Ionis Pharmaceuticals Inc (IONS) 2007 Q3 法說會逐字稿

Good day everyone and welcome to Isis Pharmaceuticals Third Quarter Financial Results Conference Call.

Today's conference is being recorded.

Leading the call today from Isis is Dr.

Stan Crooke, Isis Chairman and CEO.

Dr.

Crooke, you may begin.

Thank you Lisa.

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

Participating with me in this call are Lynne Parshall, Executive Vice President and CFO; Christina Lemonitas, our Associate Director of Investor Relations.

Also sitting in with us are Jeff Jonas, our Executive Vice President; Kate Corcoran, our Vice President of Corporate Development; and Beth Halgren, our Vice President of Finance and Chief Accounting Officer.

As we've mentioned, we will be hosting an analyst and investor day in New York next Tuesday, November 13th.

So we will keep this call relatively brief.

The analyst and investor day presentation will be webcast and we hope to see a lot of you there in person.

Isis has continued to execute its business strategy with tangible successes on multiple fronts over the past quarter.

In our last earnings call, we talked about the American Diabetes Association conference and highlighted some of our researched programs in metabolic disease.

Recently we moved a drug targeting SGLT2 into our development pipeline from that program.

We also discussed how our strategy to license antisense drugs to a number of partners has increased the breadth and value of our pipeline.

We highlighted new partnerships including the license of our drug discovery effort on PCSK9 to BMS and our technology license with Archemix.

To those we recently added licenses to two diabetes drugs and initiation of a focused metabolic disease research collaboration with J&J's Ortho-McNeil.

In addition, we've launched a newly formed joint venture Regulus and announced that the newly formed company Altair which focuses on pulmonary disease recently.

Each of these of course represents growth opportunities for antisense drug discovery and development.

We had several positive mipomersen presentations at the DALM meeting in October.

And we've now initiated our Phase 3 program for mipomersen in patients with familial hypercholesterolemia.

Today Lynne will discuss how our recent activities have affected our financial performance and outlook.

At the end of our prepared remarks, we'll be happy to answer any questions you might have.

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

Thanks Stan and good morning everyone.

As a reminder to everyone this webcast includes forward-looking statements regarding our business, the financial outlook for Isis as well as its Ibis Biosciences subsidiary and its Regulus joint venture and the therapeutic and commercial potential of Isis technologies and products in development.

Any statement describing Isis' goals, expectations, financial or other projections, intentions or beliefs is a forward-looking statement and should be considered an at-risk statement including those statements that are described as Isis' goals.

Such statements are subject to certain risks and uncertainties, particularly those inherent in the process of discovering, developing, and commercializing drugs that are safe and effective for use of human therapeutics and in the endeavor of building a business around such products.

Isis' forward-looking statements also involve assumptions that if they never materialize or prove correct could cause its results to differ materially from those expressed or implied by such forward-looking statements.

Although Isis' forward-looking statements reflect the good faith judgment of its management, these statements are based only on facts and factors currently known by Isis.

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

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

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

Stan back to you.

Thanks Christina.

2007 continues to be an exciting year for Isis on all fronts.

Since our last conference call, we have advanced our drug targeting SGL2T and its development.

Isis 388626 is the first antisense drug that interacts with a target in the kidneys, an organ in which antisense drugs naturally accumulate.

The remarkable potency and activity of Isis 388626 in animal models make it a particularly attractive antisense drug that complements our existing pipeline of drugs to treat Type II diabetes.

In September we announced our new collaboration with Ortho-McNeil.

We licensed two drugs for Type II diabetes.

Isis 325568 targeting the glucagon recptor and Isis 37713 targeting the glucocorticoid receptor.

We also initiated a focused research program in metabolic disease.

And these licenses and the research program collaboration were on very attractive terms.

We've also expanded our relationship with Alnylam to create Regulus, our micro RNA joint venture.

Recently we, in addition, added Altair to our growing list of drug development partners.

We continue to apply our technology to explore opportunities in various metabolic and cardiovascular indications.

We presented preclinical data from one of these exploratory programs in regulation of blood clotting or thrombosis at the American Heart Association conference earlier this week.

