01—Abstract
Summary
Summary of the 10-K filed February 17, 2022. Cited figures are marked; the original filing is the authoritative source.
Insmed Incorporated reported a net loss of $434.7 milliona for 2021, up from $294.1 million in 2020, as it continued to commercialize its only approved product, ARIKAYCE, and advance its pipeline.
Product revenues, net, rose to $188.5 millionb from $164.4 million, driven by the US and by launches in Japan (July 2021) and certain European markets. Research and development expenses increased to $272.7 million from $181.2 million, primarily reflecting clinical development for the Phase 3 ASPEN trial of brensocatib and the ARIKAYCE frontline confirmatory trial program. SG&A expenses rose to $234.3 million from $203.6 million on commercial launch efforts in Europe and Japan.
The balance sheet strengthened during 2021, with cash and cash equivalents of $716.8 millionc and marketable securities of $50.0 million at year-end, supported by $575.0 million of 0.75% convertible senior notes due 2028, an $11.5 million share offering at $25.00 per share, and the repurchase of $225.0 million of 1.75% notes due 2025. Management states the company believes it has sufficient funds for at least the next 12 months. The accumulated deficit was $2.3 billion, and the company expects operating losses to continue for the foreseeable future.
Key risks for investors include ARIKAYCE's accelerated approval in the US, which requires the ARISE and ENCORE confirmatory trials to support full approval, with confirmatory results expected to be reported by 2024. Revenue concentration is also significant, as the three largest customers accounted for 75% of gross product revenue in 2021. The company acquired Motus Biosciences and AlgaeneX in August 2021, recording $136.1 milliond of goodwill and $29.6 million of in-process R&D.
02—Key points
Key Highlights
- Product revenues, net were $188.5 million in 2021, up from $164.4 million in 2020, with US revenue of $159.5 million and Japan revenue of $16.0 million.
- Net loss was $434.7 million, or $3.88 per share, compared with $294.1 million, or $3.01 per share, in 2020.
- R&D expenses rose to $272.7 million from $181.2 million, mainly on the Phase 3 ASPEN trial of brensocatib and the ARIKAYCE frontline clinical trial program.
- Cash and cash equivalents were $716.8 million plus $50.0 million of marketable securities at December 31, 2021; management says this funds operations for at least the next 12 months.
- Total debt principal was $800.0 million at year-end, including $575.0 million of 0.75% convertible notes due 2028 issued in May 2021 and $225.0 million of 1.75% notes due 2025.
- The three largest customers accounted for 75% of total gross product revenue in 2021, compared with 78% in 2020.
- ARIKAYCE's US approval is accelerated, and full approval depends on confirmatory trial results expected to be reported by 2024.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2021filed February 17, 2022Financial Statements
FY2021 against FY2020
| Line item | FY2021FY2020 | Change |
|---|---|---|
| Revenue | $188.46M$164.41M | +14.6% |
| Cost of Revenue | $44.15M$39.87M | +10.7% |
| Gross Profit | $144.31M$124.54M | +15.9% |
| R&D Expenses | $272.74M$181.16M | +50.6% |
| Operating Expenses | $563.55M$429.64M | +31.2% |
| Operating Income | -$375.09M-$265.23M | −41.4% |
| Interest Expense | $40.47M$29.56M | +36.9% |
| Net Income | -$434.65M-$294.09M | −47.8% |
| EPS (Basic) | $-3.88$-3.01 | −28.9% |
| EPS (Diluted) | $-3.88$-3.01 | −28.9% |
| Shares Outstanding (Basic) | 112.11M97.61M | +14.9% |
| Shares Outstanding (Diluted) | 112.11M97.61M | +14.9% |
05—Questions
Frequently Asked Questions
What is Insmed's main source of revenue, and how did it grow in 2021?
Revenue comes entirely from ARIKAYCE, the company's only approved product. Product revenues, net, rose 14.6% to $188.5 million in 2021 from $164.4 million in 2020, driven by sales growth and launches in Japan and certain European markets. US revenue was $159.5 million, essentially flat with the prior year's $157.5 million.
Why did Insmed's losses increase in 2021?
Operating expenses rose to $563.6 million from $429.6 million. R&D expenses increased by $91.6 million, mainly for the ASPEN trial of brensocatib and the ARIKAYCE confirmatory program. SG&A expenses increased by $30.7 million on commercial launch activities in Europe and Japan and headcount growth. Interest expense also rose by $10.9 million, mostly from accretion of debt discount.
How is Insmed funding its operations?
In 2021 the company raised $575.0 million of 0.75% convertible senior notes due 2028 (net proceeds about $559.3 million) and about $270.1 million of net proceeds from an 11.5 million share offering at $25.00 per share. It used $225.0 million of those note proceeds to repurchase part of its 1.75% notes due 2025. It also has a $250.0 million at-the-market program, under which no shares had been sold as of year-end.
What are the main risks tied to ARIKAYCE's approval?
ARIKAYCE received accelerated approval in the US for refractory MAC lung disease, so full approval depends on the ARISE and ENCORE confirmatory trials. The filing states that if ENCORE is not successful, the FDA could withdraw approval. Market acceptance, reimbursement and pricing, and the boxed warning on respiratory adverse reactions are also cited as factors that could limit adoption.
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