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Insmed Announces Financial Results for Second Quarter and Six-Months Ended June 30, 2008

RICHMOND, Va., Aug. 8 /PRNewswire-FirstCall/ -- Insmed Inc. (Nasdaq: INSM), a developer of follow-on biologics and biopharmaceuticals, today reported results for the second quarter and six-months ended June 30, 2008.

Recent Company Highlights

-- Follow-on Biologics Program

-- Completed clinical trial demonstrating the bioequivalence of INS-19,

the company's recombinant human granulocyte colony stimulating

factor (G-CSF), to Neupogen(R), an FDA-approved G-CSF product for

the treatment of neutropenia that recorded 2007 sales of

approximately $1 billion;

-- Retained The Honorable Bill Thomas, Former Chairman of the House

Ways and Means Committee from 2001 to 2007, as a strategic advisor

to provide counsel on the Company's efforts to bring follow-on

biologics ("FOB") to U.S. consumers;

-- Retained the services of RBC Capital Markets ("RBC") to act as

Insmed's strategic financial advisor to evaluate and focus the

Company's strategic initiatives.


-- The Phase 2 trial of IPLEX(TM) in Myotonic Muscular Dystrophy

("MMD"), which was initiated in December 2007, has seen a strong

patient and physician interest and is now fully enrolled;

-- Received $2.6 million in cost recovery revenue in the second quarter

related to the expanded access program ("EAP") for IPLEX(TM). The

EAP in Italy to treat patients with Amyotrophic Lateral Sclerosis

("ALS"), also known as Lou Gehrig's Disease, currently includes 22

physicians and approximately 100 subjects have enrolled.

"Over the past several months, Insmed has achieved several important milestones across the full spectrum of its business," said Geoff Allan, President and CEO of Insmed. "Most importantly, our FOB initiatives have received strong scientific validatilents at beginning of

period 3,554 2,121

Cash and cash equivalents at end of period $1,379 $12,312

Supplemental information

Cash paid for interest $129 $141

The table below details the "Cash and cash equivalents" from the statement of cash flows to "Cash, cash equivalents and short-term investments" shown on the balance sheet.

June 30, December 31,

2008 2007

Cash and Cash Equivalents 1,379 3,554

Short-Term Investments 8,068 12,925

Total Cash and Cash Equivalents and

Short-Term Investments 9,447 16,479

on with the exciting results of the INS-19 clinical trial that demonstrated bioequivalence to Neupogen(R), opening the door to a potential meeting with the FDA to discuss the initiation of a possible Phase 3 trial. Additionally, retaining both Chairman Thomas to represent our interests inside the Beltway in the discussion around creating a regulatory pathway for FOB, and RBC to evaluate our strategic financial options will ensure that we make informed decisions for moving our FOB program forward, and advancing the development of IPLEX(TM) in MMD and ALS."

Revenues for the second quarter ended June 30, 2008 were $2.6 million, up from $2.3 million for the corresponding period in 2007. The increase was primarily attributable to a $1.4 million improvement in cost recovery from our EAP to treat patients with ALS in Italy. This was partially offset by the absence of license income from our agreement with Napo Pharmaceuticals Inc., ("Napo") from which we received a milestone payment in the second quarter of 2007.

The net loss for the second quarter of 2008 was $4.7 million or $0.04 per share, compared with a net loss of $2.5 million or $0.02 per share in the second quarter of 2007. This $2.2 million increase was primarily attributable to a $2.2 million increase in total expenses as the increase in revenues for the quarter was offset by the increase in net interest expense.

The $2.2 million total increase in expenses was due primarily to a $1.8 million increase in research and development expenses ("R&D Expenses"), a $340,000 increase in selling, general and administrative expenses ("SG&A Expenses"), and the realization of a $54,000 non-cash loss on investments.

The higher R&D Expenses reflected a rise in clinical trial costs this last quarter as our FOB and IPLEX(TM) programs gained momentum. The increase in SG&A Expenses was due primarily to increased investor relations and public relations activity and the loss on investments arises from the write-down of our investment in Napo. This investment, which was funded by a milestone payment from Napo, was recorded as part of our agreement with Napo in 2007.

For the six months ended June 30, 2008, revenues totaled $5.0 million, up from $3.9 million in the first six months of 2007. Consistent with second quarter results, the increase was primarily attributable to a $3.0 million improvement in cost recovery from our EAP to treat patients with ALS in Italy. This was partially offset by the absence of license income from Napo and the revenues lost from our withdrawal of IPLEX(TM) in the short stature market pursuant to the terms of our settlement agreement with Genentech Inc. and Tercica Inc. entered into in 2007.

The net loss for the six months ended June 30, 2008 was $9.5 million, or $0.08 per share, compared to $12.8 million, or $0.12 per share, for first six months of 2007. Year-over-year, R&D Expenses increased to $10.8 million for the first half of 2008, from $9.8 million, reflecting an increase in clinical trial activity for our FOB and IPLEX(TM) programs. SG&A Expenses fell to $3.0 million for the first half of 2008 from $6.5 million a year earlier due to the elimination of litigation expenses following the March 2007 settlement and the removal of commercial expenses associated with our business restructuring plan. The $446,000 loss on investments represents the write down on the Napo investment during the first half of 2008.

Interest income for the first half of 2008 was $375,000 and was a reduction from the $525,000 earned in the same period of 2007 due to the combination of a lower interest rate environment and a lower average cash balance. Interest expense increased to $682,000 in the most recent six month period from $306,000 during the corresponding period of 2007. The increase was due to an increase in the debt discount amortization resulting from the quarterly payment of our 2005 convertible notes, which began in March 2008.