In addition, we succeeded in securing significant funding for other programs including funding from CHTI to discover and develop an antisense drug to treat Huntingdon's disease, a debilitating and fatal disease with very limited treatment options.

This enables us to continue to expand our activities focused on creating treatments for severe CNS diseases.

Our existing partners have also had a very successful year.

OncoGenex continues to move forward toward Phase 3 trials with OGX-011 and recently initiated Phase 1 continues to move forward toward Phase 3 trials with OGX-011 and recently initiated Phase 1 studies of a second drug discovered in the Isis OncoGenex collaboration.

iCo, advanced iCo-007 another Isis-discovered drug into clinical development.

Lilly is continuing its work with two of our anti-cancer drugs in clinical development and now Alnylam initiated a broad collaboration with Roche that involved sublicense of our technology.

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

Our success in creating new strategic partnerships is in my view a direct byproduct of the performance of mipomersen.

The value of these transactions and of our pipeline in total have increased dramatically of the proof of concept provided by mipomersen.

At the Drugs Affecting Lipid Metabolism or DALM meeting last month, we announced further data supporting the attractive profile of mipomersen.

We showed that mipomersen effectively reduces lipids in all populations tested with data presented in heterozygous FH patients adding to the previously presented data for homozygous FH and routine high cholesterol patients.

All of these data showing potent linear dose dependent reductions in lipids both alone and when added to other lipid lowering therapies.

Mipomersen has a unique profile in lowering all atherogenic lipids.

Adding to previous data showing statistically significant reductions in LDL, VLDL, and triglycerides, data presented at DALM showed statistically significant reductions in LP(a), an independent cardiovascular risk factor.

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

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

So as we wrap up our initial Phase 2 exploration of mipomersen we are very gratified with the body of evidence supporting the development of the drug.

At this stage in drug development there are several questions that you want to be able to answer affirmatively.

And we can certainly do that for mipomersen.

Is there evidence of efficacy?

Yes.

Mipomersen is an extremely effective lipid lowering drug with a remarkably valuable profile.

Is the safety profile acceptable?

Yes.

Mipomersen is well tolerated in all patients studied to date.

Is there a clear path to registration?

Yes.

LDL cholesterol lowering is well-- is a well accepted clinical endpoint.

Have the doses schedule been selected?

Yes.

200 mg per week is right in the middle of our dose response range and appears to be a safe and will be a highly effective dose.

Does the drug address a major unmet medical need?

Yes, over 16 million U.S.

patients are at high risk for cardiovascular disease and are not meeting LDL targets with current lipid lowering drugs.

And now, we have initiated our Phase 3 program for mipomersen in patients with FH.

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

Thanks Stan.

As usual, I'm assuming that you've all had an opportunity to read the press release we issued earlier this morning, so I'll not reiterate what's detailed in the release.

Please feel free to ask questions at the end on any points from the release that needs clarification.

The financial impact of our recent activities has been very important in solidifying our financial position.

We received $15 million up front from BMS and we received $9 million in research funding over the next three years plus milestones and eventually royalties as PCSK9 drugs move forward.

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

We will receive nearly $10 million in funding from CHDI to discover drugs to treat Huntington's disease.

Ibis received contracts and grants for up $5.4 million to fund a wide variety of applications to develop-- applications development for the Ibis T5000.

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

Alnylam funded the initial $10 million of expenses for our newly created joint venture Regulus.

We received 18% of the equity of the newly formed Altair and will receive research funding milestones and eventually royalties as it proceeds to develop drugs to treat respiratory diseases.

iCo paid us a $1.25 million milestone in equity for initiation of the Phase 1 study of iCo-007 for diabetic macular edema.

Alnylam paid us $26.5 million related to their alliance with Roche as part of our technology licensing agreement granting Alnylam rights to practice and sublicense our technology related to double stranded RNAI drugs.

And Archemix granted us equity and will pay us milestones, royalties and a portion of sublicensing revenue generated from its progress with aptamer drugs that exploit our inventions in oligonucleotide chemistry.

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

Now I'll provide just a little more explanation about what you're seeing on our third quarter financial statements.

As you know in association with the Ortho-McNeil transaction, we purchased Symphony GenIsis at the end of the third quarter.

