Insmed Announces Financial Results for Third Quarter and
Nine-Months Ended September 30, 2012
MONMOUTH JUNCTION, N.J.,
Nov. 7, 2012 /PRNewswire/
-- Insmed Incorporated (Nasdaq CM: INSM), a biopharmaceutical
company dedicated to the development of innovative inhaled
pharmaceuticals for the treatment of serious lung infections, today
reported results for the third quarter and nine-months ended
September 30, 2012.
Key Recent Highlights
- Appointed Will Lewis, Co-Founder
and former President and Chief Financial Officer of Aegerion
Pharmaceuticals, Inc. (NASDAQ: AEGR), to the position of President
and Chief Executive Officer, and Andrew
Drechsler, former Chief Financial Officer of VaxInnate
Corporation, to the position of Chief Financial Officer
- Significantly enhanced financial position through $25.7 million registered direct offering of
common stock and $20 million loan
agreement with Hercules Technology Growth Capital
- Granted second composition of matter patent for ARIKACE® by
U.S. Patent and Trademark Office, providing exclusivity for ARIKACE
through mid-August 2028
- Phase 3 study (CLEAR-108) of ARIKACE in patients with cystic
fibrosis who have Pseudomonas aeruginosa lung infections
continues to enroll and remains on schedule for top-line results in
mid-2013
- Phase 2 trial (TARGET-NTM) of ARIKACE in patients with
non-tuberculous mycobacteria lung infections continues to enroll
and remains on schedule for top-line results by end of 2013
"The significant progress and strategic changes made by Insmed
in the third quarter have positioned us at the threshold of several
significant potential value-creating milestones," said Will Lewis, President and CEO of Insmed. "With
another $25.7 million in capital
added and the expected reporting of late-stage clinical data next
year, we have quickly aligned the Company for the successful
commercial launch of ARIKACE in the U.S. and Europe, following receipt of the required
regulatory approvals."
Financial Results
Quarter Ended September 30,
2012
For the third quarter of 2012, Insmed posted a net loss
attributable to common stockholders of $9.4
million, or $0.38 per common
share – basic and diluted, as compared to a net loss of
$34.6 million, or $1.39 per common share – basic and diluted, for
the three months ended September 30,
2011. The $25.2 million
improvement in net loss was primarily due to a non-cash impairment
charge of $26.0 million in the third
quarter of 2011 relating to a write-down of in-process research and
development and goodwill. This reduction in expenses in the
third quarter of 2012 was offset by a $0.4
million decline in IPLEX® discontinued product revenue, a
$0.2 million reduction in investment
income and a $0.2 million increase in
interest expense.
Insmed did not record any revenues for the three months ended
September 30, 2012, as compared to
$0.4 million in revenues reported for
the three months ended September 30,
2011. The $0.4 million
decrease was due to the elimination of discontinued product
revenue.
Research and development (R&D) expenses decreased to
$5.5 million in the three months
ended September 30, 2012, from
$6.9 million for the three months
ended September 30,
2011. The decrease of $1.4
million in 2012 is primarily attributable to a reduction of
$2.3 million in development costs
associated with initiating two ARIKACE-related clinical trials, as
compared to the same period in 2011, when the clinical program was
initially being planned. This reduction was partially offset
by an increase of $0.4 million in
manufacturing costs associated primarily with initiating a
non-clinical study and the build-up of clinical trial drug supply
for the ongoing Phase 3 (CLEAR-108) and Phase 2 (TARGET-NTM)
clinical studies, a $0.4 million
increase in regulatory and quality assurance costs driven by the
purchase of comparator drugs used in Insmed's clinical study and a
$0.1 million increase in
compensation-related expenses, as headcount increased to support
the ongoing trials.
General and administrative expenses increased $1.3 million to $3.8
million in the three months ended September 30, 2012 from $2.5 million for the three months ended
September 30, 2011 due primarily to
employee separation costs recorded in the third quarter of
2012.
Investment income for the third quarter of 2012 of $0.2 million was $0.2
million lower than the corresponding period in 2011 due to
the lower cash balance available for investment. Interest expense
was $0.2 million higher than the
third quarter of 2011 due to payments associated with the recent
debt financing.
Nine Months Ended September 30,
2012
Net loss attributable to common stockholders for the nine months
ended September 30, 2012 was
$25.9 million, or $1.04 per common share – basic and diluted,
compared to a net loss of $60.7
million, or $2.66 per common
share – basic and diluted, for the nine months ended September 30, 2011. The $34.8 million reduction in the net loss period on
period was primarily due to the combination of the previously
mentioned $26.0 million non-cash
impairment charge incurred in the third quarter of 2011 and the
$9.2 million non-cash charge for the
beneficial conversion feature of the Series B Conditional
Convertible Preferred Stock incurred in the first quarter of 2011,
which increased the net loss attributable to holders of our common
shares in the 2011 period and, in turn, increased our loss per
common share on a basic and diluted basis in the 2011 period by
$0.40. The beneficial
conversion 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 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. Additionally, a
reduction in other operating expenses of $3.3 million in the nine months ended
September 30, 2012 was fully offset
by a revenue reduction of $3.0
million, a decline in investment income of $0.5 million and an increase in interest expense
of $0.2 million.
