Ionis Pharmaceuticals Inc (IONS) 2013 Q4 法說會逐字稿

Welcome to the Isis Pharmaceuticals year end financial results conference call.

Please note this event is being recorded.

Leading the call today from ISIS is Dr. Stan Crooke, Isis' Chairman and CEO.

Dr. Crooke, please begin.

Good morning everybody and thanks so much for joining uson our call to discuss our year end financial results.

So on the call today Lynne will review the 2013 accomplishments, Beth will walk you through our financials and our guidance for 2014, and then I'll focus on our key goals for 2014.

We think 2014 is going to be a very exciting year.

Joining me on today's call are Lynne Parshall, Chief Operating Officer, Beth Hougen, Chief Financial Officer, and Wade Walke, Vice President of Corporate Communications and Investor Relations.

Wade will you read our forward-looking language statement, please?

Yes thanks, Stan.

A reminder to everyone, this webcast contains forward-looking statements regarding the financial outlook for Isis, Isis' business and therapeutic and commercial potential, Isis' technologies and products in development.

Any statement describing Isis' goals, expectations, financial or other projections, intentions or beliefs including the commercial potential of KYNAMRO, is a forward looking statement and should be considered an at-risk statement.

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

Isis' forward-looking statements also involve assumptions that, if they never materialize or prove correct, could result in end results that 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 concern Isis' programs are described in additional detail in Isis' annual report on Form 10-K for the year ended December 31, 2012, and its most recent quarterly report on form 10-Q, which are on file with the SEC.

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

Now I'll turn the call over to Lynne.

Thanks, Wade.

Good morning everyone and thank you for joining us.

2013 was a year of significant achievement in every aspect of our business.

Together with Genzyme, we successfully brought KYNAMRO to the market in the United States for patients with homozygous familial hypercholesterolemia.

KYNAMRO's approval for chronic use in patients with a lifelong disease, highlights the potential of antisense technology, and our success in creating drugs that bring benefit to patients with severe disease.

We demonstrated in the broad Phase III program that KYNAMRO significantly lowered LDL cholesterol, and reduced other atherogenic lipids that are independent risk factors for cardiovascular disease.

Moreover KYNAMRO was dosed as a single weekly at home injection that's easy and convenient to use.

And using KYNAMRO does not require any restrictions on diet or any additional monitoring.

Importantly, KYNAMRO can be safely used with the other medications patients with homozygous FH frequently take.

These attributes give us confidence in KYNAMRO's commercial success .

While Genzyme does not want us to give out specific details on sales, what we can say is that while the launch got off to a bit of a slow start, sales showed significant quarter-over-quarter growth in 2013.

And we believe sales will continue to increase significantly this year.

There are now hundreds of physicians REMS certified to prescribe KYNAMRO.

We believe that the increased number of prescribers will translate into increased prescriptions and patients on drugs.

Genzyme tells us that the reimbursement process is working well.

And that they're successfully working with payers to move patients expeditiously from prescription to drug.

This is all great news.

Genzyme has increased its sales force to support KYNAMRO's anticipated sales growth.

As we enter 2014, we expect to see returns from this increased investment.

In addition to marketing KYNAMRO in the United States, Genzyme is marketing KYNAMRO in Mexico, Argentina, and South Korea, and pursuing regulatory approvals in a number of other countries.

And of course Genzyme's continued to supply KYNAMRO in a named patient basis outside of the United States including in Europe.

Genzyme is also working closely with the regulatory authorities in Japan to evaluate the next steps in bringing KYNAMRO to the market in Japan.

In addition to Genzyme's increasing investment in marketing, we and Genzyme also continue to invest in the clinical development of KYNAMRO to support potential commercial expansion of the drug.

The ongoing focus FH study is a long-term treatment study of patients with severe heterozygous FH, that was designed to support filings to expand the indications.

This study is on track with data planned in the first half of 2015.

Assuming it's positive Genzyme could use the data from this study, plus additional new data to support refiling in Europe for approval.

The safety and tolerability we're observing in the study so far appear to be consistent with previous studies.

We also continue to gain long term efficacy and safety data through an open label extension study for KYNAMRO, in patient who participated in our earlier Phase III program.

In this study we're seeing that with longer term dosing, KYNAMRO continues to be safe and well tolerated.

This is consistent with our Phase III experience.

These data were recently published in the European Heart Journal.

In addition, presentations and scientific meetings such as the National Lipid Association annual meeting has highlighted data from our Phase III study treating children with homozygous FH.

We're also encouraged by the strong support for KYNAMRO in the cardiovascular community.

