Ionis Pharmaceuticals Inc (IONS) 2008 Q2 法說會逐字稿

Welcome to Isis Pharmaceuticals Second Quarter Financial Results Conference Call.

Leading the call today from Isis is Dr.

Stan Crooke, Isis Chairman and CEO.

Dr.

Crook, please begin.

Good morning and thanks everyone for joining us on today's conference call to discuss the financials for our second quarter of 2008.

Lynne will review the financials and our progress to date and I will primarily focus on the milestones that we hope to achieve in the coming months.

Joining me on today's call are Lynne Parshall, COO and CFO, Beth Halgren, Vice President of Finance and Kristina Lemonidis, Associate Director of Investor Relations.

Kris, would you read the forward-looking statement please?

Good morning everyone.

A reminder to everyone that this webcast includes forward-looking statements regarding Isis Pharmaceuticals' business, financial position and the outlook for Isis as well as its Isis Bioscience subsidiary and its Regulus joint venture, and the therapeutic and commercial potential of the Company's 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 or projections.

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, in developing and commercializing systems to identify infectious organisms that are effective and commercially attractive, 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 good faith judgment of its management, these statements are based only on facts and factors known by Isis.

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

These and other risks concerning Isis' programs are described in additional detail in Isis' annual report on Form 10-K for the year ended December 31, 2007 and its quarterly report on Form 10-Q for the quarter ended March 31, 2008, which are on file with the SEC.

Copies of this and other documents are available for the Company.

Back to you, Stan.

Here are the main points that we would like to make on the call today.

First, we are in the strongest position, financial position, ever in the history of the Company.

Second, thanks to the efficiency of antisense technology and the novel business strategy that it supports, we're able to continue to add multiple new drugs to the pipeline every year to advance a very broad pipeline of drugs in development and to continue to advance for technology with a net operating loss that this year will be less than $15 million.

Third, in the first six months of 2008 we've shown progress in every element of the business.

We've added new drugs to our pipeline.

We've reported encouraging clinical data for several drugs in the pipeline.

Our Ibis Division continues to do an excellent job.

The progress that Ibis has made is punctuated with the first-- with the two $20 million investments by Abbott.

Our newly formed joint venture, Regulus, is making excellent progress in micro RNA drug discovery and has completed a significant partnership with GSK shortly after we formed Regulus.

Finally, we've had continuing success in business development that provides financial strengths and sets the stage for the performance in the coming months that we'll be talking with you about.

We believe that our performance in the second half of the year will be as impressive as the progresses we've made in the first half.

At the conclusion of our conversation, if fact, I'll spend some time with you talking about those up-coming milestones.

Now I'm going to turn it over to Lynne.

Thanks, Stan.

As Stan said, we've had a great first half of this year.

We've demonstrated that our strategy is working producing concrete results across the board with the result we are in the strongest financial position we've ever enjoyed and are able to continue to aggressively execute our business strategy.

Just to give you some more concrete examples, in the last 12 months we've moved two drugs into development, started clinical testing on three drugs and moved one drug into Phase III clinical testing.

This dynamic maturation of the pipeline will continue throughout the year and beyond.

In addition, we and our partners have presented encouraging data on multiple drugs including positive mipomersen activity and long-term safety data and other enhancements to the product profile.

A publication in circulation showing that in preclinical studies mipomersen lowers LP little A [LPa] and oxidized LDL, two additional independent risks factors for cardiovascular disease, data at ASCO highlighting our cancer drugs developed by Oncogenics and Lilly.

A presentation in eight posters at the ADA highlighting not only are these attractive pre-clinical profile of our SGLT2 inhibitor, but also the exciting progress we're making with antisense drugs to treat obesity.

And last month our partners, Teva and ATL, presented very encouraging data on ATL-TV1102, our VLA-4 drug in patients with MS.

We've also continued to get done what we promised.

We completed the license of mipomersen to Genzyme on time and progressed the Phase III trial for patients with homozygous FH.

We continue to make progress on mipomersen and in fact, as we announced yesterday, we initiated the Phase III studies in heterozygous FA patients with coronary artery disease.

We also achieved Abbott's second $20 million investment in Ibis as planned and we are continuing the strong momentum.

