Welcome to the Insmed First Quarter 2013 Financial Results Conference Call. At this time, all participants are in a listen-only mode. Following management’s prepared remarks, we’ll hold a Q&A session. (Operator Instructions). As a reminder, this conference is being recorded today, May 7, 2013. I would now like to turn the conference over to Ms. Anne Marie Fields. Please go ahead, ma’am.

Thank you. Good morning. This is Anne Marie Fields with LHA. Thank you all for participating in today’s call. Joining me from Insmed are Will Lewis, President and Chief Executive Officer; and Andy Drechsler, Chief Financial Officer. Earlier this morning, Insmed announced the financial results for the first quarter of 2013. If you have not received this news release or if you would like to be added to the company’s distribution list, please call LHA in New York at 212-838-3777 and speak with Carolyn Curran. This morning, Insmed also filed its quarterly report on Form 10-Q for the three months ended March 31, 2012 with the Securities and Exchange Commission. Before we begin, I would like to caution that comments made during this conference call by management will contain forward-looking statements that involve risks and uncertainties regarding the operations and future results of Insmed. Please review the company’s SEC filings, including without limitation, the company’s Form 10-K and 10-Q, which identifies specific factors that may cause actual results or events to differ materially from those described in the forward-looking statements and which contains other important information about the company. Furthermore, the contents of this conference call contains time-sensitive information that is accurate only as of the date of the live broadcast, May 7, 2013. Insmed undertakes no obligation to revise or update any statement to reflect events or circumstances after the date of this conference call. So with that said, let me turn the call over to Will Lewis. Will?

Thanks, Anne Marie. Good morning everyone, and thanks for joining us. We made great strides during the first quarter in building Insmed’s infrastructure to support our ongoing transition to a commercial entity. The commercialization of liposomal amikacin for inhalation is an important first step in our transformation into a patient-focused stand-alone biopharmaceutical company operating at the intersection of orphan drugs, pulmonary diseases and anti-infective therapies. Central to this strategy in the near-term is the successful clinical and regulatory development of our lead product candidate in its first two orphan lung indications, namely, Pseudomonas aeruginosa infections in cystic fibrosis patients and non-tuberculous mycobacteria, or NTM, lung infections. We are excited to be well along the path of what we believe will be an exceptional year as we generate clinical data in both indications, seek to obtain regulatory approval, and put the company on commercial footing. Critical to achieving our goals has been our ongoing development of an outstanding leadership team. We continue to build the team with seasoned executives having the necessary experience to help us accomplish the objectives we face now at Insmed. As a result, there is a palpable new energy in the organization. We are advancing on our objectives every day. All of these executives share a commitment to excellence and a passion for advancing the development of innovative therapeutics to improve the lives of patients suffering from orphan diseases with unmet medical needs. New Jersey, the self-proclaimed medicine chest to the world, is a great area for recruiting experienced biopharmaceutical talent across a variety of disciplines. As such, we have been able to source and add strong talent in key areas of finance human resources and commercialization. And we are continuing our efforts to build on our team in clinical operations, European and US regulatory, reimbursements, manufacturing…

Thanks, Will. Good morning, everyone, and again, thank you for joining us. We had a productive quarter highlighted by the continued build out of our infrastructure, our level of clinical activities and our planned investments in manufacturing. We also remained focused on our balance sheet, which is critical as we seek regulatory approval and look to commercialize our first product in two orphan lung diseases. Let me begin with brief review of our financial results. But first, please note that we filed our Form 10-Q with the SEC this morning. I’ll refer you to the detailed discussion of our business, risk factors and financial disclosures contained in our SEC filings. For the first quarter, we posted a net loss of $13.7 million or $0.43 per share. This compares with a net loss of $6.8 million or $0.28 per share for the first quarter of 2012. First quarter 2013 research and development expenses increased to $10.3 million from $4.7 million in the prior year, primarily due to a $4.7 million increase in the external cost for clinical trial activities associated with our Phase 3 clinical trial in CF patients and its related two-year extension study in Europe and Canada, as well as our Phase 2 NTM clinical trial in the US. General and administrative expense for the first quarter of 2013 increased to $4.0 million from $2.5 million in the first quarter of 2012. This increase is primarily due to approximately $1.0 million in professional fees related to the review, accounting and reporting of excess equity awards previously granted to employees and directors that, at the time of the grants, were in excess of annual per-person sub-limits included in our 2000 Stock Incentive Plan. We also incurred an additional $0.3 million of non-cash stock comp expense resulting from re-measuring at fair…

Thanks, Andy. We have an exciting year ahead. We have the people, the processes and the plans in place to achieve a number of value-creating milestones as we advance our clinical trials and regulatory filings in the US and Europe and establish our commercial organization and continue building a patient-focused sustainable biopharmaceutical company. Most importantly, I’d like to remind you that our ambition, first and foremost, is to get an effective drug into the hands of patients in need. I believe our expression has been consistent on this front. If we can provide patients with a more effective, less burdensome drug, we believe everyone will benefit. Investors will hopefully make more money, our board will be happy, our employees will be satisfied, and most importantly, patients will have a better future. With that, let me open the call up to your questions. Operator?

