression, angiogenesis and metastasis , all problems central to the cancer phenotype.

For this drug, for this event we earned a milestone payment of $750,000 from Lilly and this drug is moving in preclinical development.

We look forward to Lilly putting this into clinical trials at the appropriate time.

Our goal in 2005 is to support Lilly's antisense research and development programs in cancer and we certainly hope to add valuable drug candidates to Lilly's leading oncology franchise.

We're also optimistic that additional drugs will emerge from the collaboration that go beyond just cancer.

Now to our satellite company partners.

Satellite companies represent another path towards long-term success and exemplify our ability to opportunistically capitalize on our pioneering work in all elements of RNA-based therapeutics.

Through these relationships which focus on specific drugs or specific mechanisms or specific chemistries, we are expanding the reach and potential of antisense therapeutics and participating in the success of multiple companies and multiple products.

This partnership allows us to benefit from our partner's expertise, highly focused research efforts of our partners, and take advantage of our patent state.

In the meantime our partners benefit from our experience in RNA-based drug discovery and our strength in development of these drugs.

We have successfully engaged in strategic drug discovery and development partnerships with high quality life science companies such as OncoGenex.

OncoGenex has been a partner since 2001.

This partnership combines OncoGenex's proprietary antisense and inhibitors to the cancer target clusterin with our proprietary second generation antisense chemistry.

Clusterin is a cell survival protein that when over produced prevents cancer cell death and counters the effectiveness of standard anti-tumor treatments.

In this collaboration, we're supporting OncoGenex's OGX-011 development initiatives.

In 2004, we and OncoGenex reported positive data from a Phase I trial of OGX-011.

In that study, OGX-011 was well tolerated, but more importantly OncoGenex was able to demonstrate that increasing doses of the drug resulted in increasing concentrations of the drug in prostate and lymph node, draining lymph node tissue and as that concentration increased, clusterin and messenger RNA and protein levels went down and as hoped, that was associated with increased death of cancer cells, both in the prostate and lymph nodes.

In fact, it produced up to a 91 percent dose-dependent reduction of its target in the prostate tissue.

In 2003 we expanded our collaboration with OncoGenex to include the development of another second generation antisense drug candidate, OGX-225.

Now, this compound is the first bind specific antisense inhibitor to enter development.

By that we mean it's a single antisense drug that is capable of binding to two RNAs, or to a single RNA, and as a consequent, inhibit two specific proteins that come from those RNAs.

OGX-225 targets both insulin-like growth factor binding protein 5 and and insulin-like growth binding protein 2.

These are two molecules involved in the development of metastatic disease in hormone regulated tumors such as prostate and breast cancer.

OGX-225 is in early development, but the basic concept of attempting to target more than one protein that may be related and may be important in cancer, I think, is a very exciting opportunity and we're very encouraged by Oncogenex's progress.

In 2005 we will support OncoGenex expansion of OGX-011's development into additional cancer therapeutic areas to the completion of a second Phase I trial evaluating OGX-011 in combination with Taxotere in solid tumors and the initiation of Phase II clinical trails in patients with lung, breast, and prostate cancers.

ATL is an Australian based antisense company that we helped found in 2001.

We're supporting ATL's development efforts to determine potential of ATL-1102 as effective treatment for multiple sclerosis or MS.

ATL-1102 is an antisense inhibitor of VLA-4.

In December 2004, this drug entered into Phase II-A clinical trials in patients with MS after positive findings in a Phase I dose excalation trial.

The study demonstrated that doses of 6 milligrams per kilogram per week of ATL-1102 were very well tolerated.

In 2004, ATL initiated the study to explore the activity of ATL-1101 in patients with mild to moderate psoriasis.

This drug is a second generation antisense drug designed to block the synthesis of the IGF-1 receptor, a protein involved in the regulation of cell overgrowth in psoriasis.

ATL-1101 is in a proof of concept study in patients with mild to moderate psoriasis.

In 2005, we'll continue to support ATL's on going Phase II-A trials of ATL-1102 for MS and the proof of concept study of ATL-1101 for psoriasis.

