MONMOUTH JUNCTION, N.J.,
Nov. 8, 2011 /PRNewswire/ -- Insmed
Incorporated (Nasdaq CM: INSM), a biopharmaceutical company, today
reported financial results for the third quarter and nine-months
ended September 30, 2011.
Key Recent Highlights:
- FDA clinical hold remains in place in the U.S. for ARIKACE®
(liposomal amikacin for inhalation) phase 3 program in Cystic
Fibrosis (CF) patients with Pseudomonas lung infections and
patients with non-tuberculous mycobacterial (NTM) lung disease
- Insmed continuing with evaluation of potential next steps with
ARIKACE program
- Insmed was informed during further dialogue with the Agency
that, if the Company chooses to proceed, the required 9-month dog
inhalation toxicity study of ARIKACE can be conducted in parallel
with the CF phase 3 clinical trials in human subjects
- Company takes non-cash accounting charge of approximately
$26 million to reflect the impairment
of goodwill and in-process research and development due to delays
in the ARIKACE clinical development program and added costs caused
by the FDA clinical hold
"Insmed is currently undertaking a comprehensive evaluation of
next steps for our ARIKACE program, which we expect to conduct in
an expeditious manner," said Timothy
Whitten, Insmed's President and CEO. "We are keeping
all of our options open in regards to the potential future of
ARIKACE, and intend to update the market after we have more
definitive insight regarding our path forward."
Financial Results:
In the third quarter ended September 30,
2011, the Company determined that the clinical hold and
resulting additional costs associated with the clinical hold was an
indicator of possible intangible asset impairment. In
compliance with Financial Accounting Standards Board topic 350,
external impairment testing was performed as of September 30, 2011. The impairment review
resulted in a non-cash charge of $26.0
million in the three and nine-months ended September 30, 2011 to reflect a $19.7 million decline in the fair value of
in-process research and development intangible assets and a
complete write off of goodwill totalling $6.3 million, both due to the material impact of
the clinical hold on our ARIKACE development program.
For the third quarter of 2011, Insmed posted a net loss
attributable to common stockholders of $34.6
million ($26.0 million of
which represents the non-cash charge resulting from the impairment
adjustment described above), or $1.39
per share – basic and diluted, compared to a net loss of
$0.3 million, or $0.03 per share – basic and diluted, for the
three-months ended September 30,
2010.
Net loss attributable to common stockholders for the nine-months
ended September 30, 2011 was
$60.7 million (including the
$26.0 million non-cash charge
resulting from the impairment adjustment required to be taken in
the third quarter 2011), or $2.66 per
common share – basic and diluted, compared to a net loss of
$0.6 million, or $0.05 per common share – basic and diluted, for
the nine-months ended September 30,
2010. The net loss attributable to common shares in
2011 also includes the conversion of the Series B Conditional
Convertible Preferred Stock, and a non-cash charge for the
beneficial conversion feature of the Series B Conditional
Convertible Preferred Stock in the amount of $9.2 million, which increased the net loss and,
in turn, reduced our earnings per common share on a basic and
diluted basis, by $0.40. The
charge represents the $1.00
difference between the conversion price of the Series B
Conditional Convertible Preferred Stock of $7.10 per share and its carrying value of
$6.10 per share. The carrying
value of the Series B Conditional Convertible Preferred Stock
was based on its fair value at issuance, which was estimated using
the common stock price reduced for a lack of marketability between
the issuance date and the anticipated date of conversion.
Revenues for the three-months ended September 30, 2011 were $0.4 million, as compared to $1.8 million for the quarter ended September 30, 2010. The $1.4 million reduction in revenue was primarily
attributable to a year-over-year decrease in cost recovery from
Insmed's IPLEX™ Expanded Access Program (EAP) in Europe, due to the smaller number of patients
being supplied IPLEX.
Revenues for the nine-months ended September 30, 2011 totalled $3.0 million, as compared to $5.6 million for the nine-months ended
September 30, 2010. The
$2.6 million decrease was also
primarily due to a year-over-year decrease of $2.8 million in cost recovery from the IPLEX EAP
in Europe, partially offset by
$0.2 million in license fees received
in 2011 for the out-licensing of patent technology related to
Insmed's CISPLATIN Lipid Complex.
