Insmed Inc (INSM) 2002 Q1 法說會逐字稿

Welcome to this update conference call. All participants will be able conference call ; all participates will be able to listen only until the question and answer session of the call, at which time, you will be instructed on how to ask a question. Today's conference is being recorded. If anyone has any objections, please disconnect at this time. I will now turn the conference over to Mr. Baxter Phillips. You may begin when ready.

Thank you, Sondra. Welcome to our second conference call of 2002. I am again Baxter Phillips, responsible for investor relations, before I start to speak I'd like to introduce are participants in today' call; sitting to my left is Dr. Geoffrey Allan, Chairman and CEO of Insmed, Mr. Kevin Tully, Senior Director of Finance Administration. This call may contain forward-looking statements which involve known and unknown risk, uncertainties and factors which may cause are actual results, performance, achievements or industry results to be materially different from any future results, performance or achievements expressed or implied by these forward looking statements including those described in the company's security and exchange commission and filing. It's now my pleasure to turn the call over to Mr. Kevin Tully;Kevin.

Thanks Geoffrey, Good morning, ladies and gentlemen. It's certainly a pleasure to join you this morning on another of our quarterly updates. I'll talk briefly about financial. The areas I will be covering will be comparison of quarter one 2001 with quarter one 2001, and a brief look forward to the balance of the year. In the first quarter,as you can see from our press release we reported a net operating loss of 6.1 million or 19 cents a share. This compares with a loss of 10.1 million and 31 cents per share for the corresponding period in 2001. The three main areas where this anticipated reduction in spend occurred, quarter on quarter firstly in the clinical area, the first quarter 2001, we saw several of our trials initiated, and these incurred the traditional front loading in terms of costs to ramp up enrollment. In contrast, during the first quarter of this year, enrollment in our clinical program was substantially completed and the spending reflected the none cost decline contributed to the treatment phase of the trials. So really, it's a ramp up last year and a beginning of a wind down this year. On the manufacturing side during quarter one, 2001, we incurred significant costs to produce the drugs required for our clinical program. As we entered this year with our first two trials basically fully supplied with drugs, we incurred minimal costs to the drug manufacturer during this first quarter, and finally in G & A, our expenses were significantly lower as we brought in house key services and are continuously improving the efficiency and effectiveness of our business support. In terms of interest received, just a quick note on that. We experienced a natural decline quarter on quarter as the interest income parallel down reducing cash balance. Overall,net operating loss position for this quarter remains in line with projections as we noted on our last quarterly update. In terms of cash and cash equivalents, we have 43.4 million of cash and cash equivalent until the end of March, 2001,and just for reference, as we started the year, our cash and cash equivalent balance was 51.3 million. This represents an average cash burn rate of around 3 million a month for the first quarter of this year. During the same period in 2001, the average cash burn rate was 3.7 million a month. Looking ahead to the rest of 2002, I anticipate the average monthly cash burn rate for the second quarter to fall slightly from quarter one as our phase two clinical program continues to wind down as I mentioned earlier. I expect the average cash burn rate for the first half quarter to be round about 3 million a month. As for the second half of 2002, I expect the average monthly cash burn rate to climb marginally higher as we begin preparations for our first three clinical trials and continue to ramp up our development program. This should give us an overall cash burn rate for the year of around 3 million, which is on track with our previous projections. This concludes my summary of the financials. I'll be available at the end of the call for questions. I'd now like to pass over to Geoff for a review of the business activities.

