Isis Pharmaceuticals Inc has reacquired full product rights to ISIS 113715, its preclinical Type 2 diabetes antisense drug candidate, from Merck & Co. Inc. Isis plans to initiate human clinical trials of ISIS 113715 rapidly in the first half of 2003.

"During the past year, we have compiled a strong preclinical package and are now planning the Phase I clinical trials. We believe this is a compound that can potentially offer distinct advantages over existing treatments and is a significant commercial opportunity for Isis," said Stanley T. Crooke, Isis' Chairman and CEO. "While we are disappointed that Merck has decided not to invest further in this drug, we are more enthusiastic than ever about the potential of ISIS 113715 as a treatment for Type 2 diabetes."

ISIS 113715, Isis' second-generation antisense inhibitor of PTP-1B, improves the regulation of blood sugar levels in models of Type 2 diabetes. Maintenance of appropriate blood sugar levels is essential to the management of this disease. The following are key findings of the preclinical studies:

· ISIS 113715 produced normalization of blood sugar levels in multiple rodent models, which are industry-accepted predictors of probable efficacy in humans.

· ISIS 113715 also improved glucose tolerance test results in normal and obese monkeys.

· ISIS 113715 did not produce hypoglycemia following administration of doses as high as 20 times greater than the estimated clinical dose.

· ISIS 113715 did not cause weight gain, a characteristic of many other Type 2 diabetes treatments. This is an advantageous effect since more than 50% of Type 2 diabetes patients are obese.

· ISIS 113715 can be administered once a week or potentially up to once a month by subcutaneous injection.

· ISIS 113715 has demonstrated consistent reduction of PTP-1B mRNA and protein levels in liver and fat, key tissues known to be important in the regulation of blood sugar levels.

· ISIS 113715 may be a candidate for oral administration, as it is a compound based on Isis proprietary second-generation chemistry (2'-O- methoxyethyl).

ISIS 11375 inhibits expression of the gene encoding PTP-1B, a phosphatase enzyme that acts as an insulin receptor regulator. Insulin receptors are cell surface proteins that notify the cell of when sugar is present in the blood. Antisense inhibition of PTP-1B expression enables insulin receptors to stay active longer, allowing for more sugar uptake into cells, and thereby lowering sugar levels in the bloodstream.