Research and development (R&D) expenses were $6.9 million for the third quarter of 2011,
compared to $0.8 million in the third
quarter of 2010. The increase of $6.1
million is attributable to the R&D activities for
ARIKACE, including the preparation for the initiation of the phase
3 clinical studies, which are currently on clinical hold in the
U.S., and the manufacturing of supply to support the studies.
General and administrative (G&A) expenses were
$2.5 million for the third quarter of
2011, compared to $1.6 million for
the same period in 2010. The $0.9
million increase was primarily attributable to the increased
headcount associated with the administrative support for the
full-scale development of ARIKACE.
R&D expenses increased to $21.4 million in the nine-months ended
September 30, 2011 from $2.3 million for the nine-months ended
September 30, 2010. The
increase of $19.1 million in 2011 is
also attributable to R&D of ARIKACE, including the preparation
of the phase 3 studies, which are currently on clinical hold in the
U.S., and the manufacturing of supply to support the studies.
Within the R&D expenses, clinical development and
regulatory expenses increased $9.0
million for the first nine-months of 2011 compared to 2010,
as a result of the planning efforts for the two phase 3 CF studies
and one phase 3 NTM lung disease study. There was also a
$3.8 million increase in clinical
manufacturing expenses from 2011 to 2010, attributable to the
manufacturing of ARIKACE for use in the phase 3 studies.
Also, compensation expenses rose $3.4
million due to an increased headcount of 20 year following
the merger year on year to a current R&D total of 28. In
addition, Insmed incurred the final payments of $1.1 million for the completion of the rat
carcinogenicity study in the nine-months ended September 30, 2011. G&A expenses
increased to $8.5 million in the
nine-months ended September 30, 2011
from $5.1 million for the
nine-months ended September 30, 2010.
The $3.4 million increase was
due largely to the increased finance, legal and consulting fees
related to the business combination with Transave, Inc., which was
consummated on December 1, 2010, as
well as the reverse stock split transaction effected on
March 2, 2011, and the increased
administrative support for the ARIKACE development program.
As of September 30, 2011, Insmed
had total cash, cash equivalents, short-term investments, and
certificate of deposits on hand totaling $85.3 million, consisting of $83.2 million in cash and short-term investments
and $2.1 million in a certificate of
deposit, as compared to $110.2
million of cash on hand as of December 31, 2010. The $24.9 million decrease in total cash was
primarily due to the net cash used in operating activities of
$24.1 million during the first
nine-months of 2011.
Conference Call
To participate in today's live conference call at 8:30 AM ET, please dial 866-362-4831 (U.S.
callers) or 617-597-5347 (international), and provide passcode
11382552. A live webcast of the call will also be available
at: http://www.media-server.com/m/p/8yh5aes3. 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 today at 11:30 AM
ET, at 888-286-8010 (U.S. callers) or 617-801-6888
(international), using passcode 25135317.
About Insmed
Insmed Incorporated is a biopharmaceutical company focused on
the development of innovative inhaled pharmaceuticals for the
site-specific treatment of serious lung diseases, and has a
proprietary protein platform aimed at niche markets with high unmet
medical need. Insmed's primary focus is on the development of
inhaled antibiotic therapy delivered via proprietary advanced
pulmonary liposome technology in areas of high unmet need in lung
diseases. 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 our financial position,
results of operations, the status and the results of preclinical
studies and clinical trials and preclinical and clinical data
described herein, the timing of responses to information and data
requests from FDA, the development of our products, and the
business strategies, evaluations, plans and objectives of
management, 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. Our results may be affected by such factors as
the receipt and timing of FDA and other regulatory reviews and
approvals, if at all, competitive developments affecting our
product development, delays in product development or clinical
trials, and patent disputes involving currently developing
products. The risks and uncertainties include, without
limitation, we may experience unexpected regulatory actions, delays
or requests, our future clinical trials may not be successful, we
may be unsuccessful in developing our product candidates or
receiving necessary regulatory approvals, we may experience delays
in our product development or clinical trials, our product
candidates may not prove to be commercially successful, 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, 2010 and
our Quarterly Report on Form 10-Q for the quarter ended
September 30, 2011. Investors
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.
