INSM Insmed Inc

Insmed Incorporated (NASDAQ: INSM), a developer of pharmaceutical products for the treatment of metabolic and endocrine diseases with unmet medical needs, today announced results for the three and nine-month periods ended September 30, 2005. -0- *T 1st Nine 1st Nine Months Months $000's (except EPS) Q3 2005 Q3 2004 of 2005 of 2004 ------------------------------------- Revenues 22 24 107 114 Net loss (13,756) (7,596) (28,044) (21,366) Net cash used in operations 7,867 6,544 21,556 18,449 Earnings per share (0.29) (0.20) (0.61) (0.56) *T Discussion of Revenue and Expense Items Revenues for the three months ending September 30, 2005 were $22,000 as compared to $24,000 for the equivalent period of 2004, and $107,000 for the first nine months of 2005 compared to $114,000 for the same period in 2004. The net loss for the third quarter ending September 30, 2005 was $13.8 million or $0.29 per share, as compared to a net loss of $7.6 million or $0.20 per share for the corresponding quarter of 2004. For the nine months ending September 30, 2005 the net loss was $28.0 million or $0.61 per share as compared to $21.4 million or $0.56 per share for the first half of 2004. The $6.2 million increase in the net loss for the third quarter of 2005, as compared to the same quarter of 2004, was mainly due to a combination of a $6.1 million increase in interest expense and a $0.3 million rise in general and administrative expenses, offset by an increase in investment income of $0.2 million,. The net operating loss for the nine months ending September 30, 2005 was $6.6 million higher than the corresponding period for 2004 due to increases of $8.2 million in interest expense and $0.9 million in general and administration expenses, which were partially offset by a reduction of $2.1 million in operating expenses and a rise in investment income of $0.4 million. The reduction in operating expenses were principally due to lower development and manufacturing costs for iPlex(TM) which were partially offset by increased litigation costs in support of our patent position, while the rise in interest expense and investment revenue arises from the convertible debt offering which closed in March 2005. The higher general and administrative expenses are due to increased registration and filing costs associated with the latest financings and additional external service costs in support of our business. As of September 30, 2005, the Company had total cash and cash equivalents of $20.7 million which represents an increase of $11.5 million from December 31, 2004. This increase is mainly due to the generation of $32.9 million from financing activities, offset by the use of $21.6 million in support of our business operations. Conference Call The Company will host a conference call on Thursday, November 3; at 4:30 p.m. Eastern Time to discuss operating results for the third quarter of 2005. Interested investors can listen to the call over the internet from Insmed's investor relations website at www.insmed.com or by dialing (800) 289-0494 (domestic) or 913-981-5520 (international). A telephonic replay of the call will be available for one week at 888-203-1112 (domestic) or 719-457-0820 (international), passcode: 8457563. A web replay of the call will be available through the corporate website beginning at 6:00 p.m. About Insmed Incorporated Insmed Incorporated is a biopharmaceutical company focused on the discovery and development of drug candidates for the treatment of metabolic diseases and endocrine disorders with unmet medical needs. For further information about Insmed and iPlex(TM), please visit the company's corporate website at www.insmed.com. Statements included within this press release, which are not historical in nature, may constitute forward-looking statements for purposes of the safe harbor provided by the Private Securities Litigation Reform Act of 1995. Although Insmed believes that such statements are based on reasonable assumptions within the bounds of its knowledge of its business and operations, the forward-looking statements are neither promises nor guarantees and various factors may cause its actual results to differ materially from its expectations. Forward-looking statements include all statements regarding expected financial position, results of operations, cash flows, dividends, financing plans, business strategies, operating efficiencies or synergies, budgets, capital and other expenditures, competitive positions, growth opportunities for existing or proposed products or services, plans and objectives of management, demand for new pharmaceutical products, market trends in the pharmaceutical business, inflation and various economic and business trends. Such forward-looking statements are subject to numerous risks and uncertainties, including risks that product candidates may fail in