Insmed did not record any revenues for the nine months ended
September 30, 2012. Insmed
reported $3.0 million in revenues for
the nine months ended September 30,
2011. The $3.0 million
decrease was due to the inclusion of $2.7
million of product revenue and the receipt of $0.3 million in license fees for our discontinued
CISPLATIN lipid complex program in the nine months ended
September 30, 2011, as compared to no
revenues or license fees from this program in the current year.
R&D expenses decreased to $17.6
million in the nine months ended September 30, 2012 from $21.4 million for the nine months ended
September 30, 2011. The
decrease of $3.8 million is again
primarily attributable to a reduction of $4.5 million in development costs and
$0.9 million for regulatory and
quality assurance costs associated with initiating two ARIKACE
related clinical trials, as compared to when the clinical program
was initially being planned in the same period in 2011. These
reductions were partially offset by an increase of $1.5 million in manufacturing costs in the nine
months ended September 30, 2012
associated with initiating a non-clinical study and building drug
supply for the ongoing CLEAR-108 and TARGET-NTM clinical
trials.
General and administrative expenses increased by $0.6 million to $9.0
million in the nine months ended September 30, 2012. The increase was
due largely to the $1.2 million
employee separation costs incurred in the third quarter of 2012,
offset in part by the absence of finance, legal and consulting fees
which were incurred in the nine months ended September 30, 2011 in relation to post Transave
merger matters and the March 2011
reverse stock split transaction.
Investment income decreased to $0.9
million in the nine months ended September 30, 2012, from $1.4 million in the nine months ended
September 30, 2011. The
decrease is a result of the lower overall average cash and
short-term investments balance for the current year to date period,
as compared to the year to date period ended September 30, 2011.
Liquidity Position
As of September 30, 2012, Insmed
had total cash, cash equivalents, short-term investments, and
certificate of deposits on hand totalling $91.9 million, consisting of $89.7 million in cash and short-term investments
and $2.1 million in a certificate of
deposit, as compared to $78.4 million
of cash on hand as of December 31,
2011. The $13.5 million
increase in total cash was due primarily to the $35.4 million of net proceeds received in
relation to the third quarter financing activities. These
financing activities consisted of $9.7 from debt and $25.7
million from the sale of common stock, which was partially
offset by $22.1 million used in
operating activities.
Conference Call
To participate in today's live conference call, please dial
800-573-4754 (U.S. callers) or 617-224-4325 (international), and
provide passcode 53958411. A live webcast of the call will
also be available at
http://www.media-server.com/m/p/86at7fkj. 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 10:30 AM
ET, at 1-888-286-8010 (U.S. callers) or +1-617-801-6888
(international), using passcode 37999986.
About Insmed
Insmed Incorporated is a biopharmaceutical company dedicated to
improving the lives of patients battling serious orphan lung
diseases through the development and commercialization
of novel, targeted inhalation therapies in orphan patient
populations with critical unmet needs. Insmed's lead
candidate, ARIKACE®, is engineered to deliver a
proven and potent anti-infective directly to the site of serious
lung infections to improve the efficacy, safety and
convenience of treatment for at least two identified patient
populations: cystic fibrosis (CF) patients with Pseudomonas
lung infections and patients with nontuberculous mycobacteria lung
infections (NTM). Following positive phase 2 results in CF
patients, Insmed's phase 3 registrational study of ARIKACE
(CLEAR-108) in Europe and
Canada is well underway, as is the
U.S. Phase 2 trial in NTM (TARGET-NTM). The Company expects to
report clinical results from both the CF Phase 3 and NTM Phase 2
studies in 2013 and currently is preparing for regulatory filings
and for commercialization, if and when regulatory approvals are
obtained. 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. Words, and variations of words, such as
"intend", "expect", "will", "anticipate", "believe", "continue",
"propose" and similar expressions are intended to identify
forward-looking statements. Investors are cautioned that such
statements in this release, including statements relating to our
financial position, our estimates regarding our capital
requirements, our expected cash position and our needs for
additional financing, our ability to access additional funds under
the Hercules loan agreement, results of operations, the status,
results and timing of results of pre-clinical studies and clinical
trials and pre-clinical and clinical data described herein, the
timing of and costs associated with pre-clinical studies and
clinical trials, the development of our products, our estimates of
the size of the potential markets for our product candidates, and
the business strategies, plans and objectives of management,
constitute forward-looking statements which involve risks and
uncertainties that could cause actual results to differ materially
from those in the forward-looking statements. Such risks and
uncertainties include, without limitation, failure or delay of U.S.