Just yesterday we also announced a patent allowance granting broad coverage of antisense compounds targeting anywhere in the apoB messenger RNA, including the site to which mipomersen binds.

So now let's back up and take a few minutes to briefly discuss some of the financial highlights of the second quarter.

I'm assuming you've all read our Release so I'm not going to through all of the details.

We ended the second quarter with more than $535 million in cash.

Our total revenue for the first half of 2008 increased $48 million from the same period in 2007, almost an eight fold increase.

In addition to the $175 million licensing fee from Genzyme, we continue to recognize significant financial value from the transactions we've completed including a $2 million milestone payment from BMS, $4.6 million from Alnylam, $1.4 million from ATL, $3.3 million in revenue from Ibis, which represents a 72% increase from the second quarter of 2007 and $656,000 of revenue from Regulus.

We're on track to meet our guidance for 2008 with a pro forma NOL of less that $15 million and cash of at least $450 million, which we expect will last for at least five years and does not include any additional cash from Abbott should it acquire Ibis.

Our strong financial position is a direct result of the successful execution of our business strategy.

Because of these successes this is the second profitable quarter we've recorded in a year.

While we are not yet at the point of sustainable profitability and our quarter-to-quarter performance will continue to fluctuate based on one-time events such as the Teva ATL license fee, our significant continuing revenue base coupled with the business strategy supports the expansion of the pipeline while allowing us to control our expenses.

We believe this strategy will lead to sustained, strong financial performance.

So to summarize, we've received guidance from the Agency and completed the license agreement with Genzyme and the development plan for mipomersen is well underway exemplified by the recent initiation of the Phase III Heterozygous FH trial.

Other drugs in our pipeline are advancing and showing promise and all the while we continue to receive licensing and sub-licensing fees, which should assure that we have the financial security to take our business to the next level.

We look forward to sharing our progress with all of you as we continue our successes and now I'll turn the call back over to Stan.

Thanks, Lynne, and that's a great report.

As you've heard, our financial performance is tangible evidence of the benefit that our business strategy, coupled with antisense technology, provides to our shareholders.

Beyond financial performance the advancement of our drugs and the ability of Isis and our satellite companies to attract high-quality partners and funding also provide evidence of the value of the technology, the drugs and the strategy that we're pursuing.

Mipomersen is the most advanced drug in our pipeline.

The allowance of the broad patent we announced yesterday is an important element of our proprietary position.

It provides protection from competitor apoB antisense inhibitors.

It covers both single-stranded and double-stranded RNA that is siRNA, so all antisense drugs, any antisense drug that's complementary to any site in the messenger RNA of apoB regardless of the chemistry or antisense mechanism of action.

This is the first allowance in a series of very broad filings protecting the therapeutic use of targeting apoB.

This allowance provides for our protection of the Isis enzyme apoB franchise while the Companies continue to aggressively move mipomersen toward the market over the next few months.

In addition to the Phase III study we just initiated in heterozygous FH patients with coronary artery disease, together with Genzyme we plan to initiate three additional trials to evaluate mipomersen's safety and efficacy in reducing LDL cholesterol in high-risk patients by the end of the year.

These include the initiation of a study in [atherosis] eligible patients and two studies in high risk, high cholesterol patients.

In aggregate these studies will involve approximately 500 patients, so they will add substantially to the safety and activity data for the drug and we hope they will enhance its profile.

In addition we are working hard with Genzyme in planning our EU regulatory strategy.

Later this year we look forward to presenting the first of the mipomersen liver imaging data.

In the first cohort, the normal volunteers, we hope to show no increase in liver fat but in subsequent patient cohorts we hope to be able to show over time that we see in man what we saw in animals, which is in fact a reduction in liver fat.

Finally, in addition to all the other activities going on, we're making excellent progress with our partners at Genzyme in defining the outcome study.

Another exciting opportunity in our cardiovascular program is our CRP inhibitor, which will enter clinical trials very soon.

We believe CRP plays an important causal role, not only in cardiovascular disease but also in renal and inflammatory disease.

CRP is a good example of how we plan to use our financial strength to create more robust data packages for our drugs.