While the significant upfront payments of $45 million plus the glucagon receptor Phase 1 milestone payment of $5 million and the initial research and development funding from Ortho-McNeil, are not reflected in our third quarter cash balance because they were received in October.

The purchase of Symphony GenIsis was completed during the third quarter so the numbers we're reporting reflect reductions in cash related to the purchase as well as shares issued for the same purpose.

We purchased Symphony GenIsis for $120 million of which approximately $80 million was in cash and the remainder was paid with approximately 3.4 million shares of Isis stock.

The shares issued to Symphony capital have all been sold.

So Symphony is no longer a 5% shareholder.

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

In other words, the Symphony GenIsis partnership did exactly what we intended it to do.

As Stan mentioned, mipomersen's Phase 2 performance has certainly been gratifying and we believe it has had a very positive impact on the value of all of our antisense programs.

Altogether, the partnering successes we're experiencing in 2007 have had an important impacts both in our cash position as well as our net operating loss projections.

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

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

When we reported second quarter results we adjusted our guidance for net operating loss to the mid to high $40 million and extended our cash guidance to estimate that based on reasonable assumptions for new sources of revenue and cash.

We believe we have sufficient resources to meet our anticipated funding requirements through at least the end of 2010.

And then early last month, we further adjusted our net operating loss guidance to the mid to high $20 million range.

And of course back last January we refinanced our convertible debt to extend the maturity and further strengthen our balance sheet.

We'll now be happy to take your questions.

Operator could you please begin the Q&A session?

Thank you.

(OPERATOR INSTRUCTIONS) And our first question comes from Ajem Tembuly with Lehman Brothers.

Hi good afternoon.

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

We don't have a pro forma cash balance.

Our actual cash balance is-- was right around $146 million at the end of the quarter.

That does include the reductions in cash associated with the Symphony GenIsis repurchase but does not include the cash that we received from OMI which we received at the beginning of the fourth quarter.

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

Okay thanks for clearing that up.

And then I guess just a question on the space overall perhaps for Stan there-- clearly more interest and part of that is certainly due to your Phase 2 data, proof of concept data, but what other factors are getting large pharma partners involved in this space and what's driving that interest level?

First you're right.

I think there is a great deal more interest in antisense technology today than even a year ago.

And it's not just large pharma, it's smaller companies and it is all venture capitalists, very high end venture capitalists that are now interested in applications of antisense technology.

I think the answers are really pretty simple.

First antisense works.

It works in cells.

It works in animals and mipomersen unequivocally prove it works-- prove that it works in man the way it works in animals.

And second generation antisense drugs have proven to be dramatically better.

And probably the most interesting feature of the BMS and J&J transactions is that both those transactions focused on chronic diseases where drug safety is crucial.

And so I think all of that speaks well to the technology.

Second, we've shown that a second generation antisense drugs work against undruggable targets.

And so there is a great deal of interest in targets that can't be attacked using small molecules or [monophonels].

And third, we've demonstrated that we can deliver these drugs by essentially all routes.

And so Altair is a company that was formed by us with our drug and technology to exploit aerosol applications.

And finally, the RNA world in terms of just science that's going on continues to resolve in extraordinary insights into how the body works.

And every one of those insights generates new potential targets for antisense drugs including micro RNA.

I hope that answered the question.

It was long-winded.

It does.

Thanks for taking the questions.

You bet.

And our next question is from Mark Monane with Needham.

Good morning and thank you.

Greetings from New York City.

I have Alan Carr here as well.

A question on the-- first of all congratulations on being a Phase 3 company.

Thank you.

Can you tell us a little bit more about the decision on which population to include in the familial hypercholesterolemia group.

Of course there's the heterozygous, the homozygous.

How are you-- are you approaching these separately or together in the Phase 3 trial?

Well Mark we have had our end of Phase 2 meeting with the FDA and we are continuing to have productive conversations with the FDA which are taking some time to complete.

Primarily we believe because of the FDA schedule due to the pressing business that that division is dealing with.

So we haven't gotten yet definitive answers to all of the questions we asked.

When we receive definitive answers to all of our questions, we'll share our plans for our entire Phase 3 program in more detail with you.

I should add to that one additional comment.

As you know to show efficacy from mipomersen, we don't need large numbers of patients.

