Welcome to the Insmed Third Quarter Conference Call. At this time, all participants are in a listen-only mode. Following management's prepared remarks we will hold a Q&A session. (Operator Instructions) As a reminder, this conference is being recorded today November 6, 2014. I'd now like to turn the conference over to Anne Marie Fields. Please go ahead ma'am.

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 financial results for the third quarter 2014. 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. 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 filings with the Securities and Exchange Commission including, without limitation, the company's Form 10-Q filed this morning, which identifies specific factors that may cause actual results or events to differ materially from those described in the forward-looking statements and contain other important information about the company. Furthermore, the content of this conference call contains time-sensitive information that is accurate only as of the date of the live broadcast, November 6, 2014. Insmed undertakes no obligation to revise or update any statements to reflect events or circumstances after the date of this conference call. So with that said, I would like to turn the call over to Will Lewis. Will?

Thanks Anne Marie. Good morning everyone and thanks for joining us. We are happy to report a very productive quarter highlighted by regulatory clarity for ARIKAYCE from both EU and the U.S. authorities, a successful equity financing in August, and the introduction of INS-1009 for the treatment of pulmonary arterial hypertension or PAH. The entire Insmed team is energized to enter the next phase of the company's evaluation and we are laser focused on the execution of our near-term objectives, which include advancing ARIKAYCE for approval in the U.S., Europe and other parts of the world continuing our R&D efforts in support of INS-1009 and other drug candidates, and furthering the build out of our team with a focus on growth and a commitment to results. We remain steadfast in our long-term objective to build a standalone pharmaceutical company focused on delivering effective therapies that benefit patients at the intersection of Orphan, Pulmonary and Infectious Diseases. This begins by hiring ethical people who truly have the patients' interest as their compass point. I could not be more confident in the capabilities and character of the team we have assembled and our recent accomplishments are testament to the benefit that this team will continue to bring to our shareholders. Let me begin with a discussion of our regulatory pre-commercial and clinical status. We are pleased with our dialogue to-date with both the EMA and the FDA as guided by Peggy Berry, our VP of Regulatory Affairs. We now have regulatory clarity with respect to the path towards commercialization in both markets. We remain on track to file a Marketing Authorization Application or MMA with the European Medicines Agency by year-end for approval of ARIKAYCE to treat both patients with NTM lung infections and Pseudomonas aeruginosa lung infections in CF patients. Following…

Thanks Will. Good morning everyone. As Will just reviewed, we have made considerable progress on multiple fronts. Our recent fund raise in August which generated a $108 million in net proceeds allows us to execute on our plans. In addition to our investment in human resources across several functions we continue to invest in manufacturing and pre-commercial preparation. To that end, we have been working with our manufacturing partner Ajinomoto Althea to expand and improve production capabilities. One recent success at Althea is the increase in scale of our production process from 25 liters up to 50 liters. In parallel, Therapure, our large scale manufacturing partner located in Canada continues to make progress in establishing the suite and equipment needed to produce ARIKAYCE at a 200 liter scale. While Althea will our source for the potential European commercial launch, we anticipate both of these facilities will be online in time for the potential U.S. launch. Turning now for our quarterly results for the third quarter of 2014, we reported a net loss of $24 million or $0.54 per share compared with a net loss of $17.3 million or $0.46 per share for the third quarter of 2013. The increase in net loss reflects higher personnel costs, manufacturing expenses and our pre-launch commercial activities. Excluding deprecation and non-cash stock compensation expense, we used $19.7 million in cash to fund operations, which is consistent with the second quarter of 2014. Third quarter 2014, research and development expenses increased to $15.2 million from $12.1 million in the prior year quarter. The increase was primarily due to higher compensation and personnel related expenses and a build out of additional third-party manufacturing capacity at Therapure. We reported $8.2 million in general and administrative expense in the third quarter 2014 compared with $4.7 million in the third quarter of 2013. The increase reflects greater headcounts and an increase in our pre-launch commercial activities. I would also like to highlight a few items from our balance sheet and provide cash guidance for the fourth quarter. With the $108 million equity offering completed in August, we ended the third quarter of 2014 in a strong financial position with cash and cash equivalents of $167.3 million. We expect this balance for fund operations into 2016. We expect cash operating expenses for the fourth quarter to increase and to be in the range of $22 million to $26 million. This increase in cash operating expenses from the third quarter reflects continuing infrastructure build manufacturing capacity build out and a ramp in spending for clinical studies. Finally, in the third quarter we paid $2.9 million for capital expenditures related primarily to the build out of our office and laboratory facilities in Bridgewater, New Jersey. We expect to invest approximately $2 million more to complete the construction of our research and development last year. With that resource and financial overview, I will turn the call back to Will.