Now, Alnylam.

Alnylam is a partnership focused on a mechanism of action of antisense that's called RNAi, or siRNA.

Alnylam is widely considered -- and most importantly by us -- considered to be the center of excellence in RNAi research and therapeutic development.

In 2004, we formed a strategic alliance to accelerate development and commercialization of RNAi therapeutics.

This alliance combines our expertise in antisense drug development, antisense mechanisms of action, oligonucleotide chemistry and drug development with Alnylam's expert in RNAi therapeutics.

We licensed to Alnylam our patent state relating to antisense mechanisms and oligonucleotide chemistry that they can use for double-stranded RNAi therapeutics in exchange for $5 million technology access fee participation in fees from Alnylam's partnering program and down street milestones and royalty payments.

We've already realized financial value from this alliance.

Last year we earned a $500,000 license fee from Alnylam related to Alnylam's alliance with Merck to develop and commercialize RNAi therapeutics for ocular disease.

Perhaps more importantly, I think the combination of the companies have worked together to advance the technology and exemplary of this was the publication of Alnylam demonstrating a reduction of apoB-100 in the liver of mice treated with an RNAi inhibitor.

This has been important milestone in the progression of RNAi therapeutics as the first compelling evidence that an RNAi inhibitor can work in animals.

Further, we and Alnylam have expanded our strong patent position in RNA-based drug discovery by licensing core intellectual property regarding all therapeutic uses of micro RNA from the Max Plank Society.

Micro RNAs are an exciting new area of biology and represent a new class of drug target that are accessible with antisense.

So this is our most recent satellite company relationship.

In February 2005 we announced that Sarissa, a biotechnology company emerging from the University of Western Ontario, licensed an anticancer antisense drug from us.

The drug is an antisense inhibitor of thymidylate synthase, of course, a well-known drug target that's involved in development of resistance in a -- to a number of chemotherapeutic agents.

In preclinical studies, antisense inhibition of thymidylate synthase suppress human tumor cell growth and overcame tumor cell resistance to marketed thymidylate synthase targeted drugs.

This drug is in early stage testing and Sarissa will be responsible for the development of the drug.

We'll continue to support their efforts by providing them access to our RNAi-based drug discovery and development expertise.

This partnership, similar to the one we have with OncoGenex, combines our expertise in antisense drug discovery and development, our access to our second generation chemistry with Sarissa's deep understanding of biological role of thymidylate synthase.

Before I conclude this call I'd like to just spend a few minutes on our goals for our intellectual property estate in our unique TIGER technology.

We believe that the more than 1500 issued patents that we have are of extraordinarily important long-term value.

Based our innovation, we believe we have substantial control of oligonucleotide chemistry and RNA-based drug discovery and that will be the most important value that comes from our patent estate.

In addition, our intellectual property estate has been a significant contributor to revenue, generating nearly $70 million from patent licensing.

We plan to continue to leverage our IP through our active licensing program.

The value of our patents is most recently manifested by our licensing deal with Eyetech for Macugen.

In 2001, Eyetech licensed specific patents to develop and commercialize manufacture of their drug.

This licensing agreement has been lucrative for us as exemplified by the $4 million milestone payments from Eyetech that we received in 2004 associated with Eyetech's filing of the new drug application for Macugen and Eyetech's receipt of marketing clearance for the drug from the FDA.

The value of the licensing agreement was greatly enhanced when we sold a portion of our royalty rights in Macugen to Drug Royalty USA, Inc., or DRC in exchange for an aggregate payments of $24 million over the next three years.

Under the agreement, through 2009, DRC will receive royalties on first $500 million of annual sales of Macugen.

We and DRC will each receive 50 percent of royalties on annual sales between $500 million and $1 billion and then we retain 90 percent of all royalties on the annual sales in excess of $1 billion.

Of course, after 2009 we retain 100% of all royalties.

This transaction with DRC is strategically important as it allows us to accelerate a portion of the value we anticipate from our Macugen royalty and apply those funds to the development of our pipeline.