(Operator Instructions). One moment, please, for the first question.

While we’re waiting for our first question, I’d like to note that we will be presenting at the upcoming UBS Global Healthcare Conference on Monday, May 20 at 2:00 PM in New York City. We hope you’re available to participate either in person or via webcast, which will be available on our website at insmed.com. Okay, operator, we’re ready for the first question.

Thank you. Our first question is from Ritu Baral with Canaccord. Please go ahead with your question. Ritu Baral – Canaccord: Thanks for taking the question, guys. On the upcoming Phase 3 CF trial, how has the dropout and compliance rate been on that trial? And if you could remind us again of the powering and non-inferiority margin around how that trial was designed? I have a follow-up as well.

You bet. Thanks for the question, Ritu. As it happens, we aren’t disclosing any of the dropout or the non-inferiority margin. When the trial is all locked up at the database and we’ve got the data, we’ve had a chance to review it, which is the point I want to make today, it’s not simply a question of spitting out the final data. We want to be prudent and take the time to look at and understand the data in context, then we will release all of that information. Ritu Baral – Canaccord: Got it. And moving to manufacturing, the plant, the Ajinomoto Althea plant where ARIKACE is currently manufactured, is that GMP certified and can you tell us when the last inspection might have been, if so?

I don’t know when the last inspection was. I know that it is GMP certified. And importantly, they have experience with commercial products production, so they’ve been through the inspection process before. Ritu Baral – Canaccord: Got it. And just to tag onto that, is part of the $45 million to $50 million in cash expenditure guidance, is part of that CapEx as well as part of manufacturing scale up, or do you anticipate partners to shoulder most of that burden?

Good morning, Ritu, it’s Andy. In that $45 million to $55 million is an investment at Althea, although they will share in a portion of that, but it is inclusive in that number. Ritu Baral – Canaccord: Have you determined what that is or could you tell us at this point?

The specifics of it? We... Ritu Baral – Canaccord: Yes.

Yes. I think what we’d prefer to do is wait until we make those investments because some of that is still in the planning phase, and so the exact figures aren’t known yet, but we’d be happy to share it once it’s made. Ritu Baral – Canaccord: Got it. Great. Thanks for taking the question. I’ll hop back into queue.

Thanks.

Our next question comes from the line of Joseph Schwartz with Leerink Swann. Joseph Schwartz – Leerink Swann: Good morning. I was wondering if you could give us any more insight into the proportion of patients that you see transitioning from the randomized control portion of CLEAR-108 into the extension study.

Yes. Good morning, Joe. Thanks for the question. Actually, this is going to be one of those frustrating calls this morning because we have data that is just around the corner. We just are not going to be in the position to disclose it until it’s finalized. With respect to this particular issue of carryover, while we had last patient, last visit yesterday, we would like to see the final definitive number so we can just come out and state it. And I anticipate that we would do that in the not-too-distant future by way of some form of disclosure, perhaps at the UBS Conference, if we know it by then. Joseph Schwartz – Leerink Swann: Okay, understood. Could I also ask about manufacturing? Is there anything in particular that makes the art of creating ARIKACE particularly challenging, anything that you’re on the lookout for as you try to scale up that could throw specs out of whack or anything like that?

No. It’s a good question and I think one of the reasons you’re hearing us talk a lot about manufacturing is because it’s just been my experience that many biotech companies, as they move towards commercialization, wake up to the reality that the focus of the company has historically been so myopically around the clinical data production that the manufacturing has not received the attention it needed in order to get to a place where it could comfortably move into commercial scale. So, we are trying to get out in front of that. I think we’re doing that successfully. This particular process is one that I would not characterize as complicated. It is also one that Althea Ajinomoto is very familiar with. One of the advantages of being at a lower scale is that the production that we have done there has been repeated and regular. So, last year for example, more than 20 batches were made. As we scale up to 50 kilos, we will need to do less production. And frankly, the other investment we’ll be making is on looking for supply chain redundancy so that we never get ourselves into a situation where the cholesterol, for example, that is used in the process is not available. So, either through inventory, purchasing or redundant qualification of a second supplier, we will have our entire supply chain tuned up in advance of the commercial launch. Joseph Schwartz – Leerink Swann: Okay. And can I just sneak one more in?

