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We also formpreferredpartner transactions that provide uswith a vestedpartner, such asAstraZeneca, Biogen Idec, GSK
andRoche, early in the development of a drug. Typically, the drugswe partner early indevelopment are in therapeutic areas of high
risk, like severe neurological diseases, or in areaswherePhase 2 resultswould likelynot provide a significant increase in value, like
cancer. These preferredpartner transactions allowus todevelop select drugs that couldhave significant commercial potentialwith a
knowledgeable and committedpartnerwith the financial resources to fund later-stage clinical studies and expertise to complement our
owndevelopment efforts. As inour other partnerships, we benefit financially fromupfront payments,milestone payments, licensing
fees and royalties.
And finally, we plan tokeep some drugs longer sowe can conduct Phase 3development onour ownwithout a partner. By
doing so, we believewe canmaximize the value of these drugs by licensing themmuch later indevelopment andpotentially
maintaining a larger portionof the commercial revenue. Our novel triglyceride-loweringdrug, ISIS-APOCIII
Rx
, is an example of a
drug thatwe plan todevelop into andperhaps throughPhase 3development onour own. We believewe have the resources to conduct
a broadPhase 3programon ISIS-APOCIII
Rx
, andbecause of our experience in the cardiovascular spacewithKYNAMRO, we have
the expertise to conduct thePhase 3 studies. We plan to initiate a Phase 3programon ISIS-APOCIII
Rx
this year inpatientswithFCS
and patientswith severely high triglycerides of greater than880mg/dL.
We alsoworkwith a consortiumof smaller companies that can exploit our drugs and technologies outside our primary areas
of focus.We call these smaller companies our satellite companies. We benefit from the disease-specific expertise of our satellite
companydrugdevelopment partners, who are advancingdrugs inour pipeline in areas that are outside of our core focus. Through this
strategywe can expand the therapeutic range of antisense drugs intodiseases that need new and innovative treatment options. We
providemore information onour satellite company partners in this sectionunder the subheading “SatelliteCompanyCollaborations”.
In addition, we formpartnerships focusedondeveloping and advancing certainRNA-targeting therapeutic technologies.
These partnerships take advantage of our dominant RNA-targeting intellectual property estate, and leverage our investments inour
core technologies. These collaborations typically involve a cross-license betweenus andour partner and allowus toparticipate in
newly emerging approaches toRNA-targeting therapeutics and augment our active programs in these areas.
Our partnerships fall into several categories, includingpharmaceutical alliances and licenses, satellite company collaborators,
external project funding alliances, and technology and intellectual property sales and licensing. We highlight our traditional
partnering alliances andour preferred partner transactions below inmore detail in this sectionunder the subheading “Pharmaceutical
Alliances andLicensing”.
PharmaceuticalAlliances andLicensing
We have a longhistoryof establishing allianceswith pharmaceutical industry leaders. We form traditional partnering
alliances that enable us todiscover and conduct earlydevelopment of newdrugs, outlicense our drugs topartners, andbuild a broad
base of license fees,milestone payments, profit share and royalty income. In contrast, our preferredpartner transactions provide us
with a vestedpartner early in the development of a drug. With our preferredpartners, we are able to expand andbroadenour drug
discovery efforts tonewdisease targets in therapeutic areas that are outside of our expertise or in areaswhere our partnerswill provide
tools and resources thatwill complement our drugdiscovery efforts. For instance,we established a broad strategic alliancewith
Biogen Idec that pairsBiogen Idec’s extensive resources and expertise inneurological diseaseswithour antisense technology.
Togetherwe plan to create a franchise of novel treatments for neurological disorders thatwill expandbothour pipeline andBiogen
Idec’s pipeline of promising new treatments. In cancer, we areworkingwith our partner, AstraZeneca, to conduct a comprehensive
clinical program for ISIS-STAT3
Rx
, an anti-cancer drugwe licensed toAstraZeneca. We also have a seconddrug in
development, ISIS-AR
Rx
, withAstraZeneca. Because ISIS-AR
Rx
can inhibit the productionof all known forms of androgen receptor,
orAR, we believe that this drughas the potential to be an effective treatment for all stages of prostate cancer, includingprostate
cancer patientswho are resistant to current therapies. AstraZeneca plans to evaluate ISIS-AR
Rx
inAR-related cancers in a broad
clinical program. Throughour collaboration, we are also applyingAstraZeneca’s proprietary preclinical cancermodels and screening
systems to evaluate newoncology targets.
In all of our partnerships, we benefit from the expertise our partners bring toour drugs. By couplingour partnering activity
withour efficient drugdiscovery technologywe candevelop themajorityof our drugs inour core therapeutic areas ourselves through
early proof-of-value prior to licensing. As a result of our unique strategy and innovative research anddevelopment capabilities, we can
keepour organization small and focused.