However, we've said actually several times that when we file our NDA for familial hypercholesterolemia, we plan to meet or nearly meet ICH guidelines for safety exposure.

I think that's a crucial thing to remember.

We intend to have-- meet, nearly meet the ICH guidelines which means a total exposure of about 1,500 subjects with significant long-term exposure.

So we are not scrimping on the investment to deal with long-term safety and we are intending to have that information in time for the FH NDA.

Of course I should also mention that we plan to host an analysts and investor day next Tuesday in New York.

And at that meeting, we will be providing additional data on mipomersen including an integrated safety analysis of our total experience in Phase 1 and 2 studies in human beings.

And we believe that those data continue to demonstrate that mipomersen has a very encouraging safety profile.

So stay tuned.

We will provide a much more detailed answer to your question when we have gotten definitive answers to all of the questions that we asked the FDA.

And have you start-- a concrete question, has the first patient gotten dosed?

Yes.

Has gotten dosed in the Phase 3 trial?

Yes.

That's okay.

Here's Alan Carr's a quick question.

Yes I also wanted to-- I guess a broader question that you've obviously made substantial progress with mipomersen in targeting the liver.

But I was wondering what sort of challenges and maybe technical characteristics that might change when you go after the lung or the kidneys.

You mentioned that you have a program moving forward against SGLT2 and then there's the partnership with Altair so?

Well Alan we don't really target any organ.

These drugs do what they do or to quote Kurt Vonnegut, they do doodley do what they must muddily must.

And so the organs that to which they distribute at low doses are liver, kidney, bone marrow, fat cell, spleen and organs where there are leaky vessels like cancer and inflamed tissues.

We use that information in the design of our research programs.

So while this is and SGLT2 is the first drug that works against a target that's expressed primarily in the kidney that we've taken into man.

It's by no means the first drug that we've looked at in animals that has a target in the kidney.

All we're doing is using what the drugs do naturally in the design of our research programs.

So we expect that the behavior of the drug in man will be the same as it has been in animals and the same as all the other drugs have been.

Obviously we can't know that for sure until we get the clinical trial started.

Now with the pulmonary disease approach at Altair and at Isis, there we use local delivery.

And we've shown actually for quite some time now that these drugs are ideal drugs to administer by aerosol for local applications in the lung.

They particlize nicely.

The reach all the areas in the lung and they are very stable.

And of course they're very potent when delivered by aerosol to the lung.

Thanks very much.

(inaudible) information.

Thank you.

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

Hi, thanks for taking my call.

Sure.

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

The partnership conversations are going very, very well.

And we're on track to meet our plan which is to have a choice of partners and to license it to the best partner before we begin Phase 3 trials in routine or polygenic FH-- routine or polygenic high cholesterol.

There will-- there are additional presentations on mipomersen that will be scheduled over the next many months.

And there will be publications put together.

One of the interesting features of putting publications together for mipomersen is that we have to delay final analyses because we follow these patients for five months after treatment stops, at least five months.

And so that means that it takes some time to put the final data together.

Okay great and then just really I'm just wondering where things stand with your cooperation with Lilly?

Well the Lilly collaboration continues.

They are developing both survive and [NEIL 4] anti-cancer drugs.

And they're progressing according to their plan with those drugs.

Thanks for taking my questions.

Thank you.

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

Great.

Thank you very much and Stan thanks for the literary reference earlier.

You made my morning.

A quick question, you mentioned and we've been seeing certainly in New York at the DALM meeting and we'll see next week likely at the analysts day, but maybe you can dig in a little bit more into the statement of protection versus hepatic steatosis with mipomersen.

What is your understanding thinking about that mechanism of action?

Because I do think it flies somewhat counter to a lot of experts' opinion out there.

So I just wanted to get kind of your view, a little preview on that about how and why you think and what data you have to support that we may actually see this protecting the liver from an accumulation of fat?

The data we have derived from several years of studies in mice and monkeys and they include high dose toxicity studies for a year in monkey and six months in the mouse.

And the data are unequivocal.

That is with long-term treatment with Isis 3010 trial for mipomersen contrary to our expectations and expectations of people who have studied apoB-100, we see a statistically significant decline in liver fat in fat-fed animals.