This is evidenced by positive responses from third party physician surveys and a large number of published reviews and commentaries.

In short we believe that the long-term future of KYNAMRO is bright and getting brighter.

The approval of KYNAMRO provides significant validation of our technology, our approach to direct discovery, and our ability to develop drugs that could have a profound impact on patients' lives.

KYNAMRO however is only the beginning.

2013 was a year in which our pipeline matured considerably.

We reported clinical data from numerous studies showing that our drugs work in many diseases in many patient populations.

This maturation means we now have a pipeline with numerous late stage clinical programs.

We believe that at least five drugs from our pipeline could be in registration for marketing approval by 2018, and that each of these drugs represents a significant commercial opportunity.

Three of these five drugs are from our severe and rare disease franchise and represent the success we've had in developing drugs to treat diseases in the this significant area of unmet medical need.

We believe that our severe and rare franchise is one of the largest in the industry and getting larger as we continue to add new drugs to it each year.

And while we're on the subject of severe and rare diseases I would like the acknowledge today is International Rare Disease Day.

The theme for this year is improving care for people with living with rare disease and that is our commitment as well.

We believe that antisense drugs offer a unique approach for treating severe and rare disease, and we remain focused on advancing our drugs towards the market for these very needy patients.

We're also encouraged by the recognition of the various regulatory bodies have given to the need for new treatments for the rare and orphan diseases for which we're developing drugs.

In particular we are pleased by the EMA's recent positive opinions on ISIS-APOCIIIRx and ISIS-TTRRx orphan drug designations.

Consistent with our commitment to bring much needed treatments for severe and rare diseases to the market our drug designed to treat spinal muscular atrophy, ISIS-SMNRx, rapidly advanced in development during 2013.

Earlier this week we reported initial results from our Phase II studies of ISIS-SMNRx in infants and children.

In our ongoing open label study treating infants with type 1 SMA we saw early evidence that infants treated with ISIS-SMNRx might be surviving longer than what would be predicted based on the natural history of patients with this disease .

This is our first study in infants and we're pleased with how well-tolerated multiple doses of ISIS-SMNRx have been in these babies so far.

We also reported interim results from our open label study in which we're treating patients with type II and type III SMA with multiple doses of ISIS-SMNRx.

In this study we set dose- and time-dependent increases in Hammersmith scores.

These results are consistent with our observations from our previously reported single dose study which provides us with even more confidence in this drug.

And finally, for the first time, we reported data take from a new assay we developed that demonstrates dose- and time-dependent increases in SMN protein levels in the cerebral spinal fluid of children treated with ISIS-SMNRx, confirming that ISIS-SMNRx is acting through the mechanism for which it was designed.

These data are consistent with the results we saw in animals.

And all of these results continue to support our enthusiasm for this drug and are plan to expeditiously proceed to a Phase III program.

We plan to begin the Phase III study in infants shortly and then initiate a Phase III study in children with type II and type spinal muscular atrophy later this year.

We will earn an $18 million milestone payment from our partner Biogen Idec, when we initiate the infant Phase III study and various additional milestone payments as the study progresses.

We will also earn a significant milestone payment from Biogen Idec when we begin the Phase III study in children.

We're also very pleased with the progress we're making on our novel triglyceride-lowering drug, ISIS-APOCIIIRx.

Last year we reported five sets of Phase II data on ISIS-APOCIIIRx.

In these studies, ISIS-APOCIIIRx significantly reduced triglycerides in all patient groups studied, regardless of patient's incoming triglyceride levels, and was effective both as a single agent and when combined with other triglyceride lowering drugs.

In addition, ISIS-APOCIIIRx improved measures of glucose control and demonstrated consistent trends in enhancing insulin sensitivity in patients with type II diabetes.

This is important because as many as 30% of these severely high triglyceride patients are diabetic or pre-diabetic.

All of these data support our plans to begin a Phase III program this year in two different patient populations.

First Phase III study will be in patients with FCS, and the second will be in patients with severely high triglycerides.

In addition to advancing ISIS-SMNRx and ISIS-APOCIIIRx towards Phase III development, ISIS-TTRRx is a year into its Phase III program in patients with familial polyneuropathy.

We now have several patients in this study who have been treated for almost a year and we're on track to complete enrollment in 2015 and complete the study in 2016.

As a result we believe that ISIS-TTRRx could be a very important commercial asset for Isis in the near-term.

The profile of ISIS-TTRRx as a convenient once weekly low volume injection is being very well accepted by the patients in this ongoing study and we believe will be a convenient and attractive commercial presentation for the drug.

Because we're developing ISIS-TTRRx with our partner GSK, we earn milestone payments and licensing fees as this drug advances.