Thanks Andy. In closing, we are very pleased with the advances we have made. Most importantly, we are moving closer to bringing the first approved medicine to patients with NTM, a globally prevalent orphan lung disease with severe morbidity and mortality. The years to come will be nothing short of transformational for Insmed, as we look ahead, we are on strong footing and expect to deliver a series of value creating milestones including our EU submission for approval of ARIKAYCE to treat patients with NTM and CF patients with Pseudomonas. The initiation of our global Phase 3 study of ARIKAYCE to treat patients who have failed prior treatment for NTM. The IND filing for the Phase 1 study of INS-1099 and first patient dosed in that Phase 1 study. Reporting final data from the 110 open label two year extension study of ARIKAYCE in the treatment of CF patients with Pseudomonas. A series of publications relating to data from the INS-1099 PAH program, the 112 NTM study, the 110 CF study as well as pharmacoeconomic research detailing the burden of NTM illness on the healthcare system among many other topics. Our continued commercial preparation for European launch and by the end of 2015, the fill enrolment of the 212 study, our global Phase 3 study of ARIKAYCE for NTM lung disease. We have taken look at calendars and it appears that the best time to engage in a more extensive dialogue with the investment community and all of our various programs is early next year. To that end, we plan to host an Investor Day in early 2015 to feature our leadership team and discuss our programs and meet milestones in greater detail. We will provide specifics on the date and venue in early 2015 as always we appreciate your interest in and support of Insmed. Operator, we are ready to open up the call to questions.

(Operator Instructions) Our first question is from Matt Roden with UBS. Please go ahead with your question.

Great. Thanks for taking the questions and congrats on all the progress, particularly interested in the Phase 3 trial design. Thanks for all the clarity on that. The endpoint that you're using in Phase 3 looks a little bit different than the Phase 2 in terms of the requirement to show three consecutive months of culture clearance. So I'm just wondering that, if you look back to your Phase 2 results and if you apply the Phase 3 end point criteria to the Phase 2 data, what can you tell us about the results in Phase 2 under that different lens? Thanks.

You bet, Matt. And thanks for the question. Yes, the three consecutive culture conversion separated by one month apart is actually a standard that comes from tuberculosis clinical trials so that's the origin of that particular metric and it's commonly used for TB drug development. So we have applied it here and we did do a retrospective analysis of our prior results to determine would we have carried forward with three consecutive culture conversions in that study recognizing that it only had three consecutive examinations before the primary endpoint was met. And in that case we still would have met that endpoint. So I think that's a very important point whether we look at this using the – all standard of one culture conversion which we clearly met in the secondary end point of the 112 study or this new standard of three consecutive in either case we would have cleared that hurdle.

Okay, great. Thanks for that. On the inhaled treprostinil, how do you guys see the clinical regulatory path for that? I know it's still a little bit early but what do you think you guys need to show in terms of clinical data to get approved on the market but also importantly be adopted by the community?

Yes. I think the first question is one will have better information on – we plan to share the feedback from FDA, when we have that pre-IND meeting between now and the end of the year. The results of that meeting were shared during our Analyst Day because I think that will give us pretty good clarity on how they will – how we will have agreed to the development path going forward. We certainly plan to leverage as much of the history of treprostinil as we can in that proposal and data set. In terms of the adoption by the community, I can tell you that our dialogue and again, we acknowledge that this program is in early stages has a great deal of enthusiasm from treating clinicians and patients that we spoken to. This treatment burden is not simply one that is related to (indiscernible), it's really that point I make during the call about the clinical coverage over night and the notion that you could have one dose that covered you for 12 or even 24 hours would really be a break through for these folks both in terms of clinical coverage and because you wouldn't have as much of a spike and initial dosing, the AE profile might well be able to improved and so we'll have more to say about as our models continues to explore those possibilities.

