01—Abstract
Summary
Summary of the 10-K filed February 22, 2019. Cited figures are marked; the original filing is the authoritative source.
Insmed Incorporated reported its first full year with a commercial product in its 10-K for 2018.
ARIKAYCE (amikacin liposome inhalation suspension) received accelerated approval from the FDA on September 28, 2018 for refractory MAC lung disease under the LPAD pathway, with commercial shipments beginning in October 2018. Total 2018 revenues were $9.8 milliona, comprising $9.3 million of US net product revenues and $0.6 million from France ATU sales, while the net loss widened to $324.3 million, or $4.22 per share, from $192.6 million in 2017. Research and development expenses rose to $145.3 million and SG&A expenses rose to $168.2 million, driven by manufacturing costs and commercial launch preparation.
The company's ability to sustain ARIKAYCE depends on a required post-approval confirmatory trial, with the protocol expected to be finalized in the first half of 2019 and results reported by 2024. Continued approval is contingent on verifying clinical benefit in that study. Insmed also flagged reliance on a small number of third-party manufacturers, a sole nebulizer supplier (PARI), and limited prior experience commercializing a drug.
At December 31, 2018, cash and cash equivalents were $495.1 millionb, and the company stated it believes it has sufficient funds for at least the next 12 months. The January 2018 issuance of $450.0 million of 1.75% convertible senior notes due 2025 was the main driver of the higher debt balance, which was $316.6 million net of discount. Shareholders' equity declined to $208.3 million from $361.1 million.
02—Key points
Key Highlights
- ARIKAYCE received FDA accelerated approval on September 28, 2018 for refractory MAC lung disease under the LPAD pathway; commercial shipments began in October 2018.
- 2018 total revenues were $9.8 million: $9.3 million US net product revenues and $0.6 million from France ATU sales.
- Net loss was $324.3 million ($4.22 per share) in 2018, versus $192.6 million ($2.89 per share) in 2017.
- R&D expenses were $145.3 million and SG&A expenses were $168.2 million in 2018, up from $109.7 million and $79.2 million in 2017.
- A post-approval confirmatory trial is required for full approval; the protocol is expected to be finalized in the first half of 2019, with results reported by 2024.
- Cash and cash equivalents were $495.1 million at December 31, 2018, following $435.8 million in net proceeds from the January 2018 convertible notes offering.
- Accumulated deficit reached $1,282.2 million, and the company depends on a small number of third-party manufacturers and a sole nebulizer supplier, PARI.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2018filed February 22, 2019Financial Statements
FY2018 against FY2017
| Line item | FY2018FY2017 | Change |
|---|---|---|
| Revenue | $9.84M$0 | — |
| Cost of Revenue | $2.42M$0 | — |
| Gross Profit | $7.41M$0 | — |
| R&D Expenses | $145.28M$109.75M | +32.4% |
| Operating Expenses | $317.17M$188.92M | +67.9% |
| Operating Income | -$307.34M-$188.92M | −62.7% |
| Interest Expense | $25.47M$5.92M | +329.9% |
| Net Income | -$324.28M-$192.65M | −68.3% |
| EPS (Basic) | $-4.22$-2.89 | −46.0% |
| Shares Outstanding (Basic) | 76.89M66.58M | +15.5% |
| Shares Outstanding (Diluted) | 76.89M66.58M | +15.5% |
05—Questions
Frequently Asked Questions
What is Insmed's only approved product and what is its approved indication?
ARIKAYCE (amikacin liposome inhalation suspension) is Insmed's only approved product. It received accelerated approval in the US on September 28, 2018 for refractory Mycobacterium avium complex (MAC) lung disease, as part of a combination antibacterial drug regimen for adult patients with limited or no alternative treatment options.
How much revenue did Insmed generate in 2018 and how was it split?
Total 2018 revenues were $9.8 million ($9,835 thousand). This consisted of $9.3 million in net product revenues in the US and $0.6 million in net product revenues from France's ATU program.
Why did the net loss increase in 2018?
Net loss rose to $324.3 million from $192.6 million. The filing attributes the increase to higher R&D expenses (up $35.5 million, mainly external manufacturing costs), higher SG&A expenses (up $89.0 million, mainly compensation from headcount growth and pre-commercial planning consulting fees), and $19.5 million of higher interest expense from the 2025 convertible notes.
What conditions must Insmed meet to keep ARIKAYCE approved in the US?
As a condition of accelerated approval, Insmed must conduct a randomized, double-blind, placebo-controlled confirmatory trial to assess and describe ARIKAYCE's clinical benefit in MAC lung disease. The protocol is expected to be finalized in the first half of 2019, with results reported by 2024. Continued approval depends on verifying that clinical benefit.
Does Insmed have enough cash to fund operations?
The company reported $495.1 million in cash and cash equivalents as of December 31, 2018 and stated it believes it currently has sufficient funds to meet its financial needs for at least the next 12 months. It also noted it may need to raise additional capital and may do so opportunistically through equity or debt financing.
06—Continue