Insmed Announces Financial Results for Third Quarter and Nine-Months Ended September 30, 2009
Fri Nov 6, 7:00 AM
RICHMOND, Va., Nov. 6 /PRNewswire-FirstCall/ -- 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.
34.12 (0.28%)