Food and Drug Administration and other regulatory reviews and
approvals, competitive developments affecting our product
development, delays in product development or clinical trials,
patent disputes involving currently developing products, unexpected
regulatory actions, delays or requests, the failure of future
clinical trials, inability to successfully develop our product
candidates or receive necessary regulatory approvals, inability to
make product candidates commercially successful, changed in
anticipated expenses, 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, 2011 and our Quarterly
Report on Form 10-Q for the quarter ended September 30, 2012. 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 update these forward-looking statements to reflect
events or circumstances or changes in expectations.
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
INSMED
INCORPORATED
|
Consolidated Balance Sheets
(Unaudited)
|
(in
thousands, except share and per share data)
|
|
|
|
|
|
|
|
September
30,
|
|
December
31,
|
|
|
2012
|
|
2011
|
Assets
|
|
|
|
|
Current
assets:
|
|
|
|
|
Cash and cash equivalents
|
|
$
44,989
|
|
$
14,848
|
Short-term investments
|
|
44,759
|
|
61,424
|
Accounts receivable
|
|
-
|
|
757
|
Prepaid expenses and other current assets
|
|
605
|
|
370
|
Total current assets
|
|
90,353
|
|
77,399
|
|
|
|
|
|
Certificate of deposit
|
|
2,132
|
|
2,085
|
In-process
research and development
|
|
58,200
|
|
58,200
|
Other
|
|
125
|
|
212
|
Fixed
assets, net
|
|
1,647
|
|
1,937
|
Total assets
|
|
$
152,457
|
|
$
139,833
|
|
|
|
|
|
Liabilities and stockholders'
equity
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
Accounts payable
|
|
$
2,985
|
|
$
2,334
|
Accrued expenses
|
|
836
|
|
800
|
Accrued compensation
|
|
1,581
|
|
795
|
Accrued lease expense, current
|
|
291
|
|
278
|
Deferred rent
|
|
151
|
|
156
|
Capital lease obligations, current
|
|
109
|
|
114
|
Debt, current
|
|
592
|
|
-
|
Total current liabilities
|
|
6,545
|
|
4,477
|
|
|
|
|
|
Accrued
lease expense, long-term
|
|
717
|
|
923
|
Capital
lease obligations, long-term
|
|
80
|
|
166
|
Debt,
long-term
|
|
8,503
|
|
-
|
Total liabilities
|
|
15,845
|
|
5,566
|
|
|
|
|
|
Stockholders' equity:
|
|
|
|
|
Common
stock; $.01 par value; authorized shares
|
|
|
|
|
500,000,000; issued and outstanding shares,
31,178,954
in 2012 and
24,833,301 in 2011
|
|
312
|
|
248
|
Additional paid-in capital
|
|
455,560
|
|
427,743
|
Accumulated deficit
|
|
(320,095)
|
|
(294,174)
|
Accumulated other comprehensive income:
|
|
|
|
|
Unrealized gain on
investments
|
|
835
|
|
450
|
Total
stockholders' equity
|
|
136,612
|
|
134,267
|
Total liabilities and stockholders' equity
|
|
$
152,457
|
|
$
139,833
|
INSMED
INCORPORATED
|
Consolidated Statements of Comprehensive
Operations (Unaudited)
|
(in
thousands, except per share data)
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Nine
Months Ended
|
|
September
30,
|
|
September
30,
|
|
2012
|
|
2011
|
|
2012
|
|
2011
|
|
|
|
|
|
|
|
|
License
fees
|
$
-
|
|
$
1
|
|
$
-
|
|
$
252
|
Other
expanded access program income, net
|
-
|
|
434
|
|
-
|
|
2,762
|
Total revenues
|
-
|
|
435
|
|
-
|
|
3,014
|
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
Research and development
|
5,539
|
|
6,933
|
|
17,553
|
|
21,399
|
General and administrative
|
3,814
|
|
2,472
|
|
9,047
|
|
8,474
|
Impairment loss
|
-
|
|
25,990
|
|
-
|
|
25,990
|
Total operating expenses
|
9,353
|