It also provides with us near-term cash flow while retaining a substantial portion of the Macugen royalty going forward and it puts us in position to better mitigate some of the risks associated with the timing and the magnitude of commercial steps of this important product.

We also intend to continue to capitalize on the numerous commercial product opportunities arising from TIGER technology.

Lynne's already provided specific details on what we achieved in 2004 with regard to technology development of funding and the movement toward commercial reality.

We believe that TIGER is in its precommercialization phase, and our goals for the program in 2005 are, of course, to continue to secure government contracts, to move from R&D to deployment of TIGER systems to our government partners and to refine our business plan and move the technology toward commercialization.

The technology and system engineering advances the TIGER team has made are remarkable and add to the potential commercial opportunities for this system.

With that I want to thank you for taking time this morning to participate in the call.

I think the goals that we've presented today are achievable, they are important steps forward in accomplishing our long-term objective.

We believe that the the prospects for Isis are exciting, but clearly not valued in our current stock price.

We are focused on the future of the company, the extensive clinical preclinical development pipelines we and our partners are working on that are full of product opportunities, the extraordinary opportunity that TIGER represents and the value that our patent state represents long term are assets that will be appreciated.

With that I think I'll conclude and, Cindy, if you can set us up for questions and answers I'd appreciate it.

Thank you. [OPERATOR INSTRUCTIONS] Our first question comes from the line of George Fulop with Needham & Company.

Good morning.

Thanks for taking the question.

How are you?

I'd like to ask that you please elaborate a bit on the clinical time lines and also the restructuring.

Specifically, you did mention on the 301012 development some 2005 activities, but I was wondering if you could elaborate on the Phase II time line, when and can they be run in parallel, and similarly for the diabetes clinical development time line.

Stanley Crooke, MD, PhD: Okay.

Then I'll come back to restructuring and you can frame the questions that you have for me there.

I can't provide great deal more information than we've provided, George, but let me just see if I can summarize a bit.

First let's focus on oral 301012.

That's a key objective for us in 2005.

It, of course, is important with regard to 301012 but it has ramifications across the entire second generation pipeline.

Remember that what we demonstrate for one is applicable generally to all.

So this will be the first opportunity we have to demonstrate not just that we can measure drug in blood after oral administration, but we can measure pharmacology.

We expect -- we hope to have that trial underway shortly and we certainly are hopeful we'll be able to present data from our initial experience this year.

Second, we're getting the single agent Phase II and the combination work underway simultaneously.

They will move at a different pace.

The single agent work is straight forward.

We're simply evaluating dosing schedule over a longer period of dosing than one month in patients with high cholesterol.

There is -- there are multiple steps that need to be taken before you can perform efficacy trials in combination with drugs like Lipitor, so that -- so I would expect that we will have data on single agent that we can present prior to when we will have combination, but it is the case that we're progressing on both fronts.

In addition, we're wrapping up the initial trial that we did, and while there are no changes in the conclusions, we look forward to the opportunity to present the data fully.

The final thing that isn't clinical but I think is quite important is that we just published an important paper in journal of lipid research that provides the full pre-clinical profile of the drug, and what's important about that is that we demonstrate in that trial not only are we able to reduce cholesterol, which is obvious, but that we don't produce any evidence of steatosis, that is fatty liver or liver enzyme elevation and we provided answers as to why that happens with this drug which relate to turning off this -- inhibiting this target leading to turning off multiple enzymes in cholesterol biosynthesis and transport.

That's a fundamental piece of work that seems to be consistent with what we're observing in our initial clinical trials.

That is, we're able to produce this very substantial cholesterol lowering and we have had to date, obviously, limited experience but very encouraging, no evidence of GI side effects and certainly no evidence of meaningful liver enzyme elevation that would cause us to be worried.

So 301012 is a tremendously important product opportunity for us.

We believe the sub-q product can be a very large product.

And we are hopeful that we're going to have an opportunity to develop the oral.

And all of that information at one point or another will be available to us to help guide the program over the next 12 to 18 months.

Now, with 715, I'm pleased to tell you that the Phase II program with the drug as a single agent is progressing wonderfully .

We are perhaps maybe a little bit behind schedule but very little bit.

