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Insmed Announces Financial Results for Second Quarter and Six-Months Ended June 30, 2009

RICHMOND, Va., Aug. 13 /PRNewswire-FirstCall/ -- Insmed Inc. (Nasdaq: INSM), a biopharmaceutical company, today reported results for the second quarter and six-months ended June 30, 2009.

Revenues for the second quarter ended June 30, 2009 were $3.0 million, up from $2.7 million for the corresponding period in 2008. The increase was primarily attributable to $272,000 of grant revenue related to the IPLEX(TM) myotonic muscular dystrophy ("MMD") clinical trial recorded in the most recent second quarter.

The net loss for the second quarter of 2009 was $1.6 million, or $0.01 per share, compared with a net loss of $4.7 million, or $0.04 per share, in the second quarter of 2008. This $3.1 million decrease was primarily attributable to a $2.8 million decrease in total expenses, in addition to the $0.3 million increase in total revenues.

The $2.8 million total decrease in expenses was due primarily to a $4.1 million decrease in research and development expenses ("R&D Expenses"), which was partially offset by a $1.4 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. The increase in SG&A expenses was due to a combination of external finance and consulting advisory services associated with the ongoing strategic review, increased personnel costs, primarily related to the separation agreement with Geoffrey Allan, Ph.D., and license fees relating to the March 2007 patent settlement agreement with Genentech Inc. and Tercica Inc.

For the six months ended June 30, 2009, revenues totaled $5.4 million, up from $5.1 million in the first six months of 2008. Consistent with second quarter results, the increase was primarily attributable to $544,000 of grant revenue related to the IPLEX(TM) MMD clinical trial recorded during the most recent six-month period. This was partially offset by a decrease of $262,000 in cost recovery from the various Expanded Access and Named Patient Programs to treat patients with Amyotrophic Lateral Sclerosis ("ALS"), also known as Lou Gehrig's Disease, in Europe.

Net income for the six months ended June 30, 2009 was $116.2 million, or $0.93 per share, compared to a net loss of $9.5 million, or $0.08 per share, for the first six months of 2008. This $125.7 million improvement was primarily due to the $127.8 million before tax gain on sale of our FOB assets to Merck, a $3.6 million decrease in R&D expenses and the $0.3 million rise in total revenues, which were partially offset by a $3.3 million increase in SG&A expenses and $2.8 million in income tax expense on the sale of our FOB assets. Year-over-year, R&D expenses fell to $7.3 million for the first half of 2009 from $10.9 million, reflecting a decrease in manufacturing expenses following the sale of our FOB assets in March 2009. SG&A expenses increased to $6.3 million for the first half of 2009 from $3.0 million a year earlier, due largely to 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 consulting, personnel and license fees previously mentioned.

Interest income for the first half of 2009 was $135,000 and was a reduction from the $375,000 earned in the same period of 2008 due to lower interest rates.

"We remain focused on leveraging our strong balance sheet to grow our business and enhance shareholder value," said Dr. Melvin Sharoky, Insmed's Chairman. "The entire Board and management team, along with our strategic financial advisers, RBC Capital Markets, are working aggressively to identify the appropriate course of action, and we aim to complete our strategic review of alternatives as quickly as reasonably possible."

As of June 30, 2009, Insmed had total cash, cash equivalents, short-term investments, and certificate of deposits on hand totaling $124.9 million, consisting of $122.8 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 $122.5 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 and the release of a $2.1 million previously restricted certificate of deposit, which was partially offset by $10.6 million utilized to fund operations and $0.8 million for the partial repayment of the Company's 2005 convertible notes.

Conference Call

To participate in today's 8:30 AM ET live conference call, please dial 866-804-6920 (U.S. callers) or 857-350-1666 (international callers), and provide passcode 11895624. 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 11:30 AM ET at 888-286-8010 (U.S. callers) or 617-801-6888 (international callers), using passcode 53658791.

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

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.

                      INSMED INCORPORATED
                   Consolidated Balance Sheets
        (in thousands, except share and per share data)

                                       June 30,   December 31,
                                         2009          2008

    Current assets:
      Cash, cash equivalents
       and short-term investments    $122,846        $2,397
      Accounts receivable, net            211           122
      Prepaid expenses                    145            74
      Total current assets            123,202         2,593

    Long-term assets:
      Certificate of deposit            2,085             -
      Restricted cash, long-term            -         2,095
      Deferred financing
       costs, net                          13            70
      Total long-term assets            2,098         2,165

    Total assets                     $125,300        $4,758

    Liabilities and
     stockholders' equity
    Current liabilities:
      Accounts payable                   $711        $1,277
      Accrued project costs
       & other                            670           936
      Payroll liabilities               1,035           453
      Income taxes payable              1,250             -
      Restricted stock unit
       liability                            -           113
      Interest payable                      3            13
      Deferred rent                       103           168
      Deferred revenue                    270           302

