Insmed Inc (INSM) 2005 Q2 法說會逐字稿

Thank you for standing by, and welcome to the Insmed quarterly conference call. Today's call is being recorded. Now at this time, I'd like to turn the conference over to Baxter Phillips. Mr. Phillips, please go ahead.

Thank you, Dwayne. Again, thank you, and good morning -- good afternoon, ladies and gentlemen. Thank you all for joining in today's second quarter conference call review. Today, after the market close, we released our financial results for the second quarter of 2005. And currently, we've posted this release on our website, www.insmed.com. In this call we will be presenting Insmed's financial results for the second quarter of 2005, 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 GHIS indication 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, and plans for manufacturing at Avecia and regulatory plans.

Listeners are cautioned 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, and whether we'll be able to utilize our contract manufacturing facility at Avecia in Billingham, England.

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, require regulatory approval that may not be received on a timely basis or at all, and there's 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 a result of new information, future events or circumstances, or otherwise.

It is now my pleasure to introduce to you our speakers on today's call, our Chief Financial Officer, Kevin Tully, and our Chief Executive Officer, Geoffrey Allan. And I will now turn the call over for opening remarks. Geoff?

Thank you, Baxter, and good afternoon, ladies and gentlemen. Before Kevin reviews the financials, I'd like to make a few brief remarks focused on our various programs related to our lead product, SomatoKine. As you know, we have an active clinical development program designed to support the use of SomatoKine in several indications. First of all, to give you a brief update on our pivotal program where we are studying the use of SomatoKine in the growth hormone insensitivity syndrome. As you know, we submitted our NDA in January of this year; and as we announced in June, the PDUFA date for our NDA is on or before October 3 of this year. As we've highlighted in our press release on May 31, SomatoKine has proven to be an effective therapy in treating children with GHIS.

As noted, we are very pleased with the quality of data from our prospectively-designed pivotal program that was submitted to the FDA, and we are looking forward to discussing in further details of this trial data at the joint meeting with the European Society of Pediatric Endocrinology and the Lawrence Wilkins Pediatric Endocrine Society meeting held in [Leon], France in September of this year. An additional and equally important component to the clinical data is documenting our ability to commercially manufacture SomatoKine at our facilities. We have invested significant energy and resources to ensure that these facilities would be in a position to successfully complete pre-approval inspections. To date, as we would have expected, our manufacturing facilities have indeed been inspected, and I am pleased to report that no major deficiencies were identified and we have been informed that the inspection teams have recommended these facilities for approval.

As you know, we have always believed that SomatoKine has multiple therapeutic opportunities. Along with our GHIS program, we currently have additional clinical studies underway in several important disease conditions, all of which currently lack any effective therapeutic option. We are Phase 2 trials with SomatoKine for HIV-associated lipodystrophy, which we are conducting at the University of California San Francisco, and we are also studying the effects of SomatoKine in the treatment of extreme insulin resistance at the University of Cambridge in the United Kingdom. We look forward to reporting these data next year at the American Diabetes Association and the Endocrine Society's annual meetings. In addition, we will be initiating a study at the University of Rochester to study the effects of SomatoKine in the treatment of myotonic muscular dystrophy. We have started our commercial launch planning and have conducted initial market research.

We are targeting an early 2006 launch of our once-daily IGF-1 therapy, and during up-coming calls we will provide you with more detail regarding our sales and marketing plans. The next few quarters will mark an exciting transition as we move from a Research and Development company to an integrated commercial operation as we launch SomatoKine for GHIS. I am looking forward to updating you as events and programs progress. So, with those brief introductory remarks, I will now pass the call over to Kevin Tully to review with you our financials.

Thank you, Geoff, and good afternoon, everyone. My financial review today will start with a brief overview of our results for the three and six-month period ended June 30, 2005, comparing them with the corresponding periods of 2004. I will then provide some details on the results; and finally, I will close with some high-level guidance for 2005. After the overview, in the second quarter ended June 30, 2005, our reported revenues were $28,000 as compared to the $29,000 reported for the second quarter of 2004. The net loss for the latest quarter was $8.5 million or $0.19 per share, versus a net loss of $9 million or $0.23 per share in the same period for 2004. For the six months ended June 30, 2005, revenues were $85,000 versus $90,000 in the corresponding period 2004.

The net loss for the first half of 2005 was $14.3 million or $0.32 per share, compared to a net loss of $13.8 million or $0.36 per share for the first half of 2004. Looking into these results in more detail, during the latest quarter, Research and Development expenses were $5.3 million versus $7.8 million for the corresponding period of 2004. The decline in 2005 is principally due to reduced development in manufacturing costs for SomatoKine, which were partially offset by the increased litigation costs in support of our patent position. General and Administrative costs of the latest quarter were $1.6 million as compared to $1.3 million for the same period in 2004. The rise in 2005 results from a combination of increased registration and filing costs related to our recent financings and additional external service costs in support of our business.