So the single agent experience with 6 weeks of dosing is designed to a) identify a dose; b) to be sure that the drug is safe in diabetics.

That includes no weight gain, no hypoglycemia, no kidney troubles.

Those are all things we're going to be able to evaluate, as well as set the stage to do 12 weeks of dosing.

As you know, in general, for drugs with type II diabetes, longer term dosing is required to see dramatic effects on hemoglobin A1C.

We expect to be able to report results from that trial at the ADA.

And look forward to that.

Now, in addition, we have to begin combination trials with oral anti-diabetics and as those trials actually get underway we will be able to give more guidance, but it's a little difficult to give more precise guidance there and we intend to extend dosing to longer periods of time this year, and all of that will take place this year.

Of course, the drug continues to perform in animal studies in our hands and in many, many other investigators hands, and the profile continues to flesh out.

Don't forget that this drug -- don't forget the profile of this drug.

It works through a novel mechanism, it is additive to rosiglitazone and other type II diabetes drugs.

It produces no hypoglycemia.

It produces weight loss, not weight gain, doesn't produce metabolic acidosis, doesn't have important drug-drug interactions, does not get in the central nervous system, so it doesn't have central nervous system side effects and it is a target that the whole of the industry has wanted to develop drugs to but have been unable to because this target is classically undruggable target because it's a member of the large phosotates family.

With regard to our partner drugs, I think you should look to survivin and OncoGenex in cancer this year as being important years for both those drugs.

Clearly we can't be as precise with our partner drugs in terms of timing as we can with ours.

But we are encouraged by what we're hearing from Lilly and OncoGenex about the progress of those trials and each of those will have significant value in amplifying our pipeline, and maybe I'll stop there and turn to your restructuring question.

Thank you.

Specifically on the restructuring question would be the potential extent and timing of the recognition of additional charges beyond the ones reported in 4Q '04.

We will have additional restructuring charges in the first quarter this year that will primarily be associated with the termination costs from -- employees who have left the company and closing our Singapore lab.

And we're right now in the process of finalizing the components of the 2005 operating plan.

So we will provide the exact number in our first quarter financial press release.

All right.

Thanks for taking my questions.

Stanley Crooke, MD, PhD: Thanks George.

Next question, please.

Our next question comes from the line of Elemer Piros from Rodman.

Please proceed.

Yes.

Good morning, Stan.

First of all, I'd like to congratulate you.

You probably out did Eli Lilly, GlaxoSmithKline and a few other companies combined in terms of the length of the press release out this morning.

Stanley Crooke, MD, PhD: Thank you.

It speaks about the depth of your pipeline.

I'd like to join George maybe, in maybe for future reference, if could ask for a bit more specificity in the timing of things, because this is what investors want and I understand that it's more achievable with your in-house programs than with the partnered ones, and observing the stock close to at it's 5 year low, it may be a good thing to at least try.

The questions that I have is -- it really numbers related because you walked us through everything else.

To Lynne maybe, what is the cash and cash equivalents line item without the investments, Lynne?

If you remember that 4 by the end of the year?

We don't have the details from that but as you'll remember from the press release, we do have consolidated balance sheet information and we'll have the details broken out in the 10-K as we always do.

Okay.

Thank you.

The net operating loss estimates for next year, how close would that be to cash use, Lynne?

Historically our net operating losses has always been fairly close to cash use and that's why we use that as our element of guidance.

Okay.

Thank you very much for that.

And if you could just spend maybe 2 minutes, Lynne, on the debt structure of the company and how do you propose to deal with that in coming years?

Yeah.

We have two principal aspects in our debt structure.

One of them is our convertible loan from Lilly.

That has right now a $95 million carrying value where $11.8 million of that represents deferred revenue.

If you remember that debt, that debt is convertible at our option at $40 a share.

So we tend to think of that more like 2.5 million shares rather than a traditional debt instrument.

Okay.

In addition to that we have $125 million in our 5.5 percent convertible debt that was a traditional convert that we did with conversion price of 16.625 a share.

That comes due in 2009.

So we still have actually quite a lot of time left on that debt.

