01—Abstract
Summary
Summary of the 10-K filed February 25, 2021. Cited figures are marked; the original filing is the authoritative source.
Insmed Incorporated reported a 2020 net loss of $294.1 milliona, compared with $254.3 million in 2019, as it commercializes its only approved product, ARIKAYCE, for MAC lung disease.
Product revenues, net, rose to $164.4 millionb from $136.5 million, driven by ARIKAYCE net sales growth. Research and development expenses increased to $181.2 million from $131.7 million, mainly due to the frontline ARIKAYCE confirmatory trial program, the Phase 3 ASPEN trial of brensocatib, and a $12.5 million milestone payment to AstraZeneca. SG&A expenses decreased to $203.6 million from $210.8 million.
The company had $532.8 millionc in cash and cash equivalents at December 31, 2020, and states it believes it has sufficient funds for at least the next 12 months. The filing emphasizes that full US approval of ARIKAYCE depends on a confirmatory post-marketing trial, with confirmatory results to be reported by 2024, and that the company's accumulated deficit was $1.8 billion. The company's convertible senior notes ($450.0 million, 1.75% due 2025) remain outstanding.
Pipeline milestones include the Phase 3 ASPEN trial of brensocatib in bronchiectasis, a Phase 1 healthy volunteer study of TPIP with topline results announced in February 2021, and a pending Japanese new drug application for ARIKAYCE. The company's ARIKAYCE revenue remains concentrated among a small number of customers, with the three largest customers representing 28%d, 27% and 23% of gross product revenue in 2020. Investors should weigh the growth in product sales against continued operating losses, reliance on third-party manufacturers, and dependence on the outcome of the confirmatory trial program.
02—Key points
Key Highlights
- Product revenues, net, increased to $164.4 million in 2020 from $136.5 million in 2019, driven by ARIKAYCE net sales growth.
- Net loss was $294.1 million, or $3.01 per share, in 2020, compared with a net loss of $254.3 million, or $3.01 per share, in 2019.
- R&D expenses rose to $181.2 million from $131.7 million, including a $12.5 million milestone payment to AstraZeneca upon first dosing in the Phase 3 ASPEN trial.
- SG&A expenses decreased to $203.6 million from $210.8 million, mainly due to lower professional fees and other external expenses.
- Cash and cash equivalents were $532.8 million at December 31, 2020, up from $487.4 million, after net proceeds of $245.9 million from a second-quarter 2020 stock offering.
- ARIKAYCE received EC approval in October 2020 for NTM lung infections caused by MAC in adults with limited treatment options; the company launched in Germany and the Netherlands.
- Full FDA approval of ARIKAYCE depends on the confirmatory ARISE and ENCORE frontline trial program, with confirmatory trial results to be reported by 2024.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2020filed February 25, 2021Financial Statements
FY2020 against FY2019
| Line item | FY2020FY2019 | Change |
|---|---|---|
| Revenue | $164.41M$136.47M | +20.5% |
| Cost of Revenue | $39.87M$24.21M | +64.7% |
| Gross Profit | $124.54M$112.25M | +10.9% |
| R&D Expenses | $181.16M$131.71M | +37.5% |
| Operating Expenses | $429.64M$371.71M | +15.6% |
| Operating Income | -$265.23M-$235.25M | −12.7% |
| Interest Expense | $29.56M$27.70M | +6.7% |
| Net Income | -$294.09M-$254.34M | −15.6% |
| EPS (Basic) | $-3.01$-3.01 | 0.0% |
| EPS (Diluted) | $-3.01$-3.01 | 0.0% |
| Shares Outstanding (Basic) | 97.61M84.56M | +15.4% |
| Shares Outstanding (Diluted) | 97.61M84.56M | +15.4% |
05—Questions
Frequently Asked Questions
Is Insmed profitable, and how much cash does it have?
No. Insmed reported a net loss of $294.1 million for 2020, and its accumulated deficit was $1.8 billion at year-end. It had $532.8 million in cash and cash equivalents as of December 31, 2020, and believes this is sufficient to fund operations for at least the next 12 months.
What is driving the company's revenue, and how concentrated is it?
Revenue comes primarily from net sales of ARIKAYCE in the US and Europe, which increased to $164.4 million in 2020. Three customers accounted for 28%, 27% and 23% of gross product revenue in 2020.
What must happen for ARIKAYCE to receive full approval in the US?
ARIKAYCE received accelerated approval in September 2018 and must complete a post-approval confirmatory trial. The ARISE and ENCORE frontline trials began in the fourth quarter of 2020, and the filing states confirmatory trial results are to be reported by 2024. If the ENCORE trial is not successful, the FDA could withdraw approval.
What are the company's other pipeline programs?
Brensocatib, an oral DPP1 inhibitor for bronchiectasis, is in the Phase 3 ASPEN trial, which began in December 2020 and has a 52-week primary endpoint of pulmonary exacerbation rate. TPIP, an inhaled treprostinil prodrug for PAH, reported topline Phase 1 healthy volunteer results in February 2021, and two PAH patient studies are planned.
What debt does the company carry?
The company has $450.0 million of 1.75% convertible senior notes due January 15, 2025, with a carrying value of $356.3 million at December 31, 2020 after unamortized debt discount. The notes may be settled in cash, shares or a combination, at the company's option.
06—Continue