RICHMOND, Va., Aug. 13 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.
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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.
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) (unaudited) June 30, December 31, 2009 2008 Assets 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 (deficit) 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 (deficit): 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 activities: 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 212-850-5683 email@example.com Media Relations Contact: Irma Gomez-Dib - FD 212-850-5761 firstname.lastname@example.org
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