Okay.

We have a, you know, a small term lone, a variable rate term loan from Silicon Valley Bank, $26 million that we used to refinance a bunch of high-interest partner debt and the rest of our debt is for mortgages and capital leases and whatnot.

So really the Lilly loan which will convert -- which right now our plan would be to convert and 2009 maturity convertible debt are the two primary components of the debt.

Thank you so much for that.

Stan, one question on your strategic plans on Ibis.

Are we -- are you setting up Ibis to potentially spend that company or segment out, and the second question would be, when do you hope to commercialize the first product from that division?

Stanley Crooke, MD, PhD: I'll answer the first and ask Mike to deal with the second.

We are -- we do believe that long term Ibis TIGER is better managed as a separate unit.

Clearly we're drug people, and the technology in tiger is diagnostics.

The businesses are different.

It just is appropriate.

We are taking steps to assure that we will be ready to make Ibis a separate business to spin it out, if that's appropriate.

Recruiting Mike Treble is a key step in strengthening the business, and his combination with Dave Ecker and the talented R&D team is working famously and we're very pleased by that and, of course, that's a step along the way toward an independent structure.

Yes.

Stanley Crooke, MD, PhD: We will be positioned to spin TIGER out and clearly when we do that we will be a function of market conditions, cash needs, opportunities, and lots of other things.

So I would not want to predict a time when that would happen, but certainly we are positioning it to be able to take advantage of those opportunities when they occur.

Thank you, Stan.

Stanley Crooke, MD, PhD: Now, Mike?

Good morning, everyone.

In response to the time line for commercialization, we are in the process of working out installation and delivery protocols with our government partners to deploy systems over the summer and into the fall.

From what I see, everything is on schedule for to us achieve that, and we will define specific protocols for kits with those early adopters over the summer and hopefully be in a position to productize and utilize these installations in a kit format by the end of the year.

So, again, early '06 we should see the first form of the product or products on the market, and is it like -- I mean, is it good to assume that the user would be the federal government there?

The first deployments will be directed at the federal government.

We're working on a business plan to take advantage of the great breadth of applications that TIGER offers to expand and look at other market opportunities.

Stanley Crooke, MD, PhD: We think the first deployments will occur this year.

Yes.

Stanley Crooke, MD, PhD: Not 2006.

Yes.

Sorry about that.

Yes, yes, yes.

Thanks a lot.

Stanley Crooke, MD, PhD: Great to hear from you, Elemer.

I'm here.

Hanging in there.

Stanley Crooke, MD, PhD: We'll try to provide as much guidance as we can and we understand the stock is under pressure.

Yes.

Stanley Crooke, MD, PhD: Next question.

Our next question comes from the line Hugh Sales from MetaPartners.

Please proceed.

Stan, thank you for taking my question.

My first question would be, following George's question, can you help us to have better understanding about the data flow in the first half or the second half of this year in terms of your clinical development?

Stanley Crooke, MD, PhD: I don't know that I can provide any more precise information than I provided in the conference call and in the answer to George.

If you have a specific question I'll be glad to try to answer it or tell you I can't.

Okay.

Good.

Thank you.

Another question for Lynne.

Trying to understand, should we expect the same size of R&D spending this year versus last year?

No, we don't.

As will you recall, we went through a significant restructuring that we announced in early January, which decreased the size of our R&D organization.

We will continue to have a very significant focus on developing the drugs in our pipeline, including a strong focus on ISIS 715, our diabetes drug, and ISIS 301012, our lipid lowering drug, as well as continuing our leadership role in antisense technology development, but we expect that our -- to have a substantial reduction in costs and that is evidenced in the fact that while this year's pro forma net operating loss is around $84 million, we are projecting 2005 pro forma net operating loss to be in the low $50 million.

Okay.

Thank you, Lynne.

Stanley Crooke, MD, PhD: One point that I want to make about the restructuring, of course, we undertook the restructuring with an eye to husbanding our resources and our cash, and that played a key role, of course; but it's also the case that it was after a strategic re-examination of what we were doing, how were we doing it and where we wanted to focus.

