Update on Ionis Pharmaceuticals June 7, 2016 Due to recent announcements and ongoing price weakness in the stock of Ionis Pharmaceuticals, we wanted to provide you an update on our thinking relating to your investment in the company. Background: Buena Vista Investment Management began investing in Ionis Pharmaceuticals (previously known as Isis Pharmaceuticals) in 2004 based on our belief that their genetic research and unique approach to discovering new drugs through the use of Antisense Technology would eventually lead to a much higher stock price. Since that first investment 12 years ago we have seen many ups and downs in the stock price but through it all the company’s technology continues to improve and its balance sheet has never been better. As investors, we entered 2016 with the potential for a lot of good news. First, the company had three phase 3 trials coming to endpoints within 18 months. Second, the company’s new subsidiary, Akcea Therapeutics, which was created to focus on their lipid franchise, was now up and running. The company had an exceptionally strong balance sheet for a biotechnology company, with approximately $700 million in cash and marketable securities. And most importantly, the company now had 38 compounds in clinical trials, an unheard of number for a company of this size. Yet with all of these potential positive catalysts for the stock, we are now sitting at the same price level as we were in the beginning of 2014. The price of Ionis stock has dropped from a high of $77 per share in April of 2015 to the mid 20’s today. As investors, we now need to decide whether or not there is a problem with the company. We can then make the decision to retain or sell the investment. In some cases, we also have to determine if this price decline has given us an opportunity to add to existing positions or to initiate new positions. What we do know: 1. Investing in a biotechnology company requires patience and a long‐term time horizon and therefore, we expect larger than normal investment returns. Stocks in this area can be extremely volatile as we have seen with Ionis. 2. The company has extremely new and efficient technology. There are no other biotechnology companies, to our knowledge, the size of Ionis that have so many compounds in clinical trials. It is also the first new drug discovery platform in 40 years. All this make Ionis a company which is very unique and hard to value. 3. The company’s drug discovery platform has evolved and improved over the time we have been investors. The improvements in the company’s chemistry have caused the new medicines being tested to be more powerful and have fewer side effects. Potency has increased 10 fold between generation 2.0 and generation 2.5 medicines. And the company’s LICA technology has shown a 30 fold increase in potency during APO(a)‐L Rx trials. 4. The company has consistently said over the years that their drugs have no drug ‐ drug interactions. This is a very valuable and important point to us as investors in this company. Update on Ionis Pharmaceuticals (continued) So why then has the stock performed so poorly over the last year? 1. The stock was $22 per share in 2014 then it soared to $77 per share at the beginning of 2015. In our opinion this move was too far, too fast and some retracements of the price gains were both normal and healthy. 2. Biotechnology stocks in general have been weak since the end of 2015. The IShares NASDAQ biotechnology ETF was down 40% since peaking in 2015 due to pricing and political concerns. With Ionis being part of this sector, it will be subject to the same kind of volatility. 3. The most recent price decline in Ionis stock was due to an announcement that Glaxo had delayed a phase 3 trial for the Ionis drug TTR‐Rx. The trial was delayed because of decreased platelet levels in some patients. During the conference call the company also indicated that they had seen decreased platelets in a different clinical trial for its lipid drug, Volanesorsen. This caused a number of brokerage firms to raise questions about the company’s technology and the potential value of its platform. We have attached, as part of this document, some slides from the Ionis annual meeting, which took place June 3rd, and details what they know about the platelet issue. What decisions has Buena Vista made relating to your investment in Ionis Pharmaceuticals? 1. Company Management ‐ Over my 12 years as an investor in Ionis we have had 4 meetings with Dr. Stanley Crooke, the founder of the company and/or Lynn Parshall the company’s current COO. Everything that they have told us over the years has come to be realized but it has taken time and was not always without some bumps. Given that we are investing in a biotechnology company it is important that we have confidence in the management team. Based on their handling of current and past events we maintain a high regard for the management team at Ionis. 