Thank you, Kevin. Well, once again, it gives me great pleasure to be able to review with you our activities in the previous quarter, and you with guidance for the remainder 2002. The first item I would like to discuss with you this morning is the clinical calendar. As you can tell from Kevin's presentation, with regard to our expenses, last year we had a very busy year implementing and executing a very comprehensive, a phase two clinical program to put us into a strong position to initiate our phase three activities for our product INS-1. I would like to review with you the nature of these trials and the status of the importance of these trials during the remainder of this year. Let me just review quickly some of the activities that have occurred in these clinical trials to give you some sense of the nature of this program. First of all, as I said earlier, this has been a very comprehensive program. We have actually profiled and subjected to evaluation over 3,500 patient for participation in these clinical trials. This has resulted in an accrual of over 1100 patients and the various trials that we've conducted. I think this indicates how carefully we've selected the patient population for inclusion in these trials. And this is solely to ensure that we have the right patient population to demonstrate the correct profile, the safety and efficacy profile of our drug INS-1 in the two indications PCOS and type two diabetes. We've got four trials that are still ongoing, three of these trials are in PCOS, one of which is a trial designed to evaluate the effectiveness of INS-1 on the ability to enhance ovulation in women with PCOS, who have been treated with [comofel] a known ovulation induction agent. These trials will also demonstrate the effect of INS-1 on menstrual regularity and metabolic and endocrine characteristics of this condition. We've also got two additional trials, where we're fully exploring the dose response relationship of INS-1 in the PCOS subject. These trials are of nine months duration, [BONOTHERPY], as I said, those range finding the study the effect of INS-1 on the various parameters in this patient population. Mainly ovulation, menstrual regularity and again, the endocrine and metabolic abnormalities that are consistent with this condition. We are hopeful that these trials will all report out in the second half of this year. In our diabetes trial, as you may recall, this a trial that was designed to evaluate the effects of INS-1 in a population of type two diabetics who have failed the standard exercise and diet regimen of treatment. This trial involves over 400 patients, and again, this will report out in the second half of this year. All of these trials have completed their randomization phase, and we are now simply waiting for the last patients to be treated. Then we'll open the trials for analysis and duly report that analysis to you. As part of an ongoing program, with an intention to embark on phase three, we have had very extensive activities this current quarter, securing the long-term manufacturing agreements, but if necessary to manufacturer this drug in bulk in preparation for phase three clinical trials. It is our intention as we have reported before to begin phase three clinical trials in January, 2003. Now, with all that being said for INS-1, I'd like to now turn over to our product, SomatoKine, as we've said,-- as we've pressed on with our endeavors to treat PCOS and diabetes with INS-1, we are equally excited with the fact that we've commenced early stage clinical trials with SomatoKine in pursuit of a treatment for three additional indications for which there is little or no therapeutic options available on the market today. I think I spelled out in the last conference call that the characteristics of these diseases lead us to believe that they are natural targets that will subcome to treatment regimen of SomatoKine to not only to the insulin sensitizing properties of this agent, but equally importantly to the product's growth promoting activities. In the areas of interest once again, are the conditions of growth hormone and sensitivity disorders, metabolic distrophy and age distrophy. In our last conference call, I indicated to you that it would we would be applying for often designation for these these three indications, and I'm pleased to report we have submitted the application -- and application to cover all of these indications. Previously, we had been awarded often drug designation for the use of SomatoKine as an [ANTI-CATABOLIC'S] and growth promoter agent and the treatment of severe burn injuries. If we win the designation for these three indications I just mentioned, that will bring our total of orphan designations to four for this product, Consequently, we look forward to hearing from the FDA on our request in the near future, and I will be hopeful that we can give you an update on this activity in our next conference call. Now, as a calendar of clinical activities with SomatoKine, I mentioned that we have one trial -- sorry, we have these three indications, one trial in the growth hormone and sensitivity disorders , have actually being initiated. This trial is being conducted in europe. It's a phase one [PROMOCO] clinical study to compare the disposition of IGF-1 with SomatoKine in patients who suffer from severe growth disorders. This trial will probably report out in the third quarter and consistent with our other applications, -- sorry, pursuit of other indications, we'll be initiating phase two A trials in [INAUDIBLE] in quarter three and hopefully we will initiate an aids distrophy study in quarter three and quarter four. As a follow-up to SomatoKine, I also introduced in the last conference call the concept of BP3, the other hawk, so to speak, of SomatoKine, may have too much suppressant properties, thus providing approach a certain oncology indications. We have pressed ahead with preclinical studies at some leading oncology laboratories. These three clinical studies are designed to position BP3 as a potential human clinical candidate, and I hope -- I hope in the next conference call that I'll be able to give you an update of these three clinical studies and demonstrate that we've addressed this concept as to whether BP3 presents itself as a useful[INAUDIBLE] agent. Once again, in the last quarter and during the last conference 2001, we had a significant activity in the area of manufacturing for SomatoKine. We've made tremendous progress in achieving a cost effective method of manufacturer of this product that we hope will only improve as we scale up even further. This is being possible to a strong working relationship with a company that called [INAUDIBLE], which is specialist protein manufacturing company, and we hope to secure a long term manufacturing agreement very shortly to support clinical trial production and ultimate commercialization of SomatoKine for the various indications that I've talked about this morning. Now, as a wrap-up, I'd like to simply point out to you that we do continue to exhibit our scientific data at various different scientific conferences, and I'm pleased to report that this year we have six abstracts that have been accepted for presentation at the American Diabetes Association and the Endocrine Society meetings in June of this year in San Francisco. We've had one journal article report -- sorry, published reporting the effects of SomatoKine in the treatment of women suffering or recovering, sorry, from Osteoporosis Hip fracture. We continue to prosecute our intellectual property and we are seeing a consistent flow of new patents that are being allowed or issued that in total will continue to strengthen our total estate. We've had one patent filed this quarter. We've had seven additional patents allowed or granted, and we've had two patents issued. Okay, let me just simply recap where we are, I've talked about the clinical calendar for INS-1, our comprehensive program will be winding down and we'll have the results available for the second half of this year for the various trials that we have initiated in PCOS and type two diabetes and, we will duly report those trials to you. We've initiated activities with SomatoKine in the three new indications. One of those trials in the growth hormone and sensitivity syndrome is already under way and will pursue the initiation that the two trials of metabolic distrophy and [INAUDIBLE] distrophy very shortly. We're continuing to explore the efficacy of BP3 as an anti-tumor agent. And I would simply sum up at this point by simply saying that we the Insmed are dedicated to bringing these clinical trials to [frauition] and continuing to build a strong product pipeline with a solid market potential, and I believe what I've described to you today is a very strong illustration of that mission statement. So once again, I'd lake to thank you for joining us today. I will now pass the call over to the operater to moderate questions during the question and answer period. Thank you very much.

