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Insmed Announces Fourth Quarter and Full-Year 2007 Financial Results

RICHMOND, Va., March 4 /PRNewswire-FirstCall/ -- Insmed Inc. (Nasdaq CM: INSM), a developer of follow-on biologics and biopharmaceuticals, today reported results for the quarter and full-year ended December 31, 2007.

Full-Year 2007 and Recent Company Highlights

-- Follow-on Biologics Program

-- Completed development of INS-19 (Granulocyte Colony Stimulating

Factor or G-CSF) and INS-20 (Peg G-CSF), positioning these

products to enter clinical trials in 2008;

-- Testified at two congressional hearings - "Safe and Affordable

Biotech Drugs - The Need for a Generic Pathway" and "Assessing the

Impact of a Safe and Equitable Biosimilar Policy in the United

States" where Geoffrey Allan, Ph.D., the Company's President and

CEO, urged the need to create a regulatory pathway for the

approval of follow-on biologics ("FOBs") in the U.S.;

-- Appointed Steve Glover, who has approximately 25 years of

biotechnology experience, as President of the Company's FOB

program in order to most effectively leverage Insmed's scientific

capabilities in the field;

-- Completed external market assessment using a major U.S. market

research firm, which indicated a $9 billion annual market

potential for the Company's FOB candidates whose corresponding

innovator products' patents expire within the next eight years;

-- Launched a broad education campaign on the importance of

establishing a regulatory pathway for FOBs in the U.S.; and

-- Commissioned econometric study by economist Dr. Robert J. Shapiro,

former Under Secretary of Commerce in the Clinton Administration,

that identified potential cost savings of approximately $378

billion over the next 20 years from making FOBs a5

Stock options issued for services 38 79

Impairment of property, plant and equipment 5,020

Changes in operating assets and liabilities:

Accounts receivable (9) (241)

Inventory 576 (576)

Other assets (157) (4)

Accounts payable (6,282) 6,219

Accrued project costs (612) (875)

Payroll liabilities (671) (272)

Deferred rent 61 (232)

Deferred income 245

Asset retirement obligation 591 592

Interest payable - (29)

Net cash used in operating activities (25,255) (42,204)

Investing activities

Increases (Decreases) of short-term

investments 9,066 (12,191)

Purchases of investments (500) -

Purchases of property, plant and equipment - (5,020)

Net cash provided by (used in) investing

activities 8,566 (17,211)

Financing activities

Proceeds from issuance of common stock

Proceeds from issuance of convertible debt with

detachable stock warrants - -

Public offering 18,230 43,240

Issuance costs (1,266) (421)

Warrants converted into shares - 9,069

Other 138 325

Total proceeds from issuance of common stock 17,102 52,213

Costs incurred in conjunction with issuance of

debt - -

Changes in cash restricted to restricted letters

of credit 1,020 288

Net cash provided by financing activities 18,122 52,501

Increase (Decrease) in cash and cash equivalents 1,433 (6,914)

Cash and cash equivalents at beginning of period 2,121 9,035

Cash and cash equivalents at end of period $ 3,554 $ 2,121

Supplemental information

Cash paid for interest $ 279 $ 319

vailable in the



-- Made IPLEX(TM) available to physicians in Italy at the request of

the Italian Ministry of Health to treat patients with Amyotrophic

Lateral Sclerosis ("ALS"), also known as Lou Gehrig's Disease,

through an expanded access program ("EAP"), with the Company

receiving cost recovery payments for IPLEX(TM) from the Italian

Health Authorities. EAP currently includes 15 physicians and

approximately 70 subjects, and the Company received cost recovery

of $5.4 million for IPLEX(TM) supplied to the EAP in the full-year


-- Announced positive results from a Phase 2 investigator-sponsored

study of IPLEX(TM) in six patients with myotonic muscular

dystrophy ("MMD") that met the primary study endpoints of being

safe and well-tolerated, and indicated improvements in patients'

muscle mass, cholesterol and triglycerides;

-- Initiated a 24-week, multi-center, randomized, double blind,

placebo-controlled Phase 3 enabling clinical trial with IPLEX(TM)

in 60 patients with MMD;

-- Awarded a grant of $2.1 million from the Muscular Dystrophy

Association ("MDA"), which is expected to cover a substantial

portion of the external costs associated with the MMD trial;

-- Granted Orphan Drug designation for IPLEX(TM) for the treatment of

MMD by the FDA, providing the Company with, among other important

benefits, seven years of market exclusivity upon approval of

IPLEX(TM) for the MMD indication; and

-- Completed an external assessment of the total market for MMD

treatments that indicated that the market for MMD could be as high

as between $800 million and $1.4 billion.