In fact we've already earned $24 million in payments from GSK associated with the advancement of ISIS-TTRRx, including $14 million related to the ongoing Phase III study.

As this study progresses we're eligible to earn an additional $46 million in milestone payments from GSK, prior to GSK licensing the drug.

So I just spent a lot of time talking about our late stage drugs.

In addition to these drugs, the rest of our pipeline is also advancing rapidly.

In 2013 we initiated five Phase II programs, including advancing three drugs to treat type II diabetes in the Phase II clinical studies.

We also reported clinical data on ISIS-APOARx, an important addition to our cardiovascular franchise.

In addition we and AstraZeneca continue to advance our cancer programs.

We previously reported early promising data on ISIS-STAT3Rx and hope to be able to report more data from the current Phase II lymphoma study later this year.

AstraZeneca is also conducting a Phase II study of ISIS-STAT3Rx in patients with liver cancer.

All these advancements in the positive data we reported have translated into real value for Isis and our shareholders.

And this is just the tip of the iceberg.

Because of the efficiency of our technology we're able to continue to add drugs to our pipeline.

These are drugs that could significantly impact the management of diseases in many different therapeutic areas.

For example, last year we added to our pipeline ISIS-DMPKRx, a drug we're developing with Biogen Idec to treat myotonic dystrophy, type I. This is a terrible progressive disease and one for which there are limited therapeutic options.

We added ISIS-ANGPTL3Rx, a drug that has potential to lower multiple lipid parameters in patients with severe disease.

We plan to initiate clinical studies on both of these drugs this year.

If I were to go on to all of the other exciting activities in our earlier stage programs I would take up all of our time and Beth wouldn't get to talk to you about our excellent financial results.

So I'll move on to discuss our partnership successes from last year.

Last year we successfully executed our business strategy by adding new partnerships and expanding our existing partnerships to advance our severe and rare diseases, and cancer programs.

In September we significantly expanded our alliance with Biogen Idec completing our fourth collaboration with them in less than two years.

Four collaborations represent a very significant investment by Biogen Idec in antisense technology from which we have the potential to earn milestone payments and licensing fees in excess of $4 billion, plus double-digit royalties . Coupling our antisense technology to Biogen Idec's expertise we believe that we can build a large and valuable neurological disease franchise well beyond what we could have done on our own . Our collaboration with AstraZeneca is also off to a great start.

As I mentioned earlier, we have a broad Phase II program underway, for ISIS-STAT3, and we will be reporting data from that program later this year.

Together with AstraZeneca we added ISIS-ARRx, a drug to keep prostate cancer to the pipeline, and AstraZeneca plans to initialize a Phase I - II study on ISIS-ARRx this year.

Our GSK collaboration also made point progress last year as we advanced three drugs from this partnership into development.

Most recently we advanced ISIS-GSK3Rx into Phase I study in healthy volunteers and we hope to be able to share more about the target of this drug with you this year as that study advances.

2013 was a very successful year that we believe sets the stage for an equally successful year in 2014 and with that I'll turn the call over to Beth.

Thank you, Lynne.

We substantially exceeded our cash guidance and significantly improved upon our pro forma NOL guidance.

We also ended the year in the strongest financial position in the Company's history with more than $650 million in cash, and a pro forma NOL of $40 million.

We achieved these financial results by effectively executing our business strategy and successfully advancing the drugs in our pipeline.

These results illustrate that our business model is working, by consistently generating cash and revenue as our drugs progress, and allowing us to maintain a moderate and predictable expense level.

Today in our pipeline we have one drug for every 12 Isis employees.

A comparable number in a pharmaceutical company would be in the thousands of employees.

Even if you subtract marketing and sales it would be many hundreds.

This limited infrastructure is only possible because of the efficiency of the antisense technology platform we've built.

Our 2013 year-end cash balance of more than $650 million was an increase of approximately $300 million over the prior year.

The substantial improvement in our cash position was driven in large part by the more than $220 million we received from our partners, of which $130 million came from upfront payments from Biogen Idec and Roche.

And over $90 million came from a variety of payments associated with our advancing pipeline.

We ended 2013 with a pro forma NOL of $40 million, which was better than both our initial guidance from last February, as well as our revised guidance from later in the year.

Revenue was $147 million, up 44% increase over 2012, and reflects the maturation of our pipeline and the partnering successes we had in the year.

We recognized revenue from about news sources of $42 million, primarily from the amortization of upfront fees we received from Biogen Idec, AstraZeneca and Roche.

We also achieved a significant number of milestone payments as we advanced our partner drugs.