We plan to create a Phase II development plan that evaluates several of the most scientifically and commercially attractive indications for the drug, so that we will have a very robust and valuable data package at the end of Phase II.

This will enable us and our partners to define the most productive Phase III programs for the drug.

We continue to expand our therapeutic reach into new disease areas that are uniquely suited for antisense drugs, such as we are doing in the metabolic program.

While we have four type II diabetes drugs in development, each with a novel mechanism and each complementary to the other, the abundance of therapeutic targets amenable to antisense inhibition provides us with the opportunities to expand our franchise into other areas of metabolic disease including obesity.

I believe that obesity is a major opportunity for us and that patients need peripherally acting anti-obesity agents such as the drugs that we're creating that work principally in fat cells.

We look forward to moving some of these early stage programs into development in the near future.

Looking at our partner drugs.

Looking at our partner drugs, we're also very encouraged by recent data announced by ATL and Teva regarding ATL TV-1102, an antisense drug targeting VLA-4 for the treatment of patients with Multiple sclerosis.

In just eight weeks of treatment ATL was able to demonstrate statistically significant reduction in disease activity for ATL TV-1102 in patients with MS.

These results were as positive as reported for any drug in these patients in this type study ever.

We believe these data provide further evidence of the broad applicability of antisense drugs and lay the foundation for further studies on ATL TV-1102 as a new treatment option for patients with MS.

Remember, this drug works in the bone marrow to reduce expression of VLA-4 and that then leads to an effect on a CNS disease.

So it's another drug, it's another tissue, it's another disease where we're showing great activity for second generation antisense drugs.

Finally, Ibis and Regulus continue to make excellent progress.

Earlier in the year, Ibis received a $20 million investment from Abbott and entered into a distribution agreement with Abbott.

Abbott has since invested an additional $20 million in Ibis to bring Abbott's equity in Ibis to 18.6%.

The second investment was the key step toward the completion of the full purchase of Ibis by Abbott.

While expanding the Ibis technology into broader diagnostic markets with the help of our partner Abbott, Ibis also continues to benefit from government contract awards that fund the expansion of the application for the T5000 system.

In the last month Ibis received new contracts for up to $1.6 million from the government.

Over the last few days, we've gotten several questions regarding the recent articles in the Los Angeles Times and other papers that suggested that the Ibis T5000 biosensor technology was used in the investigation of the anthrax bioterrorism event.

Obviously, we're not at liberty to discuss anything we do on behalf of our government sponsors and thus can't comment on any aspect of the anthraces uni-typing studies contributed to Ibis in recent articles.

I can tell you, however, that the T5000 system is being actively used by many government agencies and to the extent possible we are sharing those results with the broader scientific community.

As you know, Ibis Technology has been pioneered to provide capabilities to rapidly and precisely characterize infectious organisms including those like bacillus anthraces.

For example, at this year's ASM Biodefense meeting we, along with the CDC in Northern Arizona University, presented results in which 89 strains of bacillus anthrasis were genotyped including the [Ang-strains], a very highly virulent strain that was used in bioterrorism.

Ibis has an existing contracts focus on pathogens detection and characterization with several government agencies, including the Department of Homeland Defense, the Defense Threat Reduction Agency, the National Institute of Health, the FBI and others.

We have actually placed several instruments within government facilities administered by the Department of Defense, the Department of Justice and, of course, the CDC.

Regulus also continues to maintain a strong intellectual property position, just obtained rights to new and promising microRNA miR-181 that has shown early promise in areas of inflammatory diseases.

This is an example of a target patent application that we are acquiring and these target patent applications then add to the core patents that we believe give us control of the therapeutic use and the therapeutic approaches to microRNA broadly.

2008 has been an exciting year of great progress.

I've only highlighted a few of our recent accomplishments at this stage for the upcoming milestones but I want to focus now on those milestones.

We think we have more exciting days ahead of us.

As I mentioned, we plan to initiate three additional new trials studying mipomersen this year and present liver imaging safety data on the drug also later this year.

We plan to initiate a Phase I clinical trial on our CRP inhibitor.

If you just think about all the diseases in which CRP is involved and the fact that we can selectively inhibit CRP to evaluate each of these opportunities, you can see how significant the opportunity that CRP inhibition may present.