We decided to terminate the development of our TNF inhibitor as we thought through how we would spend our money and the challenges of taking -- demonstrating that this drug was better than Enbrel.

And we have we realize that our research organization is so productive, and it's really strictly based on the productivity of antisense, that we have a pipeline of multiple drugs waiting for development, and so it made sense to reduce the scope of investment in drug discovery.

We have retained our investment in the key areas of technology advancement in antisense and to maintain our leadership and continue the advancing of the pipeline.

And finally, we re-examined the development organization and restructured that to be leaner and to use more outsourcing and I would say as we sit here today , a month or so post-restructuring, we're feeling really great about the organization.

I feel the development organization is really on track and doing great things now.

We've got great drugs and I think we've got a great development organization behind them.

The organization is back to work, functioning, doing well.

The senior team is on board, and feeling optimistic.

We all feel the pressure of a negative environment in the stock price, but I am very pleased to tell you that the restructuring is behind us and we're focused on the future.

Thank you.

[OPERATOR INSTRUCTIONS] We have a follow-up question from the line of George Fulop from Needham & Company.

Please proceed.

Hello?

Stanley Crooke, MD, PhD: Hello.

Can you hear me?

It's Mark Monane.

Couple questions.

Big picture questions as usual from me.

Can you -- there's really a lot going on from Isis, at Isis right now.

It's not a one-product company.

And so, therefore, given that can you help us think how you're prioritizing all the events going on at Isis?

I saw interestingly you start with the cholesterol then went to the diabetes program then went to alicaforsen.

Maybe you can talk about the therapeutics pipeline and how we should think about the company's interest and resource expenditure in these areas?

Stanley Crooke, MD, PhD: Alicaforsen UC is an important short-term opportunity.

Not a blockbuster.

Our guesstimate is that it's product opportunity in the hundreds -- $300 million range.

That's the best guess we can generate.

Perhaps a little more than that.

It's a short-term opportunity.

We think the Phase III program can be relatively modest and relatively brief.

So it's important to us and we would like to partner it so that we can spend our money on advancing the second-generation drugs into development and we would like to partner it also because we want a commercial partner who knows the drug which you can only get when you're involved in the Phase III program.

So our goal with alicaforsen UC is to days a trim, relatively brief, appropriate Phase III program with advances to continue in to 3-D and 4 and acquire a commercial partner who will participate with us.

It's high priority for us.

We are working hard on all the elements of it.

And, of course, I can't predict the outcome.

Second, 301012 is a thrilling drug.

I've been doing this for, what, 30 years now and I've seen two drugs perform like this at this stage in their development.

One was Tagamet.

We're worked up.

And the world ought to be.

And so when you hear it mentioned first, it's because I'm really excited about it.

Okay?

And it is not a trivial product.

Even if we're able to capture 3 percent or 6 percent of the patients who are on statins and can't achieve their targets, think of the numerator.

That's an enormous product opportunity for us.

715 is of is equal importance to us so we have -- we must accomplish our goals with those two drugs this yea.

And so it's one for the short term, two for the long term, and then we go to the OncoGenex drug and the Lilly survivin drug and those are the two partner drugs that I'm most excited about for this year.

That's great.

Stanley Crooke, MD, PhD: I don't know how to be clearer than that.

That's -- that was good.

I liked the extra emphasis.

Very helpful.

Stanley Crooke, MD, PhD: Anybody who has seen the apoB-100 data are excited.

They have questions about sub-q drug for cholesterol lowering.

They may have questions about development path, but there is not a soul who has seen those data that isn't excited and it is not represented in our stock price and it frustrates us just as much it is a frustrates you folks.

Absolutely.

In order to better follow the progress of Isis and help understand the value creation as it moves, would you be kind enough to give us either now or maybe at the end of the call somewhat more of a quarter by quarter synopsis of what we can expect from the company given the variety of programs going on at the same time?

Stanley Crooke, MD, PhD: Mark, I don't feel comfortable giving more precise guidance today.

As the next few weeks unfold I hope to be able to give more precise guidance.