We also see no evidence of liver toxicity at doses as high as 75 mg per kg per week in the mouse and 30 mg per kg per week in the liver-- in the monkey.

Those are the data.

They're absolute.

They're unequivocal and they do differ from what might have been expected based on the belief that inhibiting apoB-100 would result in fat accumulation because it can't be exported.

Now the data that we have reported in several forums show that about two weeks after dosing starts with mipomersen in mouse and monkeys we see changes in transcription of genes in the liver.

These genes are involved in fat synthesis and fatty acid oxidation.

And the net impact of those is that you see a decline in production of fat in the liver and an increase in the oxidation of fat in the liver.

Those data explain very clearly why we get the results that we see.

There are changes secondary to inhibiting apoB that result in a reduced liver fat content in mice and monkey.

We're very comforted by the fact that the transcriptional profiles that we see in the monkey are replicated in the mouse, are replicated in the monkey.

So it's not a single species and in fact the same thing appears to happen both in a mouse and a primate.

So our belief is that apoB-100 is the primary exporter of fat in the liver.

And that when you lower apoB-100 that is sensed by the liver and it quite sensibly turns off liver fat synthesis and increases fat oxidation.

Moreover we have in collaboration with Lipomics developed metabolomic assays that can be used in blood.

And those metabolomic assays confirm the transcriptional changes that we see when we take the liver and examine transcriptional changes.

And so we hope that we'll be able to use these assays in man to confirm that the same transcriptional events are taking place in man as are taking place in mouse and monkey.

I would say that if you ask an expert who hasn't looked at our data, he would say what we might have said three years ago that we might expect to see liver fat accumulation.

I think if you ask an expert who's actually looked at our data, he'll say exactly what I just said.

And I think that is changing.

And just like it's a final connective point would be the MRI data and when do you anticipate seeing that?

And what is the endpoint of that study, the timeframe?

That study has changed quite a bit.

It was originally designed as a primarily a safety study.

And now we're hoping to demonstrate the same results that we saw in animals so it's become almost a profile expansion study.

It's much larger and it's going to take some time as you know to recruit patients who are willing to undergo multiple MRIs is challenging and there are a limited number of sites that have the expertise to do that.

So we can't give you guidance yet about when that study will be done.

Fair enough.

I'll forward to the data.

Thanks so much Stan.

It is progressing well.

(OPERATOR INSTRUCTIONS) And our next question comes from Salveen Kochnover with Jefferies & Company.

Hi, good morning.

Thank you for taking my questions.

Could you comment whether the patients that have been dosed in the Phase 3 FH trial whether they're homozygous patients?

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

Okay and then in terms of the-- will we see the 200 mg dose of mipomersen for three months in the polygenic population or will we see results from that at RNA meeting next week?

What we've said is that we will present the 200 mg three-month data this year.

And we've also said that we will be reporting new data next week at our analyst day including a full analysis of the integrated safety from our Phase 1 and Phase 2 experience.

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

Yes.

Thank you.

And our next question comes from Aaron Reames with Wachovia.

Thank you for taking my questions.

First question I had is have you initiated 26-week dosing study in the polygenic population?

I think that's where you're going to follow patients for a year?

We're in progress.

And my-- our position is that we will provide a more detailed explanation of all the activities that we have in progress once we have definitive answers from the FDA.

Okay.

All of our questions.

Got you.

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

We will present an integrated safety analysis of our Phase 1 and 2 experience.

I don't believe that we'll be cutting the open label extension study into little salami sections over the next-- what we want to do is to accumulate substantial data in the open label extension meaning quite a number of patients treated quite a long time before we present any more information on that study.

And I guess just a maybe a more general question then.

To meet the guidelines of having exposure, long-term exposure in 1,500 patients, will-- I guess will you be expanding programs dramatically here in the near term to be able to meet that type of goal?

And I would imagine then it would be across a number of different patient populations?

Is that an accurate assumption?

We will meet or nearly meet the ICH guidelines and for safety and of course the bulk of that safety experience will come from routine high cholesterol patients because there are just so many more of those patients.

Our plans have always been to do that.

So our plans have included a significant number of studies in the next year in addition to the studies that we've already completed that will flush out our safety profile numbers.

Thank you.

Yes.