As of June 30, 2008, we had total cash, cash equivalents and short-term investments on hand of $9.4 million, compared to $16.5 million on hand as of December 31, 2007. The $7.1 million decrease in cash, cash equivalents and short-term investments primarily reflects the use of $6.0 million for operating activities and a $1.1 million principal repayment of our 2005 convertible notes, which began on March 1, 2008.

Conference Call

To participate in today's 8:30 AM ET live conference call, please dial 866-202-1971 (U.S. callers) or 617-213-8842 (international callers), and provide passcode 85261742. 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 10:30 AM ET at 888-286-8010 (U.S. callers) or 617-801-6888 (international callers), using passcode 46396392.

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

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, the FOB market in the United States may be slow to develop or never develop, government regulation of the FOB market (in foreign countries and possibly in the United States) could be onerous or slow in developing or never develop, we may lack financial resources to complete development of product candidates or to fund the ongoing operations of the Company, 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 FOB market may be unsuccessful, our common stock could be delisted from the Nasdaq Capital Market 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, 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.

Investor Relations Contact:

Brian Ritchie - FD


Corporate Communications Contact:

John Procter - Gibraltar Associates



Consolidated Balance Sheets

(in thousands, except share and per share data)


June 30, December 31,

2008 2007


Current assets:

Cash, cash equivalents and short-term

investments $9,447 $16,479

Accounts receivable, net 50 250

Prepaid expenses 193 244

Total current assets 9,690 16,973

Long-term assets:

Restricted cash - long term 2,095 2,095

Investments 54 258

Deferred financing costs, net 117 170

Property and equipment, net - 4

Total long-term assets 2,266 2,527

Total assets $11,956 $19,500

Liabilities and stockholders' equity

Current liabilities:

Accounts payable $1,088 $904

Accrued project costs & other 1,035 503

Payroll liabilities 1,178 631

Restricted stock unit liability 12

Interest payable 18 23

Deferred rent 115 115

Deferred income 825 245

Convertible debt 2,211 2,211

Debt discount (784) (950)

Net convertible debt 1,427 1,261

Total current liabilities 5,698 3,682

Long-term liabilities:

Convertible debt 1,658 2,764

Debt discount (312) (651)

Net long-term convertible debt 1,346 2,113

Asset retirement obligation 2,217 2,217

Total liabilities 9,261 8,012

Stockholders' equity:

Common stock; $.01 par value; authorized

shares 500,000,000; issued and

outstanding shares, 122,305,635 in 2008

and 121,904,312 in 2007 1,223 1,219

Additional paid-in capital 341,771 341,270

Accumulated deficit (340,299) (330,759)

Accumulated other comprehensive loss:

Unrealized loss on investment - (242)

Net stockholders' equity 2,695 11,488

Total liabilities and stockholders'

equity $11,956 $19,500


Consolidated Statements of Operations

(in thousands, except per share data - unaudited)

Three Months Ended Six Months Ended

June 30, June 30,

2008 2007 2008 2007

Sales, net $- $- $- $423

Royalties 29 17 54 52

License income - 1,045 - 1,545

Other expanded access

program income 2,619 1,213 4,911 1,915

Total revenues 2,648 2,275 4,965 3,935

Operating expenses:

Cost of goods sold - - - 576

Research and development 5,536 3,691 10,777 9,796

Selling, general and

administrative 1,493 1,153 2,975 6,535

Loss on investments 54 - 446 -

Total expenses 7,083 4,844 14,198 16,907

Operating loss (4,435) (2,569) (9,233) (12,972)

Interest income 96 224 375 525

Interest expense (328) (155) (682) (306)

Net loss $(4,667) $(2,500) $(9,540) $(12,753)

Basic and diluted net loss

per share $(0.04) $(0.02) $(0.08) $(0.12)

Shares used in computing

basic and diluted net loss

per share 121,989 113,577 121,989 107,486


Consolidated Statements of Cash Flows

(in thousands - unaudited)

Six Months Ended

June 30,

2008 2007

Operating activities

Net loss $(9,540) $(12,753)

Adjustments to reconcile net loss to net cash

used in operating activities:

Depreciation and amortization 562 168

Stock based compensation expense 298 129

Stock options issued for services 140 39

Realized loss on investments 446 -

Changes in operating assets and liabilities:

Accounts receivable 200 241

Inventory - 576

Other assets 51 (124)

Accounts payable 184 (6,507)

Accrued project costs 532 (702)

Payroll liabilities 547 (59)

Restricted stock unit liability 12 -

Deferred income 580 -

Asset retirement obligation - 295

Interest payable (5) -

Net cash used in operating activities (5,993) (18,697)

Investing activities

Decreases of short-term investments 4,857 12,044

Purchases of investments - (500)

Net cash provided by investing activities 4,857 11,544

Financing activities

Proceeds from issuance of common stock

Public Offering - 18,230

Issuance costs - (1,266)

Other 67 83

Total proceeds from issuance of common stock 67 17,047

Costs incurred in conjunction with issuance

of debt - -

Repayment of convertible notes (1,106) -

Other - 297

Net cash (used in) provided by financing

activities (1,039) 17,344

(Decrease) Increase in cash and cash

equivalents (2,175) 10,191

Cash and cash equiva

SOURCE Insmed Inc.
Copyright©2008 PR Newswire.
All rights reserved

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