Insmed Reports Financial Results for Second Quarter and First Half of 2007



    Quarterly Revenues Increase to $2.3M from $210K in Prior Year; Lower SG&A
Expenses Help Narrow Loss

    RICHMOND, VA., August 2 /CNW/ - Insmed Inc. (Nasdaq:  INSM), (referred to
herein as "Insmed", "we", "our" and "us"), a biopharmaceutical company with
unique protein process development and manufacturing experience and a
proprietary protein platform aimed at niche markets with unmet medical needs,
today announced results for the second quarter and six-month period ended June
30, 2007.

    Revenues for the three months ended June 30, 2007 were $2.3 million, up
from $210,000 from the corresponding period in 2006. The increase was due to
two factors: improvements in cost recovery from Insmed's Expanded Access
Program (EAP) to treat patients with amyotrophic lateral sclerosis (ALS) and
the receipt of licensing income from our January 2007 agreement with NAPO
Pharmaceuticals Inc.

    The net loss for the second quarter of 2007 was $2.5 million, or $0.02
per share, compared with a net loss of $8.9 million, or $0.09 per share, in
the second quarter of 2006. The year-over-year improvement was due mainly to a
reduction in selling, general and administrative (SG&A) expenses, which fell
to $1.2 million from $5.2 million in the second quarter of 2006, and to a drop
in research and development (R&D) expenses to $3.7 million from $4.3 million.
The reduction in SG&A was due primarily to reduced litigation expenses and the
elimination of commercial expenses associated with our business restructuring
plan. The drop in R&D expenses reflected a reduction in our clinical and
commercial manufacturing activity. Interest income in the second quarter of
2007 fell to $224,000 from $577,000 a year earlier. This was due to a lower
average cash balance on hand for the most recent quarter.

    For the six months ended June 30, 2007, revenues totaled $3.9 million, up
from $263,000 in the first six months of 2006. Consistent with second quarter
results, the increase was due to improvements in the cost recovery from our
EAP and the receipt of licensing income from our agreement with NAPO
Pharmaceuticals, together with increased sales of our lead drug IPLEX(TM).

    The net loss for the six months ended June 30, 2007 was $12.8 million, or
$0.12 per share, compared to $22.3 million, or $0.25 per share, for first six
months of 2006. Year-over-year, R&D expenses dropped to $9.8 million for the
first half of 2007, from $11.5 million, reflecting lower litigation expenses,
which were included in R&D during the first quarter of 2006, and reduced
clinical and commercial manufacturing activity. SG&A expenses fell to $6.5
million for the first half of 2007 from $9.0 million a year earlier, due to a
combination of reduced litigation expenses and the elimination of commercial
expenses. This reduction was partially offset by severance costs associated
with our business restructuring plan.

    Interest income for the first half of 2007 was $525,000, compared to
$889,000 for the first half of 2006. Interest expense for the six months ended
June 30, 2007 was $306,000, compared to $3.0 million for the first half of
2006. The decrease in interest expense resulted from lower amortization of the
debt discount associated with our March 2005 financing, as an acceleration of
the discount took place in the first quarter of 2006 due to the conversion of
notes into shares of Insmed common stock.

    As of June 30, 2007, Insmed had total cash and cash equivalents on hand
of $22.3 million, compared to $24.1 million on hand as of December 31, 2006.
The $1.9 million decrease in cash and cash equivalents reflected the use of
$18.7 million for operating activities and $500,000 utilized for the Company's
investment in NAPO Pharmaceuticals Inc. The decrease was partially offset by
net proceeds of $17.0 million from an offering of our common stock and
warrants to purchase common stock and $300,000 from a reduced letter of
credit.