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

Hey good morning and congratulations on all the progress.

Just wondering if you could update us on the status of 113715 in diabetes.

When might we see that data and what would you consider the potential scenarios for the data and further development?

This is Jeff Jonas.

That study is progressing well and right now we anticipate no later than the first half of next year that we'll have data to look at.

It's enrolling well and obviously we're encouraged by that.

And I think it would be future plans beyond that will depend on obviously the results of the study.

But we are optimistic that we'll have a number of options to pursue when we have [lined] the trial.

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

We've indicated Joe and I can just really just reiterate what we've said that we are running an auction process.

We are pleased with the response to the auction process.

That auction process brings multiple companies who have expressed interest to-- we provide a summary of the experience that we have with mipomersen and then those that want to participate further, must engage in additional steps prior to our granting due diligence.

That process is underway and going well and we're very pleased with the level of interest.

Okay good enough, thank you.

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

Thanks.

Congratulations on starting the Phase 3.

Stan I guess I'm just a maybe a bit confused.

It sounds like you're still waiting for some FDA sign off on the trial design but you started the study.

So I take from that that you must feel relatively confident in certain aspects of the study, the entry criteria, the fact that you're going to be dosing at 200 mg every week etc.

otherwise you wouldn't have enrolled the patient, is that correct?

We had a list of quite a number of questions that pertain to the overall Phase 3 development program that go beyond a simple question about the design, for example, of the homozygous FH trial.

We are awaiting definitive answers to all of those questions.

But we have begun the FH program and I think I'll just leave it there.

Okay so you're relatively confident in certain aspects of the program and that's enabled you to start enrollment?

I want to leave our answer where we--

Okay.

Where it was.

As if I think that is the most prudent answer I can give you.

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

Well the $50 million which constitutes the upfront license fee plus the first milestone will be recognized over the two-year period of the R&D collaboration.

The additional $2 million is R&D payments just for the first quarter of the collaboration and that'll be recognized over the first quarter of the collaboration.

And we'll continue to get those-- that funding on-- that R&D funding on a quarterly basis.

Thanks.

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

Thank you for taking my question.

I was just wondering if the Ibis monetization plans are still on track for say some time early next year?

Yes.

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

Yes it can.

The basic properties of the drug are that it is has a 30-day or longer half life and therefore to dose once a month is theoretically feasible.

We're focused on once a week dosing at 200 mg a week as our initial dose and schedule.

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

At some point, we will look at other dose schedules and probably the most attractive other schedule is once a month.

Once every two weeks is in many ways less attractive than once a week because it becomes more complicated to remember when to get the-- when to give yourself the dose and that sort of thing.

But our primary focus for the initial indication and the initial NDA is once a week at 200 mg a week with no induction or loading dose.

One of the things that I think has gotten lost in the conversations about the safety of mipomersen is how remarkable its safety has actually been given the fact that we've used loading and induction doses which of course represent the maximum stress that we could put on a person's liver.

Clearly in our longer term trials we won't need to do that and we believe all of that is very encouraging that we'll see even better safety as we go to that schedule.

The next question I had was in terms of formulation, obviously you can deliver an aerosol but could you formulate this in terms of a tablet because clearly there would be an advantage of having a tablet as opposed to an injection?

We've reported oral data in humans with mipomersen I think about a year or so ago.

And in those data we saw slightly less than 10% oral viability and we saw the level of reduction of apoB and LDL that you would expect for that.

We've said that while that is proof of concept, it probably isn't a commercially viable formulation because of cost.

And we believe that the best strategy for that is a follow-on product for mipomersen which will be one of the generation 2.2 drugs will be the drug that we develop orally.

We like that idea because it will give us a follow-on product to extend the apoB franchise and at that stage, we believe we'll have sufficient viability and potency that it would be cost competitive with existing medications.

My last question is regarding the SGLT2 and PTP-1B, wouldn't SGLT2 be a more say a benign target as opposed to PTP-1B which can influence a lot of things downstream?

I guess I understand in theory but the data in humans so far for PTP-1B suggests that the drug is quite well tolerated.

With SGLT2 obviously the animal data also suggests it will work and is also well tolerated.

So and both these agents as you know are highly specific as most antisense molecules are and potentially complementary.