|
35,395
|
|
26,600
|
|
55,863
|
|
|
|
|
|
|
|
|
Operating
loss
|
(9,353)
|
|
(34,960)
|
|
(26,600)
|
|
(52,849)
|
|
|
|
|
|
|
|
|
Investment
income
|
193
|
|
371
|
|
901
|
|
1,358
|
Interest
expense
|
(222)
|
|
(2)
|
|
(225)
|
|
(9)
|
Gain on
sale of asset, net
|
-
|
|
-
|
|
5
|
|
-
|
Loss before income taxes
|
(9,382)
|
|
(34,591)
|
|
(25,919)
|
|
(51,500)
|
|
|
|
|
|
|
|
|
Income tax
expense
|
-
|
|
-
|
|
4
|
|
2
|
|
|
|
|
|
|
|
|
Net
loss
|
(9,382)
|
|
(34,591)
|
|
(25,923)
|
|
(51,502)
|
|
|
|
|
|
|
|
|
Accretion
of beneficial conversion charge
|
-
|
|
-
|
|
-
|
|
(9,175)
|
|
|
|
|
|
|
|
|
Net
loss attributable to common stockholders
|
$
(9,382)
|
|
$
(34,591)
|
|
$
(25,923)
|
|
$
(60,677)
|
|
|
|
|
|
|
|
|
Basic and
diluted net loss attributable to common stockholders per common
share
|
$
(0.38)
|
|
$
(1.39)
|
|
$
(1.04)
|
|
$
(2.66)
|
|
|
|
|
|
|
|
|
Weighted
average basic and diluted common shares outstanding
|
25,013
|
|
24,833
|
|
24,916
|
|
22,848
|
|
|
|
|
|
|
|
|
Comprehensive loss
|
$
(9,183)
|
|
$
(34,837)
|
|
$
(25,538)
|
|
$
(51,624)
|
INSMED
INCORPORATED
|
Consolidated Statements of Cash Flows
(Unaudited)
|
(in
thousands)
|
|
|
|
|
|
|
|
|
|
Nine
Months Ended
|
|
|
|
September
30,
|
|
|
|
2012
|
|
2011
|
Operating activities
|
|
|
|
|
Net
loss
|
|
$
(25,923)
|
|
$
(51,502)
|
Adjustments to reconcile net loss to net cash (used
in)
|
|
|
|
|
provided
by operating activities:
|
|
|
|
|
|
Depreciation and amortization
|
|
412
|
|
233
|
|
Stock
based compensation expense
|
|
1,518
|
|
1,091
|
|
Gain on
sale of asset, net
|
|
(5)
|
|
-
|
|
Impairment
loss
|
|
-
|
|
25,990
|
|
Amortization of financing costs
|
|
55
|
|
-
|
|
Changes in
operating assets and liabilities:
|
|
|
|
|
|
Accounts receivable
|
|
757
|
|
31
|
|
Prepaid expenses and other assets
|
|
(175)
|
|
(352)
|
|
Accounts payable
|
|
651
|
|
54
|
|
Accrued expenses and deferred rent
|
|
31
|
|
296
|
|
Accrued lease expenses
|
|
(193)
|
|
-
|
|
Accrued compensation
|
|
786
|
|
-
|
|
Deferred revenue
|
|
-
|
|
19
|
|
Net cash used in operating activities
|
|
(22,086)
|
|
(24,140)
|
|
|
|
|
|
|
Investing activities
|
|
|
|
|
|
Purchase of fixed assets
|
|
(122)
|
|
(555)
|
|
Proceeds from sale of asset
|
|
5
|
|
-
|
|
Sales of short-term investments
|
|
17,050
|
|
26,018
|
|
Purchases of short-term investments
|
|
-
|
|
(1,585)
|
|
Net cash provided by investing activities
|
|
16,933
|
|
23,878
|
|
|
|
|
|
|
Financing activities
|
|
|
|
|
|
Payments
on capital lease obligations
|
|
(91)
|
|
(64)
|
|
Proceeds
from issuance of debt, net of issuance and financing
costs
|
|
9,726
|
|
-
|
|
Proceeds
from issuance of common stock
|
|
25,659
|
|
32
|
|
Net cash provided by (used in) financing
activities
|
|
35,294
|
|
(32)
|
|
|
|
|
|
|
Increase
in cash and cash equivalents
|
|
30,141
|
|
(294)
|
Cash and
cash equivalents at beginning of period
|
|
14,848
|
|
10,743
|
|
|
|
|
|
|
Cash and
cash equivalents at end of period
|
|
$
44,989
|
|
$
10,449
|
|
|
|
|
|
|
Supplemental disclosures of cash flow
information
|
|
|
|
|
|
Cash paid
for interest
|
|
$
164
|
|
$
9
|
|
Cash paid
for taxes, net
|
|
$
4
|
|
$
2
|
|
|
|
|
|
|
Supplemental disclosures of non-cash investing and
financing activities
|
|
|
|
|
|
Unrealized gain on investments
|
|
$
385
|
|
$
(122)
|
|
Accretion
of beneficial conversion charge
|
|
$
-
|
|
$
(9,175)
|
|
Fair value
of warrants in connection with debt
|
|
$
790
|
|
$
-
|
SOURCE Insmed Incorporated