Insmed Reports Second Quarter 2014 Financial Results

  Insmed Reports Second Quarter 2014 Financial Results

Business Wire

BRIDGEWATER, N.J. -- August 6, 2014

Insmed Incorporated (Nasdaq:INSM) today reported financial results for the
three and six months ended June 30, 2014.

Highlights of the second quarter of 2014 and recent weeks include:

  *Announced plans to file a Market Authorization Application (MAA) with the
    European Medicines Agency (EMA) for ARIKAYCE™, or liposomal amikacin for
    inhalation, for the treatment of two orphan lung diseases: nontuberculous
    mycobacterial (NTM) lung infections in treatment refractory patients and
    Pseudomonas aeruginosa lung infections in patients with cystic fibrosis
    (CF);
  *Announced plans to initiate two global Phase 3 clinical trials of ARIKAYCE
    in NTM; one for the broad NTM patient population and one confirmatory
    study for treatment refractory patients with NTM lung infections;
  *Received Breakthrough Therapy Designation from the U.S. Food and Drug
    Administration (FDA) for ARIKAYCE to treat NTM lung infections; and
  *Appointed David R. Brennan, former Chief Executive Officer of AstraZeneca
    plc, to the Insmed Board of Directors.

“With the recent regulatory clarity, we are moving forward with preparation
for commercialization in Europe while simultaneously advancing our two global
NTM studies,” said Will Lewis, President and Chief Executive Officer of
Insmed. “Given these positive developments, we are pleased with the progress
we are making toward our goal of bringing this potentially front line therapy
to the benefit of the thousands of NTM and CF patients.”

Second Quarter Financial Results

For the second quarter of 2014, Insmed posted a net loss of $23.2 million, or
($0.59) per share, compared with a net loss of $8.9 million, or ($0.28) per
share, for the second quarter of 2013. The increase in net loss was primarily
due to $11.5 million in Other revenue received during the 2013 quarter related
to a one-time payment for the sale of the Company’s right to receive future
royalties under its license agreement with Premacure (now Shire plc), as well
as to higher expenses in the 2014 quarter.

Research and development expense in the 2014 second quarter increased to $14.9
million from $12.2 million in the second quarter of 2013. The increase in
research and development expense was primarily due to the build-out of
additional third-party manufacturing capacity and higher compensation and
personnel-related expenses. These increases were partially offset by a
decrease in external clinical expenses, which was primarily related to the
completion of the Company’s Phase 3 pivotal study in CF patients in 2013.

General and administrative expense for the second quarter of 2014 was $7.9
million compared with $7.5 million in the second quarter of 2013. The increase
in general and administrative expense primarily resulted from an increase in
pre-commercial activities and higher personnel costs due to an increase in
headcount. These increases were largely offset by a $1.4 million decrease in
non-cash stock compensation expense in the second quarter of 2014, compared
with the prior year’s second quarter.

Balance Sheet Highlights and Cash Guidance

As of June 30, 2014, Insmed had cash and cash equivalents of $82.7 million and
working capital of $64.9 million. Excluding depreciation and non-cash stock
compensation expense, the Company’s cash operating expenses for the three
months ended June 30, 2014 was $19.7 million and includes expenditures of $2.1
million related to the build out of additional and redundant third party
manufacturing capacity.

During the second half of 2014, the Company plans to continue to fund further
clinical development of ARIKAYCE, increase its investment in third-party
manufacturing capacity, support efforts to obtain regulatory approvals and
prepare for ARIKAYCE commercialization. As a result, Insmed estimates that its
cash operating expenses for the second half of 2014 will be in the range of
$42 million to $47 million, which includes additional expenditures of $6
million to $8 million for third-party manufacturing capacity. In addition, in
the second half of 2014 the Company expects to invest $2.5 million to $3.5
million in new capital expenditures and pay current liabilities of $2.5
million related to the Company’s new office and laboratory facilities in
Bridgewater, N.J. The Company expects current cash balances will be sufficient
to fund operations into 2015.

Senior Leadership Team Update

Matthew Pauls, Chief Commercial Officer (CCO), will be leaving Insmed in
August 2014 to become the Chief Executive Officer of a biopharmaceutical
company based in Sweden and the U.S. Insmed plans to initiate a search to
identify a new CCO.

Lilia Arviza, PhD, recently joined Insmed in the newly created role of Vice
President of Global Medical Affairs. Dr. Arviza is responsible for medical
education, medical communication and oversight of grants, investigator
initiated studies and the medical science liaison personnel. Dr. Arviza has
more than 15 years of medical affairs experience at companies focused on
orphan diseases and broader therapeutic indications.

Gina Eagle, MD, was recently promoted to Vice President of Clinical
Development. Dr. Eagle is responsible for designing and overseeing the
clinical trials and development of the Company’s product candidates. Dr. Eagle
spent 6 years practicing medicine and has more than 9 years of experience in
clinical development in the pharmaceutical industry.

Kevin McDermottwas recently promoted to Vice President of Global Market
Access. Mr. McDermott is responsible for developing pricing strategies,
creating a strong pharmacoeconomic foundation, and securing market access
worldwide. Mr. McDermotthas more than 14 years of senior leadership in market
access.

“We welcome Lilia and look forward to sharing her passion and expertise in
medical affairs. We also congratulate Gina and Kevin on their recent
promotions,” stated Mr. Lewis. “In addition, we wish Matt continued success in
his new role as CEO, and we appreciate his contributions to Insmed over the
last year.”