We plan to report Phase II data in patients with type two diabetes with our PTB-1B inhibitor, novel insulin sensitizer in which-- in a study in which it's used in combination with sulfonylurea.

This study was designed to determine if Isis 113715 can indeed lower glucose without causing hypoglycemia and many of the other side effects associated with other type two diabetes drugs and to confirm if it indeed lowers LDL cholesterol, as we showed in a previous Phase II trial.

A drug that lowers glucose, LDL cholesterol and has none of the side effects or drug interactions of the other type two diabetes insulin sensitizers.

We plan to complete the Phase I study with our glucagon receptor inhibitor, which targets the glucagon receptor for, again, the treatment of type two diabetes.

Remember this is a much more than a simple Phase I trial because in this study we're administering a glucagon challenge, so the this study will give us direct evidence to determine if we're producing the same effects in man that we've seen in many species of animals.

We plan to initiate a Phase I study for our first CNS drug administered directly to the central nervous system targeting a gene called SOD1 involved in a severe form of ALS.

We also plan to advance at least one new drug candidate and into development and, of course, we're looking forward to the potential acquisition of Ibis by Abbott.

So I think that's a full agenda and we think there's a lot more to come.

Investments we've made in our technology coupled to our novel business strategy are yielding financial results that enable the creation of an ever expanding portfolio of antisense drugs that have the potential to have positive effects on diseases from cardiovascular to metabolic to cancer and inflammatory and central nervous system diseases.

We think that's a great opportunity and we have the financial strength to do all this now without any compromise.

And with that then I'll open up the call for questions.

Teresa, if you can set us up for questions I'd appreciate it.

(Operator Instructions) And we'll go first to Jim Birchenough with Lehman Brothers.

Just a question on the mipomersen program, just wondering if you've had any greater clarity from FDA on whether surrogate end points like LDL reduction would be a regulatory basis for approval for the heterozygous population for high risk patients, whether you've moved those discussions forward at all?

The position of the FDA is that LDL cholesterol is an appropriate end point for very high risk patients and so obviously any patient that meets the very high risk definition is a patient that should be in a study that has LDL as the primary end point.

And what is that definition of very high risk, Stan?

Well, it's straight from the Framingham definitions and that includes people who have very high cholesterol that can't get to target at using traditional agents and have either coronary artery disease or cardiovascular disease of one sort or another, so generally I think that's the simplest way to think of it.

So just following on with that if you look at the population that's being enrolled in this second Phase III that you announced yesterday, is that a population where FDA you would expect to accept LDL as an end point for registration?

I think we are planning for LDL to be an end point that's acceptable for homozygous FH and for the [atherosis] eligible patients and I think the definition-- how broad the definition of very high risk is remains to be better defined with the FDA.

Just one further question and I'll jump back in the queue, on the liver imaging study I'm expecting we'll see the data at AHA.

I'm just wondering if you can confirm that and just wondering if the data that we'll see in the fall will be sufficient to prove what we've seen in animals that you could see some reduction in liver accumulation of fat?

What I can tell you is that we do plan before the end of the year to present the liver imaging data and the first cohort is what will be presented.

Those are normal volunteers that have normal liver fat so we-- the purpose of that cohort is to be able to demonstrate that there's no increase in liver fat.

It is not a goal in that cohort to demonstrate reductions in liver fat.

Mark Monane with Needham.

Good morning and congratulations on a very productive second quarter and beginning of the third.

Question for you regarding definition that Jim talked about, high risk versus very high risk-- having high cholesterol is generally not a good thing.

If you could add anything to those definitions is there a very, very high risk category and maybe any update on what on the outcome study being planned as part of a comprehensive package.

As I think of it, there are very high risk and high risk patients and we are developing a drug to be used in combination with other drugs principally in patients who can't get to target, so by and large most of the folks in these studies have high cholesterol that hasn't-- well, all the folks in these studies have high cholesterol that hasn't been amenable to getting to target with the use of the available agents and most of them cardiovascular disease.

