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Insmed Poised to rally on Near-Term Data Catalyst And This Morning's New Analyst Coverage

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Insmed (NASDAQ: INSM) this morning received coverage from Lazard Capital  with a “buy” rating and a 1 year target of $21 a share.

The company is also expecting to report Phase III trial results for Arikace to treat cystic fibrosis patients with Pseudomonas lung infections in the middle of 2013. It is stated in the company’s recent First Quarter Financial Results Report:

Completed the patient treatment period of the Company’s registrational Phase 3 clinical trial of ARIKACE, the Company’s Iiposomal amikacin for inhalation, to treat cystic fibrosis (CF) patients with Pseudomonas lung infections in Europe and Canada and remain on track to report top-line clinical results from the trial in mid-2013.

In 2012, treatments for pseudomonas lung infections in CF generated about $424 million in sales, with Novartis capturing about $317 million from TOBI and Gilead Sciences’ Cayston capturing $107 million. If Phase III trials are successful and the drug is ultimately approved, Insmed should be able to capture a large portion of the market share.

Future Catalysts:

Insmed is also expecting to report Phase II results later in 2013. Also stated in the company’s recent First Quarter Financial Results Report:

Insmed’s U.S. Phase 2 clinical trial in patients with NTM (nontuberculous mycobacteria lung infections) is well underway with clinical results expected in late 2013.

Since this is an indication with no approved treatment and 50,000 patients in the United States, positive results from this trial would be a large milestone for the future of the company.

Some key points of interest include;

• INSM announced their Q4:12 results, ending 2012 with $92.9 million in
cash and short-term investments. INSM anticipates that current cash will be
sufficient through Phase III CF and NTM trial data and into mid-2014. The
company guided to cash requirements in the $45-55 million range for 2013.
• Dog toxicity study shows no evidence of neoplasia, squamous metaplasia or
proliferative changes as a result of ARIKACE exposure. On the call
management announced that INSM has completed the 9-month dog toxicity study
and submitted preliminary results to the FDA. We believe that the dog-tox data
alleviates concerns regarding the 2/102 rats that showed tumors in earlier data and
also likely represented a significant overhang in INSM shares.
• INSM anticipates top-line results from their study of ARIKACE in
Pseudomonas aeruginosa lung infections in patients with Cystic Fibrosis
mid-2013. The ongoing Phase III study has enrolled 302 patients who have been
randomized 1:1 to either once daily 560mg ARIKACE or twice daily TOBI. The
primary endpoint of the trial is relative change in FEV1 from baseline and the study
is greater than 80% powered to demonstrate non-inferiority. Secondary endpoints
include change in pulmonary function, time to pulmonary exacerbation among
others.
• Management also announced plans to move ARIKACE forward
in Nontuberculous Mycobacteria with a filing for the QIDP designation under
the GAIN Act for NTM. The NTM opportunity remains underappreciated;
anticipate potential publication of a patient chart survey that defines the NTM
market size and extent of unmet medical needs.

Additional potential price appreciation catalysts:

President and Chief Executive Officer of Insmed, will be presenting a corporate overview at Bank of America Merrill Lynch 2013 Health Care Conference taking place from May 14-16, 2013 at the Encore at the Wynn in Las Vegas, NV. Mr. Lewis’ presentation will take place on Thursday, May 16th at 11:20 a.m. local time. Also, on May 20th, Will Lewis will  be presenting a corporate overview at the UBS Global Healthcare Conference taking place at The Sheraton New York Hotel in New York City from May 20-23, 2013. Mr. Lewis’ presentation will take place on Monday, May 20th at 2:00 p.m.

Chart and technical overview:

INSM chart NEW

In the above chart, we can see a nice continuation pattern occurring with an elongated wedge, The stock appears to be consolidating to the upside in a tightening range. I anticipate more institutional buying shortly as company has several key presentations upcoming.  I expect $11 a share or so by mid-June.

I have made a YouTube video with further chart analysis which can be viewed below:

 

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