Yes. Joseph Schwartz – Leerink Swann: As far as your two ongoing studies go, where do you see them fitting into the US regulatory picture?

You mean with respect to the NTM? Joseph Schwartz – Leerink Swann: Yes.

Yes. Joseph Schwartz – Leerink Swann: And also CLEAR-108, is there any way that you could apply those two studies towards a regulatory pathway to be determined in the US?

Sure, so I think the best way to think about the regulatory picture is that we are going to take the 108 data certainly and share it with the FDA. As I’ve said in the past, I think the important things to keep an eye on within the 108 data will be how that data reports out. Do we – my expectation is that we’ll beat the – we will have – meet the end point of non-inferiority. And my hope is that we will also see some signals within the data that show potentially numerical superiority on key metrics. One of which will be FEV-1 percentage, but the other which will be time to first point of exacerbation, CFU reduction. Those kinds of things, I think show consistent performance and also make an argument of strength and support of any compound. But to be crystal clear, I don’t have any data. I’m completely blinded at this moment. I just want to highlight what I think is a fair way to review the dataset when it does come out. And when we have that, the strength of that will, I think, be important for the FDA’s receptivity to the use of the CF study in Europe and Canada in their own regulatory considerations and what is necessary for approval. Our first effort in the US will likely be around NTM. I think the study that we are doing right now, that’s a Phase 2 study, which we’ll report out by the end of the year, which will be supplemented by this 25-patient open label study that we’ve talked about will enable us to go to the FDA and have a dialog about appropriateness of registration and the label. We are hopeful that we’ll be able to do that. Some of the signals, I think, that you can look for over the year are whether or not we are able to procure two QIDP designation, whether or not we secure a fast track status. We’ve already secured orphan status. So, I think we’re headed in the right direction but there’ll be an awful lot that will be dependent on the strength of the data both from the 108 study and from the NTM study at the end of the year. Joseph Schwartz – Leerink Swann: And now, the sputum culture endpoint that are used in the target NTM study, are those considered validated regulatory endpoints for a disease like NTM?

Yes. That’s a great question and one that was the byproduct of several months of dialog between ourselves, key opinion leaders in the NTM space and the FDA. I mean, literally months of back and forth about what is the right way to look at this disease indication and how do we establish a dataset that gives everybody comfort that we’re having an impact that is meaningful. And the answer is that this semi-quantitative endpoint of reduction in bacterial density was universally viewed as the appropriate measure for efficacy in this trial and as an approvable endpoint, a point highlighted in a September Panel Discussion on non-CF bronchiectasis endpoints last September that our Chief Medical Officer attended. So, it is important to remind everyone that now a lot of development work has been done in this space, so this endpoint which is a little bit unusual is one that I think we had to come to via a discussion and consensus with FDA and KOL. Joseph Schwartz – Leerink Swann: Okay. Sounds good. Keep up the great work.

Thanks.

Our next question comes from the line of Greg Wade with Wedbush. Greg Wade – Wedbush: Hi, good morning, and thanks for taking my questions as well. Congratulations on the progress. With respect to CLEAR-108, now you have all the patients in and treated, could you maybe just review with us what the baseline characteristics are with respect to duration on inhaled antibiotic treatment TOBI experienced? And I’ll stop with that first question.

Yes. No, Greg, I appreciate the question and thanks for the acknowledgement of progress. I think, once again, we’re going to hold off on disclosing anything related to the trial, last patient, last visit. We have not locked the database yet, obviously, so once we have all of that data and we can look at it in context, I think that’s going to be the ideal time from our point of view to be sharing it and we will do that and be happy to talk about it. As you know for characterization purposes, patients coming into the trial, we fully expect that many of these patients will have been pre-treated with antibiotics of some kind. Many of them will be – have been pre-treated with more than one. And while all that is true in the backdrop, these patients are typically, if you will, washed out for 28 days or literally brought into the trial on their off-treatment cycle and then, they begin on the regimen of either TOBI or our drug. Greg Wade – Wedbush: Okay. And then with respect – just two quick follow-ups, this new 25-patient open-label NTM study, maybe if you could just give us a little more detail about the patient population that’s coming in. Are they – have they experienced exacerbation or are they just known to be colonized? What specific endpoints are you going to be exploring, what’s the duration of therapy, treatment schedule, et cetera? And then, lastly, if you could just remind us, your ARIKACE filing, is that going to be 505(b)(2) or NDA? And thanks.

