01—Abstract
Summary
Summary of the 10-K/A filed March 30, 2015. Cited figures are marked; the original filing is the authoritative source.
This Form 10-K/A (Amendment No. 1) for fiscal 2014 from Insmed Incorporated, a Virginia corporation, restates Part III of the original 10-K filed February 27, 2015.
The amendment was filed solely to provide governance, executive compensation, beneficial ownership, related-party, and accounting fee information that the original filing had incorporated by reference from the 2015 proxy statement, and to change the cover page's 'Documents Incorporated by Reference' section to 'None.' Financial statements are not included in this amendment, and the filing states that information is as of December 31, 2014. The filing describes Insmed as a biopharmaceutical company focused on ARIKAYCE (liposomal amikacin for inhalation) for nontuberculous mycobacteria (NTM) lung infections and cystic fibrosis patients with Pseudomonas aeruginosa lung infections, and on INS1009, an inhaled treprostinil prodrug. It reports that a Marketing Authorization Application for ARIKAYCE was filed with the European Medicines Agency and validated in February 2015, and that the FDA granted Breakthrough Therapy Designation for ARIKAYCE in NTM lung infections.
A 2014 underwritten public offering provided net proceeds of approximately $108.0 milliona. For governance and compensation, the Board is designated to have up to nine directors, with Donald Hayden, Jr. as Chairman and William H. Lewis as President and CEO.
The Audit Committee consists of David W.J. McGirr (Chairman and audit committee financial expert), Steinar J. Engelsen, M.D., and Alfred F.
Altomari, all determined to be independent. Shareholders approved say-on-pay with over 98%b of votes cast at the 2014 annual meeting, and the next advisory vote is scheduled for 2017.
The 2014 corporate bonus payout was 103% of target. Ernst & Young's total fees were $527,274c for 2014 compared with $550,703 for 2013.
02—Key points
Key Highlights
- Scope of amendment: Amendment No. 1 restates Part III (Items 10 through 14) and Part IV, which were incorporated by reference to the 2015 proxy statement in the original February 27, 2015 filing, and changes the cover page to state 'None' for documents incorporated by reference.
- Board and committees: Up to nine directors may be designated, with three staggered classes. Donald Hayden, Jr. serves as Chairman, and the Audit Committee is chaired by David W.J. McGirr, who is designated an audit committee financial expert.
- 2014 corporate performance: The Compensation Committee determined a cash bonus payout of 103% on corporate objectives, with the LAI regulatory filings objective rated 'Exceeded' and the infrastructure objective rated 'Partially Achieved.'
- Shareholder support: Over 98% of shares voted at the 2014 Annual Meeting approved the say-on-pay proposal, and shareholders will next vote on say-on-pay at the 2017 Annual Meeting.
- Major holders: As of the record date of March 25, 2015, FMR LLC held 14.9%, Palo Alto Investors, LLC held 9.3%, BlackRock, Inc. held 7.0%, and Point72 Asset Management, L.P. held 5.7% of 49,998,631 outstanding common shares. All current directors and executive officers as a group held 3.9%.
- Auditor fees: Ernst & Young LLP billed total fees of $527,274 for 2014 (audit fees of $525,279) versus $550,703 for 2013, and all services were pre-approved by the Audit Committee.
- Leadership changes: Eugene Sullivan, M.D. joined in March 2015 as Chief Medical and Scientific Officer, and Myrtle Potter and David Brennan joined the Board in December 2014 and May 2014, respectively.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-K/AFY2014filed March 30, 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
Why was this 10-K/A filed?
The filing states that the original 10-K incorporated Part III information by reference to the definitive proxy statement for the 2015 Annual Meeting of Shareholders. Amendment No. 1 was filed solely to timely provide that Part III information and to change the cover page's 'Documents Incorporated by Reference' section to 'None.'
How much did the executives earn for 2014, and how was their bonus determined?
The Summary Compensation Table shows William H. Lewis's 2014 total compensation at $1,949,865, with a 2014 cash bonus of $287,400. The Compensation Committee set the bonus based on corporate objectives, which were weighted 40% for LAI regulatory filings, 30% for manufacturing readiness, and 30% for commercialization infrastructure. The corporate objectives produced a 103% payout, and the CEO's bonus was based solely on corporate objectives.
Who are the largest shareholders according to this filing?
Based on third-party Schedule 13G filings cited in the filing, FMR LLC reported 7,449,749 shares (14.9%) as of December 31, 2014, Palo Alto Investors, LLC reported 4,625,648 shares (9.3%), BlackRock, Inc. reported 3,494,507 shares (7.0%), and Point72 Asset Management, L.P. reported 2,840,830 shares (5.7%). The company states it has not independently verified this information.
Are there any related-party transactions that investors should be aware of?
The filing states that since January 1, 2014, there were no transactions, and no proposed transactions, in which Insmed was or is to be a participant, involving more than $120,000, and in which a related person had or will have a direct or indirect material interest. The Audit Committee must review and approve all related-party transactions.
What is the company's regulatory progress described in the filing?
The filing states that Insmed filed a Marketing Authorization Application with the European Medicines Agency for ARIKAYCE for NTM lung infections and Pseudomonas lung infections in cystic fibrosis patients, and that the EMA validated the filing in February 2015. It also reports that the FDA granted Breakthrough Therapy Designation for ARIKAYCE for NTM lung infections, and that a global Phase 3 trial was advanced to begin enrollment in early 2015.
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