clinical trials or may not be successfully marketed, the company may lack financial resources to complete development of product candidates, the company may be unable to raise additional financing necessary to continue current operations, the company may not be able to re-commission our leased manufacturing facility in Boulder, Colorado, and utilize that facility to manufacture the company's product candidates, competing products may be more successful, demand for new pharmaceutical products may decrease and the biopharmaceutical industry may experience negative market trends. For further information with respect to factors that could cause actual results to differ from expectations, reference is made to reports filed by Insmed with the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended. The forward-looking statements made in this release are made only as of the date hereof and Insmed disclaims any intention or responsibility for updating predictions or financial guidance contained in this release. -0- *T INSMED INCORPORATED Condensed Consolidated Balance Sheets (in thousands, except share amounts) September December 30, 31, 2005 2004 ----------- --------- (Unaudited) Assets Current assets: Cash and cash equivalents $20,676 $9,222 Restricted cash 285 285 Other current assets 132 174 ----------- --------- Total current assets 21,093 9,681 Long-term assets: Restricted cash - long term 3,118 3,303 Deferred financing costs 1,510 - Property and equipment, net 20 27 ----------- --------- Total long-term assets 4,648 3,330 Total assets $25,741 $13,011 =========== ========= Liabilities and stockholders' equity Current liabilities: Accounts payable $1,994 $2,621 Accrued project costs 195 884 Payroll liabilities 1,364 1,183 Interest payable 106 - Restructuring reserve 360 360 ----------- --------- Total current liabilities 4,019 5,048 Long-term liabilities: Convertible debt 24,176 - Debt discount (9,676) - ----------- --------- Net convertible debt 14,500 - Asset retirement obligation 887 443 Restructuring reserve-long-term portion 47 285 ----------- --------- Total liabilities 19,453 5,776 ----------- --------- Stockholders' equity: Common stock; $.01 par value; authorized share 500,000,000; issued and outstanding shares, 53,518,863 in 2005 and 38,409,643 in 2004 535 449 Additional capital 247,526 220,515 Accumulated deficit (241,773) (213,729) ----------- --------- Net stockholders' equity 6,288 7,235 ----------- --------- Total liabilities and stockholders' equity $25,741 $13,011 =========== ========= Condensed Consolidated Statements of Operations (in thousands, except share and per share data - unaudited) Three Months Nine Months Ended Ended September 30, September 30, ----------------------------------- 2005 2004 2005 2004 ----------------------------------- Revenues $22 $24 $107 $114 Operating expenses: Research and development 6,728 6,786 16,354 18,409 General and administrative 1,190 885 4,123 3,247 ----------------------------------- Total operating expenses 7,918 7,671 20,477 21,656 ----------------------------------- Operating loss (7,896) (7,647) (20,370) (21,542) Interest income 236 51 552 176 Interest expense (6,096) - (8,226) - ----------------------------------- Net loss $(13,756)$(7,596)$(28,044)$(21,366) =================================== Basic and diluted net loss per share $(0.29) $(0.20) $(0.61) $(0.56) =================================== Shares used in computing basic and diluted net loss per share 47,799 38,406 45,938 38,399 =================================== INSMED INCORPORATED Consolidated Statements of Cash Flows (in thousands - unaudited) Nine Months Ended September 30, 2005 2004 ------------- ----------- Operating activities Net loss $(28,044) $(21,366) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 7,241 31 Non-cash stock acceleration 15 - Stock options issued for services 13 33 Changes in operating assets and liabilities: Other assets 42 (255) Accounts payable (627) 3,320 Accrued project costs (689) (980) Payroll liabilities 181 744 Restructuring reserve (238) (230) Asset retirement obligation 444 254 Interest payable 106 - ------------- ----------- Net cash used in operating activities (21,556) (18,449) ------------- ----------- Financing activities Proceeds from issuance of convertible debt with detachable stock warrants 35,000 - Proceeds from issuance of common stock 253 20 Costs incurred in conjunction with issuance of debt (2,428) - Cash restricted to restricted letters of credit 185 (3,588) ------------- ------------ Net cash provided by (used in) financing activities 33,010 (3,568) ------------- ------------ Increase (decrease) in cash and cash equivalents 11,454 (22,017) Cash and cash equivalents at beginning of period 9,222 29,526 ------------- ------------ Cash and cash equivalents at end of period $20,676 $7,509 ============= ============ *T