We earned more than $80 million in milestone and licensing payments from six of our partners associated with partners on nine different drugs.

That we can consistently generate revenue and cash from multiple partners and numerous drugs is also a reflection of the success of our partnering strategy.

This strategy supports our ability to remain financially strong while expanding and advancing our pipeline, and continuing to improve our technology.

As Lynne discussed we made significant pipeline progress in every therapeutic area including moving ISIS-TTRRx into Phase III development, and advancing ISIS-APOCIIIRx, and ISIS-SMNRx to the point where each is poised to begin Phase III studies.

We also initiated numerous clinical studies and added new drugs to our pipeline.

We accomplished all of this with only a modest increase in our expenses over 2012.

2014 has the potential to be another great year for the Company.

While continuing to make investments in the pipeline and technology we're protecting a pro forma NOL in the he low $50 million range and an ending cash balance of more than $575 million.

Already this year we have generated more than $15 million from Biogen Idec and Alnylam, which has gotten the year off to a very strong start.

One of the advantages of our partnering strategy is that a significant portion of our revenue comes from the amortization of upfront fees, and as such is predictable.

We expect revenue from this source in 2014 to be in excess of $45 million.

Our business strategy in partnerships ensure we have a steady stream of milestone opportunities each year, although each year they may come from different sources.

Because of the significant growth in our pipeline, we are projecting to earn milestone payments in excess of $110 million.

That's a $30 million increase compared to 2013.

As in 2013, these milestone payments come from multiple partners and multiple drugs.

Because we have so many opportunities we're confident we can achieve this guidance.

Our partnering strategy also takes advantage of our dominant intellectual property estate through the success of our satellite companies.

In these partnerships we earn revenue from our partners when they license our technology to their partners.

For example we earned $7.5 million earlier from Alnylam for their transaction with Genzyme.

As you know, Genzyme began marketing KYNAMRO in 2013.

As we've noted before, we have a profit sharing arrangement with Genzyme for KYNAMRO, not a royalty.

This means that we will earn a portion of KYNAMRO's profit rather than a portion of KYNAMRO's sales.

With this type of arrangement we will record revenue from KYNAMRO on our P&L when KYNAMRO is profitable.

In 2013, the initial launch year , Genzyme made significant investments to support launch and feature revenue growth.

Genzyme continues to invest in KYNAMRO through market expansion, increasing sales support in the United States, and as Lynne mentioned working closely with the regulatory authorities to evaluate the next steps to bring KYNAMRO to the market in Japan.

In addition, the focus FH study continues to progress and we're looking forward to data early next year.

We anticipate that these continued investments in KYNAMRO will translate into significant revenue growth this year and in the coming years.

We're already seeing the benefit of these investments as sales of KYNAMRO continued to increase last year.

We believe that this trajectory will continue in 2014.

However, to be conservative given the increasing level of sales support and the ongoing development efforts we've not included KYNAMRO profit-share revenue in our 2014 guidance.

Of course if KYNAMRO out performs the plan this could represent upside for us this year.

We now have a mature pipeline that will mature further as we start four planned Phase III studies this year.

As such we expect our expenses to increase.

The increase in 2014 reflects expenses to support the Phase III studies we plan to conduct,including our ongoing Phase III study for ISIS-TTRRx, and two Phase III studies each for ISIS-SMNRx, and ISIS-APOCIIIRx.

In addition, this year we plan to have numerous drugs in later stage clinical studies, and we plan to advance our earlier stage drugs as well as add new drugs to our pipeline.

So all this rolls up into our projected financial guidance of a pro forma NOL in the low $50 million range, and the year end cash balance in excess of $575 million.

In short, we're projecting another year of significant financial strength.

And with that I'll turn the call over to Stan.

Thanks, Beth.

So now let's focus on 2014.

We expect 2014 to be another important year for Isis with multiple pipeline events that we hope will continue to enhance our value.

Of course the first quarter has been dominated by news of ISIS-SMNRx.

Although we are still early in the development of ISIS-SMNRx, what we have observed so far is very encouraging to us, to Biogen Idec, to the investigators, to the patients and to the parents.

We look forward to providing a more detailed update on progress of this drug in April, at the American Academy of Neurology meeting in Philadelphia.

Even more importantly, we and our partners at Biogen Idec are finalizing our Phase III plans.

As we get those studies underway, we look forward to sharing our plans with you.

2014 is another important year for other Phase III assets.

Our partners in OncoGenex and Teva plan to report the results of the Phase III trial in men with prostate cancer on Custirsen.

Isis bears no expense for the development of Custirsen, but does receive the share of payments OncoGenex receives from Teva plus royalties.

