Insmed Inc (INSM)

[windyducat]

Aiming...the settlement percentages in principle are fairly straight forward - the bigger questions in my mind is how will the cost be calculated and how much are they.

The second sentence form the settlement below which says they will split cost and profits 50:50, is tricky to understand.

Gross profit would be revenues minus Insmed cost of goods sold,or Iplex manufacturing cost. Net profit which is split equally would be largely made up of Gross profit minus marketing and sales, distribution, and G&A which I assume would be mostly DNA given they are the commercial partner. All the cost are expensive and either could inflate their contribution.

At this point Insmed is more top line/revenue fucused and simply needs to create revenue streams. DNA on the other hand as a commercial pharm is much more bottom line focused with market pressure to sustain profits, today and far into the future.

My point. First it is DNA's best interest to hold cost down and improve bottom line performance. They need profits as much Insmed; DNA has been under cost performance pressure from the market. IMO the great deal for DNA is they got access to a potentially very lucrative pipeline with very little risk or investment. We'll see over time if DNA really believes in Iplex and if needed will they provide financial assistance outside the terms of settlement.

++If the opt-in is exercised by Genentech, Insmed would be reimbursed 50% of its incurred development costs for the indication. Subsequent development costs and profits will be split 50:50, but no royalty will be owed to Tercica++