Interest income was 252,000 for the latest quarter versus 49,000 in 2004, with the increased 2005 figure stemming from a higher average cash balance and improved investment returns. Interest expense for the last quarter was $1.8 million versus zero for the same period of 2004. This is solely due to the financial obligations arising from the March 2005 convertible debt offering. Of this 1.8 million, some 1.5 million is a non-cash expense resulting from the accretion of the debt discounts in operating costs, with the balance of [0.3] million arising from interest payable on the debt.

For the six months ending June 30, 2005, Research and Development expenses were 9.6 million as compared to 11.6 million in 2004. The 2 million reduction in 2005 is again mainly due to lower developments in manufacturing costs for SomatoKine, which were partially offset by increased litigation costs in support of our patent defense. General and Administration costs for the first half of 2005 were 2.9 million versus 2.4 million in 2004, with the increase, again, resulting from the additional reporting and filing requirements associated with our recent financings, combined with increased external consulting services in support with our business. Interest income for the six-month period ending June 30, 2005 was 0.3 million as compared to 0.1 million in 2004, while interest expense was 2.1 million for the first half of 2005 and zero in 2004, with the period differences, again, attributable to the financial obligations arising from the March 2005 financing.

As for cash, we ended the second quarter with 28.5 million of cash and cash equivalents on hand. During the second quarter, we utilized 7.4 million of cash to fund operations. For the six months ended June 30, 2005, the net cash used in operating activities was $13.7 million. In terms of financial guidance, the Company expects our net loss for the full year 2005 to be between 32 and 36 million. Cash required for operations is currently forecast to be between 29 million and 33 million for the full year of 2005. This concludes my review of the results, and now I'll turn the call back over to Geoff for closing comments.

Okay, thank you, Kevin. So in conclusion, I'd like to recap with a few summary remarks. As I previously said, we have an active clinical program designed to take advantage of the multiple therapeutic indications where we believe that SomatoKine may have a positive impact. Our near-term focus is on the growth hormone insensitivity syndrome. We will then follow this with studies in HIV-associated lipodystrophy, myotonic muscular dystrophy and extreme insulin resistance. We currently have our NDA on file with the FDA, with a PDUFA date set of October 3. We believe we have excellent data to support this NDA and look we forward to presenting the data at the joint meeting of the European Society of Pediatric Endocrinology and the Lawrence Wilkins Pediatric Endocrine Society meeting in September.

Finally, of significant importance, we have successfully concluded the requisite preapproval inspections at our commercial manufacturing facilities, and the inspection team has recommended these facilities for approval. So that concludes our remarks for today, and I will now pass the session over to questions and answers, but I'm going to make a statement up front. Because of the nature of our business and where we are, I am not prepared to comment on any regulatory and legal strategies that the Company has undertaken; and therefore, if you wish to ask a question of a non-regulatory, non-legal nature, we will be quite happy to answer them.

And if you'd like to ask a question at this time, we would ask that you press star one, star one on your touch-tone telephone. If you've been utilizing your mute button, you'll want to disengage that to make sure that your signal has registered. We'll first go to Matt Osborne with Lazard Capital Markets.

Hello, thanks for taking the question. Dr. Allan, if you could just remind us, how many, if any, patients were treated with drug from the Boulder facility, and have that data been submitted to FDA as part of the original submission?

Well, Matt, since I said I was not going to answer -- [laughter].

I thought I'd take a shot. (laughter).

Well, I can either -- I can either do one of two things here: I can either just refer you back to my comments a few minutes ago and say that we're not answering questions; but the bottom line is, as you know, we set about producing drug at our Boulder facility. That was a long-term plan to supplement the commercial supply, or drive the commercial supply of this product. We've made product at the Boulder facility; we are currently treating children with drug that was manufactured at the Boulder facility, and it will certainly be, or has been, a part of the strategy to submit that data to the FDA.

Okay. I'll try another way. Have they asked for that data at all?

We've offered it -- sorry, we've submitted it.

Okay. And what are your assumptions if [INAUDIBLE] does get approved on or before August 31, if there is orphan drug designation that's granted, what are your assumptions heading into that? Are you in discussions now with the orphan products division should that scenario play out?

Well, I think as you realize, we are very well aware of the implications of the PDUFA data between the two companies -- or the two products -- and we're not prepared to discuss our regulatory strategy at this point in time. But as you can imagine, we're in -- you know, we have had several discussions.

Okay, and one final question. In terms of cash reserves, where do you anticipate ending 2005?

Let me pass that over to Kevin.

I'll just check. We've currently get 28.5 million. And we're expecting to spend, I think, for the full year that I indicated before, between 29 and 33 for this year.

Okay. Terrific. Thank you very much.

Thank you.

There are no further questions at this time. I'd like to turn the conference back to Geoffrey Allan for a closing remark.

Okay. Thank you, everybody, for listening in this afternoon, and we look forward to talking to you in the future as events unfold. [INAUDIBLE].

With that, that does conclude today's conference call. We'd like to thank everyone for their participation and wish everyone a good day.