November 6, 2009

Insmed Announces Financial Results for Third Quarter and Nine-Months Ended September 30, 2009

RICHMOND, Va., Nov 06, 2009 /PRNewswire-FirstCall via COMTEX News Network/ -- Insmed Inc. (Nasdaq: INSM), a biopharmaceutical company, today reported results for the third quarter and nine-months ended September 30, 2009.

Revenues for the third quarter ended September 30, 2009 were $2.5 million, as compared to $4.1 million for the corresponding period in 2008. The decrease was primarily attributable to $1.0 million of grant revenue related to the IPLEX(TM) myotonic muscular dystrophy ("MMD") clinical trial recorded in the third quarter of 2008 and a reduction of $0.5 million in cost recovery from our IPLEX(TM) Expanded Access Program ("EAP") for Amyotrophic Lateral Sclerosis ("ALS") in Europe. The reduction in cost recovery from the EAP is largely due to the determination made by Insmed in the third quarter that its limited IPLEX(TM) inventory on hand should be conserved for the treatment of existing ALS patients.

The net loss for the third quarter of 2009 was $150,000; break even on a dollar per share basis, compared with a net loss of $2.2 million, or $0.02 per share, in the third quarter of 2008. This $2.0 million decrease was primarily attributable to a $2.7 million decrease in total expenses, a $0.6 million improvement in investment income and a $0.2 million reduction in interest expense, which was partially offset by the $1.6 million reduction in total revenues.

The $2.7 million decrease in total expenses was due primarily to a $3.8 million decrease in research and development expenses ("R&D Expenses"), which was partially offset by a $1.1 million increase in selling, general and administrative expenses ("SG&A Expenses").

The lower R&D expenses reflected the elimination of manufacturing expenses following the sale of our follow-on biologics ("FOB") assets in March 2009, while the higher SG&A expenses were principally due to external finance, legal and consulting advisory services associated with the ongoing strategic review. The improvement in investment returns resulted from the increased amount of cash available for investment, and the lower interest expense was due to the reduction of the debt discount amortization associated with our 2005 convertible notes.

For the nine months ended September 30, 2009, revenues totaled $7.9 million as compared to $8.8 million in the first nine months of 2008. Consistent with third quarter results, the decrease was primarily attributable to a year-over-year decrease of $0.5 million in grant revenue related to the IPLEX(TM) MMD clinical trial, and a reduction of $0.5 million in cost recovery during the most recent period from our IPLEX(TM) EAP in Europe.

Net income for the nine months ended September 30, 2009 was $116.0 million, or $0.92 per share, compared to a net loss of $11.7 million, or $0.10 per share, for first nine months of 2008. This $127.7 million improvement was primarily due to the $127.8 million before tax gain on sale of our FOB assets to Merck, combined with a $2.6 million decrease in total expenses, a $0.4 million improvement in investment returns, a $0.3 million reduction in interest expense and the absence of a $0.5 million loss on investments, which was offset by $2.8 million of income tax expense on the gain on sale and a $1.0 million reduction in net revenue.

The $2.6 million decrease in total expenses was due to a $7.3 million reduction in R&D expenses, which was partially offset by a $4.7 million increase in SG&A expenses.

The $7.3 million reduction in R&D expenses was due primarily to a decrease in manufacturing expenses following the sale of our FOB assets in March 2009. The $4.7 million increase in SG&A expenses was due largely to a combination of the recognition of stock compensation expense for the restricted stock and restricted stock units that vested on March 31, 2009, and the award of bonuses, together with the increased finance, legal and consulting fees related to the ongoing strategic review; as previously mentioned. The $0.5 million reduction in investment loss was due to the write off of the NAPO investment, which occurred in 2008.

"We are continuing our strategic review of alternatives with the assistance of our financial advisors, RBC Capital Markets, and have reviewed a number of high-quality opportunities," said Dr. Melvin Sharoky, Insmed's Chairman. "We remain focused on leveraging our strong balance sheet to grow our business and enhance shareholder value."

As of September 30, 2009, Insmed had total cash, cash equivalents, short-term investments, and certificate of deposits on hand totaling $124.1 million, consisting of $122.0 million in cash and short term investments and $2.1 million in a certificate of deposit, as compared to $2.4 million of cash on hand as of December 31, 2008. The $121.7 million increase in total cash was due to the $127.8 million in before tax proceeds from the sale of Insmed's FOB assets to Merck, $4.1 million from the conversion of warrants and options into common stock, the release of a $2.1 million previously restricted certificate of deposit and $0.5 million from securities, which was partially offset by $11.8 million utilized to fund operations and $1.0 million for the partial repayment of the Company's 2005 convertible notes.