About Insmed

Insmed Incorporated is a biopharmaceutical company dedicated to improving the
lives of patients battling serious lung diseases. Insmed is focused on the
development and commercialization of ARIKAYCE, or liposomal amikacin for
inhalation, for at least two identified orphan patient populations: patients
with nontuberculous mycobacteria (NTM) lung infections and cystic fibrosis
(CF) patients with Pseudomonas aeruginosa lung infections. For more
information, please visit http://www.insmed.com.

Forward-looking statements

This release contains forward-looking statements. 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 the status, results and timing
of clinical trials and clinical data, the anticipated benefits of Insmed’s
products, the anticipated timing of regulatory submissions, and the ability to
obtain required regulatory approvals, bring products to market and
successfully commercialize products constitute forward-looking statements that
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 European,
Canadian, U.S. Food and Drug Administration and other regulatory reviews and
approvals, competitive developments affecting the Company’s product
candidates, delays in product development or clinical trials or other studies,
patent disputes and other intellectual property developments relating to the
Company’s product candidates, unexpected regulatory actions, delays or
requests, the failure of clinical trials or other studies or results of
clinical trials or other studies that do not meet expectations, the fact that
subsequent analyses of clinical trial or study data may lead to different
(including less favorable) interpretations of trial or study results or may
identify important implications of a trial or study that are not reflected in
Company’s prior disclosures, and the fact that trial or study results or
subsequent analyses may be subject to differing interpretations by regulatory
agencies, the inability to successfully develop the Company’s product
candidates or receive necessary regulatory approvals, , the inability to make
product candidates commercially successful, changes in anticipated expenses,
changes in the Company’s financing requirements or ability to raise additional
capital, and other risks and challenges detailed in the Company’s filings with
the U.S. Securities and Exchange Commission, including its Annual Report on
Form10-K for the year ended December31, 2013 and its subsequent quarterly
reports on Form 10-Q. Investors are cautioned not to place undue reliance on
any forward-looking statements that speak only as of the date of this news
release. The Company undertakes no obligation to update these forward-looking
statements to reflect events or circumstances or changes in its expectations.

                                           
INSMED INCORPORATED
Consolidated Balance Sheets
(in thousands, except par value, share and per share data)
                                                           
                                                             
                                             As of           As of
                                             June 30, 2014   December 31, 2013
Assets                                       (unaudited)
Current assets:
Cash and cash equivalents                    $  82,697       $   113,894
Prepaid expenses and other current assets      4,015          2,269      
Total current assets                            86,712           116,163
                                                             
In-process research and development             58,200           58,200
Fixed assets, net                               4,778            1,812
Other assets                                   420            323        
Total assets                                 $  150,110     $   176,498    
                                                             
Liabilities and shareholders' equity
Current liabilities:
Accounts payable                             $  11,407       $   5,929
Accrued expenses                                4,546            3,905
Accrued compensation                            2,071            2,839
Accrued lease expense, current                  314              307
Deferred rent                                   167              129
Capital lease obligations, current              32               64
Current portion of long term debt              3,281          3,283      
Total current liabilities                       21,818           16,456
                                                             
Accrued lease expense, long-term                250              380
Debt, long-term                                16,494         16,338     
Total liabilities                              38,562         33,174     
                                                             
                                                             
Shareholders' equity:
Common stock, $0.01 par value; 500,000,000
authorized shares,
39,276,389 and 39,137,679 issued and
outstanding shares at
June 30, 2014 and December 31, 2013,            393              391
respectively.
Additional paid-in capital                      540,298          534,554
Accumulated deficit                            (429,143 )      (391,621   )
Total shareholders' equity                     111,548        143,324    
Total liabilities and shareholders' equity   $  150,110     $   176,498    
                                                                 

                                                              
INSMED INCORPORATED
Consolidated Statements of Comprehensive Loss (Unaudited)
(in thousands, except per share data)
                                                                   
                                                                   
                       Three months ended June 30,   Six months ended June 30,
                         2014          2013       2014        2013    
Other revenue          $  -            $ 11,500    $ -          $ 11,500  
                                                                   
Operating expenses:
Research and              14,942          12,225       26,293        22,559
development
General and              7,874         7,544      14,602      11,520  
administrative
Total operating          22,816        19,769     40,895      34,079  
expenses
                                                                   
Operating loss            (22,816  )      (8,269 )     (40,895 )     (22,579 )
                                                                   
Investment income         12              50           29            101
Interest expense          (595     )      (635   )     (1,201  )     (1,277  )
Other income, net        175           -          156         2       
Loss before income        (23,224  )      (8,854 )     (41,911 )     (23,753 )
taxes
                                                                   
Benefit from income      -             -          (4,389  )    (1,221  )
taxes
                                                                   
Net loss and           $  (23,224  )    $ (8,854 )   $ (37,522 )   $ (22,532 )
comprehensive loss
                                                                   
                                                                   
Basic and diluted      $  (0.59    )    $ (0.28  )   $ (0.96   )   $ (0.71   )
net loss per share
                                                                   
Weighted average
basic and diluted        39,273        31,754     39,256      31,654  
common shares
outstanding
                                                                   

Contact:

LHA
Anne Marie Fields, 212-838-3777
Senior Vice President
afields@lhai.com
or
Bruce Voss, 310-691-7100
Managing Director
bvoss@lhai.com
 
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