And the categorization of very high risk and high risk is an algorithm that considers the level of cholesterol, the level of cardiovascular risk, the age, whether they have other life styles that put them in a higher risk, such as smoking and the like and those have all been fairly well defined for a number of years, so what our plan is, focus on very high risk patients and high risk patients and those high risk patients, even the high risk patients are principally what you would think of as secondary prevention because they already have some evidence in many cases of cardiovascular disease.

Any update on the outcome study, what your plans are, what it might look like with your partner Genzyme?

We're making lots of progress and we and Genzyme do plan to discuss the nature of the outcome study later in the year.

Regarding the milestones that you've listed, you talked about the cholesterol study starting this year, the cholesterol studies, and also CRP trial, Phase I trial starting this year.

Can we expect any other of these milestones like 715 data this year?

How shall we be thinking about this?

Well, what we've said about 715 is the study is progressing nicely and we hope to finish it either very late this year or early next year and we hope to report the data very shortly after we finish it.

Very good.

And then the last question is regarding the patent that you have.

I guess a patent strategy here is looking at the targeting and the mechanism of action but then there's the unique patent on the novel chemical entity of a new chemical entity.

Can you talk about the strategy of addressing the target or addressing the mechanism versus addressing a drug in particular?

Sure.

We do it all.

I think we control so, of course, we have composition of matter patents and patent applications on all of our drugs including mipomersen.

Second, we seek method of use patents and what was allowed here as a method of use and that method of use includes any antisense mechanism and any antisense chemistry, siRNA or single strand except ribozyme targeting any side in the message and it-- and so it reads a method of lowering apoB by targeting any site in the message.

And then, of course, we have all of our core chemistry and mechanism of action and biology patents that give us a sort of lattice work of patent protection for the drugs and the technology so this patent that's just been allowed is a very broad method of use patent that covers basically any site in the RNA that you-- that anyone could design an antisense inhibitor to interact with for any purpose that would be associated with apoB reduction.

Thank you very much for the added information.

[Leland Grashell], Cowen and Company.

With the first Phase III trial of [verisin] in the homozygous FH patients now and going for some time, any enrollment update that you could provide from that trial?

It's going extremely well and we're right on schedule.

Okay so we should expect data next year, any firmer fix on when we might see data from that trial next year?

No.

And one more question on the Phase II trial of the diabetes compound 113175 could you remind us the design of that Phase II trial?

Yes it's a study in which patients have established diabetes.

They are on sulfonylurea.

They're brought in for a period of weeks and watched in and out of their drugs and stabilized on the sulfonylurea and then it's a-- then they're randomized to receive either placebo 100 milligrams per week or 200 milligrams per week of 715.

They are treated for three months and the end point is two weeks after the last dose and it was a staggered enrollment.

The first group got 100 milligrams of 715.

The second group got the 200 milligrams because this was our first experience with 715 in combination with the type two diabetes agent.

The primary end point is hemoglobin A1C.

I think at week 15, if I remember correctly, the secondary end points are various measures of glucose and the ability to lower LDL cholesterol.

Great and one more question if I may, you mentioned obesity becoming more of an area of focus for Isis, any more color you can shed on that interest?

Well, at the diabetes meeting we presented quite a bit of data on a wide range of targets that we've been working on.

Our focus is peripherally acting anti obesity agents because we feel that CNS anti obesity agents will always have CNS side effects and obviously our drugs have the benefit of not getting in the CNS and there are a variety of functions that fat cells engage in that are now known and weren't so well understood five or ten years ago and so we've targeted a variety of [different] kinds of pathways in fat cells that all in one way or another increase fat burning by affecting fat cells and we haven't yet decided.

We had three or four targets and compounds that look very interesting and our goal is over the next few months to decide on the first one that we're going to take into man and I'll be able to tell you more about that when we make that decision.

Thanks for the clarity.

You bet and if you want more information we can send you the summary of the posters and whatnot at the ADA.

Geraldine O'Keeffe, Fortis Bank.

Congratulations on a great year so far.

Stan, one comment for you, you're very rich now.

You've got a lot of money in the bank and I think it says in the Press Release that you expect it to last for five years but maybe you can shed a little bit more light on how you expect to spend that and if you would not expect to be profitable in five years time.

I'll let Lynne answer the second question.