Conference Call

To participate in today's 8:30 AM ET conference call, please dial 800-573-4754 (U.S. callers) or 617-224-4325 (international), and provide passcode 14720373. A live webcast of the call will also be available at:

http://phx.corporate-ir.net/playerlink.zhtml?c=122332&s=wm&e=2498647.

Please allow extra time prior to the webcast to register, download and install any necessary audio software.

The webcast will be archived for 30 days, and a telephone replay of the call will be available for seven days, beginning at 11:30 AM ET today at 888-286-8010 (U.S. callers) or 617-801-6888 (international), using passcode 92577797.

About Insmed

Insmed Inc. is a biopharmaceutical company with unique protein development experience and a proprietary protein platform aimed at niche markets with unmet medical needs. For more information, please visit http://www.insmed.com.

Forward-Looking Statements

This release contains forward-looking statements which are made pursuant to provisions of Section 21E of the Securities Exchange Act of 1934. Investors are cautioned that such statements in this release, including statements relating to business strategies, plans and objectives of management and our strategic review process, constitute forward-looking statements which involve risks and uncertainties that could cause actual results to differ materially from those anticipated by the forward-looking statements. The risks and uncertainties include, without limitation, we may be unsuccessful in identifying or reaching agreement with acquisition or merger candidates, our expenses may be higher than anticipated and other risks and challenges detailed in our filings with the U.S. Securities and Exchange Commission, including our Annual Report on Form 10-K for the year ended December 31, 2008. Readers are cautioned not to place undue reliance on any forward-looking statements which speak only as of the date of this release. We undertake no obligation to publicly release the results of any revisions to these forward-looking statements that may be made to reflect events or circumstances that occur after the date of this release or to reflect the occurrence of unanticipated events.

    Investor Relations Contact:
    Brian Ritchie - FD
    212-850-5683
    brian.ritchie@fd.com

    Media Relations Contact:
    Irma Gomez-Dib - FD
    212-850-5761
    irma.gomez-dib@fd.com

                             INSMED INCORPORATED
                         Consolidated Balance Sheets
              (in thousands, except share and per share data)

                                         (unaudited)
                                        September 30, December 31,
                                             2009        2008
                                             ----        ----

    Assets
    Current assets:
      Cash, cash equivalents and
       short-term investments            $121,982      $2,397
      Accounts receivable, net                319         122
      Prepaid expenses                        236          74
                                              ---          --
      Total current assets                122,537       2,593

    Long-term assets:
      Certificate of deposit                2,085           -
      Restricted cash, long-term                -       2,095
      Deferred financing costs, net             7          70
                                               --          --
      Total long-term assets                2,092       2,165
                                            -----       -----

    Total assets                         $124,629      $4,758
                                         ========      ======

    Liabilities and stockholders'
     equity (deficit)
    Current liabilities:
      Accounts payable                       $581      $1,277
      Accrued project costs & other         1,224         936
      Payroll liabilities                     421         453
      Income taxes payable                    625           -
      Restricted stock unit liability           -         113
      Interest payable                          2          13
      Deferred rent                           103         168
      Deferred revenue                        231         302

      Convertible debt                        461       2,211
      Debt discount                           (64)       (596)
                                              ---        ----
         Net convertible debt                 397       1,615
                                              ---       -----

      Total current liabilities             3,584       4,877

    Long-term liabilities:
      Convertible debt                          -         553
      Debt discount                             -         (66)
                                             ----       -----
         Net long-term convertible debt         -         487

      Asset retirement obligation               -       2,217
                                             ----       -----

    Total liabilities                       3,584       7,581
                                            -----       -----

    Stockholders' equity (deficit):
      Common stock; $.01 par value;
       authorized shares 500,000,000;
       issued and outstanding shares,
       130,208,099 in 2009 and
        122,494,010 in 2008                 1,302       1,225
      Additional paid-in capital          350,125     342,378
      Accumulated deficit                (230,382)   (346,426)
                                        ---------    --------
      Net stockholders' equity
       (deficit)                          121,045      (2,823)
                                          -------     -------

