INSM Insmed Inc

Insmed Incorporated (NASDAQ: INSM), a biopharmaceutical company focused on the development and commercialization of drug candidates for the treatment of metabolic diseases and endocrine disorders with unmet medical needs, today announced results for the three and twelve month periods ended December 31, 2006. Total revenues for the three months ended December 31, 2006 were $502,000 compared with $24,000 in the corresponding period of 2005. The net loss for the fourth quarter of 2006 was $21.4 million or $0.21 per share, compared to a net loss of $12.9 million or $0.27 per share for the fourth quarter of 2005. Total expenses for the fourth quarter of 2006 were $21.9 million, compared to $7.1 million for the corresponding quarter of 2005, due primarily to increases in commercial operations, litigation expenses and a $7.1 million asset impairment charge resulting from the expensing of certain capital equipment and inventory. Total revenues for the full year 2006 were $1.0 million, made up of $0.4 million from commercial sales, $0.4 million in cost recovery from the Expanded Access Program and $0.2 million in royalty. This compares with $0.1 million in royalties for the full year 2005. The net loss for all of 2006 was $56.1 million or $0.59 per share, compared to $40.9 million and $0.84 per share for 2005. Total expenses for the year ended December 31, 2006 were $55.4 million, compared to $27.6 million for 2005, due primarily to increased commercial and litigation expenses coupled with the asset impairment charge. As of December 31, 2006, the Company had total cash and cash equivalents of $24.1 million, which represents an increase of $5.3 million from December 31, 2005. This net increase was due to $52.5 million in net cash provided by financing activities during the year, partially offset by $47.2 million in net cash used in operating and investing activities during the year. The $52.5 million in cash from financing activities was generated from a combination of $42.8 million in net proceeds from the sale of common stock in March 2006, $9.1 million from the exercise of certain outstanding warrants, $0.6 million from a reduction in a restricted letter of credit and minor employee option conversions. Looking ahead, in light of the recent settlement of litigation over patent rights to Insmed�s lead drug candidate, IPLEX, the Company expects to refocus its development efforts in 2007 to concentrate on three areas which it believes offer significant opportunities for IPLEX: HIV associated adipose redistribution syndrome (HARS), Myotonic muscular dystrophy (MDD) And Retinopathy of prematurity (ROP). The Company believes it has sufficient cash on hand to fund operations into the fourth quarter of 2007. Conference Call The Company will host a conference call on Thursday, March 15th. 2007 at 4:30 p.m. Eastern Time to discuss the financial results for the fourth quarter and full year of 2006 and provide a business update. Interested investors can listen to the call over the internet from Insmed�s investor relations website at www.insmed.com or by dialling (877) 407-0782 (domestic) or (201) 689-8567 (international). A telephonic replay of the call will be available for two weeks at (877)-660-6853 (domestic) or (201) 612-7415 (international). The account code is 286: the conference number is 234775. A web replay of the call will be available for two weeks through our corporate website, in the investor relations segment, beginning at 6:00 p.m. About Insmed Incorporated Insmed is a biopharmaceutical company focused on the development and commercialization of drug candidates for the treatment of metabolic diseases and endocrine disorders with unmet medical needs. For more information, please visit 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. Forward-looking statements in this press release include, but are not limited to, statements regarding planned clinical trial design, our regulatory and business strategies, plans and objectives of management and growth opportunities for existing or proposed products. Such forward-looking statements are subject to numerous risks and uncertainties, including risks that product candidates may fail in the clinic or may not be successfully marketed or manufactured, the company may lack financial resources to complete development of product candidates, the FDA may interpret the results of our studies differently than we have, competing products may be more successful, demand for new pharmaceutical products may decrease, the biopharmaceutical industry may experience