She's good at talking about how we're going to save money and I'll tell you how we're going to spend it.

And he's going to let me go first.

Obviously we're in very strong financial position now and, as has been the case, our drugs are very attractive.

We think we've picked good drugs in good markets so putting any one of the drugs in late stage in the pipeline on the market would make us profitable.

We're very close to being able to be profitable now but on the basis of partnering revenue, license fees and R&D funding, so you can see that we've got a lot of things that are moving along nicely but I can't give you a time of profitability projection.

And so now I'll Stan tell you how we're going to spend the money.

I think prudently.

What I find very interesting about antisense and our business model is that we're able to do all this with and yet spend relatively little money and that's all tied to keeping the Company small, doing early discovery and early development and licensing our drugs at Phase III and not building all the infrastructure necessary for Phase III, IV, commercial applications and so on.

We think that's strategy that works given the efficiency of antisense.

And the evidence for that is straightforward.

Look at our financials and look at the pipeline and look at what we're doing.

So we intend to continue that and clearly we can be cash flow positive and profitable to some extent before even the first drug, first major drug, gets marketed.

We are planning to prudently invest more but very cautiously and the areas that we will be enhancing are first we are going to retain more of our drugs longer, that is through Phase II.

We think that those Phase II data just add tremendous value.

Second, we're going to be doing more robust Phase II programs.

CRP is an example but we will certainly be asking all, as many of the appropriate questions as are feasible in Phase II.

I think that will add significant value to all of our drugs.

And third, we're expanding into new areas.

We're moving into CNS and we're re-invigorating our cancer program and so you'll be seeing a significant number of new drugs in development and you'll see us expanding into some therapeutic areas in which we haven't been active with drugs developed by us over the last few years.

I think that's about as precise as I ought to be today but I hope that gives you an idea of how we'll spend our money.

We are not going to be in the category of biotech companies who are burning through $100 million or $400 million a year.

We don't need to do that.

We don't intend to do that.

That's very helpful, Stan, but would your investment for the future, which is also include perhaps investing in additional technologies?

We've always, even when we didn't have a lot of money invested and continuing to advance antisense technology.

We're still at the end of the beginning in RNA based drug discovery so we are continuing to invest very substantially in all areas of basic research that involve our technology and we have no intention of in the near future expanding into other technologies because we don't need to.

We can, with our little group of people, put two to four drugs per year into development with the technology that we have today and by just investing slightly more we can up that number meaningfully.

That's the place to spend our money.

Thank you very much.

Congratulations again.

[Ian Samaya] with Thomas Weisel.

Just out of the mipomersen program, Stan, you mentioned that [EFG] is willing to accept the LDL lowering endpoint depending on the risk of the patients.

Can we talk about from safety standpoint (inaudible) the liver-- potential for liver abnormalities?

At what level of tolerance is there from the FDA depending on the diverse profile of the patient?

No I don't think we can be precise about that and I don't think the FDA, even if you were to ask them and they would tell you, would give you a precise answer to that.

What happens is you look at the needs of the patient and the value that the drug brings and then you make an assessment of what the risk profile is.

That's sort of the way it's always done and I don't know a precise algorithm.

I do think it is interesting when you look at the statins Phase III data.

Of course, these are drugs that are used by everyone.

The incidence of three times [lprolam] in a normal of ALTs when the ALTs are measured monthly and require confirmation before they're reported runs from 2 to 5%, if I remember correctly, depending on the agent and the dose.

And if you go back to the Phase II trials, the very few Phase II trials that have looked at three times [lprolam] in a normal as a function of dose, the higher the dose of Lipitor the greater the incidence of ALTs, so there's in fact I think a substantial tolerance even in very low risk patients for some elevation in ALTs because people recognize that that's just the sort of a natural consequence of fiddling with lipids in the liver.

I think what the FDA and the clinicians that I talk to are principally concerned with is, is there any evidence of severe liver toxicity, idiosyncratic, severe liver toxicity and [High's] laws are the best predictors of that so we're feeling very confident that the ALT profile of our drug is going to be very attractive and we certainly have no evidence of our drug producing any sort of severe liver toxicity so that's a lot of words.