So all this is upside for us.

ISIS-TTRRx is already well along in the Phase III study in patients with TTR amyloidosis.

We have patients in this study who have been treated for almost a year.

We plan to complete enrollment in this study in 2015 and if positive we believe the study will support registration of ISIS-TTRRx in patients with the familial polyneuropathy.

We're also working with GlaxoSmithKline to finalize development plans for patients with cardiac form of this disease.

In the lipid franchise the most important event this year will be the start of the two Phase III studies in patients with FCS and the second in patients with severely high triglycerides.

Looking forward to our end of Phase II meetings, and once those are completed we'll share our plans with you.

Expanding and advancing the rest of the lipid franchise is also important.

We plan to start the Phase II program in ISIS-APOARx shortly.

We believe there's a substantial achievable commercial opportunities for this drug.

Additionally we plan to begin development of ISIS_ANGPTL3Rx , a drug designed to lower all atherogenic lipids.

Later this year, we plan to share data from that study with you and discuss how all the drugs from our lipid franchise fit together strategically.

This will also be quite an important year for our type II diabetes effort.

Today we have three drugs designed to treat type II diabetes in Phase II studies.

Each drug works through a unique mechanism and could be used at different points in the treatment of patients with type II diabetes.

The most advanced drug in this franchise is our drug designed to reduce the production of glucagon receptor, ISIS-GCGRRx.

This drug could be a very potent, effective agent for those patients who already have advanced type II diabetes.

In animals we've shown that this drug has a dual mechanism of action.

It reduces glucagon signaling and increases glp-1 and may protect the pancreas.

We're evaluating this drug in a Phase II study in patients with type II diabetes and plan to report the results of that study in the middle of the year.

The next drug in our metabolic pipeline that is likely to have an important Phase II clinical data is ISIS-GCCRRx.

This is our drug designed to reduce the glucocorticoid drive causing diabetes.

This drug is quite interesting because of its potential value in the treatment of type II diabetes and its potential to treat a number about of rare diseases and syndromes.

For example, Cushing's Syndrome is a rare disease caused by excess secretion of glucocorticoid hormones.

We plan to initially develop ISIS-GCCRx to treat patients with Cushing's disease.

Here again we plan to report data from the Phase II study of ISIS-GCCRx in patients with type II diabetes late this year -- later this year, or early next year.

The third drug we have in Phase II development for type II diabetes is our novel insulin sensitizer ISIS-PTP1BRx.

This study is enrolling well we hope to be able to share the results of that study later this year or early next year, as well.

The final drug I want to highlight is our novel drug targeting factor 11.

ISIS-Fx -- or F11Rx, that is designed to reduce thromboembolic?

events.

We're now completing a 300 plus patient Phase II study for which we're comparing the efficacy and safety of ISIS-F11Rx to enoxaparin.

In this study we're pre-treating patients who are undergoing total knee replacement and evaluating effects of 200 or 300 milligrams of ISISF11Rx weekly, compared to 40 milligrams of enoxaparin daily.

We hope to see at least equal anti-thrombotic activity and less bleeding.

ISISF11Rx like other antisense drugs should not have any drug-drug interactions.

This drug should not require special monitoring, and could be an ideal agent to use in patients who are taking many other medications.

We plan to report the results of this study in the middle of this year, 2014.

As we have a large mature pipeline of first-in-class drugs we have a very full agenda, and an exciting line up of news flow this year.

In the first half of this year, we will have reported results on ISIS-SMNRx , ISIS-GCGRx, and ISIS F11Rx.

We also look forward to OncoGenex and Teva reporting results on Custirsen.

Additionally we're initiating two more Phase III programs for quite a number of other clinical trials.

In short, it's going to continue to be an exciting time at Isis.

As we look towards the second half of the year we see an equally full agenda.

So 2014 is off to an excellent start, and we're optimistic that it will continue.

So now before I open the call up for questions, just let me summarize our major goals for the year.

Together with Genzyme we'll continue to support KYNAMRO development, marketing and commercialization activities.

These include advancing the focus FH study with the goal to report the data from this study in 2015.

Genzyme is marketing and selling KYNAMRO in the United States, supporting commercial launches in Mexico, Argentina, South Korea, and pursuing approval in a number of other countries.

We will continue to mature our pipeline of novel first-in-class drugs.

In the near term we plan to report clinical results from the Phase II studies on ISIS-SMNRx at the upcoming AAN meeting.

We and our partners plan to report data (inaudible) from up to seven drugs in late stage development, including Phase II data on ISISF11Rx and ISIS-GCGRx.