Right. So, on the latter, it’ll be an NDA. On the former question, with respect to the NTM trial, that trial was really brought about as a byproduct of what I would call the reality of the NTM patient population. So, as we all know, there is nothing approved for this indication. There are however Infectious Disease Society, American Thoracic Society guidelines for treatment for these patients and they include a pretty intense regimen of antibiotic therapies, which are often poorly tolerated. So, what we have set as an entry criteria for our Phase 2 study in NTM is that they are on this therapy regimen, the therapeutic regimen for a period of time. And they have to be filling that regimen in order to qualify for treatment with our drug. And what we’re finding is that many patients simply are unable to tolerate that therapeutic regimen before they ever get near our trial. So, there’s still a desperate need there. The patients aren’t tolerating the recommended therapy such as it is. And while we continue to enroll our Phase 2 trial, we thought it would make sense for all sides to take some of those patients who are not able to enter our trial because they are unable to tolerate the other therapy and put them on our drug in a sort of an open label compassionate use arrangement with the FDA that will enable them to get the benefit of the treatment and allow us to collect data that could be useful in consideration of our drug and its impact on the patients with NTM. To be clear, that trial is not required by the FDA. It’s one we’re trying to do to address the patient needs. Greg Wade – Wedbush: Thanks, Will.

You bet.

Our next question is a follow-up from the line of Ritu Baral with Canaccord. Ritu Baral – Canaccord: Thanks. Greg actually set up this next question perfectly. Will, even though that that trial is not required by FDA, could it have read through on the regulatory front and could it produce data that might go on the label or inform any additional either Phase 3-B or post-marketing study?

I appreciate the question, Ritu. Yes, the data from that trial we believe will be meaningful in the consideration of NTM’s uses of therapy. And again, while not required, I think it will clearly be something that will form part of the consideration for the utility of liposomal amikacin for inhalation in the treatment of NTM patients. Ritu Baral – Canaccord: Got it. And the last question, when we look at modeling increases in SG&A for this coming year, what can we expect as the company builds out? And what quarters either this year or next might be the heaviest? And could you share with us any more detail on the CF landscape in Europe, the number of centers that would ideally be targeted and sort of considerations for the number of reps, or how important reps are versus medical science liaisons in this market?

Sure. So, the two questions on the SG&A front, maybe asking Andy to comment a little as well, I think we’re going to be – the thematic in operation here is let’s be prudent in our deployment and build out. Obviously, with Matt on board, he’s already begun the process of identifying the appropriate resources to add so that once the data is out, we’re in a position to move expeditiously. There are some things that we will be doing irrespective of the data. So, those processes are certainly moving forward. But I would not anticipate substantial sales build out until so much later. All of the important architecture, which I made reference to in the comments, like patient advocacy, like the keys to reimbursements, both in the US and abroad, are really the cornerstones that will ensure success irrespective of data output. So, those are underway. With respect to the EU and the cystic fibrosis space, probably the more accurate way to address that is to say, once we have the dataset, we’ll be better and able to articulate how this will roll out and in which countries we think we will be looking to vertically integrate versus those where we will be looking for a distribution model. As I’ve always said, I think, gone are the days when Europe was launch in five countries and roll out from there. I think we’re now in an era, because of the financial challenges across Europe, that we will see a focus, certainly from our point of view in Northern Europe, possibly parts of Eastern Europe, depending on reimbursement, certainly the UK, but Southern Europe I think is probably more likely to end up in a distribution model. However, I would caveat that by saying one of the reasons we’ve brought Matt on board was to answer those questions specifically. So, we’re going to empower him to make that call. And I think probably on the next quarterly call, we’ll be providing some more specific guidance on that. Does that answer your question? Ritu Baral – Canaccord: Yes. Thanks for the follow-up. I appreciate it.

You bet.

No further questions in the queue at this time. I’d now like to turn it back to Mr. Lewis for any closing remarks.

Thank you again. As ever, we appreciate your interest and support and look forward to addressing you again when we report our top line data from our Phase 3 European-Canadian trial. Have a good day, everyone.

Ladies and gentlemen, that concludes your conference call for today. We thank you for your participation and ask that you please disconnect your lines.