Insmed settled a patent lawsuit with rival Tercica over drugs used to treat abnormally short children.
The agreement reached March 6, 2007 comes three months after a federal jury in Oakland said Insmed infringed patents controlled by Brisbane-based Tercica and owned by South San Francisco-based Genentech. The settlement relieves both companies of the cost of fighting an appeal that Insmed had promised to file, said Matthew Osborne, an analyst at Lazard Capital Markets in New York.
Under the agreement, Insmed WILL NO LONGER sell its lone product, Iplex, and will instead license the patents at issue from Tercica and Genentech to manufacture drugs to treat other diseases such as types of muscular dystrophy, the companies said in a statement.
In its restructuring, Insmed's sales and marketing group will be
eliminated and production at Insmed's manufacturing site in Boulder, Colorado
will be scaled back, to reflect the reduced drug product requirement. The
Company anticipates that the current workforce of 150 will be reduced by
approximately 34% as a result of the restructure. The projected savings are
expected to extend the Company's current cash reserves and allow the Company
to fund its operations into the fourth quarter of 2007. As of December 31,
2006 Insmed had $24.1 million of cash on hand.
Geoffrey Allan Ph. D., President, CEO and Chairman of Insmed, commented:
"With the lawsuit behind us we can now focus all our efforts on developing
IPLEX for the promising indications we have already identified, and with the
License and Development agreement with Tercica and Genentech in place we
believe we are well positioned for success." Dr. Allan added that, "The end of
litigation removes a cloud from the Company's future and the consequent
restructuring allows for an improved financial position."
The two pieces did NOT mention that Insmed faced a possible injunction, and they did not mention the fate of the children who suffer from growth deficiency.