We and our partners who will advance the pipeline and plan to initiate up to five Phase III studies including Phase III studies on ISIS-APOCIIIRx and ISIS-SMNRx, and initiate Phase II studies on up to three drugs.

We plan to broaden our pipeline by adding up to five new drugs in both partnered and unpartnered programs.

We plan to continue to make substantial advances in antisense technology and of course we'll continue to successfully execute our business strategy to generate revenue and cash.

An exciting year.

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

Emily you can set us up for questions, please.

Thank you.

We will now begin the question and answer session.

(Operator Instructions) Our first question is from Alethia Young, Deutsche Bank.

Please go ahead.

Great thanks for taking my question and congrats on the progress around SMA, and I'm really wishing that's [for the patients here.] But we'reall focused on something else today.

I know we might have some proof of concept around myotonic dystrophy maybe next year, but can you give us a little more detail about the disease and how it compares versus SMA and also how the market compares as far as the initial prevalence?

And just confirm or reconfirm around the time lines and your expectations there, just getting [a little] proof of concept.

Interesting program.

Thanks.

Well, the most important difference in is that myotonic dystrophy is a disease that will be treated peripherally with systemic antisense drugs, and the treatment needs to take place in muscle.

And we're just in the process of getting the studies under way.

And so I would rather -- we think the market opportunity is substantial as does Biogen, and we would rather get into more of those details a little later as we really begin to know more about what the profile of our drug looks like .

Great.

Thanks.

Our next question is from Jim Birchenough of BMO.

Please go ahead.

Good morning.

Yes.

Nick Abbot in for Jim this morning who is home with the flu unfortunately.

In terms of the SMA program what data have you shared with FDA, and what feedback from you got from them in terms of their level of excitement or their desire to get this drug to the market in an expeditious fashion?

Well, we've had of course a productive relationship with the FDA and the European authorities since we began this project, and they've been very supportive in facilitating our activities . We've already had our end of Phase II meetings and so they've had the opportunity to see quite a bit of data that we presented at that time they continue to be supportive and very enthusiastic about the drug so far as we can tell.

Obviously I can't speak for the FDA other than to say that they're very responsive and we have a clear path to move our drug forward.

Lynne do you want to add anything?

I would just echo what Stan said, the FDA has been very -- their interactions have been positive and supportive and they have not -- they don't have in front of them the current recent set of data and we would after AAN plan on sharing that with them.

I guess that was really my point, if you know from the natural history of type I that whatever the data show, and you clearly showing 20 patients that you've changed the natural history as far as we know it, would FDA really want you to do a placebo-controlled trial?

Obviously you don't know, but when you present the data to them, after AAN is that one of the things that you want to test the waters for?

My preference is not to speculate about that.

I think let's -- why don't we just let the -- let these babies mature, let the data mature, and as we begin to understand the real impact that we have that we seem to be having on these babies, we'll confront those opportunities and decisions and when we do we will discuss them, of course.

Okay.

Thank you.

Our next question is from Chad Messer of Needham & Company.

Please go ahead.

Thanks for taking my question.

It's always impressive to get overview of all the activities going on over there.

My question is actually on KYNAMRO.

I know you can't share any quantitative metrics or Genzyme won't let you share them which is unfortunate, but is there anything qualitative you can tell us about the launch and the patients that you're -- that you're having success with?

So specifically here we learned recently from Aegerion that an unexpectedly large number of patients are getting scripts written but not filling them, and that's most likely due to the -- to the tolerability issues and the diet.

Is this something you have any anecdotal information that you can share with us or are you getting patients on your drug that specifically are intimidated by the dietary restrictions of lomitapide?

Is that a big selling factor ?

Chad, I have to say first that of course we don't have direct access to that information.

Everything that we know comes from Genzyme.

And the things I'm comfortable saying is we remain very impressed with the commitment, the energy and support that Genzyme Sanofi is focusing on our drug.

We're very pleased with the expansion of their sales force and the quality of effort there.

We are -- as we look at our drug we think there are many attributes that KYNAMRO has that should make it highly successful in the marketplace, and compete very well against lomitapide including the fact that there is no diet requirement, there are no drug interactions, and we lower all atherogenic lipids.

And we're seeing the responses to the profiles as we hear about it from Genzyme, that one would predict.

Lynne do you want to -- is there some more color you can provide?

So, yes.

I think the only thing that I would say, Chad, just to put that in perspective is Genzyme's marketing and sales techniques, as you would want and expect, are focused on the positive attributes of our drugs, not counter selling what might be potentially negative attributes of a different drug.

And so we do think patients are taking KYNAMRO because of the whole breadth of its positive set of attributes.