2. The Antisense Technology Platform ‐ While we are not chemists, biologists or scientists, we have come to understand that the antisense platform is efficient and cost effective way to develop new medicines. The current platelet problem notwithstanding, the technology is evolving and improving. Antisense technology is not the only way to develop medicines but is one way that may improve the lives of people affected by serious diseases. 3. Wall Street –After the recent announcement of the Ionis platelet problem, two major Wall Street firms cut their price targets in half. One firm moved their target from $49 to $20 and the other from $53 to $25. After spending some time listening to company management it would be our position that these changes in price targets moved the stock more than was reasonable from an investment perspective. 4. Your investment in Ionis Pharmaceuticals ‐ After listening to the company’s review of the platelet problem during last Friday’s annual meeting, talking with a member of the management team and doing our own research, it would be our opinion that that Ionis stock should be retained. The recent decline in price offers an opportunity to purchase shares at a reasonable valuation and we will be purchasing shares in accounts, where appropriate. Please contact any member of the Buena Vista management team with questions. Respectfully submitted John Moffat, Partner Buena Vista Investment Management LLC Issues Regarding Platelet Declines Very few cases of serious platelet declines in Phase 3 studies IONIS-TTRRx in NEURO-TTR study Volanesorsen in APPROACH FCS study Misperception that serious platelet declines may have broader implications 7 What We Know About Platelet Declines Platelet reductions are a frequently observed sporadic side effect of many drugs Most are “idiosyncratic” meaning mechanism unknown Platelet reductions are easily monitored and managed Many potential contributors to platelet reductions Drug/disease-specific interaction Concomitant medications Infections 8 Partial List of Drugs/Classes Known to Cause Thrombocytopenia Others Over-the-Counter Antibiotic Chemotherapy Arrhythmia Acetaminophen Aminosalicylic acid Interferon-a Amiodarone Danazol (fibrotic breast disease) Aspirin Amphotericin B lrinotecan Digitoxin Ibuprofen Oxaliplatin Digoxin Diatrizoate meglumine- Naproxen Ampicillin Quinidine diatrizoate sodium Ceftriaxone (imaging agent) Neuro/ Cholesterol Co-trimoxazole Antidepressant Anti- Simvastatin Ethambutol Carbamazepine inflammatory Methicillin Aminoglutethimide Desipramine Diclofenac Hypertension Nalidixic acid Diazepam Meclofenamate Chlorothiazide Novobiocin Haloperidol Sulfasalazine Methyldopa Penicillin Mirtazapine Phenytoin Piperacillin Anti-parasitic Blood thinner Valproic acid Rifampicin Levamisole Abciximab Quinidine Eptifibatide Rifampin Quinine Sulfisoxazole Heartburn Heparin Stibophen Cimetidine Tirofiban Trimethoprim Suramin Sulfamethoxazole Ranitidine Vancomycin Beta-blocker Alprenolol Oxprenolol 9 Arnold, D.M. et al. (2013) Transfus Med Rev. 27:137-145 Partial List of Drugs/Classes Known to Cause Thrombocytopenia Others Over-the-Counter Antibiotic Chemotherapy Arrhythmia Acetaminophen Aminosalicylic acid Interferon-a Amiodarone Danazol (fibrotic breast disease) Aspirin Amphotericin B lrinotecan Digitoxin Ibuprofen Oxaliplatin Digoxin Diatrizoate meglumine- Naproxen Ampicillin Quinidine diatrizoate sodium Ceftriaxone (imaging agent) Neuro/ Cholesterol Co-trimoxazole Antidepressant Anti- Simvastatin Ethambutol Carbamazepine inflammatory Methicillin Aminoglutethimide Desipramine Diclofenac Hypertension Nalidixic acid Diazepam Meclofenamate Chlorothiazide Novobiocin Haloperidol Sulfasalazine Methyldopa Penicillin Mirtazapine Phenytoin Piperacillin Anti-parasitic Blood thinner Valproic acid Rifampicin Levamisole Abciximab Quinidine Eptifibatide Rifampin Quinine Sulfisoxazole Heartburn Heparin Stibophen Cimetidine Tirofiban Trimethoprim Suramin Sulfamethoxazole Ranitidine Vancomycin Beta-blocker Alprenolol Oxprenolol 10 Arnold, D.M. et al. (2013) Transfus Med Rev. 27:137-145 Serious Declines in Platelets are Not a Class Effect Observed with Second Generation Antisense Drugs Not a class effect of 2’ methoxyethyl second generation antisense drugs Serious platelet declines in only two of more than 15 second generation drugs studied in the clinic (over 3,000 people treated in our integrated safety database) No evidence of cumulative dosing effect with second generation antisense drugs Patients treated responsive to dose pause and steroid treatment Platelet declines not due to these serious