We just have a lot of clinical trials getting underway and I've provided fairly clear guidance on the trials that are in progress.

I've told you it's likely that we'll present 715 data at the ADA.

So really that's about the best I can do today.

Okay.

That's fair.

Then the last question is, there's been a lot of talks recently in biopharmaceutical world about side effects.

We had Vioxx and Celebrex, which are small molecules, then we heard about the antibody yesterday from Biogen, Idec and Elan.

Do you feel in antisense, I know the ATL program is working on this, but do you think antisense in general, and I guess the ATL program in specific, may lead to less of a potential of side effects going forward and do you believe that antisense by definition is more specific and therefore might have a different risk reward profile?

Stanley Crooke, MD, PhD: I think antisense by definition and by data is dramatically more specific than one can achieve with small molecules and different, entirely different from antibodies in many ways.

The evidence for that is thousands of publications every year where people use antisense to selectively inhibit genes that they can't possibly inhibit any other way.

And the -- and as you know, Mark, we've now treated more than 4,000 patients in our database.

We've never encountered a dose-limiting toxicity in human beings.

So we are encouraged that antisense is fulfilling the promise of more specificity, and that's translating into improved therapeutic index.

It is clearly leading the promise of improved productivity at the research level and early development.

The other thing that I find attractive about antisense is that the basic chemistry is the same across the entire pipeline so we can make predictions from compound to compound.

That means we know what to look for.

We know where the problems may reside.

We know the organs that may be at risk.

And that just allows more informed drug development.

And, of course, there can still be surprises in chronic therapy, can still lead to surprises that are target related, but that's a tremendous advantage of sameness.

Finally, with regard to VLA-4 I know only what I've read in the financial press, so I really don't understand the situation.

Our partner ATL is obviously developing a VLA-4 antagonist.

It will have different properties from the monoclonal anitbody.

I think it's very difficult today, given what I know to know what is the cause of the problem they've encountered and how it will relate to that drug versus that drug plus interferon.

That's something we're going to have to learn.

That's for your added comments and information.

Stanley Crooke, MD, PhD: Thank you, Mark.

We have a follow-up question from the line of Elemer Piros from Rodman.

Thank you, Stan.

Stan, you expressed a great degree of enthusiasm about 301012.

At what point does it become a partnerable asset?

Stanley Crooke, MD, PhD: We think it's partnerable now.

The reason it's partnerable is is that with apoB-100 and cholesterol lowering you have the great advantage of the endpoint not being a surrogate endpoint but the endpoint being cholesterol lowering and you can measure it.

The question that we are entertaining is do we have terms attractive enough to partner it today or, you know, this year, --?

Do you?

Stanley Crooke, MD, PhD: Or do we want take it to the next value inflection point?

There are companies interested in 301012 divide into two groups.

Those that don't feel that they want to develop a sub-q lipid lowering drug and those who look at that opportunity and say sub-q lipid lowering that can be given once a week or once month or once every quarter can appear to be an exciting product.

We're talking to both sets.

We have the oral study and we have a lot of other data.

So we're going to have to balance our cash needs but our stock price is where we think we are in value inflection points and general appetite for a lipid lower at this stage and we'll try to ride a good equation for partnering.

Whether we'll -- whether that will turn out that we partner this year or whether it turns out we partner later is just something that I think is too early to say.

Remembering that all these partnerships in essence are fundable.

What we need to do is to general rate enough partner revenue to continue to fund our activities.

Thank you very much.

Stanley Crooke, MD, PhD: Do you want to add or subtract anything from that?

No.

Stanley Crooke, MD, PhD: Thank you, Elemer.

Dr. Crooke there are no further questions at this time.

I'll now turn the call back to you.

Please continue your presentation or closing remarks.

Stanley Crooke, MD, PhD: Well, thanks very much, everyone, for your interest, and the questions.

I think they allowed us to amplify on the basic messages that we wanted to give and hopefully they provided more information that helps you in your investing decisions.

We look forward to 2005 being a good year for the company.

Thank you.

Ladies and gentlemen, that does conclude the conference call for today.

We thank you for your participation and ask that you please disconnect your lines.