And one that I would add to the list Stan gave you is that because we're pregnancy category B it's a more attractive alternative for women of childbearing age than pregnancy category X, potentially.

But , what we're hearing back from the field is that the overall profile of KYNAMRO is driving patients to physicians to prescribe it and driving patients to want to take it.

The other thing that I think is important to remember is that we and Genzyme are investing in expanding the opportunity with KYNAMRO with focus of age, which is going well.

And we're optimistic that study will be very positive.

And so I think if you think about the longer term future, while we're -- while Genzyme and we are investing in creating that longer term future I think that longer term future is very bright.

Great.

Thanks for the added information.

Our next question is from Cory Kasimov with JPMorgan please go ahead.

This is actually Whitney on for Cory this morning.

Thanks for taking the questions.

I guess first on SMA and the emerging competitive landscape, I think we've seen trials from PTC and Novartis initiate this year.

Just wondering if you have any information on those candidates .

The PTC is the Roche drug, and we don't -- we don't have any new information on that drug, other than that it's -- how it works and why it works is still not understood . The other thing I would say is that enrollment in our studies with SMNRx is really impressive.

And the support of the families of SMA, the SMA Foundation and the parent and patients is as positive as I've seen for any drug that I've been associated with.

Got it.

And then can you just quickly remind us the design of the GCGR trial, and what data we should expect to see when that reads out?

This is a study in patients who have type II diabetes, uncontrolled on metformin.

It's a randomized double-blind placebo control trial, 13 weeks.

And we're looking at 100 and 200 milligrams a week of GCGR.

What we hope to see is significant reduction in fasting blood glucose, and of course with 13 weeks you don't have nearly enough time to get to equilibrium on hemoglobin A1c but we're hopeful we'll see some improvement in hemoglobin A1c.

And of course we'll be watching also for tolerability issues, because this target is associated with a small molecule that -- small molecules that have been looked at.

It's associated with what appears to be manageable target related ALT elevations so all of those things we'll be looking at.

In addition to fasting glucose, we also have a number of shorter term measures of blood glucose control that are built into the study, again because it's a three-month study.

We also will be looking at GLP-1.

Remember in animals we see significant increase in GLP-1 and we think that could be a very important feature of the drug, as that added mechanism should make it (inaudible -- background noise) This drug we expect, based on animal data, to be extremely effective and to be able to work and to be used in people who have advanced diabetes, as well as earlier.

We also want to look at hypoglycemia.

We think in animals and in our Phase I trial we did see hypoglycemia.

We want to -- and we think there are mechanisms that explain that.

So we want to look carefully at that, as well.

And we're very excited about this drug.

Got it.

Thanks for taking the question.

Our next question is from Salveen Richter of Canaccord.

Please go ahead.

Hi, good morning.

This is Andrew on the line for Salveen.

Could you just remind us about the economics, particularly the royalties for SMN?

I believe it's a 10% royalty.

Can you give us any color if that's high, low, if it's tiered, and if that differs between the type I and the II - III?

Yes, it's not a 10% royalty, it's an ascending double-digit royalty.

We haven't given out what the tiers are, but it is a tiered royalty.

And it does not differ, it will be the same drug in infants and children.

It doesn't differ between the two indications.

As Lynne mentioned earlier there are quite substantial milestones that for development and regulatory milestones that matter a great deal to us.

Okay.

Great.

And then just a follow up on KYNAMRO when the focus FH reads out.

I was hoping if you could give clarity on how you see the competitive landscape particularly against the PCSK9s in heterozygous population.

Well, I think the PCSK9s are working well, but in folks who have LDL receptors.

And our focus with KYNAMRO is homozygous and severe, where we think KYNAMRO will have a very good profile that would be competitive with what PCSK9 inhibitors do.

Remember also that our strategy for the lipid franchise was to create in KYNAMRO a drug that could be used in combination with PCSK9 inhibitors and so for the really severe patients I can easily see combinations between our drug and PCSK9 inhibitors that I don't think would be nearly as attractive with an MTP inhibitor.

Okay.

Thank you very much.

(Operator Instructions)Our next question is from Navdeep Singh of Goldman Sachs.

Please go ahead.

Good morning guys and thank you for taking my questions.

Maybe a quick one on SMN.

Just wondering if you could give us some color on the amount of data, how many patients and what kind of follow up time from the 12 milligram cohorts you'll have ready by AAN?

And I have a follow up.

Thanks.

Yes, I would prefer not.

I mean we're -- it is -- the 12 milligram doses are just really going on now, and it's enrolling a lot so whatever number I gave you would be wrong today.

It's only a couple of months, and we'll give you all that at the AAN.