    Total liabilities and stockholders'
     equity (deficit)                    $124,629      $4,758
                                         ========      ======



                               INSMED INCORPORATED
                       Consolidated Statements of Operations
                 (in thousands, except per share data - unaudited)

                                Three Months Ended    Nine Months Ended
                                   September 30,        September 30,
                                   -------------        -------------
                                  2009      2008      2009       2008
                                  ----      ----      ----       ----

    Royalties                      $21       $29       $79        $83
    Grant revenue                    -     1,044       544      1,044
    Other expanded access
     program income, net         2,454     2,998     7,262      7,713
                                 -----     -----     -----      -----
      Total revenues             2,475     4,071     7,885      8,840

    Operating expenses:
    Research and development     1,143     4,997     8,483     15,774
    Selling, general
     and administrative          2,096       960     8,419      3,739
                                 -----       ---     -----      -----
      Total expenses             3,239     5,957    16,902     19,513
                                 -----     -----    ------     ------

    Operating loss                (764)   (1,886)   (9,017)   (10,673)

    Investment income              682        78       817        453
    Realized loss on investments     -       (54)        -       (500)
    Interest expense               (68)     (301)     (730)      (983)
    Gain on sale of asset, net       -         -   127,768          -
                                 -----     -----    ------     ------
    Income (loss) before taxes    (150)   (2,163)  118,838    (11,703)

    Income tax expense               -         -     2,794          -
                                 -----     -----    ------     ------

    Net income (loss)            $(150)  $(2,163) $116,044   $(11,703)
                                ======   =======  ========   ========

    Basic net income
     (loss) per share           $(0.00)   $(0.02)    $0.92     $(0.10)
                                ======    ======     =====     ======

    Shares used in computing
     basic net profit
     (loss) per share          129,442   122,314   126,072    122,070
                               =======   =======   =======    =======

    Diluted net income
     (loss) per share           $(0.00)   $(0.02)    $0.92     $(0.10)
                                ======    ======     =====     ======

    Shares used in computing
     diluted net profit
     (loss) per share          129,442   122,314   126,256    122,070
                               =======   =======   =======    =======



                               INSMED INCORPORATED
                      Consolidated Statements of Cash Flows
                           (in thousands - unaudited)

                                                Nine Months Ended
                                                  September 30,
                                                 2009       2008
                                                 ----       ----
     Operating activities
     Net income (loss)                       $116,044   $(11,703)
     Adjustments to reconcile net income
      (loss) to net cash used in operating
      activities:
       Depreciation and amortization              661        813
       Stock based compensation expense         2,425        505
       Gain on sale of asset, net            (127,768)         -
       Stock options issued for services            -        140
       Change in trading securities              (498)         -
       Realized loss on investments                 -        500
       Changes in operating assets and
        liabilities:
         Accounts receivable                     (197)       178
         Other assets                            (162)       126
         Accounts payable                        (696)       213
         Accrued project costs & other            288        176
         Payroll liabilities                      (32)         2
         Income tax liability                     625          -
         Deferred rent                            (65)         -
         Deferred income                          (71)       (54)
         Restricted stock unit liability         (113)         -
         Asset retirement obligation           (2,217)         -
         Interest payable                         (11)        (8)
                                                  ---         --
     Net cash used in operating activities    (11,787)    (9,112)
                                              -------    -------

     Investing activities
         Cash received from asset sale        127,768          -
         Change in certificate of deposits         10          -
         Purchases of short-term
          investments                         (94,646)     9,428
                                              -------      -----
     Net cash provided by investing
      activities                               33,132      9,428
                                               ------      -----

     Financing activities
     Proceeds from issuance of common stock       580          -
     Repayment of convertible notes            (1,016)    (1,658)
     Warrants converted into shares             3,493          -
     Other                                         39         62
                                               ------      -----
     Net cash provided by (used in)
      financing activities                      3,096     (1,596)
                                                -----    -------

     Increase (decrease) in cash and cash
      equivalents                              24,441     (1,280)
     Cash and cash equivalents at beginning
      of period                                 2,397      3,554
                                                -----      -----

     Cash and cash equivalents at end of
      period                                  $26,838     $2,274
                                              =======     ======

     Supplemental information
       Cash paid for interest                     $10       $182

SOURCE Insmed Inc.

http://www.insmed.com

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