Insmed Inc (INSM) 2004 Q4 法說會逐字稿

Good day and welcome to Insmed's fourth-quarter and year-end financial review. Today's conference is being recorded. At this time for opening remarks and introductions, I would like to turn the call over to Mr. Baxter Phillips. Please go ahead, Mr. Phillips.

Thank you and good morning, ladies and gentlemen. Thank you all for joining in today's fourth-quarter and year-end conference call review. Yesterday after market close, we released our financial results for the fourth quarter and year-end of 2004. Concurrently, we posted this release on our website at www.insmed.com. In this call, we will be presenting Insmed's results for the fourth quarter and year-end of 2004, along with a current review of the Company. Before we begin, let me remind you that during this call certain matters we will discuss today consist of forward-looking statements relating to, among other things, our expectations concerning the results of our clinical trials for SomatoKine, approvability of our NDA for the GHIS syndication of this product by the end of this year, financing plans, future financial and business performance, operating plans, goals and objectives of management, plans to utilize the protein manufacturing facility that we leased in Boulder, Colorado, plans for manufacturing in Avecia, and regulatory plans.

Listeners are cautioned that these statements are neither promises nor guarantees, but are subject to risks and uncertainties that could cause actual results to differ materially from the results contemplated by the forward-looking statements. In particular, the risks and uncertainties include, among other things, risks that product candidates may fail in clinical trials or may not be successfully marketed, our ability to successfully enroll patients in our clinical trials, our ability to manufacture sufficient quantities of our product candidates for our clinical and commercial production needs, whether we will be able to utilize the protein manufacturing facility in Boulder, Colorado. The Company may lack financial resources to complete development of product candidates and may not be able to raise additional financing on commercially reasonable terms.

Competing products may be more successful; required regulatory approval may not be received on a timely basis or at all, and those other risk factors contained in our most recent press release announcing our recent results and our periodic reports filed to the SEC, including, but not limited to, our annual report on Form 10-K for the year ended December 31, 2004, and subsequent Forms 10-Q. We undertake no obligation to update or revise the information provided in this call, whether as the result of new information, future events, or circumstances or otherwise.

I would like to introduce today's participants in today's call. Joining us from our Richmond facility in Richmond, Virginia, we have Phil Young, our Chief Business Officer, and Kevin Tully, our Chief Financial Officer. And joining us from Insmed Therapeutic Proteins, our protein manufacturing facility in Boulder, Colorado, we have our Chief Executive Officer, Geoffrey Allan. Geoff.

Thank you, Baxter, and good morning, ladies and gentlemen. The purpose of the call today is to review with you our financial results for 2004. First, let me start by reviewing with you our business activities in 2004. 2004 was a challenging year for the company, but I believe we met several important milestones. We now enter 2005 with three product candidates in clinical trials. As you know, these products target the IGF-I pathway. The importance of the IGF-I pathway in human disease has been well-established in the scientific community for several decades. We believe there is now a growing awareness in the investor community of the importance of drugs that target this pathway. We are very pleased as a company to be at the forefront of this activity as we develop our important drugs for the treatment of several human illnesses.

As you know, our lead product candidate is SomatoKine, a novel IGF-I replacement therapy currently being developed for the treatment of severe growth disorders. In 2004, we set and met two major milestones for SomatoKine. First, we reported midyear that the product met its primary efficacy endpoint in an ongoing Phase III clinical trial, and stimulated linear growth in children suffering from severe growth hormone insensitivity. Second, we assembled this data and filed an NDA. Last week, we reported that the FDA has accepted our filing for review. This was a good way to start 2005. Clearly, an important milestone for the remainder of this year is to obtain approval for this important product. In 2005, we will initiate several new clinical studies as we move towards our ultimate goal of establishing SomatoKine as a key hormone replacement therapy for several metabolic and anabolic conditions.

A 2004 milestone was to bring BP-3, our second product candidate, to the clinic. We achieved that goal. It is very clear that the IGF-I pathway is important in tumorigenesis. We now have two drugs, BP-3 and INSM-18, which in their own unique way can interrupt this pathway and prevent tumorigenesis. We have clearly demonstrated in preclinical studies the unique properties of these drugs. And it is our intention in 2005 to translate these important research findings into clinical utility. We have targeted breast cancer as the first major indication for BP-3, and in collaboration with the University of California, San Francisco, we're ready to initiate a clinical trial with INSM-18 in patients with relapsed prostate cancer. We believe 2005 will be an exciting year as we provide results from these clinical studies.