Okay, great. And then just one last quick one also on treprostinil, I assume that you think that you have complete freedom to operate with inhaled treprostinil. Can you talk maybe about the prostacyclin IP landscape?

Sure. So I think when we – before we embarked on this program and I should say that it's been underway for about two years, so we put our head above water with this program in September at ERS. But, it's something we have been working in our labs quietly sort of for that period of time. And we really felt we wanted to accomplish several things before we came public with it. The first is, we wanted to have multiple studies that gave us confidence that the initially data was defensible and believable. And I think the four posters we presented established that. Secondly, we wanted to not only complete a survey of the IP landscape which we have done with – I think no fewer than two outside law firms, but importantly also complete the early work that would support our own filings which we have completed and those were completed actually over a year ago. So I think from the IP point of view, we are in good shape. We will obviously be very sensitive to that as we move forward we are in areas that is occupied by other companies. But, we have looked at this issue very carefully and we feel very comfortable.

Great. Thanks for taking the questions and congrats on the progress.

You bet. Thanks Matt.

Our next question is from Paul Matteis with Leerink.

Great. Thanks very much. Thanks for taking my questions, guys. I have a few. The first one on the enrollment criteria for the Phase 3 in NTM, how refractory do patients have to be? I know that it was a little bit tough to find patients for target. So how quickly – why do you think this could enroll more quickly, especially since the N is bigger and you're confining the population to a set that responded better in Phase 2? And how many sites do you expect to have on board?

Yes. So – appreciate the question. The first general point I would make is, when we think about this study and how we are resourcing it, this company and what we are bringing to bear is, fundamentally in a different place than it was when the last study was done. The last study really was quite severely resource constrained and so that's the first and most important and empowering aspect of this. We have a full complement of very skilled folks that are around this that have done trials of this style before. So while daunting to go into four different countries or regions I should say Canada, the U.S., Europe and Australia to source patients, it's something we are very comfortable with. I can tell you we have physicians on the ground in Australia and Europe as of right now that are helping to prepare for the launch of this program, so we are way out in front on this. Other important issues are that when we look at the number of sites in the last study it was somewhere around 20 – it's mostly in the U.S., and I think one or two in Canada. This time around we are going to have somewhere north of 80 sites in those different regions, so just a simple math is going to help a great deal. Finally, and I think importantly primarily because it will help to enrich the results from our point of view, the non-CF MAC patients that we are targeting was the best responder particularly within the shorter period of time that we studied in the last trial. So using that group here, should give us the expected repeat results that we are looking for. And that the FDA is looking for to be comfortable that this…

Yes, it does, great. That's really helpful. Thanks. And just one more on the filing in Europe. You've talked about the CF and NTM filing being a quote joint MAA. So from your discussion with the EMA, to what degree do you think they're evaluating both indications separately versus together because there obviously is some overlap and how confident are you that you've met what they need for both CF and NTM and that you'll get the product label? Thanks a lot.

You bet. Well, this is one of these questions that you get from at every turn for every application and you can only go with what you have been told by the regulators to read beyond that I think is always a point for concern. In this case, I personally attended both of the co-rapporteur meeting, one in Poland – the Polish authorities and the other one England. And those are two co-rapporteurs coming into this application process. And England is the primary of the two co-rapporteurs and to be very direct, they carry an awful a lot of water in Europe when it comes to infectious disease. So I think we took their guidance – listen to it very carefully and I would characterize both as being very enthusiastic in their encouragement to us to file for both NTM and CF and as I indicated in the comments that the NTM filing should be for all NTM patients not simply those are refactories. So we will be putting these materials in and once they have had their chance to begin to review them we will be in a place where we will get the 80 and then 120 day questions that will be at some point in the early part of next year, first half we should say at this stage. And once we have those questions and indications, we will have a much better sense of where their pressure points are. But, for now on the guidance of the co-rapporteurs, we feel like we are doing exactly what they have asked us to do.