So we don't really think that's likely to be a risk for either of these agents.

You know you're probably referring to some of the small molecule experience with attempts to selectively inhibit PTP-1B.

Those small molecules have failed for the reasons that small molecules fail usually and that is they're not specific enough.

In that PTP-1B family there are many phosphatases.

And if you aren't specific for PTP-1B, you have the potential to produce a wide range of effects, many of them very detrimental.

With selective PTP-1B inhibition, we haven't seen those side effects.

Thank you very much.

Yes.

The next question comes from Geraldine O'Keeffe with Fortis.

Hi, good morning.

Thanks for taking my question.

Lynne, I just have a few kind of housekeeping questions for you actually.

Just on your guidance for the full year, operating loss of mid to high 20's, what kind of revenues should we expect then in the fourth quarter to reach that?

I mean and depending what the visibility on that.

I guess you get some payment from Ortho or you'd be booking some payments from Ortho.

But are there other payments to be booked in the fourth quarter?

Yes there are and I think probably the easiest thing to-- the easiest way to figure it out since we don't give specific revenue and expense guidance is to assume that our expenses are not going to go up very much.

Okay.

And so that probably makes it pretty easy for you to come up with a revenue number.

Yes, my next question cause the expense did jump quite a bit in the third quarter.

Is this kind of the level we should expect to see them maintain that?

Yes we do think we don't have any-- we do think we don't have any extraordinary changes in the expenses that we're anticipating in the fourth quarter.

Okay that's good.

And maybe just one quick one for you Stan, just on your Phase 3 trial design you mentioned earlier that you think your total safety package is going to around the 1,500 subjects.

Are you waiting for a partner to finalize the design of that or are you also kind planning the design around for a [partnerized] launch or is there also a chance you might decide to go ahead and go it alone?

No we're not waiting for a partner to develop the familial hypercholesterolemia indication.

And the safety database will come from all of the FH patients that we've treated, all of the people treated so far in Phase 2 and Phase 1.

And additional Phase 2 studies in the routine-- our routine high cholesterol polygenics.

And we do intend to license the drug that is our strategy and obviously we believe that we'll achieve value for that license and that's our plan.

And just one final one then Stan.

About how many patients have been exposed to the drug at this stage?

We've exposed almost 300 subjects to this-- to the drug and we will present maybe it's 250 or-- about 300 when you include every one in every study.

But in terms of meaningful exposures probably closer to 250.

But we're going to go through all that in some detail for you next week.

Okay thank you.

(OPERATOR INSTRUCTIONS) And we'll take our next question from Gabe Hoffman with Accipiter Capital Management.

Hi, thanks for taking the question.

Just was wondering in the Phase 3 that you've already initiated from mipomersen, could you tell us the size of the needle gauge that is being used?

And also will the injection be self administered or administered by-- in a doctor's office?

The size of the gauge of the needle is very small.

It's 30 gauge I think.

Jeff is that right?

30.

I think it's 30.

And in our clinical trials that are progressing to date both Phase 2 and Phase 3, the drug is administered by a physician because we want that level of control.

We will be developing devices and protocol for self administration by patients.

But we expect to have those ready for the launch of the drug for routine high cholesterol.

Would you expect it-- a requirement or to have a number of patients for the broader populations go through testing with self administration or is that the-- having all of the patients in clinical studies receive administration at a physician's office?

Is that typical for clinical development of a drug of this kind?

It can be typical.

What all we need to demonstrate is at least one of our protocols during even during the extension that self administration is feasible.

I think as Stan mentioned it's a small needle, it's subcutaneous.

So the actual process is reasonably simple.

You can also do stages where you have a nurse observe and then the patient goes home.

So I mean those are all and so I think if we intend by the time of filing to have the option of this either being physician administered or self administered.

By the time of filing of--

Of FH--

Of the polygenic--

Polygenic right, sorry.

Sounds great.

Thanks for that.

I think we're going to have to wrap it up.

You will take one more question.

Dr.

Crooke, there are no further questions at this time.

Great.

If there are no further questions, thanks everyone for your interest.

We look forward to seeing you next week.

And if you can't join us, please have a look at the webcast.

Thank you.

And that concludes today's teleconference.

Thank you for your participation and have a good day.