Insmed Inc (INSM) 2010 Q3 法說會逐字稿

Good day, ladies and gentlemen and welcome to the third-quarter 2010 Insmed Incorporated earnings conference call. My name is Latasha and I will be your coordinator for today. At this time, all participants are in a listen-only mode. (Operator Instructions). I would now like to turn the call over to Mr. Brian Ritchie with FD.

Thank you, operator. Good morning, everyone. This is Brian Ritchie from FD and welcome to Insmed's third-quarter conference call. Today, we are joined by Dr. Mel Sharoky, chairman of the Board and Kevin Tully, Executive Vice President and CFO. Mel will provide a business update followed by Kevin's review of the financials.

Insmed issued a press release this morning containing third-quarter 2010 financial results, which is posted on the Company's website. As has been Insmed's historical policy around earnings conference calls, the Company will not be taking questions following the call. However, if you have any questions or would like additional information about Insmed, please contact me at 212-850-5683 after today's call.

Before we proceed with the call, I would like to remind everyone that the Safe Harbor language contained in today's press release also pertains to this conference call and webcast. Please go ahead, Mel.

Thank you, Brian. Hello, everyone and welcome to our conference call to discuss the Company's third quarter 2010 financial results. Before Kevin provides the download on the Company's financials, I would like to give everyone an update on our strategic review process. Though we haven't had much new to report over the past few quarters, we have still been quite active with the strategic review and I am very pleased with where we stand today with this process.

I think the most effective way to communicate this message is to say that I am as confident today as I was the day we began the strategic review and our ability to identify and execute a transaction that is beneficial to shareholders.

As you know well by now, I am unable to discuss the specific details of any current discussions. However, I can assure you that, at this stage of the strategic review, we have a good understanding of the landscape of opportunities currently available to us. The process right now is all about acquiring the right asset in the right transaction.

I realize that externally it continues to appear that progress is slow, but we are aggressively pursuing attractive opportunities while being extremely diligent in our approach. As I have mentioned before, the strategic review process necessitates a thorough and demanding evaluation of all potential targets and we will not move ahead with a transaction that we do not believe is in the best interest of our shareholders.

We will not waver from this point despite the understandable frustration we know investors are feeling. The Board and management are committed to doing a transaction that they believable be beneficial to the interest of shareholders.

As we have said in the past, we consider the strategic review an evolving process as there have and continue to be a number of different opportunities at various stages of review. With that said, we remain committed to identifying the right candidate where both the assets and transaction terms are attractive for Insmed shareholders.

The strength of our balance sheet continues to keep us in an excellent position to progress to the review process without detriment to our overall cash position and we remain committed to preserving shareholders' capital. I am, however, aware that many of our investors are concerned about our ability to satisfy NASDAQ's minimum bid price rule by December 15, 2010 and we will continue seeking to regain compliance as we focus on a positive outcome for the strategic review.

In closing, I would like to personally thank the investors of Insmed for their continued support through what can be characterized as a challenging, but rewarding path. With that, I will now pass the call to Kevin for his review of the financials. Please go ahead, Kevin.

Thank you, Mel and good morning, everyone. As Mel discussed earlier, we once again closed the quarter from a position of strength with a solid cash position supported by lower expenses and a debt-free capital structure. Total revenues for the third quarter ended September 30, 2010 were $1.8 million as compared to $2.5 million for the corresponding period in 2009. The $0.7 million decline in revenue was entirely due to lower cost recovery in the most recent quarter from our IPLEX expanded access program in Italy for the treatment of ALS. As in 2009, the Company ceased patient enrollment in the EAP in order to preserve inventory for existing patients.

Net loss for the third quarter of 2010 was $0.3 million, breakeven on a per share basis, compared with a net loss of $0.1 million, also breakeven on a per share basis reported in the third quarter of 2009. The $0.2 million change in net loss was primarily due to the $0.7 million decrease in revenues, which I noted earlier and the $0.3 million decrease in investment income. These were largely offset by an overall reduction of $0.8 million in operating expenses.

The $0.8 million decrease in total expenses resulted from a $0.3 million reduction in R&D expenses and a $0.5 million decline in SG&A expenses. The lower R&D expenses resulted largely from the elimination of IPLEX fill-finish costs, which we incurred in the third quarter of 2009 while the reduced SG&A expenses were principally due to lower external market research and consultancy fees associated with our ongoing strategic review process.

Investment income for the 2010 third quarter was $345,000 as compared to $682,000 for the same period in 2009 as overall market returns declined in the current quarter versus the corresponding period in 2009. Total revenues for the nine months ended September 30, 2010 were $5.6 million as compared to $7.9 million for the corresponding period in 2009. The $2.3 million decline in revenue was due to a combination of a $1.7 million decline in EAP cost recovery, the receipt during the first nine months of 2009 of $0.5 million in grant revenue for our Phase II IPLEX trial in MMD and $0.1 million in lower income from an expired TGF-beta royalty.

Net loss for the first nine months of 2010 was $0.6 million, breakeven on a per share basis, compared with net income of $116 million, or $0.92 per share reported in the same period of 2009. The $116.6 million change in our net loss was primarily due to the $125 million after-tax gain on the sale of our follow-on biologic assets to Merck in March 2009, together with the $2.3 million reduction in revenues I noted earlier.

These were partially offset by an overall reduction of $9.5 million in operating expenses, an $0.5 million improvement in investment income and a $0.7 million reduction in interest expense. The $9.5 million decrease in total expenses resulted from a $6.2 million reduction in R&D expenses and a $3.3 million decline in SG&A expenses. The lower R&D expenses reflected the elimination of manufacturing expenses following the sale of our FOB assets in March 2009 while the reduced SG&A expenses were principally due to lower personnel costs also associated with the asset sale to Merck.

Investment income for the first nine months of 2010 was $1.3 million. This was an increase of $0.5 million over the corresponding period of 2009 and was due to improved investment returns during the period and a significantly higher cash balance invested for the full nine months of 2010.

The reduction in interest expense for the first nine months of 2010 as compared to the same period of 2009 was entirely due to the elimination of the 2005 convertible notes, which were fully repaid in March 2010. As of September 30, 2010, the Company had total cash, cash equivalents and short-term investments on hand of $126.4 million, comprised of $114.6 million in short-term investments, $9.7 million in cash and cash equivalents and $2.1 million in a certificate of deposit. This compares to $124.3 million as of December 31, 2009.

The $2.1 million increase in cash, cash equivalents and short-term investments was due primarily to the receipt of a $2 million income tax refund in 2010 and a $1.1 million improvement in unrealized gain on investments, which was partially offset by $0.8 million of net cash used in operating activities and a $0.2 million final payment on our 2005 convertible notes.

In conclusion, we remain in an excellent financial position with a good understanding of the market landscape as it relates to the strategic review. And we continue to be confident in our ability to identify and execute a transaction that is beneficial to our shareholders. With that, I would like to thank you for your continued support and investment in Insmed. That concludes my financial review. I will now pass the call back over to Brian.

Thank you, Kevin and thank you, everyone, for joining us today. We appreciate your interest and look forward to providing you with future updates. Enjoy the rest of your day.

This concludes the presentation. You may all now disconnect. Good day.