Replies to post #377 on Insmed Inc (INSM)

[abby3]

+++bottom line if insmed partners, there is less revenue coming to the company in the next 2-3 years than if they were to go it alone+++

That statement needs to be qualified:
- How expensive will it be to run a sales force only pushing one product vs. leveraging a potential partner's in-place sales force. "not very, 10-20 reps is all you need"
- How effectively will Insmed be able to negotiate reinbusement rates vs. a potoential partner with experience in this area. "label is clear, drug is straighforward, should be a no brainer to get reimbursement"
- How effective will Insmed's slaes force be vs a potential partner's "should be easy to sell a once daily vs twice daily regimen"

And these questions don't even touch on a very fundamental one:
In order to build a sales force Insmed needs to raise cash, which means a dilution of current shareholders. My guess is that the sales force/marketing will burn up about 15-20 million that we would not otherwise have to spend. "you don't spend $10-20M, yes, but you will give up 70% of the REVENUES!!!
i'm done bob thanks

[io_io]

another factor is that if you get an established sales force - as opposed to a new one that needs head-up training, re-orientation and management trust/familiarity - you will be more effective in getting a running start towards heading off the competition TRCA.

especially important as TRCA moves first, but is very vulnerable to displacement for all the reasons we know.

[rfoable1]

RE- Insm sales force
rstor, abby3, io_io, chapman,

1st factor: The sales force issue seems to break very differently between US vs. Europe or other ex-US markets.

2nd big factor: Orphan markets vs big-indication markets. Totally changes the marketing/sales force requirements.

Insmed has stated that ~30 dedicated sales reps could probably cover the U.S. IGFD prescribers for the currently approved severe primary IGFD indication. Don't know if that's true, but lets exaggerate and say the great majority of pediatric endos in the US could be covered with 50 reps.

50 reps @ $75k salary including benefits (those would be fairly senior reps) = $3.75 million/yr. Add $3 million for 1st year sampling (insm may have to spend upwards of $1 MM on samples to get patients switched away from Increlex) + travel/expenses and you've got a viable US IGFD sales force for 1-2 years costing somewhere ~ $7 MM.

True there are other start-up costs and time factors if the sales force is new - but I'm assuming that one would staff up with sales reps already having a good bit of sales exp. in endocrinology products - hence the high salaries. Must note that this is the most focused product launch you could imagine - total of 6,000 patients nationally and only 1 orphan indication to talk about throughout 2006-2007 at least.

I think Insmed could do it reasonably for the US alone.

But Europe is an entirely different set of markets. Yes, one regulatory body approves for marketing throughout, but, there remain significant marketing/sales issues between the individual countries. Each country is allowed their own decision on price approval as part of each country's national health system; in each country there is a different set of "recognized experts" in each medical field. In much of the E.U., big pharma companies sweat the gov't price approval decision even more than the regulatory/medical approval. Because health care is not a "free market" there - a super majority of Rx drugs are paid for nearly 100% by the gov't.

Europe also features differences in language, legal requirements, taxation, reimbursement, distribution channels. Now in our case, the medical opinions will probably not diverge much - iPlex will probably overcome natural national barriers easily, becoming recognized as the superior drug vs Increlex from a purely medical view point. But because gov't reimbursement will be more of an issue on the Increlex vs. iPlex competition (I expect iPlex to cost $5k - $10k more/patient/yr), the national reimbursement authorities will probably offer some resistance to switching from Increlex to iPlex. Certainly more resistance than private insurers or medicaid in the US. For all of those reasons, it would not surprise me if the switch from Increlex to iPlex takes 1-2 years longer than in the US. And that will require concerted effort of an established mktg/sales force.

So for severe primary IGFD, I think the marketing partnership in Europe is essential. Not so in the US.

The other big issue is non-orphan indications. If Insmed is going for severely insulin resistant Type 1 & Type 2 diabetics, or recovery from hip fracture, even in the US those probably require expert marketing partners - big biotechs or pharmas with total access to the diabetes or orthopedic surgical opinion leaders. A sales force of 30-50 won't do there.

IMHO Insmed MUST partner for marketing anything in Europe or other markets, but in US it depends on the scope of indications.