01—Abstract
Summary
Summary of the 10-K filed February 25, 2020. Cited figures are marked; the original filing is the authoritative source.
Insmed Incorporated's 2019 Form 10-K reports that its only approved product, ARIKAYCE (amikacin liposome inhalation suspension), received accelerated approval in the US in September 2018 for refractory MAC lung disease and was launched commercially in October 2018.
Total revenues rose to $136.5 milliona in 2019 from $9.8 million in 2018, with cost of product revenues of $24.2 million, yet the company posted a net loss of $254.3 million ($3.01 per share) compared with $324.3 million ($4.22 per share) in 2018. Accumulated deficit stood at $1.5 billion, and cash and cash equivalents were $487.4 million at December 31, 2019, which the company says is sufficient to fund operations for at least the next 12 months. The pipeline centers on INS1007, an oral DPP1 inhibitor for non-cystic fibrosis bronchiectasis (NCFBE), where the Phase 2 WILLOW study met its primary endpoint of time to first pulmonary exacerbation at 10 mg (p=0.027) and 25 mg (p=0.044).
The company plans a Phase 3 program. ARIKAYCE's full US approval depends on a confirmatory trial, with results to be reported by 2024, and the company plans a front-line confirmatory study starting in the second half of 2020. A marketing authorization application was filed in Europe in July 2019, and Japan filings are planned for the first quarter of 2020.
Investors should note the company's reliance on a single approved product, dependence on third-party manufacturers, $450.0 millionb of 1.75% convertible senior notes due 2025, and ongoing operating losses. The filing states that revenue alone is not expected to make the company profitable without reductions in operating expenses.
02—Key points
Key Highlights
- Total revenues increased to $136.5 million in 2019 from $9.8 million in 2018, reflecting the first full year of ARIKAYCE sales following its October 2018 US launch.
- Net loss was $254.3 million ($3.01 per share) in 2019, versus $324.3 million ($4.22 per share) in 2018; operating loss was $235.2 million.
- Cash and cash equivalents were $487.4 million at December 31, 2019; the company completed a public offering of 10,657,692 shares at $26.00 per share in Q2 2019, with net proceeds of $261.1 million.
- WILLOW Phase 2 top-line data for INS1007 in NCFBE met its primary endpoint at both the 10 mg (p=0.027) and 25 mg (p=0.044) doses; a Phase 3 program is planned.
- ARIKAYCE's full US approval is contingent on a confirmatory post-approval trial; confirmatory trial results are to be reported by 2024 under the FDA timetable.
- Long-term debt consists of $450.0 million of 1.75% convertible senior notes due January 2025, with a conversion price of approximately $39.16 per share.
- Accumulated deficit was $1.5 billion at December 31, 2019, and the company had 435 employees, with 373 in the US.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2019filed February 25, 2020Financial Statements
FY2019 against FY2018
| Line item | FY2019FY2018 | Change |
|---|---|---|
| Revenue | $136.47M$9.84M | +1287.6% |
| Cost of Revenue | $24.21M$2.42M | +899.3% |
| Gross Profit | $112.25M$7.41M | +1414.5% |
| R&D Expenses | $131.71M$145.28M | −9.3% |
| Operating Expenses | $371.71M$317.17M | +17.2% |
| Operating Income | -$235.25M-$307.34M | +23.5% |
| Interest Expense | $27.70M$25.47M | +8.8% |
| Net Income | -$254.34M-$324.28M | +21.6% |
| EPS (Basic) | $-3.01$-4.22 | +28.7% |
| EPS (Diluted) | $-3.01— | — |
| Shares Outstanding (Basic) | 84.56M76.89M | +10.0% |
| Shares Outstanding (Diluted) | 84.56M76.89M | +10.0% |
05—Questions
Frequently Asked Questions
How much revenue did ARIKAYCE generate in 2019, and how was it split?
Total revenues were $136.5 million in 2019. Net US product revenues were $132.1 million and net product revenues from early access programs were $4.4 million, compared with total revenues of $9.8 million in 2018.
Is Insmed profitable, and how much cash does it have?
No. The company reported a net loss of $254.3 million in 2019 and an accumulated deficit of $1.5 billion. It had $487.4 million in cash and cash equivalents at December 31, 2019, and the filing states this is expected to fund operations for at least the next 12 months.
What are the main risks around ARIKAYCE's approval status?
ARIKAYCE received accelerated approval, so full approval depends on a post-approval confirmatory trial. The filing says the trial's results are to be reported by 2024, and that if it is not successful the FDA could withdraw approval. The company also has post-marketing commitments and must satisfy ongoing regulatory requirements.
What are the next catalysts for the INS1007 program?
The company plans to design and conduct a Phase 3 program in NCFBE, with the primary endpoint expected to be frequency of pulmonary exacerbations. The filing notes that full WILLOW study data may differ from the top-line results once fully evaluated.
How is the company financed, and what dilution or debt risks exist?
The company has funded operations mainly through equity offerings and debt. It has $450.0 million of 1.75% convertible senior notes due January 15, 2025, which may be settled in cash, shares, or a combination, and conversion could dilute existing shareholders. The company says it may need to raise additional capital through equity or debt financing, strategic transactions, or otherwise.
06—Continue