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Isis is a leader in constructing strategic collaborations to meet the needs of the Company and its partners. While the strategic alliance with Eli Lilly and Company is the most significant collaboration in Isis’ history, the Company has entered into several different types of partnerships with industry leaders to exploit its expertise in RNA-based drug discovery:

Antisense Drug Discovery and Development
Isis collaborates with pharmaceutical and biotechnology partners to create new antisense drugs against gene targets selected by its partners. The work of our scientists has given us the opportunity to enter into important drug discovery relationships with industry leaders like Eli Lilly and Pfizer. To identify the most potent antisense drug to move into preclinical and clinical development, Isis screens more than 80 antisense inhibitors against a specific gene target to determine the best target to move forward.

Isis enters into drug development partnerships through:

The Company's goal is to license its later-stage drugs to partners with appropriate resources to maximize the drugs’ commercial potential.  In building its pipeline, Isis balances the use of partner funding and equity sales to minimize dilution, and to retain significant product rights to enhance shareholder value. Historically, the Company has successfully retained control of its technology while delivering value to partners.

• Accessing Isis' expertise in antisense drug discovery. As the industry’s interest in and acceptance of antisense continues to grow, a variety of companies look to develop antisense drugs. Often, these companies want to draw on Isis’ expertise or access the Company’s intellectual property. Isis actively encourages such collaborations, as they provide an opportunity to expand Isis' pipeline through participation in the development of additional antisense drugs, while reducing expense and risk to the Company. Isis has completed transactions of this nature, with Alnylam Pharmaceuticals, Canadian-based OncoGenex Technologies and Antisense Therapeutics Limited of Australia, for example.

Ibis Biosciences, Inc.: Ibis T5000 Biosensor System

Ibis Biosciences, Inc., a wholly owned subsidiary of Isis Pharmaceuticals, has developed the Ibis T5000 Biosensor System for rapid identification and characterization of infectious agents. The Ibis T5000 is capable of identifying virtually all bacteria, viruses and fungi, and can provide information about drug resistance, virulence and strain type of these pathogens. Commercial applications for the Ibis T5000 Biosensor System include epidemiologic surveillance, monitoring of pandemic diseases, identification of emerging or previously unknown pathogens, forensic characterization of human samples, identification of sources of hospital-associated infections, and, in the future, human infectious disease diagnostics. Bruker Daltonics, a subsidiary of Bruker BioSciences Corporation, is globally responsible for manufacture, order processing, installation and service of Ibis T5000 instruments. Ibis Biosciences develops, manufactures and markets Ibis T5000 assay kits.

Ibis Biosciences has received development funding from U.S. government agencies including the Defense Advanced Research Projects Agency (DARPA), the National Institute of Allergy and Infectious Diseases (NIAID), part of the National Institutes of Health (NIH), the Centers for Disease Control and Prevention (CDC), the Federal Bureau of Investigation (FBI), the Department of Homeland Security (DHS), and others.

Intellectual Property

With over 1,500 patents owned or exclusively licensed, Isis is the holder of one of the largest antisense and RNA patent estates in the pharmaceutical industry. This patent estate is a product of 17-years of research investment and innovation. The Company has established an active licensing program to protect its inventions, aid partners in developing new therapies for patients and to generate revenue for Isis. As of December 31, 2006, the Company has recognized over $77 million in intellectual property licensing from various partnerships with Idera Pharmaceuticals, Integrated DNA Technologies, Roche, atugen A/S, Dharmacon, OSI Eyetech, Pfizer, and others. The breadth of Isis' patent estate includes patents covering antisense mechansims, biology, chemistry, formulations and delivery, manufacturing, antisense functional genomics processes as well as antisense inhibitors to hundreds of molecular targets implicated in a variety of disease processes.