    Second Quarter Financing Activities

    On May 4, 2007, Insmed sold 20,255,367 shares of its common stock
together with warrants to purchase up to 2,025,536 shares of its common stock.
The price to the investors was $0.90 per unit, which was comprised of one
share of common stock and a warrant to purchase 0.1 share of common stock. The
units were not issued or certificated, and the shares of common stock and
warrants were immediately separable and issued separately. The warrants may be
exercised between November 3, 2007 and May 3, 2012 and have an exercise price
of $1.10 per share. The offering was made pursuant to the Company's effective
shelf registration statement on Form S-3 previously filed with the Securities
and Exchange Commission. Net proceeds to the Company from the offering were
$17.0 million.

    Insmed Expected to Launch into Follow-On Biologics Market

    "Our latest results clearly show not only an improving financial picture
but, perhaps more importantly, that Insmed is successfully preparing for its
launch into a substantial new market in follow-on biologics, said Insmed
President and CEO Geoffrey Allan, Ph.D.

    "We believe that Congress will soon pass legislation allowing the
marketing of 'biogenerics', medicines similar to major protein-based drugs
going off-patent. If and when this legislation passes, we believe our
state-of-the-art manufacturing facility and drug-development expertise should
place us in an advantageous position to rapidly capture a portion of this
substantial opportunity. In the meantime, our second quarter financials
indicate that Insmed has reduced its expense levels, gained a solid revenue
stream from its EAP and has decreased its burn rate," concluded Dr. Allan.

    Investor Conference Call

    Insmed will host a conference call on Thursday, August 2, 2007 at 11:00
a.m. Eastern Time to discuss the financial results for the first six months
ended June 30, 2007, and to provide a business update.

    Individuals interested in listening to the live call may do so by dialing
877-407-0782 toll free within the United States and Canada, or 201-689-8567
for international callers.

    A telephonic replay of the call will be available approximately two hours
after the call for a period of two weeks at 877-660-6853 from the United
States and 201-612-7415, for international callers. The account # is 286 and
conference id # 249996.

    Individuals interested in listening to the conference call via the
Internet may do so by visiting Insmed's website at www.insmed.com. A replay of
the call will be available on the website for a period of 90 days.

    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 www.insmed.com. To be added to Insmed's investor lists, please contact
Haris Tajyar at htajyar@irintl.com or at 818-382-9702.

    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 Global 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 June 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.

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

                                             (unaudited)
                                               June 30,     December 31,
                                                 2007           2006
                                            -------------- ---------------

    Assets
    Current assets:
      Cash and cash equivalents             $      22,259  $       24,112
      Restricted cash                                 493             407
      Accounts receivable, net                          -             241
      Inventories                                       -             576
      Other current assets                            211              87
                                            -------------- ---------------
      Total current assets                         22,963          25,423

    Long-term assets:
      Restricted cash - long term                   2,325           2,708
      Investments                                     437               -
      Deferred financing costs, net                   193             209
      Property and equipment, net                       5               8
                                            -------------- ---------------
      Total long-term assets                        2,960           2,925
                                            -------------- ---------------

    Total assets                            $      25,923  $       28,348
                                            -------------- ---------------

    Liabilities and stockholders' equity
    Current liabilities:
      Accounts payable                      $         681  $        7,187
      Accrued project costs & other                   413           1,115
      Payroll liabilities                           1,243           1,302
      Interest payable                                 23              23
      Deferred rent                                    54              54

      Convertible debt                              1,139               -
      Debt discount                                  (403)              -
                                            -------------- ---------------
         Net convertible debt                         736               -
                                            -------------- ---------------

      Total current liabilities                     3,150           9,681

    Long-term liabilities:
      Convertible debt                              3,986           5,125
      Debt discount                                (1,412)         (1,964)
                                            -------------- ---------------
         Net long-term convertible debt             2,574           3,161

      Asset retirement obligation                   1,921           1,626
                                            ------------------------------

    Total liabilities                               7,645          14,468
                                            -------------- ---------------

