01—Abstract
Summary
Summary of the 10-K filed February 27, 2015. Cited figures are marked; the original filing is the authoritative source.
Insmed Incorporated is a biopharmaceutical company focused on developing and commercializing ARIKAYCE (liposomal amikacin for inhalation) for two orphan indications: nontuberculous mycobacteria (NTM) lung infections and Pseudomonas lung infections in cystic fibrosis (CF) patients, and on INS1009, an inhaled treprostinil prodrug for pulmonary arterial hypertension.
The company has no revenue in 2014 and 2012, reported a 2014 net loss of $79.2 milliona (versus $56.1 million in 2013, which included an $11.5 million one-time payment from Premacure), and had an accumulated deficit of $470.8 million at December 31, 2014. Cash and cash equivalents were $159.2 million at year-end, and the company states it believes it has sufficient funds to meet its financial needs in 2015, though it may raise additional capital. Key regulatory progress includes an EMA Marketing Authorization Application for ARIKAYCE, validated in February 2015 for both NTM and CF indications.
The FDA granted Breakthrough Therapy designation for NTM in June 2014, and the company has commenced a global phase 3 confirmatory study (the 212 study) of about 300 patients, with preliminary top-line results expected in mid-2016. The phase 2 NTM trial missed its primary endpoint (p=0.148) but achieved statistical significance on culture conversion (11 of 44 versus 3 of 45 on placebo, p=0.01).
The company states that it does not expect ARIKAYCE or other candidates to be commercially available for at least the next year or two, if at all. Investors should weigh the company's dependence on ARIKAYCE, its sole-source manufacturing and nebulizer supply arrangements, its Hercules term loan of $25.0 millionb at 9.25% with a maturity of January 1, 2016 (extendable to 2018 if certain financing thresholds are met), and risk factors tied to clinical, regulatory and reimbursement outcomes.
02—Key points
Key Highlights
- Net loss of $79.2 million for 2014 (EPS of $(1.84)), compared with $56.1 million in 2013; operating loss of $87.4 million in 2014 versus $55.0 million in 2013.
- No revenue in 2014; 2013 other revenue of $11.5 million came from a one-time Premacure payment for the right to royalties.
- Cash and cash equivalents of $159.2 million at December 31, 2014; net cash used in operations was $64.4 million in 2014; August 2014 public offering net proceeds were $108.0 million.
- Accumulated deficit of $470.8 million; stockholders' equity of $186.2 million at year-end 2014.
- ARIKAYCE MAA validated by the EMA in February 2015 for NTM lung infections and CF Pseudomonas lung infections; FDA granted Breakthrough Therapy designation for NTM in June 2014.
- Phase 2 NTM trial did not meet its primary endpoint (p=0.148) but achieved statistical significance on culture conversion (11 of 44 vs. 3 of 45, p=0.01); global phase 3 confirmatory 212 study (about 300 patients) started in early 2015 with preliminary results expected mid-2016.
- Hercules loan of $25.0 million at 9.25% fixed interest, with interest-only period through December 31, 2015 and maturity on January 1, 2016 (option to extend to January 1, 2018 if certain proceeds thresholds are met).
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2014filed February 27, 2015Financial Statements
FY2014 against FY2013
| Line item | FY2014FY2013 | Change |
|---|---|---|
| R&D Expenses | $56.29M$44.28M | +27.1% |
| Operating Expenses | $87.36M$66.52M | +31.3% |
| Operating Income | -$87.36M-$55.02M | −58.8% |
| Interest Expense | $2.42M$2.41M | +0.1% |
| Net Income | -$79.16M-$56.07M | −41.2% |
| EPS (Basic) | $-1.84$-1.60 | −15.0% |
| Shares Outstanding (Basic) | 43.09M34.98M | +23.2% |
| Shares Outstanding (Diluted) | 43.09M34.98M | +23.2% |
05—Questions
Frequently Asked Questions
What is Insmed's lead product candidate and what indications is it being developed for?
The lead candidate is ARIKAYCE (liposomal amikacin for inhalation), a once-daily inhaled antibiotic being developed for NTM lung infections and for Pseudomonas lung infections in CF patients, both designated orphan indications. The company also develops INS1009, an inhaled treprostinil prodrug for PAH.
Does Insmed currently have any product revenue?
No. The company states it did not recognize any revenue in 2014 or 2012 and does not currently recognize revenue from product sales or other sources. Its 2013 revenue of $11.5 million was a one-time payment from Premacure.
When could ARIKAYCE become commercially available, and what are the key regulatory milestones?
The company does not expect ARIKAYCE or any other product candidate to be commercially available for at least the next year or two, if at all. Key milestones include the EMA MAA validated in February 2015, a filing in Canada expected in the second half of 2015, and preliminary top-line results from the global phase 3 212 study expected in mid-2016.
Does Insmed have enough cash to fund its operations?
The company states it believes it currently has sufficient funds to meet its financial needs in 2015, with cash and cash equivalents of $159.2 million at December 31, 2014. It has no committed sources of capital beyond that and may raise additional capital through equity, debt or strategic transactions, which could dilute shareholders.
What are the main risks tied to manufacturing and supply?
ARIKAYCE is supplied by a sole manufacturer, Althea, which operates at a relatively small scale and is supplied on a purchase order basis without a long-term supply agreement. The nebulizer is supplied by PARI, with no alternative supplier. The company has contracted with Therapure to build out a second, larger-scale manufacturing site in Canada.
06—Continue