|
|
INSMED
INCORPORATED
|
|
Consolidated
Balance Sheets (Unaudited)
|
|
(in
thousands, except share and per share data)
|
|
|
|
|
|
|
|
|
|
September
30,
|
|
December
31,
|
|
|
|
2011
|
|
2010
|
|
Assets
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
10,449
|
|
$
10,743
|
|
Short-term
investments
|
|
72,751
|
|
97,306
|
|
Accounts receivable,
net
|
|
440
|
|
471
|
|
Prepaid
expenses
|
|
343
|
|
277
|
|
Total current
assets
|
|
83,983
|
|
108,797
|
|
|
|
|
|
|
|
Certificate of
deposit
|
|
2,085
|
|
2,176
|
|
In-process research and
development
|
|
58,200
|
|
77,900
|
|
Goodwill
|
|
-
|
|
6,290
|
|
Deposits
|
|
377
|
|
-
|
|
Fixed assets, net
|
|
1,424
|
|
1,102
|
|
Total assets
|
|
$
146,069
|
|
$
196,265
|
|
|
|
|
|
|
|
Liabilities and stockholders'
equity
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
Accounts
payable
|
|
$
1,504
|
|
$
1,450
|
|
Accrued
expenses
|
|
1,548
|
|
1,256
|
|
Deferred rent
|
|
154
|
|
150
|
|
Capital lease obligations,
current
|
|
55
|
|
81
|
|
Deferred
revenue
|
|
421
|
|
402
|
|
Total current
liabilities
|
|
3,682
|
|
3,339
|
|
|
|
|
|
|
|
Capital lease obligations,
long-term
|
|
45
|
|
83
|
|
Total
liabilities
|
|
3,727
|
|
3,422
|
|
|
|
|
|
|
|
Stockholders' equity:
|
|
|
|
|
|
Common stock; $.01 par value;
authorized shares
|
|
|
|
|
|
500,000,000; issued and
outstanding shares, 24,833,301 in 2011 and 15,653,734 in
2010
|
|
248
|
|
1,565
|
|
Preferred stock; $.01 par value;
authorized shares
|
|
|
|
|
|
200,000,000; issued and
outstanding shares, zero in 2011 and 9,174,589 in 2010
|
|
-
|
|
918
|
|
Additional paid-in
capital
|
|
427,234
|
|
423,877
|
|
Accumulated
deficit
|
|
(286,011)
|
|
(234,510)
|
|
Accumulated other
comprehensive income:
|
|
|
|
|
|
Unrealized gain on
investments
|
|
871
|
|
993
|
|
Total stockholders'
equity
|
|
142,342
|
|
192,843
|
|
Total liabilities and
stockholders' equity
|
|
$
146,069
|
|
$
196,265
|
|
|
|
|
|
|
|
|
|
|
INSMED
INCORPORATED
|
|
Consolidated
Statements of Operations (Unaudited)
|
|
(in
thousands, except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
|
September
30,
|
|
September
30,
|
|
|
2011
|
|
2010
|
|
2011
|
|
2010
|
|
|
|
|
|
|
|
|
|
|
License fees
|
$
1
|
|
$
1
|
|
$
252
|
|
$
3
|
|
Other expanded access program
income, net
|
434
|
|
1,806
|
|
2,762
|
|
5,597
|
|
Total revenues
|
435
|
|
1,807
|
|
3,014
|
|
5,600
|
|
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
Research and
development
|
6,933
|
|
769
|
|
21,399
|
|
2,304
|
|
General and
administrative
|
2,472
|
|
1,636
|
|
8,474
|
|
5,058
|
|
Impairment Loss
|
25,990
|
|
-
|
|
25,990
|
|
-
|
|
Total operating
expenses
|
35,395
|
|
2,405
|
|
55,863
|
|
7,362
|
|
|
|
|
|
|
|
|
|
|
Operating loss
|
(34,960)
|
|
(598)
|
|
(52,849)
|
|
(1,762)
|
|
|
|
|
|
|
|
|
|
|
Investment income
|
371
|
|
345
|
|
1,358
|
|
1,280
|
|
Interest expense
|
(2)
|
|
-
|
|
(9)
|
|
(28)
|
|
Loss before income
taxes
|
(34,591)
|
|
(253)
|
|
(51,500)
|
|
(510)
|
|
|
|
|
|
|
|
|
|
|
Income tax expense
|
-
|
|
77
|
|
2
|
|
80
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
