Insmed Incorporated (INSM) Q2 2012 Earnings Report, Transcript and Summary

Good day ladies and gentlemen, and welcome to the Second Quarter 2012 Insmed Incorporated Earnings Conference Call. My name is Jeanine and I’ll be operator for today. At this time, all participants are in listen-only mode. Later we will conduct a question-and-answer session. (Operator Instructions) As a reminder this conference is being recorded for replay purposes. I would now like to turn the conference over to Mr. Brian Ritchie, FTI Consulting. Please proceed, sir.

Thank you, operator. Good morning everyone. This is Brian Ritchie from FTI Consulting, and welcome to Insmed’s second quarter 2012 conference call. Insmed issued a press release this morning containing second quarter 2012 financial results, which is posted on the company’s website. Today, we are joined by Mr. Tim Whitten, President and CEO, who will provide a business update and review the financials. Following the prepared remarks, Tim will be available for a question-and-answer session. We would ask you to please limit yourself to one question and one follow-up, so we have time for as many questions as possible. Before we proceed with the call, I would like to remind everyone that the Safe Harbor language contained in today’s press release also pertains to this conference call and webcast. Please go ahead, Tim.

Thank you, Brian. Hello everyone and thank you for joining us on today’s second quarter 2012 conference call. The second quarter was a landmark in our history, as we transformed Insmed into a Phase 3 development stage company, and achieved several significant milestones. First, we made substantial progress in advancing ARIKACE in the clinic in our two priority orphan diseases, and we remain on track for achieving top-line results for CLEAR-108 and TARGET-NTM in mid-2013 and the fourth quarter of 2013 respectively. Second, we substantially strengthened our financial position through the $20 million loan agreement with Hercules Technology Growth Capital. And finally, we reinforced our already strong intellectual property position as a second composition of matter patent was issued in the U.S. for ARIKACE and liposomal aminoglycosides in general. Following a careful and thoughtful evaluation of the ARIKACE clinical development options, we announced in May that the company’s resources would be applied towards the CLEAR-108 Phase 3 European and Canadian registration study in Cystic Fibrosis patients who had Pseudomonas Lung Infections and the TARGET-NTM Phase 2 trial of ARIKACE in patients with recalcitrant or resistant non-tuberculous mycobacteria lung disease. CLEAR-108 compares ARIKACE to TOBI, the market-leading inhaled antibiotic from Novartis for three complete 28-day on-treatment and 28-day off-treatment cycles in about 300 patients. We dosed the first patient in April and remain on target to have top-line data in mid 2013. We are rapidly bringing sites online, in fact about 65 of the 80 planned sites have been activated and are recruiting patients. As a reminder, patients who complete CLEAR-108 are eligible to enroll in CLEAR-110, which is an open-label study in which patients receive ARIKACE every other month for up to two years to assess primarily safety and tolerability. Open-label simply means physicians and patients will know that the…

(Operator Instructions) Your first question comes from the line of Chris Marai with Wedbush Securities. Please proceed. Christopher Marai – Wedbush Securities, Inc: Hi, good morning Tim. Thanks for taking my question.

Sure, good morning, Chris. Christopher Marai – Wedbush Securities, Inc: So just a quick update, with respect to the ARIKACE study in NTM, it sounds like you’re getting a lot of interest from investigators in enrollment, is that still on track for full enrollment in Q1 2013?

Yes Chris. We are on track to achieve top line results from the randomized portion of that study in the fourth quarter of 2013. So you can pretty much calculate how long it will take us to enroll that trial by just backing it up by about seven or eight months, and that would be when we will project that we would complete enrollment in that trial. And yes, there is a lot of interest from physicians, as well as patients, in participating in that trial. We’re the only game in town, so to speak, and we’re really excited about it and believe that if we can show benefit in this patient population and we can really become the leader for treating this disease, which is growing 8% a year. Christopher Marai – Wedbush Securities, Inc: Okay, great. And then also, I see the enrollment criteria is pretty open to, in terms of age of enrollee, 18 to 75, is there any indication from the sites about sort of the average age, or the targeted age, or common age of patients that might be enrolled in the trial?

So the short answer of that is, we don’t have any information on that so far. Based on the patient population, our expectation will be that the vast majority of patients in that trial would be in the 50s, 60s and 70s; but it’s just too early to know, have any demographics on the patients. Christopher Marai – Wedbush Securities, Inc: Okay, great. That makes sense. And just one quick follow-up then, additionally, is there any indication from your discussions with the FDA that this could be a potential registrational trial, just given the unmet medical need in NTM, I know initially it was Phase 3 and then the clinical hold and all that, but have you updated any discussions with the FDA, or is that potentially your plan? Thanks.

Sure. So the plan with our NTM study is, when we get the results of the trial in the fourth quarter of 2013 and in the follow-on three months results from the extension to that trial, then we will go to the FDA and have our customary end of Phase 2 meeting, and we’ll talk with them at that point about what potential next steps are. Chris, I appreciate the questions. Christopher Marai – Wedbush Securities, Inc: Thank you. Very helpful.

Your next question comes from the line of (inaudible) with ThinkEquity. Please proceed.

Sure, great, thanks, good morning, Tim.

Thank you, how are you?

I feel pretty good. Just a kind of a quick question for you, in terms of possible pricing strategy, is there a range that you’re looking at, or is there like a benchmark example out there that you could give us for a sort of guidance on pricing?

Sure. It’s a little early for us, in terms of coming up with a definitive price or even a very tight range. If you look in Cystic Fibrosis patients who have Pseudomonas Lung Infections that are treated with inhaled antibiotics, the pricing for the TOBI’s and the patients of the world are in that kind of $4,000 to $5,000 range. And if we potentially at some point get an indication, there’s an inhaled antibiotics for treating those patients, you would expect that we would be competitive in our pricing. We view NTM differently and while we don’t have exact pricing, it’s way too early, we think the price point in NTM is potentially significantly higher for those patients than it is in CF.

Okay. And obviously, you talked about the Hercules $10 million, could you just comment on your intentions for the remaining $10 million?

Sure. I think it’s almost very likely that we’re going to take down the additional $10 million between now and the end of the year and we’ll likely take it down at the very end of the year, the way the agreement reads is that we have the opportunity to take $10 million down between now and December 31 of 2012, and we would likely do that at the last possible time, but I’m pretty confident we are going to take it down.

Okay, great. Thank you so much.

Okay, thank you.

(Operator Instructions)

So it sounds like there are no other questions, so thank you operator, and thanks to everyone for joining us today. We appreciate your interest and support of Insmed and look forward to providing you with future updates. Enjoy the rest of your day. Thank you.

Ladies and gentlemen that concludes today’s conference. Thank you for your participation. You may now disconnect. Have a great day.