Insmed Incorporated
8720 Stony Point Parkway, Suite 200
Richmond, Virginia 23235
Telephone: (804) 565-3000
January 26, 2011
Dear Shareholder:
You are cordially invited to attend a special meeting (the “Special Meeting”) of shareholders of Insmed Incorporated (the “Company” or “Insmed”) scheduled to be held on March 1, 2011, at 9:00 a.m. Eastern Standard Time, at the Doubletree Hotel, 4355 US Route 1, Princeton, NJ 08540.
On December 1, 2010, we completed a business combination with Transave, Inc. (“Transave”), a privately-held, New Jersey-based biopharmaceutical company focused on the development of inhaled pharmaceuticals for the site-specific treatment of serious lung infections. As a result of the transaction, Transave was merged with and into our wholly owned subsidiary Transave, LLC.
At the closing of the transaction, the former Transave stockholders received an aggregate of (i) 25,938,818 newly issued shares of our common stock, par value $0.01 per share (“Common Stock”), (ii) 91,745,892 shares of our newly created Series B Conditional Convertible Preferred Stock, par value $0.01 per share (the “Preferred Stock”), and (iii) approximately $561,280 in cash. A portion of the shares of Preferred Stock received by the former Transave stockholders was retained by Insmed to satisfy claims for indemnification under the merger agreement, if any.
Shares of Preferred Stock are entitled to receive any dividends paid on our Common Stock (on an as-converted basis). Shares of Preferred Stock will begin to accrue additional dividends at a rate of 12.5% per annum at the end of each six month period following the earlier of (i) December 1, 2011 or (ii) the date upon which at least 50 patients have been given at least one dose in Phase III clinical trials for ARIKACE TM , but in no event earlier than September 1, 2011.
Unless approval of our shareholders is received, shares of Preferred Stock are not convertible into shares of our Common Stock and are non-voting, except as a separate class with respect to certain actions. If shareholder approval is obtained, then all outstanding shares of Preferred Stock will automatically and immediately convert into shares of our Common Stock.
At the Special Meeting, holders of shares of our Common Stock will be asked to consider and vote on a proposal to approve the conversion of the Preferred Stock into Common Stock and the issuance of shares of Common Stock upon conversion of the Preferred Stock (the “Preferred Stock Proposal”). Our Board of Directors unanimously recommends that our shareholders vote “FOR” the Preferred Stock Proposal.
At the Special Meeting, holders of shares of our Common Stock will also be asked to consider and vote on a proposal to amend our Articles of Incorporation, as amended, to effect a one for 10 reverse stock split of the issued and outstanding shares of our Common Stock in order to reduce the number of outstanding shares of Common Stock (the “Reverse Split Proposal”). Our Board of Directors unanimously recommends that our shareholders vote “FOR” the Reverse Split Proposal.
In addition, at the Special Meeting, holders of shares of our Common Stock may be asked to consider and vote on a proposal to adjourn the Special Meeting to solicit additional proxies if there are insufficient proxies at the Special Meeting to approve the Preferred Stock Proposal and/or the Reverse Split Proposal (the “Adjournment Proposal”). Our Board of Directors unanimously recommends that our shareholders vote “FOR” the Adjournment Proposal.
All holders of record of our Common Stock as of January 25, 2011 are entitled to vote at the Special Meeting, provided that pursuant to the rules and regulations of the NASDAQ Capital Market, the shares of our Common Stock issued to former stockholders of Transave may not be voted on the Preferred Stock Proposal. Approval of the Preferred Stock Proposal requires the affirmative vote of a majority of votes cast, in person or by proxy, at the Special Meeting. Approval of the Reverse Split Proposal requires the affirmative vote of the holders of a majority of the issued and outstanding shares of our Common Stock. Approval of the Adjournment Proposal requires the affirmative vote of a majority of the shares of our Common Stock represented in person or by proxy at the Special Meeting whether or not a quorum is present.
Please read the accompanying proxy statement for further information. It is important that your shares be represented and voted, regardless of the size of your holdings. Accordingly, whether or not you plan to attend the Special Meeting, please complete, sign and date and promptly return the enclosed proxy card in the self-addressed envelope enclosed for your convenience so that your shares will be represented at the Special Meeting. The proxy is revocable at any time before it is voted and will not affect your right to vote in person if you attend the Special Meeting.
Thank you for your ongoing support of and continued interest in Insmed.
Sincerely,
/s/ Donald J. Hayden, Jr.
Donald J. Hayden, Jr.
Chairman of the Board
Or.. you might want to consider why they are so confident that shareholders will be "happy" with the "deal" by then, that they would risk seeing a massive short attack between March 1st and June 15th to cause another delisting crisis!
These VCs were not born yesterday.. I suspect they are well capable of seeing their investment here pay off handsomely! (And that would mean a share price well north of .71¢/share!)..
And don't forget that Sharoky bought shares on the open market at .79¢ to 82¢/share.. I don't think he would be happy with anything less than a double, either!
Sentiment : Strong Buy