(34,591)
|
|
(330)
|
|
(51,502)
|
|
(590)
|
|
|
|
|
|
|
|
|
|
|
Less: accretion of beneficial
conversion feature
|
-
|
|
-
|
|
(9,175)
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Net loss attributable to common
stockholders
|
$ (34,591)
|
|
$
(330)
|
|
$ (60,677)
|
|
$
(590)
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted net loss
attributable to common stockholders per common share
|
$
(1.39)
|
|
$
(0.03)
|
|
$
(2.66)
|
|
$
(0.05)
|
|
|
|
|
|
|
|
|
|
|
Weighted average basic and
diluted common shares outstanding
|
24,833
|
|
13,030
|
|
22,848
|
|
13,025
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INSMED
INCORPORATED
|
|
Consolidated
Statements of Cash Flows (Unaudited)
|
|
(in
thousands)
|
|
|
|
|
|
|
|
|
|
Nine Months
Ended
|
|
|
|
|
September
30,
|
|
|
|
|
2011
|
|
2010
|
|
Operating
activities
|
|
|
|
|
|
Net loss
|
|
$
(51,502)
|
|
$
(590)
|
|
Adjustments to reconcile net
loss to net cash (used in)
|
|
|
|
|
|
|
provided by operating
activities:
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
233
|
|
25
|
|
|
Stock based compensation
expense
|
|
1,091
|
|
215
|
|
|
Impairment Loss
|
|
25,990
|
|
-
|
|
|
Changes in operating assets and
liabilities:
|
|
|
|
|
|
|
Accounts
receivable
|
|
31
|
|
67
|
|
|
Income tax
receivable
|
|
-
|
|
1,964
|
|
|
Prepaid expenses and other
assets
|
|
(352)
|
|
(205)
|
|
|
Accounts
payable
|
|
54
|
|
119
|
|
|
Accrued
expenses
|
|
296
|
|
(100)
|
|
|
Deferred
revenue
|
|
19
|
|
(300)
|
|
|
Net cash (used in)
provided by operating activities
|
|
(24,140)
|
|
1,195
|
|
|
|
|
|
|
|
|
Investing
activities
|
|
|
|
|
|
|
Purchase of fixed
assets
|
|
(555)
|
|
-
|
|
|
Sales of short-term
investments
|
|
26,018
|
|
90,739
|
|
|
Purchases of short-term
investments
|
|
(1,585)
|
|
(94,757)
|
|
|
Net cash provided by (used
in) investing activities
|
|
23,878
|
|
(4,018)
|
|
|
|
|
|
|
|
|
Financing
activities
|
|
|
|
|
|
|
Payments on capital lease
obligations
|
|
(64)
|
|
-
|
|
|
Repayment of convertible
notes
|
|
-
|
|
(230)
|
|
|
Proceeds from issuance of common
stock
|
|
32
|
|
-
|
|
|
Net cash used in financing
activities
|
|
(32)
|
|
(230)
|
|
|
|
|
|
|
|
|
Decrease in cash and cash
equivalents
|
|
(294)
|
|
(3,053)
|
|
Cash and cash equivalents at
beginning of period
|
|
10,743
|
|
12,740
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at end
of period
|
|
$
10,449
|
|
$
9,687
|
|
|
|
|
|
|
|
|
Supplemental disclosures of cash
flow information
|
|
|
|
|
|
|
Cash paid for
interest
|
|
$
9
|
|
$
-
|
|
|
Cash paid for taxes,
net
|
|
$
2
|
|
$
139
|
|
|
|
|
|
|
|
|
Supplemental disclosures of
non-cash investing and financing activities
|
|
|
|
|
|
Unrealized (loss) gain on
investments
|
|
$
(122)
|
|
$
1,146
|
|
|
Accretion of beneficial
conversion feature
|
|
$
(9,175)
|
|
$
-
|
|
|
|
|
|
|
|
|
|
Investor Relations Contact:
Brian Ritchie – FTI Consulting
212-850-5683
brian.ritchie@fticonsulting.com
Media Contact:
Irma Gomez-Dib – FTI Consulting
212-850-5761
irma.gomez-dib@fticonsulting.com
SOURCE Insmed Incorporated