Insmed Inc (INSM)

[smallinvestor]

zake1....i am saying that Genentech/Tercica has RESERVED the right to be 50/50 partners is because of this:

a binary outcome:

if INSM's pipeline is successful to the point where half of the development cost is less than 4% of potential royalty. It's simple math...so far it's 400M cost. Another two years...so probably 500M cost. half of that is 250M. when (50% profit - 4% of potential royalty) exceed 250M, Genentech will exercise the opt-in, which is possible. assume a 30% post royalty margin, 50% profit is about 15% revenue. 15-4 =....about 10% revenue so when expected revenue from IPLEX exceed 2.5B, genentech will choose to opt in

As ALS is estimated by my previous post to be AT LEAST 2.5B or CYTR wouldn't have received 24.5Million for 1% royalty.

if INSM's pipeline fail(unlikely, but we are discussing a binary outcome) Genentech wouldn't care about 4% royalty as it didn't have to come up with dev cost.

either way, DNA/TERCICA are more of a winner than if INSM fought on.

What is it for INSM? NO BK...and probably doubling of stock price.(which INSM could potentially be without this deal)

I am also going to read the terms closely to see if the agreement can be revoked later on. I am thinking if after 2010, INSM came up with a way to overcome 414 patent, then INSM should revoke this stupid deal as it's no longer necessary.