negative market trends and other risks detailed from time to time in the company's filings with the Securities and Exchange Commission. As a result of these and other risks and uncertainties, actual results may differ materially from those described in this press release. For further information with respect to factors that could cause actual results to differ from expectations, reference is made to reports filed by the Company 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. INSMED INCORPORATED Condensed Consolidated Balance Sheets (in thousands, except share and per share data) � Dec. 31, Dec. 31, 2006� 2005� � Assets Current assets: Cash and cash equivalents $ 24,112� $ 18,835� Restricted cash 407� 285� Accounts receivable, net 241� -� Inventories 576� -� Other current assets � 87� � 83� Total current assets 25,423� 19,203� � Long-term assets: Restricted cash - long term 2,708� 3,118� Deferred financing costs, net 209� 532� Property and equipment, net � 8� � 17� Total long-term assets � 2,925� � 3,667� � Total assets $ 28,348� $ 22,870� � Liabilities and stockholders' equity Current liabilities: Accounts payable $ 7,187� $ 968� Accrued project costs & other 1,115� 1,990� Payroll liabilities 1,302� 1,574� Interest payable 23� 52� Deferred rent � 54� � 286� Total current liabilities 9,681� 4,870� � Long-term liabilities: Convertible debt 5,125� 11,438� Debt discount � (1,964) � (5,001) Net convertible debt 3,161� 6,437� � Asset retirement obligation � 1,626� � � 1,034� � Total liabilities � 14,468� � 12,341� � Stockholders' equity: Common stock; $.01 par value; authorized shares500,000,000; issued and outstanding shares,101,328,118 in 2006 and 66,525,792 in 2005 1,013� 665� Additional paid-in capital 323,664� 264,522� Accumulated deficit � (310,797) � (254,658) Net stockholders' equity � 13,880� � 10,529� � Total liabilities and stockholders' equity $ 28,348� $ 22,870� INSMED INCORPORATED Condensed Consolidated Statements of Operations (in thousands, except per share data - unaudited) � Three Months Ended Twelve Months Ended Dec. 31 Dec. 31 2006� 2005� 2006� 2005� � Sales $ 452� $ -� $ 834� $ -� Royalties � 50� � 24� � 157� � 131� Total revenues 502� 24� 991� 131� � Operating expenses: Cost of goods sold 836� -� 1,490� -� Asset impairment 7,103� -� 7,103� -� Research and development 4,251� 5,481� 21,089� 21,835� Selling, general and administrative � 9,716� � 1,607� � 25,682� � 5,730� Total expenses � 21,906� � 7,088� � 55,364� � 27,565� � Operating loss (21,404) (7,064) (54,373) (27,434) � Interest income 528� 200� 1,937� 752� Interest expense � (552) � (6,021) � (3,703) � (14,247) � Net loss $ (21,428) $ (12,885) $ (56,139) $ (40,929) � Basic and diluted net loss per share $ (0.21) $ (0.27) $ (0.59) $ (0.84) � Shares used in computing basic and diluted net loss per share � 100,634� � 47,340� � 95,321� � 48,742� INSMED INCORPORATED Condensed Consolidated Statements of Cash Flows (in thousands - unaudited) Year Ended Dec. 31 2006� 2005� Operating activities Net loss $ (56,139) $ (40,929) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 3,369� 12,897� Non-cash stock acceleration 15� Stock based compensation expense 885� -� Stock options issued for services 79� 33� Impairment of property, plant and equipment 5,020� Changes in operating assets and liabilities: Accounts receivable (241) -� Inventories (576) -� Other assets (4) 91� Accounts payable 6,219� (1,653) Accrued project costs and other (875) 1,106� Payroll liabilities (272) 391� Deferred Rent (232) (359) Asset retirement obligation 592� 591� Interest payable � (29) � 52� Net cash used in operating activities � (42,204) � (27,765) � Investing activities Purchases of property, plant and equipment � (5,020) � -� Net cash provided by investing activities � (5,020) � -� � � Financing activities Proceeds from issuance of convertible debt with detachable stock warrants -� 35,000� Proceeds from issuance of common stock Public offering - issuance of 23 million shares 43,240� -� Issuance costs (421) -� Warrants converted into shares 9,069� -� Other � 325� � 4,621� Total proceeds from issuance of common stock 52,213� 39,621� Costs incurred in conjunction with issuance of debt -� (2,428) Cash restricted to restricted letters of credit � 288� � 185� Net cash provided by financing activities � 52,501� � 37,378� � Increase in cash and cash equivalents 5,277� 9,613� Cash and cash equivalents at beginning of year � 18,835� � 9,222� � Cash and cash equivalents at end of year $ 24,112� $ 18,835� � Supplemental information Cash paid for interest $ 319� $ 1,104