In addition, we announced this morning that we have broadened our collaboration with UCSF by securing an option to license an additional unique class of modules, which also interrupt the IGF-I signal and pathway. We believe we are assembling a very exciting portfolio of compounds that target the IGF-I pathway in unique and complementary ways; therefore, providing the Company with an exciting oncology franchise.

In 2004, we acquired a manufacturing facility. Our goal was to ensure that we could guarantee product supply in the future. Our goal by year-end was to have it staffed and operational. We achieved that goal. We now have a dedicated manufacturing facility with experienced personnel that provides SomatoKine. This was a critical step to take to ensure our future success. Earlier this week, we announced the completion of a $35 million financing. The Company now has the capital resources to stay the course in 2005, and to continue to execute on its business plan. We have an exciting business plan; three clinical-stage products in diverse therapeutic areas with a core focus on metabolic and oncology indications. We have a development infrastructure with dedicated people covering all disciplines of the drug development process. We believe 2005 will be an exciting year, and we look forward to reporting to you our progress.

Those are my overview remarks, and I will now pass on to Kevin who will discuss in more detail our financial results at year-end. Kevin.

Thank you, Geoff, good morning everyone. I will begin the financial review by first giving a brief overview of our results for the three-month period ending December 31, 2004, and comparing them with the corresponding period of 2003. I will then provide some details on the results, and finally, I will close with some high-level guidance for 2005. In the fourth quarter ended December 31, 2004, our reported revenues were 23,000, as compared with the 27,000 reported for the fourth quarter of 2003. The net loss for the latest quarter was 5.8 million or $0.14 per share versus a net loss of 2.4 million or $0.06 per share in the same period for 2003.

In the fourth quarter 2004, the 3.4 million increase in our net loss from the fourth quarter of 2003 was entirely attributable to the higher research and development spending in the final quarter of 2004, as we began the in-house production of SomatoKine for our clinical trials. As a comparison, the fourth quarter of 2003 saw minimal impact from manufacturing, as at that time we were relatively early in our program cycle. As for the full year ending December 31, 2004, the net loss was 27.2 million or $0.69 per share versus a net loss of 10.3 million or $0.29 per share for the full-year 2003. The 16.9 million increase in our net loss for the full year of 2004, as compared with the full year of 2003, resulted from a 16.2 million escalation in research and development costs, an 0.6 million rise in general and administration expenses, and a 66,000 reduction in interest income, the increased research and development spending, the roles from the manufacturing compound at both Avecia and our ITP Boulder facility for 2004. The higher general and administration expenses were due to increased external business support costs, and interest income was affected by lower interest rates and a declining cash balance.

Turning to cash, we ended the year with 9.2 million of cash on hand, which represents a reduction of 6.5 million in the cash on hand at September 30, 2004, after taking into account the additional funds from the November 2004 financing. As you will have seen from our announcements on Tuesday, we were again successful in raising additional funding with a select group of institutional investors to further bolster our activities. This latest financing is in the form of five-year convertible notes which bear interest at the rate of 5.5% per year. These notes will become due in 9 equal installments beginning in March 2008, and ending in March 2010, and are convertible at the option of the holders into a total of approximately 27 million shares in Insmed common stock at the conversion price of $1.295.

The financing also provides the warrants exercisable for up to approximately 14.9 million shares of Insmed common stock at an initial exercise price of $1.36 with a conversion floor set by formula. We expect this latest round of financing to provide approximately 32.8 million of net proceeds, which will be used to support our future activities, including the completion of existing clinical trials, the initiation of new clinical trials to expense – expand SomatoKine into additional niche indications, the establishment of planned growth initiatives consistent with the FDA approval process, and the aggressive defense of the patent lawsuits in the US and UK.

Looking forward, I expect the loss for 2005 to be broadly in line with 2004, and with the main financing now in place, we believe we have sufficient resources to fund our activities through at least the next 12 months. We are now well-positioned to advance our SomatoKine program through the planned approval of our NDA and the GHIS indication, and progress our key strategic initiatives through to implementation. This concludes my review of the financial results. I will now turn the call back over to Geoff to conclude the review.

Thank you, Kevin. I think we can now open the call for questions.

Thank you. The question-and-answer session will be conducted electronically. (OPERATOR INSTRUCTIONS) There are no questions at this time.

Thank you, ladies and gentlemen, for listening into this call this morning. As I said, I think we have a very exciting year planned for 2005. We have the financial wherewithal to execute on that plan, and we look forward to working with you, talking with you, as we execute on that plan in the future. Thank you and good morning.

That will conclude today's conference call. A rebroadcast of today's call will be available today at 12 PM Eastern time and running through March 24, 2005. To access the rebroadcast, dial 888-203-1112 or 719-457- 0820, and use the access code 7048463.