I don't know if I answered your question but I have to say that in the patient group that we're talking about we're certainly very, very optimistic that the liver safety will be very attractive relative to the needs of the patients and the therapeutic benefit of the drug.

Are you referring specifically to the homozygous or also the heterozygous and the atherosis patients?

No I am talking about all the patients,

All the patients.

I think if you took-- if you looked at all of the data we have, we actually have a remarkably liver well tolerated lipid lowering drug with regard to liver and the more data we see the better we feel about it.

Now clearly we have to get a lot more experienced and a key step for us in the next coming years is to gain that experience in a large enough patient groups and to do that prudently and then introduce the drug to patient groups where we bring the most value in a prudent fashion so that we gain commercial experience that will teach us about the safety in the real-- in real medical practice so we have all of that ahead of us.

This is there's work to be done but, as I look at this drug, it's predictable, it works in every patient, it does things that no other drug can do and so far it's imminently tolerable so it's imminently developable.

(Operator Instructions) Aaron Reames, Wachovia.

Congratulations on a strong quarter.

First question I had just is an accounting question.

In terms of interest income is the rate that we saw this quarter what we should expect on a going forward basis?

Aaron, no that has in addition to what you would think of as traditional interest income, it has a variation in it because of the derivative accounting that we have to do for some of these so I can get accountants on the phone with you and walk you through how that's likely to fluctuate over time but no the answer is no.

And then is there any update that can be provided on the regulatory status in Europe and any potential conversations that you've had with the regulators there?

I want to leave questions like that for Genzyme to answer primarily but what I will say is the teams are working really well together.

We're making great progress on putting the documents together and getting the meetings set up and we're feeling very good about everything.

Carol Werther with Summer Street Research.

Could you just tell us a little bit more about this study that started this second Phase III study?

Do these patients that are at high risk, is their LDL goal, is it 100 or is it 70, the ones that aren't reaching goal?

So the study is in patients with heterozygous FH and, as you know, that that's-- in America that's not a genetic diagnosis.

That's a clinical diagnosis.

There are 100 patients.

The primary end point is LDL reduction after 26 weeks of treatment so at week 28 and, if I remember correctly, it's a two-to-one randomization drug to placebo.

These are patients who are on maximum tolerated therapy and have not been able to get their LDL to target.

I think the requirement to get in the study may be 130 LDL.

I can't remember the-- I don't remember that for sure, Carol, so don't hold me to that.

And so-- and these people all have coronary artery disease, so in a perfect world I would say that most cardiologists would tell you they'd like to see them get to 70 but in these patients people would be delighted to get them to 100.

Thank you that makes sense and then after the study is done at the 28 weeks do you plan to follow these patients beyond that?

Are you setting up--

Yes.

Oh yes all of the folks in these trials will be allowed to continue-- the opportunity to continue the drug in various open label extension studies and other processes.

We want to get as much long-term safety data out of all of the patients that we have as possible.

So we have a primary end point in all these studies of LDL at after 6 months of treatment but we certainly are having success in getting people to roll over into open label extension studies.

It gives us the long-term safety data.

And how often are they monitored for liver abnormalities?

I don't remember in this new study that's starting.

You might want to ask the folks at Genzyme or we can check that for you but in all of our studies we've been monitoring weekly for LDL reduction and liver safety and then as we move to the longer-term studies after an initial period of weekly evaluation we're going to monthly.

And can you share with us any of the secondary end points?

Are you doing any imaging studies?

No not in that trial.

And should we assume that when you start these three additional pivotal trials this year that some of those will include patients in the EU?

Oh sure the additional trials include atherosis eligible patients, very high risk patients, and then two studies in high risk patients and, as you know, a lot of the data on mipomersen to date have been generated in the EU and we'll continue to enroll patients both in the US and in Europe.

(Operator Instructions) It does appear there are no further questions at this time.

Dr.

Crooke, I'd like to turn the conference back over to you for any additional or closing remarks.

Well, again, thanks everyone for your interest and thoughtful questions and we'd look forward to continuing to make great progress and tell you all about what we're doing.

Thanks.

That does conclude today's conference.

Thank you for your participation.

You may disconnect at this time.