Item 1.01. Entry into a Material Definitive Agreement.

On October 15, 2008, Isis Pharmaceuticals, Inc. ("Isis") and RBS Asset Finance, Inc. ("RBS") entered into a Loan Agreement related to an equipment financing, and on September 30, 2009 Isis and RBS amended the Loan Agreement to increase the aggregate maximum amount of principal Isis can draw under the agreement (such agreement, as amended, the "Loan Agreement"). Under the Loan Agreement, Isis and its subsidiaries may borrow up to $19.4 million in principal to finance the purchase of equipment. Each loan under the Loan Agreement will have a term of approximately 3 years, with principal and interest payable monthly. Interest on amounts Isis borrows under the Loan Agreement will be calculated based upon the 3 year interest rate swap at the time of each loan plus 4%. As collateral, RBS will have a security interest in the equipment purchased under the Loan Agreement.

In October 2008, Isis initially drew approximately $7.2 million in principal under the Loan Agreement.

On March 27, 2009, Isis drew approximately $2.7 million in additional principal under the Loan Agreement.

On September 30, 2009, Isis drew approximately $3.7 million in additional principal under the Loan Agreement.

Under the Loan Agreement, each of the following events are events of default, which may result in acceleration of the amounts payable under the Loan Agreement:

† Isis fails to timely pay amounts due under the Loan Agreement;

† Isis fails to perform or observe its material obligations under the Loan Agreement or another agreement with RBS, and such failure continues after a reasonable notice and cure period;

† Isis defaults under any of its other debt having a principal amount in excess of $10 million;

† Isis fails to pay a judgment or order to pay money that is excess of $10 million, unless covered by Isis' insurance or under appeal by Isis;

† The occurrence of a change of control of Isis, where the acquiring entity does not satisfy specified minimum credit criteria; or

† Isis becomes insolvent or enters bankruptcy proceedings.

Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

Reference is made to the disclosures set forth in Item 1.01 above, and are incorporated herein by reference.

In this report, unless the context requires otherwise, "Isis," "Company," "we," "our," and "us" refers to Isis Pharmaceuticals and its subsidiaries.

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