"We are clearly making significant progress in executing on our dual-path business strategy," said Dr. Allan. "Both our FOBs and IPLEX(TM) programs achieved substantial milestones in 2007, and possess significant momentum as we move through 2008. We intend to initiate clinical trials for our first two FOBs this year and will continue to have an active voice on the regulatory pathway issue. In addition, we expect to continue moving IPLEX(TM) through the clinic in multiple indications, having prioritized MMD as the initial primary indication."

Financial Results for Fourth Quarter and Full-year 2007

Revenues for the fourth quarter ended December 31, 2007 were $2.1 million, up from $502,000 for the corresponding period in 2006. The increase was mainly attributable to improvements in cost recovery from our EAP to treat patients with ALS. This was partially offset by the revenues lost from our withdrawal of IPLEX(TM) from the short stature market pursuant to the terms of our Settlement Agreement.

The net loss for the fourth quarter of 2007 was $3.3 million or $0.03 per share, compared with a net loss of $21.4 million or $0.21 per share in the fourth quarter of 2006. This improvement was attributable to a reduction in selling, general and administrative expenses ("SG&A Expenses"), which fell to $947,000 from $9.7 million and the elimination of both a $7.1 million asset impairment charge and an $836,000 cost of goods sold charge, which occurred in 2006. These were partially offset by an increase in research and development expenses ("R&D Expenses") from $4.3 million to $4.5 million.

The reduction in SG&A Expenses was due primarily to reduced litigation expenses and the elimination of commercial expenses associated with our business restructuring plan. The elimination of the asset impairment charge and cost of goods sold resulted from our withdrawal of IPLEX(TM) from the short stature market, while the higher R&D Expenses reflected an increase in our clinical activity.

Interest income in the fourth quarter of 2007 fell to $264,000 from $528,000 in same period of 2006. This was due to the combination of a lower average cash balance on hand and lower interest rates during the most recent quarter. Interest expense declined to $217,000 in the most recent period from $552,000 during the corresponding period of 2006 due to the lower conversion of notes into common stock, which resulted in a reduced debt discount amortization charge for the last quarter of 2007.

Revenues for the full-year 2007 totaled $7.5 million, up from $991,000 in the corresponding period of 2006. This increase was due to improvements in the cost recovery from our EAP and the receipt of licensing income from our agreement with NAPO Pharmaceuticals Inc., ("NAPO"), combined with increased sales of IPLEX(TM) during the first quarter of 2007.

The net loss for the 12 months ended December 31, 2007 was $20.0 million or $0.17 per share, compared to $56.1 million or $0.59 per share for the 12 months ended December 31, 2006. R&D Expenses dropped to $18.9 million from $21.1 million, reflecting lower litigation expenses which were included in R&D Expenses during the first quarter of 2006, and reduced commercial manufacturing activity in 2007. SG&A Expenses fell to $8.5 million from $25.7 million, due to a combination of reduced litigation expenses, which were included in SG&A Expenses for the final three quarters of 2006, and the elimination of commercial expenses in 2007.

Interest income for the full-year 2007 was $1.2 million, compared to $1.9 million for the full-year 2006. This decrease was mainly due to lower interest rates and a lower average cash balance for the full-year 2007 as compared to the full-year 2006. Interest expense for the 12 months ended December 31, 2007 was $682,000, compared to $3.7 million for corresponding period of 2006. This decrease in interest expense resulted from lower amortization of the debt discount associated with our March 2005 financing, as a significant acceleration of the discount took place in 2006 due to the conversion of notes into shares of our common stock.

As of December 31, 2007, we had total cash, cash equivalents and short- term investments on hand of $16.5 million, compared to $24.1 million on hand as of December 31, 2006. The $7.6 million decrease in cash, cash equivalents and short-term investments mainly reflected the use of $25.3 million for operating activities and a $500,000 investment in NAPO, which was partially offset by net proceeds of $17.0 million from an offering of our common stock and warrants to purchase our common stock and $1.0 million from the reduction of an outstanding letter of credit.