      Convertible debt                    692         2,211
      Debt discount                      (118)         (596)
        Net convertible debt              574         1,615

      Total current liabilities         4,616         4,877

    Long-term liabilities:
      Convertible debt                      -           553
      Debt discount                         -           (66)
        Net long-term
         convertible debt                   -           487

      Asset retirement obligation           -         2,217

    Total liabilities                   4,616         7,581

    Stockholders' equity
      Common stock; $.01 par value;
       authorized shares
       500,000,000; issued and
       outstanding shares,
       129,433,099 in 2009 and
       122,494,010 in 2008              1,294         1,225
      Additional paid-in
       capital                        349,622       342,378
      Accumulated deficit            (230,232)     (346,426)
      Net stockholders'
       equity (deficit)               120,684        (2,823)

    Total liabilities and
     stockholders' equity
     (deficit)                       $125,300        $4,758

                               INSMED INCORPORATED
                      Consolidated Statements of Operations
                (in thousands, except per share data - unaudited)

                                       Three Months Ended   Six Months Ended
                                            June 30,            June 30,
                                         2009      2008      2009      2008

    Royalties                             $30       $29       $58       $54
    Grant revenue                         272         -       544         -
    Other expanded access program
     income, net                        2,738     2,697     4,808     5,070
      Total revenues                    3,040     2,726     5,410     5,124

    Operating expenses:
    Research and development            1,472     5,614     7,340    10,936
    Selling, general and
     administrative                     2,874     1,493     6,323     2,975
    Realized loss on investments            -        54         -       446
      Total expenses                    4,346     7,161    13,663    14,357

    Operating loss                     (1,306)   (4,435)   (8,253)   (9,233)

    Interest income                       112        96       135       375
    Interest expense                     (420)     (328)     (662)     (682)
    Gain on sale of asset, net             13         -   127,768         -
    Income (loss) before taxes         (1,601)   (4,667)  118,988    (9,540)

    Income tax expense                      -         -     2,794         -

    Net income (loss)                 $(1,601)  $(4,667) $116,194   $(9,540)

    Basic net income (loss) per
     share                             $(0.01)   $(0.04)    $0.93    $(0.08)

    Shares used in computing basic
     net profit (loss) per share      126,178   121,989   124,360   121,989

    Diluted net income (loss)
     per share                         $(0.01)   $(0.04)    $0.93    $(0.08)

    Shares used in computing
     diluted net profit (loss)
     per share                        126,178   121,989   124,606   121,989

                      INSMED INCORPORATED
             Consolidated Statements of Cash Flows
                   (in thousands - unaudited)

                                          Six Months Ended
                                              June 30,
                                           2009      2008
    Operating activities
    Net income (loss)                  $116,194   $(9,540)
    Adjustments to reconcile
     net income (loss) to net
     cash used in operating
      Depreciation and
       amortization                        601       562
      Stock based compensation
       expense                           1,922       298
      Gain on sale of asset,
       net                            (127,768)        -
      Stock options issued for
       services                              -       140
      Realized loss on
       investments                           -       446
      Changes in operating
       assets and liabilities:
        Accounts receivable                (89)      200
        Other assets                       (71)       51
        Accounts payable                  (566)      184
        Accrued project costs &
         other                            (266)      532
        Payroll liabilities                582       547
        Restricted stock unit
         liability                           -        12
        Income tax liability             1,250         -
        Deferred rent                      (65)        -
        Deferred income                    (32)      580
        Restricted stock unit
         liability                        (113)        -
        Asset retirement
         obligation                     (2,217)        -
        Interest payable                   (10)       (5)
    Net cash used in operating
     activities                        (10,648)   (5,993)

    Investing activities
        Cash received from asset
         sale                           127,768         -
        (Increases) decreases in
         short-term investments         (87,763)    4,857
    Net cash provided by investing
     activities                          40,005     4,857

    Financing activities
    Proceeds from issuance of
     common stock                           580         -
    Repayment of convertible
     notes                                 (785)   (1,106)
    Certificate of deposits                  10         -
    Warrants converted into
     shares                               3,493         -
    Other                                    31        67
    Net cash provided by
     (used in) financing
     activities                           3,329    (1,039)

    Increase (decrease) in cash
     and cash equivalents                32,686    (2,175)
    Cash and cash equivalents
     at beginning of period               2,397     3,554

    Cash and cash equivalents
     at end of period                   $35,083    $1,379

    Supplemental information
      Cash paid for interest                $62      $129

    Investor Relations Contact:
    Brian Ritchie - FD

    Media Relations Contact:
    Irma Gomez-Dib - FD

SOURCE Insmed Inc.
Copyright©2009 PR Newswire.
All rights reserved

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