Thank you. At this time, we will begin the question and answer session of the call. Anyone who would like to ask a question, please press star one on your touch-tone phone and you will be announced prior to asking your question. To withdraw your question please press star two. Once again, if you'd lake to ask a question, please press star one now. If anyone is using a speaker phone today, please pick up your hand set before pressing star one. Our first question comes from Kevin McKenna of Dane Roucher.

Hey, Geoff, good morning. First question is the length of trial on the SomatoKine for the growth hormone insensitivity, How long will that trial be going?

Good morning, Kevin. That trial right now is a very short-term clinical trial, where we are simply looking at what we call a [pharmoquetic], would be behavior in the bloodstream of SomatoKine. Let me just give you a little bit more indication here of what we're trying to do here. The syndrome that we're looking at, growth hormone insensitivity hormone syndrome , it's been clearly demonstrated over the years that the free molecule [insulin] growth factor is quite effective in this patient population and indeed, there are patients throughout the world who are currently taking this product as we speak today, and what we've done here is we've taken a small subset of these patients that are currently on the molecule IGF-1 and we're simply looking at the profile, the blood profile of IGF-1 in this population, and we simply want to mimic the effects of IGF-1 in this population following the administration of SomatoKine. And it's our overall belief that because of the nature of the SomatoKine molecule, it will be safer and more effective than the free IGF-1. So these patients around the world who are currently taking free IGF-1 will be potentially swapped over to SomatoKine as we demonstrate this initial proof of concept.

With SomatoKine, so if it is shown to be effective, how long would it take to swap those patients over to SomatoKine?

Essentially, we'll do it an on immediate compassionate basis because these patients are essentially without any form of treatment for their condition. And as I had mentioned earlier, IGF-1 itself is being used on a compassionate basis for almost ten years now in this population. And it is our strategy to swap them over to SomatoKine as soon as we have information to ride from this study with respect to what the blood level should be and ultimately what the dose of SomatoKine should be. They will then be switched over to SomatoKine and they will continue on chronic therapy with SomatoKine, and we will ultimately use this data as part of a development of a regulatory dossier for approval of SomatoKine in this indication.

Second question, the industry -- are there certain norms that are out there for partnering and raising of money with big cap pharma and what's the company been looking for if you were to partner?

Well, there are -- well, I'm not sure if there are norms. I think each company has their own individual approach to how they wish to partner and raise finances. Our approach has always been that as we develop these products through phase two and move them into the phase three clinical programs, they simply build in volume. We've always had the intention because we've been reasonably well financed to build as much value in these products as possible before securing long-term partnerships with big pharmaceutical companies. It's very clear with the product INS-1 that to secure proper commercialization of this product, we truly need a partner, possibly of a global nature to market and distribute the product. But we feel very confident that we can continue the development of this product and seek regulatory approval. If at that time we partner, for commercialization, we think we'll build to essentially demand very, very reasonable partnering conditions. And that's always been our strategy.

Thank you.

Thank you, Kevin.

Once again, if you'd like to ask a question, please press star one now. I'm showing no further questions. I'd like to turn the conference back over to Dr. Allan.

Thank you, Sondra. If there are no further questions, I will simply wrap up this conference call at this time, and I look forward to speaking with you, some of you again when we have our third quarter conference call in the next several months.