Insmed Announces Financial Results for Third Quarter and Nine-Months Ended September 30, 2012

  Insmed Announces Financial Results for Third Quarter and Nine-Months Ended
                              September 30, 2012

Late-Stage ARIKACE® Clinical Trials in Two Initial Indications on Schedule to
Report Results in 2013

PR Newswire

MONMOUTH JUNCTION, N.J., Nov. 7, 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

  oAppointed 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
  oSignificantly enhanced financial position through $25.7 million registered
    direct offering of common stock and $20 million loan agreement with
    Hercules Technology Growth Capital
  oGranted second composition of matter patent for ARIKACE® by U.S. Patent
    and Trademark Office, providing exclusivity for ARIKACE through mid-August
    2028
  oPhase 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
  oPhase 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

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passcode 37999986.

About Insmed

Insmed Incorporated is a biopharmaceutical company dedicated to improving the
livesof patients battling serious orphan lung diseases through the
development and commercialization ofnovel, targeted inhalation therapies in
orphan patient populations with critical unmet needs. Insmed's lead
candidate, ARIKACE^®, isengineered to deliver a proven and potent
anti-infective directly to the site of serious lung infections to improve
theefficacy, safety and convenienceof 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      605                    370
current assets
Total current assets              90,353                 77,399
Certificate of deposit            2,132                  2,085
In-process research and           58,200                 58,200
development
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,      109                    114
current
 Debt, current                   592                    -
Total current liabilities         6,545                  4,477
Accrued lease expense, long-term  717                    923
Capital lease obligations,        80                     166
long-term
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   312                    248

in 2012 and 24,833,301 in 2011
 Additional paid-in capital      455,560                427,743
 Accumulated deficit             (320,095)              (294,174)
 Accumulated other
comprehensive income:
 Unrealized gain on           835                    450
investments
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              $        $       $       $    252
                          -             1           -
Other expanded access     -             434          -            2,762
program income, net
Total revenues            -             435          -            3,014
Operating expenses:
Research and development  5,539         6,933        17,553       21,399
General and               3,814         2,472        9,047        8,474
administrative
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,    -             -            5            -
net
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   -             -            -            (9,175)
conversion charge
Net loss attributable to $  (9,382)  $ (34,591)  $ (25,923)  $ (60,677)
common stockholders
Basic and diluted net
loss attributable to      $           $          $          $  
common stockholders per   (0.38)       (1.39)      (1.04)      (2.66)
common share
Weighted average basic
and diluted common shares 25,013        24,833       24,916       22,848
outstanding
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      31                  296
   rent
    Accrued lease expenses             (193)               -
    Accrued compensation               786                 -
    Deferred revenue                   -                   19
   Net cash used in operating           (22,086)            (24,140)
   activities
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            -                   (1,585)
   investments
   Net cash provided by investing       16,933              23,878
   activities
Financing activities
   Payments on capital lease            (91)                (64)
   obligations
   Proceeds from issuance of debt, net  9,726               -
   of issuance and financing costs
   Proceeds from issuance of common     25,659              32
   stock
   Net cash provided by (used in)       35,294              (32)
   financing activities
Increase in cash and cash equivalents   30,141              (294)
Cash and cash equivalents at beginning  14,848              10,743
of period
Cash and cash equivalents at end of     $     44,989    $    10,449
period
Supplemental disclosures of cash flow
information
   Cash paid for interest               $       164  $        9
   Cash paid for taxes, net             $           $        2
                                        4
Supplemental disclosures of non-cash
investing and financing activities
   Unrealized gain on investments      $       385  $     (122)
   Accretion of beneficial conversion   $           $    (9,175)
   charge                               -
   Fair value of warrants in            $       790  $        
   connection with debt                                     -







SOURCE Insmed Incorporated

Website: http://www.insmed.com
 
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