Insmed Inc. Reports Operating Results (10-Q)
Insmed Inc. has a market cap of $94.3 million; its shares were traded at around $0.7236 with and P/S ratio of 9.1. INSM is in the portfolios of Jim Simons of Renaissance Technologies LLC.
Highlight of Business Operations:On March 31, 2009, we completed the sale of our follow-on biologics (“FOB”) platform to Merck & Co., Inc. (“Merck”) for an aggregate purchase price of $130 million. As part of this transaction, Merck assumed the lease of our Boulder, Colorado-based manufacturing facility (which was also used to manufacture IPLEX™) and acquired ownership of all the equipment in the building. In addition, Merck offered positions to employees at the Boulder facility. After fees, taxes and other expenses related to the transaction, we received total net proceeds of approximately $127 million. In the fourth quarter of 2009 we recorded a $2 million tax refund receivable which increased the after tax proceeds on the sale from $125 million, as reported in the first quarter of 2009, to the $127 million reported in our full year results. The $2.0 million reduction in taxes results from the beneficial impact of the revised tax laws, which came into effect in the fourth quarter of 2009, and allowed the Company to utilize more of its net operating losses (“NOLs”) than previously able under former tax law to reduce the amount of taxes paid on the gain on sale of its FOB business to Merck in March 2009. The company received the full tax refund in April 2010. We retained our Richmond, VA corporate office, which houses our Clinical, Regulatory, Finance, and Administrative functions, in support of the continuing IPLEX™ program.
Total revenues for the second quarter ended June 30, 2010 were $1.9 million, as compared to $3.0 million for the corresponding period in 2009. The $1.2 million decline in revenue was due to a combination of $0.9 million in lower cost recovery in the most recent quarter from our Expanded Access Program (“EAP”) for IPLEX™ in the treatment of Amyotrophic Lateral Sclerosis (“ALS”) in Italy, the receipt of $0.3 million in grant revenue for the Myotonic Muscular Dystrophy (“MMD”) trial in the second quarter of 2009, and $30,000 in lower royalty income. The reduced EAP revenue resulted from a natural decline in patients receiving IPLEX™ following the Company s decision in 2009 to cease patient enrollment in order to preserve inventory for existing patients, while the lower royalty was due to the expiry of a long standing TGF-beta royalty.
Net loss for the second quarter of 2010 was $0.4 million; break even on a per share basis, compared with a net loss of $1.6 million, or $0.01 per share, reported in the second quarter of 2009. The $1.2 million change in net loss was due to an overall reduction of $1.6 million in operating expenses, a $0.4 million improvement in investment income and a $0.4 million reduction in interest expense, which was partially offset by the $1.2 million reduction in revenues noted above.
Total revenues for the six months ended June 30, 2010 were $3.8 million, as compared to $5.4 million for the corresponding period in 2009. The $1.6 million decline in revenue was again due to the same factors which impacted our second quarter 2010 revenues with a $1.0 decline in EAP cost recovery, the receipt of $0.5 million in grant revenue for the MMD trial in the first half of 2009 and $56,000 in lower income from the expired TGF-beta royalty.
Net loss for the first half of 2010 was $0.3 million; break even on a per share basis, compared with net income of $116.2 million, or $0.93 per share, reported in the first half of 2009. The $116.5 million change was primarily due to the $125.0 million after tax gain on sale of our follow on biologics (“FOB”) assets to Merck in March 2009 together with the $1.6 million reduction in revenues noted above, which were partially offset by an overall reduction of $8.7 million in operating expenses, an $0.8 million improvement in investment income and a $0.6 million reduction in interest expense.
As of June 30, 2010, the Company had total cash, cash equivalents and short-term investments on hand of $126.9 million, made up of $113.5 million in short term investments, $11.3 million in cash and cash equivalents and $2.1 million in a certificate of deposit. This compares to $124.3 million as of December 31, 2009. The $2.6 million increase in cash, cash equivalents and short-term investments was due primarily to the receipt of a $2.0 million income tax refund and a $0.6 million improvement in unrealized gain on investments, as the net cash produced from operating activities of $0.2 million was fully offset by the $0.2 million final payment of our 2005 convertible notes.
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