    Stockholders' equity:
      Common stock; $.01 par value;
       authorized shares 500,000,000;
       issued and outstanding shares,
       121,708,316 in 2007 and 101,328,118
       in 2006                                      1,217           1,013
      Additional paid-in capital                  340,675         323,664
      Accumulated deficit                        (323,551)       (310,797)
      Accumulated other comprehensive loss:
         Unrealized loss on investment                (63)              -
                                            -------------- ---------------
      Net stockholders' equity                     18,278          13,880
                                            -------------- ---------------

    Total liabilities and stockholders'
     equity                                 $      25,923  $       28,348
                                            -------------- ---------------
    

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

                                   Three Months Ended   Six Months Ended
                                        June 30,            June 30,
                                   ---------------------------------------
                                     2007      2006      2007      2006
                                   ---------------------------------------

    Sales, net                     $      -  $      8  $    423  $      8
    Royalties                            17        30        52        83
    License income                    1,045         -     1,545         -
    Other expanded access program
     income                           1,213       172     1,915       172
                                   ---------------------------------------
      Total revenues                  2,275       210     3,935       263

    Operating expenses:
    Cost of goods sold                    -        23       576        23
    Research and development          3,691     4,348     9,796    11,522
    Selling, general and
     administrative                   1,153     5,163     6,535     8,963
                                   ---------------------------------------
      Total expenses                  4,844     9,534    16,907    20,508
                                   ---------------------------------------

    Operating loss                   (2,569)   (9,324)  (12,972)  (20,245)

    Interest income                     224       577       525       889
    Interest expense                   (155)     (164)     (306)   (2,983)
                                   ---------------------------------------

    Net loss                       $ (2,500) $ (8,911) $(12,753) $(22,339)
                                   ---------------------------------------

    Basic and diluted net loss per
     share                         $  (0.02) $  (0.09) $  (0.12) $  (0.25)
                                   ---------------------------------------

    Shares used in computing basic
     and diluted net loss per
     share                          113,577   100,152   107,486    90,125
                                   ---------------------------------------
    

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

                                                        Six Months Ended
                                                            June 30,
                                                        2007       2006
                                                      ---------  ---------

    Operating activities
    Net loss                                          $(12,753)  $(22,339)
    Adjustments to reconcile net loss to net cash
     used in operating activities:
     Depreciation and amortization                         168      2,809
     Stock based compensation expense                      129        481
     Stock options issued for services                      39         40
     Changes in operating assets and liabilities:
       Accounts receivable                                 241       (105)
       Inventory                                           576     (1,797)
       Other assets                                       (124)      (107)
       Accounts payable                                 (6,507)     1,916
       Accrued project costs                              (702)      (636)
       Payroll liabilities                                 (59)       116
       Deferred rent                                         -       (165)
       Asset retirement obligation                         295        296
       Interest payable                                      -        (24)
                                                      ---------  ---------
    Net cash used in operating activities              (18,697)   (19,515)
                                                      ---------  ---------

    Investing activities
       Purchases of investments                           (500)         -
       Purchases of property, plant and equipment            -     (3,016)
                                                      ---------  ---------
    Net cash used in investing activities                 (500)    (3,016)
                                                      ---------  ---------

    Financing activities
    Proceeds from issuance of common stock
     Public offering                                    18,230     43,240
     Issuance costs                                     (1,266)      (421)
     Warrants converted into shares                          -      8,810
     Other                                                  83        135
                                                      ---------  ---------
    Total proceeds from issuance of common stock        17,047     51,764
    Changes in cash restricted to restricted letters
     of credit                                             297        288
                                                      ---------  ---------
    Net cash provided by financing activities           17,344     52,052
                                                      ---------  ---------

    (Decrease) Increase in cash and cash equivalents    (1,853)    29,521
    Cash and cash equivalents at beginning of period    24,112     18,835
                                                      ---------  ---------

    Cash and cash equivalents at end of period        $ 22,259   $ 48,356
                                                      ---------  ---------

    Supplemental information
     Cash paid for interest                           $    141   $    165
    




For further information:

For further information: Investor Relations International Haris Tajyar,
818-382-9702 htajyar@irintl.com

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INSMED INC.

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