Okay.

And then I understand you're not providing KYNAMRO sales, but any sense on how many patients are on KYNAMRO?

So yes, we know how many patients are on KYNAMRO but again that's information that Genzyme considers at this point to be competitive intelligence and so I apologize but we're not free to give you that.

Okay.

Then maybe on TTR, maybe you could discuss the overall profile of TTR versus the Alnylam product and when we should expect Isis to initiate the Phase II studies in FAC patients.

And just wondering on -- is there a rate limiting step there?

Do you still have to talk to FDA on the trial design and what not ?

So the profile for our TTR drug is very attractive.

It's a once a week drug that's being very well tolerated, easy to use, patient can administer the drug themselves.

The current drug that Alnylam is developing requires IV infusions and coming into an infusion center . And so we believe not only are we substantially ahead, we think that our drug as profiled is much more attractive.

The potencies are roughly equal.

The level of activity is more than sufficient, it's in the plus 80% level, depending on the maximum level of activity is roughly the same.

So we're very -- very optimistic about TTR, both against the disease and against the competition, and the FAC decision is principally a business decision by GSK.

Okay.

Thanks a lot.

Congrats on the progress.

Thanks very much.

And our next question is a follow up from Nick Abbott of BMO please go ahead.

Just two quick follow ups I was interested in your comment about the GCGRx, that there may be some protection of the pancreas.

I wonder if you can just elaborate on that?

And more broadly what are your goals for the antisense technology?

What are the top three on your wish list of things you would like to be able to do with this technology ? Thanks .

Well, what we have observed in animals is that we preserve the pancreas, and the mechanism is thought to be both the fact that we reduce a lot of the glucose drive and we increase GLP-1.

And of course demonstrating that in human beings is -- will require some time.

But I think the level of activity that we expect is based on animal data should be substantial, and the GLP-1 increases we hope will be meaningful and those will be sign posts that tell us we're seeing in man what we're seeing in animals.

And just because no one has asked about Factor XI, I can't end this call without encouraging you to think about Factor XI.

There is still plenty of opportunity for improved treatment of thromboembolic disease and we think FactorXI is -- F11Rx is a very exciting opportunity and encourage you to spend some time thinking about it and we would be glad to talk about it.

With regard to technology, we already know that it works.

We know that it works broadly in multiple organs.

We're not limited to a single organ and we demonstrated that we can give antisense drugs by every route of administration, including oral although certainly not ready for prime time.

So our main goals are to continue to expand the pipeline and expand the uses and routes of administration of antisense, to make oral administration available, and move forward the next level, the next set of drugs that we have that we think are going to be somewhere in the five to ten times more potent range than the drugs that we have in the clinic right now.

You want to continue to explore our generation 2.5 drugs for difficult to reach tissues like cancer and muscle.

So those are our main goals.

And we're in a period of just exponential growth and our understanding of how and antisense drugs work and using that information to create progressively better performing drugs over the next two decades is our long-term goal.

That answer your question?

Yes.

Sorry on the GCGRx.

Do you think that's something different between exogenous GLP-1 administration which is associated with pancreatitis versus this endogenous route of production?

We do.

We think the amounts and the types and all sorts of things whether it's pulsatile or not pulsatile.

So there are variety of things that may be different, but I think the key thing is we need to look at the data that we have from this Phase II study, and see what kind of profile we have with this drug.

And then we'll go from there.

Okay.

Great.

Thanks very much.

Okay.

And our next question is from -- follow up from Alethia Young of Deutsche Bank please go ahead.

So on FactorXI I'm just curious about your -- will you press release it and then have data at a medical meeting?

And what medical meeting might be a potential opportunity for that data?

We will press release it.

We'll almost certainly have a webcast.

And then the data will get presented in a variety of meetings and the meetings that make most sense for it are things like ASH and so on.

But again, we will as the data emerges -- obviously if the data aren't as positive as we hoped, then it will get into meetings in one way and if they're as positive as we hope it will get into meetings a very different feeling.

Great.

Thanks for the follow up.

You bet.

If -- with that, I think the hour is dragging on.

I think we probably out to bring it to a close.

And in closing, I would say that we spent a good bit of time talking about the pipeline and we're very excited about a number of drugs in the pipeline with glucagon receptor and FactorXI being central in the first half of the year as well as getting the Phase III programs underway.

And we continue to experience extraordinarily high levels of interest in our technology, the drugs that we have in development and in partnering, and so we're very optimistic that we will certainly achieve our business goals, as well.

Thank you very much.

The conference is now concluded.

Thank you for attending today's presentation.

You may now disconnect.