Great. Thanks very much.

You bet.

Our next question is from Josh Schimmer with Piper Jaffray.

Hi. Thanks for taking my question. Just wondering if assuming the broad label for NTM, what are the implication for that on reference pricing to the held antibiotics that are approved specifically for CF but not approved for NTM? Thanks.

Sure. Thanks for the question Josh. Pricing will have a lot more to say about as we get closer to the actual commercial launch and we see how things progress. My expectation right now, what I'm trying to guide folks towards is just take a conservative point of view in your pricing assumptions about the drug and where we are headed. And if that's includes a reference to inhaled antibiotics for the treatment of CF on or around that point. We've said historically that certainly is a safe place to be. I will say as I've said publicly many times, I believe as we focus on NTM there is a very real opportunity for a pricing premium there because there is such a desperate need. I do think that we will be thinking about both of those issues carefully as we come up with our strategy more specifically for how we are going to Europe. But, the primary point of going to Europe, I think and this is really important for people to understand is not to cover the landscape and be in every country and resource accordingly, is to tactically go into Europe and engage in those pricing discussions, have that dialog at the earlier stage, so that we can really get a sense of where pricing maybe able to go here.

Got it. Thanks very much.

You bet.

(Operator Instructions) Our next question is from Liisa Bayko with JMP Securities. Please go ahead with your question.

Hi, guys. Thanks for taking the question. Your study is going to be a six month study. Can you talk about for our filing purposes, how do we think about the practical use of ARIKACE? Are you thinking it's going to be six months? Or is it something longer than that as patient become culture negative? Or how do we think about the duration in the commercial setting?

Thanks for the question Liisa. It's actually directly on the subject that we've had, pretty good extensive study discussion with the FDA on. And that relates to this concept of standard of care. And the guidelines are clearly the backbone for how they and clinicians think about the potential use of products in and around this area. So what that means for us is, while they have agreed that a six month endpoint is appropriate for the Phase 3 study to confirm what we saw in the 112 study. The expectation here is that we would follow guidelines and the use of this product and that is certainly what clinicians are planning to do. Guidelines call for dosing patients until they culture convert and then continuing to dose them with that drug for an additional 12 months after that confirmed culture conversion. So the simplest way to think about this is, patients will be on our drug until they culture convert and then for an additional 12 months minimum. And I think that is a good a way to think about things using the guidelines that are in existence today.

Okay. That's very helpful. I didn't catch the earlier part of your call. Can you maybe just describe your end points at six months? And then are you rolling over everyone on to drug at that point? Or is there kind of an expansion, an open label expansion?

Yes. So the study will go for a six months of dosing and that will be the primary endpoint. And then, the patients who are on standard of care alone who are unable to culture convert opportunity to carry over to the use of our drug. But, the goal is to get for patients and on our drug versus standard of care to get a good 12-month of exposure, so that we can compare what's happening in each of these arms. So every patient who comes in on standard of care will have the opportunity to go on to our drug, if they are unsuccessful standard of care.

Okay. And then just for the purpose of what you talked about, how it relates to standard of care, are you going to be – is there kind of another analysis where you look at – okay, post-culture converting? And what the kind of negativity is at that point?

I'm sorry I missed the tail end of your question, you sort of faded out there.

Yes. Are you going to be – is one of your analyses, and maybe this is not for your initial filing, but are you going to be looking at that like 12 month? If that person actually was considered a responder let's say at month five because that's sort the second one, are you then going to be doing an analysis 12 months from that point in time to follow up?

Yes. Just to clarify, they will continue to be on drug for an additional 12 months after they culture convert. And the analysis will continue frankly throughout that time. We will continue to monitor them. But, certainly at the end, and then there will be a three-month off-treatment follow-up at the end of that point would be what we anticipate could be essentially the end of the study for purposes of the analysis.

Okay. Good. Thank you.

Sure.

And there are no further questions at this time. Please proceed with your presentation or any closing remarks.

Well, thank you, again for your participation. We hope you come away from this call with the same sense of enthusiasm and confidence we have for Insmed's ability to execute on our plan for bringing ARIKAYCE to market on a global basis. Have a good day everyone.