Conference Call

To participate in today's 8:30 AM ET live conference call, please dial 800-510-0146 (U.S. callers) or 617-614-3449 (international), and provide passcode 84349393. A live webcast of the call will also be available at: 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 888- 286-8010 (U.S. callers) or 617-801-6888 (international callers), using passcode 90757979.

About Insmed

Insmed Inc. is a biopharmaceutical company with unique protein process development and manufacturing experience and a proprietary protein platform aimed at niche markets with unmet medical needs. For more information, please visit

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 planned clinical study design, regulatory and business strategies, plans and objectives of management and growth opportunities for existing or proposed products, 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, risks that product candidates may fail in the clinic or may not be successfully marketed or manufactured, we may lack financial resources to complete development of product candidates, the FDA may interpret the results of studies differently than us, competing products may be more successful, demand for new pharmaceutical products may decrease, the biopharmaceutical industry may experience negative market trends, our entrance into the follow on biologics market may be unsuccessful, our common stock could be delisted from the Nasdaq Capital Market and other risks and challenges detailed in our filings with the U.S. Securities and Exchange Commission, including our Quarterly Report on Form 10-Q for the quarter ended September 30, 2007. 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


Corporate Communications Contact:

John Procter - Gibraltar Associates



Consolidated Balance Sheets

(in thousands, except share and per share data)

December 31, December 31,

2007 2006


Current assets:

Cash, cash equivalents and short-term

investments $ 16,479 $ 24,112

Short-term investments - -

Restricted cash - 407

Accounts receivable, net 250 241

Inventories - 576

Prepaid expenses 244 87

Total current assets 16,973 25,423

Long-term assets:

Restricted cash - long term 2,095 2,708

Investments 258 -

Deferred financing costs, net 170 209

Property and equipment, net 4 8

Total long-term assets 2,527 2,925

Total assets $ 19,500 $ 28,348

Liabilities and stockholders' equity

Current liabilities:

Accounts payable $ 904 $ 7,187

Accrued project costs & other 503 1,115

Payroll liabilities 631 1,302

Interest payable 23 23

Deferred rent 115 54

Deferred income 245 -

Convertible debt 2,211 -

Debt discount (950) -

Net convertible debt 1,261 -

Total current liabilities 3,682 9,681

Long-term liabilities:

Convertible debt 2,764 5,125

Debt discount (651) (1,964)

Net long-term convertible debt 2,113 3,161

Asset retirement obligation 2,217 1,626

Total liabilities 8,012 14,468

Stockholders' equity:

Common stock; $.01 par value;

authorized shares

500,000,000; issued and outstanding

shares, 121,904,312 in 2007 and

101,328,118 in 2006 1,219 1,013

Additional paid-in capital 341,270 323,664

Accumulated deficit (330,759) (310,797)

Accumulated other comprehensive loss:

Unrealized loss on investment (242) -

Net stockholders' equity 11,488 13,880

Total liabilities and stockholders'

equity $ 19,500 $ 28,348


Consolidated Statements of Operations

(in thousands, except per share data - unaudited)

Three Months Ended Twelve Months Ended

December 31, December 31,

2007 2006 2007 2006

Sales, net $ - $ 312 $ 423 $ 263

Royalties 41 50 121 157

License income 62 - 1,607 -

Other expanded access program

income 2,039 140 5,378 571

Total revenues 2,142 502 7,529 991

Operating expenses:

Cost of goods sold - 836 576 1,490

Asset impairment - 7,103 - 7,103

Research and development 4,539 4,251 18,937 21,089

Selling, general and

administrative 947 9,716 8,455 25,682

Total expenses 5,486 21,906 27,968 55,364

Operating loss (3,344) (21,404) (20,439) (54,373)

Interest income 264 528 1,159 1,937

Interest expense (217) (552) (682) (3,703)

Net loss $ (3,297) $ (21,428) $ (19,962) $ (56,139)

Basic and diluted net loss

per share $ (0.03) $ (0.21) $ (0.17) $ (0.59)

Shares used in computing basic

and diluted net loss per

share 121,812 100,634 114,682 95,321


Consolidated Statements of Cash Flows

(in thousands - unaudited)

Twelve Months Ended

December 31,

2007 2006

Operating activities

Net loss $ (19,962) $ (56,139)

Adjustments to reconcile net loss to net cash

used in operating activities:

Depreciation and amortization 406 3,369

Non-cash stock acceleration

Stock based compensation expense 521 88

SOURCE Insmed Inc.
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